Kofinas et al v. Fifty-Five Corporation et al
OPINION: Because plaintiffs have not alleged a pattern of misconduct directed at the public, plaintiff cannot recover punitive damages, so all claims for punitive damages are dismissed (though again these dismissals are, at this stage, without p rejudice). For these reasons, the Court, by order dated January 29, 2021, granted without prejudice defendants' motion to dismiss for failure to state a claim with respect to Counts Four and Six (tortious interference with contract and aiding and abetting the same) and all claims for punitive damages, and denied defendants' motions to dismiss in all other respects. SO ORDERED. (Signed by Judge Jed S. Rakoff on 2/16/2021) (rj)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
GEORGE KOFINAS & MARIA KOFINAS,
FIFTY-FIVE CORP., et al.,
JED S. RAKOFF, U.S.D.J.
George and Maria Kofinas lease three commercial units on the
cooperative in Manhattan.
Plaintiffs allege that the Board of
Directors of the cooperative were aware that water was leaking
into their units through cracks in the sidewalk and the foundation
Plaintiffs further allege that, against the advice of the
building architect, defendants pursued a quick-fix solution -sidewalk caulking and interior sealant -- rather than a more
durable solution like repairs to the sidewalk and foundation walls.
This left plaintiffs’ units vulnerable, plaintiffs’ claim, and the
leaks eventually returned, causing water damage and mold, and
requiring plaintiffs to close their business, a fertility clinic.
Meanwhile, plaintiffs allege, the cooperative spent millions of
dollars on luxuries for the residential tenants, like a roof
Case 1:20-cv-07500-JSR Document 82 Filed 02/16/21 Page 2 of 22
Plaintiffs filed this lawsuit against Fifty-Five Corporation,
the owner of the building, as well as the members of its Board of
Directors at the pertinent times and the building’s managing agent.
Plaintiffs bring six counts: breach of contract and negligence,
against the cooperative; breach of fiduciary duty and tortious
interference with contract, against the Board members; and aiding
and abetting the alleged breach of fiduciary duty and the alleged
tortious interference with contract, against the managing agent.
Now before the Court are defendants’ two motions to dismiss.
personally. The defendants also contend that the Amended Complaint
does not state a claim against the individual defendants because
those defendants are protected by the business judgment rule and
by a New York doctrine that shields individual board members
against liability for a corporation’s alleged breach of contract.
Finally, defendants contend that the Amended Complaint fails to
adequately state its claim for punitive damages.
On January 29, 2021, by bottom-line order, the Court denied
the motion to dismiss for lack of subject matter jurisdiction,
granted the motion to dismiss for failure to state a claim with
respect to Count Four, Count Six, and all claims for punitive
Case 1:20-cv-07500-JSR Document 82 Filed 02/16/21 Page 3 of 22
damages, and otherwise denied the motions to dismiss. This Opinion
explains the reasons for that ruling.
The Amended Complaint, ECF No. 65 (“Am. Compl.”), contains
the following allegations, which the Court presumes to be true for
purposes of this motion only.
Plaintiffs George and Maria Kofinas jointly own the stock and
are the lessees of the Proprietary Leases allocable and appurtenant
to units 1B, 1C, and 1D/HW (the “Units”) at 55 Central Park West
(the “Building”), a residential cooperative owned by defendant
Fifty-Five Corp. (the “Corporation”).
Am. Compl. ¶¶ 36, 37.
Plaintiffs operate fertility clinics, laboratory centers, and
surgical centers in Manhattan, Brooklyn, and Staten Island.
Plaintiffs reside in New Jersey.
Id. ¶¶ 36, 84.
Defendants Peter N. Greenwald, Jane Majeski, Paul J. “PJ”
Mode, Stephen Farinelli, Dr. Ronald Blum, David Hendin, Marc Lasry,
Robin Baum, Stewart Lipson, Sean Gallagher, Meredith Segal, David
Cudaback, Paula Dagen, Lauren Helm, Paula Wardynski, Jeffrey Levy,
and John Santoleri (the “Board Members”) were members of the Board
of Fifty-Five Corporation during the period covered by the Amended
Id. ¶¶ 12, 15-35.
Defendants Frederick Rudd and Rudd
served as managing agent for the Building.
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incorporated and have their principal place of business in -- New
Id. ¶¶ 12-35.
