Schlamowitz v. Tirado

Filing 41

MEMORANDUM AND ORDER: The Court finds in favor of plaintiff Minerva Schlamowitz. The Clerk is directed to enter judgment in favor of Minerva Schlamowitz in the amount of $89,249.48 along with any post-judgment interest that accrues from the date that judgment is entered. So Ordered by Magistrate Judge Cheryl L. Pollak on 8/22/2014. (Breslow, Sarah)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

--------------------------------------------------------)(
MINERVA SCHLAMOWITZ,

Plaintiff,

MEMORANDUM
AND
ORDER

-against12 CV 504 (CLP)
RAQUEL TIRADO,
Defendant.

--------------------------------------------------------)(
On February 2, 2012, Minerva Schlamowitz ("plaintiff') commenced this suit against her
sister Raquel Tirado ("defendant"), alleging that defendant owed her repayment on a loan in the
amount of $180,000, 1 no part of which has been repaid to plaintiff despite demands for
repayment. (Compl. 2 ~ 4).
On March 14, 2014, the parties consented to have the case tried before the undersigned,
and a bench trial was held on May 13, 2014. Having considered the testimony, evidence, and
arguments presented by the parties at trial, the Court finds that defendant owes plaintiff a total of
$89,249.48 for the reasons set forth below.

FACTUAL BACKGROUND
During the May 13, 2014 trial, it became clear that both parties agreed that Schlamowitz
had lent her sister Tirado monies over a five year period, beginning in 2007. It is also undisputed

1

Although plaintiff alleged in her Complaint that the loan was in the amount of
$180,000, at trial, plaintiff claimed that defendant actually owes her $220,400. (Transcript of the
Trial of May 13, 2014 ("Tr.") at 6, 15).
2

Citations to "Compl." refer to plaintiff's Complaint, filed February 2, 2012.
I

that the terms of the agreement were never reduced to writing. Thus, the key issues for trial
were: I) how much money had Schlamowitz lent to Tirado; 2) how much, if anything, had Tirado
repaid; and 3) whether the parties had reached an agreement as to interest.
During the trial, the parties stipulated that there were transfers in the amount of $142,500
loaned from plaintiff to defendant. (Tr. at 5). It is plaintiff's position that an additional $77,900
was loaned to the defendant, for a total amount owed of$220,400. (lih at 5-6; Joint Rpt'). This
additional $77,900 amount allegedly consists of$60,000 in undocumented cash loans, a
documented $10,000 cash withdrawal by plaintiff in Massachusetts that she claims was loaned to
Tirado, and $7,900 from two additional documented cash withdrawals plaintiff made in New
York that were also allegedly loaned to defendant. (Joint Rpt; Tr. at 6, 12-13; Ex. A4 at 429; Ex.
B at 405; Ex. C at 290).
Defendant denies receiving the $77,900 in additional cash loans. (Tr. at 22). Instead,
defendant contends that not only did she never receive these amounts, but in fact, she repaid a
total of$76,902 to plaintiff. (Joint Rpt; Tr. at 22-23). Tirado alleges that this $76,902 repayment
is comprised of$69,920 made through deposits to plaintiff's accounts, evidenced by defendant's
deposit slips, and a $7,000 undocumented cash repayment. (lih; Ex. J). Plaintiff denies receipt
of the undocumented $7,000 in cash, and claims that the $69,920 in deposits to plaintiff's
accounts was in fact interest owed on the loans, and not repayment of principal. (Joint Rpt; Tr. at

3

Citations to "Joint Rpt" refer to the Joint Report on Proposed Damages Calculations,
filed by the parties on June 17, 2014.
4

Citations to "Ex." refer to the defendant's exhibits. Exhibits A, B, and C contain the
Exhibits of the Proposed Pretrial Order submitted by defendant, filed on May I, 2014. Citations
to Exhibits H, I, J, and K refer to the Defendant's Trial Exhibits.
2

19-20).
Set forth in the table below is a summary of the parties' respective positions. Plaintiff
believes she is due $220,400 (the stipulated amount of$142,500, plus a disputed $77,900 in
additional loans), while defendant believes plaintiff is only due $65,580 (the stipulated amount of
$142,500, minus the disputed repayment of$76,902). (Joint Rpt). Plaintiff and defendant were
the only witnesses who testified at trial.

Amount Owed (Plaintiff)

Amount Owed (Defendant)

+ $142,500 loaned through transfers

+ $142,500 loaned through transfers

+ $60,000 undocumented cash loans from home -$69,920 repayments of principal from
transfers to plaintiff's account (evidenced
by deposit slips)

+ $10,000 cash loan (withdrawal in

-$7,000 cash repayment

Massachusetts)

+ $5,500 cash loan (withdrawal in New York)
+ $2,400 cash loan (withdrawal in New York)
Total: $220,4005

A.

