Opinion
327 Index No. 652507/21 Case No. 2022-02867
05-25-2023
SUREFIRE DIVIDEND CAPTURE, LP, Plaintiff–Appellant, v. INDUSTRIAL AND COMMERCIAL BANK OF CHINA FINANCIAL SERVICES LLC, Defendant–Respondent.
Oved & Oved LLP, New York (Glen Lenihan of counsel), for appellant. Schulte Roth & Zabel LLP, New York (Elizabeth Curran of counsel), for respondent.
Oved & Oved LLP, New York (Glen Lenihan of counsel), for appellant.
Schulte Roth & Zabel LLP, New York (Elizabeth Curran of counsel), for respondent.
Manzanet–Daniels, J.P., Singh, Moulton, Shulman, Higgitt, JJ.
Order, Supreme Court, New York County (Barry R. Ostrager, J.), entered on or about June 3, 2022, which, to the extent appealed from, granted defendant's motion to dismiss with prejudice the claims for aiding and abetting fraud and aiding and abetting breach of fiduciary duty for lack of standing, unanimously affirmed, with costs.
Defendant met its burden of establishing that plaintiff lacked standing to bring its fraud-based claims on behalf of nonparties Aalii Fund, LP and Alpha Capital Partners, LC (together, the "A Funds") (see e.g. DLJ Mtge. Capital v. Mahadeo, 166 A.D.3d 512, 513, 89 N.Y.S.3d 26 [1st Dept. 2018] ). While fraud claims in New York are freely assignable, "the right to assert a fraud claim related to a contract or note does not automatically transfer with the respective contract or note" ( Commonwealth of Pennsylvania Pub. Sch. Employees' Retirement Sys. v. Morgan Stanley & Co., Inc., 25 N.Y.3d 543, 550, 14 N.Y.S.3d 313, 35 N.E.3d 481 [2015] ). Thus, where a plaintiff alleges fraud-based claims as a successor-in-interest under New York law, there must be "some language – although no specific words are required – that evinces that intent and effectuates the transfer of such rights" ( id. at 550, 14 N.Y.S.3d 313, 35 N.E.3d 481 ).
Here, the one-paragraph subscription agreement provided only for the transfer of the "full balance of [A Funds’] interest in Broad Reach Capital LP to Sure Fire Dividend Capture SPV5 ... for the purposes of facilitating an in-kind subscription to the Fund in the amount of its 2/28/19 balance." This plain language was unambiguous and did not evince an intent to assign the fraud-based claims ( id . ; see also Dexia SA/NV v. Morgan Stanley , 135 A.D.3d 497, 497, 22 N.Y.S.3d 833 [1st Dept. 2016], lv denied 28 N.Y.3d 903, 2016 WL 4820516 [2016] ). Rather, the transfer of the "amount of its 2/28/19" balance plainly refers to the transfer of the amount invested in the fund, with nothing more. Nor may plaintiff insert extra-contractual allegations of intent into an agreement that is unambiguous on its face (see Ark Bryant Park Corp. v. Bryant Park Restoration Corp. , 285 A.D.2d 143, 150, 730 N.Y.S.2d 48 [1st Dept. 2001] ).
The court's dismissal of the claims with prejudice was proper. Regardless of whether plaintiff could demonstrate that it and "SureFire Dividend Capture SPV5" – the entity named in the subscription agreement – were the same entity, no discovery will change the fact that the subscription agreement does not evince an intent to assign fraud-based claims. Thus, any amendment would be futile (see Triad Intl. Corp. v. Cameron Indus., Inc., 122 A.D.3d 531, 532, 998 N.Y.S.2d 13 [1st Dept. 2014] ).