Opinion
Index No: 90/14
01-27-2016
HELEN SKARLA Plaintiff, v. NPSFT LLC, NPSFTI LLC, ELDRIDGE PROPERTIES, INC., VISIONS FEDERAL CREDIT UNION d/b/a PARAGON FEDERAL UNION, KOSTAS GOLFINOPOULOS, ESQ., KOSTAS GOLFINOPOULOS, ESQ., PLLC, and STEVEN W. STUTMAN, ESQ. Defendants.
Short Form Order Present: HONORABLE ALLAN B. WEISS Justice Motion Date: 7/20/15 Motion Seq. No.: 15 The following papers read on this motion by defendants Kostas Golfinopoulos, Esq. and Kostas Golfinopoulos, Esq., PLLC (collectively defendants Golfinopoulos) pursuant to CPLR 3211 and 3212 for summary judgment dismissing the complaint insofar as asserted against them and this cross motion by plaintiff pursuant to CPLR 3212(f) and 3101 to compel disclosure, and lift the protective order entered on March 30, 2015, with respect to discovery of bank accounts.
| PapersNumbered | |
|---|---|
| Notice of Motion - Affidavits - Exhibits | 1 - 7 |
| Notice of Cross Motion - Affidavits - Exhibits | 8 - 13 |
| Answering Affidavits - Exhibits | 14 - 16 |
| Reply Affidavits | 17 - 20 |
Upon the foregoing papers it is ordered that the motion and cross motion are determined as follows:
Plaintiff commenced this action on January 6, 2014, asserting various claims, including causes of action against defendants Golfinopoulos for breach of fiduciary duty, fraud in the inducement, constructive fraud, fraudulent concealment, unjust enrichment, and constructive trust. Plaintiff sought to set aside the judicial sale of the real properties known as 329 150th Street, Whitestone, New York (Block 4507, Lot 8) (the Whitestone property) (a residential property) and 23-33 31st Street, Long Island City, New York (Block 835, Lot 25) (the Long Island City property) (a commercial mixed-use property) (together "the mortgaged premises") held on May 3, 2013 pursuant to the judgment of foreclosure and sale entered in the action entitled Eldridge Properties, Inc. v Skarla, (Supreme Court, Queens County, Index No. 10936/2007) (the foreclosure action), void the referee's deed to Eldridge Properties, Inc. (Eldridge), and the deeds from Eldridge to NPSFT LLC (NPSFT) and NPSFT 1 LLC (NPSFT1) (the NPSFT entities), impose a constructive trust on the Whitestone and Long Island City properties, pierce the veils of the corporate defendants so as to recover damages individually from their officers, directors and employees, and for injunctive relief. Plaintiff alleged that due to the purported wrongful acts of defendants, she was unlawfully deprived of the Whitestone and Long Island City properties, and equity therein, through foreclosure and sale in the foreclosure action.
Defendants Golfinopoulos served a joint answer, asserting various affirmative defenses, including the failure to state a cause of action and the expiration of the applicable statute of limitations. Defendants Golfinopoulos previously moved for partial summary judgment pursuant to CPLR 3212 dismissing the eighth and eleventh causes of action insofar as asserted against them and the demand for an award of attorneys' fees. By order dated June 17, 2014 and entered on June 19, 2014, the motion was granted.
Thereafter, by order dated July 28, 2014, the action entitled Skarla v Golfinopoulos (Supreme Court, Index No. 7649/2014) was consolidated with the instant action. In that second action (Index No. 7694/2014), plaintiff Helen Skarla named Kostas Golfinopoulos, Esq. and Steven W. Stutman, Esq. as party defendants and asserted causes of action against defendant Golfinopoulos for legal malpractice and "attorney misconduct and deceit," and sought compensatory, consequential, punitive and treble damages. By order dated December 8, 2014, the complaint insofar as asserted against defendant Steven Stutman, Esq. was dismissed and the remainder of the action was severed.
Meanwhile, by order dated October 17, 2014 in the foreclosure action, the judicial sale of the Whitestone and Long Island City properties was vacated, and the referee's deed to Eldridge, and the subsequent deeds dated June 5, 2013 from Eldridge were stricken from the records of the City Register. By virtue of the vacatur of the foreclosure sale and setting aside of the deeds, record title of the mortgaged premises was returned to plaintiff.
The NPSFT entities filed a notice of appeal of the October 17, 2014 order in the foreclosure action.
