Opinion
No. 507958/13.
08-09-2014
SHIRLEY ELFIE LIFE TRUST and Pinkesz Mutual Holdings LLC, Plaintiff, v. Edward PINKESZ a/k/a Joseph Pinkesz a/k/a Chaim Yossi Pinkesz, Anthony Pinkesz a/k/a Ushi Pinkesz, Joel Wurtzberger, Rabbi Israel M. Kenig and The Rabbinical Court Orech Mishor of Boro Park, Defendant.
Regosin, Edwards, Stone, Feder, for Plaintiff. Anthony Pinkesk, pro se. Edward Pinkesk, pro se. Joel Wurtzberger, pro se. Orech Mishor, pro se. Rabbi Israel Kenig, pro se.
Regosin, Edwards, Stone, Feder, for Plaintiff.
Anthony Pinkesk, pro se.
Edward Pinkesk, pro se.
Joel Wurtzberger, pro se.
Orech Mishor, pro se.
Rabbi Israel Kenig, pro se.
Opinion
YVONNE LEWIS, J.
Shirley Elfie Life Trust and Pinkesz Mutual Holdings LLC (PMH) (collectively, the plaintiffs) move via order to show cause, in sequence No.1, for an order staying a special proceeding also before this court, Matter of Pinkesz v. Wertzberger (Sup Ct, Kings County, Lewis, J., index No. 14531/13). Defendants Israel Koenig, sued herein as “Rabbi Israel M. Kenig,” (Rabbi Koenig) and the Rabbinical Court Orech Mishor of Boro Park (the Beth Din) (collectively, the Beth Din defendants) cross-move, in sequence # 2, for an order, pursuant to CPLR § 3211(a)(7), dismissing the action as against them or, alternatively, granting them leave to serve a responsive pleading. The plaintiffs move, in sequence # 3, for an order compelling Edward Pinkesz a/k/a Joseph Pinkesz a/k/a Chaim Yossi Pinkesz (Edward Pinkesz), Anthony Pinkesz a/k/a Ushi Pinkesz (Anthony Pinkesz), Joel Wurtzberger (Wurtzberger) and the Beth Din defendants (collectively, the defendants) to appear for depositions. Edward Pinkesz moves and Anthony Pinkesz cross-moves, in sequences # 4 and # 5, respectively, for orders, pursuant to CPLR § 3211(a)(7), dismissing the plaintiffs' claims for money had and received, specific performance, contractual interference, conversion, unjust enrichment, fraud, breach of fiduciary duty, equitable accounting and attorney's fees, striking the plaintiffs' punitive-damages demand and dismissing all claims as asserted by Shirley Elfie Life Trust.
Background
The Underlying Facts
Edward Pinkesz, Anthony Pinkesz and Wurtzberger were engaged in business surrounding life settlement transactions, also referred to as viatical settlements, in which a person or entity purchases and maintains an existing life insurance policy as an investment, paying the original holder a lump sum. In early 2011, Wurtzberger and Anthony Pinkesz jointly purchased life insurance policies, each with a face value of $5 million, covering Jacob Pinkesz (the Jacob Policy) and Julius Pinkesz (the Julius Policy) from a Philadelphia synagogue. Edward Pinkesz, brother of Anthony Pinkesz, acted as a broker for this purchase of the Jacob Policy. Thereafter, a dispute developed between Wurtzberger and Edward Pinkesz, which they agreed to settle before Rabbi Koenig and the Beth Din. The Beth Din issued a ruling, dated May 5, 2011, (the 2011 Decision) which required Wurtzberger to give Edward Pinkesz a brokerage commission of $37,500 plus a $425,000 loan.
In June 2011, Wurtzberger, purportedly acting as the agent of PMH, purchased Anthony Pinkesz's interest in the Jacob Policy for $1 .5 million. Wurtzberger then transferred the policy to PMH, of which Shirley Elfie Life Trust is a 50% member. Jacob Pinkesz died during the summer of 2012. The plaintiffs allege that Wurtzberger received the full $5–million death benefit upon Jacob Pinkesz's death, but never delivered any of that sum to PMH.
Rabbi Koenig called Wurtzberger and Edward Pinkesz back to the Beth Din in July 2013. The circumstances and substance of this meeting remain unclear and disputed. Rabbi Koenig then issued another ruling, dated July 22, 2013, (the 2013 Decision) which awarded Edward Pinkesz $3.75 million. Edward Pinkesz subsequently commenced a special proceeding against Wurtzberger before this court to confirm the 2013 Decision (the Arbitration–Confirmation proceeding), and Wurtzberger cross-moved to vacate the 2013 Decision (see Matter of Pinkesz v. Wertzberger, Sup Ct, Kings County, Lewis, J., index No. 14531/13). A concurrently issued decision in that proceeding now vacates the 2013 Decision.
The Complaint
The plaintiffs commenced this action on December 15, 2013 and their complaint, verified by PMH's managing member, Alan Rubenstein (Rubenstein), alleged causes of action for breach of contract, money had and received and specific performance against Wurtzberger, Edward Pinkesz and Anthony Pinkesz, contractual interference against Edward Pinkesz, Anthony Pinkesz and the Beth Din defendants and conversion, unjust enrichment, fraud, breach of fiduciary duty, equitable accounting and attorney's fees against all the defendants. The plaintiffs alleged that the defendants had jointly sought to deprive the plaintiffs of the $5–million death benefit of the Jacob Policy, for which they had paid over $2 million. According to the plaintiffs, Wurtzberger received the entire $5 million upon Jacob Pinkesz's death, but has failed deliver it to PMH. The plaintiffs asserted that the 2013 Decision constituted merely a scheme by which the defendants were attempting to prevent the plaintiffs from receiving the death benefit. The plaintiffs alleged that the defendants generally acted in bad faith and with gross disregard for the plaintiffs' interests. The plaintiffs claimed that Wurtzberger, Edward Pinkesz and Anthony Pinkesz, acted as their agents, whereas the Beth Din the defendants owed them fiduciary duties because they held themselves out as a neutral arbitral forum.