Plaintiffs purchased the Units in 2014 and 2015, planning to
combine the Units and renovate them into a single fertility clinic.
Id. ¶ 38.
The Units sit slightly below sidewalk level.
2014, the Board Members had learned that water was penetrating
from under the Central Park West sidewalk into the Units, but they
discovered the water penetration.
Id. ¶¶ 52-57.
In or around October 2015, at plaintiffs’ request, John
moisture from “perched water” three feet below the
sidewalk was seeping into the Units.
Id. ¶¶ 61-62.
advised the Managing Agent, Rudd, and at least one Board member,
Greenwald, that “re-caulking is cheap and quick” but “the water is
more likely subterranean.”
Id. ¶ 62 & Ex. F.
“Short of tearing up the side walk, or elaborate injection systems,
an interior gutter is a possible fix.”
Plaintiffs allege that “the Corporation did not wish to
allocate the funds required to perform the necessary work to
permanently waterproof the Units because the Corporation preferred
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Id. ¶ 57.
The architect therefore recommended that
plaintiffs apply Aquafin, a sealant, to the fertility clinic’s
interior walls as a temporary solution, and plaintiffs did so.
Id. ¶ 58.
The Board Members chose to allocate $9,500 to re-caulk
the sidewalk (the method the architect had described as “cheap and
quick”) but did not authorize more extensive repairs.
Id. ¶ 66.
At the same Board meeting, which several of the defendant Board
Members, as well as defendant Rudd, attended, the Board allocated
$250,000 to create a rooftop garden.
Id. ¶ 67 & Ex. H.
that time, the Board allocated millions of dollars to a variety of
other capital improvement projects that would improve the quality
of life for residential unit owners, with no benefit to the
plaintiffs as commercial unit owners (e.g., a $1.5 million lobby
beautification project, a $300,000 new roof).
Id. ¶¶ 84, 106-108.
Plaintiffs finished merging and renovating the Units, and
their fertility clinic opened in February 2017.
By at least
December 2017, the Board Members learned that the structural steel
columns beneath the Units were degraded, and the Board hired an
engineer to investigate.
Id. ¶¶ 76-81.
In June 2018, at the
annual shareholder meeting, the Board Members reported to the
shareholders that a structural engineer determined that water was
rusting the columns, causing brick to separate; the Board Members
ordered that the columns be reinforced.
Id. ¶ 81.
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interior walls eventually failed, and water penetrated the clinic
again in July 2019, causing buckling and squishing floors, odors,
water bugs, wet walls, and mold.
Id. ¶¶ 4, 86-91, 138-148.
October 2019, the Board Members directed an engineer to perform a
recommended “removing the sidewalk flags along the building wall
to allow the foundation wall to be waterproofed and install[ing]
a new sidewalk to match [the] existing [one].”
Id. ¶ 93.
the Board Member defendants, Greenwald, then promised plaintiff
George Kofinas that the building would undertake these repairs
immediately after the 2019 Thanksgiving Parade, id. ¶ 96, and the
November 2019 Board meeting minutes likewise report that “[p]lans
and specifications . . . for fixing the water penetration from the
sidewalk into the Fertility Clinic are in process,” id. ¶ 97
But those repairs never happened.
Id. ¶ 99.
“ongoing discussions between the Board and Rudd Management,” the
Board instead began the “New Façade Project,” ostensibly to address
“new and persistent leaks” in residential units on higher floors.
Id. ¶ 111 & Ex. L.
The New Façade Project and the sidewalk and
foundation repair were mutually exclusive because the New Façade
Project required a sidewalk bridge.
The Board told plaintiffs
that the sidewalk and foundation repairs would need to wait until
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after the New Façade Project, repeatedly rejecting plaintiffs’
requests to reverse the sequencing.
Id. ¶¶ 102-104, 120.
attorney Phyllis Weisberg that the leaks into the fertility clinic
were related to the façade and thus plaintiffs would benefit from
the New Façade Project.
Id. ¶ 116.
Plaintiffs allege that the
Board Members caused Weisberg to make this claim and that it was
Id. ¶¶ 114-121.
Plaintiffs then instituted an Article 78
proceeding in New York Supreme Court, seeking to invoke their right
as shareholders to inspect certain records.
