Sargiss v. Magarelli

• Decision Date: 04 June 2009
• Docket Number: No. 93.,93.
• Citation: 12 N.Y.3d 527,909 N.E.2d 573
• Parties: Frieda SARGISS, Appellant, v. Marlene MAGARELLI, as Executor of Isaac G. Sargiss, Also Known as Isaac George Sarkissian, Deceased, et al., Respondents, et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

909 N.E.2d 573

12 N.Y.3d 527

Frieda SARGISS, Appellant, v. Marlene MAGARELLI, as Executor of Isaac G. Sargiss, Also Known as Isaac George Sarkissian, Deceased, et al., Respondents, et al., Defendants.

No. 93.

Court of Appeals of New York.

June 4, 2009.

Brett Kimmel, P.C., New York City (Myrna Felder of counsel), for appellant.

Bleakley Platt & Schmidt, LLP, White Plains (William Hughes Mulligan, Jr., of counsel), for Marlene Magarelli, respondent.

Walter L. Rich, White Plains, and Joseph S. Garafola for Julius Sargiss and others, respondents.

OPINION OF THE COURT

Chief Judge LIPPMAN.

In July 1996, in connection with divorce proceedings prior to this action in which both parties were represented by counsel, the decedent husband, Isaac G. Sargiss, provided his wife, Frieda Sargiss, with a statement of net worth. The statement listed "PANRAD" as an asset, but the statement did not assign any value to that asset, leaving the space provided for that information blank. Panrad Automotive Industries, Inc. (Panrad) is a private corporation that owns two shopping centers. At one time shares in Panrad were owned by the decedent, defendant Julius Sargiss (decedent's brother), and a third person. When and whether decedent's ownership interest in Panrad ended before his death lies at the root of plaintiff's action.

When asked at his deposition in January 1998 whether he, at that time, owned shares in Panrad, the decedent testified that he did not because he had sold his shares in Panrad to his brother Julius for $250,000. Decedent testified that Julius paid him the $250,000 plus interest in 1993 pursuant to an agreement the brothers had entered into in 1990. Plaintiff and decedent ultimately reached a stipulation as to how to divide their assets in the divorce proceeding, and they were divorced in the spring of 1998. Decedent moved to California and had no further contact with plaintiff after the divorce.

Isaac G. Sargiss died on March 25, 2004. Shortly thereafter, decedent's daughter discovered certain financial documents in his California home which suggested that decedent may not have sold his interest in Panrad to Julius, may have misrepresented his assets in his July 1996 statement of net worth, and may have testified falsely at his January 1998 deposition. Plaintiff commenced this fraud action in May 2005, more than six years after the fraud was allegedly perpetrated but less than two years from the discovery of the financial documents in decedent's California home.

Plaintiff's complaint alleges, among other things, that she relied on decedent's representations during the divorce proceedings as to his net worth, that she was justified in relying on those representations, that documents discovered after decedent's death show that decedent misrepresented his net worth in the divorce proceedings, that Julius, his wife Alice, and Panrad aided in the fraudulent misrepresentations, and that plaintiff would not have agreed to the 1998 stipulation if she had known the truth regarding decedent's assets. The executor of decedent's estate, Julius Sargiss, Alice Sargiss, and Panrad moved to dismiss the complaint pursuant to CPLR 3211 on grounds that the complaint did not plead fraud with sufficient specificity as required by CPLR 3016(b) and that the action was untimely.

When a plaintiff brings a cause of action based upon fraud, "the circumstances constituting the wrong shall be stated in detail" (CPLR 3016[b]). "The purpose of section 3016(b)'s pleading requirement is to inform a defendant with respect to the incidents complained of," thus, "[w]e have cautioned that section 3016(b) should not be so strictly interpreted as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting a fraud" (Pludeman v. Northern Leasing Sys., Inc., 10 N.Y.3d 486, 491, 860 N.Y.S.2d 422, 890 N.E.2d 184 [2008] [internal quotation marks and citation omitted]). What is "[c]ritical to a fraud claim is that a complaint allege the basic facts to establish the elements of the cause of action," and although under CPLR 3016(b) "the complaint must sufficiently detail the allegedly fraudulent conduct, that requirement should not be confused with unassailable proof of fraud" (id. at 492, 860 N.Y.S.2d 422, 890 N.E.2d 184). "Necessarily, then, section 3016(b) may be met when the facts are sufficient to permit a reasonable inference of the alleged conduct" (id.). On a CPLR 3211 motion to dismiss, a court may consider affidavits to remedy pleading problems (Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994]).

In connection with the motion to dismiss, the parties submitted affidavits attaching relevant documents, including certain of the financial documents found after decedent's death. These indicate, among other things, that after decedent testified he had sold his shares to his brother Julius, he received a salary of $100,000 from Panrad and debited more than $700,000 from Panrad's account. Moreover, decedent never negotiated the check given him in satisfaction of the interest to which he was...