Total: $65,580

Testimony of Minerva Schlamowitz

At trial, plaintiff Minerva Schlamowitz testified that she loaned her sister, Raquel Tirado
money for defendant's business expenses. (Tr. at 10). Schlamowitz testified that Tirado
promised to withdraw money from a certificate of deposit to pay back the loan in full once the
plaintiff needed the money, but, according to plaintiff, her sister did not repay any of the loan

5

Although plaintiff alleged at trial that there was an interest agreement of $2,500 per
month (Tr. at 19-20), she has not specifically included a calculation of that amount in her request,
limiting her claim to repayment of alleged principal totaling $220,400.
3

when a request for repayment was eventually made. Q4,. at 14-15). Schlamowitz stated that
defendant did periodically pay her interest on the loan and that defendant's deposit slips,
submitted to the Court as Exhibit J, are evidence of these periodic interest payments. (M, at 10,
14; Ex. J). Schlamowitz claimed that she and her sister had an interest agreement, whereby
defendant would pay $2,500 a month in interest. (Tr. at 19-20). However, Schlamowitz testified
that defendant would sometimes pay less than the agreed upon amount, or no interest at all
depending on how much money defendant could repay each month. (Id.)
Since the parties stipulated that Schlamowitz lent Tirado at least $142,500, the testimony
at trial focused on the additional $77,900 that plaintiff claimed she had loaned to defendant and
the $76,920 defendant claimed to have repaid plaintiff. During direct examination, plaintiff's
counsel pointed to plaintiff's bank records reflecting three cash withdrawals plaintiff made on
July 17,2008, January 28,2010, and June 3, 2010, totaling $17,900. (M, at 11-13).
Schlamowitz testified that these three withdrawals were all cash loans made to the defendant.
Q4,.) According to plaintiff, the January 28,2010 withdrawal of$10,000 was made from

plaintiff's account in Massachusetts, where defendant resides. Q4,. at 12). The July 2008 and
June 2010 withdrawals were made in New York, where plaintiff resides. (Id.) On crossexamination, Schlamowitz claimed that the January 2010 Massachusetts withdrawal was made
when plaintiff visited the defendant in Boston for one week and the $10,000 in cash was given to
Tirado as a loan. Q4,. at 18-19). Schlamowitz further claimed that the two New York cash
withdrawals from July 2008 and June 2010 represent sums loaned to defendant when defendant
came to New York to visit. Q4,. at 17-18).
Schlamowitz also testified that she loaned defendant an additional $60,000 dollars in cash

4

that is not reflected as a withdrawal in the bank statements because she saved it at home and not
at the bank. (Id. at 13). Schlamowitz claimed that the cash that she saved at home came from
her husband's pediatric practice, where she works as an assistant and handles the money. (!4,)
On cross-examination, she testified that the $60,000 in saved cash from her husband's business
was loaned to defendant periodically over five years.

iliL. at 16, 17).

Schlamowitz conceded that, other than her own sworn testimony and the bank statements
introduced into evidence, she has no further evidence to prove that any of the cash payments in
dispute were made to the defendant.

iliL. at 19).

Furthermore, Schlamowitz testified that she has

no other evidence to prove that the defendant's $69,920 in deposits to her account were in fact
interest payments. (!4,) In total, Schlamowitz claims that she loaned $220,400 to the defendant,
none of which was repaid.
B.

iliL. at 14-15; Joint Rpt).

Testimony ofRaquel Tirado

The defendant, Raquel Tirado, claimed that plaintiff only loaned her $142,500. (Tr. at
51). Tirado categorically denied receiving any of the cash payments that plaintiff claimed were
made.

iliL. at 22).

Tirado testified that the only time cash was exchanged in this financial

arrangement between plaintiff and defendant was when Tirado made a $7,000 cash repayment to
plaintiff witnessed by their mother, Zulena Calcano, and defendant's assistant in defendant's
home in Massachusetts.

iliL. at 23, 26).

However, Tirado did not call any of these witnesses to

testify about this alleged cash repayment and has no records showing that such a cash repayment
was made. (Id.)
Tirado also denied the existence of any agreement as to interest, stating repeatedly that
"we never talked about interest." (llh at 23, 41, 43, 44, 48). Instead, she testified that the

5

$69,920 in deposits she made to plaintiff's account• were repayments of principal on the Joan,
which she made approximately once a month as part of a cycle of loans and repayment agreed
upon with her sister. (Id. at 42-44). Tirado claimed that sometimes she borrowed money, repaid
it, and borrowed more all in quick succession because sudden, pressing business expenses like
"gas" and "insurance" for her transportation company would arise and require her to ask her
sister for more money immediately. (M, at 44). When questioned about scribbled out notes on
the deposit slips that she provided as evidence of the repayments, Tirado stated that she did not
remember what the notes had said, but that they could have been notes to herself, like phone
numbers. (M, at 48). She testified that she did not tamper with these deposit slips, and that ''they
were already like this" when she searched and found them for use in this lawsuit. ilih)
Additionally, Tirado testified that she was in fact mistaken when she testified at her
deposition that she had not made deposits to the joint account she shared with the plaintiff. (M,
at 30-33). She did in fact make deposits to the joint account, and both sides stipulate to that.
(Id.) Tirado was also questioned about her deposition testimony where she testified that she
suspected someone had broken into her home and stolen her bank records. (M, at 35). When
questioned at trial, Tirado confirmed that she had no proof that a break-in had occurred, only
suspicions, but she conceded that Schlamowitz's counsel had no involvement in such a crime.

(M, at 35-38).
C.

Documentarv Evidence

The only documents entered into evidence at trial consist of various Bank of America

6

Although the sisters shared a joint account at Bank of America (account number 9988),
these deposits were to plaintiff's account bearing account number 6805.
6

account statements held in the name of either plaintiff or defendant, defendant's deposit slips,
and an accounting report from Shalik, Morris & Company LLP, 7 analyzing the bank statements.
The parties stipulate to the accuracy of the exhibits.

DISCUSSION

I.

Legal Standards

A.

