Opinion
119380
10-05-2011
Long Island Conservatory, LTD., Claimant, v. The State of New York, Defendant.
For Claimant: Ford Marrin Esposito Witmeyer & Gleser, L.L.P. By: Richard J. Ahn, Esq. For Defendant: Hon. Eric T. Schneiderman, NYS Attorney General By: Kimberly A. Kinirons, Assistant Attorney General, Of Counsel
Ct Cl
For Claimant:
Ford Marrin Esposito Witmeyer & Gleser, L.L.P.
By: Richard J. Ahn, Esq.
For Defendant:
Hon. Eric T. Schneiderman, NYS Attorney General
By: Kimberly A. Kinirons, Assistant Attorney General, Of Counsel
Judith A. Hard, J.
Defendant moves this Court, prior to answering the claim, for an order dismissing the claim as jurisdictionally defective pursuant to the Court of Claims Act §§ 8, 9, 10 and 11 and the Civil Practice Law and Rules, Rule 3211 (a) (1) and (7). Claimant opposes the motion on several bases. For the reasons set forth below, defendant's motion to dismiss is denied.
The underlying claim, which was filed on January 19, 2011, relates to a joint music program for the College at Old Westbury of the State University of New York that claimant, pursued for over five years to its financial and business detriment, allegedly at the behest of defendant's agents who were making false and materially misleading statements.
FACTS
On March 15, 2005, the College at Old Westbury of the State University of New York (SUNYOW) and the Long Island Conservatory (LIC) agreed to establish a joint program in music, whereby SUNYOW would issue the degrees and provide non-music education while LIC would provide the music education, with both parties soliciting students for the program and sharing the tuition.
Claimant alleges that from the beginning, agents of the defendant, specifically, Dr. Patrick O'Sullivan and Dr. James Llana, both senior officials of SUNYOW, represented that they would take care of all the arrangements for approval. The LIC representatives most involved were Mrs. Minsun Kim, the president of LIC, and Ms. Patricia Schust, the Executive Director of LIC.
On August 28, 2005, Dr. O'Sullivan authorized a recruitment brochure showed to him by LIC to be used for immediate recruitment purposes in connection with the joint program in music. On October 25, 2005, defendant approved LIC's use of defendant's facilities for musical festivals beginning in 2005. On March 20, 2006, LIC conducted a musical performance before SUNY officials at the Garden City Hotel, with Dr. Calvin O. Butts, III, the President of SUNYOW and the Old Westbury College Foundation, Inc., in attendance.
Thereafter, from approximately mid-March 2007 until approximately Fall 2010, SUNYOW posted and represented on its website that LIC was an "Associated Program." Claimant alleges that defendant verbally confirmed to LIC that its referencing of the relationship between LIC and defendant as an "Associated Program" would be acceptable because it was merely an issue of wording.
Claimant alleges that for two years, unknown to LIC, SUNYOW had not moved forward with the approval process for the joint music program as it had represented it would. Claimant states that it was not until June 12, 2007, that Dr. O'Sullivan first submitted the Program Announcement in connection with the joint program in music. Claimant states that it was unaware that said program announcement had a lifetime of only one year from the date of circulation.
On August 21, 2007, a letter approving submission of the program proposal was issued to SUNYOW's officials, but not to LIC. The letter, which at the time was unknown to LIC, stated a need to include a contract demonstrating SUNYOW's relationship with LIC. Because the program proposal had a lifetime of one year, defendant's officials at SUNYOW had to submit the proposal to the State University of New York in Albany by August 21, 2008.
Unbeknownst to LIC, however, defendant's officials at SUNYOW did not submit said proposal by the due date of August 21, 2008. Instead, they submitted it on July 23, 2010, more than two years later. At that time, Dr. O'Sullivan submitted the contract which Dr. Butts (the President of SUNYOW) had sent to LIC for execution and which LIC had accepted on April 26, 2010. Defendant's officials withheld from LIC the fact, known to them, that the submission had not been timely.
Claimant alleges that also unknown to LIC, on August 11, 2010, SUNY personnel in Albany advised Dr. O'Sullivan that they were treating his July 23, 2010 submission as a belated request for an extension of the program announcement that SUNYOW originally submitted in June 2007, but that expired in August 2008 after no action by the College. The personnel at the State University of New York in Albany thereafter rejected SUNYOW's belated request for an extension of the June 2007 program announcement.
Claimant alleges that despite knowing the real facts, including that SUNYOW had never submitted the joint music program proposal and had allowed the 2007 program announcement to expire in August 2008, SUNYOW's officials continuously misrepresented to LIC that its arrangements for the joint program were in progress and almost completed. Claimant states that LIC had recruited and in late 2007, Dr. O'Sullivan made arrangements for the enrollment of several LIC students to SUNYOW, in connection with the joint program. The students were enrolled for the 2008 Spring semester in anticipation of taking a matriculated program in music that would lead to a degree in the next few years and were each issued a course schedule. LIC paid for the students' tuition from its own funds. Additionally, defendant allegedly authorized and otherwise approved expenditures related to the library expenses, promising that it would cover the second year's collection if LIC would purchase the first year's collection.
