Spector v. Wendy

• Decision Date: 09 June 2009
• Docket Number: 2008-06853.
• Citation: 881 N.Y.S.2d 465,2009 NY Slip Op 04888,63 A.D.3d 820
• Parties: GILBERT SPECTOR et al., Respondents-Appellants, v. DIANA WENDY et al., Appellants-Respondents.
• Court: New York Supreme Court — Appellate Division

63 A.D.3d 820

881 N.Y.S.2d 465

2009 NY Slip Op 04888

GILBERT SPECTOR et al., Respondents-Appellants, v. DIANA WENDY et al., Appellants-Respondents.

2008-06853.

Appellate Division of the Supreme Court of New York, Second Department.

June 9, 2009.

In an action, inter alia, to recover damages for fraud and unjust enrichment, the defendants appeal from so much of an order of the Supreme Court, Westchester County (Rudolph, J.), entered July 7, 2008, as denied those branches of their motion which were pursuant to CPLR 3211 (a) (5) and (7) to dismiss the fifth and sixth causes of action, and the plaintiffs cross-appeal from so much of the same order as granted those branches of the defendants' motion which were pursuant to CPLR 3211 (a) (7) to dismiss the first through fourth causes of action.

Ordered that the order is reversed insofar as appealed from, on the law, and those branches of the defendants' motion which were pursuant to CPLR 3211 (a) (7) to dismiss the fifth and sixth causes of action are granted, and the complaint is dismissed with prejudice; and it is further,

Ordered that the order is affirmed insofar as cross-appealed from; and it is further,

Ordered that one bill of costs is awarded to the defendants.

In previous litigation between the parties, the defendant Diana Wendy obtained a judgment (hereinafter the first judgment) against the plaintiffs in the amount of a loan guaranty. This Court affirmed that judgment (see Wendy v Spector, 287 AD2d 558 [2001]), and affirmed an order, made upon renewal, adhering to the original determination (see Wendy v Spector, 305 AD2d 403, 403-404 [2003]). The plaintiff Myra Spector paid the judgment with interest on October 29, 2001 and obtained contribution from the defendant Howard Wendy, who was a coguarantor. In a second action, Diana Wendy obtained a judgment (hereinafter the second judgment) against the plaintiffs herein for an attorney's fee she had incurred in the first action. In related appeals, this Court rejected the plaintiffs' contention that Diana Wendy's claim for an attorney's fee was barred by the doctrine of res judicata (see Wendy v Spector, 305 AD2d 403 [2003]), and upheld the dismissal of the plaintiffs' separate lawsuit for contribution from Howard Wendy (see Spector v Wendy, 52 AD3d 688 [2008]). On January 22, 2005 the plaintiffs paid the second judgment with interest.

By verified complaint dated October 23, 2007, the plaintiffs commenced this action, alleging that in or about April 2007, they discovered for the first time that certain ledger entries had been made in the corporate books of the primary debtor on the loan they had guaranteed. They alleged that these entries demonstrated that Diana Wendy had falsely represented in the previous litigation that she was the lawful assignee of the guaranty, entitled to enforce it against the plaintiffs, and failed to disclose that the debt on the primary obligation had been cancelled prior to entry of the first judgment. The plaintiffs asserted four causes of action alleging fraud and two causes of action alleging unjust enrichment, seeking return of all money they had paid in satisfaction of the first and second judgments. The Supreme Court, inter alia, dismissed the fraud causes of action pursuant to CPLR 3211 (a) (7) and denied those branches of the defendants' motion which were to dismiss the unjust enrichment claims on the same ground.

On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (7), the court must accept the facts as alleged in the complaint as true, accord the plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Kass v Zaslav, 55 AD3d 877 [2008]). "The essential elements of a cause of action sounding in fraud are a misrepresentation or a material omission of fact which was false and known to be false by...