Court Opinion

ID: 4083643
Source: CourtListenerOpinion
Date Created: 2016-10-07 23:48:03.354296+00
Date Added: 2024-06-11T14:07:16.400098
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
              Appellate Division, Fourth Judicial Department

179
CA 13-00749
PRESENT: CENTRA, J.P., PERADOTTO, LINDLEY, SCONIERS, AND WHALEN, JJ.

EAST2WEST CONSTRUCTION COMPANY, LLC, AND
DAVID P. DURKIN, PLAINTIFFS-APPELLANTS,

                      V                             MEMORANDUM AND ORDER

THE FIRST REPUBLIC CORPORATION OF AMERICA,
HARRY BERGMAN, JOHN E. SILVERMAN, JAMES M.
GALLAGHER, THE HOLDER GROUP, INC., DREW
HOLDER, ALSO KNOWN AS ANDREW A. HOLDER, BETH
LATOUR, ALSO KNOWN AS ELIZABETH LATOUR COLLINS,
GLEICH, SIEGEL & FARKAS LLP,
DEFENDANTS-RESPONDENTS,
ET AL., DEFENDANTS.
(APPEAL NO. 1.)

D’ARRIGO & COTE, LIVERPOOL (MARIO D’ARRIGO OF COUNSEL), FOR
PLAINTIFFS-APPELLANTS.

MENTER, RUDIN & TRIVELPIECE, P.C., SYRACUSE (JULIAN B. MODESTI OF
COUNSEL), AND GLEICH, SIEGEL & FARKAS LLP, GREAT NECK, FOR
DEFENDANTS-RESPONDENTS.

     Appeal   from an order of the Supreme Court, Onondaga County
(Deborah H.   Karalunas, J.), entered October 24, 2012. The order,
among other   things, granted in part the motion of defendants-
respondents   to dismiss certain causes of action alleged in plaintiffs’
complaint.

     It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by denying that part of the motion
seeking to dismiss the seventh cause of action against defendant
Gleich, Siegel & Farkas LLP and to amend the caption to remove that
defendant therefrom and as modified the order is affirmed without
costs.

     Memorandum: Plaintiff East2West Construction Company, LLC (E2W)
entered into a contract with defendant The First Republic Corporation
of America (FRCA) for the construction of a hotel in Liverpool, New
York. FRCA allegedly failed to make certain payments pursuant to the
contract. E2W and its sole member and principal, plaintiff David P.
Durkin, thereafter commenced this action asserting causes of action
for, inter alia, breach of contract, diversion of trust funds, fraud
and deceit, conspiracy to defraud, and injury to property.
                                 -2-                          179
                                                        CA 13-00749

     In appeal No. 1, plaintiffs appeal from an order that, inter
alia, granted in part the motion of defendant Gleich, Siegel & Farkas
LLP (GSF) and the remaining defendants-respondents (collectively, FRCA
defendants) to dismiss certain causes of action. Contrary to
plaintiffs’ contention, Supreme Court properly dismissed the cause of
action for fraud, asserted only against FRCA. “At most, plaintiffs
allege that [FRCA] induced them to enter into a contract
[modification] that [FRCA] did not intend to honor[, and] such
allegations do not state a cause of action in fraud” (Makuch v New
York Cent. Mut. Fire Ins. Co., 12 AD3d 1110, 1111; see Niagara Foods,
Inc. v Ferguson Elec. Serv. Co., Inc., 86 AD3d 919, 919). As a
result, the court also properly dismissed the cause of action for
conspiracy to defraud against the FRCA defendants because “there is no
independent tort to provide a basis for liability under [any] concert
of action, conspiracy, and aiding and abetting theories” (Small v
Lorillard Tobacco Co., 94 NY2d 43, 57; see Brenner v American Cyanamid
Co., 288 AD2d 869, 869-870; Pappas v Passias, 271 AD2d 420, 421). As
with the cause of action for fraud, plaintiffs’ cause of action for
injury to property was also properly dismissed against the FRCA
defendants as duplicative of plaintiffs’ breach of contract causes of
action (cf. Albemarle Theatre v Bayberry Realty Corp., 27 AD2d 172,
177).

     We agree with plaintiffs, however, that the court erred in
granting that part of the motion of GSF and the FRCA defendants
seeking to dismiss the seventh cause of action, for diversion of trust
funds, against GSF, and to remove GSF from the caption of the case.
We therefore modify the order in appeal No. 1 accordingly. “An
improper diversion of the contractor’s trust assets occurs when any
such trust asset is paid, transferred or applied for a nontrust
purpose . . . before all of the trust claims have been paid or
discharged . . . A trust beneficiary may enforce its rights against
any nonbeneficiary who receives trust assets with knowledge of their
trust status” (Canron Corp. v City of New York, 89 NY2d 147, 154; see
Lien Law §§ 72 [1]; 77 [3] [a] [i], [vi]; LeChase Data/Telecom Servs.,
LLC v Goebert, 6 NY3d 281, 289; Fleck v Perla, 40 AD2d 1069, 1070).
We agree with plaintiffs that a prior order of the court stating that
GSF had returned a payment from FRCA does not defeat the allegation in
the complaint that GSF received trust funds diverted by FRCA, inasmuch
as the allegation did not specify a precise amount (cf. generally CPLR
3211 [a] [1]).

     In appeal No. 2, plaintiffs appeal from an order that granted the
motion of defendants Quinlivan, Pierik & Krause A/E, doing business as
QPK Designs, Vincent Nicotra, and Linda K. Storrings (collectively,
QPK defendants) to dismiss the complaint against them. The order also
denied without prejudice E2W’s cross motion to certify a class. The
only causes of action asserted against the QPK defendants were those
for conspiracy to defraud and injury to property, and we likewise
conclude for the reasons set forth above that those causes of action
were properly dismissed against the QPK defendants (see Small, 94 NY2d
at 57; cf. Albemarle Theatre, 27 AD2d at 177). Finally, contrary to
plaintiffs’ contention, “the court properly exercised its discretion .
                                 -3-                          179
                                                        CA 13-00749

. . in denying class action certification . . . in light of the
failure to set forth evidentiary facts to support such request”
(Matros Automated Elec. Constr. Corp. v Libman, 37 AD3d 313, 313; see
CPLR 901, 902; Yonkers Contr. Co. v Romano Enters. of N.Y., 304 AD2d
657, 658-659).

Entered:   March 21, 2014                      Frances E. Cafarell
                                               Clerk of the Court