Simon v 160 W. End Ave. Corp.
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Simon v 160 W. End Ave. Corp. 2003 NY Slip Op 30262(U) July 9, 2003 Supreme Court, New York County Docket Number: Index No. 101868/03 Judge: Carol R. Edmead Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] STATE COURT OF COUNTY OF NEW BARBARA A. SIMO the Estate of JEAN C 160 West End Aven SKIPP PORTEOUS, STATE OF NEW YORK RK: PART 35 ........................... dually and as Executor of and as a Shareholder of X Index No. 101868/03 Plaintiffs, DECISION/ORDER -againstOn Submission CORPORATION, GERALD 160 WEST END AVE ROSS and INSIGNIA ANAGEMENT, Defendants. ----------------------------- --------------------------------------------- X HON. CAROL EDME D, J.S.C. MEMORANDUM DECISION Defendants 16OW,est End Avenue Owners Corporation, s/h/a 160 West End Avenue Corporation (“West En "), Gerald Ross (“Ross”) and Insignia Residential Group, s/h/a Insignia Management (“Insignia ') submit this pre-amended answer motion to dismiss the Amended Complaint. Defendants argue that, among other things, all of plaintiffs” causes of action are, in essence, claims fo ion, and are time barred, insufficiently specific, and based on actions protected by the busines judgment rule? Defendants submit that in any event, the non-defamation causes of action are insu fici ently pled. Defendants further argue that the Amended Complaint is ara A. Simon, individually, as Executor (sic) of the Estate of Jean C. White and as a shar 160 West End Avenue Corporation and her ex-husband Skipp Porteous. Ms. Simon Porteous are both beneficiaries of a will of Ms. White, which also cutri: Ex x (hereinafter "Will") . Defendant West End is a residential as Simon Ms. named . Ro ss is an officer of that Cooperative Board, and Insignia is its cooperative, defendant managing agent. determination below, the Court does not reach the business judgment rule defense. [* 2] barred under the theory f res judicata. According to defendants, West End’s previous holdover proceeding against Ms. n also involved Ms. White’s attempts to assign her apartment shares to non-family members. efendants argue that the Civil Court already rejected Ms. Simon’s claims of entitlement to occupy or as sign the subject apartment. Defendants also submit that Ms. Simon was provided a full and f ·r opp ortunity to raise the instant claims in the Civil Court proceeding, and is therefore precluded fr m raising them herein. In opposition, pla ntiffs ar gue that the false statements upon which they base their defamatory claims occurred within o e year pnor to the commencement of this action, are sufficiently specific, and are not privileged. laintiffs also argue that the remaining causes of action, to wit: breach of fiduciary duty and inten ·onal infl iction of emotional distress, may be independently maintained. Furthermore, plaintiffs ontend th at the holdover proceeding in Civil Court does not have res judicata effect on the d mage clai ms herein, as that Court is one of limited jurisdiction and the instant causes of action e unrelate d to the holdover proceeding. In reply, defenda ts reiterate the arguments in support of dismissing the Complaint, and point out, among other things, plaintiffs' failure to address the cases in support of dismissal. The Complaint3 Jean C. White o ed shares and a proprietary lease of an apartment located at 160 West End A venue, in New York C unty ("the ap artment”). In June 1999, Ms. White applied for an intervivos transfer of the apartmen to plaintiffs, Ms. Simon and Mr. Porteous, as joint tenants with right of survivorship. Mr. Ross, a dire tor of West End, advised Ms. White that her transfer was legally and 3 This action wa commenced in February 2003. 1 2 [* 3] morally improper. Bas nformation supplied by Insignia, Mr. Ross made false accusations "to the building staff, to th! Bo ard of Directors and to others including, but not limited to, the [Departmental] Disciplilary C ommittee [of the Supreme Court, Appellate Division]" that “the Plaintiffs were acting itgally and unethically in their dealings with” Ms. White and “were attempting to improperlJ influence the elderly to turn over property to them." In the letter to the Disciplinary Committee, dated September 29,1999, defendants Mr. Ross and Insignia claimed that Ms. Simon, an attorney, mproperly represented clients including Ms. White, preyed on the elderly, and attempted to o dvantages from defendant West End by false representations. Mr. Ross also complained that Porteoms, an investigator, conspired with Ms. Simon in preying on the oss' accu sations, West End refused to consider Ms. White’s application. In March 2000, the Disc plinary Committee dismissed Mr. Ross’ complaint. In June 2000, Ms W hite died, and her will naming Ms. Simon as Executrix bequeathed the apartment to Ms. Simon nd Mr. Poirteous. Ms. Simon and Mr. Porteous subsequently applied for a transfer of the apartme t pursuant to the will, but their application was rejected, based on the false information supplied by Ross. Mr. Porteous the: :after applied for a transfer to himself, but withdrew his application four months later. 