Butler v. Ross
Filing
29
OPINION & ORDER....Defendants April 11, 2016 motion to dismiss is denied. (Signed by Judge Denise L. Cote on 6/14/2016) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
SUSAN BUTLER,
:
Plaintiff,
:
:
-v:
:
NORMAN ROSS,
:
:
Defendant.
:
:
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APPEARANCES
16cv1282 (DLC)
OPINION & ORDER
For plaintiff:
Barry R. Fischer
The Barry Fischer Law Firm L.L.C.
555 Fifth Avenue
Suite 1700
New York, NY 10036
For defendant:
Martin Druyan
Martin Druyan and Associates
450 7th Avenue
New York, NY 10123
DENISE COTE, District Judge:
Plaintiff Susan Butler seeks an accounting of funds she
entrusted to defendant Norman Ross.
motion to dismiss the complaint.
The defendant has filed a
For the reasons stated below,
the motion is denied.
BACKGROUND
The following facts are taken from the complaint.
Plaintiff Butler is a citizen of Australia and Canada and a
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resident of Montreal, Canada.
In early 1987, the plaintiff met
defendant Ross, a United States citizen and resident of New
York.
Beginning in or around 1989, the defendant began managing
the plaintiff’s financial affairs.
The plaintiff alleges that
she was earning “substantial income” and “gradually ceded
complete control over her finances to Defendant, who professed
to be [an] expert in managing finances and investing.”
The
defendant persuaded her to execute a power of attorney in his
favor so that he could have free reign to manage her finances.
She relied on him to manage and invest finances in excess of $1
million.
When the plaintiff would occasionally inquire about
her investments, the defendant “assured her that her money was
safe, conservatively invested and earning good returns.”
More
recently, the defendant refused to provide any information in
response to the plaintiff’s inquiries.
In or about September 2015, the plaintiff served on the
defendant a revocation of the power attorney she had given to
him.
On or about September 24, the plaintiff made a written
demand on the defendant to submit to an investigation and
accounting of her financial affairs.
The defendant refused to
provide the requested accounting.
The plaintiff filed this lawsuit on February 19, 2016.
complaint pleads only one count seeking an accounting.
2
The
On April
12, the defendant filed a motion to dismiss the complaint
pursuant to Rule 12(b)(6), Fed. R. Civ. P.
The motion became
fully submitted on May 12.
DISCUSSION
In his motion to dismiss, the defendant generally takes
issue with the accuracy of the complaint’s description of
events.
It appears that the defendant also asserts both that
the complaint fails to state a claim, and that the complaint
should be dismissed for lack of subject-matter jurisdiction.
I.
Factual Sufficiency of the Complaint
In considering a motion to dismiss, a court must accept as
true all allegations in the complaint and draw all reasonable
inferences in the plaintiff’s favor.
Loginovskaya v.
Batratchenko, 764 F.3d 266, 269-70 (2d Cir. 2014).
“To survive
a motion to dismiss under Rule 12(b)(6), a complaint must allege
sufficient facts which, taken as true, state a plausible claim
for relief.”
Keiler v. Harlequin Enters. Ltd., 751 F.3d 64, 68
(2d Cir. 2014); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(“[A] complaint must contain sufficient factual matter, accepted
as true, to state a claim to relief that is plausible on its
face.” (citation omitted)).
A claim has facial plausibility
when “the factual content” of the complaint “allows the court to
draw the reasonable inference that the defendant is liable for
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the misconduct alleged.”
Tongue v. Sanofi, 816 F.3d 199, 209
(2d Cir. 2016) (citation omitted).
New York law appears to govern this dispute since it is
alleged that the defendant, a resident of New York, breached his
obligations as the plaintiff’s fiduciary and has refused to
provide her with an accounting.
Under New York’s interest
analysis, “in cases involving conduct-regulating laws,” the
locus of the tort usually provides the substantive law.
Krock
v. Lipsay, 97 F.3d 640, 646 (2d Cir. 1996); see also Anwar v.
Fairfield Greenwich Ltd., 728 F. Supp. 2d 372, 399-400 (S.D.N.Y.
2010); Caudle v. Towers, Perrin, Forster & Crosby, Inc., 580 F.
Supp. 2d 273, 280 (S.D.N.Y. 2008).
Under New York law, a party seeking an accounting under
must establish four conditions:
(1) relations of a mutual and confidential nature;
(2) money or property entrusted to the defendant
imposing upon him a burden of accounting; (3) that
there is no adequate legal remedy; and (4) in some
cases, a demand for an accounting and a refusal.
Mega Tech Int’l Corp. v. Miller Elec. MFG. Co., 97cv1085 (DLC),
1997 WL 790750 (S.D.N.Y. Dec. 23, 1997) (citation omitted).
Accordingly, the right to an accounting “is premised upon the
existence of a confidential or fiduciary relationship and a
breach of the duty imposed by that relationship respecting
property in which the party seeking the accounting has an
interest.”
Dee v. Rakower, 976 N.Y.S.2d 470, 478 (2d Dep’t
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2013) (citation omitted).
A fiduciary relationship, “whether
formal or informal, is one founded upon trust or confidence
reposed by one person in the integrity and fidelity of another
[and] might be found to exist, in appropriate circumstances,
between close friends or even where confidence is based upon
prior business dealings.”
Lawrence v. Kennedy, 944 N.Y.S.2d
577, 580 (1st Dep’t 2012) (citation omitted).
A power of
attorney creates a fiduciary relationship between the principal
and her agent.
