| Torrance Constr., Inc. v Jaques |
| 2015 NY Slip Op 02813 [127 AD3d 1261] |
| April 2, 2015 |
| Appellate Division, Third Department |
[*1]
| Torrance Construction, Inc., Appellant-Respondent, vLawrence R. Jaques et al., Respondents-Appellants. |
Law Office of James M. Brooks, Lake Placid (Allison M. McGahay of counsel), forappellant-respondent.
Briggs Norfolk, LLP, Lake Placid (Michael J. Hutter of Powers & Santola,LLP, Albany, of counsel), for respondents-appellants.
McCarthy, J.P. Cross appeals from an order of the Supreme Court (Muller, J.),entered October 28, 2013 in Essex County, which, among other things, partially granteddefendant Elizabeth W. Jaques' motion to dismiss the complaint.
Defendant Lawrence R. Jaques (hereinafter Jaques) was plaintiff's bookkeeper forapproximately 10 years and, between April 2006 and November 2012, allegedly stole atleast $450,000 from plaintiff, primarily by charging personal purchases to plaintiff'sbusiness accounts. Plaintiff commenced this action alleging that Jaques and his wife,defendant Elizabeth W. Jaques (hereinafter defendant), jointly participated in thisscheme, as many of the purchases were delivered to defendants' home and were used tomake improvements to the home. The complaint set forth causes of action for (1)conversion, (2) award of title to defendants' home, (3) moneys had and received, (4)breach of fiduciary duty and constructive trust, and (5) an accounting. Plaintiff also fileda notice of pendency with respect to defendants' home. Jaques answered. Defendantmoved to dismiss pursuant to CPLR 3211 (a) (1), (5) and (7) and to cancel the notice ofpendency.
Supreme Court denied defendant's motion as to the first, third and fifth causes ofaction, but dismissed the second and fourth causes of action against both defendants andcancelled the notice of pendency. The court also held that defendant was equitablyestopped from interposing [*2]any statute of limitationsdefense. Plaintiff appeals and defendants cross-appeal. We will address the causes ofaction in the order in which they were pleaded, then the statute of limitations defense andthe cancellation of the notice of pendency.
Plaintiff properly stated a cause of action against defendant for aiding and abettingconversion. On a motion to dismiss for failure to state a cause of action, courts assumethe facts alleged to be true, view them liberally and in the light most favorable to theplaintiff, and assess whether the allegations set forth all of the elements of anycognizable cause of action, even if the plaintiff has not properly labeled that cause ofaction (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]). "Conversion is anunauthorized exercise of dominion and control over" someone else's property that"interferes with and is in defiance of the superior possessory right of the owner oranother person" (Miller vMarchuska, 31 AD3d 949, 950 [2006] [citations omitted]). A claim can exist foraiding and abetting conversion if the aider-abettor has actual knowledge that the personwho directly converted the plaintiff's property did not own that property (seeWeisman, Celler, Spett & Modlin v Chadbourne & Parke, 271 AD2d 329,330 [2000], lv denied 95 NY2d 760 [2000]; Lenczycki v Shearson LehmanHutton, 238 AD2d 248, 248 [1997], lv dismissed and denied 91 NY2d 918[1998]; H2O Swimwear v Lomas, 164 AD2d 804, 805, 807 [1990]). Here, thecomplaint alleges that defendant knew of and acquiesced in Jaques' unauthorizedpersonal purchases from plaintiff's accounts, that the purchased items were delivered toand used to improve defendants' home, and that defendant accepted the benefits of theseconverted items. These allegations stated a cause of action against defendant for aidingand abetting conversion.
New York does not recognize a cause of action for "title, use and exclusivepossession" of someone else's residence. To the extent that the complaint's second causeof action can be read to allege conversion or seek a constructive trust, it is duplicative ofthe first and fourth causes of action. Thus, Supreme Court properly dismissed the secondcause of action as against defendant. On the other hand, in the absence of a CPLR 3211(a) motion by Jaques, the court was without authority to search the record and dismissany claims against him (seeMann v Rusk, 14 AD3d 909, 910 [2005]; compare CPLR 3212 [b][permitting court to search the record on a summary judgment motion and grant relief toa nonmoving party]).
