Opinion
No. 17787/09.
2013-04-3
198–210 16TH ST. LLC, as Managing Member of 16th Street Regency LLC, Plaintiff, v. M & Y SIXTEEN LLC, Mordechai Hirsch, Joseph Gruber, Marans & Weisz LLC, Richard M. Newman, Esq., Ian D. Girshek, Esq., and Chinatrust Bank (USA), Defendants.
Furman Kornfeld & Brennan, LLP, New York City, for Plaintiff. Moritt Hock Hamroff & Horowitz, LLP, Garden City, for Defendant.
Furman Kornfeld & Brennan, LLP, New York City, for Plaintiff. Moritt Hock Hamroff & Horowitz, LLP, Garden City, for Defendant.
DAVID SCHMIDT, J.
Upon the foregoing papers, defendants Marans & Weisz LLC (Marans), Richard M. Newman (Newman) and Ian D. Girshek (Girshek) (collectively, the Marans defendants) move for summary judgment dismissing the claims of 198–210 16th Street LLC (plaintiff) involving the ownership transfers of two apartments from 16th Street Regency LLC (Regency), managed by plaintiff, to defendant M & Y Sixteen LLC (M & Y). Defendant Chinatrust Bank (USA) (Chinatrust) also moves for summary judgment dismissing the only cause of action against it, namely for negligence in permitting certain funds transfers from plaintiff's account with Chinatrust.
Background
(1)
Defendant Mordechai Hirsch (defendant Hirsch) and defendant Joseph Gruber (also referred to as Yosef Gruber) (Gruber) committed by Rabbinical Binding Act on March 4, 2004 to an agreement (the Development Agreement) with Isaac Mutzen, Ben Zion Mutzen and Nathan Hirsh (also referred to as Nutta Wolf Hirsch) (collectively, Mutzen, Mutzen and Hirsch). The Development Agreement detailed a purchase brokerage fee and construction management arrangement regarding the premises at 198–200 16th Street in Brooklyn (also sometimes referenced as 200 16th Street) (the Property). Gruber and defendant Hirsch agreed to obtain approved plans for construction, hire and supervise laborers to prepare the Property for residency, attain legal condominium status for the Property, find buyers for the apartments via real estate brokers and, in return, to receive a percentage of the profit.
Mutzen, Mutzen and Hirsch, as plaintiff's members, signed an operating agreement on August 11, 2004 to enable purchasing and developing the Property (the 198–210 Agreement). This operating agreement designated Gruber as plaintiff's manager, and stated, among other things, that the manager should conduct and manage the company's business and affairs.
Plaintiff acquired ownership of the Property at some time in 2004, and Gruber and defendant Hirsch undertook the Property's renovation in the following years. The parties agree that the Property's ownership transferred to Regency at some point before 2008. An unsigned, November 1, 2006 operating agreement for Regency, identified “Issac” Mutzen as its sole member and, by default, manager (the Regency Agreement).
Plaintiff's counsel submitted a signed copy of the Regency Agreement on December 20, 2012.
An October 30, 2007 document titled “Unanimous Consent of Members for Transfer” (the Unanimous Consent) bearing the undated signatures of Mutzen, Mutzen and Hirsch, as well as Gruber, purported, among other things, to transfer ownership of the Property from plaintiff to Regency. The Unanimous Consent stated that Gruber and defendant Hirsch would serve as plaintiff's managing members, and would therefore execute all documents, instruments and agreements necessary to transfer the Property to Regency. It also purported to establish plaintiff as managing member of Regency, and directed Gruber and defendant Hirsch to act as plaintiff's managers of Regency. Mutzen, Mutzen and Hirsch signed an amendment to the Regency Agreement on June 24, 2008, which declared that each held a one-third interest in the company (the Regency Amendment).
Gruber also executed a document on October 30, 2007, titled “Designation of Law Firm as Authorized Signatory (Condo)” (Designation of Law Firm), which purportedly authorized several employees of Marans, including Newman and Girshek, to execute any documents regarding the purchase, sale and closing of condominium units at the Property. Girshek, as a Regency-authorized signatory, executed two Condominium Unit Deeds on June 25, 2008, which purportedly transferred units 4D and 4E of the Property to M & Y, a limited liability company that Gruber and defendant Hirsch had formed. Newman signed these deeds as an authorized signatory for M & Y. Plaintiff alleges that New York City Transfer Reports reflect a $400,000 purchase price for each of these transactions. M & Y sold apartments 4D and 4E to third parties on December 15, 2008, for $409,000 and $400,000, respectively.
