Opinion
652293/2019
04-28-2020
Muoi T. LUONG, Plaintiff, v. HA THE LUONG, Luong's Management LLC, Ngo's Management Inc. and Zanadu Realty of N.Y. Ltd., Defendants.
Law Offices of Max D. Leifer, P.C., New York, NY (Max D. Leifer of counsel), for plaintiff. Joseph C. Cacciato, Esq., New York, NY, for defendants.
Law Offices of Max D. Leifer, P.C., New York, NY (Max D. Leifer of counsel), for plaintiff.
Joseph C. Cacciato, Esq., New York, NY, for defendants.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 5, 7, 8, 9, 10, 11, 12, 13, 14,15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 35, 36, 38, 55 were read on this motion to DISMISS.
This action concerns a dispute over payments allegedly due to plaintiff related to three business entities and seven parcels of real property, in which plaintiff claims she owns interests. Defendants Ha The Luong (Ha), Luong's Management LLC, Ngo's Management Inc., and Zanadu Realty of NY Ltd. (collectively, defendants) move, pursuant to CPLR 3211 (a) (1), (3), (5) and (7), to dismiss the complaint. For the reasons set forth below, defendants' motion is granted in part.
BACKGROUND
The following facts are derived from the allegations in the complaint and the parties' documentary submissions. Plaintiff alleges that she and Ha have a "mutual interest" in three business entities—Luong's Management, Ngo's Management, and Zanadu (collectively, the Corporate Defendants) (NYSCEF No. 28, affirmation of Joseph C. Cacciato [Cacciato], exhibit U, ¶ 9). Plaintiff also alleges she and Ha have a "mutual interest" in the following seven properties: 344 Livingston Street, Brooklyn; 1842 82nd Street, Brooklyn; 347 West 53rd Street, Manhattan; 350 West 50th Street, Unit 31E, Manhattan; 158 Hester Street, Apt. 3E, Manhattan; 2 Baird Court, Syosset, NY; and 261-48 72nd Road, Glen Oaks, NY (collectively, the Properties) (id. ).
Under an agreement dated September 23, 2015, nonparty Lai Tin Luong (Lai) transferred his 50% ownership interest in nonparty Luong's Enterprise, Inc. (Luong's Enterprise) to Ha (NYSCEF No. 36, affirmation of Max D. Leifer [Leifer], exhibit A at 27). Plaintiff approved the transfer agreement on behalf of Luong's Enterprise (id. at 29). At that time, Luong's Enterprise owned the 53rd Street and Livingston Street properties (id. at 19 and 21).
By deed dated October 22, 2015, Luong's Enterprise conveyed title to the 53rd Street property to Luong's Management (id. at 22). Ha is the sole member of Luong's Management, as stated on the company's operating agreement of October 22, 2015 (NYSCEF No. 17, Cacciato affirmation, exhibit J at 1). While the 2015 tax return for Luong's Management lists Ha as its only member (NYSCEF No. 19, Cacciato affirmation, exhibit L at 6), its 2016 and 2017 tax returns show Ha and Meiling Ngai (Meiling) as equal members each owning one-half of the company (NYSCEF Nos. 21 and 26, Cacciato affirmation, exhibits N and S at 6).
Luong's Enterprise conveyed title to the Livingston Street property to Ngo's Management by deed dated October 22, 2015 (NYSCEF No. 36 at 21). A New York City real property transfer tax return report made in connection with the conveyance lists plaintiff and Ha as equal 50% shareholders in Luong's Enterprise and Ngo's Management (id. at 32-33). On July 19, 2017, Ha executed a contract of sale to purchase a nail salon business known as "Designer Nails Inc" located at the Livingston Street property for $3,000 from nonparty Chen Bac Ma (NYSCEF No. 23, Cacciato affirmation, exhibit P at 1). By letter addressed to Ha dated April 9, 2019, plaintiff's counsel wrote that plaintiff was "the legitimate commercial tenant as a nail salon" at the Livingston Street property (NYSCEF No. 36 at 10). The letter identified Ha as plaintiff's brother (id. ).
A filing receipt from the New York State Department of State shows that Zanadu was formed in 1986 (NYSCEF No. 8, Cacciato affirmation, exhibit A at 1). Zanadu acquired title to the 82nd Street property from nonparty Benson Estates, Inc. by deed dated October 5, 1989 (NYSCEF No. 8, Cacciato affirmation, exhibit B at 1). On that same date, plaintiff, as "Pres" of Zanadu, executed a mortgage encumbering the 82nd Street property in the principal sum of $200,000 in favor of nonparty Green Point Savings Bank (NYSCEF No. 36 at 44 and 46). On January 10, 2003, plaintiff, as Zanadu's "President," executed a mortgage encumbering the 82nd Street property in the principal sum of $260,000 in favor of nonparty Maspeth Federal Savings and Loan Association (id. at 38 and 41). Zanadu satisfied the second mortgage in August 2004 (id. at 35). Zanadu's tax returns for 2012 to 2017 list Anh Luong (Anh) as its sole shareholder (NYSCEF Nos. 14-16, 18, 20, 25, Cacciato affirmation, exhibits G-I, K, M and R at 6). A building registration summary obtained from the New York City Department of Housing Preservation and Development (HPD) website summarizes a registration statement filed December 25, 2018 for the 82nd Street property, and identifies plaintiff as an officer and a shareholder in Zanadu (NYSCEF No. 36 at 53).
