| Levin v Kitsis |
| 2011 NY Slip Op 02358 [82 AD3d 1051] |
| March 22, 2011 |
| Appellate Division, Second Department |
| Semyon Levin et al., Respondents, v Oscar Kitsis et al.,Defendants, and Anna Kitsis et al., Appellants. |
—[*1] Andrey Tikhomirov, Brooklyn, N.Y., for respondents.
In an action, inter alia, to recover damages for fraud, the defendants Anna Kitsis andL'Esperanza, Inc., appeal, as limited by their brief, from so much of an order of the SupremeCourt, Kings County (Saitta, J.), dated August 13, 2009, as denied their cross motion pursuant toCPLR 3211 (a) (1) and (7) to dismiss the complaint insofar as asserted against them.
Ordered that the order is modified, on the law, by deleting the provision thereof denyingthose branches of the cross motion of the defendants Anna Kitsis and L'Esperanza, Inc., whichwere pursuant to CPLR 3211 (a) (7) to dismiss the second cause of action alleging constructivefraud insofar as asserted against them and to dismiss so much of the sixth and seventh causes ofaction as allege unjust enrichment insofar as asserted against the defendant Anna Kitsis, andsubstituting therefor a provision granting those branches of the cross motion; as so modified, theorder is affirmed insofar as appealed from, without costs or disbursements.
On a motion to dismiss pursuant to CPLR 3211 (a) (1), "dismissal is warranted only if thedocumentary evidence submitted conclusively establishes a defense to the asserted claims as amatter of law" (Leon v Martinez, 84 NY2d 83, 88 [1994]; see Goshen v Mutual LifeIns. Co. of N.Y., 98 NY2d 314, 326 [2002]). Here, the Supreme Court properly concludedthat the documentation submitted by the appellants in support of that branch of their cross motionwhich was to dismiss the complaint pursuant to CPLR 3211 (a) (1) insofar as asserted againstthem for lack of standing failed to conclusively establish that the plaintiff Semyon Levin lackedstanding to commence this action (seeOut of Box Promotions, LLC v Koschitzki, 55 AD3d 575, 576 [2008]; Fleming v Kamden Props., LLC, 41AD3d 781, 781-782 [2007]).
In the fourth cause of action, the plaintiffs seek to recover damages against the defendantsOscar Kitsis and Ada Kitsis and the appellant Anna Kitsis for their alleged conspiracy andparticipation in a fraudulent scheme designed to deprive the plaintiffs of their rights as creditors.The appellant L'Esperanza, Inc. (hereinafter L'Esperanza), is not named in the fourth cause ofaction. The Supreme Court properly denied that branch of the appellants' cross motion which waspursuant to CPLR 3211 (a) (7) to dismiss the fourth cause of action insofar as asserted againstAnna Kitsis. [*2]Although "New York does not recognize civilconspiracy to commit a tort . . . as an independent cause of action" (Dickinson v Igoni, 76 AD3d 943,945 [2010]; see Alexander & Alexander of N.Y. v Fritzen, 68 NY2d 968, 969 [1986]), "aplaintiff may plead the existence of a conspiracy in order to connect the actions of the individualdefendants with an actionable, underlying tort and establish that those actions were part of acommon scheme" (Litras v Litras, 254 AD2d 395, 396 [1998]; see Alexander &Alexander of N.Y. v Fritzen, 68 NY2d at 969). Affording the complaint a liberalconstruction, accepting all facts as alleged to be true and according the plaintiffs the benefit ofevery possible inference, as a court must on a motion to dismiss pursuant to CPLR 3211 (a) (7)(see Plumitallo v Hudson Atl. Land Co.,LLC, 74 AD3d 1038, 1039 [2010]), the plaintiffs alleged sufficient facts from which itmay be inferred that Anna Kitsis knowingly participated in a fraudulent scheme to deprive theplaintiffs of their creditor rights (seeAnesthesia Assoc. of Mount Kisco, LLP v Northern Westchester Hosp. Ctr., 59 AD3d473, 479 [2009]; Litras v Litras, 254 AD2d at 396; Goldstein v Siegel, 19AD2d 489, 493 [1963]; cf. FirstKeystone Consultants, Inc. v DDR Constr. Servs., 74 AD3d 1135, 1138 [2010];Agostini v Sobol, 304 AD2d 395, 396 [2003]; National Westminster Bank vWeksel, 124 AD2d 144 [1987]).
