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FILED: NEW YORK COUNTY CLERK 06/09/2014 INDEX NO. 653476/2013
NYSCEF DOC. NO. 18 RECEIVED NYSCEF: 06/09/2014
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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PETER STERN and
EXPRESS TRADE CAPITAL, INC.
Plaintiffs, Index No. 653476/2013
-against-
OLEG ARDACHEV, AIR CARGO SERVICES L.L.C.,
DELEX INC., DELEX AIR CARGO, LLC, a Delaware
limited liability company, and DELEX AIR
CARGO, LLC. a Washington limited liability company.
Defendants.
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POST- HEARING BRIEF FOR THE DEFENDANT OLEG ARDACHEV
QUESTION PRESENTED
Whether this Court may admit extrinsic evidence to determine the meaning of a
contract under the holding of Korff v. Corbett, 18 A.D.3d 248 (1 Dept. 2005), which
states that extrinsic or parol evidence may be used to identify the subject matter of a
contract and “to explain the meaning of particular terms used” where the terms of the
contract are “ambiguous, indefinite or uncertain”, when the contract at issue is wholly
devoid of the subject matter and contains no terms of the subject matter that may be
interpreted by the Court.
INTRODUCTION
Plaintiffs had commenced this action by filing a complaint against the Defendants
on October 8, 2013. In the complaint, Plaintiffs allege causes of action sounding in
breach of contract, unjust enrichment, and fraudulent transfer. The alleged contract
between Plaintiff and Defendant is annexed to the complaint as Exhibit A and referenced
as “Sale Agreement” throughout. Exhibit A.
Defendants contend that the purported “Sale Agreement” is not an enforceable
and legally binding contract because it severely lacks any certainty and specificity as to
its terms, as required for contracts to be enforceable. The document is not entitled the
“Sale Agreement”, as this name first appears only in the complaint. More importantly, the
purported contract contains no terms of subject matter whatsoever, therefor rendering the
document unenforceable and not legally binding.
On November 13, 2013, Defendants made a motion to dismiss three causes of
action of the complaint that allege breach of contract and that expressly refer to the ‘Sale
Agreement’ as legally binding contract that Plaintiffs allege Defendants breached.
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Plaintiff opposed the motion by inter alia citing the holding of Korff, supra. for the
proposition that parol evidence, such as witness testimony, extrinsic records and
documents, and evidence of the business relationship between the parties, may be used by
this Court to identify the subject matter of the contract, where it finds that contract
language is indefinite, uncertain, or ambiguous.
Defendants, in their reply papers, responded that the “Agreement”, as it is written
is fatally flawed and unenforceable, because for this Court “to determine what in fact the
parties have agreed to” citing Matter of 166 Mamaroneck Ave. Corp. v 151 E. Post Rd.
Corp., 78 N.Y.2d 88 (1991) there would need to be at least some language in the
Agreement for the Court to interpret and determine. Defendants, while conceding that
extrinsic evidence is admissible to ascertain the terms of the contract that are ambiguous
and “susceptible to more than one interpretation”, see Korff, the terms of the
“Agreement” at issue may not be ascertained because it plainly and completely lacks any
language as to the subject matter of this “Agreement”, thereby rendering the Agreement
unenforceable.
A complete lack of subject matter language is not merely ambiguous or uncertain.
It is not susceptible to “more than one interpretation” but rather to each and every
possible interpretation. The Court is asked not to interpret the terms of the contract, but
rather to articulate what the parties’ intent was in regards to the subject matter, insert the
subject matter into the contract, and bind the parties – where there is no language
whatsoever to guide it in this process. Such an extreme measure, if undertaken by the
Court, would risk that Defendant would be obligated to perform under the newly inserted
terms of the Agreement, which terms he may never had knowingly agreed to nor
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assumed. “Where the void is too great, the omissions are too noticeable and the risk of
ensnaring a party in a set of contractual obligations that he never knowingly assumed is
too serious”, Mocca Lounge v. Misak, 94 A.D.2d 761, 462 N.Y.S.2d 704 (2 Dept. 1983),
the courts have repeatedly declined to enforce agreements and the Defendant is seeking
the same relief here.
