Rhodes v Swope

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[*1] Rhodes v Swope 2019 NY Slip Op 51333(U) Decided on August 13, 2019 Supreme Court, Warren County Muller, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on August 13, 2019
Supreme Court, Warren County

John Rhodes and JOANNE RHODES, Plaintiffs,


Anne Swope, Individually and as a Board Member of the Lagoon Manor Homeowners' Association, Inc. and LAGOON MANOR HOMEOWNERS' ASSOCIATION, INC., Defendants.


Fitzgerald Morris Baker Firth, Glens Falls, (Michael A. Brandi of counsel) and Braymer Law, PLLC (Claudia Braymer of counsel), for plaintiffs.

E. Stewart Jones Hacker Murphy, LLP, Troy (James E. Hacker of counsel) and Paul A. Cardinal, Latham, for defendants.
Robert J. Muller, J.

Plaintiffs' amended complaint alleges that in 2016 they purchased a townhouse unit in the Lagoon Manor Development (hereinafter the Manor) on the shores of Lake George in the Town of Bolton Landing, Warren County. All common property within the Manor is owned by defendant Lagoon Manor Home Owner's Association, Inc. (hereinafter HOA). Defendant Anne Swope also owns a townhouse in the Manor and was a Board member of the HOA from October 2014 to July 31, 2018. The amended complaint alleges that, on or about August 7, 2017, the Adirondack Park Agency (hereinafter the APA) granted permits 87-292A and 87-29211, which authorized view plans to be implemented on HOA property. The view plans — intended to create a "filtered view of Lake George" — provided that certain trees would be removed or trimmed while certain other trees would remain. The HOA hired a contractor to complete the approved tree trimming.

The gravamen of plaintiffs' allegations against Swope stems from the 2017 trimming and subsequent removal of a tree that was located beside plaintiffs' townhouse and not authorized to be removed by the terms of the APA permits. Plaintiffs allege that defendants' "removal of the tree next to [their] deck reduced the value of [their] purchase" and, further, that the "removal of the tree was significantly damaging to [their] interest."

Plaintiffs also allege that the HOA engaged in wasteful practices, including (I) incurring [*2]expenses pertaining to the view cutting and trimming of trees on HOA land that "would have been paid for by the seller"; (ii) misrepresenting the status of the septic system to "extract more money from the HOA [m]embers"; (iii) hiding an engineer's opinion as to the condition of a bridge from the HOA [m]embers, resulting "in a waste of HOA resources"; (iv) "maliciously" passing an amendment to the governing covenants "in order to punish one HOA member — the seller's landscape architect"; (v) "destroying" a historically significant entranceway at an unnecessary expense; and (vi) passing a budget that included $11,000.00 for legal fees "to sue the seller's representative for past assessments on property being developed."

Plaintiffs further allege that the HOA engaged in prohibited practices such as: (I) improper and secretive meetings without notice to the HOA members; (ii) refusing, through Swope, to provide plaintiffs with a copy of the HOA's view plan; (iii) refusing to provide plaintiffs with a copy of an "engineer's opinion" concerning a bridge; and (iv) failing to release draft reports to HOA members concerning a septic system.

Finally, in amending their complaint plaintiffs seek to hold Swope "personally liable for her independent, intentional misconduct" and "her active participation in the malfeasance by the HOA." As a consequence of the foregoing alleged acts plaintiffs seek, inter alia, a money judgment against Swope, together with punitive damages, and an Order enjoining and restraining her from interfering with the affairs of the HOA. Presently before the Court is defendants' motion to dismiss all causes of action in the amended complaint as alleged against Swope in her individual capacity (see CPLR 3211 [a] [7]).

