| McCormick v Favreau |
| 2011 NY Slip Op 02506 [82 AD3d 1537] |
| March 31, 2011 |
| Appellate Division, Third Department |
| Roger McCormick et al., Appellants-Respondents, v WilliamFavreau et al., Respondents, and James Carter,Respondent-Appellant. |
—[*1] Gleason, Dunn, Walsh & O'Shea, Albany (Richard C. Reilly of counsel), forrespondent-appellant. Carter, Conboy, Case, Blackmore, Maloney & Laird, P.C., Albany (Michael J. Murphy ofcounsel), for William Favreau and another, respondents. Hiscock & Barclay, L.L.P., Albany (Meredith A. Ireland of counsel), for James Coffey,respondent.
Garry, J. Cross appeals from an order of the Supreme Court (Muller, J.), entered October 15,2009 in Clinton County, which granted motions by defendants James Coffey, William Favreauand O'Connell & Aronowitz to dismiss the complaint against them and partially denied defendantJames Carter's motion to dismiss the complaint against him.[*2]
In 1999, plaintiff Roger McCormick, acting on behalf ofplaintiff Marimac, LLC, entered into an agreement to purchase real property in the Town ofChazy, Clinton County from defendant James Carter. Plaintiffs' attorney in this transaction wasdefendant James Coffey. Carter was represented by defendant William Favreau, an attorney withdefendant O'Connell & Aronowitz (hereinafter O & A). The purchase and sale agreementincluded a provision purporting to give plaintiffs a right of first refusal on two parcels of Carter'sproperty adjoining plaintiffs' parcel. In 2007, Carter sold one of these parcels, and plaintiffscommenced an action seeking to enforce the right of first refusal. The agreement was found tolack an essential term and, thus, to be void based upon the statute of frauds. This Court affirmedthat determination (McCormick vBechtol, 68 AD3d 1376 [2009], lv denied 15 NY3d 701 [2010], certdenied 562 US —, 131 S Ct 655 [2010]).
In December 2008, plaintiffs commenced this action asserting claims of fraud against Carter,Favreau and O & A, breach of contract and negligence against all defendants, legal malpractice,breach of fiduciary duty and strict liability in tort against Coffey, Favreau and O & A, breach ofwarranty of fitness against Favreau and O & A, and breach of a covenant not to compete againstCarter. Defendants separately moved to dismiss the complaint. Supreme Court found that all ofplaintiffs' claims against Coffey, Favreau and O & A were time-barred and dismissed thecomplaint against them. As to Carter, the court dismissed all of plaintiffs' claims except for thecause of action for breach of the covenant not to compete. Plaintiffs appeal[FN1]and Carter cross-appeals.
We agree with Supreme Court's determinations as to the timeliness of plaintiffs' claims.Plaintiffs' claim of legal malpractice is subject to a three-year statute of limitations which accruedwhen the actionable injury occurred—that is, at the time of the malpractice, not the time ofits discovery (see CPLR 214 [6]; McCoy v Feinman, 99 NY2d 295, 301 [2002]).The alleged malpractice—the drafting and review of the defectivedocuments—occurred in 1999, and Supreme Court thus correctly determined that thisclaim was time-barred. The breach of fiduciary duty claims are based on this same conduct andare also time-barred, whether the applicable limitations period is three or six years (see IDT Corp. v Morgan Stanley DeanWitter & Co., 12 NY3d 132, 139 [2009]; Paolucci v Mauro, 74 AD3d 1517, 1519-1520 [2010]). The causeof action for negligence, with a three-year limitations period (see CPLR 214 [4]), issimilarly barred, as it also accrued in 1999. The injury occurred when plaintiffs bargained andpaid for—but did not receive—a valid right of first refusal, rather than upondiscovery, as plaintiffs contend (see Kronos, Inc. v AVX Corp., 81 NY2d 90, 94 [1993];Bond v Progressive Ins. Co., 82 AD3d 1318, 1320-1321 [2011]; Schultes v Kane, 50 AD3d1277, 1278 [2008]).
A cause of action for fraud must be commenced within "the greater of six years from the datethe cause of action accrued or two years from the time the plaintiff . . . could withreasonable diligence have discovered it" (CPLR 213 [8]; see Durazinski v Chandler, 41 AD3d 918, 919 [2007]). Theallegedly false representation that the right of first refusal was valid also occurred [*3]in 1999, more than nine years before this action was commenced.Plaintiffs were represented by counsel, and it is undisputed that they received a copy of theagreement, so they also "possessed sufficient information to prompt an inquiry that would haveled to the discovery of the alleged fraud within six years of its commission" (Hoffman vCannone, 206 AD2d 740, 741 [1994]; accord Fitzgerald v Fitzgerald, 301 AD2d 851,852 [2003], lv denied 2 NY3d 707 [2004]).[FN2]Accordingly, this claim was untimely. On appeal, plaintiffs contend that the fraud was part of anongoing course of conduct that was not complete until 2007, when the statute of frauds waspleaded as an affirmative defense in the previous action. This claim was not presented in thecomplaint or record, and "[p]laintiff[s] cannot raise for the first time on appeal new facts onwhich to base the accrual of [their] causes of action in order to avoid the time restraints of theapplicable [s]tatute of [l]imitations" (Velaire v City of Schenectady, 235 AD2d 647, 649[1997], lv denied 89 NY2d 816 [1997]).
