Gold v Kanter
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Gold v Kanter 2011 NY Slip Op 33532(U) December 23, 2011 Sup Ct, Nassau County Docket Number: 006674-11 Judge: Vito M. DeStefano 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] SUPREME COURT - ST ATE OF NEW YORK Present: HON. VITO M. DESTEFANO, Justice TRIAL/IAS, PART 19 NASSAU COUNTY DEBRA GOLD, Decision and Order MOTION SUBMITTED: Plaintiff, September 23, 2011 -against- MOTION SEQUENCE:O, INDEX NO. 006674- MATTHEW KANTER, an individual, and COSMO HOLDINGS LLC, a limited liabilty corporation, Defendants. The following papers and the attachments and exhibits thereto have been read on this motion: Notice of Motion Affirmation in Opposition Affirmation in Reply to recover damages for breach of fiduciar duty, breach of Mattew Kanter ("Kanter ) and contract, fraud , misrepresentation , and conversion , Defendants Defendants ) move for an order Cosmo Holdings LLC (" Cosmo ) (collectively referred to as " pursuat to CPLR 3211(a)(7) dismissing the complaint and disqualifyng Robert Gold, Esq. from ). J representing the Plaintiff Debra Gold (" Debra In an action inter alia, par and denied in par. For the reasons that follow , the Defendants ' motion is granted in It is noted that the branch of Defendants ' motion seeking disqualification was withdrawn given 1 Robert Gold is the father of the Plaintiff, Debra Gold. [* 2] Debra s consent to change attorney and retention of new counsel in the instat 3; Ex. " U" to Opposition). (Affirmation in Reply at action In April 2007 , Kanter and Debra formed Cosmo for the purose of investing in other 6). Pursuant to Cosmo s operating agreement, both Kanter and Debra companies (Ex. "A" at were members of Cosmo , with net profits/losses allocated to the members on a 75% (Kanter) and 25% (Debra) basis (Ex. "I" to Motion at Article 3. 1). Cosmo s operating agreement listed Debra as a manager and Kanter as a manager and chief executive manager (Ex. " I" to Motion). On April 15, 2011 , Debra was notified that a meeting of the members was to be held on May 6 , 2011 , the purose of which was to " discuss the general business of (Cosmo) and to hold a 2 On May 4 vote concerning the appointment of managers to (Cosmo)" (Ex. " B" to Motion). 2011 , Robert Gold requested , on behalf of Debra, that a new notice be sent , permitting attendance and voting by proxy due to Debra s " significant health issues " (Ex. " c" to MotionV On May 5 , 2011 , Debra commenced this action asserting claims of breach of fiduciar duty, constructive trust , fraud, negligent misrepresentation , negligence misappropriation/conversion of fuds , breach of contract , intentional inflction of emotional distress, and prima facie tort (Ex. "A" to Motion). More specifically, the complaint alleges that: in 2009 , Kanter removed her as a signatory to the Cosmo ban account , despite the fact that they were equal managing members; in 2010 , Kanter failed to distribute any of Cosmo s income to her but , rather , made all distributions to himself (despite Debra s 25% interest); Kanter refused to provide her with copies of the 2009 and 2010 tax returs or copies of the 2010 and 2011 ban statements; and that Kanter has continuously and intentionally caused her stress and worr, 13). thereby ' 'jeopardizing her health and life expectancy " (Ex. " A" to Motion at 2 The letter was written Bryan Lewis of Lewis Johs Avallone Aviles, LLP (" Lewis Johs ) and at the direction of Kanter (Ex. " B" to Motion). 3 The meeting occurred on May 6 , 2011 , one day after Debra commenced the instant action. On the morning of the meeting, Robert Gold was sent an e-mail indicating that Kanter had "no objection " to him "appearing for Ms. Gold as her proxy at the member s meeting" and to " bring a proxy authorization to the meeting" (Ex. "D" to Motion). Present at the meeting were Kanter (via telephone), two attorneys from Lewis Johs (one of whom had a proxy for Kanter), and Robert Gold. Importtly, Robert Gold did not have a proxy for Debra (Ex. " E" to Motion). Despite Robert Gold' s objections, the voting of managers took place. Kanter was voted in as a manager. Although Debra was nominated for a manager position , the vote was defeated by a majority of membership interest and she