| Hense v Baxter |
| 2010 NY Slip Op 09222 [79 AD3d 814] |
| December 14, 2010 |
| Appellate Division, Second Department |
| Michael A. Hense, Appellant, v Janette A. Baxter,Respondent. |
—[*1] Housman & Associates, P.C., Tarrytown, N.Y. (Mark E. Housman and Brian Divney of counsel),for respondent.
In an action to recover damages for fraud and breach of fiduciary duty, the plaintiff appeals, aslimited by his brief, from so much of an order of the Supreme Court, Westchester County (Smith, J.),dated June 17, 2009, as denied his cross motion pursuant to CPLR 3215 for leave to enter a defaultjudgment and granted that branch of the defendant's motion which was pursuant to CPLR 3211 (a) (7)to dismiss the complaint for failure to state a cause of action.
Ordered that the order is affirmed insofar as appealed from, with costs.
The plaintiff commenced this action against the attorney who represented his former wife in adivorce action that resulted in a May 21, 2007, stipulation of settlement (hereinafter the stipulation). Thestipulation expressed the plaintiff's agreement, inter alia, to the distribution of three bank accounts, fortaxes to be paid from two of the accounts, and for the plaintiff to retain his interest in one retirementaccount and to receive a credit from the former wife for the plaintiff's interest in a second retirementaccount.
In the complaint, which was served on January 22, 2009, the plaintiff alleged that the attorney forhis former wife committed fraud and breached her fiduciary duty to him by, inter alia, advising hisformer wife to conceal the funds in two retirement accounts and four bank accounts prior to the formerwife's commencement of the divorce action. The plaintiff also alleged, inter alia, that the defendantbreached her fiduciary duty to him by depositing the proceeds from the sale of the marital residence intoa noninterest bearing IOLA account, except for approximately $16,000, which she deposited into anoninterest bearing client beneficial trust account without advising him or his former wife.
The defendant moved, inter alia, pursuant to CPLR 3211 (a) (7) to dismiss the complaint for failureto state a cause of action. The motion, which was served on March 5, 2009, was not made within thetime provided by CPLR 320 (a). However, the defendant's attorney asserted that during a conversationon February 12, 2009, the plaintiff agreed to extend the defendant's time to respond to the complaint toMarch 12, 2009. The defendant's attorney indicated that the plaintiff later denied having agreed to theextension, and the plaintiff cross-moved for leave to enter a default judgment.[*2]
The Supreme Court providently exercised its discretion indenying the plaintiff's cross motion pursuant to CPLR 3215 for leave to enter a default judgment againstthe defendant. "Considering the lack of any prejudice to the plaintiff as a result of the relatively shortdelay, the existence of potentially meritorious defenses, and the public policy favoring the resolution ofcases on the merits" (Falla v Keel Holdings,LLC, 50 AD3d 844, 845 [2008]), the Supreme Court properly excused the defendant's shortdelay in responding to the complaint (seeWiesel v Friends Exhaust Sys., Inc., 71 AD3d 1006 [2010]; Lawrence v Palmer, 59 AD3d 394[2009]; Keselman v City of New York,56 AD3d 727 [2008]).
"On a motion to dismiss for failure to state a cause of action pursuant to CPLR 3211 (a) (7), [t]hesole criterion is whether from [the complaint's] four corners factual allegations are discerned whichtaken together manifest any cause of action cognizable at law" (Chiu v Man Choi Chiu, 71 AD3d 621, 622 [2010], quoting Aranki v Goldman & Assoc., LLP, 34AD3d 510, 511 [2006] [internal quotation marks omitted]). The complaint must be construedliberally, the factual allegations deemed to be true, and the nonmoving party granted the benefit of everypossible favorable inference (see Leon v Martinez, 84 NY2d 83, 87 [1994]; Katz v Katz, 55 AD3d 680, 682[2008]; Breytman v Olinville Realty,LLC, 54 AD3d 703, 703-704 [2008]). However, " 'bare legal conclusions and factual claimswhich are flatly contradicted by the record are not presumed to be true' " (Paolino v Paolino, 51 AD3d 886, 887[2008], quoting Parola, Gross & Marino,P.C. v Susskind, 43 AD3d 1020, 1021-1022 [2007]; see Parsippany Constr. Co., Inc. v Clark Patterson Assoc., P.C., 41 AD3d805 [2007]).
A cause of action alleging fraud requires a plaintiff to establish a misrepresentation or omission ofmaterial fact which the defendant knew was false, that the misrepresentation was made to induce theplaintiff's reliance, the plaintiff's justifiable reliance on the misrepresentation or material omission, and aresulting injury (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]; Jablonski v Rapalje, 14 AD3d 484,487 [2005]; Schomaker v Pecoraro, 237 AD2d 424, 426 [1997]). Damages are limited toactual loss, not to provide compensation for a possible gain (see Lama Holding Co. v SmithBarney, 88 NY2d at 421).
Since the allegations in the complaint established that the plaintiff knew of the existence of theretirement and bank accounts which he alleged the defendant failed to disclose, the causes of actionalleging fraud were properly dismissed for failure to allege the necessary elements of reliance and injury(see Deutsche Bank Natl. Trust Co. vSinclair, 68 AD3d 914, 916 [2009]; Regina v Marotta, 67 AD3d 766 [2009]; Daly v Kochanowicz, 67 AD3d 78, 91[2009]; Ideal Steel Supply Corp. vAnza, 63 AD3d 884 [2009]; Jablonski v Rapalje, 14 AD3d at 487).
The Supreme Court also properly dismissed the cause of action to recover damages for breach offiduciary duty. Pursuant to Judiciary Law § 497 (4), an attorney has discretion to determinewhether monies received in a fiduciary capacity from a client or beneficial owner must be deposited innoninterest or interest bearing accounts (seeLafasciano v Lorber, 33 AD3d 666, 667 [2006]). Moreover, an attorney cannot be heldliable in damages for making a good-faith judgment that such monies could be deposited in an IOLAaccount (see Judiciary Law § 497 [5]). Here, there was no allegation of an improvidentexercise of discretion or bad faith.
The plaintiff's remaining contentions are without merit. Rivera, J.P., Dillon, Angiolillo and Austin,JJ., concur.