| IDT Corp. v Morgan Stanley Dean Witter & Co. |
| 2007 NY Slip Op 09091 [45 AD3d 419] |
| November 20, 2007 |
| Appellate Division, First Department |
| IDT Corporation, Respondent, v Morgan Stanley DeanWitter & Co. et al., Appellants. |
—[*1] Bracewell & Giuliani LLP, New York City (Michael D. Hess and David C. Albalah ofcounsel), and Grayson & Kubli P.C., McLean, Va., (Alan M. Grayson, of the District ofColumbia bar, admitted pro hac vice, of counsel), and Warren W. Harris and Glen A. Ballard, Jr.,of the Texas bar, admitted pro hac vice, of counsel), for respondent.
Order, Supreme Court, New York County (Herman Cahn, J.), entered April 27, 2006, which,to the extent appealed from, denied defendants' motion to dismiss the first, second, fourth andfifth causes of action in the complaint for failure to state a cause of action, affirmed, withoutcosts.
Plaintiff, a telecommunications company, alleges in its complaint that Morgan Stanley, itsformer investment banker, engaged in a variety of improper conduct in an effort to maximize thefees it collected, thereby breaching its fiduciary duty to plaintiff and causing it substantialfinancial harm in the process. The complaint asserts claims for breach of fiduciary duty, tortiousinterference with contract, tortious interference with prospective business relations,misappropriation of confidential and proprietary business information, and unjust enrichment.Morgan Stanley's motion was granted only to the extent of dismissing the third cause of actionfor tortious interference with prospective business relations.
Morgan Stanley contends that all of the remaining claims are barred by collateral estoppel,which prevents a party from relitigating an issue previously decided against it in a proceedingwhere there was a fair opportunity to fully litigate the matter (see Kaufman v Eli Lilly &Co., 65 NY2d 449, 455 [1985]), pointing to plaintiff's prior arbitration against TelefonicaInternational, S.A. where, according to Morgan Stanley, the arbitrators decided critical issues thatpreclude plaintiff's present claims. In that arbitration, however, plaintiff never had an opportunityto conduct discovery on the extent of the damages it suffered due to Morgan Stanley's allegedtortious conduct (see PenneCom B.V. v Merrill Lynch & Co., Inc., 372 F3d 488, 492-493[2d Cir 2004]). Nor are plaintiff's remaining claims time-barred or insufficient to state causes ofaction. While Telefonica's breach of its memorandum of understanding with IDT was allegedly aresult of Morgan Stanley's tortious interference, no cause of action for such interference aroseuntil plaintiff actually suffered damages, and such damages were not necessarily suffered at thetime the contract was breached (see Kronos, Inc. v AVX Corp., 81 NY2d 90, 96-97[1993]). The equitable breach of fiduciary duty claim seeking disgorgement of[*2]$10 million is governed by a six-year limitations period (CPLR 213[1]; Kaufman v Cohen, 307 AD2d 113, 118 [2003]), and should not be dismissed at thisstage of the litigation as "duplicative" of the unjust enrichment claim, when it properly serves asan alternative theory for the relief sought. Finally, the rule that an award for punitive damagesmust be limited to conduct directed at the general public applies in breach of contract cases, nottort cases for breach of fiduciary duty (see Sherry Assoc. v Sherry-Netherland, Inc., 273AD2d 14, 15 [2000]).
We have considered defendant's remaining arguments and find them unpersuasive.Concur—Andrias, J.P., Saxe, Nardelli and Sweeny, JJ.
McGuire, J., dissents in a memorandum as follows: The principal issues on appeal in thisaction brought by plaintiff-respondent IDT Corporation against defendants-appellants MorganStanley Dean Witter & Co. and Morgan Stanley & Co., Incorporated (collectively, MorganStanley) center on the extent to which IDT's claims against Morgan Stanley are barred by eitherthe doctrine of collateral estoppel on account of an earlier arbitration proceeding IDT broughtagainst nonparty Telefonica International, S.A. or the statute of limitations.