Choice of Law

This case is brought pursuant to 28 U.S.C. § 1332 and based on the diversity of the
parties. In diversity actions, federal courts follow the choice-of-law rules of the forum state to
determine the controlling substantive law. Pension Comm. of the Univ. of Montreal Pension
Plan v. Bane of Am. Sec.. LLC, 446 F. Supp. 2d 163, 191 (S.D.N.Y. 2006) (citing Erie R.R. Co.
v. Tompkins, 304 U.S. 64 (1938)). Since the action was brought in the Eastern District of New
York, New York choice oflaw principles govern. Crescent Oil & Shipping Servs .. Ltd. v. Phibro
Energy. Inc., 929 F.2d 49,52 (2d Cir. 1991).
In contract disputes, New York courts apply the law of the jurisdiction having the greatest
interest in the litigation. Id. The factors generally considered by courts in determining which
state has the greatest interest include: the place of contracting, negotiation and performance; the
location of the subject matter of the contract; and the domicile of the contracting parties.

7

In the accounting report, submitted as plaintiff's Exhibit G, plaintiff's accountants
concluded that they could verifY $130,300 in transfers from Schlamowitz to Tirado. However,
the parties stipulated to an agreed upon amount of$142,500 in transfers from Schlamowitz to
Tirado. From the Court's review of the accounting report, it is not evident where or when the
remaining $12,200 loan was made. However, as the parties stipulated at trial to $142,500 as the
amount owed to Schlamowitz (see Joint Rpt., Tr. at 5), the Court credits their accounting.
7

Ackerley Media Gr.p.• Inc. v. Sham Elecs. Corn., 170 F. Supp. 2d 445,450 (S.D.N.Y. 2001); see
also Pegasus Aviation IV. Inc. v. Aerolineas Austral Chile, S.A., No. 08 CV 11371,2012 WL
967301, at *5 (S.D.N.Y. Mar. 20, 2012) (considering each of the factors in a choice oflaw
analysis).
In this action, neither party has addressed the question of whether New York or
Massachusetts law applies. Under New York law, the law of the forum state in this case, "a party
wishing to apply the law of a foreign state [must] show how that law differs from the forum
state's law. Failure to do so results in the application of New York law." Havwin Textile Prods ..
Inc. v. Int'l Fin. Inv. & Commerce Bank Ltd., 152 F. Supp. 2d 409,413 (S.D.N.Y. 2001).
Neither party in this case has indicated that she wishes to apply Massachusetts law, and thus New
York law applies. Moreover, while the plaintiff resides in Massachusetts, and the location of the
formation and negotiation of the original oral loan agreement in this case is unclear, the vast
majority of performance on the contract occurred in New York. Plaintiff loaned the majority of
the money for which she now seeks repayment in New York, including the $142,500 stipulated
to by both parties. (Ex. H; Tr. at 5). While plaintiff claims that she made a $10,000 loan to
defendant in Massachusetts, this amount, plus the alleged $69,920 in deposits and the $7,000
cash repayment that defendant claims took place in Massachusetts, are less than the amount
loaned in New York. (Tr. at 6, 7). Thus, although the parties live in different states (New York
and Massachusetts) and there were loans and repayments made in each of those states, the Court
finds that the majority of performance on the contract took place in New York.

<Ill at 17-18).

Accordingly, given that neither side has urged application of Massachusetts law, the Court
applies the substantive law of the state of New York.

8

B.

Existence of a Binding Oral Contract

Under New York law, to recover for a breach of contract, plaintiff must establish by a
preponderance of the evidence: '"(I) the existence of an agreement; (2) the adequate performance
of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages."'
Friedman v. Schwartz, No. 08 CV 2801,2011 WL 6329853, at *3 (E.D.N.Y. Dec. 16, 2011)
(quoting Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. ofNew York, 375 F.3d
168, 177 (2d Cir. 2004)). In this case, the alleged contract was oral; there was no writing setting
forth the terms of the arrangement between the parties.
New York General Obligations Law Section 5-701 details the types of agreements
required to be made in writing:
Every agreement, promise or undertaking is void, unless it or some
note or memorandum thereof be in writing, and subscribed by the
party to be charged therewith, or by his lawful agent, if such
agreement ... [b ]y its terms is not to be performed within one year
from the making thereof or the performance of which is not to be
completed before the end of a lifetime.
N.Y. Gen. Oblig. Law§ 5-701(a)(1). Thus, New York law recognizes the existence of oral
contracts under certain prescribed conditions. Winston v. Mediafare Entm't Com., 777 F.2d 78,
80 (2d Cir. 1985). Under New York law, a written agreement is not necessary in personal loan
cases so long as the contract can be performed within one year of its formation and performance
is in fact completed before the end of a lifetime. Micena v. Katz, 68 A.D.3d 826, 827, 890
N.Y.S.2d 619, 621 (2d Dep't 2009) (finding that contracts are only void under the statute of
frauds if the contract "ha[s] absolutely no possibility in fact and law of full performance within
one year") (internal citation omitted); Ferrer v. Samuel, 192 Misc. 2d 533, 535, 746 N.Y.S.2d
242,243 (Nassau County Dist. Ct. 2002) (citing N.Y. Gen. Oblig. Law§ 5-701). Performance of

