Key Points

  • The First Department unanimously affirmed, with costs, a $1,165,058.93 judgment plus interest for the plaintiffs on their breach of contract and account stated claims.
  • The defendants breached the Loan Restructuring and Settlement Agreement as a matter of law by failing to turn over a $413,731.53 recovery on the Engelbert deposit, and they could not offset the legal fees spent to obtain it.
  • The defendants also failed to list the Dutchess County property within a reasonable time after the June 30, 2017 nonpayment, and they were on notice by late July 2020 at the latest, when plaintiffs' counsel sent a letter threatening foreclosure.
  • The failure-to-mitigate defense did not defeat summary judgment because the plaintiffs were not required to accept a February 2018 proposal or take a chance on a new agreement with the breaching party.
  • The defendants' implied-covenant counterclaim, tied to alleged manipulation of a stock price, survived as premature under CPLR 3212(f) and was severed.

A New York appeals court on Thursday upheld a $1,165,058.93 judgment against Jide Zeitlin and other defendants, ruling that they breached a loan restructuring and settlement agreement by failing to turn over a $413,731.53 recovery and by failing to list a Dutchess County property for sale in time.

A five-justice panel of the Appellate Division, First Department, affirmed the judgment unanimously, with costs, in the suit brought by Thai H. Lee and others. Justices Manzanet-Daniels, who presided, Shulman, Rodriguez, Higgitt and Rosado issued the unsigned decision.

The decision enforces the settlement's turnover and listing terms and holds that the plaintiffs' duty to limit their losses did not require them to accept a defendant's February 2018 proposal. The panel also left standing the defendants' counterclaim, which rests on their contention that one plaintiff manipulated the price of a stock. That counterclaim proceeds separately from the judgment.

In an order entered June 11, 2024, Justice Robert R. Reed of Supreme Court, New York County, granted the plaintiffs summary judgment on their claims for breach of contract and account stated. Justice Reed entered judgment for $1,165,058.93 plus interest on Aug. 23, 2024.

Justice Reed denied the plaintiffs' request to dismiss the defendants' counterclaim and severed it, so that it would be decided apart from the plaintiffs' claims. Both sides appealed. The panel dismissed the separate appeals from the June 2024 order as "subsumed in the appeals from the judgment," which brought that order up for review.

"It is clear as a matter of law that defendants failed to fulfill their contractual obligation to turn over to plaintiffs the $413,731.53 recovery they obtained with respect to the Engelbert deposit," the panel wrote. The decision does not describe the Engelbert deposit further.

The court rejected any deduction for the cost of that recovery. "There is no basis, contractual or otherwise, for defendants to offset such payment by the amount of legal fees incurred to secure this recovery," the decision states.

The agreement also required the defendants to list the Dutchess County property for sale within a reasonable time after a triggering event. The panel identified that event as the nonpayment of the remaining principal balance by June 30, 2017, and held that the defendants failed as a matter of law to list the property within a reasonable time.

The justices addressed a February 2018 email from a plaintiff and assumed that it might have extended the reasonable period. Even so, the panel wrote, "defendants should have been on notice by late July 2020, at the latest (upon receipt of plaintiffs' counsel's letter threatening foreclosure), that the time had come to take action."

The defendants had also raised a failure to mitigate damages defense. The panel held that the defense was "not a proper basis to deny summary judgment," even if the court considered it.

The plaintiffs were not required to accept the February 2018 proposal, the panel held, because "the duty to mitigate does not require that the party expose itself to unreasonable risk or expense." For that language, the justices cited the First Department's 2025 decision in Fourth Avenue Owners Corp. v. Douglas Elliman Property Management.

The panel added that the duty also does not require a party to "take a chance on a new agreement with the breaching party." For that point, the panel cited a 1932 decision, Canadian Industrial Alcohol Co. v. Dunbar Molasses Co., and a 1904 First Department decision, Rollins v. Bowman Cycle Co.

"Defendants have not articulated any basis to vacate the award of summary judgment on the account stated claim," the decision states. The defendants' other arguments on that claim, the panel wrote, "are not properly considered because they were first raised at oral argument or on appeal and are not purely legal in nature."

Turning to the plaintiffs' cross-appeal, the panel held that Justice Reed properly refused to dismiss the counterclaim as premature. The counterclaim alleges breach of the implied covenant of good faith and fair dealing. The panel cited CPLR 3212(f).

The panel gave three reasons. "Proof sufficient to rebut plaintiff's attestations that she did not manipulate the price of the relevant stock is exclusively in plaintiffs' control or the control of other third parties," the decision states. The defendants had "actively sought, thus far, unsuccessfully, to obtain such proof," the panel wrote, and their "evidence of unusual fluctuations in the relevant stock prices was sufficient to create an evidentiary basis suggesting that further discovery might lead to relevant evidence."

The surviving counterclaim did not block the plaintiffs' judgment. The panel held that the counterclaim "was not so inextricably intertwined with plaintiffs' breach of contract claim as to render the grant of summary judgment with respect to plaintiffs' claim inappropriate."

Lawyers for Zeitlin and the other defendants included John McFerrin-Clancy of McFerrin-Clancy, LLC, in New York. The plaintiffs were represented by Adam P. Briskin of Welby, Brady & Greenblatt, LLP, in White Plains.

The affirmance leaves the $1,165,058.93 judgment, plus interest, in place, along with an award of costs on the appeal. The decision, 2026 NY Slip Op 06010, is uncorrected and subject to revision before publication in the Official Reports.