By deed dated February 18, 2018, Meiling acquired title to the 50th Street property from nonparty David C. Herriman Trust (NYSCEF No. 27, Cacciato affirmation, exhibit T at 1).
Nonparty Well-Come Holdings conveyed the Hester Street property to nonparties David Ngai and Jennifer Rua Ngai by deed dated August 18, 2006 (NYSCEF No. 13, Cacciato affirmation, exhibit F at 1).
Plaintiff conveyed the Baird Court property to Ha by deed dated June 5, 2001 (NYSCEF No. 10, Cacciato affirmation, exhibit C at 1). Ha transferred title to this property to nonparties Joon Seo Lee and Soon Ae Baek on April 8, 2004 (NYSCEF No. 12, Cacciato affirmation, exhibit E at 1).
Nonparty Chung Chau Ngai (Chung) purchased the 72nd Road property on April 28, 2003 from nonparty Daral Properties, LLC (NYSCEF No. 11, Cacciato affirmation, exhibit D at 1). Chung conveyed the 72nd Road property to Meiling on April 18, 2017 (NYSCEF No. 22, Cacciato affirmation, exhibit O at 1). Meiling transferred this property to nonparty Qinqiong Huang on October 31, 2017 (NYSCEF No. 24, Cacciato affirmation, exhibit D at 1).
Plaintiff alleges she has a fiduciary relationship with "Defendant in each of the named Defendant's and properties" (NYSCEF No. 28, ¶ 10). She further alleges that she had a fiduciary relationship with Ha, and entrusted him with funds to purchase the Properties and form the Corporate Defendants (id. , ¶¶ 20-21). Plaintiff claims Ha has excluded her from possession, dominion and control over the Corporate Defendants and the Properties, and that he has failed to make financial payments to her (id. , ¶¶ 14-15). Additionally, plaintiff alleges that Ha has locked her out of Livingston Street, where she is a commercial tenant (id. , ¶ 16). Plaintiff commenced this action by filing a summons and complaint on April 18, 2019 and asserted three causes of action for an accounting, fraud and conversion, and the imposition of a constructive trust against defendants.
Defendants now move to dismiss on the grounds that the complaint fails to state a cause of action, that the complaint does not conform to the pleading requirements described in CPLR 3013 and 3016 (b), that the documentary evidence utterly refutes the allegations, that plaintiff lacks standing to pursue her claims, and that her claims are time-barred.
Defendants maintain that the business entities are owned by plaintiff's brothers, Ha and Anh, and that plaintiff has no interest in these holdings (NYSCEF No. 6, Cacciato affirmation, ¶ 10). In explaining how plaintiff acquired her knowledge of these business dealings, defendants contend she "has access to conversations between the family members and thru [sic] daily life has come to know the details of her family's holdings" (id. , ¶ 12). Defendants argue that the deeds submitted on their motion establish that plaintiff lacks standing to pursue a claim related to the Properties because she has no legal interest in them. Defendants further argue that plaintiff has no interest in, or any connection to, the Hester Street, 50th Street and 72nd Road properties, which are instead owned by Meiling, who is Ha's wife, or Meiling's family (id. , ¶¶ 9 and 11).
Defendants also contend that the complaint fails to state a cause of action because it does not plead its claims with the necessary specificity. Defendants argue that accounting and constructive trust causes of action require the existence of a fiduciary relationship, and that the complaint does not plead the elements necessary to create a fiduciary relation, the facts or circumstances of when the causes of action began to accrue, or a breach of a confidential relationship. Defendants assert that the fraud and conversion cause of action also lack specificity.
Plaintiff, in opposition, contends that the documents show she is a 50% shareholder in Ngo's Management and an officer and shareholder in Zanadu. As such, she claims she has an ownership interest in these two entities. Plaintiff additionally claims that "instead of being deeded to an individual or individuals [the Properties] were deeded and transferred to corporations," and that she is entitled to review of all corporate documents (NYSCEF No. 35, Leifer affirmation, ¶ 3). She attributes the lack of documentary evidence to the informal nature of the businesses, explaining that "this was a family venture, where all three of the family members were involved [and] a lot of the arrangements and agreements were both oral and written" (id. , ¶ 4). Plaintiff also submits "there was a conversion and possible fraud for failure to share the profits" (id. , ¶ 4).