See, e.g., Matter of Ferrara, 7 N.Y.3d 244, 251-
55 (2006); In re Garson, 793 N.Y.S.2d 397, 397-98 (1st Dep’t
2005); In re Roth, 724 N.Y.S.2d 476, 477 (2d Dep’t 2001).
An accounting under New York law is an equitable claim.
When a party bringing an accounting claim primarily seeks
monetary damages, “[t]he accounting is merely a method to
determine the amount of the monetary damages.
therefore sounds in law and not in equity.”
The action
Arrow Commc’n
Labs., Inc. v. Pico Products, Inc., 632 N.Y.S.2d 903, 905 (4th
Dep’t 1995) (citation omitted).
The statute of limitations in New York for an accounting
claim is six years.
Golden Pac. Bancorp v. F.D.I.C., 273 F.3d
509, 518 (2d Cir. 2001); In re Barabash’s Estate, 31 N.Y.2d 76,
80 (1972); N.Y. C.P.L.R. § 213.
The limitations period for
claims arising out of a fiduciary relationship does not commence
“until the fiduciary has openly repudiated his or her obligation
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or the relationship has been otherwise terminated.”
Golden Pac.
Bancorp, 273 F.3d at 518 (citation omitted).
The plaintiff has adequately plead a claim for an
accounting under New York law.
The complaint pleads the
existence of a confidential or fiduciary relationship.
It
asserts that the plaintiff entrusted the defendant with over $1
million of her personal finances to manage and invest, and
executed a power of attorney naming him as her attorney-in-fact.
The complaint also alleges a breach of that duty by describing
how the defendant failed to provide any information about the
plaintiff’s funds.
The plaintiff also sufficiently pleads that
she has “no adequate remedy at law, since she is unaware of the
nature, location and exact amount of her assets” and describes
how her demand for an accounting was refused.
The motion to dismiss principally argues that the complaint
lacks specificity.
The Rule 8, Fed. R. Civ. P., pleading
standard governs here and there is no obligation for the
plaintiff to include more detailed information in the complaint
than it presently contains.
The defendant also asserts that it is “illogical” for the
plaintiff to claim an accounting without pleading legal claims
as well.
The defendant implies that the plaintiff has an
adequate remedy at law and therefore has not pleaded an
essential element of her accounting claim.
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Yet, obtaining an
accounting is often a critical predicate for asserting legal
claims, and the absence of a legal remedy is plausible given the
defendant’s alleged refusal to provide information to the
plaintiff.
The defendant next claims that the plaintiff’s accounting
claim is barred by the six year statute of limitations.
The
complaint asserts that the defendant did not openly repudiate
his role as a fiduciary until September 2015, when he refused to
provide an accounting to the plaintiff.
Prior to that date, he
merely failed to provide information to the plaintiff regarding
her funds and acted without her knowledge.
Accordingly, taking
the facts alleged as true, the statute did not begin to run
until September 2015.
Lastly, the defendant appears to question whether New York
law applies to the plaintiff’s claims.
He implies that foreign
law applies since the events giving rise to the plaintiff’s suit
occurred in Australia or Canada.
Since the defendant is alleged
to have performed, or failed to perform, his fiduciary duties in
New York, New York law shall be applied to the accounting claim
at this stage of the proceedings.
See Krock, 97 F.3d at 645-46;
see also Schultz v. Boy Scouts of Am., Inc., 65 N.Y.2d 189, 198
(1985) (“[W]hen the conflicting rules involve the appropriate
standards of conduct . . . the law of the place of the tort will
usually have a predominant, if not exclusive, concern . . . .”).
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II.
Jurisdiction
Although the defendant does not bring a motion to dismiss
pursuant to Rule 12(b)(1), Fed. R. Civ. P., he nonetheless
generally suggests that this Court lacks subject matter
jurisdiction over the plaintiff’s accounting claim.1
“Determining the existence of subject matter jurisdiction is a
threshold inquiry and a claim is properly dismissed for lack of
subject matter jurisdiction under Rule 12(b)(1) when the
district court lacks the statutory or constitutional power to
adjudicate it.”
Morrison v. Nat’l Austl. Bank Ltd., 547 F.3d
167, 170 (2d Cir. 2008) (citation omitted).
There is no question that jurisdiction based on diversity
of citizenship exists in this case.
The defendant has admitted
that he is a United States citizen residing in New York.
The
plaintiff is a citizen of Australia and Canada residing in
Montreal.
Moreover, the complaint alleges that the defendant
managed over $1 million of the plaintiff’s finances, which
sufficiently satisfies the amount in controversy requirement.
The defendant argues that the complaint does not “plead and
prove beyond speculation or truthful good faith the $75,001
Dollar [sic] amount in controversy as required by FRCP.”
Absent
The defendant also appears to suggest that this Court lacks
personal jurisdiction over the defendant. As a New York
resident, the defendant is subject to general jurisdiction in
New York. N.Y. C.P.L.R. § 301.
1
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a showing “to a legal certainty” that the amount in controversy
does not meet the jurisdictional threshold, this Court must
accept the material allegations of the complaint as true.
Scherer v. Equitable Life Assurance Soc’y of U.S., 347 F.3d 394,
397 (2d Cir. 2003) (citation omitted).
CONCLUSION
Defendant’s April 11, 2016 motion to dismiss is denied.
SO ORDERED:
Dated:
New York, New York
June 14, 2016
________________________________
DENISE COTE
United States District Judge
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