At the scheduled hearing date, and in light of the Korff holding that states that
ambiguous terms of subject matter may be explained by parol evidence, the Honorable
Shlomo S. Hagler had directed the attorneys for the parties to prepare and submit a brief
regarding the admissibility of parol evidence to establish the existence of the contract,
where the subject matter of such contract is completely missing, as it is here. Defendants’
legal argument follows below.
DISCUSSION
Plaintiff urges the Court to overlook the glaring omissions in the Agreement and
admit extrinsic evidence to fill the wide gap left there by the parties. The Agreement as
written lacks the heading “Sale Agreement”, which name Plaintiffs apparently made up
themselves. More importantly, it contains no language whatsoever regarding the subject
matter of the agreement. The Agreement is completely silent on what was being
proposed, who was supposed to do what, what was the agreement between the parties,
and what the parties intended to bargain for. Under such circumstances, the risk is too
great of binding the Defendant to the bargain he never knowingly may have assented to,
and the Court should decline to enforce the Agreement for lack of certainty and
specificity.
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To support his position, Plaintiff relies on the holding of Korff, specifically the
portion of the holding that states: “Parol evidence, where necessary, may be used to
identify the subject matter of a contract, the parties thereto and the capacity or
relationship in which it was executed, and to explain the meaning of particular terms
used.” Korff, at 251. However, the facts of Korff are easily distinguishable from the
matter at hand. In Korff, the agreement between the parties was only “somewhat
imprecise”. The Korff agreement contained the introductory sentence that suggested that
even though a meeting of the minds was possibly not previously achieved, the language
did suggest that the parties were “settling their differences and putting their agreement in
writing”. The first paragraph referred to plaintiff's firm's outstanding legal bills and
supported a finding that there was consideration for the agreement. The next paragraph
provided that plaintiff, as opposed to his firm, was to be paid a sum certain. Korff, at
251. Under such circumstances, First Department overruled Hon. Richard B. Lowe III’s
decision and stated that parol evidence was admissible to “identify subject matter of the
contract … and to explain the meaning of particular terms used.” Id.
However, in the same decision the Korff court conditioned its holding by
reiterating that “..a court cannot enforce a contract unless it is able to determine what in
fact the parties have agreed to” Korff, at 250, citing Matter of 166 Mamaroneck Ave.
Corp. v 151 E. Post Rd. Corp., 78 N.Y.2d 88 (1991). Defendants’ main argument centers
precisely around this issue. Defendants concede that uncertain or ambiguous terms of a
contract that are open to more than one interpretation may be supplemented by the
extrinsic evidence. However, where such terms are not just ambiguous but completely
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missing, the court should apply the standard articulated by Matter of 166 Mamaroneck
and Mocca Lounge courts and decline to enforce the agreement.
Merriam-Webster dictionary defines “Ambiguous” as “able to be understood in
more than one way, having more than one possible meaning or not expressed or
understood clearly.” Furthermore, “an ambiguity does not exist simply because the
parties urge different interpretations of its terms” Bethlehem Steel Co. v. Turner
Construction Co., 2 N.Y.2d 456, 161 N.Y.S.2d 90 (1957), but is “the result of the terms
of an agreement being susceptible to more than one reasonable interpretation”. 239 East
79th Owners Corp. v. Lamb 79 & 2 Corp., 30 A.D.3d 167 (1st Dept. 2006). Korff, and
other legal precedent, that permit admissibility of parol evidence where the terms of the
contract are ambiguous is inapplicable here because the terms which are missing from the
Agreement are not open to any interpretation. They cannot be used to “identify the
subject matter of a contract … and to explain the meaning of particular terms used”,
within the holding of Korff.