DISCUSSION
At the outset, plaintiff asserts that defendants' motion is one for summary judgment. This characterization lacks merit. CPLR 3212 (a) provides that any party may move for summary judgment after issue has been joined. Here, defendants have filed a pre-answer motion to dismiss. Plaintiff's assertion that defendant cannot rely on contracts or deeds in support of the motion is similarly unpersuasive. As relevant here, contracts, deeds and tax returns qualify as documentary evidence for purposes of a CPLR 3211 (a) (1) motion (see Fontanetta v. John Doe 1 , 73 AD3d 78, 84-85 [2d Dept 2010] ; Liebman Goldberg & Hymowitz LLP v. Michael R. Drogin CPA, P.C. , 2011 NY Slip Op 33654[U], *7 [Sup Ct, Nassau County 2011]; Hirsch v. Grassi & Co., CPAs , 2011 NY Slip Op 31998[U], *6 [Sup Ct, NY County 2011] ).
Turning to the relationships between plaintiff, Ha, and the nonparties, the complaint did not plead a familial relationship between them, and did not refer to Anh, Zanadu's sole shareholder, at all. Defendants' assertions that plaintiff had never contributed funds to the Corporate Defendants and was never a member or shareholder are contained within their attorney's affirmation. Plaintiff's reference to a family business is found in her attorney's affirmation. To the extent the descriptions of these relationships are contained solely within the attorney affirmations for the parties, the affirmation of an attorney without personal knowledge of the facts lacks probative value (see Williamson, Picket, Gross, Inc. v. Hirschfeld , 92 AD2d 289, 290 [1st Dept 1983], appeal dismissed 60 NY2d 585 [1983] ), unless the statements are substantiated by documentary evidence or by proof of the attorney's personal knowledge. Significantly, plaintiff has not tendered an affidavit clarifying these relationships.
Plaintiff's reliance on a statement made at a settlement conference by defendants' prior counsel is also unavailing. "[W]hile evidence of settlement negotiations is generally inadmissible, admissions of fact made in connection with settlement negotiations are admissible" ( Central Petroleum Corp. v. Kyriakoudes , 121 AD2d 165, 165 [1st Dept 1986], lv dismissed 68 NY2d 807 [1986] ). Plaintiff submits that "the Defendant's [sic] acknowledged that the Syosset property funding came from the Plaintiff. When the property was sold the funds were used to buy the Glen Oaks property and purchases thereafter" (NYSCEF No. 35, ¶ 3). However, defendant's former counsel affirms "[t]his is categorically false" and neither he nor those present at the settlement conference in May 2019 ever claimed or acknowledged that plaintiff had made a financial contribution toward the purchase of any of the Properties (NYSCEF No. 55, affirmation of Andrew Muchmore, ¶ 6).
A. Legal Standards
A pleading must give "notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved and the material elements of each cause of action or defense" ( CPLR 3013 ). "[F]or a plaintiff to satisfy the requirements of CPLR 3013, the plaintiff cannot rely upon mere ‘buzz words’ or vague or conclusory allegations, but must instead set forth facts that truly address the underlying transactions and occurrences and the material elements of the claim" ( East Hampton Union Free School Dist. v. Sandpebble Bldrs., Inc. , 66 AD3d 122, 131 [2d Dept 2009], affd 16 NY3d 775 [2011] [Dillon, J., concurring in part, dissenting in part] [internal citations omitted] ).
A motion brought under CPLR 3211 (a) (7) addresses the sufficiency of a pleading (see Aristy-Farer v. State of New York , 29 NY3d 501, 509 [2017] ). The court must "accept the facts as alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory ( Leon v. Martinez , 84 NY2d 83, 87-88 [1994] ). "[I]f from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law," the motion will be denied ( Guggenheimer v. Ginzburg , 43 NY2d 268, 275 [1977] ). But, "allegations consisting of bare legal conclusions are not entitled to any such consideration" ( Connaughton v. Chipotle Mexican Grill, Inc. , 29 NY3d 137, 141 [2017] [internal quotation marks and citation omitted] ). Additionally, "the court is not required to accept factual allegations that are plainly contradicted by the documentary evidence or legal conclusions that are unsupportable based upon the undisputed facts" ( Robinson v. Robinson , 303 AD2d 234, 235 [1st Dept 2003] ). "When documentary evidence is submitted by a defendant ‘the standard morphs from whether the plaintiff stated a cause of action to whether it has one’ " ( Basis Yield Alpha Fund (Master) v. Goldman Sachs Group, Inc. , 115 AD3d 128, 135 [1st Dept 2014] [citations omitted] ).
