April 10, 2013
PHILIP KUBERT, SONNY SAUERHAFT, SUSAN KUBERT, NEIL ROSS, SUSAN ROSS, SHELDON ROSS, GERTRUDE ROSS, JASON GOTLIEB, ADAM GOTLIEB, JENNIFER GOTLIEB, MARK LIEBOWITZ, and JENNIFER LIEBOWITZ, and in The Right of LANZUTER BENEVOLENT SOCIETY, And on Behalf of All Other Members Of Said Corporation Similarly Situated, Plaintiffs,
MARK SPECHT, TOME SPECHT, BARRY SPECHT, LEONARD FORTGANG, and ARTHUR SILVERSTEIN, STATE OF NEW YORK by the ATTORNEY GENERAL OF THE STATE OF NEW YORK ERIC SCHNEIDERMAN, The NEW YORK STATE CEMETERY BOARD, MT. CARMEL CEMETERY OF QUEENS NEW YORK and WELLWOOD CEMETERY, Defendants. Index No. 100167/2013
CAROL R. EDMEAD, J.S.C.
In this breach of contract action, defendants Mark Specht ("Mark"), his mother Tobie Specht ("Tobie"), Mark's brother Barry Specht ("Barry"), Leonard Fortgang ("Fortgang") and Arthur Silverstein ("Silverstein") (collectively, "defendants") move pursuant to CPLR § 3211(a)(7) to dismiss plaintiffs' claim for punitive damages for failure to state a cause of action.
Plaintiffs Philip Kubert, Solomon (Sonny) Sauerhaft ("Sonny"), Susan Kubert ("Susan"), Neil Ross ("Neil"), Sandra Ross ("Sandra"), Sheldon Ross ("Sheldon"), Gertrude Ross ("Gertrude"), Jason Gotlieb ("Jason"), Adam Gotlieb ("Adam"), Jennifer Gotlieb ("Jennifer"), Mark Liebowitz ("Mark") and Jennifer Liebowitz ("Jennifer") are alleged members the Lanzuter Benevolent Association (the "Association"), and defendants are officers thereof. Plaintiffs commenced this action against defendants to restore their membership rights in the Association and attendant rights to burial plots at Mt. Carmel Cemetery and Wellwood Cemetery.
According to the Complaint, on March 15, 2011, plaintiffs (then officers and/or trustees and/or members of the Association) entered into a Settlement Agreement with defendants Tobie, Fortgang, and Silverstein (as members) in order to create mechanisms to ensure transparency and "avoid future conflicts amongst its members." Mark signed the Stipulation on behalf of plaintiffs, which provided for an election of new officers and a meeting to facilitate the orderly transition of new management.
At the following June 26, 2011 election, Mark, Tobie, Barry, and Fortgang won, and plaintiffs Philip, as outgoing Secretary, and Sonny, as outgoing Vice-President, began transferring all cemetery records, bank accounts, and historical records to Mark in California. The transfer of documents was completed by August 2011.
Since then, Mark began purging the membership and cemetery reserve rights of plaintiffs. Notwithstanding a signed acknowledgment of receipt of documents by Fortgang on July 8, 2011, Mark claimed that the outgoing officers refused to turn over the Association documents. On July 21, 2011, Mark advised plaintiff Sonny that as of July 21, 2011, neither Sonny, Sonny's father Ben Sauerhaft (now deceased), Philip nor Susan were members of the Association, or had any rights to any plots in the cemeteries. Then in August 2011, Mark wrote the remaining Association members that when the family members of the "old officers" became ill, they "illegally raised the endowment to $1, 000" to raise money, that the "old members" issued memberships improperly, and that he was invalidating any permit to open a grave that was not signed by him.