was removed as manager. Also at the May 6 meeting, Cosmo s 2010 bank statements were provided to Robert Gold. All present at the meeting were advised that Cosmo s 2010 tax returns were on extension (Ex. " E" to Motion). [* 3] The Defendants thereafter filed the instat motion to dismiss the complaint pursuant to CPLR 321 I (a)(7). On a motion pursuat to CPLR 3211(a)(7), the cour must determine whether the Plaintiff has a legally cognizable cause of action and not whether the action had been Yeshiva Rambam 300 AD2d 580 (2d Dept 2002)). The complaint must (Well properly plead be liberally construed and the Plaintiff must be given the benefit of every favorable inference Penn 278 AD2d 306 (2d Dept Speno, Goldberg, Steingart (Tifany General Holding Corp. 2000)). The cour must also accept as true the facts alleged in the complaint and any factual submissions made in opposition to the motion. If, from the facts alleged in the complaint and the inferences which can be drawn from the submissions in opposition , the cour determines that the Plaintiff has a cognizable cause of action , the motion must be denied. Notwithstading the liberal reading of the complaint , legal conclusions and facts contradicted on the record are not entitled to the presumption of truth (In re Loukoumi. Inc. 285 AD2d 595 (2d Dept 2001)). At bar , dismissal of the complaint , insofar as asserted against Cosmo, is waranted. While Cosmo is a named defendant , the complaint does not contain any allegations of (see wrongdoing on the par of Cosmo nor does it assert any causes of action against Cosmo Adejumo 36 AD3d 855 (2d Dept 2007)). Harris Regarding defendant Kanter , the breach of contract cause of action (seventh cause of action) insofar as asserted against him , alleges that Kanter breached the operating agreement by: failng to provide Debra with her 25% share of the Cosmo profits; failing to distrbute available funds as they were received; and removing Debra as a signatory on the Cosmo ban account thereby depriving her of her management rights (Ex. " A" to Motion at ~~ 43-44). The Defendants ' motion papers do not set fort any paricularized arguments or legal basis as to why the breach of contract cause of action fails to state a cause of action. Therefore (Cottone dismissal of the breach of contract action is not waranted Selective Surfaces, Inc. , 68 AD3d 1038 (2d Dept 2009)). In addition , the complaint provides sufficient notice of the occurences to be proven and the requisite elements to sustan a breach of contract claim JH Electric of New York, Inc. Morgan Chase (see JP 69 AD3d 802 (2d Dept 2010)). Neverteless , it is also well settled that a breach of contract claim does not give rise to a separate cause of action in tort unless the defendant beached a legal duty that is separate and (Hylan Electrical Contracting, Inc. Mastec apar from any purported contractual obligations Old Republic National Title Insurance Co. North America, Inc. 74 AD3d 1148 (2d Dept 2010); Cardinal Abstract Corp. 14 AD3d 678 (2d Dept 2005)). Here , the causes of action asserting [* 4] 4 negligence 5 and negligent misrepresentation are dismissed as breach of fiduciar duty, duplicative of the breach of contract claim insofar as they do not assert claims of the operating agreement. unelated to breach The third cause of action asserted in the complaint alleges that Kanter defrauded Debra do anyting to though material misrepresentation insofar as representing that he would nqt " suffcient hur" her (Ex. " A" at ~ 25). This fraud claim is not pled with the requisite paricularity to defeat a motion to dismiss (CPLR 3016(b)). With respect to the remaining fraud allegations, (Hylan , as such, are duplicative they are each related to a breach of the operating agreement and supra; Breco Electrical Contracting, Inc. Mastec North America, Inc. 74 AD3d at 1149, Town of Smith town 307 AD3d 330 (2d Dept 2003)). Environmental Contractors A constrctive trust may be imposed when propert has been acquired in such conscience retan the beneficial circumstaces that the holder of the legal title may not in good fiduciar relationship; interest. The imposition of a constrctive trust requires: a confidential or Pascal , 65 (Watson a promise; a transfer in reliance on that promise; and unjust enrichment AD3d 1333 (2d Dept 2009)). Here , Debra failed to allege a necessar component for the propert by her imposition of a constructive trust , to wit, a transfer of fuds or other valuable reliance on an alleged promise made by Kanter and , as such, the second cause of action must be Gordon 61 AD3d 932 (2d Dept 2009)). (Hallwell dismissed 4 The breach of fiduciary duty cause of action asserted that Kanter did not comply with Article " Debra with all , Article 4. , and Article 4. 