Defendants Golfinopoulos move pursuant to CPLR 3211 and 3212 for summary judgment dismissing the remainder of the complaint (originally filed under Index No. 90/2014) insofar as asserted against them. Those causes of action are based upon breach of fiduciary duty (first cause of action), fraud in the inducement (third cause of action), constructive fraud (fourth cause of action), fraudulent concealment (fifth cause of action), to set aside the foreclosure sale (sixth cause of action), unjust enrichment (seventh cause of action), imposition of a constructive trust (ninth cause of action), an injunction against the sale of the properties (tenth cause of action) and to pierce the corporate veil of Kostas Golfinopoulos, PLLC (twelfth cause of action). The cause of action based upon aiding and abetting defendants Golfinopoulos in the breach of their fiduciary duty (second cause of action) is not asserted against defendants Golfinopoulos.
Since the consolidation of the action under Index No. 7649/2014 into this action, no party has moved for leave to amend the pleadings to reflect the consolidation. Consolidation, however, serves to merge completely the two actions, such that the actions do not retain their original identity (see Vincent C. Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C602:2). It does not appear that defendant Kostas Golfinopoulos, Esq. served an answer to the causes of action asserted against him in the complaint originally filed in the action under Index No. 7649/2014. Under such circumstances, it appears that issue has not been joined with respect to such claims-- which may explain the statement by counsel for defendants Golfinopoulos that the instant motion is not directed as against the causes of action asserted against defendant Kostas Golfinopoulos, Esq. in the complaint originally filed under Index No. 7649/2014.
Plaintiff opposes the motion by defendants Golfinopoulos and seeks to lift the protective order entered on March 30, 2015, with respect to bank records produced by Citibank, N.A. (Citibank), a nonparty, in response to a subpoena duces tecum dated May 23, 2014 served by plaintiff's former counsel, so that she may use those bank records and information relating to the contents of such records, to defend against the motion by defendants Golfinopoulos. She also seeks to avail herself of CPLR 3212(f) to defeat or delay that portion of the motion by defendants Golfinopoulos which seeks summary judgment dismissing the remaining causes of action asserted against them.
Statements in a pleading shall be sufficiently particular to give the court and parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved and the material elements of each cause of action (CPLR 3013). CPLR 3016 requires that a claim of fraud be asserted in detail. On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the pleading is afforded a liberal construction and the court must give the plaintiff "the benefit of every possible favorable inference, accept the facts alleged in the complaint as true, and determine only whether the facts as alleged fit within any cognizable legal theory" (High Tides, LLC v. DeMichele, 88 AD3d 954, 956 [2d Dept 2011] [internal quotation marks omitted]; see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; McDonnell v Bradley, 109 AD3d 592, 593 [2d Dept 2013]). It is well established that the proponent of a summary judgment motion "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact," (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980]).
The court notes at the outset that successive motions for summary judgment are generally disfavored absent a showing of newly discovered evidence or other sufficient cause (see e.g. Rocky Point Drive-In, L.P. v Town of Brookhaven, 37 AD3d 805 ; Tingling v C.I.N.H.R., Inc., 120 AD3d 570 [2d Dept 2014]). The court, however, shall entertain the motion by defendants Golfinopoulos because the vacatur of the foreclosure sale of the mortgaged premises and the setting aside of the various deeds, raises the question of whether the first, third, fourth, fifth, sixth, seventh, ninth, tenth and twelfth causes of action, insofar as asserted against defendants Golfinopoulos, remain viable.
With respect to the claims asserted against defendants Golfinopoulos to set aside the sale of the mortgaged premises, void the referee's deed, and subsequent deeds, impose a constructive trust on the properties, and enjoin defendants Golfinopoulos from interfering with plaintiff's use, occupancy and ownership of the properties, the foreclosure sale was vacated and the deeds were set aside, and record title was restored to plaintiff. Plaintiff makes no allegation in the complaint of any claimed adverse estate or interest by, or occupancy of, defendants Golfinopoulos in the Whitestone or Long Island City properties and defendants Golfinopoulos assert they do not claim any interest in those properties. Plaintiff has made no claim or offered any proof that defendants Golfinopoulos have interfered with her use, occupancy or ownership of the properties since the restoration of her title. Under such circumstances, the sixth, seventh, ninth and tenth causes of action insofar as asserted against defendants Golfinopoulos no longer state a claim.
