Opinion
101760/2017
08-01-2018
H. John CAMPAIGN, Plaintiff, v. Susan H. ESTERHAY, Defendant.
John Katsandonis for defendant. H. John Campaign, plaintiff pro se.
John Katsandonis for defendant.
H. John Campaign, plaintiff pro se.
DECISION AND ORDER
David Benjamin Cohen, J.
The Complaint alleges that plaintiff hired defendant in 2007 to work for his law firm as an attorney. The Complaint further details that during the years of 2007-2013, the law firm employed a bookkeeper, Linda Smith. According to the Complaint, the bookkeeper forged checks from plaintiff's personal bank account and cashed them. Plaintiff alleges defendant was given a share of the stolen funds, was aware of this source, and concealed it from plaintiff. Defendant stopped working for plaintiff's law firm in 2012. Plaintiff became aware of the alleged forgeries in February 2013, and contacted Linda Smith with settlement proposals. After these discussions failed, plaintiff brought suit against Smith in 2014. Plaintiff now brings these causes of action to recover from defendant, stating that it wasn't until now that he had the requisite proof to sue defendant herein. The causes of action in the Complaint are (1) conversion; (2) fraud; (3) fraudulent concealment; (4) breach of implied warranty; (5) unjust enrichment; (6) elder abuse; and (7) perjury. Defendant filed the instant motion to dismiss.
When deciding a motion to dismiss pursuant to CPLR § 3211, the court should give the pleading a "liberal construction, accept the facts alleged in the complaint to be true and afford the plaintiff the benefit of every possible favorable inference" ( Landon v. Kroll Laboratory Specialists, Inc. , 22 N.Y.3d 1, 5-6, 977 N.Y.S.2d 676, 999 N.E.2d 1121 [2013] ; Faison v. Lewis , 25 N.Y.3d 220, 10 N.Y.S.3d 185, 32 N.E.3d 400 [2015] ). However, if a complaint fails within its four corners to allege the necessary elements of a cause of action, the claim must be dismissed ( Andre Strishak & Associates, P.C. v. Hewlett Packard & Co. , 300 A.D.2d 608, 752 N.Y.S.2d 400 [2d Dept. 2002] ).
Under CPLR § 3211(a)(7), the court "accepts as true the facts as alleged in the complaint and affidavits in opposition to the motion, accords the plaintiff the benefit of every possible favorable inference, and determines only whether the facts as alleged manifest any cognizable legal theory" ( Elmaliach v. Bank of China Ltd. , 110 A.D.3d 192, 199, 971 N.Y.S.2d 504 [1st Dept. 2013]quoting Sokoloff v. Harriman Estates Dev. Corp. , 96 N.Y.2d 409, 414, 729 N.Y.S.2d 425, 754 N.E.2d 184 [2001] ). Under CPLR§ 3211(a)(5), a court must grant a motion to dismiss when a cause of action cannot be maintained due to the applicable statute of limitations.
Plaintiff's First Cause of Action
A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession ( State of New York v. Seventh Regiment Fund, 98 N.Y.2d 249, 746 N.Y.S.2d 637, 774 N.E.2d 702 [2002] ). Two key elements of conversion are (1) plaintiff's possessory right or interest in the property ( Pierpoint v. Hoyt, 260 N.Y. 26, 182 N.E. 235 [1932] ; Seventh Regiment Fund, 98 N.Y.2d at 259, 746 N.Y.S.2d 637, 774 N.E.2d 702 ), and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's rights ( Employers' Fire Ins. Co. v. Cotten, 245 N.Y. 102, 156 N.E. 629 [1927] ).
Conversion in New York is governed by a three-year statute of limitations ( CPLR § 214[3] ; Vigilant Ins. Co. of Am. v. Hous. Auth. of City of El Paso, Tex. , 87 N.Y.2d 36, 637 N.Y.S.2d 342, 660 N.E.2d 1121 [1995] ). Since the alleged conversion took place between 2007-2013, and plaintiff did not bring suit until 2017, the claim is barred by the applicable statute of limitations.
Plaintiff's Second and Third Causes of Action
Defendant's claim that causes of action for fraud or fraudulent concealment are bared the statute of limitations is without merit. In New York, the statute of limitations for fraud causes of action is the greater of six years from the date of the fraud or two years from the date it was discovered, or reasonably could have been discovered through due diligence ( CPLR § 213(8) ; see Cusimano v. Schnurr , 137 A.D.3d 527, 531, 27 N.Y.S.3d 135 [1st Dept. 2016] ).
