Opinion
Index No. 160271/202
05-22-2024
Mitchell Spirt, Plaintiff, v. Sheri Spirt, Defendant.
Markewich & Rosenstock LLP, New York, NY (Eve Rachel Markewich, Lawrence Rosenstock, and Emily Ramsdell of counsel), for plaintiff. Greenfield Stein & Senior, LLP, New York, NY (Angelo M. Grasso and Adam D. Solomon of counsel), for defendant.
Unpublished Opinion
Markewich & Rosenstock LLP, New York, NY (Eve Rachel Markewich, Lawrence Rosenstock, and Emily Ramsdell of counsel), for plaintiff.
Greenfield Stein & Senior, LLP, New York, NY (Angelo M. Grasso and Adam D. Solomon of counsel), for defendant.
Gerald Lebovits, J.
This action, brought by plaintiff, Mitchell Spirt, against his sister, defendant Sheri Spirt, is about who is the rightful beneficiary of the IRA of the parties' late mother, nonparty Leila Zuckerman.
In December 2016, Zuckerman opened the IRA at issue, designating plaintiff as its sole beneficiary upon Zuckerman's death. Plaintiff alleges that between December 2016 and August 2017, Zuckerman began to show increased "signs of dementia and cognitive decline, and became more and more dependent upon" defendant. (NYSCEF No. 1 at ¶ 9.) On August 17, 2017, defendant took charge of Zuckerman's financial affairs. (Id. at ¶ 11.) On August 29, 2017, Zuckerman changed the beneficiary of the IRA from plaintiff to defendant. (Id. at ¶ 14.) Zuckerman died in September 2018.
In October 2023, plaintiff brought this action. Plaintiff alleges that the 2017 change of beneficiary was either a forgery by defendant or the product of fraudulent inducement or undue influence exercised by defendant over Zuckerman. Plaintiff asserts five causes of action. The first three causes of action, sounding in undue influence, fraud, and unjust enrichment, seek damages in the amount of the IRA balance at Zuckerman's death. The fourth cause of action requests a declaratory judgment that the change of beneficiary is void and that plaintiff is the rightful beneficiary. The fifth cause of action seeks disgorgement of any funds distributed to defendant from the IRA.
Defendant now moves to dismiss the complaint in its entirety under CPLR 3211 (a) (5) and (a) (7). The motion is granted only as to the fifth cause of action and is otherwise denied.
DISCUSSION
I. The Branch of Defendant's Motion Seeking Dismissal of Plaintiff's Undue-Influence, Fraud, and Declaratory-Judgment Claims
Plaintiff's undue-influence, fraud, and declaratory-judgment claims are undisputedly subject to a six-year statute of limitations. Defendant argues that these claims are untimely, and therefore subject to dismissal under CPLR 3211 (a) (5), because the claims were brought on October 19, 2023-more than six years after the claims accrued upon the change of beneficiary that occurred on August 29, 2017. Defendant's argument fails because it does not account for COVID-19-related tolling of the statute of limitations.
Between March and November 2020, the governor signed a series of executive orders that tolled the statute of limitations for a total of 228 days due to the advent and effects of the COVID-19 pandemic. (See Murphy v Harris, 210 A.D.3d 410, 411 [1st Dept 2022] [holding that the governor's executive orders tolled the statute of limitations, rather than merely suspending it]; accord Brash v Richards, 195 A.D.3d 582, 582 [2d Dept 2021] [same].) Given that 228-day toll, the three claims at issue on this branch of the motion-brought 51 days after what otherwise would have been the expiration of the limitations period-are timely. Defendant's contrary argument that the governor's executive orders suspended, rather than tolled, the limitations period is foreclosed by the Appellate Division's decisions in Murphy and Brash.
II. The Branch of Defendant's Motion Seeking Dismissal of Plaintiff's Unjust-Enrichment Claim
Defendant also moves under CPLR 3211 (a) (5) to dismiss plaintiff's unjust-enrichment claim as untimely, asserting that the claim is governed by a three-year statute of limitations. This court disagrees.
