| Mosaic Caribe, Ltd. v AllSettled Group, Inc. |
| 2014 NY Slip Op 03024 [117 AD3d 421] |
| May 1, 2014 |
| Appellate Division, First Department |
[*1]
| Mosaic Caribe, Ltd., Appellant, v AllSettledGroup, Inc., Respondent. |
Arent Fox LLP, New York (James M. Westerlind of counsel), for appellant.
Cozen O'Connor, New York (Jill L. Mandell of counsel), for respondent.
Order, Supreme Court, New York County (Eileen Bransten, J.), entered on or aboutJuly 29, 2013, which denied plaintiff Mosaic Caribe, Ltd.'s motion for leave to file anamended complaint, unanimously affirmed, with costs.
Contrary to plaintiff's assertions, the court applied the correct standard in reviewingits motion for leave to amend the complaint. The court correctly noted that if theproposed amendments are totally devoid of merit and legally insufficient, leave to amendshould be denied (Heller v Louis Provenzano, Inc., 303 AD2d 20, 25 [1st Dept2003]; see also MBIA Ins. Corp.v Greystone & Co., Inc., 74 AD3d 499, 500 [1st Dept 2010]; Pier 59 Studios, L.P. v ChelseaPiers, L.P., 40 AD3d 363, 366 [1st Dept 2007]).
Regarding the fraud claim, the court correctly concluded that plaintiff failed to allegeloss causation, namely, that the misrepresentation caused plaintiff to lose the deposit thatit had paid to acquire the life insurance policy at issue (Laub v Faessel, 297AD2d 28, 31 [1st Dept 2002]). Plaintiff alleged that it agreed to purchase the policy andpay the deposit based on the misrepresentation of proposed defendant Krasnerman, CEOof defendant AllSettled Group, Inc. (ASG), that one of his companies owned the policy;however, this merely shows that the alleged misrepresentation caused plaintiff to enterinto the transaction (id.). It does not show that the misrepresentation actuallycaused plaintiff to lose its deposit (see Friedman v Anderson, 23 AD3d 163, 164 [1st Dept2005]). Among other things, plaintiff fails to allege that it ever paid the balance of the $3million purchase price for the policy after paying the initial $350,000 deposit, or thatASG, as the purchasing agent, was contractually obligated to acquire the life insurancepolicy absent plaintiff's payment of the full price. Thus, there are no allegationsestablishing that the alleged misrepresentation, as opposed to plaintiff's failure to pay forthe life insurance policy, caused plaintiff's loss.
Furthermore, plaintiff failed to sufficiently allege justifiable reliance on thatmisrepresentation. Plaintiff, who agreed to purchase the policy at issue at least a yearafter the alleged misrepresentation, should have sought verification of ownership of thepolicy before agreeing to purchase it for $3 million. Plaintiff cannot credibly claim that ithad no available means of verification, as such information would have been availablefrom defendant or the proposed defendants had plaintiff requested it (Mountain Cr. Acquisition LLC vIntrawest U.S. [*2]Holdings, Inc., 96 AD3d 633,634 [1st Dept 2012]; UST Private Equity Invs. Fund v Salomon Smith Barney,288 AD2d 87, 88 [1st Dept 2001]; see also HSH Nordbank AG v UBS AG, 95 AD3d 185,197-198, 198 n 9 [1st Dept 2012]).
In any case, the fraud claim was duplicative of the breach of contract claim. Amongother things, apart from an unelaborated request for punitive damages in connection withthe fraud claim, the proposed amended complaint seeks the same damages as the breachof contract claim, specifically, return of the deposit plaintiff paid pursuant to the contract(see e.g. Mañas v VMSAssoc., LLC, 53 AD3d 451, 453-454 [1st Dept 2008]; Krantz v ChateauStores of Canada, 256 AD2d 186, 187 [1st Dept 1998]).
The concerted action claim was also totally devoid of merit. As discussed above,Mosaic failed to allege that Krasnerman or ASG fraudulently induced Mosaic to transferits deposit, and thus, that they acted tortiously or that either defendant committed atortious act in pursuance of the agreement (Rastelli v Goodyear Tire & RubberCo., 79 NY2d 289, 295 [1992]). Furthermore, that ASG benefitted by receiving thedeposit does not suffice to show that it had any understanding that any of the defendantswould defraud Mosaic, or that it acted tortiously (see National Westminster Bank vWeksel, 124 AD2d 144, 147 [1st Dept 1987], lv denied 70 NY2d 604[1987]).
The court properly concluded that there was no viable civil conspiracy, havingconcluded that there was no viable fraud claim that formed the overt act for theconspiracy.
The cause of action for breach of fiduciary duty was properly deemed duplicative ofthe breach of contract claim as it alleges the very same facts as the breach of contractclaim (Leather v United States Trust Co. of N.Y., 279 AD2d 311, 312 [1st Dept2001]; Perl v Smith Barney, 230 AD2d 664, 666 [1st Dept 1996], lv denied89 NY2d 803 [1996]). Mosaic failed to allege that ASG had any duty to Mosaicapart from that set forth in the contract, and thus, that it had any independent fiduciaryduty to acquire the life insurance policy at issue, or return Mosaic's deposit.
The claim for money had and received, a quasi contract claim, seeks return ofMosaic's deposit. The deposit was paid pursuant to the underlying contract. Absent avalid fraud claim calling into question the validity of the underlying contract, this claimmay not be maintained (see Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d382, 389 [1987]; Goldstein vCIBC World Mkts. Corp., 6 AD3d 295, 296 [1st Dept 2004]).
As the intentional tort claims are all devoid of merit, the court properly concludedthat Mosaic failed to allege any conduct that was sufficiently egregious to warrantpunitive damages arising from a breach of contract (New York Univ. v ContinentalIns. Co., 87 NY2d 308, 316 [1995]; AXA Mediterranean Holding, S.P. v ING Ins. Intl., B.V., 106AD3d 457, 457-458 [1st Dept 2013]).
Finally, based on the above, the court correctly concluded that it lacked jurisdictionover proposed defendants Krasnerman and ASG, who are undisputedlynon-domiciliaries. Jurisdiction does not lie over Krasnerman pursuant to New York'slong-arm statute because the complaint fails to sufficiently allege that he committed anytortious act, including making any [*3]fraudulentmisrepresentation, in New York (CPLR 302 [a] [2]). Absent a valid conspiracy claim, nopersonal jurisdiction exists over ASG or Krasnerman based on such a conspiracy (see Lawati v Montague MorganSlade Ltd., 102 AD3d 427, 428 [1st Dept 2013]). Concur—Tom, J.P.,Friedman, Andrias, Saxe and DeGrasse, JJ. [Prior Case History: 2013 NY Slip Op31723(U).]