Anderson v. Greene
| Decision Date | 10 August 2016 |
| Docket Number | 14 Civ. 10249 (KPF) |
| Parties | KEVIN CARROLL ANDERSON, Plaintiff, v. ARTHUR B. GREENE, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Kevin Carroll Anderson brought suit against accountant Arthur B. Greene ("Greene"), and accounting firms Arthur B. Greene & Company, P.C. ("ABG Co.," and with Greene, the "Greene Defendants"), and Marks, Paneth & Shron LLP ("MPS," and collectively with the Greene Defendants, "Defendants"), alleging breach of fiduciary duty based on a theory of constructive fraud and legal malpractice. Defendants now move to dismiss Plaintiff's Third Amended Complaint on the grounds that (i) the statute of limitations for all claims expired prior to the filing of Plaintiff's lawsuit, and (ii) Plaintiff has not stated a claim upon which relief can be granted. The Court has exercised its discretion to convert the motions into motions for summary judgment insofar as they relate to Defendants' limitations-based arguments. And, for the reasons discussed below, Defendants' motions are granted in part and denied in part; all of Plaintiff's claims are dismissed, with the exception of his claims against Greene and MPS for breach of fiduciary duty relating to his 2009 and 2010 tax returns.
Plaintiff alleges that Greene served, from 1990 until at least 2012, as his "lawyer, tax advisor, CPA, bookkeeper, financial planner, investment advisor, and overall business manager." (TAC ¶ 8). At the beginning of the relationship, Greene worked at ABG Co.; in 2009, Plaintiff states, ABG Co. merged with MPS, and Greene thereafter provided services from MPS. (Id. at ¶ 5). Initially, Greene worked only as Plaintiff's accountant; after about fiveyears, in 1990, Greene approached Plaintiff with an offer to provide "full business management services." (Id. at ¶ 22). These services were detailed in a prospectus dated November 7, 1990, followed by a meeting on December 4, 1990, which Plaintiff transcribed and has termed a "verbal contract." (Id. at ¶¶ 22-23; TAC, Ex. 1A, 1B).2
Greene "represented to [Plaintiff] that he was a financial expert" who could manage and invest Plaintiff's money more aptly than Plaintiff, and thus, he would "maintain[] full custodial control and signature authority" on all of Plaintiff's accounts. (TAC ¶¶ 9-10). As Plaintiff enumerates, the written prospectus indicates that Greene would "be responsible for":
planning the financial future of [Plaintiff], contract negotiations, receipt of all income, deposit[ing] all earnings, drawing checks to pay bills, maintaining records, all tax returns, wills, trusts, estate planning, insurance, supervision of investment program, determination of asset purchases, and all financial planning for an annual fee of 5% of yearly gross professional earnings.
(Id. at ¶ 24). Plaintiff claims that Greene "received all monies and mail" for him, and "recommended" that he (Greene) have durable and individual power of attorney. (Id. at ¶ 10). Further, Greene created a corporation for Plaintiff, Joe Coyote Inc. ("JCI"), and served as Secretary and Treasurer of that corporation. (Id. at ¶ 9).
Plaintiff asserts that, by virtue of Greene's role as his accountant, a fiduciary relationship existed; Greene also "rendered personal financial, investment, and tax advice," and managed Plaintiff's "assets and business," including his defined contribution pension fund. (TAC ¶ 12). Plaintiff claims Greene had "complete and total control" of Plaintiff's finances, along with "legal control" through his role as the "Secretary Treasurer of JCI and the trustee of the JCI pension/investment account"; Greene's "superior knowledge" and "position of trust and confidence" placed him in a fiduciary role." (Id. at ¶¶ 11, 13).
Plaintiff alleges that in late 2010, he went to a bank to cash a certificate of deposit ("CD"), but discovered that it had been garnished due to a federal tax lien, "because his taxes had not been filed for 6-8 years." (TAC ¶ 15). Plaintiff claims not to have been aware of any tax liens, as Greene received all of Plaintiff's mail and failed to inform him of any issues. (Id.). Plaintiff requested to meet with Greene and his partner, Richard Guttenberg, who were then employees at MPS, but they became "uncooperative and evasive" and would not agree to meet. (Id. at ¶¶ 15-16).3 According to Plaintiff, he "began to learn [that this failure to file Plaintiff's taxes over a period of years] was only a fraction of the financial wrong doings." (Id. at ¶ 19).
