theCPLRblog

CPLR R. 3016(b) with particularity

CPLR R. 3016 Particularity in specific actions

Nicosia v Board of Mgrs. of the Weber House Condominium, 2010 NY Slip Op 07254 (App. Div., 1st 2010)

Plaintiff's fraud claim should be dismissed for the additional reason that it is not pleaded with particularity (CPLR 3016[b]). A cause of action for fraud requires plaintiff to plead: (1) a material misrepresentation of a fact, (2) knowledge of its falsity, (3) an intent to induce reliance, (4) justifiable reliance and (5) damages (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]). Plaintiff's complaint is bare-bones. Among other deficiencies, plaintiff does not allege how he learned that the Board was purporting to exercise its right of first refusal. Plaintiff attaches an August 6, 2007 letter that the Board sent to Axminster's attorney stating that the Board was electing to exercise its right of first refusal. However, plaintiff does not articulate who communicated this information to him or when he received this information. Thus, we are left to guess that somehow Axminster's attorney communicated the Board's decision to plaintiff at some point. Plaintiff also does not explain how he relied to his detriment on the Board's alleged exercise of its right of first refusal. While we can suppose that plaintiff's reliance somehow involved his refraining from taking steps to enforce the closing, it is not for us to interject our supposition into plaintiff's pleading. Nor is it our place to explain what damages might have flowed from the failure to close. The dissent points to allegations from the tortious interference cause of action where plaintiff alleges that because of defendants' wrongful conduct, "plaintiff's contract with Axminster to purchase the Unit was not consummated." However, this language does not appear in plaintiff's cause of action for fraud. And, even if it did, this language would hardly satisfy the CPLR 3016(b) requirement that the facts constituting the fraud "be stated in detail." Certainly, what plaintiff did or did not do after learning that the Board was exercising its right of first refusal, and what damages flowed from that action or inaction, are within plaintiff's purview.

While the dissent may be correct that plaintiff can prevail on his fraud claim "if Axminster reasonably relied on the misrepresentation in selling the unit to Kesy," plaintiff has not alleged this. Rather, plaintiff's allegations concerning Axminster are more nefarious — that Axminster directly breached its duties to plaintiff by failing to perform "its required due diligence to determine if the sale to KESY was in accordance with the By-laws."

Thus, the facts of this case could very well eventually support a fraud claim. However, plaintiff has not pleaded these facts sufficiently and, unlike the dissent, we decline to speculate and infer the facts for him, especially given our liberal rules regarding amendment of pleadings.

The bold is mine.

 

Pleading Defamation and Fraud. CPLR R. 3016(a)(b)

Moreira-Brown v City of New York, 2010 NY Slip Op 02063 (App. Div., 1st, 2010)

In this action for defamation and emotional distress, the verified complaint alleges that on or about September 12, 1998, defendant Police Detective Raymond Rivera, acting as agent for his codefendants, made written and verbal defamatory statements that plaintiff "had committed rape and sexual assault and was being sought by the police for arrest and prosecution [for] rape and sexual assault." These words were not demarcated as a quotation in the complaint. Dismissing the complaint, the motion court held that plaintiff had not complied with CPLR 3016(a) because the complaint "does not set forth the particular words alleged to be defamatory."

While a complaint alleging defamation must allege the particular spoken or published words on which the claim is based, the words need not be set in quotation marks (see John Langenbacher Co. v Tolksdorf, 199 AD2d 64 [1993]). When construed in the light most favorable to plaintiff, the complaint alleges that Detective Rivera specifically stated that plaintiff "had committed rape and sexual assault," and "was being sought by the police for arrest and [*2]prosecution" for those crimes. This allegation is sufficient to meet the requirements of CPLR 3016(a).

