Salvatore Gargano & Compass Constr. of N.Y. Co. v. Michael Morey, Champlain Stone Ltd., INDEX NO. 608026/2015
| Decision Date | 18 May 2016 |
| Docket Number | INDEX NO. 608026/2015 |
| Citation | 2016 NY Slip Op 32965 (U) |
| Parties | SALVATORE GARGANO and COMPASS CONSTRUCTION OF N.Y. CO., INC., Plaintiffs, v. MICHAEL MOREY, CHAMPLAIN STONE LTD., EAGLES NEST LLC, GREGORY GRANDE, SEAN CARROLL, GRANDE AGGREGATES, GRANDE AGGREGATES LLC, NORTHEAST AGGREGATES DOCK OPERATOR LLC, NORTHEAST AGGREGATES DOCK OWNERS LLC, NORTHEAST AGGREGATES EQUIPMENT LEASING LLC, NORTHEAST AGGREGATES, LLC, NORTHEAST AGGREGATES QUARRY OWNERS LLC, STONY CREEK SERVICES, LLC, WHITEHALL AGGREGATES, LLC, MONROE TRACTOR & IMPLEMENT CO., INC., CHRISTOPHER BAUM AND BAUM & BAILEY, P.C., Defendants, -and- MAGNOLIA ASSOCIATES, LLC, Proposed Intervenor-Defendant. |
| Court | New York Supreme Court |
Submission Date: 03/09/16
Motion Sequence: 008
DECISION & ORDER
Papers Numbered Sequence #008 Notice of Motion, Affirmation & Exhibits, and MemorandumOf Law 1 Affirmation in Opposition & Exhibits 2 Memorandum of Law in Opposition 3 Affidavit in Further Support of Motion 4 Reply Affirmation in Further Support of Motion 5 Reply Memorandum of Law in Further Support of Motion 6
Upon the foregoing papers, motion by defendants Michael Morey, Champlain Stone Ltd. ("Champlain"), and Eagles Nest LLC ("Eagles") for judgment dismissing the twenty causes of action against them pursuant to CPLR §3211(a)(1) and (a)(7) and CPLR §3016(b) is granted in part, and denied in part, pursuant to CPLR §3211(a)(7) as set forth below.
Plaintiffs are investors located in Nassau County, New York. Plaintiff Salvatore Gargano is the president of plaintiff Compass Construction of N.Y. Co., Inc.. Their claims arise out of an alleged investment in the amount of $3,006,000.00, that they made in a mining business, and equipment for that business, in upstate New York.
Plaintiffs had previously worked with defendant Carroll, and Carroll introduced them to the individual defendants, Morey and Grande. Defendant Morey is the managing member of defendants Eagles and Champlain.
According to plaintiffs, defendant Morey, individually, and through Eagles and Champlain, owned real property in Whitehall, New York, on which a quarry is located ("the real property"). Plaintiffs allege that Morey, Grande, and Carroll, together with defendants Grande Aggregates, Grande Aggregates LLC, and Monroe, engaged in a scheme to induce them to invest in a sham purchase of the real property, and two large pieces of mining equipment ("the equipment") for the mining business.
Plaintiffs commenced this action in December, 2015. In the complaint they allege a total of thirty causes of action against a variety of defendants. Plaintiffs collectively refer to the "mining defendants," and include within this term: Morey, Eagles, Champlain, Grande, Grande Aggregates, Grande Aggregates LLC, Stony Creek, Northeast Aggregates, Northeast Owner, Northeast Operators, Northeast Leasing, Northeast Quarry, Whitehall and Carroll (complaint, ¶ 28).
Defendant Morey denies the allegations of the complaint in his answer (Exhibit B to the moving papers), and alleges fifteen affirmative defenses.
On this motion, Morey, Eagles, and Champlain seek judgment dismissing the twenty causes of action alleged against them. In a footnote in Morey's moving affidavit (p.1, fn.1), and in the Preliminary Statement to Defendants' Memorandum of Law, Morey and the attorney for the moving defendants state that the term "Champlain" shall collectively refer to all three defendants, Champlain, Eagles and Morey. In the interests of a complete and understandable record, this Court declines the collective approach and will address the defendants individually.
On a motion to dismiss pursuant to CLR §3211, the facts as alleged must be accepted as true, the pleader must be accorded the benefit of every favorable inference, and the court must determine only whether the facts as alleged fit within any cognizable theory (ABN AMRO Bank, N.V. v. MBIA, Inc, 17 N.Y.3d 208, 227 [2011], citing Leon v. Martinez, 84 N.Y.2d 83, 87 [1994]; Samiento v. World Yacht Inc., 10 N.Y.3d 70, 79 [2008]). "Bare legal conclusions, as well as factual claims flatly contradicted by the record, are not entitled to any such consideration" (Everett v. Eastchester Police Dept., 127 A.D.3d 1131, 1132 [2d Dept. 2015], lv. app. den. 26 N.Y.3d 911 [2015], quoting Riback v. Margulis, 43 A.D.3d 1023 [2d Dept. 2007]; Goel v. Ramachandran, 111 A.D.3d 783, 791-792 [2d Dept. 2013]).