To the extent the cause of action for breach of fiduciary duty insofar as asserted against defendants Golfinopoulos is predicated upon plaintiff's allegation that those defendants gave her "poor" advice when advising her to mortgage both the Whitestone and Long Island City properties in connection with her purchase of the Whitestone property in or around 2004, such allegation violates the three-year statute of limitations which applies to a claim for money damages arising from the rendition of a professional service (see CPLR 214). It is not saved by any toll premised upon a claim of continuous representation, because any representation by defendants Golfinopoulos, regarding the mortgage transaction, ended with the mortgage loan closing in 2004 (see Dignelli v Berman, 293 AD2d 565 [2d D ept 2002]). Any subsequent representation by defendants Golfinopoulos of plaintiff relative to the properties does not warrant application of the doctrine in connection with the claimed poor advice allegedly given in 2004 regarding the mortgaging of the properties. In addition, such alleged poor advice relative to the 2004 mortgage transaction is barred by the six-year statute of limitations applicable to plaintiff's fraud and unjust enrichment claims insofar as asserted against defendants Golfinopoulos (see CPLR 213[1], [8]; Coombs v Jervier, 74 AD3d 724 [2d Dept 2010]). Thus, plaintiff cannot pierce the corporate veil of defendant Kostas Golfinopoulos, Esq., PLLC to recover damages from defendant Kostas Golfinopoulos, Esq., for such alleged poor advice relative to the mortgaging of the properties.
Defendants Golfinopoulos assert that because the foreclosure sale of the properties and the deeds have been set aside, plaintiff has suffered no cognizable injury to support the remainder of the causes of action (i.e., those portions not barred by the applicable statutes of limitations) based upon breach of fiduciary duty and fraud insofar as asserted against them. In an action for breach of fiduciary duty or fraud, injury is a required element of the cause of action (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]; Channel Master Corp. v Aluminium Ltd. Sales, 4 NY2d 403, 407 [1958]; Kurtzman v Bergstol, 40 AD3d 588, 590 [2d Dept 2007]).
Plaintiff alleges that during the period of the engagement of defendants Golfinopoulos, Golfinopoulos schemed with Steven Louros, Esq. to defraud her and enable defendants Eldridge and the NPSFT entities, companies with whom Golfinopoulos was purportedly associated, to acquire the mortgage loan and obtain the properties at a severely discounted value at foreclosure, and divest her of all ownership interest. Plaintiff also alleges that defendants Golfinopoulos breached their fiduciary duties to her by engaging in self-dealing and acting for the benefit of defendants Eldridge and the NPSFT entities rather than for her benefit. According to plaintiff, defendants Golfinopoulos conspired with Louros to acquire the note and mortgage on behalf of defendant Eldridge, and then received disbursed moneys from defendant Eldridge after the transfer of the parcels to the NPSFT entities. She alleges she suffered injuries including becoming homeless as a result of the reliance on the alleged advice of defendants Golfinopoulos to rent out her home in an effort to generate income, incurring legal fees to defendants Golfinopoulos relative to their representation of her in connection with the foreclosure action, incurring of expenses and legal fees related to the efforts to set aside the foreclosure sale and subsequent deeds, and incurring, during the period of her divestment of title, water damage to and building violations on the Whitestone property. Plaintiff hence has sufficiently alleged the element of injury to state causes of action based upon breach of fiduciary duty and fraud insofar as asserted against defendants Golfinopoulos.
Defendants Golfinopoulos furthermore have failed to establish their prima facie showing of entitlement to summary judgment dismissing the remainder of the causes of action (i.e., those portions not barred by the applicable statutes of limitations) based upon breach of fiduciary duty and fraud insofar as asserted against them. They have not addressed the factual issues regarding whether defendants Golfinopoulos acted on behalf of defendant Eldridge in the acquisition of the note and mortgage and the conveyance of the properties to the NPSFT entities. Questions of fact also exist as to whether defendants Golfinopoulos committed any misconduct constituting breach of fiduciary duty, fraud in the inducement, constructive fraud and fraudulent concealment (see Zuckerman v City of New York, 49 NY2d 557; see also Heaven v McGowan, 40 AD3d 583, 584 [2d Dept 2007]). Contrary to the assertion of defendants Golfinopoulos, the complaint sufficiently details the allegations of fraud (see CPLR 3016).