Colasacco v Robert E. Lawrence Real Estate, 68 AD3d 706 (App. Div., 2nd, 2009)

CPLR 3016 (b) provides, in relevant part, that "[w]here a cause of action or defense is based upon misrepresentation, fraud, mistake . . . the circumstances constituting the wrong shall be stated in detail." The specificity requirements are relaxed where it is alleged that the particular circumstances of the alleged fraud are peculiarly within the defendants' knowledge (see Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486, 491-492 [2008]; Pericon v Ruck, 56 AD3d 635, 636 [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 defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" (Orlando v Kukielka, 40 AD3d 829, 831 [2007]; see Ross v DeLorenzo, 28 AD3d 631, 636 [2006]). Here, the complaint fails to allege the elements of fraud with sufficient specificity. In particular, the complaint fails to allege that DiCorato's alleged misrepresentations to the plaintiffs were known by the defendants to be false. Furthermore, it is clear from the face of the complaint that the plaintiffs' supposed reliance upon DiCorato's alleged misrepresentations concerning the location of the property's boundary lines was unreasonable as a matter of law (see Orlando v Kukielka, 40 AD3d at 831). There was no allegation in the complaint that the dimensions and boundary lines of the subject property were within the exclusive knowledge of the defendants. Indeed, the plaintiffs could easily have ascertained these facts through the use of ordinary means (see Esposito v Saxon Home Realty, 254 AD2d 451 [1998]; Bennett v Citicorp Mtge., Inc., 8 AD3d 1050 [2004]; Mosca v Kiner, 277 AD2d 937, 938 [2000]). Accordingly, the Supreme Court should have dismissed the fraud cause of action pursuant to CPLR 3211 (a) (7).

Similarly, the cause of action sounding, in effect, in negligent misrepresentation also fails to meet the specificity requirements of CPLR 3016 (b). Furthermore, in order to prevail on such a cause of action, a plaintiff must establish that the defendant had a duty to use reasonable care to impart correct information due to a special relationship between the parties, that the information was incorrect or false, and that the plaintiff reasonably relied upon the information (see Grammer v Turits, 271 AD2d 644, 645 [2000]). The complaint fails to allege that the defendants had a duty to the plaintiffs to impart correct information arising out of a special relationship between them. Moreover, as with the fraud cause of action, the complaint fails to allege circumstances under which the plaintiffs' reliance upon DiCorato's alleged misrepresentations could be considered reasonable or justifiable. Thus, the Supreme Court should also have dismissed the second cause of action pursuant to CPLR 3211 (a) (7).

The bold is mine.

Sufficiently particular but individual issues predominate: CPLR R. 3016; CPLR § 901

CPLR R. 3016 Particularity in specific actions

CPLR § 901 Prerequisites to a class action

Dobroshi v Bank of Am., N.A., 2009 NY Slip Op 06382 (App. Div., 1st, 2009)

...

Contrary to defendant's claim, the second cause of action pleads fraud with sufficient particularity to satisfy CPLR 3016(b) (see Lanzi v Brooks, 43 NY2d 778, 780 [1977]). It informs defendant that plaintiff complains of the significant increase in settlement costs between the Good Faith Estimate of Settlement Services (GFE) and the HUD-1 statement, and of the fact that she was informed about this increase only one day before the closing. 

Plaintiff's allegation that defendant deliberately underestimated settlement costs to induce her to obtain a loan from it, rather than from a competing lender states a claim for fraud (see Wright v Selle, 27 AD3d 1065, 1067-1068 [2006]). The GFE was not a mere statement of future intent (see Watts v Jackson Hewitt Tax Serv., Inc., 579 F Supp 2d 334, 352 [ED NY 2008]), and the issue of material misrepresentation is not subject to summary disposition (see e.g. Brunetti v Musallam, 11 AD3d 280, 281 [2004]).

...

The motion court should have stricken the class action allegations. First, individual issues will predominate because all claims under General Business Law § 349 will require [*3]analysis of whether the ultimate closing costs were so unreasonable as to amount to a deceptive practice (cf. Weil v Long Island Savings Bank, FSB, 200 FRD 164, 174 [ED NY 2001] [distinguishing a case where each plaintiff would have to provide evidence of the services performed compared to a case where the plaintiffs claim that the alleged scheme was illegal per se]). Moreover, plaintiff contends that defendant's bad faith in making estimates is actionable. However, to determine if defendant acted in bad faith, it will be necessary to individually examine each of the tens of thousands of transactions at issue. Finally, plaintiff's proposed class would number in the thousands and would have individually tailored written disclosures, different types and amounts of fees and different reasons for the increase in closing costs. These circumstances negate the possibility that common questions would predominate (see Rose v SLM Fin. Corp., 254 FRD 269, 272-73 [WD NC 2008]).

