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Concord Capital Mgt., LLC, et al v. Bank of America.

New York Supreme Court Appellate Division, First Department


January 3, 2013

CONCORD CAPITAL MGT., LLC, ET AL., PLAINTIFFS-APPELLANTS,
v.
BANK OF AMERICA., N.A., ETC., ET AL., DEFENDANTS-RESPONDENTS, IRA L. BRODY, DEFENDANT.

Appeal from order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered December 5, 2011, which granted defendants-respondents' motions to dismiss the complaint, deemed appeal from judgment, same court and Justice, entered February 10, 2012, and, so considered, said judgment unanimously affirmed, with costs.

Concord Capital Mgt., LLC v Bank of America., N.A.

Decided on January 3, 2013

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Gonzalez, P.J., Friedman, Saxe, Richter, Abdus-Salaam, JJ.

"The doctrine of in pari delicto mandates that the courts will not intercede to resolve a dispute between two wrongdoers" (Kirschner v KPMG LLP, 15 NY3d 446, 464 [2010]). "The justice of the in pari delicto rule is most obvious where a willful wrongdoer is suing someone who is alleged to be merely negligent" (id.), such as defendant Bank of America, N.A. It is true that defendant Fifth Third Bank is alleged to have acted willfully; however, in pari delicto "also applies where both parties acted willfully" (id.).

The IAS court properly declined to apply the adverse interest exception to the in pari delicto rule. Although the complaint alleges that plaintiffs' former executives looted plaintiffs, it also alleges that the corrupt executives' scheme brought millions of dollars into plaintiffs' coffers and allowed plaintiffs to survive for a few years. "So long as the corporate wrongdoer's fraudulent conduct enables the business to survive -- to attract investors and customers and raise funds for corporate purposes --" the adverse interest exception does not apply (id. at 468).

In light of the foregoing, we need not reach defendants-respondents' alternative arguments for dismissal.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: JANUARY 3, 2013

CLERK

20130103

© 1992-2013 VersusLaw Inc.



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