A motion to dismiss pursuant to CPLR §3211(a)(1) "may be appropriately granted only where documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326 [2002]). Neither affidavits, nor letters are considered documentary evidence for the purposes of CPLR §3211(a)(1) (Shofel v. DaGrossa, 133 A.D.3d 649, 650 [2d Dept. 2015]; JBGR, LLC v. Chicago Tit. Ins. Co., 128 A.D.3d 900, 903 [2d Dept. 2015]).
Where a party offers evidentiary proof on a motion pursuant to CPLR §3211(a)(7), the criterion is whether the proponent of the pleading has a cause of action (Leon, supra at 88; Randazzo v. Nelson, 128 A.D.3d 935, 936 [2d Dept. 2015]). Affidavits submitted almost never warrant dismissal under CPLR §3211(a)(7) unless they establish conclusively that the plaintiff has no cause of action (Dolphin Holdings, Ltd. v. Gander & White Shipping, Inc., 122 A.D.3d 901, 902 [2d Dept. 2014]; Bokhour v. GTI Retail Holdings, Inc., 94 A.D.3d 682, 683 [2d Dept. 2012]).
Whether a claim will later survive a summary judgment motion, or whether the plaintiff will ultimately be able to prove his or her claims, is not part of the calculus in determining a motion to dismiss (see EBC I, Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11, 19 [2005]; Vasomedical, Inc. v. Barron, 137 A.D.3d 778 [2d Dept. 2016]; Zellner v. Odyl, LLC, 117 A.D.3d 1040, 1041 [2d Dept. 2014]).
In support of their motion for dismissal defendants Morey, Eagles, and Champlain submit the following documents: two affidavits by Morey, the pleadings, a transcript of the oral argument before this Court on January 26, 2016, a Gargano affidavit dated December 24, 2015, a Purchase and Sale Agreement between Eagles and Champlain as seller, and Grande Aggregates LLC, as buyer of the subject real property, documentation of wire transfers by Gargano, and a letter by Brian Premo, Gargano's attorney, dated August 17, 2015.
The Court has reviewed this documentation, and finds that much of it does not qualify as "documentary evidence" for the purposes of CPLR §3211(a)(1). To the extent that it may qualify as "documentary evidence," the documentation does not "utterly refute" plaintiffs' claim. For this reason, dismissal pursuant to CPLR §3211 (a)(1) is denied.
The first cause of action alleges a claim against the mining defendants for a constructive trust over payments made by plaintiffs, the equipment, and revenues from the mining of the property. The elements of a cause of action to impose a constructive trust are (1) a confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance thereon, and (4) resulting unjust enrichment (see Sharp v. Kosmalski, 40 N.Y.2d 119, 121 [1976]; Loeuis v. Grushin, 126 A.D.3d 761, 765 [2d Dept. 2015]). A conventional business relationship, without more, is insufficient to create a fiduciary relationship (Chi Lo Liu v. Radmin, 106 A.D.3d 1042, 1043 [2d Dept. 2013], quoting Legend Autorama, Ltd. v. Audi of Am., Inc., 100 A.D.3d 714, 717 [2d Dept. 2012]; Friedman v. Anderson, 23 A.D.3d 163, 166 [1st Dept. 2005]). In the absence of a confidential or fiduciary relationship with the defendants, plaintiffs have no cause of action for imposition of a constructive trust (County of Nassau v. Expedia, Inc., 120 A.D.3d 1178, 1181 [2d Dept. 2014]; Evans v. Rosen, 111 A.D.3d 459 [1st Dept. 2013]).
A fiduciary relationship may exist when one party reposes confidence in another and reasonably relies on the other's superior expertise or knowledge, but not in an arm's-length business transaction involving sophisticated business people (Faith Assembly v. Titledge of N.Y. Abstract, LLC, 106 A.D.3d 47, 62 [2d Dept. 2013]; Guarino v. North Country Mtge. Banking Corp., 79 A.D.3d 805, 807 [2d Dept. 2010]). The core of a fiduciary relationship is "a higher level of trust than normally present in the marketplace between those involved in arm's length business transactions" (EBC I, Inc, supra at 19; Faith Assembly, supra). Dismissal of a cause of action for the imposition of a constructive trust pursuant to CPLR §3211 is warranted where the plaintiff fails to plead facts demonstrating the existence of a fiduciary or confidential relationship (Refreshment Mgt. Servs., Corp. v. Complete Off. Supply Warehouse Corp., 89 A.D.3d 913, 915 [2d Dept. 2011]; Baer v. Complete Off. Supply Warehouse Corp., 89 A.D.3d 877, 878 [2d Dept. 2011]; Pfeiffer v. Jacobowitz, 29 A.D.3d 661, 662 [2d Dept. 2006]). Conclusory allegations of a fiduciary relationship also fail to satisfy the requirements of CPLR §3016(b) (Faith Assembly, supra).
Defendants Morey, Eagles, and Champlain argue that none of them ever entered into any contracts or any business relationship of any kind with plaintiffs.
In opposition, plaintiffs argue that Morey, Eagles, and Champlain are the principals and/or employers of Grande and Carroll, their agents and/or employees. Under this theory, plaintiffs allege that Morey, Eagles, and Champlain are responsible for the torts of their agents/employees. This is the linchpin of the entire complaint against these moving defendants. Plaintiffs further argue that on this 3211 motion, they are only required to plead their claim for aconstructive trust, not prove it, and credibility is not at issue.
In reply, defendant Morey submits an additional affidavit wherein he avers that Grande and...
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