| Spector v Wendy |
| 2009 NY Slip Op 04888 [63 AD3d 820] |
| June 9, 2009 |
| Appellate Division, Second Department |
| Gilbert Spector et al., Respondents-Appellants, v DianaWendy et al., Appellants-Respondents. |
—[*1] Bart J. Eagle, PLLC, New York, N.Y., for respondents-appellants.
In an action, inter alia, to recover damages for fraud and unjust enrichment, the defendantsappeal from so much of an order of the Supreme Court, Westchester County (Rudolph, J.),entered July 7, 2008, as denied those branches of their motion which were pursuant to CPLR3211 (a) (5) and (7) to dismiss the fifth and sixth causes of action, and the plaintiffs cross-appealfrom so much of the same order as granted those branches of the defendants' motion which werepursuant to CPLR 3211 (a) (7) to dismiss the first through fourth causes of action.
Ordered that the order is reversed insofar as appealed from, on the law, and those branchesof the defendants' motion which were pursuant to CPLR 3211 (a) (7) to dismiss the fifth andsixth causes of action are granted, and the complaint is dismissed with prejudice; and it isfurther,
Ordered that the order is affirmed insofar as cross-appealed from; and it is further,
Ordered that one bill of costs is awarded to the defendants.
In previous litigation between the parties, the defendant Diana Wendy obtained a judgment(hereinafter the first judgment) against the plaintiffs in the amount of a loan guaranty. This Courtaffirmed that judgment (see Wendy v Spector, 287 AD2d 558 [2001]), and affirmed anorder, made upon renewal, adhering to the original determination (see Wendy v Spector,305 AD2d 403, 403-404 [2003]). The plaintiff Myra Spector paid the judgment with interest onOctober 29, 2001 and obtained contribution from the defendant Howard Wendy, who was acoguarantor. In a second action, Diana Wendy obtained a judgment (hereinafter the secondjudgment) against the plaintiffs herein for an attorney's fee she had incurred in the first action. Inrelated appeals, this Court rejected the plaintiffs' contention that Diana Wendy's claim for anattorney's fee was barred by the doctrine of res judicata (see Wendy v Spector, 305AD2d 403 [2003]), and upheld the dismissal of the plaintiffs' separate lawsuit for contributionfrom Howard Wendy (see Spector vWendy, 52 AD3d 688 [2008]). On January 22, 2005 the plaintiffs paid the secondjudgment with interest.[*2]
By verified complaint dated October 23, 2007, theplaintiffs commenced this action, alleging that in or about April 2007, they discovered for thefirst time that certain ledger entries had been made in the corporate books of the primary debtoron the loan they had guaranteed. They alleged that these entries demonstrated that Diana Wendyhad falsely represented in the previous litigation that she was the lawful assignee of the guaranty,entitled to enforce it against the plaintiffs, and failed to disclose that the debt on the primaryobligation had been cancelled prior to entry of the first judgment. The plaintiffs asserted fourcauses of action alleging fraud and two causes of action alleging unjust enrichment, seekingreturn of all money they had paid in satisfaction of the first and second judgments. The SupremeCourt, inter alia, dismissed the fraud causes of action pursuant to CPLR 3211 (a) (7) and deniedthose branches of the defendants' motion which were to dismiss the unjust enrichment claims onthe same ground.
On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (7), the court mustaccept the facts as alleged in the complaint as true, accord the plaintiffs the benefit of everypossible favorable inference, and determine only whether the facts as alleged fit within anycognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Kass v Zaslav, 55 AD3d 877[2008]). "The essential elements of a cause of action sounding in fraud are a misrepresentation ora material omission of fact which was false and known to be false by defendant, made for thepurpose of inducing the other party to rely upon it, justifiable reliance of the other party on themisrepresentation or material omission, and injury" (Orlando v Kukielka, 40 AD3d 829, 831 [2007]; see Small vLorillard Tobacco Co., 94 NY2d 43, 57 [1999]; Oko v Walsh, 28 AD3d 529 [2006]). The plaintiff must show notonly that he actually relied on the misrepresentation, but also that such reliance was reasonable(see McMorrow v Dime Sav. Bank ofWilliamsburgh, 48 AD3d 646, 647-648 [2008]; Oko v Walsh, 28 AD3d 529 [2006]).
Here, the Supreme Court properly dismissed the fraud causes of action. Contrary to theplaintiffs' contentions, the alleged entries in the corporate books merely reflected anafter-the-fact accounting for the satisfaction of the loan by the payment of value for theassignment of the note and guaranty to Diana Wendy. Accepting the allegations as true, they donot establish that Diana Wendy made false representations or material omissions upon which theplaintiffs reasonably relied in paying the first and second judgments. Accordingly, the plaintiffsfailed to state a cause of action to recover damages for fraud (see Oko v Walsh, 28 AD3dat 529-530).
Nor did the plaintiffs state a cause of action to recover for unjust enrichment. "To prevail ona claim of unjust enrichment, a plaintiff must establish that the defendant benefitted at theplaintiff's expense and that equity and good conscience require restitution" (Whitman Realty Group, Inc. v Galano,41 AD3d 590, 592-593 [2007]; seeCruz v McAneney, 31 AD3d 54, 59 [2006]). Here, accepting the plaintiffs' allegationsas true, they do not establish that the first and second judgments were unlawfully or fraudulentlyobtained or that, as a matter of equity, Diana Wendy should disgorge the payments she receivedunder those judgments. Accordingly, the Supreme Court should have dismissed the fifth andsixth causes of action.
In light of our determination, we need not reach the parties' remaining contentions. Prudenti,P.J., Miller, Eng and Belen, JJ., concur.