Morrell v Golden Goslings, Inc.
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Morrell v Golden Goslings, Inc. 2012 NY Slip Op 31549(U) May 30, 2012 Sup Ct, Nassau County Docket Number: 16231/10 Judge: Thomas Feinman 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] So SHORT FORM ORDER SUPREME COURT - ST ATE OF NEW YORK COUNTY OF NASSAU Present: Hon. Thomas Feinman Justice SCOTT MORRLL and ROSELEE MORRLL Plaintiff TRIAL/IAS PART 9 NASSAU COUNTY INDEX NO. 16231/10 x X X - against - THE GOLDEN GOSLINGS , INC. d/b/a MYZIV A MZ CONSULTING COMPANY , LLC , MZ NATIONAL LLC , ROBERT ABRAMS, HOWARD FENSTERMAN ABRAMS , FENSTERMAN , FENSTERMAN , EISMAN GREENBERG FORMATO & EINIGER , LLP MOTION SUBMISSION DATE: 4/4/12 MOTION SEQUENCE NO. Defendants. The following papers read on this motion: Notice of Motion and Affidavits................................. Memorandum of Law in Support of Motion............... Notice of Cross- Motion and Affidavits....................... Memorandum of Law in Support of Cross- Motion.... Memorandum of Law in Support of Reply................. Affirmation in Opposition.......................................... Reply Affirmations..................................................... RELIEF REQUESTED The defendants , Robert Abrams (" Abrams ), Howard Fensterran (" Fensterman ), and Abrams , Fensterman , Fensterman , Eisman , Greenberg, Formato & Einiger , LLP (the " AF Firm (collectively with Fensterman and Abrams , the " AF defendants ), The Golden Goslings , Inc. Golden Goslings ), MZ Consulting Company, LLC (" MZ Consulting ), and MZ National" , (collectively with Golden Goslings , MZ Consulting, MZ National , and the AF defendants , the 3212 dismissing plaintiffs ' Amended Verified defendants ), move for an order pursuant to CPLR Complaint. The defendants submit a Memorandum of Law in support ofthe motion. The plaintiffs cross-move for an order compellng the defendants to fully respond to plaintiffs ' First and Second [* 2] Notice for Discovery and Inspection , and to appear for depositions , and oppose defendants ' motion. The plaintiffs submit a Memorandum of Law in support ofthe cross-motion. The defendants submit opposition to the cross-motion , and in reply to defendants ' motion , and a Memorandum of Law in support of the defendants ' opposition and reply. The plaintiffs submit a reply affrmation. BACKGROUND The plaintiffs initiated this action for breach of contract , unjust enrichment , breach of fiduciary duty, legal malpractice , fraud and accounting. The plaintiff, Scott Morell , (hereinafter referred to as " S. Morrell), and his mother , plaintiff, Roselee Morrell , (hereinafter referred to as " Morrell" ), allege , essentially that defendant , Fensterman , their longtime attorney, induced them into investing in an internet business venture that was controlled by the AF Firm which defrauded plaintiffs for their own benefit. The plaintiffs allege that F ensterman and the AF Firm acted as plaintiffs ' counsel in business and personal affairs for over twenty (20) years , that Fensterman and Abrams solicited the plaintiffs to invest in MYZIV A , and made misrepresentations to the plaintiffs prior to the abandonment of plaintiffs ' shares. The complaint provides that Fensterman said that MYZIV A is a " great opportunity" , MYZIV A would engage an accountant other than the one used by F ensterman , and the AF defendants , that Abrams and Fensterman represented that if the Abandonment Agreement was signed , S. Morrell would receive ten percent , (10%), of MYZIVA profits. The complaint alleges breach of contract in failing to satisfy the balance due , unjust enrichment based on defendants selfish interests , breach of fiduciary duty based on material misrepresentations , malpractice on postinvestment advise , fraud in the inducement based on representations that the investment opportunity had a likelihood of success , and an accounting. 2002 , S. Morrell Purchaser ), entered into a " Stock and Membership Interest Purchase Agreement" with Golden Goslings, MZ Consulting and MZ National Sellers " and also referred to as " MYZIV A" ). S. Morrell , Purchaser , agreed to purchase ten (10) shares of Golden Goslings , a five percent , (5 %), membership interest in MZ Nationals for one On or about September 30 , hundred thousand and 00/1 00 dollars , ($100 000. 