In August 2020, Board
averring that plaintiffs had caused the water penetration issues
and that, in any event, the issues had been cured; Weisberg
penetration issues had been cured.
Id. ¶¶ 123-132.
allege that these statements were untrue and contradicted by, among
other things, Weisberg’s prior, February 2020 letter.
In February 2020, plaintiffs retained an indoor environmental
consultant, who confirmed the presence of elevated levels of mold
spores in the Units, including in the air conditioning ducts.
Plaintiffs closed the clinic to conduct internal repairs.
Plaintiffs allege that this closure was caused by the
leaks and mold, not by the COVID-19 pandemic.
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Plaintiffs filed this suit on September 14, 2020.
moved to dismiss under Rule 12(b)(6) on November 20, 2020, ECF No.
December 4, 2020, ECF No. 65. Defendants supplemented their motion
to dismiss to address the Amended Complaint on December 10, 2020,
ECF No. 66, and filed a second motion to dismiss under Rule
12(b)(1) on December 22, 2020, ECF No. 67.
Both motions to dismiss
are now fully briefed.
Under Article III, federal courts may exercise subject matter
jurisdiction only over actual cases and controversies.
Carter v. HealthPort Technologies, LLC, 822 F.3d
allegations of the complaint when assessing standing at the motion
district court will need to make findings of fact in aid of its
decision as to standing.”
Id. at 57.
On a motion to dismiss for failure to state a claim, a court
must accept all factual allegations as true and draw all reasonable
inferences in favor of the non-moving party. See, e.g., ATSI
Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007).
To withstand a motion to dismiss under Rule 12(b)(6), the plaintiff
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must plead facts to state a claim for relief that is plausible on
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
is inappropriate where a plaintiffs’ allegations are “enough to
raise a right to relief above the speculative level.”
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
may consider exhibits to the operative complaint because “the
complaint is deemed to include any written instrument attached to
it as an exhibit.”
Chambers v. Time Warner, Inc., 282 F.3d 147,
152 (2d Cir. 2002).
Lack of Subject Matter Jurisdiction
The Court begins with the second motion to dismiss, which
argues that the Court lacks subject matter jurisdiction because
the Kofinas Fertility Group, P.C., a New York State Professional
Corporation that plaintiffs own, operated the fertility clinic
located in the Kofinas Units and is therefore, defendants argue,
“the real party in interest to the damages herein . . . and not
Plaintiffs in their individual capacities.”
Mem. in Support of
Second Mot. to Dismiss, ECF No. 67-12 (“Second MTD”), at 4.
lack of standing is not always the equivalent of lack of subject
matter jurisdiction, here, where jurisdiction is predicated on
diversity of citizenship, the two merge.
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Because diversity jurisdiction is the sole constitutional
basis for this civil action, plaintiffs must plead standing under
both New York law and Article III of the Federal Constitution.
For present purposes, New York standing law is no stricter than
See Saratoga Cty. Chamber of Commerce, Inc. v.
Pataki, 100 N.Y.2d 801, 812 (2003) (explaining that New York courts
“requir[e] that the litigant have something truly at stake in a
genuine controversy”); Siegel N.Y. Prac. § 136 (6th ed. 2020)
(“[Under New York law,] [o]rdinarily, only the most officious
interloper should be ousted for want of standing.”).
there is Article III standing, there is also standing under New
Article III standing requires that a plaintiff demonstrate
defendants and (3) redressable by the Court.
Carter v. HealthPort
Technologies, LLC, 822 F.3d 47, 55 (2d Cir. 2016).
not challenge the second and third elements, which are plainly
if plaintiffs demonstrate that defendants wrongfully
delayed repairs, in violation of contractual obligations and/or
fiduciary duties, then plaintiffs have plausibly pleaded that the
subsequent water damage and/or business losses were caused by those
And monetary damages would, of course, redress those
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As to the first element -- injury in fact -- defendants devote
most of their brief to the argument that only Kofinas Fertility
Group, and not plaintiffs in their individual capacities, suffered
an injury in fact because “the property that was damaged appears
to have belong [sic] to the medical clinic and not Plaintiffs in
their individual capacity.”