The bold is mine.

CPLR R. 3211 ROUNDUP: CPLR R. 3211(a)(1)(7)(8); CPLR R. 3016(a)

CPLR R. 3211

(a)(1) defense is founded upon documentary evidence

(a)(5) the cause of action may not be maintained because of arbitration and award, collateral estoppel, discharge in bankruptcy, infancy or other disability of the moving party, payment, release, res judicata, statute of limitations, or statute of frauds

(a)(7)  pleading fails to state a cause of action

(8) the court has not jurisdiction of the person of the defendant

CPLR R. 3016 Particularity in specific actions

Freud v St. Agnes Cathedral School, 2009 NY Slip Op 05943 (App. Div., 2nd, 2009)

It is undisputed that, on August 27, 2007, the plaintiff's process server visited the defendant's school and delivered the summons and complaint in this action to Patricia Wren, who was employed by the defendant. The defendant moved to dismiss the complaint on the ground that service of process was invalid since Wren was only a secretary and not authorized to receive service of process on behalf of the defendant. At the hearing to determine the validity of service of process upon the defendant, the process server testified that she approached Wren, whom she believed to be a secretary, identified the summons and complaint, and asked Wren if she was authorized to accept service of the papers. According to the process server, Wren replied that she was so authorized. Wren testified at the hearing that she was employed by the defendant as a clerk, but denied that she ever told the process server that she was authorized to accept service of process on behalf of the defendant. After the hearing, the court denied the motion to dismiss.

Ordinarily, the hearing court's assessment of a witness's credibility is entitled to substantial deference (see Ortiz v Jamwant, 305 AD2d 477; McGuirk v Mugs Pub, 250 AD2d 824, 825; Carlin v Crum & Forster Ins. Co., 170 AD2d 251). Under these circumstances, we perceive no reason to disturb its determination on appeal (see Fashion Page v Zurich Ins. Co., 50 NY2d 265).

Horbul v Mercury Ins. Group, 2009 NY Slip Op 05947 (App. Div., 2nd, 2009)

The plaintiff alleged in the complaint that the defendants committed slander per se when they reported to the police that the plaintiff had filed a fraudulent claim with them for no-fault medical benefits for his son. However, the complaint failed to comply with CPLR 3016(a), which requires that a complaint sounding in defamation "set forth the particular words complained of'" (Simpson v Cook Pony Farm Real Estate, Inc., 12 AD3d 496, 497, quoting CPLR 3016[a]; see Fusco v Fusco, 36 AD3d 589). Compliance with CPLR 3016(a) is strictly enforced (see Abe's Rooms, Inc. v Space Hunters, Inc., 38 AD3d 690). Accordingly, that branch of the defendants' motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint for failure to state a cause of action should have been granted. 

Pinkava v Yurkiw, 2009 NY Slip Op 05953 (App. Div., 2nd, 2009)

The Supreme Court denied the defendants' motion, in effect, to dismiss the first cause of action pursuant to CPLR 3211(a)(7), for summary judgment dismissing the second through twelfth causes of action on the ground that they were barred by the statute of frauds, and for summary judgment on the counterclaims. We affirm.

