SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

876 

CA 11-00339 

PRESENT: SCUDDER, P.J., CENTRA, FAHEY, GREEN, AND GORSKI, JJ. 

 

STEVEN M. TUDISCO AND GENESEE VALLEY 

LEASING, INC., PLAINTIFFS-APPELLANTS,

V MEMORANDUM AND ORDER

CARL DUERR AND CAROL DUERR, 

DEFENDANTS-RESPONDENTS. 

(APPEAL NO. 2.) 

 

PIRRELLO, MISSAL, PERSONTE & FEDER, ROCHESTER (STEVEN E. FEDER OF

COUNSEL), FOR PLAINTIFFS-APPELLANTS.

WILLIAM S. RUBY, ROCHESTER, FOR DEFENDANTS-RESPONDENTS. 

 

Appeal from an order of the Supreme Court, Monroe County (Kenneth

R. Fisher, J.), entered July 26, 2010. The order, inter alia, granted

defendants’ motion to “modify and/or resettle” an order entered April

27, 2010 pursuant to CPLR 2221 (a) and awarded defendants attorneys’

fees of $24,940.29. 

It is hereby ORDERED that the order so appealed from is

unanimously modified on the law by vacating the amount of $41,000

awarded on the first counterclaim and substituting therefor the amount

of $35,100, vacating the award of attorneys’ fees, reinstating the

fourth and fifth causes of action in accordance with our decision

herein concerning the amount paid on the promissory note and granting

plaintiffs judgment on liability for those causes of action, and as

modified the order is affirmed without costs, and the matter is

remitted to Supreme Court, Monroe County, for further proceedings in

accordance with the following Memorandum: Plaintiffs commenced this

action seeking damages for, inter alia, the alleged conversion by

defendants of several pieces of construction equipment, including an

excavator with two buckets and a grapple attachment, two backhoes and

a bulldozer. Defendants asserted counterclaims for, inter alia, a

money judgment for the balance owed on a promissory note. Following a

nonjury trial, Supreme Court dismissed the complaint and granted

judgment in favor of defendants on the first counterclaim, i.e., for

the balance owed on the promissory note, and awarded them reasonable

attorneys’ fees with respect to the first counterclaim. Defendants

thereafter moved to “modify and/or resettle” that order pursuant to

CPLR 2221 (a), alleging that the court erred in stating that ownership

of the excavator had been transferred to defendants. Plaintiffs

cross-moved to “modify[ ]” the order pursuant to CPLR 2221 (a) on the

ground that the corrected statement of fact sought by defendants would
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CA 11-00339 

establish that defendants’ actions in taking possession of the

excavator constituted conversion. Plaintiffs appeal from an order

that granted the motion, denied the cross motion and awarded

attorneys’ fees to defendants.

Viewing the evidence in the light most favorable to defendants,

we conclude that there is no fair interpretation of the evidence

supporting the court’s determinations that defendants did not convert

the equipment in question, i.e., the excavator and three attachments,

the two backhoes and the bulldozer, and that the promissory note did

not constitute a security agreement (see generally Palermo v Taccone,

79 AD3d 1616, 1618-1620).

“ ‘[T]o establish a cause of action in conversion, the

plaintiff[s] must show legal ownership or an immediate superior right

of possession to a specific identifiable thing and must show that the

defendant[s] exercised an unauthorized dominion over the thing in

question . . . to the exclusion of the plaintiff[s’] rights’ ” (id. at

1619-1620). “ ‘A conversion takes place when someone, intentionally

and without authority, assumes or exercises control over personal

property belonging to someone else, interfering with that person’s

right of possession . . . Two key elements of conversion are (1) [the]

plaintiff[s’] possessory right or interest in the property . . . and

(2) [the] defendant[s’] dominion over the property or interference

with it, in derogation of [the] plaintiff[s’] rights’ ” (id. at 1620,

quoting Colavito v New York Organ Donor Network, Inc., 8 NY3d 43,

49-50). 

