Davis v Davis

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Davis v Davis 2012 NY Slip Op 32407(U) September 18, 2012 Supreme Court, Suffolk County Docket Number: 21975/2011 Judge: Paul J. Baisley Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SI IO J Z T FO 1 NI O I< 1 El3 1 1 INDEX NO. 21075/201 I SUPI1EILlE COURT - STATE OF NE\V YORI< 1)Ch'T-J - SUFFOLK COUNTY PRESENT: Hon. Paul J . Baislev, .Jr. ORTG. RFTURN DATE: May 21,20 12 FTNAL RETURN DATE: May 21,2012 C'ATHERINE DAVIS, P 1ai n t i ff, MOT. SEQ. #: 001 M I 1 002 Mot D PLTP'S ATTORNEV_: GOLDMAN & MAURER, LI,P 475 NORTHERN BLVD, STE 24 GREAT NECK, NY I 1021 -a g 3 i 11 st- JILL DAVIS, Defendant. DEPT'S ATTORNEY: GALASSO LANGIONE & ROTTER, LT,P 377 OAK STREET, STE 101 GAIinEN CITY, NY 11530 Upon the following papers mimbered 1 t o 2 read on this iiiotioii for consolidation, etc.; cross motion for dismissal, etc. : Notice of MotioidOrder to Show Cause and supporting papers 1 - 27 ; Notice of Cross Motion and supportiiig papers 28 - 39 ;Aiisweriiig Affidavits a i d supporting papers 40 - 45 ; Replying Affidavits a i d supportiiiS . . ) it is, papcr's 46 - 49 ; Other ; & f ( ORDERED that thc motion by plaintiff for, inter alia, an order consolidating this action 111 an act ion cnt Ltled Ciithcrinc Dmas, plrriiitifl ngnirist Bixce D m i s , ~I~feiicf~iit, assigned index numbci 2 1 076/20 1 1, a n d gi-aiiting s u m m a r y judgiiient in her favor is denied, without prejudice; and it is ORDERED that the cross motion by defendant for, inter alia, an order dismissing thc complaint is granted to the extent set fort11 herein, aiid is otheiwise denied; and it is further ORDERED that attorneys ror tlic parties in this action shall appear on September 21 , 201 2 at 10:OO a.m. at the DCM-J Par1 of the Supreme Court, I Court Street, Rivcrhead, New Yoi-lk Cor a preliminary coiiferencc. In August 2009, plaintiff Calherine Davis commenced an action against her husband, D o ~ i g l Davis, for a judgment of divorce aiid ancillary relief During the marriage, Do~iglas :~ was employed by Davis Aircraft, Inc., a closely-held family corporation founded by his grandfather. His father, Biiice Davis, allegedly oversees the corporation and his sister, defendant Jill Davis, [* 2] Davis v Davis Index No. 21975/2011 Page 2 allegedly controls its day-to-day operations. In addition to owning stock iii Davis Aircraft, Douglas allegedly held ownership interests in various businesses with other family members during thc iiiarriage. Prior to the coiiinienceineiit of tlie matrimonial action, Douglas was convicted in connection with a fatal motor vehicle accideiit tliat occurred on January 29, 2009, as hc was driving while intoxicatcd. Significantly, just days after the fatal accident, Douglas executed durable powers of attorney appointing Bruce Davis aiid Jill Davis as his attoiiieys-in-fact, conferring on them fLill and unqualified authority to act in his place and stead. A pendcnte litc order issued by this Court (Blydenburgh, J.) on April 29, 2010 continued the temporary rclief previously granted to plaintiff by an order to show cause dated August 26, 2009. LJnder such order, Douglas was directed to pay, among other things, temporary child support aiid maintenance, and to pay tlic carrying charges for the marital residence. Further, plaintiff, Douglas, and their agents, servants and/or employees were restrained fi-om rcmoving, transfei-ring, selling, encunibering . . . or otherwise acting with respect to any and all marital asscts, whether rcal or personal or in his name or her name or in tlie name of a iioniince, including but not limited to . . . bank accounts, investment security accounts . . . and any other assct held by tlie defendant during the pendency of the inatrinionial action without prior written consent of plaintiff or further order of the Court, On May 3 1, 201 1, a second pendente lite order was issued by tlie Court (Quinn, J.) in the Davis matrimonial action. As relevant to tlie instant action, the order denied an application by Douglas for leave to pay counsel fees from a UBS account, and granted an application by plaintiff that defendant be directed to pay his courtordered obligations rroin inconie, not marital assets. It is noted that Douglas was tcrininatcd fiom his employnient with Davis Aircrart sometime after his conviction and sentencing on