Opinion
5344/08.
Decided September 29, 2009.
Kroll, Moss Kroll, Garden City, New York, by: Jonathan Kroll, Esq., for plaintiff.
Marino Scotti, Corona, New York, by: Tammy Scotti, Esq., for defendant.
Upon the foregoing papers it is ordered that plaintiff's motion for an order:(1) directing that defendant be ordered to prove an accounting to plaintiff of all monies received from the income producing subject properties as well as a schedule of all payments and expenses on said properties and (2) ordering and directing that a receiver be appointed to manage all of the income producing subject properties as well as dividing the income derived from properties to the plaintiff and defendant, is hereby denied.
Plaintiff and defendant are a married couple who after their marriage acquired rental income real property together as husband and wife, or acquired by defendant solely in his name with down payment proceeds he received from plaintiff. Plaintiff maintains that although married, she and defendant have been separated for many years, during which time the defendant has been in complete dominion and control over the properties they both own. Ms. Luo alleges that since their separation, Mr. Yang has taken all of the profits from the income producing real estate without accounting as to how or where the money was being spent. Plaintiff further maintains that while she has requested that defendant share the income derived from the properties they both own, he has refused to do so. On February 29, 2008, plaintiff commenced an action for the imposition of a constructive trust and for the provision of an accounting.
I. PLAINTIFF'S MOTION
A. Plaintiff's motion for a temporary receiver
CPLR 6401 provides that the court "[u]pon motion of a person having an apparent interest in property which is the subject of an action in the supreme ***court, [may appoint] a temporary receiver *** prior to judgment *** where there is danger that the property will be removed from the state, or lost, materially injured or destroyed. *** The court appointing a receiver may authorize him to take and hold real *** property, and sue for, collect and sell debts or claims, upon such conditions and for such purposes as the court shall direct"
(CPLR 6401 [a], [b]). "Appointment of a receiver is an extreme remedy which should be granted only upon a clear showing of the necessity for conservation of the property and the interests of the movant" ( Rose v. Rose, 305 AD2d 578 [2d Dept 2003]).
Plaintiff has presented no proof to support the provisional remedy of the appointment of a temporary receiver. Plaintiff has demonstrated no proof to support her theory that defendant has converted the property to his own use alone. Plaintiff has failed to establish a prima facie case for the relief requested. Furthermore, plaintiff has failed to present any evidentiary facts that the property will be "removed from the state, or lost, materially injured or destroyed." There has been no showing that any assets have dissipated or that there is a danger that any asset will be dissipated.
B. Plaintiff's motion for an accounting
The relief sought by the plaintiff, although not specifically stated is in the nature of an affirmative injunctive relief, i.e. an order directing that defendant prove an accounting to plaintiff of all monies received from income producing subject properties as well as a schedule of all payments and expenses on said properties. A court should not grant a preliminary injunction where the granting of the injunction would be the ultimate relief sought in the action, in the absence of special circumstances requiring immediate relief ( Yome v. Gorman, 242 NY 395). Here, as the relief sought by plaintiff in this motion is identical to the ultimate relief sought in the action and as plaintiff has submitted no evidence to support "special circumstances" requiring immediate relief, plaintiff's motion for an accounting is denied.
II. DEFENDANT'S CROSS MOTION FOR AN ORDER DISMISSING PLAINTIFF'S COMPLAINT
Defendant moves to dismiss the plaintiff's complaint on the grounds of res judicata as well as upon the basis that the complaint fails to state a meritorious cause of action.
A. Res judicata
"Principles of res judicata require that once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy'". ( Chen v. Fischer , 6 NY3d 94 )[internal citations omitted]). "It is not always clear whether particular claims are part of the same transaction for res judicata purposes. A pragmatic' test has been applied to make this determination-analyzing whether the facts are related in time, space, origin, or motivation whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.'" Id. [internal citations omitted]). "The doctrine of res judicata prohibits a party from relitigating any claim which could have been, or which should have been litigated in a prior proceeding." ( County of Nassau v. New York State Public Employment Relations Board, 151 AD2d 168 [2d Dept 1989][internal citations omitted]). The rule applies to claims that either were actually litigated or could have been litigated in a prior proceeding ( see, Cohen v. City of New York, 2001 NY Slip Op 50028u (Sup Ct, New York County 2001). Res judicata will only be applicable where there "has been a final judgment on the merits". ( Lewis v. City of New York , 17 Misc 3d 537 [Sup Ct, Bronx County 2007]). The main objective of res judicata is to "ensure finality, prevent vexatious litigation, and promote judicial economy." ( See, Chen, supra).
In the instant case, there were two prior divorce actions. The first action was discontinued when the parties reconciled. The second divorce action was filed on June 26, 2006 and included a cause of action for constructive trust (ie. the fourth cause of action). The second action, Index No. 14217/06, was dismissed by Hon. Sidney Strauss, Supreme Court, Queens County on October 1, 2007. Plaintiff had an opportunity to move for severance of the claims or a separate trial of the claims, but she did not do so. Plaintiff had an ample opportunity to litigate constructive trust/unjust enrichment claims in the second action for divorce. The final judgment dismissed all of plaintiff's claims as well as those that could have been litigated. Plaintiff's instant claims for a constructive trust are identical to the claims in the action for divorce. As there has been a final judgment on the merits, res judicata will apply. Moreover, since plaintiff's claims for an accounting and conversion stem from her claim to impress a constructive trust, she is now precluded from advancing such claims that were proferred before Hon. Strauss' dismissal on October 1, 2007. However, plaintiff's claims for accounting and conversion for actions by defendant from the time of the dismissal to the present are still viable.