6 of the operating agreement and " failed to provide (Ex. " A" at documents she was legally entitled to as a Cosmo Managing Member and LLC Member 16- 19). 5 The fifth cause of action alleging negligence on the par of Kanter specifically asserts that Kanter breached his duty of good faith by engaging in the "unauthorized distrbutions 37-38). fuds " and " breached the Cosmo Operating Agreement" (Ex. " A" at of 6 The allegations of negligent misrepresentation asserted in the fourth cause of action of the competently and acting complaint are: 1) Kanter represented that he was managing the affairs of Cosmo " in the best interest" of Debra, despite the fact that he had every intention of misappropriating the receipts due her; and 2) that Kanter represented that he would provide Debra with the 2009 and 2010 Cosmo 31- 32). A" at returns and 2010 and 2011 bank statements despite having no intention of doing so (Ex. " 7 The other allegations of fraud asserted in the complaint are: 1) Kanter represented that he was , despite the fact managing the affairs of Cosmo " competently and acting in the best interest" of Debra that he had every intention of misappropriating the receipts due Debra; and 2) that Kanter represented that he would provide Debra with the 2009 and 2010 Cosmo tax returns and 2010 and 2011 bank 25-26). statements despite having no intention of doing so (Ex. " A" at [* 5] The cause of action asserting an intentional inflction of emotional distress must also be dismissed because the actions complained of " do not rise to the level of conduct which is ' outrageous in character , and so extreme in degree , as to go beyond all possible bounds of decency, and to be regarded as atrocious , and utterly intolerable in a civilzed communty'" Consolidated Rohrlich Household Finance Corp. 296 AD2d 488 (2d Dept 2002); (Skarren Bus Transit, Inc. 15 AD3d 561 (2d Dept 2005) (citations omitted)). Additionally, Debra has failed to allege sufficient facts to sustain a cause of action under the theory of prima facie tort where there are no allegations in the complaint that Kanter s " sole motivation was ' disinterested Lindner 59 NY2d 314 333 (1983); Spitzer malevolence (Burns Jackson Miler Summit 224 AD2d 567 (2d Dept 1996)). Bell Slepakoff The sixth cause of action asserted in the complaint-misappropriation/conversion, alleges that Kanter: "misappropriated Cosmo funds by paying himself fuds that he was not entitled to and refused to "pay to Gold the unauthorized distrbutions that he made to himself' ; and that the distributions have not been in accord with the desire of a majority of the Managing Members of Cosmo " (Ex. "A" to Motion at ~ 40). A claim for conversion canot be predicated on a breach of Northeast Land Development Corp. contract (Hamlet at Wilow Creek Development Co. , LLC v 555 Realty Co. 240 AD2d 375 (2d MBL Life Assurance Corp. 64 AD3d 85 (2d Dept 2009); Dept 1997)). Accordingly, because Debra failed to set fort any allegations demonstrating a wrong independent from the contract claim , the Defendants are entitled to dismissal of the sixth cause of action. Based on the foregoing, it is hereby ordered that: the complaint is dismissed insofar as asserted against Defendant Cosmo Holdings LLC; the first , second , third , fourh , fift , sixth, eight and ninth causes of action are dismissed insofar as asserted against Kanter; the branch of the motion seeking dismissal of the seventh cause of action insofar as asserted against Kanter is denied. A Preliminar Conference has been scheduled for Januar 17 2012 , at 9:30 A.M. in the Preliminar Conference Par. This constitutes the decision and order of the cour. Dated: December 23 2011 ENTERED DEC 2 9 2011 oAU COUNTY COUNTY CLERK' S OFFtCE
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