With respect to the excavator, it is undisputed that Genesee

Valley Leasing, Inc. (Genesee Valley) owned the equipment and that

plaintiff Steven M. Tudisco was using the equipment to perform work on

property owned by defendant Carl Duerr in October 2004. It is also

undisputed that the excavator was thereafter moved by Carl Duerr to

other property owned by him and remained there until it was returned

to plaintiffs approximately four years later, during the pendency of

the instant action, in a severely damaged condition. At trial,

plaintiffs submitted photographs of the excavator taken when it was

refurbished at a cost of $44,000, i.e., three months before it was

removed by Carl Duerr to his property. Plaintiffs also presented the

testimony of Henry Wells, who inspected the excavator on behalf of the

non-party company from which plaintiffs leased the excavator before

purchasing it. Wells testified that he was familiar with how Tudisco

maintained equipment and that he had not observed other pieces of

equipment owned or used by plaintiffs in the condition that the

excavator was in when it was returned to plaintiffs, i.e., inoperable,

with broken windows and evidence of a fire in the engine compartment

where the hydraulics are located. The court admitted in evidence the

estimate to make the necessary repairs to the excavator in the amount

of $85,049. Defendants merely presented the testimony of Carl Duerr

that the excavator was damaged when he received it and the testimony

of a former employee of Genesee Valley that the company’s employees

were “hard” on equipment. With respect to the three attachments for

the excavator, Tudisco testified that they also were located on

defendants’ property when defendants removed the excavator. Although
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CA 11-00339 

Carl Duerr denied that he had the attachments in his possession, a

photograph taken on April 1, 2009 established that the 46-inch bucket

was located on defendants’ property. We therefore conclude that

plaintiffs established by a preponderance of the evidence that they

had a possessory right to the excavator and attachments and that

defendants interfered with that right in derogation of plaintiffs’

rights (see Palermo, 79 AD3d at 1620).

With respect to the two backhoes and the bulldozer, it is

undisputed that defendant Carol Duerr is the titled owner of that

equipment. Plaintiffs had leased the equipment from the

aforementioned non-party company, and Tudisco asked defendants for

assistance in purchasing it. The record establishes that, in order to

execute the transfer of the equipment to Carol Duerr, she paid

Syracuse Supply Company $100,000, plaintiffs paid Syracuse Supply

Company $16,000 and plaintiffs transferred the credit in the equipment

in the amount of $250,000 to Carol Duerr. The handwritten promissory

note, drafted in part by Carol Duerr, states in relevant part that

Tudisco would “borrow $100,000 and agree to pay it back by January 1,

2003. It is up to Carl . . . Duerr to keep the machinery or sue for

the money that is owed . . . Tudisco shall pay all legal fees incurred

in this transaction. Genesee Valley . . . is also liable for this

transaction.” In his own handwriting, Tudisco added that the minimum

payment per month would be $2,400, due and payable in full 18 months

from March 13, 2002. We agree with plaintiffs that they and others on

their behalf had paid a total of $64,900 on the promissory note when

defendants took possession of the two backhoes and bulldozer in early

October 2004, rather than $59,000, as the court found. 

We conclude that the court’s finding that defendants “loaned”

plaintiffs the backhoes and bulldozer to permit Tudisco to generate

enough business to pay them back $100,000 and then withdrew their

permission to use the equipment “ ‘could not be reached under any fair

interpretation of the evidence’ ” (Treat v Wegmans Food Mkts., 46 AD3d

1403, 1404). The finding that plaintiffs had no possessory interest

in that equipment “ ‘produce[s] a result that is absurd, commercially

unreasonable [and is] contrary to the reasonable expectation of the

parties’ ” (Greenwich Capital Fin. Prods., Inc. v Negrin, 74 AD3d 413,

415). Instead, we conclude that the promissory note memorialized “an

agreement that creates or provides for a security interest” in the

equipment (UCC 9-102 [73]), which is “a commercially reasonable and

practical result” (Greenwich Capital Fin. Prods., Inc., 74 AD3d at

415). Indeed, “the provisions of [article 9 of the UCC] with regard

to the rights and obligations [of the parties to a security agreement]

apply whether title to collateral is in the secured party or the

debtor” (UCC 9-202). The promissory note provided Carl Duerr with

remedies available to a secured creditor, i.e., to keep the equipment

(see generally UCC 9-610; 9-620 [a] [1]), or to sue for the balance of

the money owed (see UCC 9-601 [a] [1]).

