17-2084-cv Purjes v. Plausteiner

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 A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 6th day of April, two thousand eighteen.

PRESENT: ROBERT D. SACK, PETER W. HALL, CHRISTOPHER F. DRONEY,

Circuit Judges. ---------------------------------------------------------------------- DAN PURJES,

Plaintiff-Counter-Defendant-Appellant,

v. No. 17-2084-cv

STEVEN PLAUSTEINER, SUSAN PLAUSTEINER,

Defendants-Counter-Claimants-Appellees.

---------------------------------------------------------------------- FOR APPELLANT: Steven E. Mellen, Winget, Spadafora & Schwartzberg, LLP, New York, New York.

FOR APPELLEE: Carolyn K. Cole, Cole Assoc., Lebanon, NH, and Kimberly C. Lau, Warshaw Burstein, LLP, New York, New York (on the brief).

1 Appeal from a judgment of the United States District Court for the Southern District

of New York (Caproni, Judge).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment of the district court is AFFIRMED.

Plaintiff-Counter-Defendant-Appellant Dan Purjes (“Purjes”) brought the instant

action against his former business partners, claiming breach of contract and fraudulent

conveyance. Following a two-day bench trial, the district court entered judgment in favor of

Defendants-Counter-Claimants-Appellees Steven and Susan Plausteiner (“the Plausteiners”).

The Plausteiners are former majority owners of Snowdance LLC (“the Company”), a

company that owned and operated Ascutney Mountain Resort in Vermont (“the Resort”) for

roughly two decades. In 1998, Purjes became a minority investor in the Company. In 2000,

he lent the Company $1,000,000 to help finance the purchase of a high-speed quad lift. And

the Company in turn issued a promissory note to Purjes for the same amount. And the

Plausteiners, Purjes, and the Company then executed a subordination agreement (“the

subordination agreement”). The subordination agreement provided that any loans the

Plausteiners had made to the Company, whether made before or after the $1,000,000 loan,

were subordinated to the Company’s obligation to repay Purjes the principal of the $1,000,000

loan he had made to the Company. The subordination agreement also provided that in the

event of default on the $1,000,000 loan the Company would not pay any amount due to the

Plaustieners until the $1,000,000 loan was repaid in full, and that should the Plausteiners

receive any funds in contravention to the subordination agreement such funds were to be

2 returned to the Company for repayment of the $1,000,000 loan upon Purjes’s demand. The

Company stopped making payments on the loan in 2001, and it is still unsatisfied. SPA 32.

Before us on appeal is the question of whether the Plausteiners breached that

subordination agreement in carrying out two transactions. For the reasons set forth below,

we conclude that they did not. We assume the parties’ familiarity with the facts and record

of prior proceedings, which we reference only as necessary to explain our decision to affirm.

“On appeal from a judgment after a bench trial, we review the district court’s findings

of fact for clear error and its conclusions of law de novo. Mixed questions of law and fact are

also reviewed de novo.” Roberts v. Royal Atlantic Corp.,

(2d Cir. 2008).

Purjes first argues that the Plausteiners should be equitably estopped from arguing that

a condominium titled in their name belonged to them, because they recorded the proceeds of

sales of other condominiums on the tax returns of the Company. We review this mixed

question of law and fact de novo. It is undisputed that at the time Purjes invested in the

Company the Plausteiners personally held title to several condominiums at the Resort. The

Company was entitled to use all of the condominiums as rental properties and paid all expenses

related to them. Between 2002 and 2004, all but one of the condominiums were sold. The

proceeds of those sales were reported on the Company’s federal tax returns as § 1231 gains

and as “proceeds from the sale of property and equipment.” App’x at 605, 634, 662. The

Plausteiners testified that they voluntarily contributed the proceeds from the sale of those

condominiums to the Company.

In 2010, the Plausteiners surrendered their interest in the Company. In 2012, the

Plausteiners sold the last condominium, Unit 603, for $112,000. According to Purjes, the

3 fact that the Plausteiners reported the sale of some condominiums, of which the Company

received all proceeds, on the Company’s tax returns, estops them from arguing that a separate

condominium, to which they held title, belonged to them before they sold it. This argument

is entirely unpersuasive. Not only has Purjes failed to establish that the Plausteiners ever

represented that the Company owned Unit 603, he has failed to establish that he justifiably

relied on such a representation. See Kosakow v. New Rochelle Radiology Assocs., P.C.,

(2d Cir. 2001) (explaining that “[t]he doctrine of equitable estoppel is properly

invoked where the enforcement of the rights of one party would work an injustice upon the

other party due to the latter’s justifiable reliance upon the former’s words or conduct”).

The second transaction Purjes takes issue with is the Plausteiner’s purchase of a snow

groomer they allowed the Company to use for two seasons. Purjes argues that the Company

paid roughly $71,000 to rent the snow groomer for the 2008 season, and that when the

Plausteiners purchased the snow groomer themselves they were given a roughly $57,000

discount on account of those rent payments. The district court found that the Plausteiners

presented credible testimony that the Company never paid rent for the groomer, and that the

discount on the price of the snow groomer was the product of negotiation. Subsequently,

the district court found that the Company had not paid rent for the groomer. Reviewing this

determination for clear error, we are not “left with the definite and firm conviction that a

mistake has been committed.” Locher v. Unum Life Ins. Co. of Am.,

(2d Cir.

2004) (internal quotation marks omitted).

4 We have considered all Purjes’s arguments and conclude that they are without merit.

Accordingly, we AFFIRM the judgment of the district court.

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

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