Plaintiffs' Motion To Stay The Arbitration
Confirmation Proceeding
(1)
The plaintiffs now move, by order to show cause, for an order staying any proceedings concerning the 2011 or 2013 Decisions until after discovery herein and an opportunity for summary judgment motions. They claim that Rabbi Koenig issued the 2013 Decision as part of the defendants' “devious, deceptive and disingenuous conspiratorial efforts” to keep the Jacob Policy benefits under Wurtzberger's control and away from PMH. Hence, the plaintiffs urge that the Arbitration–Confirmation proceeding must be stayed until after discovery herein is complete to prevent dissipation of the death benefit.
(2)
Edward Pinkesz, in opposition, alleges that Wurtzberger “is behind the The plaintiff [PMH], and has commenced this action with the obvious attempt to enjoin me, through a collateral action, from confirming the arbitration award, or alternatively, seeks to harass me through judicial process.” Rubenstein, Edward Pinkesz urges, has no personal knowledge of the facts underlying the action, and he emphasizes that the plaintiffs' allegations concerning the Beth Din decisions are “upon information and belief.” Edward Pinkesz argues that he never knew of any member of PMH other than Wurtzberger and that Wurtzberger sought out other people to become members of PMH in order to commence the instant action. If this motion is granted, Edward Pinkesz contends, the court should compel the plaintiffs to post a $2–million bond. He claims that the plaintiffs materially misstated the underlying facts by ignoring language in the agreement transferring the Jacob Policy from Anthony Pinkesz to Wurtzberger that reserved a potential interest for Edward Pinkesz, to be determined by the Beth Din. Edward Pinkesz contends that the misconduct which the plaintiffs allege was all committed by Wurtzberger.
Edward Pinkesz also submits a supplemental opposition to the plaintiffs' order to show cause, in which he introduces his own affidavit that was submitted in opposition to Wurtzberger's cross motion to vacate the 2013 Decision in the Arbitration–Confirmation proceeding. In that affidavit, he argues, among other things, that the 2013 Decision awarded him $3.75 million based not only on his interest in the Jacob Policy, but also in the Julius Policy. He contends that the 2011 Decision represented only an interim arbitration ruling and that the $425,000 award was granted to him only as a brokerage commission.
(3)
Anthony Pinkesz argues, in opposition to the plaintiffs' order to show cause, that the plaintiffs fail to sufficiently show the necessity of a preliminary injunction with clear and convincing evidence. He urges that Rubenstein lacks personal knowledge of the interactions between Wurtzberger, Edward Pinkesz, Anthony Pinkesz and the Beth Din defendants. Furthermore, Anthony Pinkesz contends, the plaintiffs' adequate remedy of law in the form of money damages precludes now granting them a preliminary injunction. Like Edward Pinkesz, Anthony Pinkesz argues that, if a preliminary injunction is granted, it should be conditioned on the plaintiffs' posting of a $2–million bond.
The Dismissal Motions
(1)
The Beth Din defendants cross-move, in sequence # 2, for an order dismissing the action as against them, pursuant to CPLR § 3016(b), CPLR § 3211(a)(7) and the doctrine of arbitral immunity, or, alternatively, granting them leave to serve a responsive pleading under CPLR § 3024. The Beth Din defendants argue that arbitral immunity shields arbitrators from all liability for acts performed in the arbitral capacity to prevent potential harassment or intimidation of arbitrators. Arbitral immunity requires dismissal, the Beth Din defendants argue, even of accusations of fraud. They also contend that the plaintiffs have failed to state a cause of action against the Beth Din defendants, as an arbitration award binds only the parties thereto. As the plaintiffs were not party to the contested arbitration decisions, the Beth Din defendants assert, they cannot have suffered harm or prejudice from those rulings. The Beth Din defendants additionally argue that the plaintiffs' failure to plead fraud with the particularity required by CPLR § 3016(b) requires dismissing the complaint. In the alternative, the Beth Din defendants state that they adopt the arguments advanced by Edward Pinkesz in his dismissal motion (see discussion of motion sequence # 4, infra ). The Beth Din defendants also seek, as an alternative remedy, leave to serve a responsive pleading under CPLR § 3024.
The Beth Din defendants support their cross motion with the affidavit of Rabbi Koenig under the caption of another pending case (Moskowitz v. Wells Fargo Bank, N.A., Sup Ct, N.Y. County, index No. 504509/13).
(2)
Edward Pinkesz now moves, in motion sequence # 4, for an order dismissing all of the plaintiffs' claims other than the breach-of-contract claim pursuant to CPLR § 3211(a)(7) and CPLR § 3016(b), striking the plaintiffs' punitive-damages demand pursuant to CPLR § 3211(a)(7) and dismissing the claims by Shirley Elfie Life Trust for lack of standing pursuant to CPLR § 3211(a)(7) and Limited Liability Company Law § 610. Edward Pinkesz primarily argues that the plaintiffs' tort claims must be dismissed as they all stem from a purported breach of contract. He contends that a breach-of-contract allegation generally will not support a fraud claim without an alleged breach of some independent duty or a misrepresentation of present fact. The fraud claim also warrants dismissal, Edward Pinkesz urges, because the plaintiffs failed to plead it with the particularity required by CPLR § 3016(b), instead reciting only the bare elements of fraud. Any misrepresentations, he stresses, were made by Wurtzberger.