4 In their opposit n papers, plaintiffs acknowledge that the alleged false statements in the 1999 complaint letter time barred (Aff. in Opp. at <][7, S), but assert that they were recommunicated to the Bo rd in connection with Ms. Simon’s transfer application in “Spring of 2002.” The complaint, does not contain any allegation that the letter was republished in “Spring of 2002.” 3 [* 4] the Estate: through Ms. Simon, applied for a transfer to herself In September individually, but was als denied as a result of a false accusation made by “defendants” that she was “not a good neighbor,” s well as the allegations in the complaint letter. 6 “Upon information and belief, [West End] did n t act in good faith or within the business judgment rule but used its secret l proceedings to defame he innocent . . . " Ms. Simon was also denied access to the list of shareholders necessary t appeal the Board’s decision. On July 21, 2002 1Mr. Ross told a tenant cooperator that he had a “lot of information about” Ms. Simon, and that on acted “improperly” in that “she was the lawyer for the lady who left the apartment and s d up getting the apartment.” Mr. Ross also told the tenant that Ms. unethically as a lawyer.” In September 2002, Mr. Ross told another Simon “acted impr tenant that he had a “lotof information” about Ms. Simon, that she was “manipulative” and that there were “bad reports"about her from her present building. 7 Based on the ab le, plaintiffs seek, against West End, Mr. Ross, or Insignia separately or collectively (1) moneyd ma ges arising from West End’s and Mr. Ross’ breach of fiduciary duty, resulting when West En used confidential information to falsely attack a member and a prospective transferee and interfered ith an agreement between the shareholder and a proposed transferee; (2) J A fair reading the complaint indicates that this September 2001 application was made by Ms. Simon on behalf bf the Est;te (see complaint, 'J[<J! 28 and 36). After the Bo~ [_ denied Ms. Simon’s transfer application, it commenced an action for possession against Ms. Jimon as Executrix. The Civil Court (Schachner, J.) determined that an executrix had a right to cupy the subject apartment, but that Ms. Simon in her individual capacity did not, as she d not have approval from the Board. The Civil Court granted West End a money judgment d full judgment of possession. ! I The original cmhplaint did not contain these additional allegations of false statements made in July and Septelber 2002. 7 4 I [* 5] (as a result of the false st tements by West End resulting in denials of plaintiffs’ applications to take title) an order directing est End to transfer shares pursuant to the will; (3) to enjoin West End from creating a second class o hareholders in violation of the Internal Revenue Code ("IRC"), Certificate of Incorporation, and B y~ ws; (4) an injunction on behalf of the Estate requiring West End to provide the shareholder list in "Jf'T for the Estate to appeal the Board’s denials; (5) money damages, based ! on defendants’ tortious nterference with Ms. White’s agreement to convey the property to Ms. Simon and Mr. Porteous,l (6) money damages for defamation of Ms. Simon; (7) money damages for defamation of Mr. Port us; and (8) money damages for “vicious and malicious’’ actions in breach el of obligations to plaintif s Analysis First Cause of I Jtion I Plaintiffs’ first cause of action for breach of fiduciary duty against West End and Mr. Ross l arises from West End’s lleged improper reliance on false statements and its failure to act in 1999 t lI on Ms. White’s applicat on, West End’s alleged improper reliance and denial of Ms. Simon’s and I r Mr. Porteous’ transfer ap lications some time prior to September 2001, West End’s failure to act on Mr. Porteous’ subsequen~ transfer application, and West End’s improper reliance upon and making I of defamatory statemen tl to deny the Estate’s transfer application in September 2001. Plaintiffs’ I breach of fiduciary duty