Plaintiff properly stated a cause of action against defendant for moneys had andreceived. The elements of such a cause of action are that the defendant received moneybelonging to the plaintiff and benefitted from that money, and that equity and goodconscience will not permit the defendant to keep the money (see Matter of Moak, 92 AD3d1040, 1044 [2012], lv denied 19 NY3d 812 [2012]; Matter ofWitbeck, 245 AD2d 848, 850 [1997]). The complaint alleges that money stolen fromplaintiff by Jaques was used to improve and maintain defendants' home, and thatdefendant consented to these actions. Accepting the allegations as true, and reasonablyinferring that the use of this money provided a benefit to defendant, the third cause ofaction was sufficient.
Supreme Court erred in dismissing the fourth cause of action against bothdefendants. The parties refer to this cause of action as seeking a constructive trust. Thecomplaint does not sufficiently allege that plaintiff is entitled to a constructive trustagainst defendant, as there are no allegations that she was in a confidential or fiduciaryrelationship with plaintiff, that she made a promise or that a transfer was made in relianceon any such promise—in fact, the allegations are that the money was transferredwithout plaintiff's knowledge, rather than in reliance on a promise (compare Rafferty Sand &Gravel, LLC v Kalvaitis, 116 AD3d 1290, 1291 [2014]). The fourth cause ofaction, viewed liberally and incorporating the previous allegations, does containallegations that fit within the cognizable legal theory of breach of fiduciary duty byJaques as aided and abetted by defendant. Jaques was plaintiff's sole bookkeeper and hadauthorization to [*3]write checks on at least one businessaccount, putting him in a confidential and fiduciary relationship of trust with plaintiff (see New York State Workers'Compensation Bd. v SGRisk, LLC, 116 AD3d 1148, 1152-1153 [2014]). Thecomplaint alleges that Jaques breached his duty by stealing plaintiff's money and makingunauthorized personal purchases with it. The complaint also alleges that defendantknowingly participated and acquiesced in Jaques' activities, and that she intended todeprive plaintiff of its money. The allegations were sufficient to plead aiding andabetting breach of a fiduciary duty, as they alleged Jaques' breach, knowing participationby defendant through the provision of substantial assistance to Jaques, and damage toplaintiff (see Roni LLC vArfa, 15 NY3d 826, 827 [2010]; Kaufman v Cohen, 307 AD2d 113, 126[2003]). Although plaintiff may not be able to obtain a constructive trust againstdefendant, the fourth cause of action can survive against her to recover money damagesas a claim for aiding and abetting breach of fiduciary duty. As noted above, the court didnot have the authority to dismiss any causes of action against Jaques on defendant'sCPLR 3211 (a) motion, as Jaques did not move for any relief (see Mann v Rusk,14 AD3d at 910).
Plaintiff was not entitled to an accounting against defendant. "[T]he existence of afiduciary relationship between the parties is a prerequisite to the equitable relief of. . . an accounting" (Hydro Invs. v Trafalgar Power, 6 AD3d 882, 886 [2004];see Gersten-Hillman Agency,Inc. v Heyman, 68 AD3d 1284, 1286 [2009]; Berke v Hamby, 279AD2d 491, 492 [2001]). Plaintiff has not alleged any such relationship between it anddefendant. Although Jaques had a fiduciary relationship with plaintiff, that relationship isnot imputed to defendant. Hence, the fifth cause of action should be dismissed againstdefendant.
