DECISION AND ORDER On May 16, 2022, this Court conducted an inquest in the instant action. The Court had ample opportunity to observe and assess the demeanor and credibility of the witnesses and carefully reviewed and considered all exhibits admitted into evidence. Factual Background The plaintiffs commenced this action to recover damages based upon several causes of action including breach of contract, conversion, unjust enrichment, constructive trust, fraud and an accounting, all centered around the allegations that the plaintiffs invested to become shareholders in a corporation which was to be a Filipino restaurant constructed, managed and maintained by defendant Jose Cornelio Castellvi (hereinafter “Castellvi”). Rather than issue shares to the various plaintiff investors, Castellvi allegedly issued shares to his ex-wife, Cherry Manuel Castellvi (hereinafter “Cherry Castellvi”). The defendants interposed answers initially, but then failed to comply with any discovery whatsoever. The defendants’ recalcitrance resulted in motion practice in which the plaintiffs sought and obtained a default on the issue of liability with respect to their breach of contract, conversion and unjust enrichment causes of action. An Order was entered on January 6, 2022, by the Hon. Joseph Risi striking the defendants’ answers and pleadings, declaring defendants in default and referring the matter for an Inquest. The Inquest The plaintiff, Jomina Gauuan (hereinafter “Gauuan”), testified that she was approached in or about December 2014 by Castellvi to invest in a restaurant to be located at 49-12 Queens Boulevard, Queens, New York, known as Eatshowtime in the amount of $5,000.00 in exchange for some shares in the restaurant corporation. Guaan stated she furnished Castellvi with two checks totaling $5,000.00, which he negotiated. However, the witness failed to furnish these canceled checks and there was never a written document formalizing the agreement between Gauuan and Castellvi. Guuan testified that there was no discussion with Castellvi about the number of shares she was to receive in exchange for her funds. Gauuan further testified the restaurant did not open under the name of Eatshowtime, but rather as Kabayan. According to her testimony, in or about May 2015, Gauuan met with Castellvi together with plaintiff Oliver Punongbayan (hereinafter “Punongbayan”) and requested shares in Kabayan. However, Castellvi explained he was unable to issue shares to thembecause Kabayan belonged to his wife. At that meeting, Castellvi agreed to execute a promissory note to return their investments over time. He agreed verbally, but never provided such a promissory note. Plaintiff, Marites Nicol (hereinafter “Nicol”) also testified at the inquest. She stated that she met with Castellvi a couple of times between October and December 2014; the entire series of events having occurred between August 2014 and February 2015. Similarly, she gave Castellvi $5,000.00 by check to invest in Eatshowtime in or about November of 2014 and just as Gauuan, she did not furnish any documentary evidence in the form of a cancelled check, a contract or shares in the corporation. In or about May 2015, Nicol demanded the return of her money from Castellvi, which she never received. Nicol further testified that she had a series of conversations by text messages with Cherry Castellvi, the alleged owner of Kabayan. According to Nicol, the text messages conveyed that Castellvi owed money to his ex-wife Cherry Castellvi, representing her share of proceeds from property they owned and sold, but which he failed to distribute to her. In essence, the Kabayan restaurant was transferred to her by Castellvi instead of him distributing her share of the proceeds to her from the sale of the jointly owned property. The text messages were predominantly in the Tagalog language. However, the text messages were not translated into English and admitted into evidence. Punongbayan also testified that he was approached by Castellvi with virtually the same offer as the preceding witnesses. The only difference seemed to be that Punongbayan stated he invested $11,000.00 with Castellvi. He also paid Castellvi by check, the documentation for which he did not furnish to the Court. Like the other plaintiff witnesses, Punongbayan did not submit any documentation to support his claims. No testimony or other evidence was offered by, or on behalf of plaintiff, Arnel Piamonte. Discussion The principle of just compensation as applicable in actions for breach of contract is the allowance of damages. The foundation of the theory of damages for breach of contract is to make the injured party whole or replace the loss caused by the breach. Seidman v. Industrial Recycling Properties, Inc., 106 AD3d 983, 967 NYS2d 77 (2nd Dep’t. 2013). The goal is to award damages to compensate the injured party, by putting them in as good a position as they would have been had the defendant complied with the agreement in the first place. “The injured party is entitled to compensation for the losses sustained as a result thereof, J. B. Preston Co. v. Funkhouser, 261 N.Y. 140, 184 N.E. 737 (1933) and is to be placed, so far as money can do so, in the situation he or she would have been if the contract had been performed.” 36 NYJur. 2d Damages §32; Seidman v. Industrial Recycling Properties, Inc., supra; Cole v. Macklowe, 99 AD3d 595, 953 NYS2d 21 (1st Dep’t. 2012). Damages for breach of contract may include general “consequential damages”, which are indirect and compensate for additional losses incurred as a result of the breach. Therefore, the plaintiff may recover all the damages which were occasioned by the breach of contract by the defendant, determined by the loss sustained or gain prevented at the time and place of the breach, Kaminsky v. Herrick, Feinstein LLP, 59 AD3d 1, 870 NYS2d 1 (1st Dep’t. 2008); meaning the loss incurred by, or gain denied to, the plaintiff. In this instance, the loss sustained by, or gain prevented to, the plaintiffs were the cost of the investments and the potential profits from the restaurant. However, the amount of profits cannot be ascertained without an order for an accounting, which in turn cannot be issued justifiably