(2)
Plaintiff, during this period, maintained two bank accounts with defendant Chinatrust: an operating account, which account number ended in 929, with Mutzen, Mutzen and Hirsch as authorized signers (the 929 Account), and an escrow account, which account number ended in 748, with only two bank employees as authorized signers (the 748 Account). Transactions from the 748 Account required plaintiff's written request to Chinatrust, which has stated that it opened this account “for maintaining an interest reserve and for holding sale proceeds” concerning plaintiff's loans. Plaintiff provided Chinatrust an April 21, 2005 document titled Member Resolutions of 198–210 16th St. LLC, signed by Mutzen, Mutzen and Hirsch, that, among other things, recorded the members' resolutions to allow plaintiff to take a $9.36 million mortgage loan on the Property, to empower plaintiff's manager to execute all loan-related documents for plaintiff and to restate that Gruber acted as plaintiff's manager (the Member Resolutions). Gruber allegedly requested seven electronic transfers, denominated as interest payments, from the 748 Account between January 18, 2008 and July 9, 2008. These transfers, all payable to 234 Green LLC, totaled $121,632.28, and Chinatrust authorized each one. Chinatrust mailed monthly account statements for the 748 Account to plaintiff at 320 Roebling Street, Suite 326 in Brooklyn, with a July 10, 2008 statement marking the account's closure.
(3)
Plaintiff commenced this action on July 16, 2009 and has alleged that the Marans defendants breached their fiduciary duties thereby causing damage to plaintiff. Such claimed damage resulted when Girshek and Newman, as authorized signatories for Regency and M & Y respectively, signed the Condominium Unit Deeds transferring units 4D and 4E to M & Y, purportedly without plaintiff's consent and without paying plaintiff any of the combined $800,000 purchase price. Plaintiff has also alleged that the Marans defendants were involved in the subsequent transfer of units 4D and 4E from M & Y to third parties, which, it claims, constituted a further breach of fiduciary duties.
Plaintiff has claimed that it never received any payment from the sales, and thus categorizes the Marans defendants' actions regarding these property transfers as conversion and unjust enrichment. Plaintiff has further alleged that the Marans defendants knew that the conveyances were unauthorized when made, which therefore makes them a fraud. Finally, plaintiff has alleged that the Marans defendants acted intentionally, willfully and maliciously, which qualifies their actions as a prima facie tort on plaintiff.
Plaintiff has separately alleged that Chinatrust failed to properly ensure that Gruber held authorization to cumulatively transfer $121,632.28 belonging to plaintiff from the 748 Account, and thus acted negligently in permitting such transfers.
The Marans Defendants' Summary Judgment Motion
The Marans defendants move for summary judgment dismissing the complaint in its entirety. They generally assert that the Unanimous Consent and Designation of Law Firm were legally effective, and that plaintiff thus explicitly authorized them to make the challenged property conveyances. The Marans defendants claim that they breached no fiduciary duties owed to plaintiff because Gruber and defendant Hirsch, acting for plaintiff, had authorized the Marans defendants' actions. Indeed, the Marans defendants note that either plaintiff had actually authorized Gruber and defendant Hirsch to manage its affairs or that Gruber and defendant Hirsch held apparent authority from plaintiff that permitted the Marans Defendants' reliance.
The Marans defendants further assert that plaintiff's unjust enrichment cause of action must fail as the Marans defendants received no benefit, other than associated attorney's fees, from the underlying transactions. Similarly, they assert that the alleged fraudulent conveyances cause of action warrants dismissal because they neither received nor benefitted from the contested conveyances. The Marans defendants additionally claim that plaintiff cannot maintain its conversion cause of action because conversion applies only to personal property, not interests in real property, and because they exercised no dominion or control over plaintiff's interests in the Property. Finally, the Marans defendants assert that the prima facie tort cause of action merits dismissal because their actions were based on economic, rather than solely malevolent, motives, and, in any event, plaintiff brought the prima facie tort claim more than one year after the contested conveyances.
