Court Opinion

ID: 2751706
Source: CourtListenerOpinion
Date Created: 2014-11-14 20:05:15.432777+00
Date Added: 2024-06-11T11:26:41.205795
License: Public Domain

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

908
CA 13-02239
PRESENT: SMITH, J.P., FAHEY, LINDLEY, WHALEN, AND DEJOSEPH, JJ.

RACHEL HECKL, PERSONAL NEEDS GUARDIAN OF AIDA
COREY, AN INCAPACITATED INDIVIDUAL, THOMAS J.
COREY AND OLIVIA J. COREY, CO-PROPERTY
GUARDIANS OF AIDA COREY, AN INCAPACITATED
INDIVIDUAL, AND PERMCLIP PRODUCTS CORPORATION,
PLAINTIFFS-RESPONDENTS,

                    V                                MEMORANDUM AND ORDER

DANIEL M. WALSH, FRANK PANARO, ET AL., DEFENDANTS,
HSBC NORTH AMERICA, INC. AND HSBC BANK USA N.A.,
DEFENDANTS-APPELLANTS.
(APPEAL NO. 2.)

JAECKLE FLEISCHMANN & MUGEL, LLP, BUFFALO (BRADLEY A. HOPPE OF
COUNSEL), FOR DEFENDANTS-APPELLANTS.

LIPPES MATHIAS WEXLER FRIEDMAN LLP, BUFFALO (BRENDAN H. LITTLE OF
COUNSEL), FOR PLAINTIFFS-RESPONDENTS.

     Appeal from an order of the Supreme Court, Erie County (John A.
Michalek, J.), entered June 18, 2013. The order, among other things,
granted plaintiffs’ motion seeking leave to reargue and, upon
reargument, denied those parts of the motions of defendants Frank
Panaro, HSBC North America, Inc. and HSBC Bank USA N.A. to dismiss the
fraud cause of action as asserted by plaintiff Permclip Products
Corporation.

     It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by granting those parts of the motion
of defendants HSBC North America, Inc. and HSBC Bank USA N.A. to
dismiss the conversion and replevin causes of action against them and
as modified the order is affirmed without costs.

     Memorandum: Plaintiff guardians and plaintiff Permclip Products
Corporation (Permclip) commenced this action asserting causes of
action for conversion, replevin and fraud in connection with the
alleged embezzlement of funds by defendants Daniel M. Walsh and Frank
Panaro from Aida Corey, the incapacitated individual represented by
plaintiff guardians and the widow of Permclip’s founder. HSBC North
America, Inc. and HSBC Bank USA N.A. (HSBC defendants) are alleged to
be vicariously liable as Panaro’s employer.

     By the order in appeal No. 1, Supreme Court, inter alia, granted
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                                                         CA 13-02239

those parts of the motions of Panaro and the HSBC defendants to
dismiss the amended complaint as asserted by Permclip pursuant to CPLR
3211 (a) (5) and denied those parts of the motions of Panaro and the
HSBC defendants to dismiss the amended complaint as asserted by
plaintiff guardians pursuant to CPLR 3211 (a) (7) and 3016 (b). By
the order in appeal No. 2, the court granted plaintiffs’ motion for
leave to reargue and, upon reargument, denied those parts of the
motions of the HSBC defendants and Panaro to dismiss the fraud cause
of action as asserted by Permclip, and otherwise adhered to its prior
decision. The HSBC defendants now appeal.

     We note at the outset that the appeal by the HSBC defendants from
the order in appeal No. 1 must be dismissed because that order was
superseded by the order in appeal No. 2 (see generally Loafin’ Tree
Rest. v Pardi [appeal No. 1], 162 AD2d 985, 985). We further note
that, although plaintiffs purport to cross-appeal from the order in
appeal No. 1, their brief on appeal seeks only an affirmance.
Inasmuch as plaintiffs did not timely perfect a cross appeal seeking
affirmative relief, their cross appeal was deemed dismissed (see
generally 22 NYCRR 1000.12 [b]; Edgett v Clarelli, 72 AD3d 1635,
1635).

     It is well settled that, “ ‘[i]n considering a motion to dismiss
for failure to state a cause of action pursuant to CPLR 3211 (a) (7),
the facts pleaded must be presumed to be true and accorded every
favorable inference, and the sole criterion is whether from [the
complaint’s] four corners factual allegations are discerned which
taken together manifest any cause of action cognizable at law’ ”
(Stormes v United Water N.Y., Inc., 84 AD3d 1352, 1353).

     Here, we conclude that the court erred in denying those parts of
the motion of the HSBC defendants with respect to plaintiff guardians’
causes of action for conversion and replevin, but properly denied that
part of the motion with respect to plaintiffs’ fraud cause of action.
We therefore modify the order in appeal No. 2 accordingly.