The statue of frauds prohibits the conveyance of real property without a written contract (see General Obligations Law § 5-703[1]). While the statute of frauds empowers courts of equity to compel specific performance of agreements in cases of part performance (see General Obligations Law § 5-703[4]), the claimed partial performance "must be unequivocally referable to the agreement" (Messner Vetere Berger McNamee Schmetterer Euro RSCG v Aegis Group, 93 NY2d 229, 235; Luft v Luft, 52 AD3d 479, 481). It is not sufficient that the oral agreement gives significance to the plaintiff's actions. Rather, the actions alone must be " unintelligible or at least extraordinary,' [and] explainable only with reference to the oral agreement" (Anostario v Vicinanzo, 59 NY2d 662, 664, quoting Burns v McCormick, 233 NY 230, 232; see Adelman v Rackis, 212 AD2d 559, 561). Significantly, the doctrine of part performance "is based on principles of equity, in particular, recognition of the fact that the purpose of the Statute of Frauds is to prevent frauds, not to enable a party to perpetrate a fraud by using the statute as a sword rather than a shield" (Nicolaides v Nicolaides, 173 AD2d 448, 449-450, see Scutti Enters. v Wackerman Guchone Custom Bldrs., 153 AD2d 83, 87).

Pleadings & CPLR R. 3016 & Slander per se

CPLR R. 3016 Particularity in specific actions

Pourquoi M.P.S., Inc. v Worldstar Intl., Ltd., 2009 NY Slip Op 05755 (App. Div., 2nd, 2009)

The order appealed from relates to the plaintiff's amended complaint, and the affirmative defenses set forth in the answer thereto of the defendant Worldstar International, Ltd. [*2]However, those pleadings are no longer viable as they have been superseded by new pleadings alleging new causes of action (see Penniman v Fuller & Warren Co., 133 NY 442, 444; Bobash, Inc. v Festinger, 57 AD3d 464, 465; Williams v Feig, 12 AD3d 504, 505; Schoenborn v Kinderhill Corp., 98 AD2d 831, 832; Hawley v Travelers Indem. Co., 90 AD2d 684; Halmar Distribs. v Approved Mfg. Corp., 49 AD2d 841; Millard v Delaware, L. & W. R. Co., 204 App Div 80, 83; Branower & Son v Waldes, 173 App Div 676, 678). Accordingly, the appeal has been rendered academic and must be dismissed (see generally Chalasani v Neuman, 64 NY2d 879, 880; Bobash, Inc. v Festinger, 57 AD3d at 465; DePasquale v Estate of DePasquale, 44 AD3d 606, 607; Stefanopoulos v Action Airport Serv. of L.I., Inc., 35 AD3d 590; Weber v Goss, 18 AD3d 540; Monter v Massachusetts Mut. Life Ins. Co., 12 AD3d 650, 651; Williams v Feig, 12 AD3d at 505; Van Valkenburgh, Nooger & Neville v Rider Publ., 24 AD2d 437, 438).

Epifani v Johnson, 2009 NY Slip Op 05287 (App. Div., 2nd, 2009)

"The elements of a cause of action [to recover damages] for defamation are a false [*5]statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and it must either cause special harm or constitute defamation per se'" (Salvatore v Kumar, 45 AD3d 560, 563, quoting Dillon v City of New York, 261 AD2d 34, 38). The complaint must set forth the particular words allegedly constituting defamation (see CPLR 3016[a]), and it must also allege the time when, place where, and manner in which the false statement was made, and specify to whom it was made (see Dillon v City of New York, 261 AD2d at 38).

"Generally, a plaintiff alleging slander must plead and prove that he or she has sustained special damages, i.e., the loss of something having economic or pecuniary value'" (Rufeh v Schwartz, 50 AD3d 1002, 1003, quoting Liberman v Gelstein, 80 NY2d 429, 434-435). "A plaintiff need not prove special damages, however, if he or she can establish that the alleged defamatory statement constituted slander per se" (Rufeh v Schwartz, 50 AD3d at 1003). The four exceptions which constitute "slander per se" are statements (i) charging plaintiff with a serious crime; (ii) that tend to injure another in his or her trade, business or profession; (iii) that plaintiff has a loathsome disease; or (iv) imputing unchastity to a woman (see Liberman v Gelstein, 80 NY2d at 435). When statements fall within one of these categories, the law presumes that damages will result, and they need not be alleged or proven (id.).

Johnson, in addressing the defamation cause of action, appears to claim, in effect, that her alleged statement to Supple's references that Supple was "crazy" is the only statement at issue. However, in addition to this purported statement, Supple alleges that Johnson stated, to Oliverre and another employee named Marita, that Supple's employment with her was being terminated because she was stealing.