Plaintiff argues in opposition that the terms of the Development Agreement explicitly limited Gruber and defendant Hirsch's powers. Plaintiff stresses that the 198–210 Agreement barred the manager from selling or transferring all or substantially all of plaintiff's assets without the members' unanimous written consent, and that the members never gave such consent. Plaintiff questions the Unanimous Consent's authenticity, by asserting that Isaac Mutzen does not recall signing it and would not have signed a blank agreement. Plaintiff, in any event, asserts that the Unanimous Consent limited Gruber and defendant Hirsch's powers to those required for transferring the Property to Regency. The Regency Agreement, according to plaintiff, vested all ownership and management of Regency in Isaac Mutzen, and no effective modification occurred until the Regency Amendment.
Hence, plaintiff contends that Gruber held no authority to execute the Designation of Law Firm in October 2007. Plaintiff further alleges that the Marans defendants failed to exercise due diligence by not looking beyond the Designation of Law Firm and Unanimous Consent in concluding that Gruber could vest them with authority to act on plaintiff's behalf. Allowing Gruber to exercise his purported authority as manager, plaintiff alleges, means that the other defendants assisted Gruber in taking control of plaintiff's property without authority or remuneration to plaintiff.
Plaintiff also states that the Regency Amendment permitted Gruber to manage the business, but that document, in fact, makes no mention of Regency's management.
The Marans defendants, in reply, reassert that the Unanimous Consent controlled in establishing Gruber's authority to manage the Property after its transfer to Regency. They note that all members of plaintiff and Regency signed the Unanimous Consent and that plaintiff first presented the Regency Agreement in opposition to this motion. The Marans defendants further claim that plaintiff raised no objection when Marans employees signed documents effecting transfers of 28 other units of the Property. Conveying units 4D and 4E fails to qualify as self dealing, they argue, because plaintiff's and Regency's members had decided to give the units to M & Y in return for management services rendered by Gruber and defendant Hirsch.
Discussion
The Summary Judgment Standard
A summary judgment movant must show prima facie entitlement to judgment as a matter of law by producing sufficient admissible evidence demonstrating the absence of any material factual issues (CPLR 3212[b]; Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 [1986] ). Failure to make such a showing requires denial of the motion regardless of the sufficiency of any opposition (Vega v. Restani Constr. Corp., 18 N.Y.3d 499, 503 [2012] ). The opposing party overcomes the movant's showing only by introducing “evidentiary proof in admissible form sufficient to require a trial of material questions” (Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980] ).
Considering a summary judgment motion requires viewing the evidence in the light most favorable to the motion opponent (Vega, 18 N.Y.3d at 503, 942 N.Y.S.2d 13, 965 N.E.2d 240). Nevertheless, “mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient” to defeat a summary judgment motion (Zuckerman, 49 N.Y.2d at 562, 427 N.Y.S.2d 595, 404 N.E.2d 718). “The court's function on a motion for summary judgment is to determine whether material factual issues exist, not to resolve such issues” (Ruiz v. Griffin, 71 A.D.3d 1112, 1115 [2010] [internal citation and quotation marks omitted] ).
Breach Of Fiduciary Duty
Attorneys owe fiduciary duties to their clients ( see, e.g., Matter of Cooperman, 83 N.Y.2d 465, 471–72 [1994];Lyons v. Menoudakos & Menoudakos, P.C., 63 A.D.3d 801, 802 [2009];Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 A.D.3d 1, 8–9 [2008] ). Such duties include “undivided and undiluted loyalty to those whose interests the fiduciary is to protect” (Matter of Wallens, 9 N.Y.3d 117, 122 [2007];see also Matter of Cooperman, 83 N.Y.2d at 472, 611 N.Y.S.2d 465, 633 N.E.2d 1069). A limited liability company manager owes fiduciary duties to the company and, derivatively, to its members ( see Tzolis v. Wolff, 10 N.Y.3d 100, 105–06 [2008] [confirming availability of derivative actions challenging fiduciary duty breaches by limited liability company management]; Yuko Ito v. Suzuki, 57 A.D.3d 205, 207–08 [2008] ).