thc criminal mattcr, and that he has been incarcerated since October 2009. Subsequently, in July 201 1, plaintiff commenced this action (Action No. 1 ) against Jill Davis apparently seeking damages for conversion, negligence and breach of fiduciary duty. Tlie first cause of action in the coiiiplaiiit allegcs, among other things, that plaintiff has an equitable ownersliip interest in the UBS account, and that Jill, under the authority granted her by the power of attorney, withdrew $140,000 from the UBS account and coiiverted such funds for her own use and enjoyment and to pay her brother s attorneys fees and the parties household expenses in violation of tlie pendente lite ordcrs issued in the matrimonial action. Although tlic complaint states the sccond cause of action is for negligence, the pages setting forth the allegations in support of the second and third causes of action were not included in the papers submitted on the i i i oti on. Simultaneously with the coininencement of this action, plaintiff filed a separate action (Action No. 2) against Bruce Davis, assigned index number 21976/2011, asserting causes of action for conversion, negligence and breach of fiduciary duty. As with tlie complaint in Action No. 1 , tlic first cause of action alleged in the complaint for Action No. 2 asserts tliat Bnice [* 3] Davis v Davis Index No. 21975/2011 Page 3 converted $140,000 from the UBS account. The second cause of action alleges that as attomeyin-fact for Douglas Davis, Bruce owed a duty to plaintiff, that lie breached that duty by failing to confoi-in to tlie required standards of conduct, and that plaintiff was liaiiiied by his carelessness and ncgligeiit management of the UBS account. Similarly, the third cause of action alleges BI-LICC owed a fiduciary duty to plaintiff by virtue of the power of attorney granted to him by his son, that hc breached such duty by engaging in the unauthorized withdrawal of $140,000 from the UBS account, and that plaintiff was deprived of her right to the proper equitable distribution award as a result of such breach. Plaintiff now moves for an order consolidating Action No. 1 and Action No. 2. She also seeks an order granting sunimaiy judgment in her favor as against both Jill Davis and Bruce Davis, compensatory daniagcs in thc sum of $140,000, punitive damages in the sum of $500,000, and sanctions in the sum of $10,000. As to the branch of tlie niotion seeking suniniary judgment, plaintiff argues that Jill and Bruce, acting as attorney-in-fact for Douglas Davis, withdrew suins totaling $1 40,000 from a UBS account tliat, though titled in her husband s iianie, contains marital funds and is indisputably a marital asset. She argues that the pendente lite orders issued in the inatriinonial action restrained Douglas from using funds in the UBS account, that Jill and Bruce used their powers as attorneys-in-fact to violate such orders, and that, in doing so, they violated duties owcd to her on behalf of her husband. She further argues that Douglas, Bruce and Jill colluded with each other to liquidate the U B S account as part of a scheme to reduce her equitable share of marital assets. Plain tiffs subinissions in support of the motion include an incomplete copy of tlie complaint, a copy of the answer, copies of the pleadings in Action No. 2, and copies of the pendente lite orders issued in the niatriinonial action. In addition, plaintiff submits copies of statements for a UBS account in the name of Douglas Davis, excerpts of Douglas s deposition testimony in the matrimonial action, and a billing statement prepared by plaintiffs counsel for services and costs allegedly incurred by plaintiff in connection with Action No. 1 and Action No. 2. Jill opposes the motion and cross-moves for an order dismissing the complaint or granting suinmary judgment in her favor. In an affidavit submitted with the cross-moving papers, Jill alleges that she did riot withdraw funds from the U B S account, and that she did not know of the restraining orders issued in connection with the matrimonial action. She argues that as tlie issue of whether the UBS account is a marital asset is to be decided in the matriinonial action, which is scheduled to go to trial in October 2012, plaintiffs claims for conversion, negligence and breach of fiduciary duty are premature. Further, Jill seeks an order, pursuant