The complaint alleges that the statement that Supple was terminated because she was stealing from Johnson was made on or about June 15, 2005, sets forth the statement allegedly made, and that it was made to Oliverre and Marita. Accordingly, these allegations satisfied the pleading requirements of CPLR 3016, inasmuch as it alleged the time when, place where, and manner in which the false statement was made, and specified to whom it was made (see generally Dillon v City of New York, 261 AD2d at 38).

With regard to damages, the complaint only alleges that Supple "has been injured in her good name and reputation, has suffered great pain and mental anguish, and has otherwise been damaged in all to her damage [sic] in a sum to be proven at the time of trial according to proof." This assertion fails to allege special damages with sufficient particularity. However, if the allegedly defamatory statement qualifies as slander per se, the failure to plead special damages with particularity will not be fatal. 

As to the alleged statement that Supple was stealing from Johnson, this constitutes an allegation of a "serious crime" so as to qualify as slander per se (see Liberman v Gelstein, 80 NY2d at 435 [discussing the distinction between serious and nonserious crimes for qualification as slander per se, and citing the Restatement of Torts, § 571, comment g, which lists crimes actionable as per se slander, including, inter alia, larceny]). Further, this alleged statement would clearly constitute one of fact rather than the privileged expression of an opinion (see Mann v Abel, 10 NY3d 271, 276 [expressions of opinion, as opposed to assertions of fact, are deemed privileged and, no matter how offensive, cannot be the subject of an action to recover damages for defamation]).

With regard to Johnson's alleged statement describing Supple as "crazy," the complaint only alleges that the defamation occurred when Johnson made this remark generally to Supple's "references," and thus failed to identify, with necessary specifity, the person or persons to whom the statements were made (see Dillon v City of New York, 261 AD2d at 38), resulting in an insufficiently pleaded cause of action. Moreover, Johnson's remark to Oliverre allegedly characterizing Supple as "crazy" does not appear to be a defamatory statement concerning Supple; Johnson did not tell Oliverre that she believed that Supple was "crazy," but only that she telephoned Supple's references and told them that Supple was "crazy." To the extent that the Court may infer that the substance of the statement was Johnson's assertion that Supple was "crazy," this would appear to be a hyperbolic expression of opinion and, thus, nonactionable (see generally Mann v Abel, 10 NY3d at 276).

Since, however, Johnson's alleged statement that Supple's employment was being terminated because Supple was stealing was sufficiently pleaded, and constituted slander per se, the Supreme Court properly denied that branch of Johnson's motion which was to dismiss so much of the eighth cause of action as was premised on this allegedly defamatory statement.

The bold is mine.

CPLR R. 3016 Pleading Requirements; Ct. App.

CPLR R. 3016 Particularity in specific actions

Eurycleia Partners, LP v Seward & Kissel, LLP, 2009 NY Slip Op 04299 (Ct. App., 2009)

The elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages (see Ross v Louise Wise Servs., Inc., 8 NY3d 478, 488 [2007]; Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]). A claim rooted in fraud must be pleaded with the requisite particularity under CPLR 3016 (b).

We recently explored the pleading requirements of CPLR 3016 (b) in Pludeman v Northern Leasing Sys., Inc. (10 NY3d 486 [2008]). In that case, we noted that the purpose underlying the statute is to inform a defendant of the complained-of incidents. We cautioned that the statute "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" (id. at 491 [internal quotation marks and citations omitted]). Although there is certainly no requirement of "unassailable proof" at the pleading stage, the complaint must "allege the basic facts to establish the elements of the cause of action" (id. at 492). We therefore held that CPLR 3016 (b) is satisfied when the facts suffice to permit a "reasonable inference" of the alleged misconduct. And, "in certain cases, less than plainly observable facts may be supplemented by the circumstances surrounding the alleged fraud" (id. at 493).