Dismissal under CPLR 3211 (a) (1) is warranted "where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" ( Goshen v. Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 [2002] ). "A paper will qualify as ‘documentary evidence’ only if it satisfies the following criteria: (1) it is ‘unambiguous’; (2) it is of ‘undisputed authenticity’; and (3) its contents are ‘essentially undeniable’ " ( VXI Lux Holdco S.A.R.L. v. Sic Holdings, LLC , 171 AD3d 189, 193 [1st Dept 2019], quoting Fontanetta , 73 AD3d at 86-87 ).
The issue of standing concerns an injury in fact, expressed as "an actual legal stake in the matter being adjudicated" which thereby "ensures that the party seeking review has some concrete interest in prosecuting the action" ( Society of Plastics Indus. v. County of Suffolk , 77 NY2d 761, 772 [1991] [internal quotation marks and citation omitted] ). On a motion to dismiss brought under CPLR 3211 (a) (3), the defendant bears the burden of demonstrating that a plaintiff has no standing (see Brunner v. Estate of Lax , 137 AD3d 553, 553 [1st Dept 2016] ). In response, "the plaintiff has no burden of establishing its standing as a matter of law; rather, the motion will be defeated if the plaintiff's submissions raise a question of fact as to its standing" ( U.S. Bank N.A. v. Trulli , 179 AD3d 740, 742 [2d Dept 2020] [internal quotation marks and citation omitted] ).
"On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (5) on the ground that it is barred by the statute of limitations, a defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired’ ( Norddeutsche Landesbank Girozentrale v. Tilton , 149 AD3d 152, 158 [1st Dept 2017], quoting Benn v. Benn , 82 AD3d 548, 548 [1st Dept 2011] ). To meet this burden, it is incumbent upon the defendant to demonstrate when the claim accrued (see Lebedev v. Blavatnik , 144 AD3d 24, 28 [1st Dept 2016] ). The plaintiff, in response, must show "whether the statute of limitations is inapplicable or whether the action was commenced within the statutory period [and] must aver evidentiary facts establishing that the action was timely or raise an issue of fact as to whether the action was timely" ( MTGLQ Invs., LP v. Wozencraft , 172 AD3d 644, 645 [1st Dept 2019], lv dismissed 34 NY3d 1010 [2019] [internal quotation marks and citations omitted] ).
B. The First Cause of Action for an Accounting
As a first cause of action, plaintiff seeks an accounting of the "profit and loss and revenue related to the corporations and the properties" (NYSCEF No. 28, ¶ 11). "The right to an accounting is premised upon the existence of a confidential or fiduciary relationship and a breach of the duty imposed by that relationship respecting property in which the party seeking the accounting has an interest" ( Palazzo v. Palazzo , 121 AD2d 261, 265 [1st Dept 1986] ).
The first element of an accounting claim is the existence of a fiduciary relationship, the absence of which requires dismissal (see Front, Inc. v. Khalil , 103 AD3d 481, 483 [1st Dept 2013], affd 24 NY3d 713 [2015] ). "A fiduciary relationship arises ‘between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation’ " ( Roni LLC v. Arfa , 18 NY3d 846, 848 [2011] [internal citation omitted] ). "Put differently, ‘[a] fiduciary relation exists when confidence is reposed on one side and there is resulting superiority and influence on the other’ " (id. [internal citation omitted] ). Ascertaining whether such a relationship exists is a fact-specific inquiry (id ). Key to the determination are "the concepts of reliance, and de facto control and dominance" ( Northeast Gen. Corp. v. Wellington Adv. , 82 NY2d 158, 173 [1993] [internal quotation marks and citation omitted] ).
Defendants move to dismiss this cause of action under CPLR 3211 (a) (1), (3), (5), and (7). The motion is denied as to plaintiff's claim under this cause of action against Ngo's Management, granted as to her claims against Luong's Management and Zanadu, and granted as to her claims against Ha relating to the 7 parcels of real property.
With respect to the claims against Ngo's Management, defendants fail to offer any documentary evidence demonstrating that plaintiff lacks an ownership interest in that entity. Instead, defendants rely on their attorney's statement that plaintiff never was never a shareholder (NYSCEF No. 6, ¶¶ 55, 71-73). There is no indication, however, that this statement was made on personal knowledge. As such, defendants' contention that plaintiff has no "interest" in Ngo's Management fails, and that part of the motion brought under CPLR 3211 (a) (1) and (3) to dismiss the first cause of action against Ngo's Management is denied. In any event, plaintiff's submissions included a letter in which Ha acknowledged plaintiff as a "shareholder with half of Ngo's Management" (NYSCEF No. 36 at 10 and 17).
With respect to the branch of the motion brought under CPLR 3211 (a) (7), "[f]amily members stand in a fiduciary relationship toward one another in a co-owned business venture" ( Braddock v. Braddock , 60 AD3d 84, 88 [1st Dept 2009] appeal withdrawn 12 NY3d 780 [2009] ). The complaint, as supplemented by plaintiff's documentary evidence, satisfies the first element of the accounting claim. Plaintiff's joint ownership with Ha of Ngo's Management is sufficient to conclude there was a fiduciary relationship between them (see Unitel Telecard Distrib. Corp. , 90 AD3d at 569 [stating that shareholders in a closely held corporation owe a fiduciary duty to each other] ).