blaim against Mr. Ross is based on his alleged false accusations. J Cooperative co orations and their boards of directors owe a fiduciary duty to their shareholder-tenants and Jave a duty to act in an appropriate and reasonable manner (Chemical Bank I also Stowe v I 9 East 8b Street, Inc., 257 AD2d 355, 683 NYS2d 60 [Pt Dept 19991). v 635 Park Ave. Corp., 155 Misc 2d 433,588 NYS2d 257 [Sup Ct New York County 19921; see th I 5 It is [* 6] undisputed that Ms. Sir m, in her individual capacity, 8 and Mr. Porteous were not shareholders of 1999 when Ms. White applied for the transfer, or in the period prior to the subject apartment September 2001. Thus West End and Mr. Ross did not owe a fiduciary duty to them during this time. Nor can this cau : of action be maintained against West End for breach of its fiduciary duty to its shareholder Ms. act on Ms. White’s ,lite in 1999, when it relied upon the alleged false statements and failed to transter application or in 2001, when it relied on alleged false statements to deny the Estate’s transfer applj,cation. In evaluating a motion to dismiss, the court must liberally construe I the complaint in plaintifrl s favor and assume that the allegations of the complaint are true (see CPLR §3026; see Barrows v 1 •zansky, 111 AD2d 105 Dept 19851). plaintiffs’ claims that West End relied on false statements and delayed Assuming as tn acting on Ms. White’s a : plication in 1999 and denied the Estate’s application in September 2001, such claims fail to make out a claim of breach of fiduciary duty. Plaintiffs argue that “the evidence will show that the Board :singled out Ms. White and the Plaintiffs because of the way they sought to transfer the property w ch singled out Plaintiffs because Barbara A. Simon was a lawyer and a friend of the sharehold I. ,, Although pleading unequal treatment of shareholders is sufficient to allege a breach of fiduc ry duty (Aronson v Crane, 145 AD2d 455 Dept. 1988]), the allegation that West End subject, I Ms. White or her Estate to disparate or unequal treatment because the prospective transferee is a lawyer and friend is insufficient. There are no allegations that this type of treatment by the B(v(rd toward Ms. White or to her Estate differed from the treatment other 8 t In opposition t defendants’ contention that plaintiffs are not shareholders, plaintiffs’ retort that “In fact, Plaintiff, as Executor of the Estate of a shareholder, is a shareholder” (Aff. In Opp. «)[2). I I 6 [* 7] l i I i similarly situated shareh lders received. The complaint is devoid of any allegations describing what the uniform treatment of lhareholders was, or that West End’s acts constituted a departure from any such uniform treatment. I l The Court notes at cooperative boards have the absolute right for any reason or no reason E ! l the boards does not act n bad faith or engage in illegal discriminatory practices (see to withhold its approval fan applicant, or to require reasonable financial documentation, provided Simpson v Berkley Owner‘s Corp., 213 AD2d 207 [l5' Dept 19951; Application of Folic, 139 AD2d 456, 457-458 [lst Dept 1988]; Rossi v Simms, 119 AD2d 137 [l5' Dept 1986] [absent illegal ~ discrimination, the coop rative corporation has the right to withhold their approval of an applicant’s purchase for any reasoj or no reason]). The proprietary lease regarding the subject apartment Ject Ms. White’s transfer application in 1999or in 2001 for any reason (see permitted West End to r ! Lease, Section 16 0):"There shall be no limitation, except as above specifically provided, on the l l right of Directors or less es to grant or withhold consent, for any reason not proscribed by law or for no reason, to an assignm nt”]). The allegations in the complaint are insufficient to rise to the level of bad faith, in that the acts, as pleaded, do not denote misconduct amounting to bad faith (see Schwartz v Rosenthal, 1 Misc 2d 85 [Sup Ct New York County 1958] citing, Steinberg v Carey, 285 AD 1131 [ l81 Dept 1 55]). Further, there are no allegations of illegal discriminatory practices, tparate treatment discussed above. other than the alleged di ' Also, plaintiffs’ reach of fiduciary duty claim against West End for its alleged defamatory I statements made in conriection with the Estate’s transfer application in September 2001 sounds in I defamation. Since the e alleged false accusations occurred outside the one-year statute of ! I limitations, they are timk barred (see In the Matter of Entertainment Partners Group, Inc. v Gail 7 [* 8] I Davis et al., 198 AD2d b3 [I5t Dept 19931 [plaintiff “may not circumvent the one-year statute of l limitations applicable t defamation claims by denominating the action as one for intentional relations, prima facie tort, or injurious reputation, if, in fact the claim interference with seeks redress for injury reputation”]). claims against Mr. Ross for breach of fiduciary duty to Ms. White Additionally, for his alleged false state ents to the Board and to Ms. White in 1999, and to the Board in 2000 and 2001 are not actionable. individual directors cannot be held liable for breach of fiduciary duty absent l an allegation of a separa e tortious act (see Kravtsov v Thwaites Terrace House Owners Corp., 267 AD2d 154 Street Corp., 246 AD2d 324 [1st Dept 19981). Dept 199~); Konrud v 136 East loMs. White that her 1999 application was legally and morally improper, I and his “accusations,” including those in the 1999 complaint letter, to the Board also sound in Here, Mr. Ross’ advice v National Broadcasting Co., et al., 19 NY2d 453, supra). Also, the defamation (see Morrisln I I MJ.I Ross in 2000 through September 2001 to the Board, including statements that Ms. Simon was "nof a good neighbor,” also sound in defamation. Therefore, notwithstanding alleged statements by I the label applied by plai~tiffs to their first cause of action, the claims against Mr. Ross, in essence, I are ones for defamation.! Since the alleged false accusations occurred outside the one-year statute of limitation, they are ti e barred (see In the Matter of Entertainment Partners Group, Znc. v Gail T i Davis et al., 198 AD2d 63 [1 st Dept 19931). I In light of this d termination, the Court does not reach the merits of the business judgment J I rule or common interest p rivilege claims. i 9 The complaint fsalso devoid of any allegation that Mr. Ross participated in any fraudulent acts, or acted pn an discriminatory or self dealing manner. l I 8 [* 9] Second Cause of Action Plaintiffs’ secon cause of action against West End for an order directing the transfer of I I shares pursuant to the will is also dismissed. The crux of plaintiffs’ second cause of action is that I West End improperly relied on false information supplied by defendants Mr. Ross and Insignia to l deny the conveyance of he apartment inter vivos or through the Will, and to “cover” the Board’s improprieties. This causb of action essentially mirrors the first cause of action, and is dismissed for l the reasons set forth abo, e. Third Cause of ction of action for an “order enjoining defendant from establishing a second Plaintiffs’ third class of shareholders” i dismissed. This claim on behalf of the Estate is based on West End’s wrongful refusal to permit the Executrix from occupying the premises in violation of the IRC, the Certificate of Incorporation, and the Bylaws. However, this claim was raised in the Civil Court J proceeding. In this reg d, Ms. Simon claimed that by denying an executrix’s right to occupancy, West End effectively crdated a second inferior class of shareholder in violation of (1) BCL §SO l's requirement that there e ist only one class of shareholders and (2) IRC §216's condition precedent to certain tax benefits there exist a single class of stock. The Civil Court effectively rejected Ms. Simon’s contention hen it granted West End a full judgment of possession. Since the merits I of this cause of action ere raised and litigated, and determined, it is barred by res judicata (see t Tsabbar v Delena, 300 ~D2d 196 [1st Dept 20021; Marinelli Assoc. v Helmsley-Noyes Co., Inc. 265 AD2d 1 [161 Dept 20001). !' Fourth Cause of li\.ction Pursuant to BCJ §607, a “list of shareholders . . . shall be produced at any meeting of 9 [* 10] i I shareholders upon the rtuest thereat or prior thereto of any shareholder” (emphasis added). The ' plaintiffs failed to allege that the request for the shareholder list was made during a shareholder meeting, or requested pnor thereto. Plaintiffs’ mere allegation that they were denied access to the b list is fatally vague (see PLR $3013 [“Statements in a pleading shall be sufficiently particular to f give the court and parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to e proved and the material elements of each cause of action”]). Therefore, the fourth cause of action for an injunction directing West End to produce the shareholder list is I dismissed. Fifth Cause of t I Plaintiffs’ fifth chuse of action against all defendants for tortious interference with contract is based on alleged falsle accusations made by defendants which interfered with the agreement I I i between