Gluck v Gross

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Gluck v Gross 2021 NY Slip Op 32500(U) November 29, 2021 Supreme Court, Kings County Docket Number: Index No. 526519/19 Judge: Leon Ruchelsman 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. [*FILED: 1] KINGS COUNTY CLERK 11/29/2021 10:53 AM INDEX NO. 526519/2019 NYSCEF DOC. NO. 120 RECEIVED NYSCEF: 11/29/2021 SUPRE.ijE COURT OF T.HE S'I'A.TE OF NEW YORK COUNTY OF KINGS :. CIVIL TERM: COMMERCIAL 8 ------ -- --------- ------~--- ----- -. --x l S$AC GLUCK,. Plaintiff, bebisioh ~rtd tirder lridex No. ·"5"2 6519 /19 -- against SHMUEL GROSS.,. GH REALTY .LLC & .J7 WOLC.OTT .LLC, -Defendants, 2&, 2021 ~oveciber ------------- ----- .- ------------·-.. -------· .--x P.RESENT: HON... LEON RUCHELSMAN The plaintiff has moved seeking to reargue a portion ·of a ·decision and orde-r dated May l-0, 2.021 which d~nied. the plaint.if£' s reque-.st for surmp.ary judgement on a claim for l;:ireach of fiduciary duty. The defendant opposE!s the motion. were s·ubmit.ted by the parties and .arguments heid, Papers After reviewing all the- arguments .this court now make_:s the following. determination . As rec::or"ded in the· prior decision and orde!'r, on January 17-, 2,017 the plaintiff, Isaac Gluck 10.aned .$217, 000 to the de_fenctant, Shmuel Gross and an entity he .owned, defendant GH Gross Realty The parties· signed a do:cument,.-- which pt.J.rsuant_ to a· LLC. 9ettificAte of accur~cy fro~ a translator states that ~I I~aac Gluck., have given 217.,000.00 to Shmuel Gross for 3.7 Wol.cot:t st~ .. wh.en the house will be= sold in about 6.-·s months, I will recE;!ive the profit, $ 4 0 O, 2 times 217.00 [sic]; approxim:atel y 0 0 0. 0 O" (see, Ag .reeni.e·n t, annexed as E"Xhibit A to: ·the 1 of 5 [*FILED: 2] KINGS COUNTY CLERK 11/29/2021 10:53 AM NYSCEF DOC. NO. 120 INDEX NO. 526519/2019 RECEIVED NYSCEF: 11/29/2021 Comp1aint). The plaintiff asserts the property has not been sold and that in any event there are no questions of fact he is entitled to the amo11nt he loaned in addition to approximately another $200,000 as profit, pursuant to the agreement. The plaint:iff sought summary judgement arguing there are no questions of fact the de:fenclant breached a fiduciary duty in failing to endeavor to sell the property pursuant to the agreement. The court denied that request and the plaintiff now seeks to reargue that determination. Conblusiorts of Law A motion to reargue must be based upon the £.act the court overlooked or misapprehended fact or law or for some other reason mistakenly an::ived at in its earlier decision (Deutsche Bank National Trust Co., v. Russo, lJO AU3d 952, 96 NYS2d 617 [2d Dept., 2019]). To succeed on a Claim for breach of a fiduciary duty, a plaintiff must establish the existence of the following three elements: (1) and defendant, a fiduciary relationship existed between plaintiff (2) ini scoriduct by the defendant, and {3) damages th.at were directly ca:usec:l by the defendant's misconduct (Kurtzman v Berqstol, .§.§.§., 40 AD3d ss:a, 835 NYS2d 644, 646 [2d Dept., 2007], Birnbaum v .. Birnbaum, 73 NY2d 461, 5.41 NY$2d 746 [1989] 2 2 of 5 [*FILED: 3] KINGS COUNTY CLERK 11/29/2021 10:53 AM INDEX NO. 526519/2019 NYSCEF DOC. NO. 120 RECEIVED NYSCEF: 11/29/2021 stating individuals jointly managirrg a limited liability corporation creates a fiduciary duty among the members analogous to that of partners). The first element, namely a fiduciary relationship is satisfied as plaintiff adequately establishes, and defendants concede, that they had jointly formed a partners hip. It has been wel 1 established that "bu sines s [ and] professional partners, are bound