Naftali et al v. New York Deferred Exchange Corp. et al

Filing 34

ORDER ADOPTING REPORT AND RECOMMENDATIONS: For the reasons set out (PLEASE SEE ORDER FOR FURTHER DETAILS), the Court adopts Judge Lindsay's R&R in its entirety. Defendants' motion to dismiss is therefore granted with respect to the claims for equitable relief, as well as with respect to all claims against defendant Trinklein. Defendants' motion to dismiss is denied with respect to all other claims. So Ordered by Judge Joan M. Azrack on 9/26/2017. (Ortiz, Grisel)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ORA NAFTALI and RONI NAFTALI, AS
TRUSTEES OF THE EDTOM TRUST DATED
APRIL 10, 2011,
Plaintiffs,
-against-

For Online Publication Only
FILED 
CLERK 

9/26/2017 1:48 pm

U.S. DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
LONG ISLAND OFFICE 

ORDER
15-cv-7152 (JMA) (ARL)

NEW YORK DEFERRED EXCHANGE CORP.,
FRITZ TRINKLEIN, and JEFFREY WECHSLER,
Defendants.
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AZRACK, United States District Judge:
Before the Court are objections filed by New York Deferred Exchange Corp. (“NYDEC”)
to Magistrate Judge Arlene R. Lindsay’s Report and Recommendation dated August 15, 2017
(the “R&R”).
In their Amended Complaint, plaintiffs advance six causes of action arising out of
transactions involving NYDEC. Specifically, plaintiffs assert causes of action for negligence,
conversion, and breach of contract against NYDEC and defendant Trinklein, a principal of
NYDEC. Plaintiffs also request equitable relief against both NYDEC and Trinklein. Finally,
plaintiffs advance a claim for legal malpractice and negligence against Wechsler, who acted as
legal counsel for plaintiffs with respect to the transactions involving NYDEC.
On November 11, 2016, NYDEC and Trinklein filed a motion to dismiss the claims against
them. 1 The Court referred the motion to Judge Lindsay for report and recommendation on March
16, 2017. In the R&R, Judge Lindsay recommends denying the motion to dismiss plaintiffs’
1

Defendant Wechsler has not moved to dismiss the claims against him.

claims for negligence, conversion, and breach of contract against NYDEC, but recommends
granting the motion to dismiss plaintiffs’ equitable claims. Judge Lindsay also recommends
granting the motion to dismiss all claims against defendant Trinklein, finding that the allegations
were insufficient to establish personal liability.
NYDEC objects to the R&R insofar as it recommends denial of the motion to dismiss the
negligence and conversion claims. For the reasons that follow, the Court overrules NYDEC’s
objection and adopts the R&R in its entirety.
I. STANDARD OF REVIEW
Those portions of a report and recommendation to which there is no specific reasoned
objection are reviewed for clear error. See Pall Corp. v. Entegris, Inc., 249 F.R.D. 48, 51
(E.D.N.Y. 2008).
In reviewing a magistrate judge’s report and recommendation, a court must “make
a de novo determination of those portions of the report or . . . recommendations to which
objection[s] [are] made.” 28 U.S.C. § 636(b)(1); see also Brown v. Ebert, No. 05–CV–5579, 2006
WL 3851152, at *2 (S.D.N.Y. Dec. 29, 2006). The court “may accept, reject, or modify, in whole
or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1).
II. DISCUSSION
As an initial matter, no party objects to the portions of the R&R other than those concerning
the negligence and conversion claims. The Court reviews the portions of the R&R to which no
party has objected for clear error. Finding no clear error, the Court adopts those portions of the
R&R.
Because NYDEC objects to Judge Lindsay’s recommendation that the Court deny the
motion to dismiss the negligence and conversion claims, those portions of the R&R are

reviewed de novo.
NYDEC purports to advance two arguments in support of its position that the Court should
reject the R&R and grant the motion to dismiss the negligence claim. However, the thrust of both
of these arguments is the same—NYDEC argues that plaintiffs have failed to allege a distinct
negligence claim and contends that the claim is duplicative of the breach of contract claim. Having
conducted a de novo review, the Court disagrees for many of the same reasons identified by Judge
Lindsay in the R&R. Simply stated, plaintiffs have adequately pleaded a distinct claim for
negligence. The Court therefore adopts the R&R on this point and denies defendant’s motion to
dismiss the negligence claim.
NYDEC advances a similar argument with respect to the conversion claim, contending that
the conversion claim is duplicative of the breach of contract claim. Having conducted a de novo
review, the Court disagrees, finding—as Judge Lindsay rightly noted—that plaintiffs have
adequately pleaded a distinct conversion claim arising, in part, out of allegations concerning
defendant’s refusal to return the sale proceeds to plaintiffs when requested.
For the reasons set out above, the Court adopts Judge Lindsay’s R&R in its entirety.
Defendants’ motion to dismiss is therefore granted with respect to the claims for equitable relief,
as well as with respect to all claims against defendant Trinklein. Defendants’ motion to dismiss is
denied with respect to all other claims.
SO ORDERED.
Date: September 26, 2017
Central Islip, New York
_____/s/ (JMA)___________
Joan M. Azrack
United States District Judge