Offices of Paul C. Cavaliere, New York (Paul C. Cavaliere of
counsel), for appellant.
Anthony Hilton, New York, for appellants-respondents.
Frankfurt Kurnit Klein & Selz, P.C., New York (John B.
Harris of counsel), for respondents-appellants.
Renwick, J.P., Richter, Manzanet-Daniels, Feinman, Kapnick,
from order, Supreme Court, New York County (Shirley Werner
Kornreich, J.), entered May 20, 2015, which denied
defendants' application for an order to show cause,
unanimously dismissed, without costs. Order, same court and
Justice, entered May 20, 2015, which granted plaintiffs'
motion for sanctions, unanimously affirmed, without costs.
Order, same court and Justice, entered July 17, 2015, which
ruled that defendants had waived their right to serve paper
discovery demands, unanimously affirmed, without costs.
Order, same court and Justice, entered on or about September
18, 2015, which, to the extent appealed from as limited by
the briefs, inter alia, granted defendants' first motion
to dismiss (for failure to state a cause of action) so much
of the fraud and breach of fiduciary duty claims as were
predicated on misrepresentations allegedly made before the
assignments by defendant Strategic Development Partners, LLC
(SDP), the claims for constructive trust and punitive
damages, and all claims against defendant Great Court Capital
LLC, and denied the motion as to the remaining portion of the
fraud and breach of fiduciary duty claims, the breach of
contract claim, and the accounting claim as against SDP, and
denied their second motion to dismiss (based on forum non
conveniens), unanimously modified, on the law, to deny the
first motion as to the request for punitive damages on the
fiduciary duty claim, and otherwise affirmed, without costs.
Appeal from so much of the September 18, 2015 order as denied
vacatur of the orders entered April 3 and May 4, 2015,
unanimously dismissed, without costs, as moot.
respect to dismissal of the entire action, the motion court
considered the factors relevant on a forum non conveniens
motion and providently exercised its discretion in ruling
that the action should proceed in New York rather than South
Africa (see Islamic Republic of Iran v Pahlavi, 62
N.Y.2d 474, 479 , cert denied 469 U.S. 1108');">469 U.S. 1108
business judgment rule does not avail defendants since
plaintiffs are neither shareholders of a corporation,
challenging the decisions of the corporation's directors
(see Auerbach v Bennett, 47 N.Y.2d 619, 629 ),
nor residents of a cooperative or condominium, challenging
the decisions of the board of directors or board of managers
(see Matter of Levandusky v One Fifth Ave. Apt.
Corp., 75 N.Y.2d 530, 537 ). This case involves,
in the first instance, contract interpretation, namely,
whether defendant SDP has satisfied the conditions in
paragraph 7(a) of the 2012 agreement to require plaintiffs to
forbear from suit.
court correctly dismissed so much of the fraud claim as dealt
with the misrepresentations that defendants allegedly made
before plaintiffs entered into their assignment agreements
with SDP. "To establish a fraud claim, a plaintiff must
demonstrate that a defendant's misrepresentations were
the direct and proximate cause of the claimed losses"
(Friedman v Anderson, 23 A.D.3d 163, 167 [1st Dept
2005]). "To establish causation, plaintiff must show
both that defendant's misrepresentation induced plaintiff
to engage in the transaction in question (transaction
causation) and that the misrepresentations directly caused
the loss about which plaintiff complains (loss
causation)" (Laub v Faessel, 297 A.D.2d 28, 31
[1st Dept 2002]).
liberally in plaintiffs' favor, the complaint adequately
alleges transaction causation. However, the complaint
insufficiently alleges loss causation (see id.).
Plaintiffs' losses are not alleged to have been caused by
poor security for the loan or defendants' supposed
failure to lend money to MOD; rather, the complaint alleges
that plaintiffs' losses were caused by defendants'
privileging of their own claims in the litigation and
settlement with nonparty MOD. Plaintiffs allege, inter alia,
that "the Actual Settlement Amount was more than
sufficient to repay the Plaintiff Lenders in full, with
interest, but Defendants sought to... retain more than $12
million for themselves as supposed lost profits because [MOD]
failed to pursue the public offering."
plaintiffs submitted no proposed amendment, the court
properly denied their request - made in a footnote in their
brief - to replead (see Gerrish v State Univ. of N.Y. at
Buffalo, 129 A.D.3d 1611, 1613 [4th Dept 2015]).
contend that the individual defendants (Mark Isaacson and
Ivan Berkowitz) are not subject to liability for fraud and
breach of fiduciary duty because they acted on behalf of SDP
and there is no basis for piercing SDP's corporate veil.
However, the rule on which defendants rely is applicable to
contract claims, not tort claims (compare Feigen v
Advance Capital Mgt. Corp., 150 A.D.2d 281, 282 [1st
Dept 1989], lv dismissed in part, denied in part 74
N.Y.2d 874 , with Fletcher v Dakota, Inc., 99
A.D.3d 43, 49 [1st Dept 2012]). Defendants' contention
that the individual defendants did not profit personally is
also unavailing (see Pludeman v Northern Leasing Sys.,
Inc., 10 N.Y.3d 486, 491 ).
claim that plaintiffs failed to plead the contract cause of
action with particularity is without merit. There is no
requirement of heightened particularity in a contract claim
(see East Hampton Union Free School Dist. v Sandpebble
Bldrs., Inc., 66 A.D.3d 122, 125 [2d Dept 2009],
affd 16 N.Y.3d 775');">16 N.Y.3d 775 ; CPLR 3016). Even if,
arguendo, it were found that the complaint was not
sufficiently particular to give the requisite notice
(see CPLR 3013), in opposition to defendants'
first motion to dismiss, plaintiffs submitted an affirmation
by their counsel describing defendants' failure/refusal
to give them full and timely access to information and
documents pertaining to MOD's default in making the
payments required under the South African settlement (see
Rovello v Orofino Realty Co., 40 N.Y.2d 633, 635
contend that the constructive trust claim should be
reinstated. However, the purpose of a constructive trust is
to prevent unjust enrichment (Simonds v Simonds, 45
N.Y.2d 233, 242 ), and plaintiffs do not argue that the
motion court erred in dismissing their unjust enrichment
claim. Moreover, since constructive trust applies to property
already acquired by a defendant (see id. at 241),
the motion court correctly dismissed so much of the fourth
cause of action as sought to impose a constructive trust over
any future funds received by defendants from MOD. In
addition, plaintiffs do not allege that defendants will fail
to pass along plaintiffs' share of future MOD payments;
on the contrary, the documentary evidence indicates that SDP
has been fulfilling its obligation to pass plaintiffs'
pleading alter ego liability against Great Court, plaintiffs
failed to allege facts indicating that defendants abused or
perverted the corporate form for the purpose of causing harm
to them (see East Hampton Union Free School Dist. v
Sandpebble Bldrs., Inc., 16 N.Y.3d 775');">16 N.Y.3d 775, 776 ). For
example, they do not allege that they contracted with SDP
because defendants led them to believe that it was the same
as the ...