In May 2001, IDT commenced an arbitration proceeding against Telefonica alleging that IDThad sustained over $2 billion in damages as a result of Telefonica's delays in performance andbreaches of a memorandum of understanding (the MOU) that IDT and Telefonica entered into inAugust 1997 relating to a South American submarine cable network (the SAm-1 Network) thatTelefonica expected to build. The MOU had three distinct components: (1) a capacitycomponent, pursuant to which IDT had the right to purchase at least $100 million of capacity inthe SAm-1 Network over a five-year period, with an option to purchase additional capacity,under certain favorable pricing conditions; (2) an equity purchase component, pursuant to whichIDT had the right to purchase up to 10% of the equity in a company, "NewCo," that Telefonicawould establish to "construct, establish, operate and maintain the [SAm-1] System and, directlyor indirectly sell capacity on the System"; and (3) a joint venture component, pursuant to whichTelefonica and IDT agreed to establish a joint venture company to develop and market certainproducts.
IDT alleges that Morgan Stanley, acting as Telefonica's investment banker in connectionwith the SAm-1 transaction, wrongly induced Telefonica to propose to IDT that it accept a 5%interest in an entity to be called Emergia, instead of a 10% interest in NewCo. In essence, IDTclaims that Emergia was the entity contemplated by the MOU and that NewCo was denominatedEmergia in an effort to persuade IDT to accept a smaller interest than the one to which it wasentitled under the MOU. Thus, the complaint alleges that in July 2000, Morgan Stanley assuredIDT that the value of a 5% interest in Emergia was far greater than the value of a 10% interest inNewCo.
Collateral estoppel prevents a party from "relitigat[ing] an issue that was previously decidedagainst it" (Singleton Mgt. v Compere, 243 AD2d 213, 215 [1998]), and it "appl[ies] as[*3]well to awards in arbitration as [it does] to adjudications injudicial proceedings" (Matter of American Ins. Co. [Messinger—Aetna Cas. & Sur.Co.], 43 NY2d 184, 189-190 [1977]). As is clear from the 72-page decision issued by thearbitration panel, the panel found that: Telefonica did not breach the joint venture component ofthe MOU; Telefonica breached the equity purchase component of the MOU but IDT did notsustain any damages as a result of that breach; Telefonica breached the capacity purchasecomponent of the MOU and IDT thereby sustained $16.9 million in damages; the breaches of theequity and capacity components occurred no earlier than October 2000; and IDT was agreeable toand benefitted from any prebreach delay in the parties' performance under the MOU.
With the exception of its claim for unjust enrichment and punitive damages, all of IDT'sclaims against Morgan Stanley seek damages allegedly caused when Morgan Stanley inducedTelefonica to delay performance under and breach the MOU. These claims are barred by thearbitration panel's findings that only one breach of the MOU by Telefonica caused IDT anydamages and that the amount of those damages was $16.9 million (Norris v Grosvenor Mktg.Ltd., 803 F2d 1281, 1286 [2d Cir 1986] [applying New York law and concluding in actionalleging, inter alia, tortious interference with contract that plaintiff was collaterally estopped fromrelitigating issue decided against him in earlier arbitration proceeding he had commenced againsta different party for breach of contract]; Guard-Life Corp. v Parker Hardware Mfg. Corp.,50 NY2d 183, 197-198 [1980] [amount of lost profits awarded to plaintiff in arbitration againstcontracting party for breach of contract is conclusive on plaintiff in subsequent action for tortiousinterference with contract seeking such profits]).[FN1]
IDT does not dispute that these adverse findings were made by the arbitration panel. Rather,its argument that collateral estoppel does not bar these claims is premised on the principle thatthe party to be precluded from relitigating an issue must have had a full and fair opportunity inthe prior action or proceeding to contest the issue that was decided against it (see AlliedChem. v Niagara Mohawk Power Corp., 72 NY2d 271, 276 [1988], cert denied 488US 1005 [1989]), and the flexibility in the application of the doctrine that inheres in its equitablenature (see Gilberg v Barbieri, 53 NY2d 285, 291 [1981]). In particular, IDT relies on theSecond Circuit's decision in PenneCom B.V. v Merrill Lynch & Co., Inc. (372 F3d 488[2d Cir 2004]).
In PenneCom, the plaintiff, PenneCom, brought an action against Merrill Lynchalleging that it had caused PenneCom $100 million in damages by tortiously interfering with acontract between PenneCom and Elektrim S.A., pursuant to which Elektrim agreed to purchasefrom PenneCom the shares of its subsidiary. In an earlier arbitration proceeding against Elektrim,PenneCom was awarded $38 million in fees and damages for Elektrim's breach of the contract.Merrill Lynch moved to dismiss the tortious interference claim, contending that it was barred bycollateral estoppel because the arbitration award had determined that PenneCom's damages onaccount of the breach did not exceed $38 million (id. at 491-492).