Plaintiffs' breach of contract claim—consisting of the conclusory assertion that alldefendants violated an implied covenant of good faith and fair dealing—is subject to asix-year limitations period that begins to run at the time of the breach (see CPLR 213 [2];Ely-Cruikshank Co. v Bank of Montreal, 81 NY2d 399, 403 [1993]). On appeal,plaintiffs contend that the breach occurred in 2007; this claim appears to depend on the theorythat an implied covenant of good faith and fair dealing existed "in aid and furtherance" of theinvalid agreement (Trump on the Ocean,LLC v State of New York, 79 AD3d 1325, 1326 [2010] [internal quotation marksomitted]) and that the covenant was violated by challenging the agreement's validity. We agreewith Supreme Court that if a breach of an implied covenant of good faith and fair dealingoccurred, it must have done so when the agreement was drafted and executed in 1999. Thus, thisclaim is time-barred. Moreover, any breach of contract claim against Carter based on the 2007transaction is barred by res judicata, since it was or could have been raised in the prior litigationarising out of that transaction, which ended in a final judgment on the merits (see Landau, P.C. v LaRossa, Mitchell &Ross, 11 NY3d 8, 13 n 3 [2008]; Matter of Martin v Central Off. Review Comm. of N.Y. State Dept. ofCorrectional Servs., 69 AD3d 1237, 1238 [2010]).
Plaintiffs' claim for breach of warranty of fitness appears from their brief and complaint to beasserted under UCC 2-315. Even if such a claim were applicable to a transaction that did notinvolve the sale of goods (see UCC 2-102; Krouner v Travis, 290 AD2d 917, 919[2002]), the applicable four-year limitations period began to run on the date of delivery in 1999and has long since expired (see UCC 2-725 [1], [2]).
Finally, we reject plaintiffs' contention that defendants should be precluded from relying onthe statute of limitations by the doctrine of equitable estoppel, "an extraordinary remedy whichapplies where a party is prevented from filing an action within the applicable statute oflimitations due to his or her reasonable reliance on deception, fraud or misrepresentations by theother" (Pulver v Dougherty, 58 AD3d 978, 979-980 [2009] [internal quotation marks,brackets and citations omitted]). The doctrine would apply only if plaintiffs demonstrated " 'thatsubsequent and specific actions by defendants somehow kept them from timely bringing suit' "(id. at 980, quoting Zumpano vQuinn, 6 NY3d 666, 674 [2006]), a showing they have not made.[*4]
Plaintiffs' claim that Supreme Court should havepermitted additional discovery before dismissing the complaint (see CPLR 3211 [d]) wasimproperly raised for the first time on appeal (see Fletcher v Boies, Schiller & Flexner, LLP, 75 AD3d 469, 470[2010]); further, the record includes no evidentiary showing supporting this claim (see Rochester Linoleum & Carpet Ctr., Inc.v Cassin, 61 AD3d 1201, 1202 [2009]). Similarly, plaintiffs' contentions that O & Ashould be held liable for aiding and abetting a breach of fiduciary duty and for violating JudiciaryLaw § 487 do not appear in their complaint or elsewhere in the record and are not properlybefore this Court (see Matter ofLaBarbera v Town of Woodstock, 55 AD3d 1093, 1094 [2008]).
With regard to Carter's cross appeal, we find that plaintiffs' claim that he breached a covenantnot to compete should have been dismissed. Pursuant to CPLR 3013, pleadings must give thecourt and parties notice of the transactions and occurrences to be proven and the materialelements of each cause. Upon a breach of contract claim, those elements are the formation of acontract, performance by the plaintiff, breach and "resulting damage" (Clearmont Prop., LLCv Eisner, 58 AD3d 1052, 1055 [2009] [internal quotation marks and citation omitted]). Thecomplaint alleges that Carter violated a covenant not to compete in the 1999 agreement byengaging in marina operations and purchasing a boat business. It includes a jury trial demand "asto all counts for" damages and seeks injunctive relief as to the covenant not to compete.However, it lacks any allegation that plaintiffs were damaged by this alleged violation. Further,no affidavits or other evidence were submitted by plaintiffs in opposition to Carter's motion. Thiscause of action is thus lacking a material element that cannot be supplied even through the liberalconstruction required on a motion to dismiss for failure to state a claim (see CPLR 3026;SUS, Inc. v St. Paul TravelersGroup, 75 AD3d 740, 741 [2010]), and it should have been dismissed (see Woodhill Elec. v Jeffrey Beamish,Inc., 73 AD3d 1421, 1421-1422 [2010]).
Peters, J.P., Lahtinen, Malone Jr. and Kavanagh, JJ., concur. Ordered that the order ismodified, on the law, without costs, by reversing so much thereof as partially denied defendantJames Carter's motion to dismiss the complaint; motion granted in its entirety and complaintdismissed against said defendant; and, as so modified, affirmed.
Footnote 1: Plaintiffs fail to address in theirbrief Supreme Court's dismissal of their strict products liability claim; accordingly, any issuewith respect thereto is deemed abandoned (see e.g. William J. DeTorres III, M.D., P.C. v Claxton-Hepburn Med.Ctr., 65 AD3d 733, 735 [2009]).
Footnote 2: Although plaintiffs' complaintasserts that the documents were drafted by Favreau and/or O & A, it appears that the documentsactually may have originated with plaintiffs and their counsel.