A plaintiff properly establishes a breach of fiduciary duty by showing (1) the existence of a fiduciary relationship, (2) misconduct by the defendant fiduciary and (3) damages caused by the defendant fiduciary's misconduct (Parekh v. Cain, 96 A.D.3d 812, 816 [2012] ). Liability also accrues if a defendant aided and abetted a fiduciary's breach of duty by knowingly providing substantial assistance to accomplish the breach ( see Caprer v. Nussbaum, 36 A.D.3d 176, 193 [2006];Kaufman v. Cohen, 307 A.D.2d 113, 125 [2003] ).
Here, the Marans defendants, who clearly owed fiduciary duties as plaintiff's attorneys, contend that they held actual authorization to convey units 4D and 4E. Plaintiff, however, has raised a triable factual issue regarding whether the Marans defendants violated their duty of undivided loyalty to plaintiff by signing for both plaintiff, as seller, and M & Y, as buyer, in these transactions. Another question exists regarding whether the Marans defendants also aided and abetted Gruber in breaching his fiduciary duty when the Marans defendants signed for both plaintiff, who Gruber owed fiduciary duties as its manager, and M & Y, a company Gruber owned. Such situation presents a clear conflict of interest, and the unresolved question concerning whether the Marans defendants knew about the conflict negates granting them summary judgment on plaintiff's first, breach of fiduciary duty cause of action.
Conversion
Establishing conversion requires showing that a defendant intentionally, and without authority, assumed or exercised control over another's personal property, and thus interfered with the right of possession (Colavito v. New York Organ Donor Network, Inc., 8 N.Y.3d 43, 49–50 [2006] ). A conversion action may concern a sum of money, and such an action lies where someone pays money to an agent for a principal's benefit, and the agent never delivers such money ( see Britton v. Ferrin, 171 N.Y. 235, 242–43 [1902] ). No conversion action lies, however, for taking real property ( see Garelick v. Carmel, 141 A.D.2d 501, 502 [1988] ).
Here, the Marans defendants argue that no real property conversion cause of action exists and that they exercised no dominion or control over plaintiff's interests in units 4D and 4E of the Property. Plaintiff's complaint, however, claims only that the Marans defendants failed to forward money owed to plaintiff from the proceeds of units 4D's and 4E's sales. Arguments about real property interests therefore bear no relation to this cause of action for converting a sum of money. The Marans defendants have thus failed to make a prima facie showing on this claim, and their motion must be denied regarding the fourth, conversion cause of action.
Unjust Enrichment
An unjust enrichment cause of action is an equitable quasi-contract claim. Hence, a plaintiff must show that the defendant benefitted at the plaintiff's expense, and that equity demands restitution ( see Georgia Malone & Co., Inc. v. Rieder, 19 N.Y.3d 511, 516 [2012] ). Unjust enrichment does not, however, cover a defendant's fees for goods or services actually rendered ( see Gargiulo v. Oppenheim, 63 N.Y.2d 843, 846 [1984] [no unjust enrichment where purchased stock shares actually received]; Paramount Film Distrib. Corp. v. State of New York, 30 N.Y.2d 415, 421–22 [1972] [no unjust enrichment of State for charging motion picture license fees], rearg. denied31 N.Y.2d 709 [1972],cert denied414 U.S. 829 [1973];Metal Cladding v. Brassey, 159 A.D.2d 958, 958–59 [1990] [no unjust enrichment where sums paid for services] ).
The Marans defendants assert that they received no benefit from the sale of units 4D and 4E other than associated legal fees, and note that plaintiff has made no allegation, much less offered evidence, that the Marans defendants received any benefit. The services the Marans defendants rendered prevent their attorney's fees from constituting unjust enrichment. Plaintiff has made no arguments opposing these points.
Therefore, the Marans defendants have made a prima facie showing that they received no unjust benefit resulting from the transactions in question, and plaintiff has failed to raise any triable factual issues. Accordingly, the motion must be granted regarding the sixth, unjust enrichment cause of action.