Similarly, Edward Pinkesz argues, the plaintiffs' claims for conversion, breach of fiduciary duty, contractual interference and unjust enrichment must be dismissed, as they may not be premised on a mere breach of contract and the plaintiffs fail, otherwise, to plead facts demonstrating such claims. Only Wurtzberger, he urges, bore a fiduciary duty towards the plaintiffs, whereas he and Anthony Pinkesz participated only in an arm's-length business transaction with Wurtzberger as PMH's agent. Edward Pinkesz contends that the accounting claim must be dismissed, as he had no confidential relationship with the plaintiffs, and that the money-had-and-received claim must be dismissed, as the complaint alleges only that Wurtzberger possessed money owed to the plaintiffs Specific performance, Edward Pinkesz urges, is inappropriate when money damages may adequately address a the plaintiff's injury and, in any case, is not a claim distinct from breach of contract.
Edward Pinkesz argues that the plaintiffs have no basis for requesting either attorney's fees or punitive damages, given that the action essentially seeks recovery only for a breach of contract. Finally, he contends that the action must be dismissed as asserted by Shirley Elfie Life Trust, as a member of an LLC lacks standing to assert claims on that LLC's behalf. Here, he urges, only PMH was party to the underlying agreement and Shirley Elfie Life Trust thus has no basis to advance claims herein.
(3)
Anthony Pinkesz cross-moves, in sequence # 5, for an order, pursuant to CPLR §§ 3211(a)(7) and 3016(b), dismissing all of the plaintiffs' claims other than breach of contract, striking the plaintiffs' demand for punitive damages and dismissing claims as advanced by Shirley Elfie Life Trust. He argues for dismissal of these claims on identical grounds as those advanced by Edward Pinkesz.
(4)
The plaintiffs, in opposition to the three dismissal motions, first stress that no party seeks to dismiss the breach-of-contract cause of action. They urge that they have adequately plead that Edward Pinkesz, Anthony Pinkesz and the Beth Din defendants intentionally interfered with a valid contract, causing the plaintiffs harm. The plaintiffs also allege that the defendants, in obtaining and issuing the 2013 Decision, knew that the $3.75–million award was not justified and intended it to interfere with PMH's contractual rights to collect the Jacob–Policy death benefit.
The plaintiffs contend that they have adequately pleaded a conversion claim, as they had an “undisputed entitlement” to the death benefit and the defendants have withheld such money or aided and abetted the withholding. The money-had-and-received cause of action, the plaintiffs argue, must survive, as the plaintiffs paid Wurtzberger, Edward Pinkesz and Anthony Pinkesz for their interests in the Jacob Policy; those defendants benefitted from the payment and equity thus requires payment of the death benefit. They argue that the defendants were unjustly enriched by their receipt of the Jacob–Policy death benefit and that equity requires disgorgement of that money. The plaintiffs further urge that equity requires imposing a constructive trust.
The plaintiffs acknowledge the pleading requirements of CPLR § 3016(b), but contend that they need only have pleaded details sufficient to notify the defendants of each claim's substance. They urge that New York courts have relaxed the particularity requirement when the detailed circumstances of a fraud are known only to the defendants. Here, the plaintiffs allege, Wurtzberger, Edward Pinkesz and Anthony Pinkesz, in transferring the Jacob Policy to PMH, “led Plaintiffs to belief [sic] that Plaintiffs would be the beneficiaries of the POLICY's Death Benefits upon the transfer.” The plaintiffs contend that their harm constituted a foreseeable result of the 2013 Decision's issuance. They argue that, “[i]n order to prevail, the plaintiffs need only prove that the defendants acted unfairly in some manner” and emphasize that the allegations of wrongdoing concerning fraud herein are distinct from those concerning breach of contract.
The plaintiffs argue that their relationships with each of the defendants should be considered fiduciary because they were “characterized by trust and reliance” and the defendants were assuming responsibility for the plaintiffs' affairs. Edward Pinkesz and Anthony Pinkesz, the plaintiffs allege, were party to the sale of the Jacob Policy to PMH and assumed a duty to ensure that the death benefits would be paid to PMH under that agreement. The plaintiffs further assert that the Beth Din defendants assumed fiduciary duties by holding themselves out as an impartial arbitration forum. The plaintiffs contend that the defendants thus acted as the plaintiffs' agents and bore duties of good faith and loyalty. The plaintiffs allege that the defendants breached these purported duties by conspiring to withhold the $5–million death benefit from the plaintiffs.
Specific performance of the underlying agreement is warranted herein, the plaintiffs claim, as promissory estoppel requires Wurtzberger, Edward Pinkesz and Anthony Pinkesz to perform under the agreement's terms. The plaintiffs assert that a constructive trust is justified as the defendants breached fiduciary duties by violating an implied promise to the plaintiffs. An accounting is also necessary, the plaintiffs argue, to enable the return of moneys and assets of which the defendants, as fiduciaries, have wrongly deprived the plaintiffs. The plaintiffs contend that an award of attorney's fees and punitive damages is justified by the defendants' malicious and fraudulent conduct. They additionally urge that attorney's fees may be justified by fraud that precipitates particularly onerous legal expenses.
The plaintiffs contend that arbitral immunity does not require dismissing the claims as against the Beth Din defendants, as their conduct exceeded and violated their arbitral capacity. The plaintiffs assert that they were necessary parties to the arbitration, since the Jacob–Policy death benefit constituted the main subject of the dispute, but were intentionally excluded. This exclusion, they argue, rendered the arbitral proceedings fatally flawed. The plaintiffs contend that the Beth Din defendants, by reopening the dispute between Wurtzberger and Edward Pinkesz in 2013 and issuing a new ruling, exceeded their jurisdiction and thus should not receive any immunity for the 2013 Decision. The scope for modifying arbitration rulings, the plaintiffs urge, is narrowly defined by CPLR § 7509, which permits modification only upon written application within 20 days of the original ruling and only for specific types of correction. The plaintiffs complain that they were also excluded from the 2013 arbitral proceedings and allege that only Rabbi Koenig rendered the 2013 Decision, without proper input from the other two members of the arbitral panel.
