Gerschel v. Christensen

• Decision Date: 18 October 2016
• Citation: 2016 N.Y. Slip Op. 06794,40 N.Y.S.3d 41,143 A.D.3d 555
• Parties: Alexander J. GERSCHEL, et al., Plaintiffs–Appellants, v. Craig G. CHRISTENSEN, et al., Defendants–Respondents, Christensen Law Group, LLP, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

143 A.D.3d 555

40 N.Y.S.3d 41

2016 N.Y. Slip Op. 06794

Alexander J. GERSCHEL, et al., Plaintiffs–Appellants,

v. Craig G. CHRISTENSEN, et al., Defendants–Respondents,Christensen Law Group, LLP, et al., Defendants.

Supreme Court, Appellate Division, First Department, New York.

Oct. 18, 2016.

Philippe J. Gerschel, New York, appellant pro se and for Alexander J. Gerschel, Andre R. Gerschel and Daniel A. Gerschel, appellants.

Himmel & Bernstein, LLP, New York (Andrew D. Himmel of counsel), for respondents.

FRIEDMAN, J.P., ANDRIAS, SAXE, FEINMAN, KAHN, JJ.

Order, Supreme Court, New York County (Barbara Jaffe, J.), entered December 15, 2015, which granted the motion of defendants Craig G. Christensen and Christensen Capital Law Corporation (defendants) to vacate a default order pursuant to CPLR 5015(a)(1)

, unanimously affirmed, without costs.

Our previous decision (128 A.D.3d 455, 9 N.Y.S.3d 216 [1st Dept.2015]

) did not preclude defendants from moving to vacate the default order that was entered in the IAS court on that decision. “An issue must be actually litigated for the law of the case doctrine ... to apply” ( People v. Grasso, 54 A.D.3d 180, 210, 861 N.Y.S.2d 627 [1st Dept.2008]

; see also

Bishop v. Maurer, 83 A.D.3d 483, 484, 921 N.Y.S.2d 224 [1st Dept.2011] ). What was at issue and litigated on the prior appeal was the interpretation of CPLR 1003 and the tolling agreements, not the standards for vacating a default judgment.

The motion court providently exercised its discretion by accepting defense counsel's excuse that he failed to make a timely motion to dismiss the amended complaint on behalf of defendants.

Except as to the tenth cause of action, defendants “set forth facts sufficient to make out a prima facie showing of a meritorious defense” (Bergen v. 791 Park Ave. Corp., 162 A.D.2d 330, 331, 570 N.Y.S.2d 940 [1st Dept.1990]

). Plaintiffs' claims for legal malpractice, negligence, conversion, unjust enrichment, and constructive trust accrued at the time of their injury; these claims are not subject to a discovery rule (see e.g.

McCoy v. Feinman, 99 N.Y.2d 295, 301, 755 N.Y.S.2d 693, 785 N.E.2d 714 [2002] [malpractice]; Playford v. Phelps Mem. Hosp. Ctr., 254 A.D.2d 471, 471–472, 680 N.Y.S.2d 267 [2d Dept.1998], lv. denied 93 N.Y.2d 806, 689 N.Y.S.2d 707, 711 N.E.2d 983 [1999] [negligence]; Vigilant Ins. Co. of Am. v. Housing Auth. of City of El Paso, Tex., 87 N.Y.2d 36, 44, 637 N.Y.S.2d 342, 660 N.E.2d 1121 [1995] [conversion]; Kaufman v. Cohen, 307 A.D.2d 113, 127, 760 N.Y.S.2d 157 [1st Dept.2003] [unjust enrichment]; Knobel v. Shaw, 90 A.D.3d 493, 496, 936 N.Y.S.2d 2 [1st Dept.2011] [constructive trust] ). The statute of limitations for malpractice, negligence, and conversion is three years (McCoy, 99 N.Y.2d at 301, 755 N.Y.S.2d 693, 785 N.E.2d 714 ; Playford, 254 A.D.2d at 471, 680 N.Y.S.2d 267 ; Vigilant, 87 N.Y.2d at 44, 637 N.Y.S.2d 342, 660 N.E.2d 1121 ); that for unjust enrichment and constructive trust is six years (Knobel, 90 A.D.3d at 495–496, 936 N.Y.S.2d 2 ). Plaintiffs were injured in November 2001, when the Bella Meyer Trust and Francine Meyer de Camaret Trust were dissolved and plaintiffs failed to receive their share of the distributions therefrom. Thus, the statutes of limitation ran either in November 2004 or November 2007, depending on the cause of action. Plaintiffs did not sue until September 2010.

Where “an allegation of fraud is essential to a breach of fiduciary duty claim” (IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132, 139, 879 N.Y.S.2d 355, 907 N.E.2d 268 [2009]

), the statute of limitations is six years (id. ), and “[t]he discovery accrual rule ... applies” (Kaufman, 307 A.D.2d at 122, 760 N.Y.S.2d 157 ). Two of the plaintiffs submitted affidavits saying they did not know until early September 2008 that the trusts had been distributed in 2001. On the other hand, plaintiffs' father submitted an affidavit saying that his sons were aware that distributions had been made by or before 2003. Where, as here, “[i]ssues of fact are created in the affidavits submitted on behalf of the opposing parties” (Bishop v. Galasso, 67 A.D.2d 753, 412 N.Y.S.2d 214 [3d Dept.1979] ), a defendant can establish a meritorious defense and is entitled to have a default judgment vacated (id. ).

When a plaintiff alleges fraud or constructive fraud (cf. Colon v. Banco Popular N. Am., 59 A.D.3d 300, 301, 874 N.Y.S.2d 44 [1st Dept.2009]

), “[a] cause of action for negligent misrepresentation accrues on the date of the alleged misrepresentation which is relied upon by the plaintiff” (Fandy Corp. v. Lung–Fong Chen, 262 A.D.2d 352, 353, 691 N.Y.S.2d 572 [2d Dept.1999] ). The complaint does not allege that defendants made any misrepresentation on which plaintiffs relied.

If defendants were plaintiffs' fiduciaries for the...