to CPLR 321 1, dismissing the complaint against her for failure to state a cause of action, lack of capacity, and failure to name a necessary party. Alternatively, she requests suiiiniary judgment in her favor on the complaint. The branches of the motion and the cross motion seeking suiiimaiy judgment are denied, without prejudice. CPLR 3212 (b) requires that a niotion for summary judgment be supported by [* 4] Davis v Davis liidex No. 21975/2011 Page 4 copics of all of the pleadings filed in tlie action (see Sendor v Cliervin, 51 AD3d 1003, 857 NYS2d 500 [2d Dept 20081; Matsyuk v Konlnlipos, 35 AD3d 675, 824 NYS2d 918 [2d Dept 20061). Here, both plaintiff and defendant failed to include a complete copy of the complaint with their moving papers. For the same reason, the branch of plaintiff s motion for an order consolidating Action No. 1 and Action No. 2 is denied at this time, without prejudice. It is noted that while plaintiffs counsel alleges in a reply affirmation that Jill has stipulated to consolidating this action with Action No. 2, no written stipulation was annexed to the reply papers. On a motion to dismiss, the complaint is to be afforded a liberal constixction, the facts alleged are presumed to be true, the plaintiff is afforded the benefit of every favorable infereiicc, and the court is to detei-mine only whether the facts as alleged fit within any cognizable legal theory (EBCI, Iiic. 1 Goldnzan, Sachs & Co., 5 NY3d 11, 19, 799 NYS2d 170 [2005]; Leon v hfwtincz, 84 NY2d 83, 87-85, 614 NYS2d 972 [ 19941; Basile v Wiggs, 98 AD3d 640, 2012 NY Slip Op. 06007 [2d Dept 20121; Uzzle v Nunzie Ct. Homeowners Assn., Inc., 70 AD3d 928, 929930, 895 NYS2d 203 [2d Dept 201 01). When a party moves under CPLR 321 l(a)(7) for dismissal based on the failure to state a cause of action, the initial test is whether tlie pleading states a cause of action, not whether the plaintiff has a cause of action (Guggeiihei/izer v G n z h r g , 43 NY2d 268,275,401 NYS2d 182 [1977]; Sokol v Lender, 74 AD3d 1180, 118011 81, 904 NYS2d 153 [2d Dept 20101). However, if docuiiientary proof is subinifted by the moving party, the test applied by the Court is whether plaintiff has a cause of action, not wlictlier lie or she has stated one in the complaint (Guggeuzlzebmr v Girzzburg, 43 NY2d 268, 275, 401 NYS2d 182; Peter F. Gnito Arcliitectui-e, LLC v Sinzone Dev. Corp., 46 AD3d 530, 846 NYS2d 368 [2d Dept 20071; McGuire 1.1 Stel-ling Doubleduy Enters., L.P., 19 AD3d 660, 799 NYS2d 65 [2d Dept 20051, lv denied 7 NY3d 701, 818 NYS2d 191 [2006]). When a moving party presents evidentiary material, bare legal conclusions and factual allegations in the complaint which are flatly contradicted by sucli evidence will not be presunied true on a motion to dismiss, and dismissal will be granted under CPLR 321 1 (a)(7) if such evidence disproves an essential allcgation of the complaint (see Peter I;. Gnito Architecture, LLC v Sinzone Dev. Covp., 46 AD3d 530, 846 NYS2d 365; Pnlcizzolo v Herrick, Feinstein, LLP, 298 AD2d 372, 751 NYS2d 401 [2d Dept 20021; Dorin v Masucci, 230 AD2d 764, 646 NYS2d 363 [2d Dept 19961,lv ~lc~iieci! 89 NY2d 81 1, 657 NYS2d 404 [1997]). Furthermore, when assessing a dismissal motion, a court may consider affidavits submitted to remedy pleading defects, thereby preserving inarlfiilly pleaded, but potentially meritorious, claims (Rovello v Orofirzo Realty Co., 40 NY2d 633, 635636,389 NYS2d 3 14 [ 19761). Dismissal of the cause of action for conversion for failure to state a cause of action is granted. To establish a claim for convcrsion, a plaintiff must show legal ownership or an iiniiicdiatc superior right of possession to a specific identifiable thing and must show that the defendant exercised an unauthorized dominion over the thing in question . . . to the exclusion of the plaintiff s rights (Independence Discount Corp. v Bressnev, 47 AD2d 756, 757, 365 NYS2d [* 5] Davis v Davis Index No. 21975/2011 Page 5 44 [2d Dept 19751; see Cusack v Aiizer-ican Defense Sys, Iiic., 86 AD3d 586, 927 NYS2d 381 [2d Dept 201 11; Mcssiah Covenant Coniniunity Cliuvcli v Weinbaum, 74 AD3d 916, 905 NYS2d s 209 [2d Dcpt 201 01). Tangible personal property or specific nioney must be involved for conversion to occur (IilcleperzdenceDiscotint Covp. v Bvessner, 47 AD2d 756, 757, 365 NYS2d 44). The complaint in Action No. 1 does