Claimant alleges that on eight occasions, LIC was contacted by letter or spoke with a representative of the State Education Department (SED) or the State University of New York in Albany (SUNY) regarding issues or concerns with the way LIC was conducting its operations regarding the joint program. Claimant alleges that it timely and thoroughly responded to and addressed each issue and concern, and also promptly told SUNYOW officials what had transpired. On each occasion, LIC received false assurances that everything was in order.
Thereafter, by letter dated August 31, 2010, defendant notified LIC that SUNYOW "cannot proceed with these degrees." This was after LIC allegedly spent hundreds of thousands of dollars and five years' efforts, none of which LIC would have expended had it not been solicited and misled by SUNYOW officials.
Claimant served a Notice of Intention to File a Claim upon the Attorney General on November 24, 2010 and a claim on January 14, 2011. The claim alleges constructive fraud, fraud, intentional misrepresentation, negligent misrepresentation, unjust enrichment, breach of contract, and promissory estoppel. A Stipulation by the parties, filed February 22, 2011, extended defendant's time to answer the claim. Defendant subsequently served this motion to dismiss in lieu of answering the claim. Defendant alleges that the matter is jurisdictionally defective, there exists several defenses founded upon documentary evidence, and the claim fails to state a cause of action.
When entertaining a pre-answer motion to dismiss pursuant to CPLR 3211, a court must take the allegations as stated in the claim as true and resolve all inferences which can reasonably flow therefrom in favor of the pleader (see Cron v Hargro Fabrics, 91 NY2d 362, 366 [1998]; Ferran v Belawa, 241 AD2d 841 [3d Dept 1997]). The Court's function is to determine whether the claimant's factual allegations fit within any cognizable legal theory, without regard to whether the allegations can ultimately be established (Union State Bank v Weiss, 65 AD3d 584, 585 [2d Dept 2009]). If factual allegations are discerned, which taken together manifest any cause of action cognizable at law, then a motion for dismissal will fail (see Pacific Carlton Dev. Corp. v 752 Pac., LLC, 62 AD3d 677, 679 [2d Dept 2009]; Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]).
With the foregoing in mind, the Court analyzes the viability of the instant claim.
ANALYSIS
Timeliness
Defendant argues that the causes of action alleging constructive fraud, fraud, intentional misrepresentation and negligent misrepresentation should be dismissed on the basis that they are time barred. Defendant states that claimant knew that the SED was not aware of the proposed program based upon conversations it had with Barbara D. Meinert, Coordinator, Office of Higher Education, Office of College and University Evaluation, SED, on May 12, 2009, and February 2, 2010. Defendant states that claimant was also aware of the limited involvement of SUNY and the SED based upon the numerous cease and desist letters claimant received from SUNY's counsel's office and the SED. Defendant argues that because claimant had actual knowledge of the facts constituting the alleged fraud and its damages were reasonably ascertained on May 12, 2009, claimant's filing of a notice of intention to file a claim on November 24, 2010 is untimely and this Court does not have jurisdiction.
In opposition, claimant states that it timely responded to each of the calls and letters from SUNY and SED, and was repeatedly assured that the approval process was moving forward and nearly complete. As such, claimant states that it did not and could not have known that a fraud was being perpetrated against it. Claimant argues that the first notice of a potential claim arose on the date it received the notice of rejection from SUNYOW, which was September 3, 2010, and that said date is when the causes of action accrued. Based upon the documents before it, the Court agrees.
Claims for intentional torts and unintentional torts must be filed and served upon the Attorney General within 90 days from the date of accrual, unless the claimant within said time, serves the Attorney General with a written notice of intention to file the claim, in which event the claim would need to be filed and served upon the Attorney General within two years after accrual for an unintentional tort or one year after accrual of the claim for an intentional tort (Court of Claims Act §§10 [3], 10 [3-b]). Claims for breach of contract, and any other claim not otherwise provided for in Court of Claims Act § 10 must be filed and served within six months from the date of accrual unless within said time, claimant serves the Attorney General with a written notice of intention to file the claim, in which event the claim would need to be filed and served upon the Attorney General within two years after the accrual of the claim (Court of Claims Act § 10 [4]).
Accordingly, as claimant served a notice of intention to file a claim on November 24, 2010, followed by a claim on January 14, 2011, the claim is timely and defendant's motion to dismiss is denied to the extent it alleges that claimant's causes of action are untimely.
