Merger Clauses Trump Alleged Oral Joint-Ventures in New York Real-Estate Deals: A Commentary on IPA Asset Management, LLC v. Schuman (2025)

Introduction

On 4 June 2025 the Appellate Division, Second Department handed down IPA Asset Management, LLC v. Schuman, a decision that underscores the formidable power of merger clauses and documentary evidence under CPLR 3211 to extinguish claims that hinge on alleged oral joint-venture agreements in real-estate transactions.

Parties. IPA Asset Management, LLC (“IPA”) sold five parcels of real property (“the subject properties”) to limited-liability companies controlled by Brian Schuman (collectively “the Schuman defendants”).

Allegations. IPA contended that, besides the written contracts of sale, the parties orally formed a joint venture to facilitate a 1031 like-kind exchange. Allegedly, IPA loaned the “shortfall” of the purchase price to the defendants, who promised to repay the loan by selling some parcels and investing the proceeds—together with IPA—into development of another income-producing property. When the defendants allegedly kept the proceeds, IPA sued for:

• Breach of joint-venture agreement
• Breach of fiduciary duty
• Conversion
• Fraudulent inducement
• Promissory estoppel
• Constructive trust, equitable mortgage, deed rescission and declaratory relief

The Supreme Court (Suffolk County) dismissed those claims under CPLR 3211(a)(1) and (a)(7); the Appellate Division has now affirmed in full, creating a robust precedent on the interplay between merger clauses, documentary evidence, and joint-venture pleadings.

Summary of the Judgment

The Second Department held:

• Even liberally construed, the complaint and IPA’s affidavit fail to allege an essential element of a joint-venture — a mutual promise to share profits and losses.
• In any event, documentary evidence—the five fully executed contracts of sale—utterly refutes any oral joint-venture claim. Each contract (a) sets a fixed purchase price, (b) disclaims any loan or purchase-money mortgage, and (c) includes a broad merger clause stating that all prior understandings “were merged” into the written agreements.
• Because the fiduciary-duty, constructive-trust, promissory-estoppel and fraudulent-inducement claims all derive from the alleged joint venture, they too are barred.
• The conversion claim also fails for lack of pleaded dominion or control over the disputed sale proceeds.

Accordingly, the order of dismissal was affirmed with costs.

Analysis

Precedents Cited

• Kefalas v. Pappas, 226 A.D.3d 757 (2d Dept 2023) – articulated the four essential elements of a joint venture; relied on to show that IPA did not plead profit-and-loss sharing.
• MacKay v. Paesano, 185 A.D.3d 915 (2d Dept 2020) – applied similar elements and dismissed joint-venture claims; cited for fiduciary-duty ramifications.
• Nanomedicon, LLC v. Research Found. of SUNY, 112 A.D.3d 594 (2d Dept 2013) – example of documentary evidence “utterly refuting” allegations under CPLR 3211(a)(1).
• Denenberg v. Schaeffer, 137 A.D.3d 1197 (2d Dept 2016) & Matter of Primex Intl. Corp. v. Wal-Mart Stores, 89 N.Y.2d 594 (1997) – enforceability of merger clauses barring reliance on prior oral agreements.
• Additional supporting citations: Adar Bays, LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021) (distinguishing loans from investments); Phillips v. Taco Bell Corp., 152 A.D.3d 806 (2d Dept 2017) (affidavits not documentary evidence).

Legal Reasoning

1. Pleading Deficiency (CPLR 3211(a)(7)). Even assuming an oral venture existed, IPA’s papers omitted the sine qua non of joint ventures—an agreement to share profits and losses. Without it, no fiduciary relationship arises.
2. Documentary Evidence Override (CPLR 3211(a)(1)). The defendants submitted the signed contracts of sale, which are “unambiguous, authentic, and undeniable” documentary evidence. Their merger clauses extinguished any prior or contemporaneous oral promises. Because those documents “utterly refute” IPA’s contrary allegations, dismissal is mandatory.
3. Collateral Claims Collapse. • Fiduciary duty and constructive-trust claims stand or fall with the joint-venture allegation.
   • Promissory estoppel and fraudulent inducement are barred where a fully integrated written agreement governs the subject matter (and is not alleged to be itself fraudulent).
   • Conversion requires “ownership plus dominion.” IPA alleged neither as to the defendants’ bank accounts.

Impact of the Decision

1. Strengthened Shield of Merger Clauses. The ruling emphatically signals that merger (integration) clauses remain a potent defense at the pre-answer stage, even against quasi-contract, tort, and fiduciary claims that seek to escape contract language.

2. Heightened Pleading Standards for Joint Ventures. Plaintiffs must now carefully allege profit-and-loss sharing or risk early dismissal. Merely asserting co-investment or cooperative conduct is insufficient in the Second Department.

3. Guidance for 1031 Exchange Participants. In like-kind exchanges, parties sometimes rely on informal side agreements. IPA v. Schuman warns that, unless those terms are embedded or referenced in the executed contracts, they may be illusory.

4. Procedural Clarity. The decision demonstrates the tandem use of CPLR 3211(a)(1) and (a)(7) and clarifies that documentary evidence can disprove factual allegations without converting the motion into summary judgment.

Complex Concepts Simplified

• Joint Venture. A temporary partnership formed for one project, requiring (i) intent to be co-venturers, (ii) contribution by each party, (iii) joint control, and (iv) an agreement to share profits and losses.
• Merger (Integration) Clause. A contract provision declaring that the written agreement is the parties’ entire deal, nullifying reliance on prior oral statements.
• CPLR 3211(a)(1). New York rule allowing dismissal when “documentary evidence” conclusively defeats the claim. Documents must be undeniable; mere affidavits or emails do not qualify.
• CPLR 3211(a)(7). Allows dismissal for “failure to state a cause of action”—effectively, that the pleading is legally insufficient even if its facts are true.
• Like-Kind (1031) Exchange. Federal tax mechanism enabling a property owner to defer capital-gain tax by swapping one investment property for another of “like kind.” Complex timelines and escrow arrangements often prompt joint-venture-style cooperation.

Conclusion

IPA Asset Management, LLC v. Schuman stands as a firm reminder that courts will not permit litigants to bypass integration clauses with allegations of oral joint ventures or fiduciary promises. Documentary evidence in the form of clear, comprehensive contracts remains king; where such documents directly contradict a party’s story, dismissal may follow even before discovery. Practitioners should therefore (i) memorialize any side understandings in writing, (ii) precisely plead joint-venture elements, and (iii) scrutinize merger clauses before litigating quasi-contract claims. The ruling reinforces contractual certainty in New York real-estate dealings and will likely be cited whenever parties attempt to elevate unwritten collaboration into enforceable joint-venture rights.