J. Haspel, Goshen, NY, for appellant.
Morrison & Foerster LLP, New York, NY (Adam J. Hunt and
Mark David McPherson of counsel), for respondent.
E. CHAMBERS, J.P., SHERI S. ROMAN, ROBERT J. MILLER,
FRANCESCA E. CONNOLLY, JJ.
DECISION & ORDER
action, inter alia, to recover damages for fraud and
negligence, the plaintiff appeals from an order of the
Supreme Court, Rockland County (Kelly, J.), entered February
3, 2015, which granted the motion of the defendant Capital
One, N.A., for summary judgment dismissing the complaint
insofar as asserted against it.
that the order is affirmed, with costs.
plaintiff is a successful real estate investor who deposited
more than $40 million into an account at a bank branch of the
defendant Capital One, N.A. (hereinafter Capital One). The
defendant Solomon Hager was a "business concierge"
at the bank. Hager introduced the plaintiff to the defendant
Irving Goldstein, who was not a Capital One employee, for the
purpose of making investments into medium term notes, a
product purportedly available only in foreign markets.
Goldstein then introduced the plaintiff to other defendants,
some of whom were located in Israel and Switzerland. Over the
next two years, an elaborate confidence scheme unfolded
whereby the plaintiff deposited millions of dollars into bank
accounts located in Israel, Switzerland, and Denmark, which
were controlled by the overseas defendants. The plaintiff was
unable to recover approximately $20 million of the funds he
transferred into foreign accounts, and commenced this action,
inter alia, to recover damages for fraud and negligence.
Capital One moved for summary judgment dismissing the
complaint insofar as asserted against it, asserting that it
bore no liability for the plaintiff's investment losses.
The Supreme Court granted Capital One's motion, and the
Supreme Court properly granted Capital One's motion for
summary judgment dismissing the complaint insofar as asserted
against it. "The doctrine of respondeat superior renders
an employer vicariously liable for torts committed by an
employee acting within the scope of the employment. Pursuant
to this doctrine, the employer may be liable when the
employee acts negligently or intentionally, so long as the
tortious conduct is generally foreseeable and a natural
incident of the employment" (Judith M. v Sisters of
Charity Hosp., 93 N.Y.2d 932, 933). Furthermore, the
principal is "responsible for the acts of its authorized
agents even if particular acts were unauthorized.... And
where conduct falls within the scope of the agents'
authority, everything they know or do is imputed to their
principals" (Kirschner v KPMG LLP, 15 N.Y.3d
446, 465-466 [citations omitted]).
when an employee's actions are a gross departure from
normal performance, his or her actions cannot be considered
to be within the scope of his or her employment (see
Roberts v 112 Duane Assoc., LLC, 32 A.D.3d 366, 369).
Concomitantly, creation of an agency for some purpose does
not automatically invest the agent with apparent authority to
bind the principal without limitation (see Edinburg
Volunteer Fire Co., Inc. v Danko Emergency Equip. Co.,
55 A.D.3d 1108, 1110).
in opposition to Capital One's prima facie showing, the
plaintiff failed to raise a triable issue of fact as to
Hager's actual authority to refer the plaintiff to an
individual outside Capital One for investment advice.
Furthermore, Hager's actions in introducing the plaintiff
into a fraudulent scheme outside the bank were so clearly
outside the scope of his employment that his actions were not
reasonably foreseeable by Capital One (see Melbourne v
New York Life Ins. Co., 271 A.D.2d 296, 298-299). The
fact that the meeting with Goldstein did not occur at the
Capital One bank branch further militates against liability
based on a theory of respondeat superior (see Horvath v L
& B Gardens, Inc., 89 A.D.3d 803, 804; Fernandez
v Rustic Inc., 60 A.D.3d 893, 896).
plaintiff also failed to raise a triable issue of fact in
opposition to Capital One's prima facie showing that
Hager had no apparent authority to refer the plaintiff to an
individual outside Capital One for investment advice. The
existence of apparent authority depends on the words or
actions of the principal, not the agent (see Hallock v
State of New York, 64 N.Y.2d 224, 231; Wood v
William Carter Co., 273 A.D.2d 7). The plaintiff points
to no specific words or actions of any Capital One
representative which clothed Hager with the apparent
authority to introduce the plaintiff to individuals outside
the bank for the purpose of investing in foreign schemes
(see Fleet Credit Corp. v Cabin Serv. Co., 192
A.D.2d 421, 424).
the plaintiff could rely on the appearance of authority only
to the extent that such reliance was reasonable (see
Hallock v State, 64 N.Y.2d at 231). Here, the
plaintiff's reliance was unreasonable as a matter of law.
The stated returns on the investment offered to him, 300% in
one week with zero risk, were so extraordinary as to be
unbelievable, triggering the duty of reasonable inquiry into
Hager's actual authority (see Collision Plan
Unlimited v Bankers Trust Co., 63 N.Y.2d 827, 830-831;
ER Holdings, LLC v 122 W.P.R. Corp., 65 A.D.3d 1275,
1277; Global Mins. & Metals Corp. v Holme, 35
A.D.3d 93, 100; Heffernan v Marine Midland Bank, 267
A.D.2d 83, 84).
respect to the plaintiff's claims that are not based on
vicarious liability, Capital One established its prima facie
entitlement to judgment as a matter of law that its alleged
actions were not the proximate cause of the plaintiff's
injury, and the plaintiff failed to raise a triable issue of
fact in opposition. "An intervening act may break the
causal nexus when it is extraordinary under the
circumstances, not foreseeable in the normal course of
events, or independent of or far removed from the
defendant's conduct" (Maheshwari v City of New
York, 2 N.Y.3d 288, 295 [internal quotation marks
omitted]). Thus, an independent intervening act may
constitute a superseding cause, and be sufficient to relieve
defendants of liability, "if it is of such an
extraordinary nature or so attenuated from the
defendants' conduct that responsibility for the injury
should not reasonably be attributed to them" (Gordon
v Eastern Ry. Supply, 82 N.Y.2d 555, 562).
contrary to the plaintiff's contentions, the injury the
plaintiff suffered is attenuated from any actions of Capital
One with respect to the plaintiff's account. There were
numerous individuals who subsequently acted to cause the
plaintiff to transfer money into overseas banks. The
plaintiff's own failure to conduct any due diligence with
regard to the scheme is an additional superseding cause. The
plaintiff had invested millions of dollars in real estate
over the years, and was therefore a seasoned businessman
(see Zanett Lombardier, Ltd. v Maslow, 29 A.D.3d
495, 496). Nevertheless, he did not consult an attorney or
financial advisor, or seek information from the Securities
and Exchange Commission. Reliance on misrepresentations is
not justified when the truth could have been discovered with
due diligence (se ...