Immunity
Defendant states that the crux of claimant's case is that the proposed joint program was never approved and LIC did not reap the financial rewards of such. Defendant argues that SUNY and SED, however, have the authority by statute, regulation and case law to review and evaluate academic programs and to determine which programs should be registered, and that the decision regarding the proposed joint program is a discretionary academic determination that is protected by qualified immunity.
Based upon claimant's allegations that LIC is not challenging a decision to reject the joint program, but the fraudulent statements and misrepresentations made to LIC, the Court finds that defendant's actions may not be subject to immunity. Accordingly, to the extent defendant's motion seeks to dismiss the claim based upon immunity, it is hereby denied.
Breach of Contract
Defendant alleges that there is no valid and enforceable contract between the parties, because the contract was never signed by an authorized representative of the State, as required by General Obligations Law § 5-701(a) and, further, because it never received the approval of the State Comptroller, as required by State Finance Law § 112 (3).
There does not appear to be any dispute that the parties did not obtain a fully executed
written contract. There also does not appear to be any dispute that the Comptroller never approved a contract between SUNYOW and LIC. However, the Court finds that claimant has alleged facts which, if proven, would constitute a cognizable cause of action for breach of an implied contract that may not be barred by State Finance Law § 112 (see Parsa v State of New York, 64 NY2d 143 [1984]). As such, to the extent defendant's motion seeks to dismiss the breach of contract cause of action, it is hereby denied.
Material Misstatement of Fact
Defendant alleges that claimant's causes of action for constructive fraud, fraud, intentional misrepresentation and negligent misrepresentation must fail because each requires a material misrepresentation of fact and claimant has failed to identify the specific material misrepresentations upon which it relied. The Court disagrees. The claim is replete with allegations sufficiently particular to provide defendant with the basic facts establishing the elements of its causes of action for fraud and misrepresentation. Accordingly, to the extent defendant's motion seeks the dismissal of claimant's causes of action for failing to allege a material misrepresentation of fact, it is denied.
Justifiable or Reasonable Reliance
Defendant alleges that claimant's causes of action for constructive fraud, fraud, intentional misrepresentation, negligent misrepresentation and promissory estoppel require proof of claimant's justifiable reliance upon a misrepresentation under the circumstances. Defendant argues that claimant has not set forth that its reliance upon the representations of administrators of Old Westbury College was justified and therefore said causes of action should be dismissed. The Court disagrees. Claimant need not prove at this juncture that its reliance was justified, it need only set forth factual allegations, which if true, would constitute a cognizable legal theory. The Court determines claimant has done so.
Promissory Estoppel
" 'To establish a promissory estoppel it must be shown that the defendant made a clear and unambiguous promise upon which the [claimant] reasonably relied to his or her detriment' " (Clifford R. Gray, Inc. v LeChase Constr. Servs., 51 AD3d 1169 [2008], quoting Roufaiel v Ithaca Coll., 241 AD2d 865, 869 [1997]). Estoppel is generally unavailable against the State of New York. However, "[a] governmental agency may be subject to estoppel when a manifest injustice has resulted from actions taken in its proprietary or contractual capacity" (Allen v Board of Educ. of Union Free School Dist. No. 20, 168 AD2d 403, 404 [1990], appeal dismissed 77 NY2d 939 [1991]). When the public agency's misconduct has induced justifiable reliance by a party who then changed his position to his detriment, an estoppel may be imposed (id).
In the present claim, defendant is alleged to have advised LIC that arrangements for the joint program in music were underway and moving forward, and at one point, that "ninety-five percent of the process has been completed." Additionally, defendant is alleged to have authorized certain expenditures for the expansion of the library and promised LIC it would cover the second year's collection, if LIC purchased the first year's collection. Claimant alleges that LIC expended substantive amounts of monies, to its detriment, in reliance on the statements of defendant. Based on the foregoing, defendant's motion to dismiss is denied to the extent it seeks dismissal of claimant's cause of action for promissory estoppel.
Unjust Enrichment
To prevail on a claim of unjust enrichment, a party must show: (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 (see Cruz v McAneney, 31 AD3d 54, 59 [2d Dept 2006]). Claimant has alleged that based upon defendant's acts and statements, LIC expended substantial financial resources on advertising and student recruitment for the purpose of enrolling students at SUNYOW in connection with the joint program, which led to the actual enrollment and payment of tuition to defendant. The Court finds that claimant has made factual allegations which, taken together, manifest a cognizable cause of action for unjust enrichment. Accordingly, defendant's motion to dismiss the same is denied.
CONCLUSION
Based upon the foregoing, defendant's motion to dismiss is denied. Defendant is directed to file and serve its answer to the claim within forty (40) days of the filing of this Decision and Order.
Albany, New York
October 5, 2011
JUDITH A. HARD
Judge of the Court of Claims