by a fiduciary duty requiring 'the punctilio of an hormr the most sensitive' Dannett & u Graubard Mallen Horowitz v. Moskovitz, 86 NY2d 112, 629 NYS2d 1009 [1995], citing Meinhard v. Salmon, 249 NY 458 [1928]). The second element of misconduct must now be examined. Misconduct by a fiduciary constituting a breach of duty can take one of two forms, either breach of loyalty or breach of care (Higgins v. New York Stock Exch., Inc., 10 Misc3d 257, 80~ NYS2d 339 [Supreme Court New York County 2005]) . Generally, a breach of loyalty will be established wh.ere plaintiff can show that defendant participated on both s·ides of a transaction. "This is a sensitive and 'inflexible' rule of fidelity, barring not only blatant self-dealing, bllt also requiring avoidance of situations in which a fiduciary's pei;sqnal interest possibly conflicts with the inte.rest of those; owed a fiduciary duty". Birnbaum; supra) . "The duty of care re.rers to the re.sponsibility c,f a ... f idiJcia,ry to exerc:L$e, in th.e per:formaI)ce of his or he.r 3 3 of 5 [*FILED: 4] KINGS COUNTY CLERK 11/29/2021 10:53 AM NYSCEF DOC. NO. 120 INDEX NO. 526519/2019 RECEIVED NYSCEF: 11/29/2021 tasks, the care that a reasonably prudent person would use under similar circumstances" (In re Ticketplanet.com, 313 BR 46 {S.O.N.Y. Bankr.uptcy Co:urt, 2004), citing Norlin Corp~. v. Robnev, Pace, Inc., 744 F2d 255, [2d Cir. 1984}). In turn, the fiduciary duty of due care, "obligates [fiduoiari.es] to act in an informed and \reasonably diligent' basis in 'considering material information'" (Higgins, supra). Lastly, concerning damages, plaintiffs must demonstrate that they did in fact suffer financial injury caused by defendant's breach of duty (105 East Second St. Assocs. v. Bobrow, 175 AD2d 746, 573 NYS2d 503 [1st Dept., 1991]) . a To establish the damages component o.f a claim for breach of fiduciary duty plaintiff is required to show at a minimum, that the defendant's actions were "a substantial factor" in causing an "identifiable loss" (See, (105 East Second St. Assocs. v. Bobrow, supra). The cru• of the breach of fiduciary claim is contained in Paragraph 66 of the Amended Complaint which states that "Dafandants [sic] breached his fiduciary duties by failing to sell the ]?rope.tty timely and return the invested amount" (id) . However, that cl.aim is entirely duplicative of the breach of corit~act claiITt (Pacella v. Town of Newburgh Volunteer Ambulance Corps. Inc., l64AD3d809, 83NYE33d246. [2dDept., 2018])~ Since the breach of contract claim remains pending since the condition 4 4 of 5 [*FILED: 5] KINGS COUNTY CLERK 11/29/2021 10:53 AM NYSCEF DOC. NO. 120 INDEX NO. 526519/2019 RECEIVED NYSCEF: 11/29/2021 precedent, na:rhely selling the property; has hot yet been fulfilled, there can likewise be no summary determination any breach of fiduciary duty occurred. Again, as recorded in the prior decision and order this cannot go on indefinitely. The defendant tlas retained new counsel and counsel asked for time to become familiar with the case. Thus, the issues of breach of contract and breach of fiduciary duty are held in abeyance f.or thirty days pending a review of the case by new counsel. Moreover, during this time the new counsel must Comply with outstanding discovery demands. The court will conduct a conference the first week of January 2022. The failure of the defendant to present Concrete steps to satisfy its obligations under the contract will result in granting the motion seeking summary judgement on all Causes of action. So ordered. ENTER: DATED: November 29, 2021 Brooklyn N.Y. Hon. JSC. 5 5 of 5 Leon Ruchelsman

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