The Alleged Fraudulent Conveyances Cause Of Action
Plaintiff has identified its eighth cause of action as a claim for “fraudulent and unauthorized conveyances,” though the prayer for relief has referred to such claim simply as a cause of action for fraud. The Marans defendants have, thus, somewhat understandably, made arguments treating the eighth cause of action as one for fraudulent conveyances under the Debtor and Creditor Law.
Debtor and Creditor Law § 273 allows decisions finding a form of constructive fraud when a debtor conveys property without fair consideration to become insolvent ( see Joslin v. Lopez, 309 A.D.2d 837, 837–38 [2003] ). No such constructive fraud cause of action lies against a party classified as neither a transferee nor a beneficiary of a fraudulent conveyance (Federal Deposit Ins. Corp. v. Porco, 75 N.Y.2d 840, 842 [1990] ).
The Marans defendants stress that plaintiff made no allegation labeling them either a transferee or a beneficiary of the contested conveyances. Plaintiff has made no arguments opposing these points. Hence, the motion must be granted regarding the eighth cause of action to the extent that it presents a claim for fraudulent conveyances under the Debtor and Creditor Law.
The facts herein, however, prevent treating the eighth cause of action as a fraudulent conveyances claim. Debtor and Creditor Law provisions ensuring that creditors get repaid bear no relation to the underlying facts of the case nor the allegations made by plaintiff. Indeed, neither the language used nor the facts alleged clarify what theory of relief plaintiff intended to advance with the eighth cause of action.
Hence, this motion must be denied regarding the eighth cause of action to the extent it presents a claim premised on fraud or some other theory as the Marans defendants have failed to make a prima facie showing concerning such claims. The prejudice this ambiguity has caused, however, warrants granting leave allowing the Marans defendants to submit a motion to dismiss this cause of action under CPLR 3211.
Prima Facie Tort
CPLR 215(3) establishes a one-year limitations period for enumerated intentional torts, including assault, battery, false imprisonment, malicious prosecution, libel, slander and violations of the right of privacy. The Marans defendants challenge plaintiff's prima facie tort claim as time barred and have cited cases applying CPLR 215(3) to prima facie tort claims ( see Yong Wen Mo v. Gee Ming Chan, 17 A.D.3d 356, 358 [2005];Mahmud v. Kaufmann, 454 F Supp 2d 150, 163 [SDNY 2006], mod496 F Supp 2d 266 [SDNY 2007] ).
The Marans defendants err by relying on these cases. The Appellate Division, First, Third and Fourth Departments, have held that the one-year statute of limitations applies to all claims of intentional prima facie tort ( see 10 Ellicot Sq. Ct. Corp. v. Violet Realty, Inc., 81 A.D.3d 1366, 1368–69 [2011],lv denied17 N.Y.3d 704 [2011];Angel v. Bank of Tokyo–Mitsubishi, Ltd., 39 A.D.3d 368, 370 [2007];Della Villa v. Constantino, 246 A.D.2d 867, 868 [1998] ), but the Appellate Division, Second Department, has applied this limitations period to prima facie tort claims more narrowly. For example, it held in Jemison v. Crichlow that a three-year limitations period governs a prima facie tort cause of action premised on economic, rather than reputational, damages (139 A.D.2d 332, 336 [1988],affd on other grounds74 N.Y.2d 726 [1989] ). Subsequent Second Department cases affirmed that a one-year limitations period applies to prima facie tort claims concerning reputational harm ( see Kenna v. New York Mut. Underwriters, 188 A.D.2d 586, 588 [1992] ), and held that the one-year limitations period applies where the underlying facts essentially constitute an intentional tort ( see Yong Wen Mo, 17 A.D.3d at 358, 792 N.Y.S.2d 589). The Second Department has not, however, held that CPLR 215 applies to all prima facie tort claims.
Here, plaintiff's cause of action alleges economic damages without facts amounting to an intentional tort claim, and this situation warrants applying a three-year limitations period. The conveyances underlying this claim occurred on June 25, 2008, and plaintiff commenced this action on July 16, 2009, well within the three-year statute of limitations. Consequently, no limitations period bars this cause of action.