9

the oral loan agreement in this case commenced the same year it was formed, when plaintiff
began to loan money to defendant in 2007; the agreement could have been completed within one
year, and was completed before the end of either party's lifetime. (Tr. at 25). Thus, the contract
in question does not need to be written.
Nevertheless, it must first be shown that the oral contract in question was sufficiently
definite in its terms to be considered enforceable. "Few principles are better settled in the law of
contracts than the requirement of definiteness. If an agreement is not reasonably certain in its
material terms, there can be no legally enforceable contract." Cobble Hill Nursing Home. Inc. v.
Heruy & Warren Com., 74 N.Y.2d 475, 482, 548 N.Y.S.2d 920, 923, 548 N.E.2d 203, 206
(1989). Even where the parties "believe they are bound, if the terms of the agreement are so
vague and indefinite that there is ... no means by which such terms may be made certain, then
there is no enforceable contract." Deligiannis v. PepsiCo. Inc., 757 F. Supp. 241,256 (S.D.N.Y.
1991 ). Therefore, where a contract does not have such essential terms as the time or manner of
performance or price to be paid, the contract is unenforceable. Cleveland Wrecking Co. v.
Hercules Constr. Com., 23 F. Supp. 2d 287,292 (E.D.N.Y. 1998).
However, New York courts "ha[ve] not applied the definiteness doctrine rigidly." 166
Mamaroneck Ave. Com. v. 151 E. Post Rd. Cor,p., 78 N.Y.2d 88, 91, 571 N.Y.S.2d 686,687,
575 N .E.2d 104, 105 (1991 ). "[W]here it is clear from the language of an agreement that the
parties intended to be bound and there exists an objective method for supplying a missing term,
the court should endeavor to hold the parties to their bargain. Striking down a contract as
indefmite and in essence meaningless is at best a last resort." Id. (internal quotation marks and
citation omitted).

10

When ruling on the definiteness of a contract, "[w]hat is looked to ... is not the parties'
after-the-fact ... subjective intent" given during testimony at trial, "but their objective intent as
manifested by their expressed words and deeds at the time" the agreement was made. Cleveland
Wrecking Co. v. Hercules Constr. Com., 23 F. Supp. 2d at 292 (quoting Reprosystem. B.V. v.
SCM Com., 522 F. Supp. 1257, 1275 (S.D.N.Y. 1981)), rev'd in part on other grounds, 727 F.2d
257 (2d Cir.), cert. denied, 469 U.S. 828 (1984). In this case, the parties disagree as to the
material terms of the oral agreement. The testimony given at trial was unclear as to when and
where the agreement was made and what the actual terms of the agreement were. There is no
objective evidence from which to determine the agreed upon duration of the loan, the timing of
any repayment, or whether it was agreed that the defendant would pay interest on the loan. What
is known is that plaintiff agreed to loan money to defendant and defendant agreed to pay that
money back. What is also not disputed is that there were a series ofloans made over time by
plaintiff, and there were periodic, non-regular payments of monies by defendant over a period of
five years. (Tr. at 25; Exs. H, I).
Courts have held that, in endeavoring to hold parties to their agreements and avoid
invalidating mutually agreed upon contracts for indefiniteness, "a method for reducing
uncertainty to certainty might, for example, ... [be] ascertained by reference to an extrinsic
event, commercial practice, or trade usage ...." Cobble Hill Nursing Home. Inc. v. Henrv &
Warren Com.. 74 N.Y.2d at 483, 548 N.Y.S.2d at 923, 548 N.E.2d at 206. Specifically, a prior
course of dealings between the parties may be used as "an objective criteria" that can inform the
definiteness of the terms of the oral agreement in question. Eli Attia Architects v. Safr!b No. 94
CV 2928, 1996 WL 480721, at *4 (S.D.N.Y. Aug. 23, 1996) (upholding the definiteness of an

11

oral contract between a builder and his client based upon the terms of prior arrangements
between them). In this case, plaintiff and defendant previously entered into an almost identical
loan agreement in 2004. Both parties agree that the terms of this prior loan agreement were that
plaintiff would incrementally loan defendant an unfixed amount of money as needed and
defendant would repay that money when requested. (Tr. at 9, 25). That appears to be what
occurred for the 2007 loan agreement at issue in this case as well. (ld.) There does not appear to
have been any agreement as to interest payments in connection with the 2004 loan, nor does it
appear that the parties agreed to a specific deadline for repayment. (Id.)

Considering the terms of this prior 2004 loan agreement in understanding the essential
terms of the loan agreement in question, there is sufficient reason to believe that the second oral
loan agreement -the one in question - was of the same style and had the same essential terms as
the prior 2004 agreement. There was no specific amount, time limit, or schedule for loaning, and
repayment would occur when requested and when possible. The performance on the second loan
agreement, which was incremental and non-regular by both parties, confirms this claim. (Exs. H,
1).

Although the parties disagree as to whether interest was required, this genuine
disagreement about interest is not enough to void the entire oral contract for indefiniteness given
the definiteness of the other essential terms of the contract. See Cohen & Sons v. Lurie Woolen
Co., 232 N.Y. 112, 114, 133 N.E. 370, 370-71 (192l)(finding that voiding a mutually assented
contract for indefiniteness is "at best a last resort," and is only to be done when construction of
essential terms regarding "subjectmatter [sic], time, and price" are completely futile). Thus, even
if there is a disagreement as to interest (see discussion infra at 16-20), this disagreement does not

12

render construction of the agreement entirely futile. Therefore, the Court finds that the terms of
the oral loan agreement in this case were sufficiently definite and certain, though purposefully
non-specific, to fulfill the definiteness requirement.
In addition to definiteness, oral contracts, specifically, must pass a further requirement to