Defendants' contention that the accounting cause of action subject to dismissal under CPLR 3211 (a) (5) as time-barred is not supported. Accounting claims are subject to a six-year statute of limitations (see Kohan v. Nehmadi , 130 AD3d 429, 429 [1st Dept 2015] ). While the complaint does not apprise defendants of when the cause of action accrued (see CPLR 3013 ), counsel's letter to Ha on March 21, 2019 expressly references an accounting related to Ngo's Management (NYSCEF No. 36 at 26). There is no indication that Ha or Ngo's Management agreed to furnish an accounting after receiving the letter.
As for the claims against Luong's Management and Zanadu, the allegations in support of the accounting claim against those defendants are not sufficiently particular to give the court and defendants notice of the transactions at issue or the material elements for the claim (see CPLR 3013 ; see Eklund v. Pinkey , 27 AD3d 878, 879 [3d Dept 2006] [dismissing a cause of action for an accounting where the allegations were not sufficiently particular] ). The documentary evidence also utterly refutes plaintiff's claim that she has an ownership interest in Luong's Management or Zanadu.
The complaint alleges that plaintiff has a fiduciary relationship with "Defendant" (NYSCEF No. 28, ¶ 10), but "use of the word ‘fiduciary’ cannot alone establish fiduciary duties on the part of the named person or entity" ( SNS Bank v. Citibank , 7 AD3d 352, 356 [1st Dept 2004] [internal quotation marks and citation omitted] ). Here, the complaint fails to plead specific facts describing the basis for finding a confidential relationship between plaintiff and defendants. Plaintiff merely alleges that she has a "mutual interest," but the phrase is imprecise and not defined in the complaint. To the extent "mutual interest" can be construed to mean ownership, ownership does not always give rise to a fiduciary relationship.
It is well settled that a corporation does not owe its shareholders a fiduciary duty (see Unitel Telecard Distrib. Corp. v. Nunez , 90 AD3d 568, 569 [1st Dept 2011] ), and plaintiff did not plead that she owned any shares in Zanadu. Moreover, Zanadu's corporate tax returns, which constitute documentary evidence (see Liebman Goldberg & Hymowitz LLP , 2011 NY Slip Op 33654[U], *7), disprove the assertion that plaintiff is an owner. Her reliance on Zanadu's mortgages from 1989 and 2003 are unavailing, as the mere fact that plaintiff executed those documents as an officer does not automatically lead to the conclusion that she is a shareholder. The HPD printout listing plaintiff as an officer and a shareholder is not competent proof of her ownership in Zanadu. Significantly, plaintiff has not furnished the court with a stock certificate or any other document setting forth her ownership interest. And while plaintiff's attorney states that "a lot of the arrangements and agreements were both oral and written," the statement, made without personal knowledge, is insufficient.
Similarly, plaintiff did not plead that she is a member of Luong's Management, and the documents establish that she is not a member. Limited Liability Company Law § 102 (q) defines a "member" as "a person who has been admitted as a member of a limited liability company in accordance with the terms and provisions of this chapter and the operating agreement and has a membership interest in a limited liability company." A "membership interest" is "a member's aggregate rights in a limited liability company, including, without limitation: (i) the member's right to a share of the profits and losses of the limited liability company; (ii) the member's right to receive distributions from the limited liability company." ( Limited Liability Company Law § 102 [r] ). "[M]embers of a limited liability company may seek an equitable accounting under common law" ( Gottlieb v. Northriver Trading Co. LLC , 58 AD3d 550, 551 [1st Dept 2009] ).
The operating agreement and the tax returns for Luong's Management identify Ha or Ha and Meiling as its only members, and therefore, they utterly refute plaintiff's assertion that she has an ownership interest in that entity. Furthermore, the operating agreement provides a procedure for the admission of additional members (NYSCEF No. 17 at 2; see also Limited Liability Company Law § 602 [b] ), but plaintiff has not alleged that she complied with its provisions. Plaintiff has not submitted an affidavit or documentary evidence challenging this point.
The documentary evidence also establishes that plaintiff does not have a "mutual interest" in the 7 parcels of real property at issue. When parties jointly own real property, each is entitled to share in the rents and profits from that property (see Palazzo , 121 AD2d at 265 ). The deeds submitted on the motion show that neither plaintiff nor Ha own the Properties either jointly or separately in their own names. Although plaintiff and Ha are siblings, "[t]he mere fact that parties are siblings, standing alone, is insufficient to support a fiduciary relationship" ( Castellotti v. Free , 138 AD3d 198, 209 [1st Dept 2016] ; Meltzer v. Koenigsberg , 99 NYS2d 143, 148 [Sup Ct, Kings County 1950], affd 277 AD 1050 [2d Dept 1950] ).