Supreme Court erred in concluding that the doctrine of equitable estoppel tolled thestatutes of limitations as raised by defendant. Although the doctrine precludes adefendant from relying on a "statute of limitations defense when the plaintiff wasprevented from commencing a timely action by reasonable reliance on the defendant'sfraud, misrepresentation or other affirmative misconduct . . . , equitableestoppel does not apply where the misrepresentation or act of concealment underlying theestoppel claim is the same act which forms the basis of [the] plaintiff's underlyingsubstantive cause[s] of action" (Kosowsky v Willard Mtn., Inc., 90 AD3d 1127, 1130-1131[2011] [internal quotation marks and citations omitted]). To support its estoppelargument here, plaintiff is relying on the same underlying conduct that forms the basis ofthe substantive causes of action—namely, defendant's acceptance of delivery atdefendants' home of goods charged to plaintiff, which arguably would have concealedJaques' theft from plaintiff. Thus, equitable estoppel should not be applied to preventdefendant from asserting a statute of limitations defense.
Aside from the estoppel argument, plaintiff does not raise any argument that wouldprevent application of the statutes of limitations. For conversion, a three-year statute oflimitations applies and runs from the date that the conversion took place, not fromdiscovery of the theft (see CPLR 214 [3]; Vigilant Ins. Co. of Am. v HousingAuth. of City of El Paso, Tex., 87 NY2d 36, 44 [1995]; Berman v Goldsmith,141 AD2d 487, 487 [1988]). The statute of limitations runs separately from each separateact of conversion; a series of conversions against the same person or entity is notconsidered a single transaction for such purpose (see Stanley v Morgan Guar. TrustCo. of N.Y., 173 AD2d 390, 391 [1991]). A six-year statute of limitations applies toa cause of action for moneys had and received (see Bias Limud Torah v County ofSullivan, 290 AD2d 856, 857 [2002], lv denied 98 NY2d 610 [2002]). Thestatute of limitations for breach of fiduciary duty differs depending on whether thesubstantive remedy sought is purely monetary—giving rise to the three-year periodapplicable to injuries to property (see CPLR 214 [4])—or is equitable innature—giving rise to a six-year period pursuant to CPLR 213 (1) (see IDT Corp. v Morgan StanleyDean Witter & Co., 12 NY3d 132, 139 [2009]). We have already [*4]determined that the equitable remedy of constructive trust isnot available against defendant, and that plaintiff is limited to collecting money damagesfor the breach of fiduciary duty cause of action, making the three-year limitations periodapplicable here. As this action was commenced on December 21, 2012, the applicablestatute of limitations bars recovery for any conversions or breaches of fiduciary dutyalleged to have occurred more than three years prior to that date, and for moneys had andreceived more than six years prior to that date.
Finally, the notice of pendency should not have been cancelled. When SupremeCourt dismissed the second and fourth causes of action against both defendants, itreasonably cancelled the notice of pendency because no remaining cause of action couldresult in a judgment that "would affect the title to, or the possession, use or enjoyment of,real property" (CPLR 6501). Now that we have reinstated those two causes of actionagainst Jaques and the fourth cause of action against defendant, and the notice ofpendency is applicable and proper as to those causes of action, we reinstate the notice ofpendency.
Egan Jr., Devine and Clark, JJ., concur. Ordered that the order is modified, on thelaw, without costs, by reversing so much thereof as (1) granted defendant Elizabeth W.Jaques' motion by dismissing the fourth cause of action against her, (2) denied saiddefendant's motion as to the fifth cause of action against her, (3) determined that saiddefendant was estopped from raising the statute of limitations defense, (4) sua spontedismissed the second and fourth causes of action against defendant Lawrence R. Jaques,and (5) cancelled the notice of pendency; (1) motion denied as to the fourth cause ofaction, (2) motion granted as to the fifth cause of action against defendant Elizabeth W.Jaques, (3) bar as untimely any recovery against said defendant (a) on the first or fourthcauses of action for conversion or breaches of fiduciary duty occurring more than threeyears prior to commencement of this action and (b) on the third cause of action formoneys had or received more than six years prior to commencement of this action, (4)second and fourth causes of action reinstated against defendant Lawrence R. Jaques, and(5) notice of pendency reinstated; and, as so modified, affirmed.