(5)
The Beth Din defendants, in reply, contend that Wurtzberger is seeking to harass Rabbi Koenig in response to the 2013 Decision and stress that the plaintiffs have not sought a default judgment against Wurtzberger, despite his failure to serve a responsive pleading. They further assert that the plaintiffs' delay in bringing an action to recover the Jacob–Policy death benefit suggests that they are “not interested in a judgment against Mr. Wurtzberger, but only in attacking the remaining defendants in a campaign to harass and intimidate them.”
The Beth Din defendants argue that the plaintiffs “misconstrue[ ] the doctrine of arbitral immunity” and that conduct that comprises part of an arbitral proceeding, such as their underlying acts therein, receives protection regardless of any purported wrongfulness. Arbitral immunity, they assert, is intended to protect arbitrators from harassment or intimidation, exactly, they claim, what the plaintiffs intend to achieve from bringing the instant claims against the Beth Din defendants. They reiterate that an arbitration award cannot prejudice a non-party, but assert that if one could, the proper remedy would be seeking the award's vacatur, not commencing an action against the arbitrator. Unlike a judge, the Beth Din defendants urge, an arbitrator lacks the power to join necessary parties, as arbitration is a voluntary process. Finally, the Beth Din defendants contend that the arbitration agreement between Wurtzberger and Edward Pinkesz specifically permitted them to rule without any time limitation and denominated Rabbi Koenig as the sole arbitrator.
(6)
Edward Pinkesz, in reply to the plaintiffs' opposition, argues that the plaintiffs do not contest that tort claims may not be premised on a mere contractual breach. He urges that the plaintiffs fail to identify any independent legal duty and that, consequently, their contractual-interference, conversion, fraud and breach-of-fiduciary-duty claims warrant dismissal. Similarly, he argues that an unjust-enrichment claim cannot survive when a valid contract existed and that specific performance may not be granted where money damages would constitute an adequate remedy. Even properly pleaded claims, he asserts, may be dismissed when they are duplicative. Edward Pinkesz reiterates that the plaintiffs allege that only Wurtzberger, not Edward Pinkesz, received money that belongs to the plaintiffs, and he thus urges that the money-had-and-received claim must be dismissed. He argues that the plaintiffs have not plead either a fiduciary or a confidential relationship between themselves and him, as needed to establish a breach of fiduciary duty or justify an accounting.
Edward Pinkesz contends that the plaintiffs offer no valid basis for awarding attorney's fees and that punitive damages cannot be awarded for a mere contractual violation that was not malicious and aimed at the public. The plaintiffs, he argues, do not oppose the portion of his motion seeking to dismiss the claims as brought by Shirley Elfie Life Trust. Edward Pinkesz additionally asserts that a mere breach-of-contract claim would not justify a preliminary injunction, as the plaintiffs would have an adequate legal remedy.
Although the plaintiffs claim that they lack the facts necessary to plead the alleged fraud in detail, Edward Pinkesz argues that they fail to identify the specific facts they would need to make such a pleading. Edward Pinkesz contends that the plaintiffs are Wurtzberger's alter ego and commenced the instant action as a method of obtaining discovery pertinent to the Arbitration–Confirmation proceeding. He adds that the defendants should generally be afforded priority in conducting discovery.
The Motion To Compel Depositions
(1)
The plaintiffs, in motion sequence # 3, move for an order, pursuant to CPLR §§ 3101, 3102, 3106, 3113 and 3211(d), compelling the defendants to appear for depositions. They argue that the facts necessary to oppose the defendants' dismissal motions are known exclusively by the defendants and thus the plaintiffs cannot yet assert them. The plaintiffs emphasize that the defendants themselves admit that the plaintiffs, as non-parties to the arbitration, lack personal knowledge of those proceedings, yet they have refused the plaintiffs' requests for consensual discovery. Accordingly, they urge that they must be granted leave to conduct discovery and depose the defendants.
(2)
The Beth Din defendants, in opposition to the plaintiffs' motion, argue that the plaintiffs fail to make a sufficient start towards establishing a claim in order to warrant pre-answer depositions. Instead, the Beth Din defendants contend, the plaintiffs merely make conclusory allegations of a conspiracy between the defendants. They further argue that their arbitral immunity precludes them from appearing for deposition. Such immunity should apply, the Beth Din defendants urge, as the plaintiffs seek to uncover details of the arbitration proceeding that occurred before Rabbi Koenig.
(3)
Edward Pinkesz argues, in opposition, that the plaintiffs seek to compel depositions in order to uncover evidence for use in replying to Edward Pinkesz's opposition to the plaintiffs' order to show cause. Accordingly, he urges, compelling depositions at this time “would eviscerate the clear and convincing evidence standard that the movant for a preliminary injunction is required to satisfy.” He reiterates extensive arguments against granting the plaintiffs a preliminary injunction and against their claims generally, and he again alleges that Wurtzberger “is behind the Plaintiffs in this action, and that the Plaintiffs are Wurtzberger's alter egos.” Edward Pinkesz urges that Wurtzberger is seeking, by the instant action, to improperly obtain discovery for use in the Arbitration–Confirmation proceeding. He contends that the plaintiffs fail to make a sufficient start towards demonstrating that discovery could uncover facts needed to oppose the defendants' dismissal motions under CPLR § 3211(d). Furthermore, Edward Pinkesz argues that discovery could not help the plaintiffs overcome the legal arguments warranting dismissal, primarily that many of the plaintiffs' claims are duplicative of their breach-of-contract claim and that the plaintiffs otherwise simply fail to plead facts supporting claims as to Edward Pinkesz. He asserts that, generally, the defendants should be granted priority in conducting discovery. Edward Pinkesz additionally supports his opposition with a copy of a memorandum of law which he previously submitted in the Arbitration–Confirmation proceeding in support of his motion to confirm and in opposition to Wurtzberger's motion to vacate the 2013 Decision.
(4)
Anthony Pinkesz, in opposing the plaintiffs' motion, adopts the arguments advanced by Edward Pinkesz.