Plaintiffs presented the testimony of Wells, who leased the

backhoes and bulldozer to plaintiffs and thereafter sold them to Carol

Duerr. Wells had 40 years experience in leasing and selling

construction equipment and testified with respect to the value of
-4- 876 

CA 11-00339 

those three pieces of equipment as of September 2004. He testified

that one backhoe was valued at $46,000, the other backhoe was valued

at $48,000 and the bulldozer was valued at $115,000. Defendants

presented the testimony of a witness whom Carl Duerr hired to retrieve

one of the backhoes from plaintiffs. That witness testified that the

backhoe was inoperable and in severely damaged condition. Defendant

failed to present any testimony with respect to the condition of the

remaining backhoe and the bulldozer, and we therefore conclude that

plaintiff established by a preponderance of the evidence that the

value of the backhoes and the bulldozer exceeded the $41,000 that

defendants alleged was the amount owed on the promissory note. 

Defendants had an obligation to enforce the security agreement in

good faith (see generally UCC 1-203). Defendants, however, retained

the backhoes and bulldozer without complying with the provisions of

the UCC, either by disposing of those pieces of equipment in a

commercially reasonable manner and paying any surplus to plaintiffs

(see UCC 9-610 [a], [b]; 9-615 [d] [1]), or by obtaining plaintiffs’

consent after the default to retain the equipment in satisfaction of

debt (see UCC 9-620 [a] [1]; [c]). We therefore conclude that,

because plaintiffs established that the value of the backhoes and the

bulldozer exceeded the amount that they owed on the promissory note,

plaintiffs had a possessory interest in that equipment and defendants’

dominion over it was in derogation of the rights of plaintiffs (see

generally Colavito, 8 NY3d at 49-50; Five Star Bank v CNH Capital Am.,

LLC, 55 AD3d 1279, 1281). 

We also agree with plaintiffs that the court erred in awarding

attorneys’ fees to defendants beyond the scope of the indemnity

provision included in the promissory note (see generally Hooper Assoc.

v AGS Computers, 74 NY2d 487, 491). “ ‘[A] contract assuming th[e]

obligation [to indemnify with respect to attorneys’ fees] must be

strictly construed to avoid reading into it a duty [that] the parties

did not intend to be assumed’ ” (Zanghi v Laborers’ Intl. Union of N.

Am., AFL-CIO, 21 AD3d 1370, 1372, quoting Hooper Assoc., 74 NY2d at

491). In particular, “the language of an indemnity agreement ‘should

not be extended to include damages [that] are neither expressly within

its terms nor of such character that it is reasonable to infer that

they were intended to be covered under the contract’ ” (id.). Here,

pursuant to the promissory note, defendants are entitled to attorneys’

fees related to claims or counterclaims to enforce their rights under

the note (see Gizzi v Hall, 309 AD2d 1140, 1142). Thus, the court

erred in awarding defendants attorneys’ fees unrelated to the

enforcement of those rights, including attorneys’ fees related to the

causes of action for conversion of the construction equipment. 

Further, because the affidavit of defendants’ attorney with respect to

his fees included only one amount representing the total fees

incurred, we are unable to determine the amount of attorneys’ fees

related to the enforcement of defendants’ rights under the promissory

note (see generally RLI Ins. Co. v Smiedala, 77 AD3d 1293, 1295). 

We therefore modify the order by vacating the amount of $41,000

awarded on the first counterclaim, for the balance owed on the

promissory note, and substituting therefor the amount of $35,100,
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CA 11-00339 

vacating the award of attorneys’ fees, reinstating the fourth cause of

action and the fifth cause of action with the exception of the

reference to $59,000 having been paid to defendants in paragraph 33,

inasmuch as this Court has determined that plaintiffs paid $64,900 on

the promissory note, and granting judgment to plaintiffs on liability

with respect to those causes of action. We remit the matter to

Supreme Court to determine the amount of reasonable attorneys’ fees

incurred by defendants with respect to the enforcement of their rights

under the promissory note and to determine the amount of damages with

respect to the fourth and fifth causes of action, following further

proceedings if necessary.

Entered: November 10, 2011 Patricia L. Morgan

Clerk of the Court