Opinion
05-30-2024
SIRE SPIRITS, LLC, et al., Plaintiffs-Appellants, v. BEAM SUNTORY, INC., et al., Defendants-Respondents, Julious Grant et ah, Defendants.
Blank Rome LLP, New York (Eamon O’Kelly of counsel), for appellants. MoloLamken LLP, New York (Steven F. Molo of counsel), for Beam Suntory, Inc. and Jim Beam Brands Co., respondents. Arnold & Porter Kaye Scholer LLP, New York (Paul J. Fishman of counsel), for Michael Caruso, Gina Caruso, MCF Consulting, Inc., and G2J Brand, Inc., respondents.
Blank Rome LLP, New York (Eamon O’Kelly of counsel), for appellants.
MoloLamken LLP, New York (Steven F. Molo of counsel), for Beam Suntory, Inc. and Jim Beam Brands Co., respondents.
Arnold & Porter Kaye Scholer LLP, New York (Paul J. Fishman of counsel), for Michael Caruso, Gina Caruso, MCF Consulting, Inc., and G2J Brand, Inc., respondents.
Moulton, J.P., Scarpulla, Shulman, Higgitt, O’Neill Levy, JJ.
Orders, Supreme Court, New York County (Melissa A. Crane, J.), entered August 21, 2023 and August 29, 2023, which, insofar as appealed from as limited by the briefs, granted defendants Beam Suntory, Inc. and Jim Beam Brands Co.’s (together, Beam) motion to dismiss the claims for conspiracy to commit fraud and aiding and abetting fraud (counts IV and VII), granted defendant Gina Caruso’s motion to dismiss the fraud and unjust enrichment claims against her (counts I, III, VI, and XII), and granted defendants Michael Caruso’s, MCF Consulting, Inc.’s, and G2J Brand, Inc.’s (collectively, with Gina Caru- so, the Caruso defendants) motion to dismiss the claim for unjust enrichment against them (count XII), and struck plaintiffs’ requests for punitive damages and attorneys’ fees incurred in a prior arbitration, unanimously affirmed.
[1] The court properly dismissed the conspiracy to commit fraud and aiding and abetting fraud claims asserted against the Beam defendants (counts IV and VII) insofar as based on defendant Michael Caruso’s apparent authority to act on behalf of Beam. The amended complaint does not allege words or conduct of a Beam executive (defendant Julius Grant) that would give rise to a reasonable belief on plaintiffs’ part that Caruso, in engaging in the alleged fraudulent conduct, was acting as an employee or agent of the Beam defendants with authority to act on their behalf (see e.g. VFP Invs. I LLC v. Foot Locker, Inc., 147 A.D.3d 491, 492, 48 N.Y.S.3d 27 [1st Dept. 2017], lv denied 29 N.Y.3d 910, 2017 WL 2435371 [2017]). Contrary to plaintiffs’ contentions, the complaint does not allege "explicit representations" by Grant about Caruso’s authority to act on behalf of Beam. Rather, it alleges only a vague statement by Grant concerning the nature of Caruso’s relationship with Grant and with Beam.
[2] The court properly dismissed the fraud-based claims against defendant Gina Caruso (counts I, III, VI) for failure to adequately plead scienter (see Manda Intl. Corp. v. Yager, 139 A.D.3d 594, 32 N.Y.S.3d 145 [1st Dept. 2016]; National Westminster Bank v. Weksel, 124 A.D.2d 144, 511 N.Y.S.2d 626 [1st Dept. 1987], lv denied 70 N.Y.2d 604, 519 N.Y.S.2d 1027, 513 N.E.2d 1307 [1987]). With respect to Gina, the complaint alleges that "upon information and belief," she was an officer of defendants MCF Consulting and G2J Brand, without any allegations as to her actual job responsibilities, and alleges only a single ministerial act of mailing company documents (allegedly fraudulent invoices) on a number of occasions. These allegations, alone, are not sufficient to support the rational inference that Gina knew that the invoices she mailed were part of a fraudulent embezzlement scheme involving Michael Caruso and defendant companies.
[3] In addition, the court correctly dismissed the unjust enrichment claim asserted against the Caruso defendants (Count XII) as duplicative of the fraud claims (see Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777, 790-791, 944 N.Y.S.2d 732, 967 N.E.2d 1177 [2012]; Apollo Mgt., Inc. v. Cernich, 202 A.D.3d 527, 528, 163 N.Y.S.3d 503 [1st Dept. 2022]). Contrary to plaintiffs’ contention, the complaint alleges only that the Caruso defendants received kickbacks in connection with their participation in the fraud; it does not allege the unjust enrichment claim in the alternative (see Tahari v. Narkis, 216 A.D.3d 557, 559, 190 N.Y.S.3d 16 [1st Dept. 2023]), and it has no allegations that could support the theory that the Caruso defendants knowingly received proceeds of criminal wrongdoing as gratuitous donees (see Metropolitan Bank & Trust Co. v. Lopez, 189 A.D.3d 443, 445, 137 N.Y.S.3d 319 [1st Dept. 2020]).
[4] The court correctly dismissed plaintiffs’ request for punitive damages. The complaint does not allege that defendants’ actions were "aimed at the public or showed the requisite moral turpitude" (Errant Gene Therapeutics, LLC v. Sloan-Kettering Inst. for Cancer Research, 174 A.D.3d 473, 475-476, 106 N.Y.S.3d 302 [1st Dept. 2019], citing New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 315-316, 639 N.Y.S.2d 283, 662 N.E.2d 763 [1995]). The court also correctly dismissed plaintiffs’ request for attorneys’ fees incurred in the prior arbitration. The narrow exception that allows for such recovery in cases where a defendant caused or required the plaintiff to sue a third party is not properly invoked here (see Chase Manhattan Bank v. Each Individual Underwriter Bound to Lloyd’s Policy No. 790/004A89005 , 258 A.D.2d 1, 690 N.Y.S.2d 570 [1st Dept. 1999]).