(5)
The plaintiffs, in reply, reiterate that they claim the Beth Din defendants exceeded the proper scope of arbitral authority and that such acts receive no protection from arbitral immunity. Such immunity, they urge, does not shield all actions taken by an arbitrator. The plaintiffs contend that they do not claim that a mere allegation of wrongdoing will overcome arbitral immunity, but that the facts herein support a finding that the Beth Din defendants exceeded the scope of their jurisdiction in performing the acts that underlie the plaintiffs' claims. The defendants' repeated assertions that the plaintiffs lack personal knowledge of the arbitration proceedings, the plaintiffs urge, only supports their demand to conduct discovery. The plaintiffs reiterate that the facts they need to oppose the dismissal motions exist, but are exclusively known to the defendants. They claim that they have made a sufficient start towards showing adequate, non-frivolous allegations.
Furthermore, the plaintiffs characterize Edward Pinkesz's affidavit from the Arbitration–Confirmation proceeding as “shocking and perjuriously false.” They allege that Edward Pinkesz has made repeated improper assertions as to Rabbi Koenig's acts and motives during the arbitration process in the absence of any direct testimony or affidavit from Rabbi Koenig himself. They additionally contend that Edward Pinkesz's recounting of the hearing that preceded the 2013 Decision is contradicted by a transcript of that hearing submitted in the Arbitration–Confirmation proceeding (a transcript which was submitted by Wurtzberger, who purportedly recorded the hearing and had a transcript of the recording produced). The plaintiffs assert that they “are NOT proceeding for the purpose of discovery—but rather to protect their sizable investment that the defendants seek to misappropriate.”
Discussion
The Order To Show Cause
The plaintiffs' motion via order to show cause, in sequence # 1, seeks a preliminary injunction staying the Arbitration–Confirmation proceeding. As this court issues a concurrent decision in that proceeding, vacating the 2013 Decision, the order to show cause will be denied as moot.
The Dismissal Motions
(1)
A defendant's dismissal motion under CPLR § 3211(a)(7) requires determining whether the plaintiff has stated a cause of action, but “[i]f the court considers evidentiary material, the criterion then becomes whether the proponent of the pleading has a cause of action” (Sokol v. Leader, 74 AD3d 1180, 1181–1182 [2010] [emphasis added], quoting Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275 [1977] ; see also Elmhurst Dairy, Inc. v. Bartlett Dairy, Inc., 97 AD3d 781, 783 [2012] ). Dismissal results only if the movant demonstrates conclusively that the plaintiff has no cause of action, or that “a material fact as claimed by the pleader to be one is not a fact at all” (Sokol, 74 AD3d at 1182, quoting Guggenheimer, 43 N.Y.2d at 275 ; see also Lawrence v. Graubard Miller, 11 NY3d 588, 595 [2008] ). A court considering a dismissal motion on the basis of failure to state a claim generally must accept the facts alleged in the complaint as true and make any possible favorable inferences for the plaintiff (Paino v. Kaieyes Realty, LLC, 115 AD3d 656, 656 [2014] ; Sokol, 74 AD3d at 1181 ).
(2)
The Beth Din defendants primarily contend that arbitral immunity requires dismissal of the action as against them. “[A]rbitrators are immune from liability for acts performed in their arbitral capacity” (Jacobs v. Mostow, 69 AD3d 575, 576 [2010] [internal quotation marks omitted], appeal dismissed 15 NY3d 889 [2010] ; see also Gondal v. New York Stock Exch., 27 AD3d 271, 272 [2006] ; John Street Leasehold v. Brunjes, 234 A.D.2d 26, 26 [1996] ; see generally Wally v. General Arbitration Council of Textile & Apparel Indus., 165 Misc.2d 896, 897–898 [Sup Ct, N.Y. County 1995] [“arbitrators in contractually agreed upon arbitration proceedings are absolutely immune from liability in damages for all acts within the scope of the arbitral process”], appeal dismissed 241 A.D.2d 983 [1997], quoting Austern v. Chicago Bd. Options Exch., 898 F.2d 882, 886 [2d Cir1990], cert denied 498 U.S. 850 [1990] ). This sort of official immunity was extended to arbitrators “[b]ased primarily on the functional comparability' of the arbitrator's role in a contractually agreed upon arbitration proceeding to that of his judicial counterpart” (Austern, 898 F.2d at 886 ; see also Wally, 165 Misc.2d at 898 ). Although this type of immunity may not be overcome by allegations of bad faith, it does not protect actions taken outside of an arbitrator's official capacity or actions taken in the complete absence of jurisdiction (see Mireles v. Waco, 502 U.S. 9, 11–12 [1991] ).
Here, the plaintiffs allege that arbitral immunity provides no protections for the Beth Din defendants' conduct, as their acts occurred outside the proper scope of arbitral authority. Specifically, the plaintiffs contend that the 2013 hearing and the resulting decision occurred outside of the Beth Din defendants' jurisdiction because that power terminated upon the issuance of the 2011 Decision. Given these allegations, and the concurrent vacatur of the 2013 Decision on such grounds, the Beth Din defendants fail to demonstrate that arbitral immunity provides a shield to the plaintiffs' claims, and dismissal on the basis of arbitral immunity must, therefore, be denied. The Beth Din defendants' request for leave to serve a responsive pleading pursuant to CPLR § 3024 shall be granted.
(3)
Edward Pinkesz and Anthony Pinkesz make numerous arguments in support of dismissing all causes of action other than the breach-of-contract claim, and the Beth Din defendants, as an alternative strategy, adopt the IR arguments.The moving defendants first contend that the plaintiffs' contractual-interference claim must be dismissed as duplicative of the breach-of-contract claim. A the plaintiff asserting a contractual-interference (or tortious-interference-with-contract) cause of action must demonstrate “the existence of a valid contract between the the plaintiff and a third party, the defendant's knowledge of that contract, the defendant's intentional procurement of the third-party's breach of the contract without justification, actual breach of the contract, and damages resulting therefrom” (Lama Holding Co. v. Smith Barney, 88 N.Y.2d 413, 424 [1996] ; see also Pabon v. Many, 99 AD3d 773, 774 [2012] ).