A claim rooted in fraud must be pleaded with the requisite particularity ( CPLR 3016(b) ). The elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages ( Eurycleia Partners, LP v. Seward & Kissel, LLP , 12 N.Y.3d 553, 883 N.Y.S.2d 147, 910 N.E.2d 976 [2009] ). However, "the purpose of section 3016 (b)'s pleading requirement is to inform a defendant with respect to the incidents complained of," thus, "[w]e have cautioned that section 3016 (b) should not be so strictly interpreted as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting a fraud" ( Pludeman v. Northern Leasing Sys., Inc. , 10 N.Y.3d 486, 491, 860 N.Y.S.2d 422, 890 N.E.2d 184 [2008] ).
Further, "instead of an affirmative misrepresentation, a fraud cause of action may be predicated on acts of concealment where the defendant had a duty to disclose material information" ( Kaufman v. Cohen , 307 A.D.2d 113, 119–20, 760 N.Y.S.2d 157 [1st Dept. 2003] ). Therefore, to state a claim of fraudulent concealment, a plaintiff must plead all of the elements of fraud and allege that the defendant had a duty to disclose material information and failed to do so ( P.T. Bank Cent. Asia v. ABN AMRO Bank N.V. , 301 A.D.2d 373, 376, 754 N.Y.S.2d 245 [1st Dept. 2003] ). Although a cause of action for fraud may be predicated on acts of concealment, there must first be proven a duty to disclose material information ( Dembeck v. 220 Cent. Park S., LLC , 33 A.D.3d 491, 492, 823 N.Y.S.2d 45 [1st Dept. 2006] ). "Concealment with intent to defraud of facts which one is duty-bound in honesty to disclose is of the same legal effect and significance as affirmative misrepresentations of fact" ( Nasaba Corp. v. Harfred Realty Corp., 287 N.Y. 290, 295, 39 N.E.2d 243 [1942] ).
Further, a duty to disclose may also arise "under the special facts doctrine where one party's superior knowledge of essential facts renders a transaction without disclosure inherently unfair" ( Jana L. v. W. 129th St. Realty Corp. , 22 A.D.3d 274, 277, 802 N.Y.S.2d 132 [1st Dept. 2005] ). A party is considered to have superior knowledge in a transaction when the material facts were peculiarly within the knowledge of one party and that information could not easily have been discovered by the other party through the exercise of ordinary intelligence ( id. at 278, 802 N.Y.S.2d 132 ). Inasmuch as plaintiff did not set forth any statements made in furtherance of the alleged scheme and plaintiff does not make any allegations of affirmative misrepresentation, the second cause of action for fraud is dismissed as insufficiently pled and as duplicative of the fraudulent concealment cause of action.
Here, the Complaint alleges that defendant committed fraud "as to the performance to her duties as an attorney in the law firm" and "had a fiduciary duty to disclose the unlawful activities." However, plaintiff is an individual who has sued in his personal capacity and not on behalf of his law firm, a distinct legal entity. Indeed, the checks were allegedly drawn against plaintiff's personal account, by an individual other than defendant. As defendant worked for the law firm, she owes no duty to John Campaign individually and thus, was not "duty bound" to disclose the alleged fraud, as an employee might to its employer. Further, although the Complaint does not specifically discuss liability under the special facts doctrine, the Complaint does not state a cause of action under the special facts doctrine as there is no transaction in which defendant allegedly had superior knowledge (see Hahn v. Dewey & LeBoeuf Liquidation Tr., 143 A.D.3d 547, 39 N.Y.S.3d 30 [1st Dept. 2016] (the special facts doctrine generally applies to claims of fraud in sales transactions). Further, there is no allegation that the parties ever had any discussion relating to the alleged checks during which defendant withheld or concealed information. Additionally, plaintiff has not stated any facts showing that plaintiff was induced in any way. Similarly, plaintiff's allegations that he, in his individual capacity, (1) "relied on Defendant's representations that she was faithful in performance of her duties as an attorney in Plaintiff's Law Firm" and (2) "relied on Defendant's reputation as an attorney formerly employed at the prestigious law firm of White and Case" do not constitute reliance in a fraud action.