Ms. White and ~:Laintiffs regarding the inter vivos conveyance of the shares. As to West I End, this allegation is coln1clusory at best. Further, the discussion supra page 7 applies. This claim f ' must also fail as to Mr. 1Ross and Insignia, as it sounds in defamation, and is predicated on events I which occurred outside the statute of limitations (see CPLR §215[3]; Morrison v National t Broadcasting Co., et al., 19 NY2d 453 and In the Matter of Entertainment Partners Group, Znc. v Gail Davis et al., 198 A 2d 63, discussion supra). I Sixth, Seventh, Jnd Eighth Causes of Action I Ms. Simon’s sixt:h cause of action for defamation is dismissed for lack of specificity. CPLR 1 ~ 3016 (a) requires that in defamation action, "the particular words complained of ...be set forth in ! ' the complaint." The corh plaint also must allege the time, place and manner of the false statement l and specify to whom it 1as made (Arsenault v Forquer, 197 AD2d 554 10 Dept 19931; Vardi v [* 11] e Mutual Life Ins. Co., 136!AD2d453 [pt Dept 19881). Further, plaintiff must allege special damages, I i unless the statements ar;e slanderous per se (Libemzan v Gelstein, 80 NY2d 429 [1992]). The I I statements by Mr. Ross bn July 21,2002 that Ms. Simon acted “unethically” as the “lawyer for the ! lady who left the apartm~nt and wound up getting the apartment,” is slanderousper se, as they relate l to her profession. Thkrefore, plaintiff need not plead special damages resulting from these I i statements (see Libermah v Gelstein, 80 NY2d 429, supra [statements that tend to injure another in his or her trade, busineds or profession is an exception to the requirement of special damages be I alleged]). However, thdse statements are not actionable, as they, along with the other statements made on September 20,1 2002, were made to a “Tenant Cooperator.” As the complaint fails to identify to whom or where the statements were made, it is facially insufficient. The Court notes that in opposition to instant iliotion, plaintiffs also claim that the complaint letter was republished to the Board which resulted in ~he denial of Ms. Simon’s application “at an undetermined time” in Spring E 2002. However, the Amended Complaint contains no such allegation, which nonetheless, is I insufficiently specific. 10 ! To the extent the\seventh cause of action by Mr. Porteous for defamation rests on the alleged I republications of the coinplaint letter in connection with his transfer applications some time prior to September 2001, sucl-i claims are time-barred (see CPLR §215[3]). Furthermore, the statements ! r 10 The Court notes that this cause of action cannot be dismissed on the ground that the statements were protectkd under the common interest privilege, which extends to communications made tiy one person to another upon a subject in which both have an interest” (Stillman v Ford, 22 N~2d 48 [1968]). The privilege may be defeated if the defendant spoke with actual malice (with’ knowledge that the statement was false or reckless disregard of whether ) it was false or not) or with common law malice (ill will or spite) (Libemzan v Gelstein, 80 NY2d 429,438 supra). The cdmplaint alleges that the alleged false statements were “known to be false” or made “after Mt. Ross learned that the allegations were false.” 11 [* 12] by Mr. Ross made within the statute of limitations period did not pertain to Mr. Porteous. Therefore, Mr. Porteous has no claim for defamation. Ms. Simon’s eighth cause of action for intentional infliction of emotional distress must also fail, as none of the alleged 2002 false accusations are so “outrageous in character and so extreme in degree as to go beyond 11 possible bounds of decency and to be regarded as atrocious and utterly intolerable in a civilized society” (Howell v New York Post Co., 81 NY2d 115 [ 19931). I Furthermore, sinbe Mr. Porteous’ eighth cause of action for intentional infliction of emotional E distress is based on the pre-2001 statements, and the alleged statements in 2002 do not include him, such claim must also fail (CPLR §215[3]; Spinale v Guest, 270 AD2d 3 [1st Dept 20001 [holdingthat l intentional infliction of ~motional distress claim is time-barred absent an allegation that defendants did anything in the one-year period prior to the commencement of the action]). Based on the fdregoing, defendants’ motion to dismiss the Complaint in its entirety is granted. This constitutes decision and order ruc::r of u1 the u1c:: court. ~uun. Dated: July 9,2003 Justice Carol R. Edmead 12
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