Lanzi v. Brooks
| Decision Date | 24 November 1976 |
| Citation | 388 N.Y.S.2d 946,54 A.D.2d 1057 |
| Parties | Joseph LANZI, Respondent, v. Arthur BROOKS, Appellant. |
| Court | New York Supreme Court — Appellate Division |
DeGraff, Foy, Conway & Holt-Harris, Albany (Carroll J. Mealey, Albany, of counsel), for appellant.
Connor, Curran, Connor, Flint & Schram, Hudson (Theodore Guterman, II, Hudson, of counsel), for respondent.
Before KOREMAN, P.J., and GREENBLOTT, SWEENEY, MAHONEY and LARKIN, JJ.
Appeal from an order of the Supreme Court at Special Term, entered March 29, 1976 in Columbia County, which denied defendant's motion to dismiss plaintiff's complaint for failure to state a cause of action.
This is an action to recover damages for fraud and deceit. In his first cause of action, plaintiff alleges that prior to October, 1964, all the stock of Textile By-Products Corporation was owned by a trust created by defendant's father-in-law and that defendant was vice-president of the corporation and in exclusive control thereof; that the corporation was in serious financial and production difficulties at that time; that the defendant made certain fraudulent representations to plaintiff which plaintiff relied on in accepting a position with the corporation as production manager in October of 1964; that the corporation prospered after plaintiff began work at the corporation; that plaintiff received a salary of $25,000 a year plus a substantial bonus from the corporation's profits; that the stock of the corporation was sold in 1968 to the defendant, his wife, two sales representatives and the plaintiff (who received 1/6 of the total shares); that the plaintiff was fired by the defendant on June 20, 1975, contrary to the representations made to him by the defendant in 1964; and that he was removed as a director.
In his second cause of action plaintiff alleges that he invented a new type of padded car roof in 1967 which he was advised could be patented; that the defendant represented to the plaintiff that if he refrained from obtaining a patent and allowed the corporation to manufacture the product, they would avoid litigation and the bonus of the plaintiff would be increased; and that the plaintiff relied on this statement and was thereby deprived of royalties in the amount of $3,000,000.
In the third cause of action, plaintiff seeks punitive damages, alleging that there existed a confidential relationship between the parties and that the defendant acted maliciously.
In our view, Special Term erred in denying defendant's motion to dismiss for failure to state a cause of action, pursuant to CPLR 3211 (subd. (a), par. 7). To plead a prima facie case of fraud the plaintiff must allege representation of a material existing fact, falsity, scienter, deception and injury. (Reno v. Bull, 226 N.Y. 546, 550, 124 N.E. 144, 145.) In addition, each of these essential elements must be supported by factual allegations sufficient to satisfy the requirement of CPLR 3016 (subd. (b)) that 'the circumstances constituting the wrong shall be stated in detail' when a cause of action based upon fraud or breach of trust is alleged. CPLR 3016 (subd. (b)) imposes a more stringent standard of pleading than the generally applicable 'notice of the transaction' rule of CPLR 3013, and complaints based on fraud or breach of trust which fail in whole or in part to meet this special test of factual pleading have consistently been dismissed (see Block v. Landegger, 44 A.D.2d 671, 354 N.Y.S.2d 430; Meltzer v. Klein, 29 A.D.2d 548, 285 N.Y.S.2d 920). Measured against this standard it is apparent that the complaint fails to state a cause of action.
Defendant accurately contends that the alleged falsity of all representations in the first cause of action except for that relating to the method of future profit sharing, not heretofore mentioned, is contradicted by other allegations in the first cause of action. Plaintiff thus concedes that the following alleged misrepresentations were not in fact misrepresentations but actually were facts which occurred: That the Textile By-Products Corporation would pay plaintiff an annual salary of $25,000, plus a substantial bonus, to be based on any increase in gross profits of the corporation; that plaintiff...
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...is a factual misrepresentation), cert. denied, 434 U.S. 1015, 98 S.Ct. 731, 54 L.Ed.2d 759 (1978); Lanzi v. Brooks, 54 A.D.2d 1057, 1058, 388 N.Y.S.2d 946, 948 (3d Dep't 1976) ("Absent a present intent to deceive, a statement of future intentions, promises or expectations is not actionable ......
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