The Court notes that an analysis of cases where Courts have sustained a cause of action for fraudulent concealment based upon the special facts doctrine demonstrates that in each case there was some underlying transaction and that defendant had some active participation in the fraud by affirmatively withholding or omitting certain facts or information in conversations or in the transaction in furtherance of the underlying fraud (see Madison Apparel Grp. Ltd. v. Hachette Filipacchi Presse, S.A. , 52 A.D.3d 385, 861 N.Y.S.2d 296 [1st Dept. 2008] [defendant licensor had a duty to disclose negotiations with a third party while inducing plaintiff licensee of a clothing company to terminate trademark]; P.T. Bank Cent. Asia , 301 A.D.2d 373, 754 N.Y.S.2d 245 [1st Dept. 2003] [plaintiff investor successfully pled fraudulent concealment when defendant bank had documents not readily available to investor and solicited investor to purchase interest in a loan that was substantially overvalued]; Swersky v. Dreyer & Traub , 219 A.D.2d 321, 643 N.Y.S.2d 33 [1st Dept. 1996] [plaintiff successfully pled fraudulent concealment when defendant instructed plaintiff to delay registering stocks and misrepresented the stock purchase price to plaintiff's detriment]; Barrett v. Freifeld , 64 A.D.3d 736, 883 N.Y.S.2d 305 [2nd Dept. 2009] [plaintiff successfully pled fraudulent concealment when defendant accountant failed to disclose financial statements about a pharmacy company plaintiff intended to purchase from a third party to plaintiff's detriment]; Stevenson Equip., Inc. v. Chemig Const. Corp. , 170 A.D.2d 769, 565 N.Y.S.2d 318 [3rd Dept. 1991] [fraudulent concealment sufficiently pled when defendant was told by the FBI that a truck was stolen and sold it to plaintiff without disclosing this knowledge]. In all of these cases, the Courts held that a claim for fraudulent concealment under the special facts doctrine was properly pled where, during conversations or negotiations relating to a transaction the respective defendants affirmatively failed to disclose certain knowledge or only disclosed part of their superior knowledge.
Plaintiff's Fourth Cause of Action
Plaintiff's allegations in the Fourth Cause of Action for breach of the implied covenant of good faith and fair dealing are dismissed as they are duplicative of the fraud claims (see generally Amcan Holdings, Inc. v. Canadian Imperial Bank of Commerce , 70 A.D.3d 423, 894 N.Y.S.2d 47 [1st Dept. 2010] ) and in any event, the law firm is not a party to this action. Further, an implied covenant of good faith and fair dealing only exists when there is a contract ( Levine v. Yokell , 258 A.D.2d 296, 685 N.Y.S.2d 196 [1st Dept. 1999] ). However, there is no implied covenant for at-will employment contracts ( Murphy v. Am. Home Prod. Corp., 58 N.Y.2d 293, 304-305, 461 N.Y.S.2d 232, 448 N.E.2d 86 [1983] ). Since plaintiff and defendant had an at-will employment contract, defendant's motion to dismiss this cause of action is granted.
Plaintiff's Fifth Cause of Action
"[U]nder New York law, there is no identified statute of limitations period within which to bring a claim for unjust enrichment" ( Maya N.Y., LLC v. Hagler , 106 A.D.3d 583, 585, 965 N.Y.S.2d 475 [1st Dept. 2013] ). Rather, the statute of limitations takes the form of the claim to which it is pled in the alternative (see Bd. of Managers of Chelsea 19 Condo. v. Chelsea 19 Assocs., 73 A.D.3d 581, 905 N.Y.S.2d 8 [1st Dept. 2010] ).
To state a claim of unjust enrichment, the plaintiff must prove "that (1) the defendant was enriched, (2) at plaintiff's expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered" ( Georgia Malone & Co., Inc. v. Rieder , 19 N.Y.3d 511, 516, 950 N.Y.S.2d 333, 973 N.E.2d 743 [2012] ). Plaintiff pled that defendant was enriched as she shared the funds that were wrongfully taken from him by Linda Smith. Thus, the wrongful act that is the basis of the alternative theory for this unjust enrichment cause of action was the alleged taking of, and not returning of, the funds which (as discussed above) is subject to a three-year statute of limitations for conversion. As plaintiff has not brought this action within three years of the wrongful actions alleged, this cause of action is dismissed.
Plaintiff's Sixth Cause of Action
Plaintiff has not pled any factual allegations suggesting a claim for elder abuse and therefore the cause of action must be dismissed under CPLR 3211(a)(7) for failure to state a cause of action.
Plaintiff's Seventh Cause of Action
In New York, there is no civil action for perjury ( Verplanck v. Van Buren , 76 N.Y. 247, 261 [1879] ). As such, plaintiff did not state a cause of action upon which relief may be granted.
Plaintiff's Eighth Cause of Action
Plaintiff states that he added an informal amendment to his verified complaint. However, there is no amendment on the record in the County Clerk's Office at 60 Centre Street in Room 141. As such, defendant's motion to dismiss this cause of action is granted. Accordingly, it is hereby
ORDERED that defendant's motion to dismiss is granted in full and this action is dismissed.