The Appellate Division, First Department, has held that when a cause of action for unjust enrichment is based upon the same facts as, and pleaded in the alternative to, another cause of action, the unjust-enrichment claim is subject to the same statute of limitations as the cause of action to which it is the alternative. Thus, for example, a claim for unjust enrichment stemming from allegedly tortious conduct is subject to CPLR 214's three-year limitations period for tort claims. (See Bandler v DeYonker, 174 A.D.3d 461, 462 [1st Dept 2019].) On the other hand, when-as here-a claim for unjust enrichment stems from allegedly fraudulent conduct, the claim is subject to the six-year statute of limitations governing fraud claims. (See CPLR 213 [8]; Deutsche Bank, AG v Vik, 142 A.D.3d 829, 829 [1st Dept 2016] [fraudulent-conveyance claim].)
The same is true when the unjust-enrichment claim is pleaded as an alternative to a cause of action sounding in breach of contract, also subject to a six-year limitations period. (See CPLR 213 [2]; Maya NY, LLC v Hagler, 106 A.D.3d 583, 585 [1st Dept 2013].)
Defendant's contrary argument is based on the First Department's decision in Underground Utilities, Inc. v Comptroller of the City of New York, which describes unjust-enrichment claims as being subject to a three-year limitations period. (See 170 A.D.3d 481, 482 [1st Dept 2019].) But Underground Utilities did not suggest that it intended to depart from the First Department's precedents holding that the statute of limitations for "in the alternative" unjust-enrichment claims will depend on the limitations period of the underlying cause of action. Regardless, Underground Utilities's discussion of the unjust-enrichment statute of limitations is dicta: The claims at issue there were asserted nearly seven years after they accrued, rendering them untimely no matter which limitations period applied.
In short, this court agrees with plaintiff that Vik, rather than Underground Utilities, is the controlling First Department precedent here. Under Vik, plaintiff's unjust-enrichment claim is subject to a six-year statute of limitations-and is therefore timely for the same reason as the causes of action discussed in Point I, supra.
Defendant also appears to argue that the unjust-enrichment claim is untimely because it is based on the same allegations as plaintiff's fraud and undue-influence claims, which defendant asserts to be meritless. (See NYSCEF No. 12 at 3-4.) This argument, asserted for the first time on reply, is not properly before the court. In any event, defendant has not sought to dismiss the fraud and undue-influence claims under CPLR 3211 (a) (7) for failure to state a cause of action. Nor is it clear to the court-and defendant does not explain-why the (asserted) failure of those claims on the merits should affect what limitations period applies to the related unjust-enrichment cause of action.
III. The Branch of Defendant's Motion Seeking Dismissal of Plaintiff's Disgorgement Claim
Finally, defendant argues that plaintiff's cause of action seeking disgorgement should be dismissed because disgorgement is a remedy, not a freestanding cause of action. This court agrees. In NWM Capital, LLC v Scharfman, for example, the First Department held that a plaintiff's "allegations of disgorgement do not preclude dismissal" of plaintiff's claims against defendants against whom claims would not otherwise lie, because "disgorgement in this context is a remedy, not a cause of action." (144 A.D.3d 414, 415 [1st Dept 2016]. Similarly, in Marcum LLP v L'Abbate, Balkan, Colavita & Contini, L.L.P. (222 A.D.3d 486, 488 [1st Dept 2023]), the First Department treated plaintiff's request for disgorgement of attorney fees it had previously paid to defendants as, "essentially, a claim for monetary damages in connection with [plaintiff's] legal malpractice claim"; and therefore that dismissal of the malpractice claim also entailed dismissal of the disgorgement claim.
This court holds only that plaintiff may not maintain a freestanding claim sounding in disgorgement. This court need not, and does not, reach on this motion the question whether plaintiff may obtain disgorgement as a remedy should he prevail on one or more of his other causes of action.
Accordingly, it is
ORDERED that the branches of defendant's motion seeking dismissal of plaintiff's fraud, undue-influence, unjust-enrichment, and declaratory-judgment causes of action are denied; and it is further
ORDERED that the branch of defendant's motion seeking dismissal of plaintiff's disgorgement cause of action is granted; and it is further
ORDERED that defendant shall serve and file an answer to the complaint within 20 days of entry of this order; and it is further
ORDERED that the parties shall appear before this court for a telephonic preliminary conference on June 28, 2024.