Here, whether the claim is labeled fraud or aiding and abetting fraud, we conclude that neither the allegations in the complaint nor the surrounding circumstances give rise to a reasonable inference that S & K participated in a scheme to defraud or knew about the falsity of the two contested statements in the offering memoranda. The amended complaint conclusorily alleges that at some unspecified point in 2005 S & K became aware that more than 10% of Wood River's holdings were invested with Endwave but, nonetheless, S & K continued to issue offering memoranda falsely representing that Wood River would not invest more than 10% of its assets in any given security ^[FN7]. In support of this allegation, plaintiffs assert that S & K was informed in January 2005 that Wood River had purchased 10% of Endwave's stock. But the fact that S & K may have been aware that Wood River owned 10% of Endwave's stock is not material to whether Wood River invested more than 10% of its total assets in Endwave, particularly where there is no [*5]indication that S & K was ever informed of Wood River's overall asset levels or the cost basis of the Endwave shares. Plaintiffs' reliance on a 2002 letter — predating the existence of Wood River by nearly a year — from a S & K attorney to Whittier discussing the performance of a separate fund is similarly unavailing.

Nor do the surrounding circumstances breathe life into plaintiffs' fraud claim premised on the 10% cap representation. Unlike the individual corporate officer defendants in Pludeman, each of whom managed a company implicated in a nationwide fraudulent scheme covering a span of years, S & K was outside counsel to Wood River, whose manager — Whittier — was convicted of securities fraud. Notably, plaintiffs do not dispute S & K's assertion that they secured Whittier's assistance in drafting the amended complaint. The absence of any firm factual pleadings relevant to S & K's knowledge that Wood River breached the 10% restriction or any fraudulent scheme between Whittier and S & K is even more conspicuous in light of Whittier's cooperation with plaintiffs.

We likewise find the amended complaint's alternative allegation of fraud or aiding and abetting fraud — that S & K knew TBS was not Wood River's auditor yet continued to list TBS in the offering memoranda — to be similarly conclusory. As the Appellate Division recognized, the complaint elsewhere alleges that in the summer of 2005 TBS falsely represented that it was the fund's auditor and would conduct an audit. In short, although we are mindful that a plaintiff need not produce absolute proof of fraud and that there may be cases in which particular facts are within a defendant's possession, it is also true that the strength of the requisite inference of fraud will vary based on the facts and context of each case. Under the facts of this case, we believe that the allegations in the complaint, coupled with the surrounding circumstances, do not give rise to a reasonable inference that S & K committed fraud or aided and abetted Wood River's or Whittier's fraudulent activities.

The bold is mine.

CPLR R. 3016 Fraud Not Pled With Particularity

CPLR R. 3016 Particularity in specific actions

Cangro v Marangos, 2009 NY Slip Op 02661(App. Div., 1st, 2009)

Order, Supreme Court, New York County (Leland G. DeGrasse, J.), entered January 22, 2008, which denied plaintiff's motion for an order "granting compensatory and punitive damages" and setting a trial date, and granted defendant's cross motion to dismiss the complaint for failure to state a cause of action, unanimously affirmed, without costs.

The allegations in the complaint and in plaintiff's affidavit constitute "bare legal conclusions" (see Caniglia v Chicago Tribune-N.Y. News Syndicate, 204 AD2d 233, 233-234 [1994]). Plaintiff's fraud claims are not pleaded with the requisite particularity (CPLR 3016[b]). Her defamation claims fail because the alleged offending statements were made in the context of a judicial proceeding to which they were directly
related (see Sexter & Warmflash, P.C. v Margrabe, 38 AD3d 163, 174-176 [2007]).

The bold is mine.

CPLR R. 3016

CPLR R. 3016 Particularity in specific actions

Coast Equities, LLC v JCC Ventures, Inc., 2009 NY Slip Op 02288 (App. Div., 1st, 2009)

Nor does it avail defendants to argue that the lease was induced by fraud, assuming that any fraud by plaintiff's predecessor can be imputed to plaintiff, where there is no evidence of the circumstances surrounding the fraud (CPLR 3016[b]) — there is only an attorneys' affirmation, a verified answer conclusorily alleging fraud, and the August 2005 DOB notice (see Zuckerman v City of [*2]New York, 49 NY2d 557, 562-563 [1980]).