B. Defendant's cross motion to dismiss based upon the ground that the complaint fails to state a meritorious cause of action.
On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction ( Leon v. Martinez, 84 NY2d 83.) In determining whether plaintiff's complaint states a valid cause of action, the court must accept each allegation as true, without expressing any opinion on plaintiff's ultimate ability to establish the truth of these allegations before the trier of fact ( 219 Broadway Corp. v. Alexanders, Inc., 46 NY2d 506; Tougher Industries, Inc. v. Northern Westchester Joint Water Works, 304 AD2d 822 [2d Dept 2003]). The court must find plaintiff's complaint to be legally sufficient if it finds that plaintiff is entitled to recovery upon any reasonable view of the stated facts ( see, CPLR 3211[a][7]; Hoag v. Chancellor, Inc., 246 AD2d 224 [1st Dept 1998]).
Plaintiff asserts three causes of action in her Verified Complaint for (1) Constructive Trust/Unjust Enrichment;
(2) Accounting; and (3) Conversion.
1. Constructive Trust/Unjust Enrichment
It is well-established law that: "a constructive trust may be imposed [when] property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest' (internal citations omitted).' In the development of the doctrine of constructive trust as a remedy available to courts of equity, the following four requirements were posited: (1) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon and (4) unjust enrichment." ( Sharp v. Kosmalski, 40 NY2d 119) (internal citations omitted)." "However these elements are simply guidelines and are not to be applied rigidly in pursuing the goal of preventing unjust enrichment." ( Henness v. Hunt, 272 AD2d 756 [3d Dept 2000]).
It is well-established law that: "[t]o prevail on a claim of unjust enrichment, a party must show that (1) the other party was enriched, (2) at that party'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" (internal quotation marks and citations omitted)( Blue Wolf Group, LLC. v. Gaiam, Inc., 16 Misc 3d 1113 (A) [Civ Ct, New York County 2007]).
Contrary to defendant's argument, plaintiff has alleged sufficient facts to establish a cause of action for unjust enrichment/constructive trust.
2. Accounting
An accounting is an equity action whereby a court of equity is requested to require the defendant to account to the plaintiff regarding his actions in which the plaintiff and defendant are interested, of which plaintiff is ignorant, yet is entitled to information. "The complaint in an equitable action for an accounting must allege relations of a mutual and confidential nature, money or property entrusted to the defendant imposing upon him or her the burden of accounting, that there is no adequate legal remedy, and in some cases, a demand for an accounting and a refusal. The existence of a fiduciary relationship between plaintiff and defendant and wrongdoing on the part of the defendant are essential elements of an equity complaint where an accounting is demanded."
Kastle v. Steibel, 120 AD2d 868, 502 NYS2d 538 (3d Dept); Goldstein v. Tri-Continental Corporation, 282 NY 21, 24 NE2d 728 (1939); Leonard v. Cammann, 257 AD 387, 13 NYS2d 244 (1st Dept 1939); Szarf v. Blumenfeld, 7 Misc 2d 181, 163 NYS2d 249 (Sup 1957), order rev'd on other grounds, 5AD2d 887, 172 NYS2d 984 (2d Dept 1958); Wyckoff v. Sagall, 16 Misc 2d 630, 56 NYS2d 392 (Sup 1945).
Chabot v. Empire Trust Co., 189 F Supp 666, (SDNY 1960), judgment rev'd on other grounds, 30 F2d 458 (2d Cir 1962); Adam v. Cutner Rathkopf, 238 AD2d 234, 656 NYS2d 753 (1st Dept 1997); Kaminsky v. Kahn, 20 NY2d 573, 285 NYS2d 833, 232 NE2d 837 (1967); Hamilton v. Patrolmen's Benevolent Ass'n of City of New York, 88 NYS2d 683 (Sup 1949).
Plaintiff alleges in the complaint, inter alia, an ownership interest in the existence of a fiduciary relationship between plaintiff and defendant and a failure of defendant to account to plaintiff. Affording the complaint liberal construction, the court determines that it states a valid cause of action for accounting ( see, Rose v. Rose, 305 AD2d 578 [2d Dept 2003] [held where a party has an ownership interest in property with another, including marital property, they are entitled to an accounting of the income received from the property by the other party]).
3. Conversion
To state a cause of action for conversion, plaintiff must show legal ownership to a specific identifiable thing and that defendant exercised unauthorized dominion over it, to the exclusion of plaintiff's rights ( Batsidis v. Batsidis , 9 AD3d 342 [2d Dept 2004], citing Independence Discount Corp. v. Bressner, 47 AD2d 756 [2d Dept 1975]).
Plaintiff alleges in the complaint, inter alia, that she has ownership interests in certain rental income real property and that defendant has exercised dominion and control over such property to the exclusion of plaintiff's rights and without her authority. The court finds the complaint is legally sufficient in stating a cause of action for conversion.
Assuming the facts asserted by plaintiff are true, the facts in the complaint can demonstrate valid claims of unjust enrichment, constructive trust, accounting and conversion based upon a reasonable view of the facts and liberal view of the pleadings, plaintiff's complaint states valid cause of actions ( see, Rosenheck v. Rosenheck, 69 AD2d 878 [2d Dept 1979]).
Accordingly, defendant's motion to dismiss the complaint is denied.
This constitutes the decision and order of the Court.