be enforceable. The parties must have shared a mutual intent to be bound by their oral agreement
in order for the oral contract to be enforceable. See Friedman v. Schwartz, 2011 WL 6329853, at
*4-5; see also Shaftel v. Dadras, 39 F. Supp. 2d 217, 225 (E.D.N.Y. 1999) (citing Ciaramella v.
Reader's Digest Ass'n. Inc., 131 F.3d 320, 323 (2d Cir. 1997)). This is to ensure that people can
"control whether and when tentative proposals become binding," Ciaramella v. Reader's Digest
Ass'n. Inc., 131 F.3d at 323, so that "parties are not trapped into 'surprise contractual obligations
that they never intended"' to be made orally. Cleveland Wrecking Co. v. Hercules Constr. Corp.,
23 F. Supp. 2d at 292-93 (quoting Arcadian Phosphates. Inc. v. Arcadian Corp., 884 F.2d 69,7172 (2d Cir. 1989)).
The Second Circuit has articulated a four-factor test to determine whether the parties
intended to be bound by their agreement: "(1) whether there has been an express reservation
between the parties not to be bound absent a formal writing; (2) whether one party has partially
performed the contract; (3) whether there are material terms left to be negotiated; and (4) whether
it is the type of agreement that is usually reduced to a writing." Shaftel v. Dadras, 39 F. Supp. 2d
at 225-26 (citing Ciaramella v. Reader's Digest Ass'n. Inc., 131 F.3d at 323). No single factor is
decisive, but each provides significant guidance. R.G. Group. Inc. v. Hom & Hardart Co., 751
F.2d 69, 74-75 (2d Cir. 1984).
In this case, all four prongs are met. First, there is no evidence that either party expressed

13

reservations about being bound by the oral agreement, absent a formal writing. On the contrary,
in her testimony, defendant agreed that she entered into an oral loan agreement with plaintiff, and
that she is bound to repay what plaintiff loaned to her. (Tr. at 25). Plaintiff brings this suit
because she clearly intended for her oral loan agreement with defendant to be binding as well.
Therefore, both parties were satisfied with the loan agreement being solely oral, and expected
that oral agreement to be binding.
In regards to the second prong, both parties at least partially performed the contract. Both

parties stipulate that plaintiff did loan defendant at least $142,500 and that defendant did deposit
$69,920 into plaintiff's account. ili!,. at 5). Plaintiff contends that these deposits were interest
payments; defendant claims the deposits were repayments of principal. ili!,. at 19-20, 23).
Without passing on the merits of their arguments, it remains clear that defendant's payments
constitute partial performance on the oral loan agreement.
As for the third prong, although the parties dispute what the original terms of the contract
were with respect to interest, neither party disputes the fact that the terms of the loan were agreed
upon when the oral agreement was entered into, and were not left open for future negotiation.
Plaintiff testified that the parties originally agreed that $2,500 in interest was to be paid monthly.
(Id.) Defendant testified that there was never an agreement to pay interest, and that the original
agreement was to only repay the loan principal. Gd. at 42-44). Despite this factual dispute about
interest, there is no evidence that there were terms left to be negotiated in the future.
In regards to the fourth prong, it is not unusual that a simple, personal loan agreement

between sisters was not reduced to formal writing. See Friedman v. Schwartz, 2011 WL
6329853, at *4 (holding that an oral loan agreement was not of a nature expected to be written

14

because of its simplicity and the close relationship between the parties); see also Ciaramella v.
Reader's Digest Ass'n. Inc., 131 F.3d at 326 (finding that "the complexity of the underlying
agreement is an indication of whether the parties reasonably could have expected to bind
themselves orally"). Thus, all four prongs of the test are met.
Indeed, utilizing this same four-prong test, courts have consistently upheld the legitimacy
of oral contracts similar to the one in this case when there was sufficient evidence that an
agreement occurred and was intended to be binding. See Friedman v. Schwartz, 2011 WL
6329853, at *6 (upholding the existence of a $100,000 oral loan agreement between business
partners); Ferrer v. Samuel, 192 Misc.2d at 535-36, 746 N.Y.S.2d at 243-44 (upholding the
existence of a small oral loan agreement between a woman and her ex-boyfriend under New
York Law); see also Shaftel v. Dadras, 39 F. Supp. 2d at 226 (denying motion for summary
judgment based on evidence that oral contract between two architects was intended to be
binding). Thus, in this case, it is clear that both parties did intend for their oral agreement to be
binding, and that the existence of this oral contract is legitimate and enforceable under New York
law.

II.

Factual Disputes
While both parties agree that an enforceable oral contract was made between them, there

are factual disputes as to the amount loaned to defendant and the amount repaid to plaintiff. In
order for the Court to properly enforce this contract, there are four key factual disputes that must

be adjudicated. The first is whether the parties agreed that interest would accrue on the loan, and
whether to treat defendant's deposits of $69,920 to plaintiff as interest payments, as plaintiff

15

alleges, or repayments of principal, as defendant claims. The second issue is whether or not
plaintiff's three cash withdrawals totaling $17,900 are to be treated as loans to defendant. Third,
the Court must determine whether to credit plaintiffs assertion that she loaned defendant an
additional $60,000 in cash that she had saved at home. Finally, the Court must determine
whether or not to credit defendant's claim that she repaid plaintiff $7,000 in cash. These issues
will be discussed individually below.

A.

Defendant's Deposits

The first question is whether the parties reached an agreement on interest and whether the
$69,920 in deposits to plaintiff's account were interest payments, as plaintiff alleges, or
repayments of principal, as defendant claims. The evidence regarding this issue consists of
defendant's deposit slips showing $69,920 in deposits to plaintiff's Bank of America account
number 6805, a selection of plaintiff's bank statements for account number 6805 that confirms
many of these deposits, and an accounting report summarizing these transfers. (Exs. G, I, J). It
is plaintiff's position that these deposits were interest payments made by the defendant in
accordance with the agreement reached between the parties that defendant would pay $2,500 per
month in interest to plaintiff. 8 (Id. at 14, 19-20). Plaintiff testified that this was an oral
agreement, and that she has no written evidence to substantiate her claim that the deposits were
interest payments. (IQ, at 19).
Plaintiffs counsel argued, however, that the pattern of payments between plaintiff and

