Summary
finding aiding and abetting breach of fiduciary duty claim was time-barred and should have been dismissed, where none of the aiding and abetting allegations occurred within the actionable period for the primary breach
Summary of this case from Romanoff v. RomanoffOpinion
2011-10-25
Diana Joy INGHAM derivatively on behalf of COBALT ASSET MANAGEMENT, L.P., Plaintiff–Respondent,v.Charles R. THOMPSON, et al., Defendants,H.G. Wellington Co., Inc., Defendant–Appellant,Cobalt Asset Management, L.P., Nominal Defendant.
Curtis, Mallet–Prevost, Colt & Mosle LLP, New York (Jason Gottlieb of counsel), for appellant.Joseph M. Heppt, New York, for respondent.
Curtis, Mallet–Prevost, Colt & Mosle LLP, New York (Jason Gottlieb of counsel), for appellant.Joseph M. Heppt, New York, for respondent.
Order, Supreme Court, New York County (Charles E. Ramos, J.), entered February 9, 2011, which denied defendant H.G. Wellington Co.'s motion to dismiss plaintiff's claims of aiding and abetting breach of fiduciary duty and unjust enrichment against Wellington, unanimously reversed, on the law, with costs, the motion granted, and the complaint dismissed as against Wellington. The Clerk is directed to enter judgment accordingly.
Plaintiff, a limited partner in Cobalt Asset Management, L.P. (CAM), alleged that Wellington aided and abetted defendant Thompson's alleged breach of his fiduciary duties to CAM, and was thereby unjustly enriched. Thompson was a general partner of CAM when he entered into two agreements with Wellington in April 1995. In the assignment agreement, Wellington agreed to pay CAM $35,000 for, among other things, the right, title and interest in the investment management agreements governing 38 client accounts managed up to that time by CAM. In the executive services agreement, Wellington agreed to pay Thompson a base salary of $50,000 per year plus a portion of the management fees received by Wellington from CAM's investment management clients.
We find that the aiding and abetting claim is barred by the statute of limitations. The applicable limitations period for that claim is six years, since plaintiff's fraud cause of action against co-defendants is not merely “incidental” to the breach of
fiduciary duty cause of action against them ( see CPLR 213[1], [8]; Kaufman v. Cohen, 307 A.D.2d 113, 121, 760 N.Y.S.2d 157 [2003] ). However, the complaint contains no allegations of any conduct by Wellington after 1995, except the receipt of monies owed under the contracts through 2001. Wellington correctly contends that the various theories argued by plaintiff for tolling the limitations period are inapplicable here. Equitable estoppel does not apply, as there are no allegations that Wellington made any affirmative representations or had a fiduciary duty to plaintiff ( see Kaufman, 307 A.D.2d at 126, 760 N.Y.S.2d 157). The discovery accrual rule does not apply in cases alleging constructive fraud ( id.; see CPLR 213[8], 203[g] ). Repudiation is also unavailing, as the requirement of a clear repudiation applies only to claims seeking an accounting or other equitable relief ( see Matter of Kaszirer v. Kaszirer, 286 A.D.2d 598, 599, 730 N.Y.S.2d 87 [2001] ).
Moreover, plaintiff failed to state a cause of action for aiding and abetting breach of fiduciary duty against Wellington, as the assignment agreement expressly represented that the transfer of the partnership's assets was conducted in accordance with the partnership agreement and investment management agreements. In the face of such a representation, it does not necessarily follow that Wellington should have suspected it was assisting wrongdoing simply because the terms of the agreements appear one-sided. Nor does plaintiff point to any duty Wellington—an outsider to the partnership—would owe to the limited partners to conduct any further investigation as to the “fairness” of the transaction. Based on the documentary evidence and the facts in the complaint, it could not be inferred that Wellington had actual knowledge that it sought to conceal from the limited partners ( see Kaufman, 307 A.D.2d at 125, 760 N.Y.S.2d 157; compare Oster v. Kirschner, 77 A.D.3d 51, 55–56, 905 N.Y.S.2d 69 [2010] ).
Plaintiff's unjust enrichment claim against Wellington also fails, inasmuch as a valid and enforceable contract governs the subject matter of the claim ( see Superior Officers Council Health & Welfare Fund v. Empire HealthChoice Assur., Inc., 85 A.D.3d 680, 682, 927 N.Y.S.2d 324 [2011] ).