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- 815 Courchevel 1850 LLC v. Wisdom Equities LLC
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT ’ S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION

“ SUMMARY ORDER ” ). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT O N ANY PARTY NOT REPRESENTED BY COUNSEL. At a stated term of the United States Court of Appeals for the Second Circuit, 1 held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the 2 City of New York, on the 1 6 t h da y of F e b r u a r y , two thousan d twenty

- one

. 3 4 PRESENT: 5 DENNIS JACOBS, 6 RICHARD J

. SULLIVAN , 7 JOSEPH F. BIANCO , 8 Circuit Judges

. 9

_____________________________________ 10 11 COURCHEVEL 1850 LLC , 12 13 Plaintiff

- Counter

14 Defendant

- Counter

15 Claimant

- Appellant , 16 17

v. No. 20

- 815 18 19 WISDOM EQUITIES LLC, 4 LAFAYETTE 20 REALTY LLC , 21 22 Intervenors

- Counter

23 Claimants

- Counter

- 242 Defendants

- Appellees

. * 1

_____________________________________ 2 3 For Appellant : Danielle P. Light , Hasbani & Light, P.C., New York, NY

.

For Appellee 4 Lafayette Realty LLC : JASON LOWE , Law Offices of Jason Lowe, New York, NY

.

4
Appeal from the United States District Court for the Southern District of 5

New York ( Vincent L. Br ic c etti , J udge )

. 6
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, 7
ADJUDGED, AND DECR EED that the judgment of the district court is 8

AFFIRMED

. 9
Appellant Courchevel 1850 LLC appeals the March 3, 2020 decision of the 10

district court (Briccetti, J. ) granting summary judgment in favor of Appellees 11
Wisdom Equities and 4 Lafayette Realty LLC on their counterclaims for rescission, 12
unjust enrichment, and breach of contract, and awarding Appellees a money 13
judgment in the amount of $366,869.04. Courchevel argues that there was a lack 14
of admissible evidence supporting the district court’s decision to grant Appellees’ 15

* The Clerk of Court is respectfully directed to amend the caption as set forth above.3 summary judgment motion on rescission , and relatedly, that summary judgment 1
on Appellees’ unjust enrichment counterclaim was not warranted. Courchevel 2
also contends that the district court erred by awarding Appellees “both summary 3
judgment on their claim for rescission (equitable remedy) and for breach of 4
contract (remedy at law),” Courchevel Br. at 14 , because rescission results in the 5

absence of a contract , which in turn precludes a legal remedy, and that triable 6
issues of fact remain with respect to the breach of contract claim. We assume the 7
parties’ familiarity with the underlying facts, procedural history, and issues on 8
appeal. 9
The district court properly granted summary judgment on Appellees’ 10

counterclaim for rescission for failure of consideration, which also defeated the 11
purpose and substance of the contract

. In New York, “[a] contract may be 12

rescinded for failure of consideration,

. . . for inability to perform it after it is made, 13
for repudiation of the contract or an essential part thereof and for such a breach as 14
substantially de feats its purpose,” including breaches that were “so substantial 15
and fundamental as to strongly tend to defeat the object of the parties in making 16

the contract.” Callanan v. Keeseville, Ausable Chasm & Lake Champlain R.R. Co. , 199 17
N.Y. 268, 269 (1910). “ Failure to perform in every respect is not essential, but a 184 failure which leaves the subject of the contract substantially different from what 1

was contracted for is sufficient.” Id. “Where the consideration appears to be 2
valuable and sufficient, but turns out to be wholly false, or a mere nullity . . . the 3
consideration wholly fails . . . and the party paying or depositing money upon it 4

can recover it back.” Chapman v. City of Brooklyn , 40 N.Y. 372, 379

– 80 (1869) 5
(internal quotation marks omitted)

. 6

Here, the parties contracted for the assignment of a winning bid at a 7

foreclosure sale; that foreclosure sale was unwound, making the bid “a mere 8
nullity

. ” I d. at 379. As the district court determined, “ [s] ince [4 Lafayette] cannot 9
receive that which [it] bargained for”

– a bid for the property

– “there is a failure 10
of consideration,” which “gives the disappointed party the right to rescind the 11

contract.” Fugelsang v. F ugelsang , 517 N.Y.S.2d 176, 177 (2d Dep’t 1987) ; see 12