8

Plaintiff testified that although the agreement was for defendant to pay $2,500 per month
in interest, some months defendant would pay less. (Tr. at 19-20).
16

defendant do not make sense if defendant's deposits were principal repayments. During cross
examination, plaintiff's counsel pointed to two series of transactions in the bank statements. In
the first set of transactions, defendant deposited $4,000 into plaintiff's account on August 13,
2007; plaintiff then made a pair of$3,000 loans to defendant a week later on August 21,2007
and then on August 27, 2007. (14, at 43; Ex. Eat 120). The second set of transactions shows that
defendant made a deposit of $5,600 into plaintiff's account on October 10, 2007 even though she
had just borrowed $5,000 six days earlier. She then borrowed another $5,000 on October 23,
2007. (Tr. at 44; Ex. J at 1015). In his summation, plaintiff's counsel argued: "Who borrows
$5,000, to repay $5,000, to borrow $5,000 in a two week period? That's not how you [repay]
principal on a loan. That sounds more like interest." (Tr. at 56). Plaintiff's counsel also argued
that the scribbled out text on the deposit slips was evidence that defendant is hiding notations
that these deposits were actually intended as interest payments. (14, at 48). Finally, counsel
contends that a lack of signatures on these slips calls into question who made these deposits.

It is defendant's position that these deposits were repayments of principal on the loan, and
that there was never an agreement betwe'en defendant and plaintiff, oral or otherwise, that interest
would be owed or paid on the loan. (14, at 42-44). Responding to plaintiff's argument about the
pattern of payments, defendant testified that sometimes she borrowed money from her sister,
repaid it, and loaned more in succession because sudden, pressing business expenses for her
transportation company would arise and require her to ask for more money immediately. (14, at
44). Additionally, defense counsel argued that the amount paid to plaintiff in deposits is simply

too high to be interest payments. In his summation, counsel argued that if the $69,920 were

17

interest, the interest rate would be around 50%, which would be considered a usurious rate. (.kb
at 52). Looking at just the first few transactions, defendant noted that there was "approximately
$5,000 lent and a $2,000 deposit a couple weeks later." (Id. at 51-52). He questioned how such
large amounts could possibly be interest. (Id. at 51-52).
With no documentation to verify the existence of an interest agreement or the terms of
such an agreement, the Court is left with only the record of transactions between plaintiff and
defendant and the conflicting testimony of plaintiff and defendant. After considering all of the
testimony, evidence, and arguments in this case, the Court finds that plaintiff has failed to
demonstrate by a preponderance of the evidence her claim that these deposits were interest
payments and not repayments of principal.
First and foremost, the Court is persuaded by defendant's counsel's argument that the
deposits are too large to be interest. Analysis ofthe plaintiffs bank statements in conjunction
with the accounting report reveals that during the first two years of the loan, plaintiff loaned
defendant approximately $88,450;9 during that same period, defendant paid plaintiff $63,520. 10
(Ex. Gat 1035-1036; Exs. H, I, J). If these were solely interest payments as plaintiff claims, the
interest paid would be at the rate of71.8%, an amount way beyond a reasonable interest rate. Cf.
N.Y. Banking Law§ 14-a(l) (limiting interest rate in New York to 16%); O'Donovan v.
Galinski, 62 A.D.3d 769,769-70, 878 N.Y.S.2d 443,444-45 (2d Dep't 2009) (holding that
repayment at annualized rate of31% violated New York's usury laws). Not only is it absurd to

9

This number includes only verified loans plaintiff made to defendant- $57,300 in 2007,
and $31,150 in 2008.
'"Defendant's transfers to plaintiff totaled $34,840 in 2007 and $28,680 in 2008.
18

think that anyone would borrow money at an interest rate of 70%, but Schlamowitz' s testimony
was that the agreement required interest payments of$2,500 per month regardless of the amount
borrowed. (Tr. at 19-20). The repayments in this case simply cannot be explained as interest
payments alone absent any documentation or compelling evidence to corroborate plaintiff's
claim.
Although plaintiff argued that these deposits could not be principal repayments because it
is counterintuitive to borrow and repay principal in the manner and time-frame defendant claims
occurred, defendant provided plausible testimony explaining the pattern of payments. She
explained that sometimes she borrowed money, repaid it, and borrowed more all in quick
succession because of sudden, pressing business expenses like gas and insurance for her
transportation company that would require her to ask for more money immediately. (Ill. at 44).
Her testimony is consistent with the bank statements that show a pattern of small, nonuniform,
periodic payments to defendant, and payments of small, nonuniform amounts to plaintiff. (Ex. G
at I 035; Ex. H).
Similarly, although plaintiff's counsel argues that the scratched out handwriting on the
deposit slips reflects an attempt to conceal the true nature of the deposits as interest payments, he
has supplied no reason, other than sheer speculation, to believe that the notes in fact reflect
comments about interest payments to plaintiff. The defendant testified that she did not tamper
with the slips and that she used these old deposit slips as note paper to write down things like
telephone numbers that could have been later scribbled out. (Tr. at 48). This testimony seems
just as likely, if not more likely than plaintiffs proposed theory that defendant purposefully
scribbled out the text to hide evidence that these deposits were for interest.

