Opinion
No. 600537/09.
2010-08-9
Najung SEUNG, Plaintiff, v. FORTUNE COOKIE PROJECTS and Mary Dinaburg, Defendants.
Michael F. Maschio, Esq. and Meichelle R. MacGregor, Esq., of Cowan, Liebowitz & Latman, P.C. for the Plaintiff. Alan Effron, Esq., of Pelosi Wolf Effron & Spates LLP for the Defendants.
Michael F. Maschio, Esq. and Meichelle R. MacGregor, Esq., of Cowan, Liebowitz & Latman, P.C. for the Plaintiff. Alan Effron, Esq., of Pelosi Wolf Effron & Spates LLP for the Defendants.
EILEEN BRANSTEN, J.
Plaintiff Najung Seung (“Plaintiff”) moves pursuant to Rule 2221(d) of the Civil Practice Law and Rules (“CPLR”) for leave to reargue this Court's October 16, 2009 Decision and Order (the “October 16, 2009 Decision”) granting Defendants Fortune Cookie Projects' (“Fortune Cookie”) and Mary Dinaburg's (“Dinaburg,” and, collectively with Fortune Cookie, “Defendants”) motion to dismiss the complaint. Defendants oppose the motion.
BACKGROUND
Plaintiff is a citizen of the Republic of Korea. Complaint at ¶ 1. Fortune Cookie is an organization started in 2006 to curate and organize exhibitions of art throughout the far east. Id. at ¶ 6. Dinaburg is Fortune Cookie's founder. Id.
Plaintiff became familiar with Dinaburg through an acquaintance employed as Dinaburg's assistant. Id. at ¶ 7. Plaintiff regarded Dinaburg as a knowledgeable art dealer, well versed in the value of artwork. Id.
In May of 2006, Plaintiff paid Dinaburg and non-party Dinaburg Arts, LLC $118,000 for a painting by John Wesley entitled “Bulls and Bed” Id. at ¶ 8. Despite receiving Plaintiff's payment in full, Dinaburg thereafter sold the Wesley painting to a third party. Id. at ¶ 10. Dinaburg then offered Plaintiff a $200,000 credit to purchase a new painting. Id. at ¶ 12. The $200,000 credit represented Plaintiff's initial $118,000 payment for the Wesley painting plus the $82,000 profit Dinaburg made on her sale of the work to the third party. Id.
On March 14, 2008, Dinaburg offered Plaintiff a substitute painting, a work by Julian Schnabel entitled “Chinkzee.” Id. Dinaburg represented to Plaintiff that the Schnabel painting was worth $500,000, but that she would sell the painting to Plaintiff for $380,000, the gallery's price. Id. at ¶ 13. Plaintiff contends that she relied upon Dinaburg's representation of the Schnabel painting's value and advanced to Dinaburg an additional $90,000 to purchase the painting. In addition to $118,000 Plaintiff had already provided for the Wesley painting, and the $82,000 Dinaburg credited to Plaintiff for the profit of the third-party sale of the Wesley painting, Plaintiff then owed a balance of approximately $90,000 for the new painting. Id. at ¶ 18.
After Plaintiff provided the $90,000 payment to Defendants for the Schnabel painting, Plaintiff learned that the painting had recently sold at an auction for $156,000, and that the sale price had been estimated before the auction as $60,000 to $80,000. Id. at ¶ 19. Plaintiff further discovered that an appraisal by Sotheby's placed the market value of the Schnabel painting at no more than $100,000 to $110,000. Id.
On February 19, 2009, Plaintiff filed the instant complaint. Plaintiff seeks return of the $208,000 she provided to Defendant and the $82,000 Dinaburg had received as profit for her sale of the Wesley painting to the third-party. Plaintiff asserted claims for fraud, negligent misrepresentation, promissory estoppel and unjust enrichment. On July 27, 2009, Defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7). Defendants prevailed in a decision dated October 16, 2009 (the “October 16, 2009 Decision”).
In the October 16, 2009 Decision, this Court dismissed Plaintiff's claim for fraud on the grounds that Plaintiff's blind reliance on Dinaburg's representation of the Schnabel painting's value was not reasonable. The Court found that the sale of the painting constituted an arm's length transaction and, thus, Plaintiff was not entitled to rely upon Dinaburg's statement of the Schnabel painting's value. The Court dismissed Plaintiff's negligent misrepresentation claim on the grounds that Plaintiff failed to plead the requisite underlying relationship of trust and confidence essential to establish the claim's necessary element of a special relationship between the parties. The Court dismissed Plaintiff's claim for promissory estoppel upon finding that Plaintiff's failure to independently ascertain the value of the Schnabel painting prevented Plaintiff from reasonably relying on Dinaburg's statements of the painting's value. Furthermore, the Court found that Plaintiff failed to allege any reliance damages. Finally, the Court dismissed Plaintiff's claim of unjust enrichment on the grounds that Plaintiff was not entitled to rely on Dinaburg's representations of the Schnabel painting's value. The court found that because Plaintiff could have, but did not, obtain an independent appraisal of the Schnabel painting, Defendants were not unjustly enriched.