Here, the plaintiffs allege that the defendants (other than Wurtzberger) intentionally caused Wurtzberger to breach a contract whereby he had agreed to forward the plaintiffs the Jacob–Policy death benefit upon its maturation. The moving defendants do not challenge a breach of such a contract or resulting damages, nor do they explicitly challenge that they knew of such a contract or intentionally caused a breach. As the moving defendants do not seek to dismiss the plaintiffs' breach-of-contract claim, their argument may, accordingly, be understood as asserting that the plaintiffs fail to claim a contract between themselves and a third party because each defendant was, in fact, a direct party to the contract. Given the dearth of details presently available concerning this contract's substance, however, presently holding that each moving defendant was party to the contract and dismissing the contractual-interference claim as duplicative would seem premature. The alternative option, treating the moving defendants' arguments as judicial admissions that they were party to such a contract and dismissing the contractual-interference claim, would seem to improperly exult technical propriety over substantive accuracy. Hence, dismissal of this cause of action must be denied.
(4)
Establishing conversion requires showing that a defendant intentionally, and without authority, assumed or exercised control over another's personal property and thus interfered with the right of possession (Colavito v. New York Organ Donor Network, Inc., 8 NY3d 43, 49–50 [2006] ). A conversion action may concern a specifically identifiable sum of money subject to an obligation of particular treatment (Lemle v. Lemle, 92 AD3d 494, 497 [2012] ; Hoffman v. Unterberg, 9 AD3d 386, 388 [2004], abrogated on other grounds Tzolis v. Wolff, 10 NY3d 100 [2008] ; see Britton v.. Ferrin, 171 N.Y. 235, 242–243 [1902] ).
Here, the plaintiffs allege that the defendants intentionally appropriated the $5–million Jacob–Policy death benefit, a specifically identifiable sum of money that the plaintiffs allege was rightfully theirs. A conversion claim may be dismissed as duplicative when it arises from a mere purported contractual breach (see Hamlet at Willow Cr. Dev. Co., LLC v. Northeast Land Dev. Corp., 64 AD3d 85, 112–113 [2009], lv dismissed 13 NY3d 900 [2009] ; see also East End Labs., Inc. v. Sawaya, 79 AD3d 1095, 1096 [2010] ). Nevertheless, given the murkiness of the agreement between PMH and the defendants concerning the Jacob Policy and the uncertainty, as discussed above, regarding who was in privity to such an agreement, the conversion claim cannot be presently deemed duplicative and dismissal must be denied as to this cause of action.
(5)
Both money had and received and unjust enrichment are quasi-contractual claims (Georgia Malone & Co., Inc. v. Rieder, 19 NY3d 511, 516 [2012] ; Board of Educ. of Cold Spring Harbor Cent. School Dist. v. Rettaliata, 78 N.Y.2d 128, 138 [1991] ). The elements of a money-had-and-received claim are “(1) the defendant received money belonging to the plaintiff, (2) the defendant benefitted from receipt of the money, and (3) under principles of equity and good conscience, the defendant should not be permitted to keep the money,” whereas the unjust-enrichment elements are “(1) the [defendant] was enriched, (2) at [the plaintiff's] expense, and (3) that it is against equity and good conscience to permit [the defendant] to retain what is sought to be recovered” (Goel v. Ramachandran, 111 AD3d 783, 790, 791 [2013] ).
In the instant case, the plaintiffs' allegation that the defendants wrongfully took possession of the Jacob–Policy death benefit, to which the plaintiffs were rightfully entitled, makes out the elements of either a money-had-and-received or an unjust-enrichment claim. Although quasi-contractual claims are generally precluded when an enforceable contract governs the parties' dealings, causes of action for money had and received and unjust enrichment may survive as alternative claims to breach of contract where, as here, the existence or efficacy of a contract is not conclusively established (see Goldman v. Simon Prop. Group, Inc., 58 AD3d 208, 220 [2008] ; see also Plumitallo v. Hudson Atl. Land Co., LLC, 74 AD3d 1038, 1039 [2010] ; Hochman v. LaRea, 14 AD3d 653, 654–655 [2005] ). Accordingly, dismissal as to the plaintiffs' money-had-and-received and unjust-enrichment claims must be denied.
(6)
A the plaintiff in a fraud action must show “a misrepresentation or a material omission of fact which was false and known to be false by the defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury” ‘ (Mandarin Trading Ltd. v. Wildenstein, 16 NY3d 173, 178 [2011], quoting Lama Holding Co., 88 N.Y.2d at 421 ; see also Salazar v. Sacco & Fillas, LLP, 114 AD3d 745, 746 [2014] ; Curtis–Shanley v. Bank of Am., 109 AD3d 634, 636 [2013], lv denied 22 NY3d 1133 [2014] ). A promissory statement may constitute a factual misrepresentation only if a plaintiff shows that the promisor harbored a concurrent, undisclosed intent not to honor the promise (see Venables v. Sagona, 85 AD3d 904, 906 [2011] ).
CPLR § 3016(b) requires that a plaintiff plead the circumstances of any purported fraud “in detail,” and the Appellate Division, Second Department, has treated this as requiring that “fraud must be pleaded with particularity so as to inform the defendant of the alleged wrongful conduct and give notice of the allegations plaintiff intends to prove” (McDonnell v. Bradley, 109 AD3d 592, 593 [2013] ; see also Greenberg v. Blake, ––– AD3d ––––, 2014 N.Y. Slip Op 03233, *1 [2014]; House of Spices [India], Inc. v. SMJ Servs., Inc., 103 AD3d 848, 850 [2013] ). Where the detailed circumstances of an alleged fraud may be only within the knowledge of a defendant, however, “the heightened pleading requirements of CPLR § 3016(b) may be met when the material facts alleged in the complaint, in light of the surrounding circumstances, are sufficient to permit a reasonable inference of the alleged conduct including the adverse party's knowledge of, or participation in, the fraudulent scheme” (House of Spices [India], Inc., 103 AD3d at 850 [internal quotation marks omitted]; see also Pludeman v. Northern Leasing Sys., Inc., 10 NY3d 486, 491–492 [2008] ).