19

The Court is also not persuaded by plaintiffs argument that the absence of signatures on
the deposit slips means that defendant did not make these deposits. (Id. at 45-4 7). This
argument that defendant did not make these deposits actually conflicts with plaintiffs own
theory that these deposit slips reflect interest payments by defendant, as purportedly evidenced by
her notes on the slips. Regardless, the evidence supports a finding that defendant made these
deposits. First, defendant produced these slips to the Court, and there is no basis to believe that
defendant obtained these slips from someone else and then attempted to pass them off as her
own. Second, defendant's explanation that all of these deposits were made in Boston and thus
were made either by defendant herself or by her family members, as opposed to those that were
made by plaintiff in New York, was also reasonable. (Id. at 47). Substantiating this testimony,
the branch codes on all but two ofthe deposit slips show that these deposits were made in Boston
at the branch where the account maintained by Xuxa Transportation, Inc. (defendant's
transportation business) and the joint account maintained by defendant and plaintiff are located.
(Ex. Gat 1027). The remaining two deposits were made at other branches in Massachusetts.
(Id.) Finally, the one deposit slip that has a signature bears the signature of Hector Tirado,
defendant's husband. (Tr. at 46, 56). This further corroborates defendant's testimony that she or
her family members made these deposits to plaintiffs account.

ilih at 4 7).

The final factor that the Court has considered in determining that plaintiff has failed to
show that there was an agreement to pay $2,500 interest on a monthly basis is the plaintiffs
apparent decision not to request such interest now." Based on a rough calculation if, in fact,
11

Although plaintiff claimed at trial that the parties had agreed on interest payments of
$2,500 per month (see Tr. at 19-20), there were only two occasions on which defendant deposited
exactly $2,500- February 11,2008 and July 16,2008. These two transactions alone certainly do
20

there was an agreement to pay $2,500 in interest, defendant would owe $92,500 in interest.

12

Thus, after analyzing all of the testimony and evidence, the Court finds that plaintiff has
failed to sustain her burden of proof on the agreement to pay interest, and that the deposits in the
amount of$69,920 were principal repayments made by defendant to plaintiff. Accordingly, in
determining the amount owed to plaintiff, the Court has subtracted the $69,920 in repayments
from the stipulated amount loaned of$142,500.

B.

Plaintiff's Cash Withdrawals

The second issue is whether plaintiff's three cash withdrawals totaling $17,900 are
evidence of cash loans made to defendant, as plaintiff contends. Bank statements confirming that
plaintiff made three cash withdrawals on July 17,2008, January 28, 2010, and June 3, 2010, were
entered into evidence. (Tr. at 11-13; Ex. A at 429; Ex. Bat 405; Ex. Cat 290; Ex. H). Plaintiff
testified that these three withdrawals were all cash loans she made to the defendant. (Tr. at 1113). She asserts that the January 2010 withdrawal of$10,000 was made in Massachusetts, where
defendant resides. Q4, at 12). Plaintiff claimed that she withdrew this cash and gave it to
defendant while she was visiting defendant in Boston on vacation. Plaintiff's counsel contended,
without evidence, that plaintiff made no large purchases in Boston when she visited her sister,
and therefore, the $10,000 cash withdrawal made in Boston during a visit with defendant could

not constitute consistent monthly payments which would evidence a set interest agreement.
12

This accounts for $2,500 per month in interest for the 37 months from May 2007
through June 2010, the earliest and latest dates for the loan referenced at trial. (Tr. at 4, 10).
Even taking into account the $76,902 previously paid to plaintiff, which plaintiff claims was all
interest, defendant would still owe an additional $15,598 in interest, which plaintiff does not
appear to be claiming at this time.
21

not be anything other than a loan, especially given that "there [was] a loan going on back and
forth" between plaintiff and defendant at this time. ili!, at 20-21, 55). The other two withdrawals
were made in New York, where plaintiff resides. (Ex. A at 429; Ex. C at 290). Plaintiff claimed
that these two withdrawals were evidence of loans to defendant when defendant came to New
York to visit. (Tr. at 17-18).
Defendant categorically denied receiving any of these three cash withdrawals that
plaintiff claimed were loans to defendant.

ilil at 22).

She did not offer an alternative

explanation for these withdrawals; she only stated that they were not loans to her. 13 (ld.)
The Court is not persuaded by plaintiff's testimony regarding the $10,000 Massachusetts
cash withdrawal. Although there was a pattern of loans between plaintiff and defendant
involving transfers of thousands of dollars, the defendant denied receiving this particular amount
and there is no written evidence to confirm that the transfer actually occurred. While plaintiff's
counsel argued that plaintiff would not have spent that much money on the trip, it is entirely
plausible that she loaned or gave the money to someone other than the defendant- for example,
her mother. Given that it is plaintiff's burden to establish that she loaned the money to
defendant, the Court finds that she has failed to establish by a preponderance of the evidence that
the $10,000 Massachusetts withdrawal was a loan to defendant. 14

13

Defendant's counsel argued that plaintiff was generous with her sister, and thus implied
that these cash withdrawals could have been for some sort of gift or financial aid unrelated to the
loan, but there was no testimony to support this argument. (Id. at 53). Moreover, plaintiff's
counsel responded that although plaintiff was generous enough to buy small things like ice cream
and food for defendant's children when she visited defendant, plaintiff's generosity cannot
explain a $10,000 cash withdrawal in Boston. ilil at 21-22, 55).
14

Even plaintiff's own expert asserted that this amount was not supported by sufficient
evidence. (Ex. Gat 3, 5).
22

Although the parties discussed the Massachusetts withdrawal at length at trial, the New
York withdrawals were barely mentioned at all. Plaintiff only testified that they occurred, that
they were loans made to defendant when she visited New York, and that defendant denies
receiving them. Qlt at 17-18, 22). There is nothing in the record, other than plaintiff's
testimony, to suggest that these amounts were loaned to defendant and were not amounts used by
plaintiff for other things. Given the conflicting testimony, the Court finds that plaintiff has not
met her burden of proof with regards to the two New York withdrawals totaling $7,900."
Consequently, the Court finds that these two cash withdrawals were not loans to defendant.

C.