In October 2011, Mark then solicited the assistance of plaintiffs Mark, Regina, Jason, Adam and Phyllis as the "old officers" left the Association's maps is such disarray. This was followed by another letter in November 2011, this time to Mark, Regina, Adam, Jennifer, and Neil, Sandra, Sheldon and Gertrude Ross, warning that their failure to assist Mark in determining where their burial plots were would result in their removal from the membership and the revocation of their burial plot reserves. Mark then threatened to expel Sheldon and Gertrude from the Association, in direct contrast to a letter he previously wrote in 2008 inviting them to join his effort in removing the outgoing officers, and promising that their plot would not be placed in jeopardy. Mark never asked Philip, in his capacity as record keeper, for clarification regarding the burial plot reserves before sending out these improper letters. Thereafter, Mark, Tobie, Barry, Fortgang and Silverstein notified the cemeteries to reject the existing reserves and deeds issued by the prior Association administration.
In their first cause of action, plaintiffs allege that defendants unlawfully, unilaterally and without notice terminated plaintiffs' membership rights and rights to burial plot reserves, in violation of the Association's By-Laws by failing to follow meeting and notice procedures, and failing to give plaintiffs an opportunity to be heard prior to terminating their rights.
In their second cause of action, plaintiffs seek $10 million in punitive damages against each defendant. Plaintiffs allege that defendants' conduct "was and continues to be so vile, so egregious and so shocking to the conscience of American society in that Defendants would prevent all of these Plaintiffs from being buried next to their predeceased family members and other longtime friends all Lanzuter Society members" (Complaint, ¶ 45).
In support of dismissal of the punitive damage claim (second cause of action), defendants argue that New York caselaw does not recognize an independent cause of action for punitive damages. Further, a plaintiff seeking punitive damages as an additional remedy when the claim arises from a breach of contract must allege that the conduct associated with the breach of contract is "actionable as an independent tort." Claims alleging breach of by-laws are essentially breach of contract claims. Thus, plaintiffs cannot base their punitive damages claim on their underlying breach of contract claim because they have not alleged any tort claim independent of their alleged breach of contract claim. And, plaintiffs have not alleged that defendants' alleged egregious conduct was part of a pattern directed at the public generally. Plaintiffs are merely seeking to remedy a private wrong, i.e., the termination of their Association membership and rights to burial plots.
In opposition, plaintiffs argue that punitive damages are not a separate cause of action but are intertwined with plaintiffs' entitlement to compensatory damages. Compensatory damages are intended to have the wrongdoer make the victim whole and to assure that the victims receive fair and just compensation commensurate with the injury sustained. Punitive damages on the other hand are not to compensate the injured party but rather to punish the tortfeasor and to deter this wrongdoer and others similarly situated from indulging in the same conduct in the future. Punitive damages can only be found by the trier of fact after the plaintiff has had the opportunity to present his claim for compensatory damages.
Plaintiffs claim that defendant Mark attempted to extricate $1, 500.00 per plot from Association members he insisted were nonmembers, i.e., Ludovik (Joel) and Miriam Benedek, even though Association members, pursuant to New York State law, would be entitled to the plots at $250.00 each (see January 4, 2012 e-mail from Mark to the Benedeks). These were cemetery reserves the Benedeks had already received during the prior administration. The Benedeks were Association members on June 26, 2011 and voted at the June 26, 2011 election. Thus, such conduct violates New York State Not For Profit Corporation Law §1513 (a),  and rises to the level of a misdemeanor punishable by a fine of not more than $500 or not more than six months imprisonment or both. Punitive damages may be sought when the wrongdoing was deliberate and has the character of outrage frequently associated with crime. Mark engaged in a series of deceitful and defamatory accusations against plaintiffs and their families. On July 14 and July 15, 2012 he intentionally delayed the burial of the outgoing President, Ben Sauerhaft, an elderly, 97-year-old man, who was a longtime member of the Association.
