           SUPREME COURT OF THE STATE OF NEW YORK
              Appellate Division, Fourth Judicial Department

751
CA 13-01334
PRESENT: SMITH, J.P., CENTRA, CARNI, WHALEN, AND DEJOSEPH, JJ.


ROGER PASQUARELLA AND 2030 ELMWOOD AVENUE, INC.,
PLAINTIFFS-RESPONDENTS,

                     V                               MEMORANDUM AND ORDER

1525 WILLIAM STREET, LLC, DEFENDANT-APPELLANT.


STEINER & BLOTNIK, BUFFALO (RICHARD J. STEINER OF COUNSEL), FOR
DEFENDANT-APPELLANT.

AUGELLO & MATTELIANO, LLP, BUFFALO (JOSEPH A. MATTELIANO OF COUNSEL),
FOR PLAINTIFFS-RESPONDENTS.


     Appeal from an order of the Supreme Court, Erie County (Timothy J.
Walker, A.J.), entered May 23, 2013. The order granted the motion of
plaintiffs for summary judgment.

     It is hereby ORDERED that the order so appealed from is unanimously
affirmed without costs.

     Memorandum: In this action arising from a contract for the sale
of a parcel of real property, defendant appeals from an order granting
plaintiffs= motion for summary judgment on their cause of action for
specific performance. Plaintiffs negotiated intermittently over a
two-year period to purchase the subject parcel from defendant, a limited
liability corporation (LLC). All of the contractual negotiations were
conducted by Zvi Sultan, who indicated to plaintiffs that he was
president-principal of defendant, by plaintiff Roger Pasquarella as agent
for the business that subsequently became plaintiff 2030 Elmwood Avenue,
Inc. (2030 Elmwood), and by the attorneys for the parties. Throughout
the negotiations, defendant=s attorney acted as if Sultan had authority
to negotiate on defendant=s behalf. There were several lengthy breaks
in the negotiations, but the parties eventually finalized the details
of the contract, and, in April 2012, the contract was signed. Sultan,
in executing the contract on behalf of defendant, indicated that he was
defendant=s manager, and defendant=s attorney accepted plaintiffs= deposit
of $7,500.00. When plaintiffs= attorney sought the documents that,
pursuant to the contract, defendant was obligated to provide prior to
closing, defendant declined to provide them and refused to schedule a
closing date. Defendant sought to return plaintiffs= deposit after this
action was commenced, using the services of a different attorney.
Defendant contended that Sultan had no authority to bind defendant because,
shortly before the contract was signed, Sultan sold a controlling interest
in defendant to his son, and the operating agreement between the two
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                                                               CA 13-01334

provided that a sale of corporate property must be approved by all members.

     We agree with plaintiffs that, in support of their motion for summary
judgment, they demonstrated that they Asubstantially performed [their]
contractual obligations and w[ere] willing and able to perform [their]
remaining obligations@ (EMF Gen. Contr. Corp. v Bisbee, 6 AD3d 45, 51,
lv dismissed 3 NY3d 656, lv denied 3 NY3d 607; see generally Pesa v Yoma
Dev. Group, Inc., 18 NY3d 527, 530-531), and thus demonstrated that they
were entitled to summary judgment (see generally Zuckerman v City of New
York, 49 NY2d 557, 562).

     In opposition, defendant failed to raise a triable issue of fact
whether Sultan lacked apparent authority to bind defendant contractually.
 AEssential to the creation of apparent authority are words or conduct
of the principal, communicated to a third party, that give rise to the
appearance and belief that the agent possesses authority to enter into
a transaction. The agent cannot by his own acts imbue himself with
apparent authority. Rather, the existence of apparent authority depends
upon a factual showing that the third party relied upon the
misrepresentation of the agent because of some misleading conduct on the
part of the principal C not the agent@ (Hallock v State of New York, 64
NY2d 224, 231 [internal quotation marks omitted]; cf. N.X. v Cabrini Med.
Ctr., 97 NY2d 247, 252 n 3). Here, we conclude that plaintiffs reasonably
relied on, inter alia, their prior course of dealing with Sultan in his
capacity as president, principal and manager of defendant (see Benderson
Dev. Co. v Schwab Bros. Trucking, 64 AD2d 447, 456; see also Federal Ins.
Co. v Diamond Kamvakis & Co., 144 AD2d 42, 46-47, lv denied 74 NY2d 604).
 In addition, the record establishes that defendant allowed its attorney
to act in a manner consistent with Sultan=s continued authority, and that
defendant accepted the deposit that plaintiffs provided to that attorney
in conjunction with the signing of the contract, thus Agiv[ing] rise to
the appearance and belief that [Sultan] possesse[d] authority to enter
into [the] transaction@ (Hallock, 64 NY2d at 231). Defendant therefore
Aallowed [Sultan] to represent that he had the requisite authority[,]
and it may not now be denied@ (Benderson Dev. Co., 64 AD2d at 456; cf.
56 E. 87th Units Corp. v Kingsland Group, Inc., 30 AD3d 1134, 1134-1135).


     Finally, we note that Limited Liability Company Law ' 412 (a) provides
that, A[u]nless the articles of organization of a limited liability company
provide that management shall be vested in a manager or managers, every
member is an agent of the limited liability company for the purpose of
its business, and the act of every member, including the execution in
the name of the limited liability company of any instrument, for apparently
carrying on in the usual way the business of the limited liability company,
binds the limited liability company, unless (i) the member so acting has
in fact no authority to act for the limited liability company in the
particular matter and (ii) the person with whom he or she is dealing has
knowledge of the fact that the member has no such authority.@ A nearly
identical subsection provides that, where management of an LLC is vested
in a manager, the acts of the manager are binding upon the LLC unless
the manager at issue has in fact no authority to act for the LLC, and
the person with whom he or she is dealing knows that the manager lacks
                                  -3-                                751
                                                             CA 13-01334

such authority (' 412 [b] [2] [A], [B]). Thus, regardless whether Sultan
was acting as a manager of defendant, as reflected by his signature on
the contract, or as a member of defendant, as he and defendant=s attorney
previously had indicated to plaintiffs, he had apparent authority to act
and his acts were binding upon defendant unless, inter alia, plaintiffs
had Aknowledge of the fact that [Sultan] ha[d] no such authority@ (' 412
[a] [i]; [b] [2] [B]). Here, defendant failed to tender any evidence
indicating that plaintiffs had knowledge of the recent limitation of
Sultan=s authority. Consequently, defendant failed to raise a triable
issue of fact whether Sultan lacked authority to enter into the contract
and thereby bind defendant to perform it (see Zuckerman, 49 NY2d at 562).




Entered:   August 8, 2014                        Frances E. Cafarell
                                                 Clerk of the Court