The District Court granted Merrill Lynch's motion but the Second Circuit reversed. Thelinchpin in the court's decision was an allegation by PenneCom that went "to the very heart of[*4]whether its damages claims were fully and fairly adjudicatedin the [arbitration] proceeding" (id. at 493); namely, that Merrill Lynch "presentedfraudulent evidence on Elektrim's behalf during the arbitration" (id. at 490), and that thisfraudulent evidence had "minimized the loss award" (id. at 489). The court, stressing thatunder the governing New York law collateral estoppel is an equitable doctrine and that "one 'whocomes to equity must come with clean hands' " (id. at 493, quoting Amarant vD'Antonio, 197 AD2d 432, 434 [1993]), concluded that PenneCom should be permitted toconduct discovery bearing on its contention that Merrill Lynch had "devised a fraudulent schemeto dupe the arbitrators . . . as to the extent of loss incurred . . . fromElektrim's breach" (id.).
According to IDT, PenneCom is "directly on point" because it alleges that"deceptions by Morgan Stanley were perpetrated on both IDT and the Arbitration Panel, andserved to minimize falsely the loss caused to IDT by Telefonica's breach." Similarly, it allegesthat "Morgan Stanley devised a fraudulent scheme to dupe both IDT and the Arbitration Panel asto the 'distinction' between NewCo and Emergia and the valuation of these companies." Insupport of these allegations, IDT does not point to any testimony at the arbitration hearing fromanyone affiliated with Morgan Stanley. Rather, it relies on "slanted" projected valuations thatMorgan Stanley had presented to it in July 2000, long before the arbitration proceeding wascommenced, that it had subpoenaed from Morgan Stanley during discovery prior to thearbitration, and that thereafter were "submitted" (IDT does not state by whom) to the arbitrationpanel. IDT claims that these projected valuations misled the panel by suggesting a "falsedistinction" between NewCo and Emergia and misrepresenting the relative projected valuationsof the two entities, including by assigning a far greater value to a 5% interest in Emergia than a10% interest in NewCo.[FN2]As in PenneCom, IDT maintains, the bar of collateral estoppel should not apply and itshould be entitled to take discovery relating to these allegations.
PenneCom is irrelevant because IDT's claim that the arbitration panel was deceivedis conclusively refuted by the panel's comprehensive 72-page decision. As for the supposed "falsedistinction" between NewCo and Emergia, the panel concluded that the two entities weredistinct, vindicating Telefonica's position on what is in essence a question of law relating to theproper interpretation of the MOU. More critically, the panel expressly identified and discussedthe four bases for this conclusion, none of which have anything to do with the allegedly deceptivevaluations of NewCo and Emergia: (1) the text of the MOU; (2) the minutes of a July 2000 IDTboard meeting indicating that IDT itself recognized that its right to invest in NewCo was not thesame as a right to invest in Emergia; (3) the predispute conduct of IDT and Telefonica; and (4)the equity arrangements between Telefonica and an unrelated entity, Tyco, which converted its[*5]right to a 15% interest in NewCo to a 6% interest in Emergia.
Nor does anything in the opinion even suggest that the panel credited the projection thatNewCo's value would be approximately 13% to 15% of Emergia's projected value. To thecontrary, in determining IDT's damages for Telefonica's breach of the equity purchase componentof the MOU, the panel assessed NewCo's value at 45% of Emergia's value. Moreover, as wouldbe expected of sophisticated arbitrators, the panel recognized that Morgan Stanley's July 2000projected valuation was, if not tendentious, the product of a negotiation in which Morgan Stanleywas acting for Telefonica. Thus, after noting that the July 2000 projection of NewCo's value wasa small fraction of the value projected for Emergia, the panel stressed that those projections were"prepared by Telefonica and Morgan Stanley to be presented to IDT as part of the process ofnegotiating IDT's ownership percentage in Emergia."
In short, the panel's decision refutes IDT's claim that the arbitration award was affected to itsdetriment by the ostensibly "slanted" projections. To avoid the collateral estoppel consequencesof the panel's findings, the burden is on IDT to show that the award was so affected (Kaufmanv Eli Lilly & Co., 65 NY2d 449, 456 [1985]), but IDT offers only speculation and whollyconclusory assertions.