Plaintiff's Additional Alleged Cash Loans

The third issue is whether plaintiff made additional cash loans totaling $60,000 to
defendant with cash that she saved at home, as plaintiff alleges, or whether these cash loans
never occurred, as defendant contends. Plaintiff claims that the undocumented $60,000 came
from patient payments at her husband's pediatric practice, where plaintiff serves as the practice
administrator. (Tr. at 16-17). She claims that she periodically brought home cash in her role as
the practice's administrator. Qlt) Plaintiff claimed that she used this cash to make loans to
defendant over a period of five years. Usually, these amounts would be given to defendant when
plaintiff would go on vacation to Boston or when defendant would visit New York. (Id.) Since
this cash was not held in a bank, there are no bank statements showing withdrawals of this cash.
Defendant testified that none of these alleged cash loans occurred. Gd. at 22). While

"Here, too, plaintiff's own expert report states that more evidence is required to ascertain
that these transfers were made to defendant from plaintiff. (Ex. G at 3, 5).
23

cross-examining plaintiff, defendant's counsel pointed out that plaintiff had not provided any
documentation to show that her husband's practice received this cash or that plaintiff held this
cash at home. (!4, at 15). Plaintiff conceded that she has no "form of paperwork or
documentation which would substantiate [the] claim" that she loaned defendant this $60,000
cash. (.!!!.) She testified that this $60,000 would have been recorded in her husband's business
records as money received, and that she could have provided these records. (ld. at 17).
However, plaintiff did not provide these records, or any other evidence to meet her burden of
proof. Additionally, it is unusual to pay doctors in cash. Records confirming that plaintiff's
husband received a steady stream of cash from his patients would have corroborated the
credibility of plaintiff's testimony regarding this issue, but plaintiff chose not to call her husband
to testify. Plaintiff criticized the defendant for failing to call defendant's mother to testify about
defendant's alleged $7,000 cash repayment. (See discussion infra at 23). Plaintiff has similarly
failed to provide any corroborating testimony regarding her alleged $60,000 undocumented cash
loans.
Given that plaintiff has provided no evidence to substantiate her testimony that $60,000
was allegedly taken in cash from her husband's pediatric practice, held at her home, and
eventually loaned to defendant, the Court does not credit plaintiff's claim that the $60,000 in
question was a loan to defendant.

D.

Defendant's Alleged Cash Repavment

The final issue is whether defendant made a $7,000 cash repayment to plaintiff.
Defendant claimed that she made one cash repayment of $7,000 to plaintiff when plaintiff visited

24

defendant's home. (Tr. at 23). Defendant testified that her assistant, Yolobrina Saldana, and her
mother, Zulena Calcano, were witnesses to this repayment, which allegedly occurred in
defendant's son's room. @at 23, 26). However, these witnesses were not called to testify at
trial. Defendant also stated that she could not provide records to confirm that she made this
repayment. @ at 26).
Plaintiff contends that this alleged cash repayment did not occur. (Id. at 15).
Furthermore, plaintiffs counsel argued that defendant's testimony regarding this cash repayment
is not credible because it is internally inconsistent. When questioned, defendant testified that her
mother was a witness to this $7,000 repayment that allegedly occurred before this lawsuit was
initiated. @at 26). However, defendant also testified that her mother did not find out about the
loan agreement between plaintiff and defendant until plaintiff initiated the lawsuit in 2012. @
at 27). Plaintiffs counsel pointed out this inconsistency, asking "how could [her mother] have
been present for the repayment and known all about it" if her mother only found out about the
loan "after the case started." @ at 56-57).
The Court finds that this inconsistency is persuasive in casting doubt upon the credibility
of defendant's testimony regarding this cash repayment. It is defendant's burden to prove by a
preponderance of the evidence that this repayment occurred. Defendant's testimony is the only
evidence provided to substantiate defendant's claim about this cash repayment. There is no
further documentation or witness testimony showing that this repayment occurred. Accordingly,
the Court finds that defendant did not repay plaintiff this $7,000 in cash.

25

III.

Prejudgment Interest
Plaintiff asks for prejudgment interest in her Complaint. (Compl. '1[6). Under New York

State law, interest is recoverable for general civil judgments involving a breach of contract. The
method for calculating pre-judgment interest is set forth in N.Y. CPLR § 5001, which provides
that interest shall be calculated at the non-compounded rate of9% per annum, CPLR §§ 500l(a),
5004, and that "[i]nterest shall be computed from the earliest ascertainable date the cause of
action existed." Id.
It is unknown when exactly plaintiff first demanded repayment. (Tr. at 14). Thus, the
earliest ascertainable date the cause of action existed is the day the Complaint was filed, February
2, 2012. Calculating prejudgment interest at a rate of9%, or a daily rate of0.021918%, the
Court calculates interest in the amount of$16,669.48, based on total damages of$72,580 over
the 932 days since the Complaint was filed.

CONCLUSION
The Court finds that plaintiff is entitled to repayment on her loan to defendant, as follows:
Stipulated Loan

+ $142,500.00

Defendant's Deposits into
Plaintiff's Account as Repayment

- $69,920.00

Prejudgment Interest

+ $16,669.48

Total

$89,249.48

Accordingly, the Court finds in favor of plaintiff Minerva Schlamowitz. The Clerk is
directed to en.ter judgment in favor of Minerva Schlamowitz in the amount of$89,249.48 along
26

with any post-judgment interest that accrues from the date that judgment is entered.
The Clerk is further directed to send copies of this Memorandum and Order to the parties
either electronically through the Electronic Case Filing ("ECF") system or by mail.

SO ORDERED.
Dated: Brooklyn, New York
August 22, 2014

/s/ Cheryl L. Pollak

27