     Addressing first the replevin cause of action, we note that
replevin is a remedy employed to recover a specific, identifiable item
of personal property (see Khoury v Khoury, 78 AD3d 903, 904), and
“[o]rdinary currency, as a rule, is not subject to replevin” (Matter
of Equitable Life Assur. Socy. of U.S. v Branch, 32 AD2d 959, 960).
Unless the currency can be specifically identified, i.e., it consists
of specific, identifiable bills or coins, replevin does not lie (see
id.). Here, the amended complaint alleges that the individual
defendants “have used some or all of Aida Corey’s $4 million in cas[h]
to purchase real and personal property and other tangible assets” and
that they “have taken approximately $4 million of Aida Corey’s cash
and/or personal property.” The sole focus of the parties, both in
Supreme Court and on appeal, however, has been on the money allegedly
taken by the HSBC defendants, and we therefore deem abandoned any
allegations by plaintiffs concerning personal property (see Ciesinski
v Town of Aurora, 202 AD2d 984, 984). We thus conclude that the
amended complaint fails to state a cause of action for replevin,
because there is no “specifically identified” money that plaintiffs
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                                                         CA 13-02239

seek to recover (Equitable Life Assur. Socy. of U.S., 32 AD2d at 960).

     With respect to the plaintiff guardians’ cause of action for
conversion, the amended complaint likewise alleges that the individual
defendants “have taken approximately $4 million of Aida Corey’s cash
and/or personal property,” but as with the replevin cause of action we
conclude that plaintiffs have abandoned any allegations concerning
personal property (see Ciesinski, 202 AD2d at 984). Money may be the
subject of a cause of action for conversion only if “it can be
identified and segregated as a chattel can be” (Payne v White, 101
AD2d 975, 976), i.e., “where there is a specific, identifiable fund”
(Manufacturers Hanover Trust Co. v Chemical Bank, 160 AD2d 113, 124,
lv denied 77 NY2d 803; see Thys v Fortis Sec., 74 AD3d 546, 547).
Contrary to the contentions of plaintiff guardians, the sums allegedly
converted here do not constitute the type of specific, identifiable
fund that would support a conversion cause of action (see 9310 Third
Ave. Assoc. v Schaffer Food Serv. Co., 210 AD2d 207, 208; see also
Vital Crane Servs., Inc. v Micucci, 118 AD3d 1404, 1405).

     Contrary to the contention of the HSBC defendants, however, the
court properly refused to dismiss the fraud cause of action against
them. A fraud cause of action must allege that the defendant: (1)
made a representation to a material fact; (2) the representation was
false; (3) the defendant intended to deceive the plaintiff; (4) the
plaintiff believed and justifiably relied on the statement and in
accordance with the statement engaged in a certain course of conduct;
and (5) as a result of the reliance, the plaintiff sustained damages
(see Ross v Louis Wise Servs., Inc., 8 NY3d 478, 488). The
allegations in the complaint must set forth the “basic facts
constituting the fraud” (Pace v Raisman & Assoc., Esqs., LLP, 95 AD3d
1185, 1189), to “inform a defendant of the complained-of incidents”
(Eurycleia Partners, LP v Seward & Kissell, LLP, 12 NY3d 553, 559).
The Court of Appeals has “cautioned that [CPLR] 3016 (b) should not be
so strictly interpreted as to prevent an otherwise valid cause of
action in situations where it may be impossible to state in detail the
circumstances constituting the fraud” (Pludeman v Northern Leasing
Sys., Inc., 10 NY3d 486, 491 [internal quotation marks omitted]).
Here, much of the detail surrounding the alleged fraud is
“ ‘peculiarly within the knowledge’ ” of the individual defendants and
the HSBC defendants, and we agree with plaintiffs that an inference of
fraud arises from the circumstances alleged in the amended complaint
(id.; see Matter of Gordon v Bialystoker Ctr. & Bikur Cholim, 45 NY2d
692, 698-699; Sepulveda v Aviles, 308 AD2d 1, 8; Spatz v Bajramoski,
214 AD2d 436, 436-437).

     In view of our decision, there is no need to address the
remaining contentions of the HSBC defendants.

     As a final point, we note that prior to oral argument this Court
was made aware of the existence of a second amended complaint, which
is not included in the record before us, and counsel for plaintiffs
contended at oral argument that the second amended complaint renders
this appeal moot. Plaintiffs did not properly seek that relief by way
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                                                         CA 13-02239

of motion, even though there was adequate time in which to do so, and
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                                                            CA 13-02239

thus their contention is not properly before us.

Entered:   November 14, 2014                       Frances E. Cafarell
                                                   Clerk of the Court