Related contentions by IDT also are meritless. Thus, IDT's protest that the arbitration panel"did not . . . consider whether Morgan Stanley had acted tortiously in providing [theJuly 2000 projections] to IDT and urging IDT to rely upon it" is correct but beside the point.Contrary to the unstated premise of this protest, the economic damages IDT sustained as a resultof Telefonica's breaches of the MOU are not affected let alone increased by Morgan Stanley'sattempts to induce it, tortiously or otherwise, to rely on the projections. Nor is IDT persuasive incontending that delay damages "were not considered, much less awarded, by the arbitrationpanel." In fact, IDT did seek such damages, and the panel did not award any because it found thatperformance delays prior to the date of the breaches of the capacity and equity purchasecomponents of the MOU were agreed to and mutually beneficial to IDT and Telefonica. Thepanel found, in other words, that the delays did not constitute breaches of the MOU. Thesefindings by the panel are unconnected to any alleged misconduct by Morgan Stanley and, asMorgan Stanley correctly argues, it is precisely these adverse findings that bar IDT fromrelitigating the same delay issues against Morgan Stanley.[FN3]
Accordingly, I would hold that IDT's claims, other than its unjust enrichment and punitivedamage claims, are barred by collateral estoppel. Given my view that IDT's reliance onPenneCom is misplaced, I need not address Morgan Stanley's contention, which themajority [*6]implicitly rejects, that PenneCom is in anyevent inconsistent with New York case law. Suffice it to say that the cases Morgan Stanley cites,such as Jacobowitz v Herson (268 NY 130 [1935]), Altman v Altman (150 AD2d304 [1989], lv denied 74 NY2d 612 [1989]) and Parker & Waichman v Napoli (29 AD3d 396 [2006], lvdismissed 7 NY3d 844 [2006]), afford considerable if not decisive support for its argumentthat under New York law collateral estoppel cannot be avoided by a showing that the judgmentor determinations in the prior proceeding were tainted by perjury or other "intrinsic fraud"(Jacobowitz, 268 NY at 133).
As for IDT's unjust enrichment claim, it should have been dismissed for independent reasonsadvanced by Morgan Stanley in its motion to dismiss. The unjust enrichment claim has twofacets, one of which seeks to recover $10 million IDT paid to Morgan Stanley in accordance withan engagement letter relating to an unrelated transaction between IDT and AT & T. As MorganStanley argues, because the $10 million was paid pursuant to the express terms of theengagement letter, IDT cannot recover the $10 million under an unjust enrichment theory if theletter constitutes a valid and enforceable contract (Clark-Fitzpatrick, Inc. v Long Is. R.R.Co., 70 NY2d 382, 388 [1987]). According to IDT, the engagement letter is not a valid andenforceable contract because IDT was "coerced" and "extorted" by Morgan Stanley into signingthe engagement letter and paying the $10 million. However, "an agreement purportedly procuredunder duress must be promptly repudiated" (Wujin Nanxiashu Secant Factory v Ti-Well Intl. Corp., 14 AD3d352, 353 [2005]). Indisputably, the alleged extortion occurred no later than October 2000when, according to IDT's complaint, IDT "paid the exorbitant $10 million fee to MorganStanley." Because IDT did not bring this action until November 2004, more than four years later,it must be deemed to have ratified the letter of engagement (see Matter of Guttenplan,222 AD2d 255, 257 [1995] [agreement allegedly procured under duress "deemed to have beenratified" when petitioners "failed to take any action toward repudiation of the agreement for overtwo years after its execution"], lv denied 88 NY2d 812 [1996]).[FN4]
The other facet of IDT's unjust enrichment claim alleges that Morgan Stanley was unjustlyenriched by fees it received from Telefonica and others. The failure to allege that MorganStanley's enrichment comes at IDT's expense, however, is fatal to this facet of the unjustenrichment claim (see Conlon vTeicher, 8 AD3d 606, 607 [2004]).