Under the sixth and seventh causes of action, the plaintiffs allege that the appellants wereunjustly enriched. "To state a cause of action to recover damages for unjust enrichment, aplaintiff must allege that (1) the other party was enriched, (2) at [the plaintiff's] expense and (3)that it is against equity and good conscience to permit [the other party] to retain what is sought tobe recovered" (AHA Sales, Inc. vCreative Bath Prods., Inc., 58 AD3d 6, 19 [2008] [internal quotation marks omitted];see Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421 [1972],cert denied 414 US 829 [1973]; Cruz v McAneney, 31 AD3d 54, 59 [2006]). " 'The essence ofunjust enrichment is that one party has received money or a benefit at the expense of another' "(Goldman v Simon Prop. Group,Inc., 58 AD3d 208, 220 [2008], quoting City of Syracuse v R.A.C. Holding, 258AD2d 905, 906 [1999]). Here, the plaintiffs alleged that the defendants Oscar Kitsis and AdaKitsis improperly assigned, without consideration, a consolidated mortgage interest toL'Esperanza, a corporation owned and controlled by their daughter, Anna Kitsis. At the sametime, Oscar Kitsis and Ada Kitsis obtained title to the subject premises in lieu of foreclosure,thereby improperly transferring to L'Esperanza a lien superior to the liens asserted by theplaintiffs. These allegations were adequate to state a cause of action against L'Esperanza torecover damages for unjust enrichment (see Plumitallo v Hudson Atl. Land Co.,LLC., 74 AD3d at 1039; Cruz v McAneney, 31 AD3d at 59). The complaint doesnot adequately plead this cause of action against Anna Kitsis in her individual capacity, however,in that the plaintiffs do not allege any basis for piercing the corporate veil and imposing personalliability upon Anna Kitsis. Accordingly, the Supreme Court properly denied that branch of theappellants' cross motion which was to dismiss the cause of action alleging unjust enrichmentinsofar as asserted against L'Esperanza under the sixth and seventh causes of action, but shouldhave granted that branch of the cross motion which was to dismiss those causes of action allegingunjust enrichment insofar as asserted against Anna Kitsis.
In addition to seeking to recover damages for unjust enrichment and participation in afraudulent scheme, the plaintiffs, under the seventh cause of action and incorporated allegationsof the complaint, seek a judgment declaring that certain real estate transactions are invalid and topermanently enjoin the appellants from continuing to engage in the alleged wrongful scheme todeprive the plaintiffs of their creditor rights. The cause of action for declaratory and injunctiverelief was adequately pleaded against the appellants, and the Supreme Court properly denied thatbranch of the appellants' motion which was to dismiss so much of the seventh cause of action asstated a cause of action for injunctive and declaratory relief (see Goldman v Simon Prop.Group, Inc., 58 AD3d at 218).
However, the Supreme Court should have granted that branch of the appellants' cross motionpursuant to CPLR 3211 (a) (7) which was to dismiss the second cause of action allegingconstructive fraud insofar as asserted against the appellants. A cause of action sounding in actualfraud must state that the defendant knowingly misrepresented or concealed a material fact for thepurpose of inducing another party to rely upon it, and that the other party justifiably relied uponsuch misrepresentation or concealment to his or her own detriment (see Lama Holding Co. vSmith Barney, 88 NY2d 413, 421 [1996]; Channel Master Corp. v Aluminium Ltd.Sales, 4 NY2d 403, 406-407 [1958]; Deutsche Bank Natl. Trust Co. v Sinclair, 68 AD3d 914, 916[2009]). "The elements of a cause of action to recover [*3]forconstructive fraud are the same as those to recover for actual fraud with the crucial exception thatthe element of scienter upon the part of the defendant, his [or her] knowledge of the falsity of hisrepresentation, is dropped . . . and is replaced by a requirement that the plaintiffprove the existence of a fiduciary or confidential relationship warranting the trusting party torepose his [or her] confidence in the defendant and therefore to relax the care and vigilance he [orshe] would ordinarily exercise in the circumstances" (Brown v Lockwood, 76 AD2d 721,731 [1980]; see Leone v Sabbatino, 235 AD2d 460, 461 [1997]; Del Vecchio vNassau County, 118 AD2d 615, 617-618 [1986]). Here, the plaintiffs failed to allege factsdemonstrating that a fiduciary or confidential relationship existed between themselves and theappellants (see Sentlowitz v CardinalDev., LLC, 63 AD3d 1137, 1138 [2009]; Sokol v Addison, 293 AD2d 600, 601[2002]; Iglesias v Dazi, 253 AD2d 515, 516 [1998]; Mack v Meier, 251 AD2d298 [1998]; cf. Elias v Handler, 155 AD2d 583 [1989]). Accordingly, the second causeof action to recover damages for constructive fraud should have been dismissed insofar asasserted against the appellants. Prudenti, P.J., Angiolillo, Florio and Sgroi, JJ., concur.