A motion to dismiss under CPLR 3211 (a) (7) requires a determination as to "'whether the proponent of the pleading has a cause of action, not whether he has stated one'" (Sokol v Leader, 74 AD3d 1180, 1181-82 [2010], quoting Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). "On a motion to dismiss for failure to state a cause of action, [the Court] must 'afford the pleadings a liberal construction, accept the facts alleged therein as true, accord the plaintiff the benefit of every possible inference and determine whether the facts alleged fit within any cognizable legal theory'" (Nelson v Capital Cardiology Assoc., P.C., 97 AD3d 1072, 1073 [2012], quoting Matter of Upstate Land & Props., LLC v Town of Bethel, 74 AD3d 1450, 1452 [2010]). As the Third Department has declared, however, "[s]uch favorable treatment . . . is not limitless" (Mid-Hudson Val. Fed. Credit Union v Quartararo & Lois, PLLC, 155 AD3d 1218, 1219 [2017], affd 31 NY3d 1090 [2018] [internal quotation marks and citation omitted]). Indeed, "[n]otwithstanding the broad pleading standard, bare legal conclusions with no factual specificity do not suffice to withstand a motion to dismiss" (id.; see Godfrey v Spano, 13 NY3d 358, 373 [2009]).

While a corporation can only act through an individual and a corporate officer is not subject to personal liability for actions taken in furtherance of the corporation's business (see Worthy v New York City Hous. Auth., 21 AD3d 284, 286 [2005, Tom, J., concurring], it is equally true that "[p]ersonal liability will be imposed . . . upon corporate officers who commit or participate in the commission of a tort, even if the commission or participation is for the corporation's benefit" (Key Bank of NY v Grossi, 227 AD2d 841, 843 [1996]). In Key Bank of NY v Grossi (supra), the distinguishing characteristic was a conversion while here the alleged tort is rather more amorphous — especially when examined in light of "the well-settled principle that a corporate officer is not normally liable in his or her personal capacity . . . unless the officer [*3]expresses some intention to be personally bound" (W. Joseph McPhillips, Inc. v Ellis, 278 AD2d 682, 683 [2000]).

Turning to plaintiffs' first cause of action, which alleges intertwined claims sounding in breach of fiduciary duty, trespass and malfeasance against Swope for purportedly directing the removal of the subject tree, the Court observes that a claim for breach of fiduciary duty requires a plaintiff to establish: (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by defendant's misconduct (see Delibasic v Manojlovic, ___ AD3d ___, 2019 NY Slip Op 05613, *1 [2019]; Loch Sheldrake Beach & Tennis Inc. v. Akulich, 141 AD3d 809, 811 [2016], lv dismissed 28 NY3d 1104 [2016]). Furthermore, "[a] cause of action sounding in breach of fiduciary duty must be pleaded with the particularity required by CPLR 3016 (b)" (Palmetto Partners, L.P. v AJW Qualified Partners, LLC, 83 AD3d 804, 808 [2011]), which provides that "[w]here a cause of action . . . is based upon misrepresentation, fraud, mistake, wilful default, breach of trust or undue influence, the circumstances constituting the wrong shall be stated in detail."

Here, notwithstanding plaintiffs' allegation that Swope acted "without authorization from the HOA" when allegedly directing a contractor to cut down a tree directly behind their unit, plaintiffs have failed to delineate any conduct by Swope outside that of her position as a member of the HOA Board with the requisite factual specificity. "It is well-settled that a breach of fiduciary duty claim does not lie against individual cooperative board members where there is no allegation of 'individual wrongdoing by the members . . . separate and apart from their collective actions taken on behalf of the' cooperative" (Hersh v One Fifth Ave. Apt. Corp., 163 AD3d 500, 500 [2018], quoting 20 Pine St. Homeowners Assn. v 20 Pine St. LLC, 109 AD3d 733, 735-736 [2013]; see Peacock v Herald Sq. Loft Corp., 67 AD3d 442, 443 [2009]).

Plaintiffs' allegations of trespass, malfeasance, and intentional misconduct against Swope — also embedded in the first cause of action — are likewise unsupported by factual allegations in the amended complaint. "Trespass . . . involves 'an intentional entry onto the land of another without justification or permission'" (Schillaci v Sarris, 122 AD3d 1085, 1087 [2014], quoting Volunteer Fire Assn. of Tappan, Inc. v County of Rockland, 101 AD3d 853, 855 [2012]; see Woodhull v Town of Riverhead, 46 AD3d 802, 804 [2007], lv denied 10 NY3d 708 [2008]). Plaintiffs do not allege that Swope entered their property or that they own the land upon which the subject tree existed. As such, the claim of trespass cannot stand.

