| Abacus Fed. Sav. Bank v Lim |
| 2010 NY Slip Op 06143 [75 AD3d 472] |
| July 20, 2010 |
| Appellate Division, First Department |
| Abacus Federal Savings Bank, Appellant, v Carol JohnMee Lim et al., Defendants, and Frances Eng, Respondent. |
—[*1] Peluso & Touger, LLP, New York (Dana Marie Catanzaro of counsel), forrespondent.
Order, Supreme Court, New York County (Jane S. Solomon, J.), entered August 17, 2009,which denied plaintiff's motion for summary judgment as against defendant Frances Eng,unanimously affirmed, with costs.
This action is for restitution of funds embezzled in furtherance of a fraudulent schemeperpetrated by some of plaintiff's employees, particularly Carol John Mee Lim, the manager ofone of its branches, and others, including Lim's sister, defendant Eng. Although Eng answered,several defendants did not, resulting in a judgment entered on April 23, 2004 against thedefaulting defendants in the principal amount of $9,161,633.81.
A 2003 federal indictment charged the bank employees with various offenses, but Lim fledbefore she could be arrested. Several years later, under a separate federal indictment, Eng herselfwas arrested for participating in this criminal enterprise, and charged with conspiring to commitbank fraud, in violation of 18 USC § 1344. The indictment alleged that Eng and othersexecuted "a scheme . . . to defraud a financial institution . . . by meansof false and fraudulent pretenses, representations and promises." Eng's overt acts in furtheranceof the conspiracy consisted of providing Lim with two checks "that ENG completed, signed, andendorsed for deposit into a victim account at Abacus Bank," apparently to help Lim conceal herembezzled funds. While the instant action was pending, Eng pleaded guilty to one count ofconspiracy to commit bank fraud, admitting that she wrote three checks. It was determined thatthe loss to the bank from the three checks totaled $160,000.
Plaintiff moved for summary judgment against Eng based upon this criminal conviction, andargued that the conviction collaterally estopped her from denying liability. The motion did not,however, attach plea minutes or even attempt to establish an identity of elements between thecivil claims and the criminal proceeding. It did seek the full amount of the default judgmentagainst Eng.
Although an "issue decided in a criminal proceeding may be given preclusive effect in a[*2]subsequent civil action" (D'Arata v New York Cent. Mut.Fire Ins. Co., 76 NY2d 659, 664 [1990]), there must be an identity of issue necessarilydecided in the prior action that is decisive of the present action, and "there must have been a fulland fair opportunity to contest the decision now said to be controlling" (see Launders v Steinberg, 9 NY3d930, 932 [2007], quoting Buechel v Bain, 97 NY2d 295, 303-304 [2001], certdenied 535 US 1096 [2002]). This standard has not been satisfied in this case. The complaintasserts six causes of action against Eng: conversion, constructive trust, restitution, unjustenrichment, conspiracy, and demand for an accounting. A cause of action for fraud was assertedonly against Lim. In not identifying the cause of action on which similar relief had been obtainedagainst Eng, plaintiff failed to establish its entitlement to summary judgment on any of itspresent claims.
Specifically, a "conversion takes place when someone, intentionally and without authority,assumes or exercises control over personal property belonging to someone else, interfering withthat person's right of possession" (Colavito v New York Organ Donor Network, Inc., 8 NY3d 43,49-50 [2006]). Plaintiff failed to establish that Eng ever assumed or exercised control over anyproperty belonging to the bank. As for unjust enrichment, which is defined as the receipt by oneparty of money or a benefit to which it is not entitled, at the expense of another (see City ofSyracuse v R.A.C. Holding, 258 AD2d 905, 906 [1999]), plaintiff failed to show how Engwas personally enriched at the expense of the bank, or that she herself benefitted from thefraudulent scheme. For this same reason, summary judgment is unavailable for the restitutionclaim (see Matter of Witbeck, 245 AD2d 848 [1997]). The elements necessary for theimposition of a constructive trust are a confidential or fiduciary relationship, a promise, atransfer in reliance thereon, and unjust enrichment (see Matter of Gupta, 38 AD3d 445, 446 [2007]). Plaintiff has, atthe very least, not demonstrated the existence of a confidential or fiduciary relationship betweenitself and Eng. The failure to establish the existence of such a fiduciary relationship alsoprecludes summary judgment for an accounting (see Akkaya v Prime Time Transp., Inc., 45 AD3d 616 [2007],lv denied 10 NY3d 704 [2008]). Therefore, the fact that Eng pleaded guilty to conspiracyin federal court does not aid plaintiff in establishing its prima facie entitlement to summaryjudgment on the above-mentioned claims.
Collateral estoppel is also inapplicable with respect to the conspiracy claim. As SupremeCourt correctly noted, New York does not recognize an independent cause of action forconspiracy to commit a civil tort (seeRomano v Romano, 2 AD3d 430, 432 [2003] ["a cause of action sounding in civilconspiracy cannot stand alone, but stands or falls with the underlying tort"]). In fact,"[a]llegations of conspiracy are permitted only to connect the actions of separate defendants withan otherwise actionable tort" (Alexander & Alexander of N.Y. v Fritzen, 68 NY2d 968,969 [1986]). Therefore, under New York law, to establish a claim of civil conspiracy, theplaintiff "must demonstrate the primary tort, plus the following four elements: (1) an agreementbetween two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties'intentional participation in the furtherance of a plan or purpose; and (4) resulting damage orinjury" (World Wrestling Fedn. Entertainment, Inc. v Bozell, 142 F Supp 2d 514, 532[SD NY 2001]).
Here, Eng was not sued for fraud. In any event, she pleaded guilty solely to conspiracy todefraud, and her plea minutes were not attached to the motion.[FN*]The mere attachment of the [*3]judgment, without the pleaallocution and without any analysis, was insufficient to establish an identity of issues (seeSearles v Dalton, 299 AD2d 788, 789 [2002]). Indeed, although Eng admitted to signingthree checks, there is no indication in the record that she allocuted to the elements of bank fraud(18 USC § 1344), which are to
"knowingly execute[ ], or attempt[ ] to execute, a scheme or artifice—
"(1) to defraud a financial institution; or
"(2) to obtain any of the moneys, funds, credits, assets, securities, or other property ownedby, or under the custody or control of, a financial institution, by means of false or fraudulentpretenses, representations, or promises."
To support a conviction for the crime of bank fraud, the government must prove thatdefendant "(1) engaged in a course of conduct designed to deceive a federally chartered orinsured financial institution into releasing property; and (2) possessed an intent to victimize theinstitution by exposing it to actual or potential loss" (United States v Barrett, 178 F3d643, 647-648 [2d Cir 1999]). Concur—McGuire, J.P., Moskowitz, Acosta and Freedman,JJ. [Prior Case History: 2009 NY Slip Op 31832(U).]
Footnote *: To establish a conspiracy tocommit bank fraud, the government must prove beyond a reasonable doubt that (1) a conspiracyexisted, (2) the defendant knew of and voluntarily participated in the conspiracy, and (3) therewas an overt act in furtherance of the conspiracy, which requires proof of intention both to agreeand to commit the substantive offense (United States v Munoz-Franco, 487 F3d 25, 45[1st Cir 2007], cert denied 552 US 1042 [2007]).