ROEMER AND FEATHERSTONHAUGH, PC v. Featherstonhaugh

• Decision Date: 09 December 1999
• Court: New York Supreme Court — Appellate Division
• Parties: ROEMER AND FEATHERSTONHAUGH, P. C., Appellant,<BR>v.<BR>JAMES D. FEATHERSTONHAUGH et al., Defendants, and THREE FEATHERS, INC., Respondent.

267 A.D.2d 697

699 N.Y.S.2d 603

ROEMER AND FEATHERSTONHAUGH, P. C., Appellant,

v.JAMES D. FEATHERSTONHAUGH et al., Defendants, and THREE FEATHERS, INC., Respondent.

Mercure, J. P.

Decided December 9, 1999.

Peters, Spain, Carpinello and Graffeo, JJ., concur.

Mercure, J. P.

Defendant James D. Featherstonhaugh is a former principal and employee of plaintiff, a professional corporation providing legal, lobbying, marketing and consulting services. As relevant to this appeal, the complaint alleges causes of action sounding in conversion and fraud claiming that Featherstonhaugh and defendant Elizabeth K. Clyne, another employee of plaintiff, diverted property properly belonging to plaintiff to Featherstonhaugh (money and stock options) and to defendant Three Feathers, Inc. (hereinafter the corporation), a close corporation owned by Featherstonhaugh and his wife (two parcels of real property). Supreme Court granted the corporation's preanswer motion to dismiss the complaint against it and plaintiff appeals.

We affirm. Initially, we agree with Supreme Court that the conversion cause of action based upon the corporation's alleged receipt and possession of two parcels of real property fails to state a cause of action. Fundamentally, the subject matter of a conversion action must constitute identifiable tangible personal property (see, 23 NY Jur 2d, Conversion, and Action for Recovery of Chattel, §§ 4, 5, 11). Thus, whether the property claimed to have been converted is real property, as alleged in the complaint, or an interest or expectancy in a business opportunity, as plaintiff now alleges, conversion will not lie. In our view, neither Glenn v Hoteltron Sys. (74 NY2d 386) nor Matter of Greenberg (Madison Cabinet & Interiors) (206 AD2d 963) holds to the contrary.

Next, we conclude that the corporation's mere possession of the real property that Featherstonhaugh is alleged to have acquired for less than market value cannot support a fraud cause of action against the corporation, either on a primary or an "aider and abettor" theory. Notably, the complaint alleges no facts that would support a finding that plaintiff was damaged by its reliance on any misrepresentations by the corporation (see, King v Schonberg & Co., 233 AD2d 242; National Westminster Bank v Weksel, 124 AD2d 144, lv denied 70 NY2d 604) or that any relationship existed between the corporation and plaintiff such as would have given rise to an independent duty to act (see, National Westminster Bank v...