It appears that Kostas Golfinopoulos, Esq. practiced law in his individual capacity, and at some point thereafter, formed defendant Kostas Golfinopoulos, Esq., PLLC. He admittedly serves as the professional limited liability company's "principal." As a twelfth cause of action, plaintiff re-alleges the allegations set forth in the paragraphs numbered 1 through 144, including that she retained "Golfinopoulos" as her counsel. She also sets forth as an allegation (paragraph 146), the legal standard for establishing a basis to pierce a corporate veil to hold a defendant owner of a corporation personally liable for the injuries to a plaintiff. She further alleges that "Golfinopoulos cannot hide behind [defendant Kostas Golfinopoulos, Esq., PLLC] to defraud [plaintiff]" (paragraph 147). Such allegations do not themselves support a claim, and furthermore, New York does not recognize a separate cause of action to pierce the corporate veil (see DiMauro v United, LLC, 122 AD3d 568 [2d Dept 2014]; Rosen v Kessler, 51 AD3d 761, 761 [2d Dept 2008]). The court notes, however, that an individual may be liable for fraud or a tort without piercing the corporate veil if it is proved that he or she participated in and benefitted from the fraudulent or tortious conduct (see D'Mel & Assoc. v Athco, Inc., 105 AD3d 451, 452 [1st Dept 2013]; Rajeev Sindhwani, M.D., PLLC v Coe Business Service, Inc., 52 AD3d 674 [2d Dept 2008] [a corporate officer who participates in the commission of a tort may be held individually liable, regardless of whether the officer acted on behalf of the corporation in the course of official duties and regardless of whether the corporate veil is pierced [internal quotation marks omitted]). In this instance, there are claims based upon breach of fiduciary duty and fraud which remain asserted against defendants Golfinopoulos.
The motion by defendants Golfinopoulos is granted to the extent of dismissing (1) the sixth, seventh, ninth and tenth causes of action insofar as asserted against defendants Golfinopoulos (in the complaint filed under Index No. 90/2014), (2) so much of the complaint which asserts a claim for breach of fiduciary duty and fraud insofar as asserted against defendants Golfinopoulos predicated upon an allegation that those defendants gave her "poor" advice in relation to mortgaging the Whitestone and Long Island City properties in connection with her purchase of the Whitestone property, and (3) the twelfth cause of action insofar as asserted against defendants Golfinopoulos and denied as to the remaining causes of action.
To the extent plaintiff seeks to lift the protective order, that branch of her cross motion is in fact an attempt to reargue the prior motions by defendant Eldridge for a protective order and by defendant Golfinopoulos to suppress the information related to the contents of the records produced by Citibank. Defendant Eldridge previously moved for a protective order relative to the bank records produced by Citibank in response to a subpoena duces tecum, and defendants Golfinopoulos had separately moved for, among other things, to suppress all documents produced by Citibank in response to the subpoena. Plaintiff opposed the motions, asserting the records were relevant to the issue of whether defendant Eldridge was used as a "conduit" for the layering of the transactions by the other defendants in an effort to try to disguise their fraudulent scheme to obtain her properties. By order dated March 30, 2015, the court determined that plaintiff failed to show that the Citibank records were material and necessary to the prosecution of her claims, and precluded plaintiff from "making use of any of the documents produced by Citibank in response to the May 23, 2014 subpoena duces tecum," and suppressed the information related to the contents of such records produced by Citibank.
On a motion for leave to reargue, the movant must demonstrate matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion (CPLR 2221[d][2]). A motion for leave to reargue is addressed to the sound discretion of the court (see Deutsche Bank Nat. Trust Co. v Ramirez, 117 AD3d 674 [2d Dept 2014]; HSBC Bank USA, N.A. v Halls, 98 AD3d 718 [2d Dept 2014]). Nevertheless, a motion for leave to reargue is not designed to provide an unsuccessful party with successive opportunities to reassert or propound the same arguments previously advanced, or to present arguments different from those already presented (see Ahmed v Pannone, 116 AD3d 802 [2d Dept 2014]; Matter of Anthony J. Carter, DDS, P.C. v Carter, 81 AD3d 819, 820 [2d Dept 2011]). Plaintiff has failed to demonstrate that the court overlooked or misapprehended any matters of fact or law in determining the prior motions by defendant Eldridge for a protective order, and by defendants Golfinopoulos to suppress the information related to the contents of the records produced by Citibank.
Moreover, that branch of the cross motion by plaintiff for reargument is untimely, having been made after the expiration of the 30-day statutory period for a motion for leave to reargue (CPLR 2221[d][3]). A party may not, by the simple expedient of styling his or her application in some alternative form, circumvent the 30-day time limit for bringing a motion to reargue (CPLR 2221[d][3]).
Thus, that branch of the plaintiff's cross motion for, in effect, leave to reargue the prior motions by defendant Eldridge for a protective order, and by defendants Golfinopoulos to suppress the information related to the contents of the records produced by Citibank is denied.
To the extent plaintiff otherwise seeks to compel disclosure, a party is first required to use the disclosure devices pursuant toArticle 31 of the CPLR. Plaintiff has failed to show she has served any disclosure demand, etc., upon defendants Golfinopoulos and that they failed to respond to or comply with it. Under such circumstances, plaintiff has failed to demonstrate the need for court assistance relative to obtaining disclosure at this juncture. That branch of the cross motion by plaintiff to compel disclosure is denied. Dated: January 27, 2016
/s/_________
J.S.C.