In addition, among the 400 empty plots in Wellwood Cemetery belonging to the Association Mark and the Association allowed a permit and grave opening to a new member Toni T. Schneps to be buried in Philip's cemetery plot, and issued a reserve to Mr. Schnep's relative Betty Schneps and placed it in Susan's chosen burial plot, even though it knew, based on plaintiffs' prior action for breach of the Stipulation, of plaintiffs' intent to preserve their cemetery rights. Such conduct rises to the very level the Court of Appeals has held to be so outrageous, vindictive and malicious to warrant punitive damages upon proving, upon completion of discovery, the compensatory damage claim.
Defendants' threatening and intimidating letters are outrageous and endanger the entire public when individuals utilize their power to harm not only fraternal association members but people in public proximity to this conduct.
In reply, defendants argue that plaintiffs' caselaw, which involved a tort/defamation action, is distinguishable. Such caselaw never addressed the issue of the timing of punitive damages determinations, and did not hold that it is improper to dismiss deficient punitive damages claims on 3211 (a)(7) motions. Defendants' motion is ripe for review, and the Court should grant defendants' motion.
Plaintiffs' claim that defendants' conduct was "so outrageous, vindictive and malicious to warrant punitive damages" based on three instances of alleged misconduct: (i) defendants' attempt to extract payments from the Benedeks for burial plots, (ii) the burial of a new member, Toni Schneps, in one of the plaintiffs family burial plots, and (iii) delaying the burial of Ben Sauerhaft, the father of one of the plaintiffs, lacks merit. Even assuming that the alleged conduct rises to the level of egregiousness necessary for punitive damages, neither the complaint nor the opposition papers demonstrate that defendants' alleged conduct was "part of a pattern directed at the public generally." Plaintiffs' bald, conclusory and self-serving statements that defendants' alleged conduct "endangers the entire public" is insufficient. Defendants' conduct is not alleged to be part of a pattern of similar conduct directed at the public generally.
In determining a motion to dismiss pursuant to CPLR 3211(a)(7), the Court's role is ordinarily limited to determining whether the complaint states a cause of action (Frank v Daimler Chrysler Corp., 292 A.D.2d 118, 741 N.Y.S.2d 9 [1st Dept 2002]). The standard on a motion to dismiss a pleading for failure to state a cause of action is not whether the party has artfully drafted the pleading, but whether deeming the pleading to allege whatever can be reasonably implied from its statements, a cause of action can be sustained (see Stendig, Inc. v Thorn Rock Realty Co., 163 A.D.2d 46 [1st Dept 1990]; Leviton Manufacturing Co., Inc. v Blumberg, 242 A.D.2d 205, 660 N.Y.S.2d 726 [1st Dept. 1997] [on a motion for dismissal for failure to state a cause of action, the court must accept factual allegations as true]). When considering a motion to dismiss for failure to state a cause of action, the pleadings must be liberally construed (see, CPLR §3026), and the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit into any cognizable legal theory" (Nonnon v City of New York, 9 N.Y.3d 825 ; Leon v Martinez, 84 N.Y.2d 83, 87-88, 614 N.Y.S.2d 972 ).
A cause of action for punitive damages cannot stand as a separate cause of action since it constitutes merely an element of the single total claim for damages on the underlying causes of action (APS Food Systems, Inc. v Ward Foods, Inc., 70 A.D.2d 483, 421 N.Y.S.2d 223  citing Goldberg v New York Times, 66 A.D.2d 718; Ferrucci v State of New York, 42 A.D.2d 359, 362, aff'd 34 N.Y.2d 881; Kallman v Wolf Corp., 25 A.D.2d 506). Therefore, a claim for punitive damages is not a separate cause of action (Rivera v City of New York, 40 A.D.3d 334, 836 N.Y.S.2d 108 [1st Dept. 2007] citing Rocanova v Equitable Life Assur. Socy. of U.S., 83 N.Y.2d 603, 612 N.Y.S.2d 339 ; Goldstein v Winard, 173 A.D.2d 201, 569 N.Y.S.2d 425 ).
Here, plaintiffs' second cause of action simply alleges an independent demand for punitive damages, and as such, can only be sustained to the extent it may be recoverable for the alleged breach of contract claim asserted in the first cause of action (Chuz v St. Vincent's Hosp., 186 A.D.2d 450, 589 N.Y.S.2d 17 [1st Dept 1992] (acknowledging that "by-laws may form the basis of a claim for breach of contract")).
