Opinion
16734 653052/13
01-21-2016
LUMEN AT WHITE PLAINS, LLC, et al., Plaintiffs–Appellants, v. Moses STERN also known as Mark Stern, et al., Defendants, Reiss Eisenpress LLP, et al., Defendants–Respondents.
Sheikh Partners P.C., New York (Umar A. Sheikh of counsel), for appellants. Kaufman Dolowich & Voluck, LLP, Woodbury (Amanda Gurman of counsel), for respondents.
Sheikh Partners P.C., New York (Umar A. Sheikh of counsel), for appellants.
Kaufman Dolowich & Voluck, LLP, Woodbury (Amanda Gurman of counsel), for respondents.
Opinion
Order, Supreme Court, New York County (Carol Edmead, J.), entered August 19, 2014, which granted defendants-respondents' (defendants) motion to dismiss the complaint as against them, unanimously affirmed, without costs.
The motion court correctly dismissed the claim that defendants aided and abetted a fraud, as plaintiffs failed to adequately plead that defendants had actual knowledge of the fraud, or that they provided substantial assistance in the fraud's commission (Stanfield Offshore Leveraged Assets, Ltd. v. Metropolitan Life Ins. Co., 64 A.D.3d 472, 476, 883 N.Y.S.2d 486 1st Dept.2009, lv. denied 13 N.Y.3d 709, 2009 WL 3379028 2009 ). The complaint does not allege that defendants knew about the fraudulent transactions, but only that they and other defendant lawyers “knew of each other's involvement” and failed to, among other things, “advise the Plaintiffs once the fraud was discovered.” Such limited allegations amount to, at best, constructive knowledge, which is insufficient to support an aiding and abetting fraud claim (see Gregor v. Rossi, 120 A.D.3d 447, 448–449, 992 N.Y.S.2d 17 1st Dept.2014 ). Further, plaintiffs' allegations that defendants failed to act are insufficient to show “substantial assistance,” as plaintiffs do not sufficiently allege that defendants had a duty to act to protect plaintiffs' interests (see Stanfield, 64 A.D.3d at 476, 883 N.Y.S.2d 486; see also Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 562, 883 N.Y.S.2d 147, 910 N.E.2d 976 2009 ). Plaintiffs' allegations of an attorney-client relationship between them and defendants are conclusory (see Denenberg v. Rosen, 71 A.D.3d 187, 196, 897 N.Y.S.2d 391 1st Dept.2010, lv. dismissed 14 N.Y.3d 910, 904 N.Y.S.2d 688, 930 N.E.2d 762 2010 ) and refuted by the documentary evidence submitted by defendants. Plaintiffs' allegations that defendants released signed documents from escrow in connection with a sale of an interest in plaintiff LLC are insufficient to show “substantial assistance,” because defendants' acts fall within the scope of their duties as counsel for defendant Stern, the buyer (Barbarito v. Zahavi, 107 A.D.3d 416, 420, 968 N.Y.S.2d 422 1st Dept.2013 ).
Plaintiffs have abandoned any claim of fraud against defendants, and, in any event, the complaint fails to allege that defendants themselves engaged in fraud. Plaintiffs' unjust enrichment claim is conclusory, as they failed to allege, among other things, how defendants were unjustly enriched (Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 183, 919 N.Y.S.2d 465, 944 N.E.2d 1104 2011 ).