Oral Agreement For Real Estate Not Enforceable, Brooklyn Court Holds March 14, 2010

Reading this decision, I can’t help but wonder what the plaintiff or his attorney were thinking when they brought this breach of oral agreement and breach of fiduciary duty lawsuit.

In Malaty v. Malaty, the plaintiff Naguib Malaty sued his brother to compel the turnover of the defendant’s interest in a Brooklyn property that was supposedly purchased with plaintiff’s money, and for money damages in breach of conract and breach of fiduciary duty that the defendant purportedly owed to plaintiff’s two corporations.

Plaintiff had a few “minor” problems with his claim, however. First, he had no proof that his corporations were actually legitimate (based upon the evidence adduced at trial, the Court opined that these corporations for tax evasion purposes); Second, he had no written agreement memorializing the defendant’s agreement to transfer ownership of the subject property to plaintiff, as a result of which his claim was barred by New York’s Statute of Frauds.

In dismissing this branch of the plaintiff’s claim, the Court cited the underlying theory behind New York’s Statute of Frauds, which is over 100 years old:

“The purpose of the Statute of Frauds is sufficiently indicated by its title. It is a statute against frauds. It was designed to prevent litigation over oral agreements, where the terms are always dependent upon the uncertain and varying memory of witnesses. This evil was to be remedied by the reduction of the terms of the contract to writing, so that the parties might not misunderstand the particulars of the contract which they were making; that no one might be induced to enter a court of justice to vex the peace of his opponent without clear and definite evidence of the terms of the contract which formed the ground of action, equally accessible to both parties and to the court; and that perjury might not be invited to sustain a claim which never had any real existence.”

I find the irony in this decision amusing. The plaintiff figured that in attacking his brother’s integrity, no one would bother to question his own, and in so doing, lost sight of the fact that he could be setting himself up for an IRS audit and investigation.

Jonathan Cooper is a New York Business Litigation and New York Commercial Litigation Lawyer with a focus on New York breach of contract and New York business fraud claims before the Nassau, Queens, Brooklyn, Bronx, Westchester and Suffolk County courts of New York State. For more information, feel free to contact his Long Island office at 516-791-5700.

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