As for IDT's claim for punitive damages, Morgan Stanley offers one argument (other than itsargument based on the statutes of limitations applicable to the underlying tort claims) for itsdismissal: the failure of the complaint to allege that the general public was harmed by MorganStanley's alleged misconduct. Such an allegation, however, is not essential to an award ofpunitive damages in a tort action (seeRoss v Louise Wise Servs., Inc., 8 NY3d 478, 489 [2007] ["Punitive damages arepermitted when the defendant's wrongdoing is not simply intentional but evince(s) a high degreeof moral turpitude and demonstrate(s) such wanton dishonesty as to imply a criminal indifferenceto civil obligations" (internal quotation marks and citations omitted)]; Giblin v Murphy,73 NY2d 769, 772 [1988] [upholding award of punitive damages for breach of fiduciary duty;argument that "punitive damages award must be overturned because there was no harm aimed atthe public generally" rejected on ground that[*7]"(p)unitivedamages are allowable in tort cases such as this so long as the very high threshold of moralculpability is satisfied"]; Don Buchwald & Assoc. v Rich, 281 AD2d 329, 330 [2001]["The limitation of an award for punitive damages to conduct directed at the general publicapplies only in breach of contract cases, not in tort cases for breach of fiduciaryduty"]).[FN5]
Because Morgan Stanley advances no other argument for dismissal of the punitive damagesclaim,[FN6]it should be upheld unless the underlying tort claims that remain (IDT's claims for tortiousinterference with contract, breach of fiduciary duty and misappropriation of confidential andproprietary business information) are barred by the applicable statutes of limitations. Irespectfully disagree with Supreme Court and the majority that such claims are not so barred.
First, a claim for tortious interference with contract accrues not when the contract isbreached, as does a breach of contract claim, but when an injury is sustained (Kronos, Inc. vAVX Corp., 81 NY2d 90, 94 [1993]). When the injury is sustained, "rather than the wrongfulact of defendant or discovery of the injury by plaintiff, is the relevant date for marking accrual"(id.). Alternatively put, "accrual occurs when the claim becomes enforceable, i.e., whenall elements of the tort can be truthfully alleged in a complaint" (id.). Regardlessof exactly when, prior to May 25, 2001 (the date IDT commenced the arbitration againstTelefonica), IDT sustained injury on account of the breach or breaches of the MOU that MorganStanley allegedly tortiously induced, IDT's tortious interference claim certainly accrued by May25, 2001. After all, IDT alleged in its statement of claim that the MOU was a binding agreement,that it had been breached and that it had sustained injuries as a result.
Because IDT did not commence this action until November 5, 2004, more than three yearsafter it commenced the arbitration against Telefonica, IDT's tortious interference claim istime-barred (see CPLR 214 [4]). The IAS court ruled otherwise, reasoning that "IDTcould not have pled this cause of action until after the Arbitration Panel had determined that theMOU was a valid and binding agreement." The IAS court cited no authority supporting thisconclusion, and [*8]IDT cites none on this appeal.
Presumably, the IAS court was not of the view that the validity of a contract always must beestablished in a legal proceeding before a claim of tortious interference with the contract canaccrue. Under such a view, after all, a tortious interference claim might not even accrue untillong after, perhaps years after, the expiration of the six-year statute of limitations generallyapplicable to the underlying breach of contract action (CPLR 213 [2]). Rather, the IAS court mayhave concluded that the validity of a contractual obligation must be established before a cause ofaction accrues for tortiously interfering with the contract only when, as here, the parties to thecontract agree to arbitrate all issues relating to the contract, or at least all issues relating to itsvalidity and binding character. If so, I disagree with that conclusion. In my view, the right of anonparty to the contract to be free of the burdens of defending against an otherwise untimelyclaim of tortious interference with the contract should not be curtailed by the fortuity that theparties to the contract agreed to arbitration.
Although the majority does not endorse the IAS court's rationale for concluding that thetortious interference claim was not time-barred, the reasoning offered by the majority is plainlyflawed. According to the majority, IDT's "damages were not necessarily suffered at the time thecontract was breached." That may be so, but it is besides the point. As noted, regardless ofprecisely when IDT sustained damages on account of Telefonica's breach of the MOU, IDTunquestionably sustained damages no later than May 25, 2001, more than three years before itcommenced this action. After all, IDT alleged exactly that in the statement of claim it filed onthat date. Accordingly, the majority's entire analysis rests on a principle—that injury neednot have been sustained at the same time as the breach—that is entirely irrelevant.
As for IDT's claim for misappropriation of confidential information, Supreme Court correctlyconcluded that it is governed by a three-year statute of limitations (CPLR 214 [4]; see Demasv Levitsky, 291 AD2d 653, 658 [2002], lv dismissed 98 NY2d 728 [2002]). SupremeCourt erred, however, in concluding that there were issues of fact as to when IDT learned ofMorgan Stanley's alleged misappropriation of confidential information. When IDT was injuredby the alleged acts of misappropriation, "rather than [the date of] the wrongful act of defendant ordiscovery of the injury by plaintiff, is the relevant date for marking accrual" (Kronos, 81NY2d at 94). The injuries alleged with respect to this claim are essentially the same as thosealleged in the tortious interference cause of action and thus this claim also is time-barred.