"[T]he pleading elements required to state a claim for punitive damages as an additional and exemplary remedy when the claim arises from a breach of contract... [are]: (1) defendant's conduct must be actionable as an independent tort; (2) the tortious conduct must be of the egregious nature set forth in Walker v Sheldon (10 N.Y.2d 401, 404-405, 223 N.Y.S.2d 488, 179 N.E.2d 497 ...); (3) the egregious conduct must be directed to plaintiff; and (4) it must be part of a pattern directed at the public generally (Rodriguez v Allstate Ins. Co., 33 Misc.3d 827, 931 N.Y.S.2d 462 [Sup. Ct, New York County 2011] citing Rocanova v Equitable Life Assur. Soc. of U.S., 83 N.Y.2d 603, 613, 634 N.E.2d 940 ). "Where a lawsuit has its genesis in the contractual relationship between the parties, the threshold task for a court considering defendant's motion to dismiss a cause of action for punitive damages is to identify a tort independent of the contract.... [W]here a party is merely seeking to enforce its bargain, a tort claim will not lie (see, Rodriguez, 931 N.Y.S.2d at 467 citing Sommer v Federal Signal Corp., 79 N.Y.2d 540, 583 N.Y.S.2d 957, 593 N.E.2d 1365  and New York Univ v Continental Ins. Co., 87 N.Y.2d 308, 316, 639 N.Y.S.2d 283, 662 N.E.2d 763, 767 ).
However, as Rodriguez v Allstate Ins. Co. (33 Misc.3d 827, supra) points out, "punitive or exemplary damages have been allowed in cases where the wrong complained of is morally culpable, or is actuated by evil and reprehensible motives, not only to punish the defendant but to deter him, as well as others who might otherwise be so prompted, from indulging in similar conduct in the future" (citing Toomey v Farley, 2 N.Y.2d 71, 83, 156 N.Y.S.2d 840, 138 N.E.2d 221). It has been stated that "It is not the form of the action that gives the right to the jury to give punitory damages, but the moral culpability of the defendant" (Walker v Sheldon, 10 N.Y.2d 401, 404^105; Cohen v New York Property Ins. Underwriting Ass'n, 65 A.D.2d 71, 410 N.Y.S.2d 597 [1st Dept 1978]).
The rights asserted herein, though initially sounding in contract, relate to conduct recognized by Courts affecting the right of sepulcher, which involves the right to choose and control the care, burial, cremation, or other final disposition of a dead human body (Mack v Brown, 82 A.D.3d 133, 137, 919 N.Y.S.2d 166 [2d Dept 2011] ("The common-law right of sepulcher gives the next of kin the absolute right to the immediate possession of a decedent's body for preservation and burial or other disposition of the remains, and damages may be awarded against any person who unlawfully interferes with that right or improperly deals with the decedent's body")). The evolution of the right to compensable damages stemming from the violation of one's right of sepulcher is thoroughly explained by reference to Egyptian, Biblical, and Greek beliefs in the First Department decision, Melfi v Mount Sinai Hosp. (64 A.D.3d 26, 877 N.Y.S.2d 300 [1st Dept 2009]). The violation of this tort, once established, entitles the next of kin to compensation for the emotional suffering and mental anguish which they experienced as a result (Mack v Brown, 82 A.D.3d at 137-138). More importantly, the First Department in Melfi recognized that "punitive damages may be awarded in a loss of sepulcher claim" (64 A.D.3d at 41; see also, Liberman v Riverside Memorial Chapel, 225 A.D.2d 283 [1st Dept 1996] (upholding jury award for punitive damages, against defendant (though not the precise amount) based on evidence that defendant "advertised itself as adhering to the highest standards of Jewish funerary practices with a 'special understanding of the needs of Jewish families, '" but had acted "consciously and deliberately in complete disregard of both civil and religious law")).
