- Bookmark
- Share
- CaseIQ
Robles v. Patel
Factual and Procedural Background
The plaintiff, Salvador Sanchez Robles, was allegedly injured while working on a renovation project at a property owned by defendant Kirit Patel. The plaintiff initially commenced a personal injury action against Kirit and others to recover damages for these injuries. Liberty Mutual Insurance, Kirit's insurer, disclaimed coverage for that lawsuit. Subsequently, the plaintiff filed this action alleging that the defendants committed fraud related to insurance coverage for the renovation project and that Kirit fraudulently conveyed his property to Stanley Lane Realty Corp., allegedly co-owned with Niraj Patel, after the personal injury action was commenced. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint or, alternatively, for leave to amend their answer. The Supreme Court denied those branches of the motion, prompting this appeal.
Legal Issues Presented
- Whether the complaint adequately stated a cause of action for fraud based on alleged misrepresentations made to the plaintiff regarding insurance coverage.
- Whether the fraud cause of action predicated on alleged misrepresentations made to nonparty Liberty Mutual Insurance should be dismissed.
- Whether the cause of action alleging fraudulent conveyance under Debtor and Creditor Law § 273-a was sufficiently pleaded.
- Whether the defendants should be granted leave to amend their answer to change certain responses to the plaintiff's allegations.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Eurycleia Partners, LP v Seward & Kissel LLP, 12 NY3d 553, 559 | Elements of fraud and requirement for particularity in pleading fraud under CPLR 3016(b) | Used to define the necessary elements of fraud and the requirement that fraud allegations be stated with particularity. |
| Lee Dodge, Inc. v Sovereign Bank, N.A., 148 AD3d 1007, 1008 | Elements of a cause of action for fraud | Supported the court's assessment of whether the fraud cause of action was adequately pleaded. |
| Leon v Martinez, 84 NY2d 83, 87 | Standard for liberal construction of pleadings and acceptance of factual allegations as true | Guided the court in construing the complaint liberally and accepting all factual allegations as true. |
| RBE N. Funding, Inc. v Stone Mtn. Holdings LLC, 78 AD3d 807, 809 | Requirement to state fraud allegations with sufficient particularity | Used to determine whether the complaint sufficiently informed defendants of the fraud allegations. |
| Pasternack v Laboratory Corp. of Am. Holdings, 27 NY3d 817, 828 | Requirement that misrepresentations be made to the plaintiff and relied upon by plaintiff to state fraud | Supported dismissal of fraud claims based on misrepresentations made to Liberty Mutual, not the plaintiff. |
| New York Tile Wholesale Corp. v Thomas Fatato Realty Corp., 153 AD3d 1351, 1354 | Requirement that plaintiff must show misrepresentations were made to and relied upon by plaintiff | Further supported dismissal of fraud claims based on alleged misrepresentations to Liberty Mutual. |
| Bynum v Keber, 135 AD3d 1066, 1068 | Requirement of plaintiff's reliance on misrepresentations to state fraud | Used to affirm dismissal of fraud claims related to misrepresentations to Liberty Mutual. |
| Fishcer v Sadov Realty Corp., 34 AD3d 632 | Essential element of an unsatisfied judgment for fraudulent conveyance under Debtor and Creditor Law § 273-a | Supported dismissal of fraudulent conveyance claim for failure to allege an unsatisfied judgment. |
| Frybergh v Weissman, 145 AD2d 531, 531-532 | Requirement of unsatisfied judgment to maintain fraudulent conveyance claim under Debtor and Creditor Law § 273-a | Applied to dismiss the fraudulent conveyance cause of action. |
| Coyle v Lefkowitz, 89 AD3d 1054, 1056 | Requirement of unsatisfied judgment for fraudulent conveyance claims | Used to affirm dismissal of fraudulent conveyance claim. |
| 1259 Lincoln Place Corp. v Bank of N.Y., 159 AD3d 1004 | Standard for granting leave to amend pleadings without prejudice or surprise | Supported granting defendants leave to amend their answer. |
Court's Reasoning and Analysis
The court first identified the elements required to state a cause of action for fraud, including material misrepresentation, knowledge of falsity, intent to induce reliance, justifiable reliance by the plaintiff, and damages, citing controlling precedents. The court applied a liberal standard in construing the complaint, accepting all factual allegations as true and giving the plaintiff favorable inferences. It found that the complaint sufficiently alleged fraud based on misrepresentations made directly to the plaintiff concerning insurance coverage, with adequate particularity to inform the defendants of the claims.
However, the court determined that the plaintiff failed to state a cause of action for fraud based on alleged misrepresentations made to Liberty Mutual Insurance because the plaintiff did not allege that these misrepresentations were intended to be communicated to or relied upon by the plaintiff. Consequently, that portion of the fraud claim was properly dismissed.
Regarding the fraudulent conveyance claim under Debtor and Creditor Law § 273-a, the court found the claim deficient because the plaintiff failed to allege the existence of an unsatisfied judgment against Kirit Patel, an essential element. Therefore, that cause of action was also subject to dismissal.
The court further held that the defendants should be granted leave to amend their answer to change certain responses to the plaintiff's allegations, as such amendment would not cause prejudice or surprise to the plaintiff.
Finally, the court rejected the defendants' remaining contentions as without merit.