Plaintiff now moves, pursuant to CPLR 2221(d), for leave to reargue this Court's October 16, 2009 Decision on all claims.
ANALYSIS
A motion for leave to reargue pursuant to CPLR 2221(d) “shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion.” CPLR 2221(d)(2); People v. D'Alessandro, 13 NY3d 216, 219 (2009).
A. Special Relationship
Plaintiff contends that the Court overlooked the standard of law regarding special relationships when it granted Defendants' motion to dismiss pursuant to CPLR 3211(a)(7). Plaintiff's Memorandum of Law in Support of Motion to Reargue (“Mem. in Supp.” at 4. Plaintiff argues that the nature of the parties' relationship should be resolved by a trier of fact and not as a matter of law. Id. Alternatively, Plaintiff claims the Court misapprehended the facts alleged in Plaintiff's complaint in determining that the complaint does not sufficiently establish a special relationship between the parties. Id.
In opposition to Plaintiff's current motion, Defendants argue that the issue of whether a special relationship existed between the parties is appropriate for summary disposition. Defendants' Memorandum of Law in Opposition to Plaintiff's Motion to Reargue (“Mem. in Opp.”) at 7. Furthermore, Defendants contend that Plaintiff failed to allege facts sufficient to establish that a special relationship existed between the parties, and Plaintiff's bare allegation that a special relationship existed is insufficient to defeat a motion to dismiss. Id.
The October 16, 2009 Decision was a motion to dismiss. On a motion to dismiss pursuant to CPLR 3211(a)(7), the pleading is to be afforded a liberal construction. CPLR 3026; Thomas v. Thomas, 70 AD3d 588, 590 (1st Dep't 2010). The Court “accept[s] the facts as alleged in the complaint as true, accord[s] plaintiffs the benefit of every possible favorable inference, and determine[s] only whether the facts as alleged fit within any cognizable legal theory.” Leon v. Martinez, 84 N.Y.2d 83, 87–88 (1994) (internal citations omitted). Under CPLR 3211(a)(7), “the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one.” Id. at 88 (internal quotations and citations omitted).
Plaintiff cites Hutchins v. Utica Mut. Ins. Co., 107 A.D.2d 871 (3rd Dep't 1985), Callahan v. Callahan, 127 A.D.2d 298 (3rd Dep't 1987), and Knight Securities, L.P. v. Fiduciary Trust Co., 5 AD3d 172 (1st Dep't 2004) for the general proposition that the determination of whether a special relationship exists is a question of fact and is inappropriate for resolution at the pleadings stage. However, the First and Third Departments found in each case that summary disposition was inappropriate because the facts stated a possible special relationship between the parties. Here, Plaintiff's alleged facts regarding the parties' relationship did not and do not reasonably present the possibility of finding a special relationship.
In Hutchins v. Utica Mut. Ins. Co., the plaintiffs alleged fraud and misrepresentation against their casualty automobile insurance carrier and its claims adjuster. Hutchins, 107 A.D.2d at 871. The record indicated that the defendant “may have held himself out as an experienced claims adjuster, familiar with the legal ramifications of the [automobile] accident, discouraged plaintiffs from retaining counsel, and attempted to influence their decision concerning settlement.” Id. at 872. Based on these allegations, the Third Department found there was “clearly a question of fact as to whether [the defendant] attempted to establish a relationship of trust with [the] plaintiffs in an effort to induce a minimal settlement.” Id.
In Callahan v. Callahan, the plaintiff alleged that her ex-husband's attorney, a “trusted friend of both herself and [her ex-husband],” misrepresented the value of property co-owned by the plaintiff and her ex-husband while negotiating their separation agreement and advised the plaintiff that she did not need her own attorney. Callahan, 127 A.D.2d at 301. The plaintiff alleged that due to her past friendship with her ex-husband's attorney, she “relied on his advice in signing the documents.” Id. at 299–301. The Third Department found that the plaintiff had alleged facts sufficient to establish that her ex-husband's attorney owed her a fiduciary duty. Id. at 301. The Court stated that “[t]he law is clear that an attorney who induces a nonclient to forego the advice of separate counsel in reliance on his own advice may be liable for any false representations made to the nonclient.” Id.