00), and agreed to advance the sum offour hundred inter thousand and 00/1 00 dollars , ($400 000. 00), to the Sellers. The Purchase Agreement provided, , that he has sufficient alia that the Purchaser acknowledges that he is purchasing an investment available resources to provide adequately for his curent needs and " can bear the economic risk for a complete loss of his investment hereunder , and acknowledges the substantial risk involved in Seller s operations. The Purchaser and Seller also agreed that " there are no promises , agreements conditions , undertakings , waranties or representations , oral or written , expressed or implied between them , other than as set forth herein On or about June 22 , 2005 , R. Morrell Purchaser ), entered into a " Stock Purchase certain shares of Agreement" with Golden Goslings Seller ). R. Morrell agreed to purchase Golden Goslings for one hundred thousand and 001100 dollars , ($100 000. 00). As Purchaser , R. Morrell acknowledged that she purchased the shares for investment purposes only, that she has suffcient available financial resources to provide adequately for her current needs , and could bear the substantial risks involved with the company s operations. [* 3] On or about December 31 , 2008 , R. Morrell and S. Morrell , executed a " Share Abandonment Agreement" acknowledging that MYZIV A no longer had any business operations , and that its shareholders were surendering their shares. DISCUSSION The court' s function on this motion for summary judgment is issue finding rather than issue Twentieth Century Fox Film Corp. 165 NYS2d 498). Since summar v. (Sullvan judgment is a drastic remedy, it should not be granted where there is any doubt as to the existence 413 NYS2d 141). Thus , when the existence ofan v. Ceppos (Rotuba Extruders ofa triable issue. v. Goodson (Stone issue offact is even arguable or debatable , summar judgment should be denied. 200 NYS2d 627. The role of the cour is to determine if bonafide issues of fact exists , and not to v. Chittenden 69 NY2d Black Corp. , 203 AD2d 239; v. Saga (Gaither resolve issues of credibility. 665). determination. Once a movant has met its initial burden of proof on a summar judgment motion , the burden shifts to the opponent to provide evidence in admissible form to demonstrate an issue of fact. Eyler 582 NYS2d 990). It is well established that a pary opposing a summar judgment (Gaddy v. motion must " lay its proof' and present evidence , in admissible form , demonstrating the existence v. Associated (Friends of Animals, Inc. of triable issues of fact which preclude sumar judgment. Morgan v. New York 49 NY2d 557; v. City of New York Zuckerman Fur Mfrs :, Inc. 46 NY2d 1065; Telephone 220 AD2d 728). Bald , conclusory allegations, speculation and surmise are insufficient v. Health Ins. Plan of Greater NY 7 NY2d 56; (Shapiro to defeat a motion for summary judgment. v. 37 AD3d 528). Gelesko Levy, 48 AD3d 547; v. New York City Transit Authority, Skouras showing of entitlement to summary judgment. prima facie Here , the defendants have made a As to plaintiffs ' cause of action for breach of contract as and against the defendants , F ensterman and Abrams , the defendants have demonstrated that neither Fensterman or Abrams are a par to the subject contract , the Purchase Agreement , which is between S. Morrell and Golden Goslings , MZ Consulting and MZ National. It is well established that a par may not assert a contractual cause of v. Carlton on the Park, Ltd. 286 AD2d (Hampton Living, Inc. action against a par absent privity. v. Bank of Leumi Trust 240 AD2d 382). Additionally, S. 664; Outrigger Construction Company Morrell testified that he believed Golden Gosling would repay the loan. As to plaintiffs ' cause of action for unjust enrichment , as it is based on the Abandonment Agreement , it must fail as the express contract governs the matter , precluding recovery in quasi v. Galano (Whitman Realty Group, Inc. contract for events arising out of the same subject matter. 