not allege that plaintiff owned, possessed or had control over tlie UBS account at issue, or that Jill was in possession of such account and improperly exercised control over it to plaintiffs exclusion (see Cnstaldi v 39 Win$eld Assocs., 30 AD3d 458,820 NYS2d 279 [2d Dept 20061; B a d e v Bnsile, 9 AD3d 342,778 NYS2d 91 3 [2d Dept 20041). However, dismissal of the cause of action for negligence and breach of fiduciary duty tinder CPLR 32 1 1 (a)(7) is denied. Liability for iiegligence must be premised upon a finding of a lcgal duty owed by the defendant to the plaintiff (Pulkca v Edelnzaii, 40 NY2d 781, 782, 390 NYS2d 393 [ 19761). A tort obligation is a duty imposed by law to avoid causing injury to others ( N e w Yorlc Univ. v Contiizentnl Ins. Co., 87 NY2d 308, 316, 639 NYS2d 283 [1995]), and [dluty in negligence cases is defined neither by foreseeability of injui-y . . . nor by privity of contract (Lalidon v KvoIl Lob. Specialists, Inc., 91 AD3d 79, 85, 934 NYS2d 183 [2d Dept 201 I]). Defense counsel s conclusory assertion that the negligence cause of action must be dismissed, because plaintiff cannot establish privity between defendant and herself is insufficient to show that she does not liave a cause of action for negligence. As to tlie third cause of action, [a]nyone who knowingly participates with a fiduciary in breach of trust is liable for the h l l amount of the damage caused thereby to the cestuis que trust (Wecltsler v Bow~nnii, 285 NY 284,291,34 NE2d 322 [1941]; see Velazquez v Decnzrdin, 49 AD3d 712, 854 NYS2d 163 [2d Dept 20081). Here, the evidence presented by Jill did not conclusively establish her defense that she did not direct the transfer of funds from the UBS account in violation of the restraint placed on such funds by the pendente lite orders, particularly in light of the deposition testimony as to such transfers during lier brother s incarceration (see Minslcy v Hnber, 74 AD3d763, 903 NYS2d 441 [2d Dept 20101). As to the application for dismissal based on plaintiffs failure to name Douglas Davis as a defendant, a party may seek dismissal of a complaint on the ground that the court should not proceed in the absence of a person who should be a party (CPLR 321 1 [a], [lo]). CPLR 1001 (a) provides that parties are necessary and should be joined in the action if complete relief is to be accorded between the persons who are parties to tlie action or who inislit be inequitably affectcd by a judgment in tlie action. The failure to join a necessary party under CPLR 1001 is a ground for dismissal of an action without prejudice pursuant to CPLR 1003 (see CPLR 1003). However, when a person who should have been joined in an action was not made a party, but is subject to the jurisdiction of tlie court, dismissal is not the proper remedy; rather, the court shall order him [or her] sumiiioned (CPLR 1001 [b]; see Schwimmer v Welz, 56 AD3d 541, 868 NYS2d 671 [2d Dept 20081; see geiier-ally Matter o Red Hoolc/Gowanus Clinmbev o Conzrnerce v New Yo/-lcCity f f Bd. ofstds. & Appeals, 5 NY3d 452, 805 NYS2d 525 [2005]). Dismissal based on plaintiffs [* 6] Davis v Davis Index No. 21975/2011 Page 6 alleged failure to join a necessaiy party is denied, as Jill has not shown, or even alleged, that Douglas is not subject to the jurisdiction of this Court or that joinder is not possible (see Schwimi?imv Wels, 56 AD3d 541, 868 NYS2d 671; see also Matter ofLong Is. Co~itractors' .4ssn. v TOIIJH Rivedierid, 17 AD3d 590, 793 NYS2d 494 [2d Dept 20051). of The application for dismissal of tlie complaint for lack of standing also is denied. A plaintiff gciierally has standing to maintain a lawsuit if he or she has suffered an iiijury in fact as a result of tlie defendant's actions (see Silver v Patalci, 96 NY2d 532, 730 NYS2d 482 [2001]; Marma I) Oimige Regional Med. Ctr., 63 AD3d 11 13, 882 NYS2d 287 [2d Dept 20091). Here, tlie allegations in the complaint that plaintiff had a financial interest in the UBS account, and that Jill's actions allowed Douglas to deplete such asset, are sufficient to establish plaintiffs standjng to sue for negligence and breach of fiduciary duty. Accordingly, plaintifrs motion is denied, and the cross iiiotion is granted only to the extent that the cause of action for conversion is dismissed. HON. PAUL J. BATSLEY, JR., J.S.C.

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