Here, contrary to defendants' contention, defendants' alleged wrongful termination of plaintiffs' membership and concomitant burial rights is actionable as an independent tort, which though insufficient to support the first cause of action for breach of contract, is sufficient to support the second cause of action for punitive damages. Although plaintiffs' claim does not involve the improper handling of a deceased body per se, the claim is directly related to the right to control the care and burial of the plaintiffs' bodies and at least, of the body of Sonny's father, Ben Sauerhaft. The complaint, coupled with the submissions, allege that defendants' interference with plaintiffs' right is unfounded, unwarranted, and motivated by financial, personal gain, in a direct affront to the purpose of the Association, which is to address the social, material and spiritual needs of Jewish immigrants from Lanzut. When examined in light of the alleged purpose of the Association, defendants' alleged actions take on a different moral character, and the claims against them, if proven true, may support an award of punitive damages (see Walker v Sheldon, 10 N.Y.2d at 406 [reasoning that "those who deliberately and cooly engage in a far-flung fraudulent scheme, systematically conducted for profit, are very much more likely to pause and consider the consequences if they have to pay more [in punitive damages] than the actual [compensatory] loss suffered by an individual plaintiff')).
Furthermore, plaintiffs assert that defendants' conduct constitutes a violation of New York State Not For Profit Corporation Law §1513, entitled "Sale of burial rights, " which governs the conveyance of plots (1513(a)) and the resale of burial plots (1513(c)). This statute also declares that a violation of section 1513(a) constitutes a misdemeanor ("A violation of this subdivision shall constitute a misdemeanor and shall be punishable by a fine of not more than five hundred dollars or not more than six months imprisonment or both. Each violation shall constitute a separate offense"); see also, § 1514, entitled "Misdemeanor; general penalty" providing that "Wherever under the provisions of this article a person violating any part thereof is deemed to be guilty of a misdemeanor and no specific penalty is provided, the penalty for each separate violation shall be imprisonment for not more than six months or a fine of not more than five hundred dollars, or both")). Therefore, although plaintiffs did not allege a cause of action under this statute, the provisions above lend support to plaintiffs' claim that the conduct of the defendants, if proven, rises to the level of a criminal indifference to defendants' civil obligations.
Thus, while there are no specific allegations that defendants' alleged conduct was part of a pattern of similar conduct directed at the public generally, this factor does not deprive plaintiffs' the right to seek punitive damages as their claim relates to the alleged violation of their common law right of sepulcher. Thus, dismissal of plaintiffs' punitive damages on the ground of failure to state a cause of action is denied.
It is noted that the second cause of action is styled as one for punitive damages, and New York courts do not recognize a separate cause of action for punitive damages. However, to the degree the second cause of action incorporates "the allegations herein above set forth herein above, " the Court finds that a claim the common law tort claim has been stated. The second cause of action also adds that defendants' conduct "is so vile, so egregious and so shocking to the conscious of American society in that Defendants would prevent all of these Plaintiffs from being buried to their predeceased family members and other longtime friends all Lanzuter society members." Therefore, in the interests of justice and judicial economy, the Court declines to dismiss the second cause of action to the extent plaintiffs' allegations are intertwined with the violation of the right of sepulcher (see e.g., Dabriel, Inc. v First Paradise Theaters Corp., 99 A.D.3d 517, 952 N.Y.S.2d 506 [1st Dept 2012] (declining to dismiss an inartfully pleaded cause of action for failure to state a tortious interference with contractual relations or economic advantage claim where it stated a claim for conversion)).
Based on the foregoing, it is hereby
ORDERED that defendants' motion pursuant to CPLR § 3211(a)(7) to dismiss plaintiffs' claim for punitive damages for failure to state a cause of action is denied; and it is further
ORDERED that defendants shall serve a copy of this order with notice of entry upon plaintiffs within 20 days of entry.
This constitutes the decision and order of the Court.