In the absence of any language, describing what it is the parties hereto actually
agreed to, and which may guide the Court to lend meaning and interpretation to the
Agreement by admitting extrinsic evidence, the Court should decline to consider such
evidence because of the inherent risk of undue prejudice to the Defendant. Binding the
Defendant to a set of contractual obligations to which he never agreed, based on oral
testimony of interested or biased parties, can have the most far-ranging implications. A
signature on a practically blank paper may be a reason to haul a defendant in court on a
claim of the breach of an express contract and where defendant’s credibility may be
pitted against such interested parties. Such results would be grossly inequitable in light of
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the well-established principles of contract law of certainty and definitiveness. Plaintiff is
free to proceed on the theories of implied contract, quasi-contract, or unjust enrichment.
However, the elements of an express and enforceable contract between the parties are
palpably missing from the document that this Court is asked to review and rule upon.
The party seeking to enforce a contract bears the burden to establish that a binding
agreement was made and to prove the terms of the contract. Paz v. Singer Co., 151
A.D.2d 234, 235, 542 N.Y.S.2d 10 (1 Dept. 1989), citing Fisch, NY Evidence § 1098 (2d
ed). The agreement is required to be sufficiently definite so that a court can ascertain its
terms for the purpose of determining whether it has been breached and avoiding
imposition of contractual obligation under circumstances where intent to conclude a
binding agreement is not present. Cobble Hill Nursing Home v. Henry & Warren Corp.,
74 N.Y.2d 475, 548 N.Y.S.2d 920 (1989). The Agreement that Plaintiffs ask this Court to
enforce is anything but so sufficiently definite. Plaintiffs are utterly unable to meet their
burden of proof and establish the existence of a binding agreement.
While there is a lack of caselaw in New York that deals with the exact set of
circumstances as in the instant matter, where the subject matter of a contract is not just
uncertain or ambiguous but completely missing it its entirety, and for obvious reasons, in
the Second Department’s case reported as Rouzani v. Rapp, 203 A.D.2d 446 (2 Dept.
1994), the court was asked to decide enforceability of a lease agreement. The Rouzani
court wrestled with a similar scenario1, namely that the purported written contract for sale
of business contained only the purchase price without any agreement on other essential
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This case involves a proposed sale of a business and the lease of the premises in conjunction with that sale. The
defendant and his sister were co-owners of the premises. The plaintiff and the defendant signed an agreement setting
forth the purchase price of the business, the “starting” monthly rent, and the approximate duration of a lease. The
agreement stated that a “[f]ormal lease and legal formalities
& details” would follow in two to three weeks. In addition,
the defendant accepted a deposit from the plaintiff. Subsequently, the defendant's sister rejected the agreement. The
plaintiff refused to accept the defendant's return of the deposits and commenced the action alleging that the defendant
breached the lease.
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terms. The court held that the agreement was too vague and indefinite to be enforced. In
so holding, the court found that “there is no evidence of an agreement to any material
terms other than the purchase price stated in the memorandum. The purported contract for
the sale of the business, containing only the purchase price, lacked other essential terms
and was therefore too vague and indefinite to be enforced”, citing Martin Delicatessen v.
Schumacher, 436 N.Y.S.2d 247, 417 N.E.2d 541(1981). Just as here, the Agreement
contains only the price and no material terms, thus it is unenforceable for vagueness and
indefiniteness.
Even a detailed scrutiny of the challenged “Agreement” reveals nothing to
establish a binding agreement between the parties. To the contrary, the document appears
fatally flawed from the outset, bearing only the nondescript recitation “Agreed:”, the
terms of payment, and three signatures. The document contains nothing that would
enable the Court to ascertain the intent of the parties as to who should receive
compensation, for what, under what conditions, and if any such condition would excuse
performance or render this Agreement null and void. In fact, the document makes no
reference whatsoever to the business that Plaintiff claims he sold to Defendant pursuant
to this “Agreement”.
Under such circumstances, and according to the New York legal precedent cited
by counsel in this Brief, the answer to the Question Presented should be an emphatic No.
DATED: Brooklyn, New York Respectfully submitted,
May 1, 2014
By: ________________
Robert Bondar, Esq.
Attorney for Defendants
28 Dooley Street, 3rd floor
Brooklyn, New York 11235
Telephone (347) 462-3262
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