41 AD3d 590). As to plaintiffs ' causes of action for breach of fiduciar duty, and legal malpractice with (McCormickv. Favreau respect to the 2005 Purchase Agreement , such actions are time- bared. AD3d 1537). Moreover , the defendants have demonstrated that S. Morrell testified that " " initiated the investment loan to MYZIV A , that Abrams and Fensterman told him it was a " great opportunity R. Morrell testified that she did not recall the substance of what was said by either Fenstermap or Abrams concerning her investment in MYZIV A , or her execution of the Abandonment Agreement. S. Morrell testified that he sought the advise of his accountant who told him that it was a good investment and worth the risk. The defendants refer to an " opinion letter" written by S. Morrell' [* 4] accountant concerning the investment , whereby, within twenty- four hours , S. Morrell emailed his offer" thereto. In order to recover damages on a breach of fiduciar duty theory, the plaintiff must prove the existence of a fiduciary duty between the paries , a breach of that duty and identifiable (Fitzpatrick House IL LLC damages suffered by the plaintiff as a proximate cause ofthe breach. Bergstol 40 AD3d 558). v. Kurtzman Family Services 55 AD3d 664; Neighborhood Youth Plaintiffs must demonstrate that " but for " the breach of duty, plaintiff would not have sustained Bender 74 AD3d 1111). v. (Boone ascertainable damages. Assuming that plaintiffs rely on the attorney- client relationship, or shareholder status , the alleged breach is premised on the same facts , and as so , the breach of fiduciar duty will be Strawn, LLP 28 AD3d 746). Moreover v. Winston (Town of North Hempstead dismissed. recover on a legal rnalpractice action where plaintiff admittedly relied on his plaintiffs canot accountant' s opinion letter , as S. Morrell sought professional advise from his accountant. Here (Eurycleia confidence was not one-sided resulting in superiority and influence on the other. Kissel, LLP 12 NY3d 553). The unilateral belief of a plaintiff that an v. Seward Partners, LP attorney- client relationship exists ' is not sufficient. There must be an " explicit undertaking to v. Volpe Canfield 237 AD2d 282). 288 AD2d 378; v. perform a specific task" (Wei Chang Failure to prove the existence of such a relationship warrants disrnissal of a claim for legal supra). (Wei Chang, malpractice. The moving defendants have also demonstrated that the plaintiffs ' claims for malpractice concerning the MYZIV A investment are time- bared , and the continuous representation doctrine is v. Eisenstein 96 NY2d 164). As already provided , R. Morrell testified (Shumsky not applicable. that she could not recall anything Abrams told her , and could only remember Fensterman told her sometime in 2005 " it is going to be great" . R. Morrell testified Fensterran did not give her any arguendo Fensterman and S. other " advice " and she let her son , S. Morrell , handle it. Assuming, Morrell had an attorney- client relationship concerning the MYZIV A investment in 2005 , upon Fensterman s remark that it was a " great opportnity " sometime in 2005 , the action is time- bared. S. Morrell' s claim that he was fraudulently induced to enter into a Purchase Agreement is v. (Oggioni Oggioni 46 AD3d 646). The cause of action for fraud in the inducement time- bared. (Ply * Gem of Laurel, Inc. v. Lee of a contract accrues at the time of the execution of the contract. entered into in 2005 , the action is time- barred. 91 AD2d 513). As the Purchase Agreement was Should plaintiff seek to argue that he is entitled to rely on the two-year discovery rule , (two years from when he discovered the fraud), the claim fails as S. Morrell , by his own admission , testified that he knew of MYZIV A' s deteriorating financial condition upon his review of its tax returns sometime in 2005 , and knew that his investments were not performing well. . Here , plaintiffs ' claims concerning fraud in the inducement , is based upon Fensterman statement that " it' s going to be great" it's a great investment" , and " it' s a great opportunity . In order to prevail on a claim of fraud in the inducement , plaintiffs must prove a misrepresentation of a material fact which was false and known to be false by the par making it , the misrepresentation was made for the purose of inducing them to rely on it , they justifiably relied upon it , and a Wildenstein 16 NY3d 173). A mere expression of resulting injury. (Mandarin Trading Ltd. expectations , v. nor representation of expected performance not realized v. Aluminum Sales, Inc. 4 NY2d 403). (Channel Master Corp. does not constitute fraud. Harris NY2d 317 , the agreement between the v. Additionally, here , as in Danann Realty Corp. parties specifically provides that plaintiff is not relying upon representations that fall outside ofthe agreement. opinion of present or futue [* 5] As the defendants have met their initial burden of proof on this summar judgment motion the burden shifts to the plaintiffs to provide evidence in admissible form to demonstrate the existence of a triable issue of fact with respect to the alleged causes of action contained in the summons and v. Eyler 582 NYS2d 990). The plaintiffs have failed to do so. (Gaddy complaint. The plaintiffs argue that the instant motion for summary judgment is premature and further discovery is necessary. The argument that more discovery wil help plaintiff oppose the motion is unavailing. " The mere hope that somehow plaintiff wil uncover evidence that wil prove a case provides no basis pursuant to ~3212(f) for postponing a determination of a summar judgment Franklin 179 AD2d 746). The motion may not be thwared by a " fishing v. motion. (Plotkin expedition " predicated on the mere hope or speculations that discovery would produce relevant Vilage of Endicott 202 AD2d 885). v. Wiliams Sons 207 AD2d 875; v. Bowne (Prado evidence. The paries herein , at a conference before the undersigned , agreed to the submission of defendants ' summary judgment motion prior to conducting defendants plaintiffs ' counsel requested to modify the motion schedule. Plaintiffs ' counsel provides it's associate did not agree , rather objected. In any event , the request to modify the motion schedule was denied. Moreover , as already provided , the mere argument that more discovery will help plaintiffs Sons, supra; Willams Bowne v. Franklin , supra; Prado v. (Plotkin motion is unavailing. ' depositions. Thereafter Endicott, supra). Here , plaintiffs have not provided an evidentiar basis upon which to show that discovery v. Bennett 47 NY2d 619). Plaintiffs have not offered what (Auerbach may lead to relevant evidence. (Id. , Nash facts , necessar to oppose the motion , are " uniquely in the defendants ' possession. 72 AD3d 1037). Baumbli Construction Corp. Additionally, here , the plaintiffs , in opposition , have failed to present evidence in admissible form to warant denial of this summary judgment motion. While plaintiffs , in opposition , claim that they relied on Fensterman s advise , plaintiffs do not offer what the advise was , other than Fensterman s apparent vouch of confidence , and do not dispute that sometime in 2005 , Fensterman purorted claims for fraudulent inducement bared. Plaintiffs do not dispute that S. Morrell breach of fiduciar duty, or malpractice are timesought advise from his accountant concerning the MYZIV A investment. Plaintiffs ' contention that he relied on Fensterman s confidence does not constitute fraud. As already provided , a mere (Channel expression of opinion or future expectations of a performance does not constitute fraud. In any event , the plaintiffs ' allegations and assertions that they relied on Master Corp. , supra). Fensterman , a long time attorney, with respect to the MYZIV A investment , are unsubstantiated. Additionally, the plaintiffs do not dispute that the subject agreements do not contain personal guarantees , or that the subject agreements provide and acknowledge the purchase of an investment which bears an economic risk , and the agreement was made without representations outside the agreement. stated it was a " great investment" . Arguably, any "5- [* 6] CONCLUSION In light of the foregoing, defendants ' motion for summar judgment is granted in its entirety, and the plaintiffs ' cross-motion to compel discovery is denied in its entirety. Therefore , plaintiffs ' Amended Verified Complaint is hereby dismissed. Dated: May 30 2012 cc: Jaspan Schlesinger LLP Zeichner Ellman & Krause LLP ENTERED JUN 04 2012 NASSAU COUNTY COUNTY CLERK' S OFFICE
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