without the plaintiffs first demonstrating the amounts of their investments. In the case at bar, the defendants’ answer was stricken. Therefore, the situation is akin to one in which they never answered. However, where there has been a default in appearing or answering and an inquest is directed, it is still necessary to present proof of the actual damages sustained. Paulson v. Kotsilimbas, 124 AD2d 513, 514, 508 NYS2d 428 (1st Dept. 1986). (See Ferndanez v. Atias, 50 Misc 3d 127[A], 2015 NY Slip Op 51864[U] [App Term, 1st Dept 2015]; See also Bitzios v. Michelakis, 89 AD3d 779, 781, 932 NYS2d 521 [2nd Dept 2011]). Here, while the testimony of the three plaintiff witnesses was virtually identical, so too are the deficiencies in the proof of their damages. In their discussions/negotiations with Castellvi, there was no determination, or even mention, of the percentage of ownership the plaintiffs would acquire. Nor was there any testimony of the means in which they would receive the return of their investments. There was no writing memorializing any agreement whatsoever. There were no canceled checks admitted into evidence and no acknowledgement of receipt of the funds and their purpose. Since a default by defendant in appearing does not constitute an admission as to damages, it remains plaintiff’s burden to prove its damages through competent evidence. Paulson v. Kotsilimbas, supra. The testimonial evidence presented in the case at bar was insufficient to be considered competent evidence, even in its totality. It is extremely unfortunate, but the plaintiffs failed to provide any substantive proof of damages, and such a failure “is fatal to a cause of action for breach of contract”, Proper v. State Farm Mut. Auto. Ins. Co., 63 AD3d 1486, 1487, 882 NYS2d 340 (3rd Dept. 2009). The proof of their damages, which was limited to their testimony, did not provide a sufficient evidentiary basis for the monetary awards made. See 345 East 69th Street Owners Corp. v. Platinum First Cleaners, Inc., 158 AD3d 452, 72 NYS3d 42 (1st Dept 2018). The notion that the plaintiffs did not insist on a written agreement to be signed at the time the investment money was furnished strains credulity. “The essential elements of a cause of action sounding in fraud are a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury”. Spector v. Wendy, 63 AD3d 820, 881 NYS2d 465 (2nd Dept 2009); Orlando v. Kukielka, 40 AD3d 829, 831, 836 NYS2d 252 (2nd Dept 2007); see Small v. Lorillard Tobacco Co., 94 NY2d 43, 57, 698 NYS2d 615 (1999); Oko v. Walsh, 28 AD3d 529, 814 NYS2d 655 (2nd Dept 2006). The plaintiff must show not only that he actually relied on the misrepresentation, but also that such reliance was reasonable. See McMorrow v. Dime Sav. Bank of Williamsburgh, 48 AD3d 646, 647-648, 852 NYS2d 345 (2nd Dept 2008); Oko v. Walsh, supra. Plaintiffs did not submit any evidence to demonstrate that Castelvi’s representations were misrepresentations at the time they were made to induce the plaintiffs to invest in Eatshowtime. They met with him initially in the Fall/Winter of 2014. The restaurant allegedly opened in May 2015 under the name of Kabayan. Plaintiffs have not shown that Castelvi’s representations were false at the time that he solicited them in the Fall/Winter of 2014. Plaintiffs also did not submit any evidence to demonstrate that their reliance on Castellvi’s possible misrepresentations was reasonable. They did not testify about any prior relationship they had with Castelvi, whether fiduciary in nature or otherwise. They merely testified that he solicited them to invest in Eatshowtime. How he was led to them to solicit their funds is a mystery. It is unknown whether they invested with him previously, how long they knew him, the circumstances under which they first came to know him or any details whatsoever with respect to whatever relationship they may have had with him. To determine whether their reliance was reasonable in a vacuum is something the Court is unable to do. Therefore, it cannot be said that their reliance was reasonable. Since this is a key element of a cause of action for fraud, the plaintiffs’ cause of action for fraud is not sustainable. Plaintiffs must also present admissible documentary evidence to support their claim of fraud and conversion. Cf. Equidyne Corp. v. Vogel, 160 AD2d 389, 390, 554 NYS2d 19 (1st Dept.1990); Pereloma v. Valenteychik, 40 AD3d 833, 833, 836 NYS2d 247 (2d Dept.2007); Best Metropolitan Towel & Linen Supply Co., Inc., v. Afternoones Rest., 21 Misc.3d 1105(A), 2008 WL 4444261 (Civil Ct. N.Y. County 2008). Plaintiffs’ utter failure to furnish any relevant and material documentation to substantiate their claims renders them fatally flawed. Based upon the foregoing, the plaintiffs’ claims for fraud and conversion are dismissed. The causes of action sounding in unjust enrichment and constructive trust were also unsupported by the evidence adduced at the inquest and thus cannot be sustained. The Court is constrained to find that none of the plaintiffs’ causes of actions are sustainable, because they are so lacking in their proof. It is a shame when individuals, such as the likes of Castellvi are able to “get over” on an unsuspecting public, whose only fault was to trust such a scurrilous figure. Clearly, if the allegations set forth by the plaintiffs with respect to Castellvi are true, then Castellvi is nothing more than a scourge; a blight upon society and a predator on his own brothers and sisters. It is unfortunate when a miscreant is rewarded for their misdeeds; even more so when he profits from preying on members of his own community. Certainly, that is not the intention of this Court. However, while the Court feels empathy towards his victims, it cannot grant a judgment where the proof of the claims is so deficient. One can only hope that the disgrace Castellvi brings upon himself and the effect of his actions upon his reputation in his community, will be some solace to those he has injured. Conclusion It is with profound dismay that the Court must dismiss the complaint, based upon the failure of the plaintiffs to prove their damages. This constitutes the Decision and Order of this Court. Dated: September 13, 2022