Proving a prima facie tort claim requires a plaintiff show that the defendant (1) intentionally inflicted harm upon plaintiff, (2) resulting in special damages, (3) absent excuse or justification and (4) by acts that would otherwise be lawful ( see Freihofer v. Hearst Corp., 65 N.Y.2d 135, 142–43 [1985] ). A plaintiff must also demonstrate that defendant acted with a solely malevolent motive, i.e., in a purely malicious fashion ( see Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 333 [1983];Lynch v. McQueen, 309 A.D.2d 790, 792 [2003] ).
Here, the Marans defendants have argued that, at minimum, some economic end motivated the actions defendants M & Y, Gruber and defendant Hirsch took, as they reconveyed apartments 4D and 4E to third parties. Plaintiff have made no arguments opposing this assertion. Therefore, the Marans defendants have made a prima facie showing warranting judgment in their favor, and plaintiff has failed to raise any triable factual questions. Hence, the motion must be granted as to the ninth, prima facie tort cause of action.
Chinatrust's Summary Judgment Motion
Chinatrust has separately sought summary judgment on the negligence cause of action, the only claim against it in this action. Chinatrust argues that all relevant documentation shows Gruber had actual authority to act as manager of plaintiff. More specifically, it notes that the 198–210 Agreement appointed Gruber as plaintiff's manager and gave the manager responsibility for the company's business and affairs.
Chinatrust also claims that plaintiff provided it with the Member Resolutions, which reaffirmed Gruber's status as plaintiff's manager and specifically empowered the manager to execute on plaintiff's behalf all documents concerning the Chinatrust loan. The Unanimous Consent, Chinatrust further claims, reaffirmed Gruber's managerial authority, and explicitly directed him and defendant Hirsch to act as plaintiff's managing members, whose responsibilities included managing Regency for plaintiff. Chinatrust argues that plaintiff never notified Chinatrust of any restriction or removal of Gruber's authority, which, it believes, should estop plaintiff from asserting that Gruber lacked authority to act on its behalf. Chinatrust additionally claims that Gruber routinely acted on plaintiff's behalf, during relevant times, by signing loan documents and managing plaintiff's daily business.
Chinatrust also argues that the applicable one-year limitations period time bars plaintiff's claim against it, as the last contested transfer occurred on July 9, 2008 and Chinatrust was not served with plaintiff's complaint until July 16, 2009. It alleges that plaintiff received and retained the monthly account statements for the 748 Account and yet raised no objections to any of the transactions until commencing this action more than one year after the final transfer.
Plaintiff, in opposition, urges construing the Member Resolutions' language authorizing Gruber to sign loan-related documents as limiting Gruber's authority to that role, argues that the Unanimous Consent should have placed Chinatrust on notice that Regency owned the Property and further argues that Chinatrust should subsequently have investigated Gruber's authority. Plaintiff also alleges that its claim involves both the 748 and the 929 Accounts.
Discussion
UCC 4–A–505 bars claims contesting funds transfers from banks where the customer received notice identifying the transaction and did not object within one year of notification. This provision reflects the common law legal duty of an account holder to examine monthly statements ( see Thomson v. New York Trust Co., 293 N.Y. 58, 68 [1944],rearg. denied293 N.Y. 751 [1944] ). Case law treats notice received by an agent entrusted to manage an account as received by the principal, even if the agent was actively mismanaging the account at that time ( see id. at 66–69,56 N.E.2d 32).
Chinatrust has established that the final contested funds transfer occurred on July 9, 2008, and has introduced a copy of a July 10, 2008 account statement reflecting that transfer, which is addressed to plaintiff at 320 Roebling Street, Suite 326 in Brooklyn. Plaintiff conceded at oral argument that the location serves as its corporate address, but has neither offered any evidence nor made any arguments about the date that it received this or any other account statement. Chinatrust, similarly, has offered no evidence concerning its mailing of each account statement or its regular business practices in this regard.
Plaintiff commenced this action on July 16, 2009. The last of the contested transfers occurred on July 9, 2008, which a July 10, 2008 account statement reflected, and it seems quite likely that at least one year elapsed between notification to plaintiff of the first six transfers and the date when it first objected to Chinatrust (via the complaint in this action). Nevertheless, Chinatrust has introduced no evidence proving the time of mailing and receipt of each account statement or outlining its typical business practices in sending account statements. The absence of such evidence leaves only impermissible speculation regarding whether plaintiff received notice of the transfers more than one year before bringing this complaint, and necessitates examining the merits of the parties' arguments.