Holding and Implications
The court modified the Supreme Court's order by granting the defendants' motion to dismiss the portions of the fraud cause of action based on misrepresentations to Liberty Mutual and the fraudulent conveyance cause of action. It also granted leave to amend the answer to change certain responses. As so modified, the order was affirmed insofar as appealed from, without costs or disbursements.
The direct effect is that the plaintiff's claims based on misrepresentations to Liberty Mutual and the fraudulent conveyance claim are dismissed, while the fraud claim based on misrepresentations to the plaintiff remains viable. The defendants may amend their answer accordingly. No new precedent was established by this decision.
SHERI S. ROMAN, J.P.
SANDRA L. SGROI JOSEPH J. MALTESE HECTOR D. LASALLE, JJ. (Index No. 607028/16)
Kelly, Rode & Kelly, LLP, Mineola, NY (Eric P. Tosca of counsel), for appellants.
Cardali & Associates, P.C. (Sacks and Sacks, LLP, New York, NY [Scott N. Singer], of counsel), for respondent.
DECISION & ORDER
In an action, inter alia, to recover damages for fraud, the defendants appeal from an order of the Supreme Court, Nassau County (Anthony L. Parga, J.), entered July 25, 2017. The order, insofar as appealed from, denied those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the complaint or, alternatively, for leave to amend the answer so as to change certain responses to the plaintiff's allegations.
ORDERED that the order is modified, on the law and in the exercise of discretion, by deleting the provisions thereof denying those branches of the defendants' motion which were pursuant to CPLR 3211(a)(7) to dismiss so much of the fraud cause of action as was premised upon allegations that the defendants made misrepresentations to nonparty Liberty Mutual Insurance, and to dismiss the cause of action alleging fraudulent conveyance, and for leave to amend the answer so as to change certain responses to the plaintiff's allegations, and substituting therefor a provision granting those branches of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.
The plaintiff allegedly was injured while working on a renovation project at a property owned, at the time of the accident, by the defendant Kirit Patel (hereinafter Kirit). The plaintiff commenced a personal injury action against Kirit, among others, to recover damages for those injuries. Kirit's insurer, Liberty Mutual Insurance (hereinafter Liberty Mutual), disclaimed coverage for the lawsuit.
The plaintiff thereafter commenced this action, alleging that the defendants committed fraud relating to insurance coverage for the renovation project, and that Kirit fraudulently conveyed his property to the defendant Stanley Lane Realty Corp., which he allegedly co-owned with the defendant Niraj Patel, after the personal injury action was commenced. The defendants moved, inter alia, pursuant to CPLR 3211(a) to dismiss the complaint or, alternatively, for leave to amend the answer so as to change certain responses to the plaintiff's allegations. The Supreme Court denied those branches of the motion.
The elements of a cause of action to recover damages for fraud are "a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages" (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559; see Lee Dodge, Inc. v Sovereign Bank, N.A., 148 AD3d 1007, 1008). Moreover, where a cause of action is based on fraud, "the circumstances constituting the wrong shall be stated in detail" (CPLR 3016[b]; see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d at 559).
Here, construing the complaint liberally, accepting all factual allegations to be true, and giving the plaintiff the benefit of all favorable inferences (see Leon v Martinez, 84 NY2d 83, 87), the complaint adequately stated a cause of action alleging fraud based upon the allegations that the defendants knowingly made misrepresentations to the plaintiff regarding insurance coverage for the renovation project. The complaint stated the misrepresentations with sufficient particularity to clearly inform the defendants of the incidents complained of (see RBE N. Funding, Inc. v Stone Mtn. Holdings, LLC, 78 AD3d 807, 809). However, the plaintiff failed to state a cause of action based upon alleged misrepresentations the defendants made to Liberty Mutual, as the plaintiff failed to adequately allege that the misrepresentations were made for the purpose of being communicated to the plaintiff in order to induce his reliance thereon or that these misrepresentations were relayed to the plaintiff, who then relied upon them (see Pasternack v Laboratory Corp. of Am. Holdings, 27 NY3d 817, 828; New York Tile Wholesale Corp. v Thomas Fatato Realty Corp., 153 AD3d 1351, 1354; Bynum v Keber, 135 AD3d 1066, 1068). Accordingly, the Supreme Court should have granted that branch of the motion which was to dismiss so much of the fraud cause of action as was predicated upon alleged misrepresentations made by the defendants to Liberty Mutual.
The plaintiff also failed to state a cause of action to recover for a fraudulent conveyance pursuant to Debtor and Creditor Law § 273-a. The plaintiff failed to allege the existence of an unsatisfied judgment against Kirit, which is an essential element of a cause of action pursuant to Debtor and Creditor Law § 273-a (see Fishcer v Sadov Realty Corp., 34 AD3d 632; Frybergh v Weissman, 145 AD2d 531, 531-532; see also Coyle v Lefkowitz, 89 AD3d 1054, 1056). Therefore, the Supreme Court should have granted that branch of the motion which was to dismiss that cause of action.
The Supreme Court should also have granted that branch of the defendants' motion which was for leave to amend the answer so as to change certain responses to the plaintiff's allegations, since the amendment would not result in prejudice or surprise to the plaintiff (see CPLR 3025[b]; 1259 Lincoln Place Corp. v Bank of N.Y., 159 AD3d 1004).
The defendants' remaining contention is without merit.
ROMAN, J.P., SGROI, MALTESE and LASALLE, JJ., concur. ENTER:
Aprilanne Agostino
Clerk of the Court
Alert