Accordingly, that part of defendants' motion to dismiss the first cause of action is granted to the extent of dismissing the accounting cause of action against Luong's Management and Zanadu and so much of the cause of action against Ha related to the 7 properties.
C. The Second Cause of Action for Fraud and Conversion
The second cause of action for fraud and conversion is predicated upon Ha's "possession and control as well as dominion over the various properties and corporations" and his failure "make payment to the plaintiff of both rightful control and financial payment" (NYSCEF No. 28, ¶¶ 14-15).
A common-law fraud claim requires a plaintiff to plead "a misrepresentation or a material omission of fact which was false and known to be false by [the] defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" ( Ambac Assur. Corp. v. Countrywide Home Loans, Inc. , 31 NY3d 569, 578-579 [2018] [internal quotation marks and citation omitted] ). The complaint must "allege the basic facts to establish the elements of the [fraud] cause of action" ( Pludeman v. Northern Leasing Sys., Inc. , 10 NY3d 486, 492 [2008] ). "[B]undled, bare-boned and conclusory allegations" will not suffice ( MP Cool Invs. Ltd. v. Forkosh , 142 AD3d 286, 291 [1st Dept 2016], lv denied 28 NY3d 911 [2016] ). In addition, CPLR 3016 (b) provides that a claim for fraud must be pled with particularity, a requirement that is satisfied "when the facts are sufficient to permit a reasonable inference of the alleged conduct" ( Pludeman , 10 NY3d at 492 ).
Here, the fraud allegations in the complaint are merely bare legal conclusions and are devoid of the details requisite to pleading the claim with particularity (see Barclay Arms, Inc. v. Barclay Arms Assoc ., 74 NY2d 644, 646-647 [1989] [dismissing a cause of action for fraud under CPLR 3013 and 3016 (b) where "[t]he complaint did not allege the essential elements of a fraud claim"] ). Indeed, it is unclear whether plaintiff even intended to assert a fraud claim against the Corporate Defendants: the allegations largely pertain to Ha alone. Assuming she intended to do so, the complaint fails to disclose any fraudulent actions on the part of the Corporate Defendants (see Jonas v. National Life Ins. Co. , 147 AD3d 610, 612 [1st Dept 2017] [concluding that "lumping together all defendants" on a fraud claim was impermissible] ). "[T]he misconduct complained of [must] be set forth in sufficient detail to clearly inform a defendant with respect to the incidents complained of" ( Board of Mgrs. of 411 E. 53rd St. Condominium v. Dylan Carpet , 182 AD2d 551, 552 [1st Dept 1992] ), and plaintiff's failure to recount the Corporate Defendants' specific misconduct warrants dismissal of the fraud claim against them (see MP Cool Invs. Ltd. , 142 AD3d at 291 [dismissing a cause of action for fraud where the "[a]ctual specific false factual statements" were not identified] ).
Nor does the complaint adequately plead a claim for fraud against Ha. The complaint does not discuss the specific misconduct Ha engaged in, including the actions Ha promised to undertake, when or how the promise was made, or when Ha failed to perform them. As such, the complaint does not comport with CPLR 3013 or 3016 (b) and inform Ha of the circumstances constituting the alleged wrong (see Sonkin v. Sonkin , 157 AD3d 414, 415 [1st Dept 2018], lv denied 32 NY3d 904 [2018] ; MP Cool Invs. Ltd. , 142 AD3d at 291 ).
The complaint also has not alleged that Ha "knowingly uttered a falsehood" ( CPC Intl. Inc. v. McKesson Corp ., 70 NY2d 268, 285 [1987] [internal quotation marks and citation omitted] ), or laid out facts from which Ha's knowledge of the misrepresentation or fraudulent intent to induce plaintiff's reliance can reasonably be inferred (see Cronos Group Ltd. v. XComIP, LLC , 156 AD3d 54, 72 [1st Dept 2017] [stating that the plaintiff failed to plead "specific facts from which it may be reasonably inferred that the defendant did not intend to keep the promise when it was made"]; FNF Touring LLC v. Transform Am. Corp ., 111 AD3d 401, 402 [1st Dept 2013] [concluding that the plaintiff offered no facts from which the defendant's intent to induce the plaintiff's reliance could be inferred] ).
Ordinarily, the third element of justifiable reliance is not one suitable to resolution on a motion to dismiss ( Braddock v. Braddock , 60 AD3d 84, 88 [1st Dept 2009], appeal withdrawn 12 NY3d 780 [2009] ). In this instance, however, absent facts describing Ha's purported misrepresentation, plaintiff has not adequately alleged that her reliance on that misrepresentation was reasonable. The complaint also lacks any information illustrating how plaintiff's reliance on an alleged misrepresentation caused her to change her position or caused her "not to take some other, more beneficial course of action" ( Waggoner v. Caruso , 20 Misc 3d 1146[A], 2008 NY Slip Op 51891[U], *19-20 [Sup Ct, NY County 2008], affd 68 AD3d 1 [1st Dept 2009], affd 14 NY3d 874 [2010] ).