In the case at bar the plaintiffs' complaint fails to plead fraud with the particularity required by CPLR § 3016(b) As to a factual misrepresentation, the complaint asserts only that Wurtzberger, Edward Pinkesz and Anthony Pinkesz “led Plaintiffs to belief [sic] that Plaintiffs would be the beneficiaries of the POLICY's Death Benefits.” The plaintiffs give no indication of the manner in which these defendants purportedly misled them or if they made any misrepresentations of fact in doing so. Furthermore, were an inference made that one or more of the defendants, at some point, promised that the plaintiffs would receive the Jacob–Policy death benefit, such a promise could be considered a factual misrepresentation only if the plaintiffs also established that the promisor had a concurrent intent not to perform (see Venables, 85 AD3d at 906 ). The plaintiffs fail to make a showing that disclosure of facts exclusively within the defendants' knowledge could sufficiently bolster their fraud claim, since they fail to adequately allege the facts that would have to be within their own knowledge, namely the factual misrepresentations on which they claim to have reasonably relied. Consequently, the dismissal motions must be granted as to the fraud cause of action.
(7)
A plaintiff establishes a breach of fiduciary duty by showing the existence of a fiduciary relationship, misconduct by the defendant fiduciary and damages caused by that misconduct (Faith Assembly v. Titledge of N.Y. Abstract, LLC, 106 AD3d 47, 61 [2013] ; Parekh v. Cain, 96 AD3d 812, 816 [2012] ). A fiduciary relationship may be found where a person “is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation” (Faith Assembly, 106 AD3d at 62 [internal quotation marks omitted] ), and an agent is generally treated as a fiduciary (see Sokoloff v. Harriman Estates Dev. Corp., 96 N.Y.2d 409, 416 [2001] ). Fiduciary duties include “undivided and undiluted loyalty to those whose interests the fiduciary is to protect” (Matter of Wallens, 9 NY3d 117, 122 [2007] ; see also Matter of Cooperman, 83 N.Y.2d 465, 472 [1994] ). Liability may also accrue if a defendant aided and abetted a fiduciary's breach of duty by knowingly providing substantial assistance to accomplish the breach (see Caprer v. Nussbaum, 36 AD3d 176, 193 [2006] ; Kaufman v. Cohen, 307 A.D.2d 113, 125 [2003] ). CPLR § 3016(b) requires that a breach-of-fiduciary-duty claim, like a fraud claim, be pleaded with particularity (Faith Assembly, 106 AD3d at 62 ; Parekh, 96 AD3d at 816 ).
Although the plaintiffs adequately allege that Wurtzberger may have acted as a fiduciary in facilitating their acquisition of the Jacob Policy, they fail to plead facts showing the type of reliance upon Edward Pinkesz, Anthony Pinkesz or the Beth Din defendants that would justify treating any of them as fiduciaries. Applying the extensive duties of a fiduciary, requiring a person to devote absolute loyalty to the interests of another, to the adverse parties to a transaction entered into by a principal's agent or to an arbitrator addressing a dispute between those parties would be nonsensical. Furthermore, the plaintiffs fail to plead with the requisite particularity that Edward Pinkesz, Anthony Pinkesz or the Beth Din defendants provided “substantial assistance” to any alleged breach by Wurtzberger (see Caprer, 36 AD3d at 193 ). Hence, the dismissal motions must be granted as to the plaintiffs' breach-of-fiduciary-duty claim.
(8)
Specific performance may constitute a proper breach-of-contract remedy when “the subject matter of the particular contract is unique and has no established market value” ‘ (Sokoloff, 96 N.Y.2d at 415, quoting Van Wagner Adv. Corp. v. S & M Enters., 67 N.Y.2d 186, 193 [1986] ; cf. Marinoff v. Natty Realty Corp., 34 AD3d 765, 767 [2006] [“(t)he determination of whether to grant or deny the equitable remedy of specific performance lies within the discretion of the court and the right to such relief is not automatic”], lv denied 8 NY3d 811 [2007] ). Specific performance may not be awarded, however, if money damages would adequately protect the plaintiff's expectation interest (Sokoloff, 96 N.Y.2d at 415 ; Express Shipping, Ltd. v. Gold, 63 AD3d 669, 672 [2009] ).
Here, the plaintiffs complain only of their deprivation of a sum of money, specifically the $5–million death benefit of the Jacob Policy. Accordingly, their expectation interest may be completely met by money damages. No basis exists to justify maintaining a separate claim for specific performance, which would, in any case, seem indistinguishable from the satisfaction of any damages award. Hence, the dismissal motions must be granted as to the plaintiffs' specific-performance claim.
(9)
A plaintiff seeking an accounting must allege money or property entrusted to the defendant, in which the plaintiff has an interest or which should be equitably divided (Sitar v. Sitar, 50 AD3d 667, 670 [2008] ; see also Schantz v. Oakman, 163 N.Y. 148, 157 [1900] ). Seeking an equitable accounting also requires that a plaintiff show an absence of any adequate remedy at law (Unitel Telecard Distrib. Corp. v. Nunez, 90 AD3d 568, 569 [2011] ; see McCabe v. Queensboro Farm Prods., 13 A.D.2d 674, 674 [1961] ). As discussed above, the plaintiffs' claimed harm may be adequately remedied by money damages. An equitable accounting in these circumstances is unnecessary, and, consequently, the dismissal motions must be granted as to this cause of action.