UCC 4–A–204 places strict duty on a bank to refund a customer any amount paid on the basis of an unauthorized electronic funds transfer ( see Regatos v. North Fork Bank, 5 N.Y.3d 395 [2005] ). Here, Chinatrust has made a prima facie showing that Gruber in fact possessed authority to conduct business for plaintiff. The 198–210 Agreement explicitly empowered the designated manager to conduct plaintiff's business and affairs, and named Gruber manager “until his successor is duly elected and qualified.” The Member Resolutions, as delivered to Chinatrust, reaffirmed this designation and explicitly authorized the manager to execute plaintiff's loan-related documents. One cannot logically read the Member Resolutions' language as limiting Gruber's managerial authority: the wording is clearly intended to merely assure Chinatrust that Gruber possessed the power to act on plaintiff's behalf.
Even if the clause did limit Gruber's power to executing plaintiff's loan-related documents, all the evidence suggests that the 748 Account served as an escrow account directly related to the loan. Plaintiff's position that this cause of action concerns both of plaintiff's accounts with Chinatrust lacks merit as the monthly account statements for the 748 Account reflect all the transactions underlying the claim.
Furthermore, plaintiff's arguments that Regency's organization and the execution of the Unanimous Consent should either have actually impacted Gruber's authority to act on behalf of plaintiff or alerted the bank to the possibility of changes in control of plaintiff equally lack merit. Regency's creation, and even the transfer of plaintiff's primary asset, the Property, to Regency, fails to alter Gruber's authority to manage plaintiff's business under the 198–210 Agreement. Plaintiff has introduced no evidence and alleged no facts suggesting that it had curtailed or limited Gruber's authority during the time in question, much less that it gave the bank notice of any such change. The suggestion that Chinatrust should have further inquired about an amendment of the 198–210 Agreement also emerges as meritless. No party has introduced such an amendment, and plaintiff has neither suggested that such an amendment modified or revoked Gruber's authority, nor even that such an amendment actually existed.
Hence, Gruber possessed actual authority to request the first six transfers, i.e., those occurring between January 18 and May 2, 2008, which justifies granting Chinatrust's motion on those transactions. A question exists, however, regarding whether this conclusion affects the July 9, 2008 transfer from the 748 Account.
The evidence from Chinatrust concerning this cause of action includes letters sent to Chinatrust requesting each of the contested funds transfers from the 748 Account. Even a cursory look reveals that the signature on the letter requesting the July 9, 2008 transfer differs dramatically from Gruber's signature on the other six letters and on other submitted documents. Furthermore, the language of this request differs from the virtually identical language found throughout the others, and the questionable request utilized letterhead of 234 Greene LLC instead of plaintiff's letterhead. 234 Greene LLC shares a corporate address with plaintiff, but a question nonetheless exists regarding whether Chinatrust should have exercised greater scrutiny in granting this transfer request, particularly as 234 Greene LLC received the transferred funds. Proof ultimately showing that someone other than Gruber signed the request for the July 9 transfer would moot arguments about Gruber's authority to act on plaintiff's behalf.
The evidence that Chinatrust submitted to support its motion fails to make a prima facie showing that a time limitation bars challenging the seventh transfer or that an authorized person requested such transaction. Hence, the motion must be denied regarding the contested July 9, 2008 transfer. Accordingly, it is
ORDERED that the Marans defendants' summary judgment motion is granted to the extent of dismissing the sixth cause of action against it, for unjust enrichment, the ninth cause of action against it, for prima facie tort and the eighth cause of action against it to the extent considered a claim premised on a fraudulent conveyances theory under the Debtor and Creditor Law, and is otherwise denied with leave to pursue CPLR 3211 dismissal of the eighth cause of action, as otherwise construed; and it is further
ORDERED that Chinatrust's summary judgment motion is granted to the extent of dismissing the negligence cause of action against it concerning the contested transactions occurring between January and May 2008, and denied concerning the contested transaction occurring on July 9, 2008.
This constitutes the decision and order of the court.