With respect to conversion, "[t]he tort of conversion is established when one who owns and has a right to possession of personal property proves that the property is in the unauthorized possession of another who has acted to exclude the rights of the owner" ( Republic of Haiti v. Duvalier , 211 AD2d 379, 384 [1st Dept 1995] ). To state a cause of action for conversion, the complaint must plead the "(1) plaintiff's possessory right or interest in the property and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's rights’ " ( Pappas v. Tzolis , 20 NY3d 228, 234 [2012], rearg denied 20 NY3d 1075 [2013], quoting Colavito v. New York Organ Donor Network, Inc. , 8 NY3d 43, 50 [2006] ).
The allegations on the conversion claim are deficient. "The subject matter of a conversion cause of action ‘must constitute identifiable tangible personal property’; real property and interests in business opportunities will not suffice" ( C & B Enters. USA, LLC v. Koegel , 136 AD3d 957, 958 [2d Dept 2016] [internal quotation marks citations omitted]; accord Benn , 82 AD3d at 550 [dismissing so much of the cause of action for conversion predicated upon the conversion of real property] ). Here, plaintiff complains of Ha's possession and control over the Properties and the Corporate Defendants, but these allegations concern real property and business interests. As such, plaintiff has no claim for conversion. In any event, assuming plaintiff may assert a claim for conversion over real property, the documents offered on the motion establish that she owns no legal title to any of the Properties (see Thea v. Thea , 284 AD2d 245, 245 [1st Dept 2001] [dismissing a cause of action for conversion as "legally insufficient, since plaintiffs had neither legal title to the funds, nor any possessory interest in them"] ).
Regarding the Livingston Street property, which is owned by Ngo's Management, plaintiff complains she is a commercial tenant and that Ha has locked her out of the premises. However, conversion of a leasehold is not a cognizable cause of action (see Sun Gold Corp. v. Stillman , 95 AD3d 668, 669-670 [1st Dept 2012] ). Moreover, the contract of sale for "Designer Nails Inc" establishes that Ha purchased the business in his own name. Plaintiff, in response, has not added any facts to bolster her claim of a "mutual interest" in the nail salon business at Livingston Street or the equipment therein (see MBF Clearing Corp. v. Shine , 212 AD2d 478, 479 [1st Dept 1995] ).
To the extent a claim for conversion of intangible property, such as shares of stock, can be sustained (see Thyroff v. Nationwide Mut. Ins. Co. , 8 NY3d 283, 299 [2007] ), the complaint does not allege that Ha converted plaintiff's shares of stock or her membership interest in the Corporate Defendants.
The complaint also fails to adequately plead a claim for the conversion of money. To state a claim for the conversion of money, the complaint must describe "a specific, identifiable fund and an obligation to return or otherwise treat in a particular manner the specific fund in question" ( Amity Loans v. Sterling Natl. Bank & Trust Co. of NY , 177 AD2d 277, 279 [1st Dept 1991] [internal quotation marks and citation omitted] ). Plaintiff refers to a "payment" due to her (NYSCEF No. 28, ¶ 15), but fails to identify a specific, identifiable fund that forms the basis of the claim (see Pritsker v. Oppenheimer Acquisition Corp. , 178 AD3d 429, 430 [1st Dept 2019] ).
Assuming plaintiff seeks her share of the profits from the Corporate Defendants, the funds used to pay a dividend or distribution are generally maintained in a corporate account, and "commingled funds cannot be the subject of a claim of conversion" ( Jakob v. Gershwin Partners, Inc ., 2011 NY Slip Op 33873[U], *5 [Sup Ct, NY County 2011], citing Auguston v. Spry , 282 AD2d 489, 291 [2d Dept 2001] ). Plaintiff also has not alleged the Corporate Defendants have declared a dividend or distribution. Accordingly, defendants' motion for dismissal of the second cause of action for fraud and conversion is granted, and the second cause of action is dismissed.
D. The Third Cause of Action for a Constructive Trust
The third cause of action pleads a claim for the imposition of a constructive trust, presumably on Ha's assets. A constructive trust is an equitable remedy intended to prevent unjust enrichment ( Sharp v. Kosmalski , 40 NY2d 119, 123 [1976] ). To plead a cause of action for a constructive trust, the complaint must allege "(1) a confidential or fiduciary relation, (2) a promise, (3) a transfer in reliance thereon and (4) unjust enrichment" ( id. at 121 ).