IDT's cause of action for breach of fiduciary duty has both legal and equitable components.The legal component, which seeks both compensatory and punitive damages based on MorganStanley's alleged breach of fiduciary duties owed to IDT, is governed by a three-year statute oflimitations (see Carlingford Ctr. PointAssoc. v MR Realty Assoc., 4 AD3d 179, 180 [2004]). This portion of the claim istime-barred for the same reason as the tortious interference and misappropriation claims, i.e., itaccrued no later than May 25, 2001. Concerning the equitable component, it need not bedetermined whether IDT is correct in urging a six-year statute of limitations because, as limitedby its brief, it seeks only the return of the $10 million fee that Morgan Stanley allegedly extractedfrom it by economic coercion. Accordingly, the claim is duplicative of IDT's cause of action forunjust enrichment (see Fesseha v TD Waterhouse Inv. Servs., 305 AD2d 268, 269[2003]; William Kaufman Org. v Graham & James, 269 AD2d 171, 173 [2000]), which,as discussed above, should have been dismissed.
Finally, IDT's contention that the equitable tolling doctrine applies with respect to its [*9]tortious interference and misappropriation claims is without meritas IDT fails to allege "subsequent and specific actions by defendants [that] kept [it] from timelybringing suit" (Zumpano v Quinn, 6NY3d 666, 674 [2006]).
Accordingly, I would reverse and grant the motion to dismiss in its entirety. [See2006 NY Slip Op 30076(U).]
Footnote 1: Of course, as noted inGuard-Life, as compared to the damages that can be awarded for breach of contract, thedamages that can be awarded for tortious interference with a contract are broader in scope (50NY2d at 197 n 6).
Footnote 2: IDT asserts as well that MorganStanley "willingly" produced the projected valuations in response to its subpoena and did so"knowing that these documents would be relied on by the arbitrators." Although IDT claims thatthe projected valuations "infected the arbitration panel's decision," it cannot claim that it wasdeceived by them. Indeed, as its complaint alleges, on the strength of these same projectedvaluations Morgan Stanley assured it in July 2000 that a 5% interest in Emergia was far superiorto the 10% interest in NewCo that was IDT's right under the MOU. IDT, however, rejected theproposal that it accept the smaller interest in Emergia.
Footnote 3: IDT makes a passing referencein its brief to another memorandum created by Morgan Stanley in May 2000, stating that thepanel "expressly quotes, relies upon, and notes 'accord[ ]' with [this] fraudulent" memorandum.The complaint, however, makes no mention of that memorandum and IDT offers nothing in itsbrief to support or explain its alleged "fraudulent" character. Moreover, the excerpts from thememorandum quoted in the panel's decision have nothing to do with the fraudulent schemealleged in the complaint, but instead concern the capacity of the cable used in the SAm-1Network, possible capacity upgrades and the uncertainties attendant to attempting to derivevaluations of hypothetical upgrades.
Footnote 4: Neither in its complaint nor inits brief on appeal does IDT contend that it was under continuing duress, so as to suspend itsobligation to repudiate (Matter of Guttenplan, 222 AD2d at 257).
Footnote 5: In Steinhardt Group vCiticorp (272 AD2d 255 [2000]), we upheld fraud causes of action but affirmed thedismissal of a claim for punitive damages. In doing so, we stated that "this was a privatetransaction" and the "absence of an allegation of egregious tort directed at the public at largejustified the IAS Court's dismissal of the ad damnum for punitive damages" (id. at 257).In my view, this statement should be read to uphold the dismissal of the claim for punitivedamages on the ground that it alleged neither the requisite level of moral culpability (i.e., an"egregious tort") nor conduct directed at the public generally.
Footnote 6: I would not consider MorganStanley's argument, advanced in its reply brief for the first time, that even if an allegation ofpublic harm were not required, IDT fails to allege conduct rising "to the requisite level of wantonand willful wrongdoing" that would justify an award of punitive damages (see Commissioners of State Ins. Fund vConcord Messenger Serv., Inc., 34 AD3d 355 [2006]).