(10)
Generally, a plaintiff may not be awarded attorney's fees as part of a damages award unless such relief is specifically authorized by statute, rule or contract (Lemming v. Barnwell Nursing Home & Health Facilities, Inc., 15 NY3d 375, 379 [2010] ; Hooper Assoc. v. AGS Computers, 74 N.Y.2d 487, 491 [1989] ; Matter of Papke v. Dolan, 116 AD3d 779, 2014 N.Y. Slip Op 02442, *1 [2014] ). Here, the plaintiffs point to no statutory or contractual basis for awarding them attorney's fees. In opposition to the dismissal motions, they assert that the Court of Appeals' decision in City of Buffalo v. Clement Co. (28 N.Y.2d 241 [1971] ) supports additionally awarding attorney's fees “where there are fraudulent circumstances dictating unusual legal expenditures.” ‘ Contrary to the plaintiffs' assertion, that decision affirmed the denial of attorney's fees in the absence of statutory authority, reiterating that “these expenses are merely incidents of litigation” (Clement Co., 28 N.Y.2d at 262–263 ). Indeed, that decision contains none of the language that the plaintiffs ascribe to it nor any suggestion that exceptional legal expenses incurred in a fraud action permit the recovery of attorney's fees without explicit authorization. Consequently, the plaintiffs' claim for attorney's fees must be dismissed.
Punitive damages will generally result only where a defendant's conduct manifests “spite or malice, or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that the conduct may be called wilful or wanton” ‘ (Marinaccio v. Town of Clarence, 20 NY3d 506, 511 [2013], rearg. denied 21 NY3d 976 [2013], quoting Dupree v. Giugliano, 20 NY3d 921, 924 [2012], rearg. denied 20 NY3d 1045 [2013] ). Furthermore, to recover punitive damages for a contractual breach, a plaintiff must show that the defendant's conduct was independently tortious, that it was egregious, that it directly related to the plaintiff and that it was part of a pattern of conduct directed at the public (New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 316 [1995] ; see also Rocanova v. Equitable Life Assur. Socy. of U.S., 83 N.Y.2d 603, 613 [1994] [“where the breach of contract also involves a fraud evincing a high degree of moral turpitude’ and demonstrating such wanton dishonesty as to imply a criminal indifference to civil obligations', punitive damages are recoverable if the conduct was aimed at the public generally” ‘], quoting Walker v. Sheldon, 10 N.Y.2d 401, 404–405 [1961] ).
Here, the plaintiffs fail to allege that the defendants' purported contractual breach constituted part of a pattern directed at the public, and thus fail to plead facts that could justify punitive damages for their breach-of-contract claim. The plaintiffs sufficiently plead facts that could support a finding of wantonness or willfulness, however, potentially permitting punitive damages on their surviving tort claims, i.e., tortious interference with contract, conversion and breach of fiduciary duty.
(11)
Limited Liability Company Law § 610 states, “A member of a limited liability company is not a proper party to proceedings by or against a limited liability company, except where the object is to enforce a member's right against or liability to the limited liability company.” The reason for Shirley Elfie Life Trust's status as a plaintiff in this action is unclear. All purported underlying transactions and duties allegedly involved the defendants and PMH, and not Shirley Elfie Life Trust directly. The plaintiffs raise no arguments in opposition to the moving the defendants' position that all causes of action must be dismissed as asserted by Shirley Elfie Life Trust. Consequently, that portion of the dismissal motions must be granted.
The Motion To Compel Depositions
The plaintiffs urge the necessity of compulsory depositions on the basis that they lack sufficient knowledge of facts necessary to oppose the defendants' dismissal motions. As those dismissal motions are decided herein on the basis of the complaint's facial allegations, the plaintiffs' motion to compel depositions is moot and must be denied. Discovery and depositions shall, instead, proceed, as in any other action, in conformance with the schedule ordered pursuant to a preliminary conference. Furthermore, as discussed above, the plaintiffs' fraud claim could not have been saved by gaining knowledge exclusively held by the defendants, as the plaintiffs have failed to sufficiently allege even the elements of that claim which, logically, they would need to have had awareness. Accordingly, it is hereby
ORDERED that the plaintiffs' motion, via order to show cause, in sequence # 1, is denied as moot; and it is further
ORDERED that the Beth Din defendants' dismissal cross motion, in sequence # 2, is granted as to the causes of action for fraud, breach of fiduciary duty, equitable accounting and attorney's fees, as to the plaintiffs' demand for punitive damages in connection with their breach-of-contract claim, as to all causes of action as asserted by Shirley Elfie Life Trust and as to their request for leave to serve a responsive pleading within 10 days of the service of this order with notice of entry, pursuant to CPLR § 3024, and is otherwise denied; and it is further
ORDERED that the plaintiffs' motion, in sequence # 3, to compel depositions is denied as moot; and it is further
ORDERED that Edward Pinkesz's dismissal motion, in sequence # 4, is granted as to the causes of action for fraud, breach of fiduciary duty, specific performance, equitable accounting and attorney's fees, as to the plaintiffs' demand for punitive damages in connection with their breach-of-contract claim and as to all causes of action asserted by Shirley Elfie Life Trust, these are also denied; and it is further
ORDERED that Anthony Pinkesz's dismissal cross motion, in sequence # 5, is granted as to the causes of action for fraud, breach of fiduciary duty, specific performance, equitable accounting and attorney's fees, as to the plaintiffs' demand for punitive damages in connection with their breach-of-contract claim and as to all causes of action as asserted by Shirley Elfie Life Trust, these are also denied denied; and it is further
ORDERED that the caption is amended as follows:
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
Pinkesz Mutual Holdings LLC, Plaintiff,
against—Index No. 507958/13
Edward Pinkesz a/k/a Joseph Pinkesz a/k/a Chaim Yossi Pinkesz, Anthony Pinkesz a/k/a Ushi Pinkesz, Joel Wurtzberger, Israel Koenig and The Rabbinical Court Orech Mishor of Boro Park, Defendants.
This constitutes the decision and order of the court.