Plaintiff states that, at some point, he received an email indicating that MPS would drop him as a client effective December 31, 2011. (TAC ¶ 25). As he alleges, this termination occurred "without completion of paid for work including six (6) years of [ ] personal taxes and 10-12 years of JCI returns and required reports." (Id.). Further, Greene "resigned as trustee" of the JCI Pension Plan on May 18, 2012. (Id. at ¶ 26).
Plaintiff asserts that Defendants breached their fiduciary duty of care through constructive fraud by "showing an outrageous, reckless, abusive, and egregious disregard," specifically by:
(TAC ¶ 18). Plaintiff claims that these breaches harmed both his personal life and his professional standing, and, "most painfully," rendered himfinancially unable to provide for his mother before she died. (Id.). Plaintiff also states that the conduct at issue "[was] either done by Mr. Greene, or he directed someone within ABG&Co or MPS to do so." (Id. at ¶ 20).
Plaintiff does not address the violations listed in the preceding paragraph claim-by-claim; rather, he presents a laundry list of factual allegations that the Court will address in the order they are presented, omitting those allegations that amount to mere legal conclusions.
First, Plaintiff alleges that Greene failed to file or send Plaintiff's personal taxes in 1994 and from 2004 to 2011, resulting in liens, levies, garnishment of wages and bank accounts, and a tax bill of approximately $100,000. (TAC ¶¶ 28-29). Additionally, Plaintiff claims that Greene failed to file corporate taxes and required forms for JCI for a period of 10 to 12 years. (Id. at ¶ 29). Plaintiff states that, in the fall of 2010, Guttenberg informed him that Greene was transferring Plaintiff's money into Greene's personal account to avoid Government seizure, but Guttenberg did not inform Plaintiff of any liens or levies at that time. (Id. at ¶ 30).4
Plaintiff states that, after hiring an independent attorney in July 2011, that attorney was informed by Greene that Plaintiff "had slipped through the cracks," which Plaintiff interprets to mean "the returns had never been completed or filed." (TAC ¶ 33). Greene later stated to Plaintiff that the taxforms had indeed been prepared and mailed to Plaintiff, but Plaintiff had not filed them. (Id.). Plaintiff contends that Greene received "numerous warnings and notices spanning several years," alerting him to Plaintiff's tax delinquencies. (Id.). And while acknowledging Greene's claim that he never signed tax forms, Plaintiff states that Greene had power of attorney and had previously signed IRS extension forms and JCI corporate returns. (Id.).
Further, Plaintiff alleges that in June 2011, Guttenberg dated a 2005 tax return with the date "10/10/06," even though the actual date was June 21, 2011. (TAC ¶ 34). Guttenberg assured Plaintiff that this was acceptable, but as Plaintiff asserts, this "created a situation that made it appear that [Plaintiff and his then-wife] were simply refiling their returns," when it was instead an attempt to cover Greene's prior failures to file. (Id.).
Next, Plaintiff asserts that Greene purports to have all previous tax forms and pertinent records saved to his computer; however, following Plaintiff's request for these documents in November 2010, it took six to nine months for Greene to send the tax forms to Plaintiff. (TAC ¶ 35). Further, in the course of preparing delinquent tax forms for 2009 and 2010, Plaintiff sought records from Greene and MPS in order to answer certain questions, but they "denied access to the records requested." (Id. at ¶ 36).
Separately, Plaintiff alleges that while he was attempting to resolve these tax issues, other MPS employees — also not named as defendants — endeavored to transfer Plaintiff's Chase Bank account to a retail branch without Plaintiff's consent. (TAC ¶ 38). While Plaintiff expressed opposition,the address on this account was ultimately changed. (Id.). Finally, Plaintiff claims "a discrepancy between Social Security reported earnings ($3,500,000) as reported by Mr. Greene and earnings on [Plaintiff's] union statements ($7,100,000 including foreign earnings)." (Id. at ¶ 39).
As but another proffer of misconduct, Plaintiff alleges that Greene breached his fiduciary duty "by not disclosing all relevant facts relating to matters regarding [Plaintiff's] finances." (TAC ¶ 41). As he states, rather than providing all bank, financial, and...
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