Plaintiff further cites Knight Securities L.P. v. Fiduciary Trust Co. for the general proposition that no determinations of special relationships should be made at the pleadings stage. See Knight Secs. L.P., 5 AD3d at 174 (stating “whether there was a special relationship between the parties at bar is a factual issue inappropriate for summary adjudication”). However, the Knight Securities opinion does not contain any of the facts upon which that decision was based. Therefore, it cannot be used as a basis for comparison with the present case.
In the present case, Plaintiff failed to allege facts in her complaint sufficient to establish any questions of fact regarding her relationship with Defendants beyond that of a buyer and a seller. “Where no such allegations have existed, courts have not hesitated to dismiss negligent misrepresentation claims on motions to dismiss.” JP Morgan Chase Bank v. Winnick 350 F.Supp.2d 393 (S.D.NY 2004); see also Andres v. LeRoy Adventures, 201 A.D.2d 262, 262 (1st Dep't 1994) (affirming dismissal of a negligent misrepresentation claim on the grounds that a special relationship “could not be discerned from the arms' length dealings between the parties alleged in the complaint”; Delcor Laboratories, Inc. v. Cosmair, Inc., 169 A.D.2d 639, 640 (1st Dep't 1994) (“Inasmuch as the IAS court was required to accept all allegations in the complaint as true, and draw all inferences in plaintiffs' favor, for purposes of considering viability of the claim on this dismissal motion, the court in applying that standard had authority to evaluate the sufficiency of the alleged special relationship, as a matter of law” (citations omitted)).
The Court has not misapprehended the facts in determining that the parties acted as arm's length buyer and seller in the transaction at issue. Plaintiff's conclusory statements and alleged facts are insufficient to establish that a special relationship existed between the parties. The Court applied the proper standard of law in so finding.
B. Fraud
Plaintiff contends second that the Court overlooked the law and facts relating to Plaintiff's fraud claims. Mem. in Supp. at 5. Plaintiff argues Defendants made misrepresentations of the Schnabel painting's value to induce Plaintiff to purchase the work at an inflated price. Id. at 7. Plaintiff further claims that Defendants sought to gain Plaintiff's trust by promising to make amends for selling the Wesley painting to a third party. Id. Plaintiff argues that Defendants attempted to induce Plaintiff's trust in Dinaburg in order to induce Plaintiff into relying on Dinaburg's statements regarding the Schnabel painting's value, statements which Dinaburg knew to be false. Id. at 7–8. Plaintiff asserts that her reliance on Dinaburg's misrepresentations was justified and she was therefore fraudulently induced into purchasing the Schnabel painting. Id. at 8.
Defendants argue that Plaintiff failed to sufficiently plead reasonable reliance on Dinaburg's statements of the Schnabel painting's value. Mem. in Opp. at 3. Defendants contend that Plaintiff's alleged reliance on Dinaburg's representation of the painting's value was unreasonable because Plaintiff did not seek to obtain her own appraisal of the painting. Id. at 4–5. Furthermore, Defendants argue that Plaintiff's alleged facts regarding the parties' relationship are insufficient to establish the special relationship of trust or confidence required for Plaintiff to blindly rely on Dinaburg's representations of the painting's value. Id. at 9.
A claim for fraud requires “a representation of fact, which is either untrue and known to be untrue or recklessly made, and which is offered to deceive the other party and to induce them to act upon it, causing injury.” Jo Ann Homes at Bellmore, Inc. v. Dworetz, 25 N.Y.2d 112, 119 (1969); see also McMorrow v. Dime Savings Bank of Williamsburgh, 48 AD3d 646, 647 (2nd Dep't 2008). A party is not justified in relying on any alleged misrepresentations if the facts were not peculiarly within the other party's knowledge and the party “had the means to discover the truth by the exercise of ordinary intelligence.” Joseph v. NRT Inc., 43 AD3d 312, 313 (1st Dep't 2007).
The Court properly found that the sale of the Schnabel painting was an arm's length transaction and that no special relationship existed between the parties. Plaintiff was therefore not entitled to rely upon Dinaburg's assessment of the painting's value, and the painting's value was not peculiarly within Defendants' knowledge. Plaintiff conceded that she did not attempt to ascertain the painting's value until after she agreed to its purchase. Plaintiff, therefore, did not show justifiable reliance on misrepresentations by Defendants, and the Court properly dismissed Plaintiff's fraud claim.
C. Negligent Misrepresentation
Plaintiff next argues that the Court overlooked the facts and misapprehended the law in finding that Plaintiff was not entitled to rely upon Dinaburg's representations regarding the Schnabel painting's value. Mem. in Supp. at 8–9. Plaintiff contends that the facts alleged in the complaint established a special relationship between the parties which justified Plaintiff's reliance on Dinaburg's representations of the Schnabel painting's value. Id. at 10.