Here, the statements in the complaint are too vague and conclusory to give defendants notice of the specific transactions at issue or when they occurred in accordance with CPLR 3013. Indeed, the complaint recites only legal conclusions, which is insufficient (see Connaughton , 29 NY3d at 141 ). The complaint alleges there is a fiduciary relationship between plaintiff and Ha, but this general statement is not supported by specific factual averments describing the circumstances giving rise to a confidential relationship (see Kopelowitz & Co., Inc. v. Mann , 83 AD3d 793, 798 [2d Dept 2011] [dismissing a cause of action for a constructive trust where the complaint did not plead any facts showing that the parties had entered a fiduciary relationship] ). For example, the complaint lacks an allegation that Ha enjoyed a position of confidence or superiority with plaintiff, that he was under any duty to act or give advice to her, or that she relied on Ha's expertise in a particular matter (see Roni LLC Arfa , 18 NY3d at 848 ). Thus, the fundamental basis for a fiduciary relationship is lacking.
Similarly, the statement that "[p]laintiff relying on the Defendant's Luong promise and fiduciary relationship entrusted funds" to him (NYSCEF No. 28, ¶¶ 21-22) is conclusory (see Gaidon v. Guardian Life Ins. Co. of Am. , 255 AD2d 101, 101-102 [1st Dept 1998], mod on other grounds 94 NY2d 330 [1999] [concluding that "[t]he alleged reliance and trust necessary for a finding of such relationship are stated in conclusory fashion"] ). Plaintiff's claim that Ha "promised to give information" (NYSCEF No. 28, ¶ 20) is insufficient to establish that he was under any duty to do so, nor does the statement describe the promise in detail. Moreover, as noted above, a familial relationship is insufficient to establish a confidential relationship (see Castellotti , 138 AD3d at 209 ).
Whether plaintiff has sufficiently pled that a fiduciary relationship exists for the accounting cause of action also has no bearing on whether a fiduciary relationship exists for purposes of the constructive trust cause of action. "A constructive trust will be impressed when an unfulfilled promise to convey an interest induces another, in the context of a confidential or fiduciary relationship, to make a transfer resulting in unjust enrichment" ( McGrath v. Hilding , 41 NY2d 625, 628-629 [1977). In effect, a constructive trust claim concerns the defendant's alleged abuse of the relationship of trust and confidence placed in the defendant by the plaintiff (see Sharp , 40 NY2d at 121-122 ).
In this action, the complaint lacks specific factual statements describing a fiduciary relationship or facts sufficient to infer that Ha abused that relationship to induce plaintiff to entrust him with funds. In contrast, on the accounting cause of action, the mere fact of plaintiff's and Ha's joint ownership of Ngo's Management is sufficient to conclude that a fiduciary relationship exists. Consequently, absent a fiduciary relationship, the third cause of action for a constructive trust must be dismissed (see Evans v. Rosen , 111 AD3d 459, 459 [1st Dept 2013] ). Plaintiff has not tendered an affidavit in response to cure this pleading deficiency.
In view of the foregoing, the court need not address the other arguments raised by defendants in support of dismissal.
Accordingly, it is
ORDERED that the branch of defendants' motion under CPLR 3211 seeking to dismiss the complaint against defendants Luong's Management, LLC., and Zanadu Realty of NY Ltd is granted, and the complaint is dismissed in its entirety against defendants Luong's Management, LLC., and Zanadu Realty of NY Ltd, with costs and disbursements to said defendants as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of said defendants; and it is further
ORDERED that the action is severed and continued against the remaining defendants Ha The Luong and Ngo's Management Inc.; and it is further
ORDERED that the branch of defendants' motion under CPLR 3211 seeking to dismiss the complaint against defendants Ha The Luong and Ngo's Management Inc is granted to the extent of dismissing the second and third causes of action against them, and the motion is otherwise denied; and it is further
ORDERED that counsel for defendants Luong's Management, LLC., and Zanadu Realty of NY Ltd shall serve a copy of this order with notice of its entry on all parties and on the County Clerk (Room 141B) and the Clerk of the Trial Support Office (Room 158); and it is further
ORDERED that counsel for defendants may serve notice of entry by mail or by overnight delivery service; and it is further
ORDERED that counsel for defendants shall e-file a copy of its notice of entry (and the accompanying affidavit(s) of service) on NYSCEF as soon as filing in pending nonessential matters is again permitted by order of Chief Administrative Judge Lawrence Marks;
ORDERED that defendants Ha The Luong and Ngo's Management Inc. shall serve an answer to the complaint within 40 days after service of notice of entry, and shall e-file a copy of that answer on NYSCEF as soon as filing in pending nonessential matters is again permitted by order of Chief Administrative Judge Marks; and it is further
ORDERED that the parties shall confer and prepare a joint request for a preliminary conference with this court, as set forth in the Remote Conference Protocol available on this court's website, http://ww2.nycourts.gov/courts/1jd/supctmanh/index.shtml.