Claims of malfeasance are typically reserved for public officials for intentionally doing something criminal or illegal. In People v Flanagan (28 NY3d 644 [2017]), the Court of Appeals declared that "[i]n order to be guilty of official misconduct for malfeasance a defendant (1) must commit an act that constitutes an unauthorized exercise of his or her official functions, (2) knowing that the act is unauthorized, (3) with the intent to obtain a benefit or deprive another of a benefit" (id. at 657; see Penal Law § 195.00 [1]). Swope, as a member of the HOA Board, is clearly not a public official and a claim for malfeasance cannot lie as against her.

[In Pomerance v McGrath (143 AD3d 443 [2016], lv denied 32 NY3d 913 [2019]), the First Department held as follows:

"While directors of a condominium board, acting in their capacity as board members, who cause the performance of an affirmative tortious act of malfeasance may be subject to personal liability, directors who are responsible for mere [*4]nonfeasance by the entity, without causing the commission of any affirmatively tortious acts, are not subject to personal liability for such nonfeasance (see Pomerance v McGrath, 124 AD3d 481, 482 [2015], lv dismissed [2015] [analogizing violation of condominium bylaws to a breach of contract, which will not create personal liability]; Peguero v 601 Realty Corp., 58 AD3d 556, 559 [2009] [tortious nonfeasance or a mere failure to act will not subject corporate officers to personal liability]). Here, plaintiff merely alleges that the board did not honor her inspection rights and failed to respond adequately to her complaints of noise emanating from an adjacent apartment. These allegations amount only to mere nonfeasance for which the board members cannot be held individually liable. Plaintiff's conclusory allegation that the board ignored her noise complaints to retaliate against her for other disputes does not suffice to transform the claim into one for affirmative tortious misconduct" (id. at 447-448).

With respect to the intentional conduct allegations, Tucciarone v Hamlet on Olde Oyster Bay Homeowners Assn., Inc. (154 AD3d 898 [2017]) is most instructive. There, plaintiff commenced an action to recover damages against a homeowners' association and its individual members and, in reversing the lower court, the Second Department held that "defendants established, prima facie, that the individual defendants did not commit any tortious acts outside the scope of their authority as Board members" (id. at 901; see also Cohen v Kings Point Tenant Corp., 126 AD3d 843, 845 [2015] [granting motions to dismiss of two individual defendants because "the amended complaint was devoid of allegations that [they] acted tortiously other than within the scope of their authority as Board members of the cooperative"]; Meadow Lane Equities Corp. v Hill, 63 AD3d 699, 700 [2009] ["Here, because [plaintiff] failed to plead . . . that [defendant] acted tortiously other than in her capacity as a member of the Board, the Supreme Court properly concluded that those causes of action should be dismissed pursuant to CPLR 3211 [a] [7]."]; Brasseur v Speranza, 21 AD3d 297, 298 [2005] ["[I]n the absence of any allegations that the individual defendants acted tortiously other than in their capacity as [B]oard members, the . . . cause of action states no cognizable claim against them."]). Here, plaintiffs failed to allege that Swope acted tortiously other than within the scope of her authority as an HOA Board member.

Therefore, having considered the Affidavit of Thomas J. Higgs, Esq. sworn to January 11, 2019 together with Exhibit "A" and "B"; defendants' Memorandum of Law dated January 11, 2019; the opposing Affirmation of Michael A. Brandi, Esq. dated February 8, 2019; plaintiffs' Memorandum of Law dated February 18, 2019; and defendants' Reply Memorandum of Law dated March 1, 2019, and upon due deliberation

It is ORDERED that all causes of action as alleged against Swope in her individual capacity are dismissed, with prejudice, and is further

ORDERED that any relief not specifically addressed has nonetheless been considered and is hereby expressly denied.

The above constitutes the Decision and Order of this Court.

The original of this Decision and Order has been e-filed by the Court. Counsel for defendants is hereby directed to serve a copy of the Decision and Order with notice of entry in [*5]accordance with CPLR 5513.

Dated: August 13, 2019

Lake George, New York