Defendants contend that Plaintiff failed to plead facts sufficient to establish that her reliance on Dinaburg's alleged representations of the Schnabel painting's value was reasonable. Mem. in Opp. at 3–4.
A claim for negligent misrepresentation requires the plaintiff to allege facts sufficient to establish that the defendant “possess[es] unique or specialized expertise, or [is] in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified.” Kimmell v. Schaefer, 89 N.Y.2d 257, 263 (1996).
The facts alleged in Plaintiff's complaint fails to establish that Defendants were in a special position of confidence and trust with Plaintiff. See § A, supra. Thus, Plaintiff's reliance on Dinaburg's representations of the Schnabel painting's value was not justified and the Court properly dismissed Plaintiff's negligent misrepresentation claims.
D. Promissory Estoppel
Plaintiff next claims that the Court overlooked the facts in dismissing Plaintiff's claim of promissory estoppel. Mem. in Supp. at 13. Plaintiff argues that she sufficiently alleged a special relationship of trust and confidence between the parties in her complaint justifying her reliance on Dinaburg's representations of the Schnabel painting's value. Id.
A cause of action for promissory estoppel must state “a clear and unambiguous promise, reasonable and foreseeable reliance by the party to whom the promise is made, and an injury sustained in reliance on that promise.” Braddock v. Braddock, 60 AD3d 84, 95 (1st Dep't 2009) quoting Williams v. Eason, 49 AD3d 866, 868 (2nd Dep't 2008).
The Court properly found that Plaintiff was not entitled to rely on Dinaburg's representations of the Schnabel painting's value because the sale of the Schnabel painting constituted an arm's length relationship between a buyer and seller. Plaintiff has presented no facts showing otherwise. The Court properly dismissed Plaintiff's claim.
E. Unjust Enrichment
Finally, Plaintiff contends that the Court misapprehended the law when applying Mandarin Trading Ltd. v. Wildenstein, 65 AD3d 448 (1st Dep't 2009) to dismiss Plaintiff's unjust enrichment claims. Mem. in Supp. at 10–11. Plaintiff argues that the present case is distinguishable from Mandarin Trading because in that case the First Department dismissed the plaintiff's unjust enrichment claim upon finding no relationship between the parties. Mem. in Supp. at 11. Plaintiff asserts that the facts here were sufficiently plead to establish a relationship between the parties. Id.
Defendants argue that Plaintiff's unjust enrichment claim requires that Plaintiff's reliance on Dinaburg's statements of the Schnabel painting's value be reasonable. Mem. in Opp. at 12. Defendants argue that Plaintiff's allegations that Dinaburg, as seller of the Schnabel painting, made verbal statements of the Schnabel painting's value are insufficient to establish Plaintiff's reasonable reliance thereon. Id.
“To state a cause of action for unjust enrichment, a plaintiff must allege that it conferred a benefit upon defendants and that defendants will obtain such benefit without adequately compensating plaintiff.' “ Lake Erie Distributors, Inc. v. Martlet Importing Co., 221 A.D.2d 954, 956 (4th Dep't 1995) (quoting Tarrytown House Condominiums, Inc. v. Hainje, 161 A.D.2d 310, 313 (1st Dep't 1990).
In Mandarin Trading, the First Department dismissed the plaintiff's claims of unjust enrichment on the grounds that the plaintiff was not entitled to rely on the defendant's appraisal of the painting. Mandarin Trading, 65 AD3d at 451–52. The First Department found that because the plaintiff failed to establish that the defendant was aware of the plaintiff's existence, the defendant's statements could not have been made with the intention of inducing the plaintiff's reliance. Id. at 450. Furthermore, the First Department found that even if the defendant had been enriched, the enrichment was not unjust because the plaintiff “could have, but did not, obtain its own appraisal.” Id. at 452.
Here, the Court found that Plaintiff was not entitled to rely on Dinaburg's representations of the Schnabel painting's value. However, this Court arrived at its conclusion for different reasons than the First Department in Mandarin Trading. In the present case, the Court properly found that due to the parties' buyer/seller relationship, the sale of the Schnabel painting was an arm's length transaction. The Court thus found that Plaintiff was not entitled to rely solely on Dinaburg's representations of value regarding the Schnabel painting.
The Court's dismissal of Plaintiff's unjust enrichment claim on the grounds that Plaintiff was not entitled to rely on Dinaburg's representations of the Schnabel painting's value is in accord with the First Department's decision. The Court properly dismissed Plaintiff's unjust enrichment claim.
Accordingly, it is
ORDERED that Plaintiff's motion for leave to reargue is denied.
This constitutes the decision and order of the Court.