Flandrow v. Hammond , 148 N.Y. 129, 132

– 33 (1895) (finding a failure of 13

consideration where a purportedly attached judgment “sold by the defendant to 14
the plaintiff was never in fact levied upon

. . . and , hence , . . . void ” ). 15

C ontrary to Courchevel’s view , whether the mortgage was in fact 16
previously paid by defendants ( who are not parties to this appeal ) is irrelevant to 175 whether the consideration for the contract failed . A ccordingly, so too are its 1
arguments that the district court improperly relied on hearsay evidence or a void 2

satisfaction to find that the default judgment should be vacat ed

– particularly as 3

the vacatur itself is not being appealed here . In vacating its entry of default 4
judgment, the district court undid the foreclosure sale, nullifying the deed based 5
on the winning bid that was the subject of the assignment between Courcheve l 6
and 4 Lafayette. That nullification , which Courchevel does not contest , alone 7

caused the failure of consideration. 8

Just as the district court did not err in granting summary judgment for 9
Appellees on their counterclaim for rescission, it relatedly did not err in finding 10
that Appellees were entitled to recover on their claim for unjust enrichment. “To 11
prevail on a claim for unjust enrichment in New York, a plaintiff must establish 12
(1) that the defendant benefitted; (2) at the plaintiff's expense; and (3) that equity 13
and good conscience require restitution.” Beth Israel Med. Ctr. v. Horizon Blue 14

Cross & Blue Shield of N.J. , Inc. , 448 F.3d 573, 586 (2d Cir. 2006) (internal quotation 15
marks omitted). As a “quasi

- contract claim,” unjust enrichment “is an obligation 16

the law creates in the absence of any agreement. ” Id. ( emphasis and internal 17
quotation marks omitted). “[W]here rescission of a contract is warranted, a party 186 may timely rescind and seek recovery on the theory of quasi contract.” Id. at 587 1
(internal quotation marks omitted). As discussed, rescission is warranted , 2

enabl ing Appellees to seek equitable recovery . Courchevel admits that it 3

received from 4 Lafayette the purchase price, less credits for taxes, and that 4 4
Lafayette’s acquisition of the property was unwound by the nullification of the 5

deed. We therefore have n o difficult y affirming the district court’s judgment on 6
unjust enrichment : Courchevel benefited at 4 Lafayette’s expense, and equity 7
and good conscience require restitution. 8

Courchevel is correct, however, that the district court could not award 9
summary judgment on the counterclaim for breach of contract in addition to those 10

for rescissi on and unjust enrichment. Because the district court granted 11
rescission, there was no longer a valid contract on which it could find breach and 12
legal damages. See Krigsfeld v. Feldman , 982 N.Y.S.2d 487, 489 (2d Dep’t 2014) 13
(explaining that “ plaintiffs could not recover damages under their cause of action 14
alleging the quasi

- contract claim of unjust enrichment if the jury found that the 15
parties entered into an oral contract which covered the same subject matter ”). 16

Since 4 Lafayette only moved for summary judgment on the breach of contract 17

claim in the alternative to rescission , and the district court ruled on the breach of 187 contract claim by “assuming the parties have an enforceable agreement,” Sp. 1
App’x at 12, the disposition granting judgment on both rescission and breach of 2
contract was facially inconsistent , though ultimately of no consequence

. 2 3

We have considered Courchevel’s remaining arguments and find them to 4
be meritless. Accordingly, we AFFIRM the judgment of the district court. 5

FOR THE COURT: 6 Catherine O ’ Hagan Wolfe, Clerk of Court 7

2 T he district court awarded legal damages in the amount of $32,000 for the breach of contract claim. The court also found that Appellees were entitled to judgment on th e unjust enrichment and rescission counterclaims in light of the fact that Courchevel had “accepted $320,000 from 4 Lafayette but it did not and cannot perform its end of the bargain.” Sp. App’x at 11. While not explicit in the judgment, the $32,000 in l egal damages appears to have been subsumed into the final judgment’s principal award of $320,000, and otherwise not separately awarded. Thus, the judgment on the contract claim does not affect the final judgment award

.