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 ...