| Apollo H.V.A.C. Corp. v Halpern Constr., Inc. |
| 2008 NY Slip Op 08284 [55 AD3d 855] |
| October 28, 2008 |
| Appellate Division, Second Department |
| Apollo H.V.A.C. Corporation, Appellant, v HalpernConstruction, Inc., et al., Respondents, et al., Defendants. |
—[*1] Herrick, Feinstein LLP, New York, N.Y. (William R. Fried and David I. Feuerstein of counsel),for respondents.
In an action, inter alia, to recover damages for fraud, the plaintiff appeals from an order of theSupreme Court, Westchester County (Donovan, J.), entered June 27, 2007, which granted the motionof the defendants Halpern Construction, Inc., and Jason M. Halpern for summary judgment dismissingthe 18th cause of action alleging common-law fraud against the defendant Jason M. Halpern.
Ordered that the order is affirmed, with costs.
The plaintiff Apollo H.V.A.C. Corporation (hereinafter Apollo) was a subcontractor for tworenovation projects on properties owned by the defendants Savoy Little Neck Associates, LimitedPartnership, and Savoy Boro Park Associates, Limited Partnership (hereinafter together Savoy). Thedefendant Jason M. Halpern (hereinafter Halpern) was the sole owner and principal officer of thedefendant Halpern Construction, Inc. (hereinafter HCI), the general contractor on the renovationprojects. Prior to completion of the work, Savoy terminated the contracts with HCI and commencedan action against HCI to recover damages for alleged contract violations (hereinafter the terminationaction). HCI filed mechanic's liens against the two Savoy properties, which included amounts dueApollo, and asserted counterclaims against Savoy in the termination action. Apollo and Savoy enteredinto a separate agreement whereby Apollo continued to work directly for Savoy on one of the projectsand agreed not to file a mechanic's lien in exchange for Savoy's agreement to pursue Apollo's claim forpayment against HCI in the termination action.[*2]
Approximately 3½ years after commencement of thetermination action, HCI and Savoy agreed to settle that action, without monetary recovery by eitherparty, by discontinuing their respective claims against each other, with prejudice. HCI did not notifyApollo prior to the settlement. Apollo commenced this action to recover amounts due for workperformed on the Savoy properties, asserting, inter alia, a cause of action seeking to hold Halpernpersonally liable for fraud (the 18th cause of action). The Supreme Court granted the motion of HCIand Halpern for summary judgment dismissing that cause of action. We affirm.
"To make out a prima facie case of fraud, the complaint must contain allegations of a representationof material fact, falsity, scienter, reliance and injury" (Small v Lorillard Tobacco Co., 94 NY2d43, 57 [1999]). Here, HCI and Halpern established their prima facie entitlement to judgment as amatter of law dismissing the 18th cause of action. HCI and Halpern demonstrated that neither of themknowingly made any misrepresentations to Apollo with the intent to induce Apollo's reliance. Inopposition, Apollo failed to raise a triable issue of fact (see Waterman v Weinstein Mem. Chapel, 49 AD3d 717, 718 [2008];Del Vecchio v Nassau County, 118 AD2d 615, 617-618 [1986]).
Apollo further contends that it is in a fiduciary relationship with Halpern by reason of HCI'smanagement of a trust fund under Lien Law § 70, that, as such, Halpern had a duty of fulldisclosure to Apollo which included the obligation to inform Apollo of the settlement, and that Halpernbreached that fiduciary obligation and committed fraud by settling the termination action withoutadvising Apollo. That argument is also without merit.
Under article 3-A of the Lien Law, Apollo was a beneficiary and HCI was the trustee of a trustfunded by all property received by HCI and any right of action against Savoy in connection with theconstruction contracts (see Lien Law §§ 70, 71; Aspro Mech. Contr. v Fleet Bank, 1 NY3d324, 328 [2004]; Matter of RLI Ins. Co., Sur. Div. v New York State Dept. of Labor,97 NY2d 256, 262 [2002]). A cause of action alleging fraud against a fiduciary may be premisedupon a material omission of fact that is known to be false and made for the purpose of inducing theother party to rely upon it (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996];Spencer v Green, 42 AD3d 521,522 [2007]). A corporate officer may be held personally liable for a tort of the corporation if he or shecommitted or participated in its commission, whether or not his or her acts are also by or for thecorporation (see Greenway Plaza Off. Park vMetro Constr. Servs., 4 AD3d 328, 329-330 [2004]; Fleck v Perla, 40 AD2d1069, 1070 [1972]).
Essential to the fraud claim, however, is proof that the allegedly fraudulent omission was asubstantial factor in causing identifiable loss to the plaintiff (see Willberry Corp. v Schwartz, 29 AD3d 899 [2006]). Here, HCI andHalpern demonstrated, prima facie, that the failure to notify Apollo of the settlement of the terminationaction did not induce Apollo to do or to refrain from doing anything to its detriment. Apollo, inopposition, failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted themotion of HCI and Halpern for summary judgment dismissing the 18th cause of action.
Apollo's remaining contentions are without merit. Spolzino, J.P., Ritter, Santucci and Carni, JJ.,concur.