Second MTD 10-11.
with defendants’ argument is simple: the complaint alleges, and
defendants do not dispute, that plaintiffs (not Kofinas Fertility
Group) lease the Units, signed the contract that was allegedly
breached, and are the shareholders to whom a fiduciary duty is
Defendants argue that plaintiffs did not suffer the alleged
lost business income and have not proved that they paid for certain
alleged renovation work.
They invite the Court to wade into a
detailed debate concerning these various categories of damages.
However, that is an issue of fact to be resolved at a later stage
on a fuller record.
The question presented here is standing, and
it is not a close call.
Plaintiffs have alleged water damage to
the Units that they, not Kofinas Fertility Group, lease, and
defendants do not dispute, for present purposes, that plaintiffs
lease the Units or that water damage occurred.
The alleged damage
to real property in which plaintiffs hold an interest constitutes
injury in fact.
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Accordingly, the Court denies defendants’ motion to dismiss
that claims that the Court lacks subject matter jurisdiction and/or
that plaintiffs lack standing.
B. Necessary Party
standing, defendants also point out several times that Kofinas
Fertility Group is a New York citizen.
That point is irrelevant
to standing, so the Court infers that defendants may also be
attempting to argue (though they did not explicitly do so) that
Kofinas Fertility Group is a necessary party pursuant to Federal
Rule of Civil Procedure 19(a)(1), and that its joinder would defeat
Rule 19(a)(1) provides that a person is a necessary
(A) in that person’s absence, the court cannot accord
complete relief among existing parties; or
(B) that person claims an interest relating to the
subject of the action and is so situated that disposing
of the action in the person's absence may:
(i) as a practical matter impair or impede the
person's ability to protect the interest; or
(ii) leave an existing party subject to a
substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the
The Second Circuit has explained that
[a] necessary party must be joined as a party to the
action unless joinder would deprive the court of subject
matter jurisdiction. In those circumstances, the court
must assess whether in equity and good conscience, the
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action should proceed among the existing parties or
should be dismissed by considering the factors provided
in Rule 19(b).
Washington Nat’l Ins. Co. v. OBEX Grp. LLC, 958 F.3d 126, 134–35
(2d Cir. 2020) (internal quotation marks and citation omitted).
Kofinas Fertility Group is not a necessary party under either
19(a)(1)(A), Kofinas Fertility Group’s presence is not necessary
for the Court to accord complete relief among the existing parties.
If plaintiffs prevail, then they, personally, may recover from
Under Rule 19(a)(1)(B), Kofinas Fertility Group might
have “an interest” in these proceedings. But it has not “claim[ed]
an interest.” Fed. R. Civ. P. 19(a)(1)(B) (emphasis added). Under
the law of this Circuit, failure to claim an interest prevents the
Kofinas Fertility Group from being a necessary party under Rule
See Washington Nat’l Ins. Co., 958 F.3d at 135
(explaining that the third party “must claim an interest for Rule
quotation marks omitted); accord Peregrine Myanmar Ltd. v. Segal,
89 F.3d 41, 49 (2d Cir. 1996) (“[S]atisfying the second prong of
Rule 19(a) is ‘contingent [ ] upon an initial requirement that the
absent party claim a legally protected interest relating to the
subject matter of the action.’”) (quoting with approval Northrop
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Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1043 (9th Cir.
Accordingly, this case can proceed without Kofinas Fertility
Group, and diversity remains complete.
Failure to State a Claim
Defendants’ other motion to dismiss challenges Counts Three
through Six, arguing pursuant to Rule 12(b)(6) that they fail to
state a claim upon which relief can be granted.
These four claims
Defendants’ brief is not a paragon of clarity, but
the Court discerns two overarching arguments.
contend that plaintiffs merely disagree with defendants’ ordinary
business judgments, so the business judgment rule protects the
Board Members against liability.
Second and relatedly, defendants
argue that the Board Members are protected by a New York doctrine
that shields Board Members from liability for alleged misconduct
undertaken in the Board Members’ capacities as Board Members.
Court considers these two arguments in turn.
The Business Judgment Rule
The business judgment rule, which New York has long followed
with respect to corporate boards, applies also to decisions made
by the board of a residential cooperative.
The seminal case is
Levandusky v. One Fifth Ave. Apt. Corp., 75 N.Y.2d 530 (1990).
Levandusky established that, “[i]n the context of cooperative
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dwellings, the business judgment rule provides that a court should
defer to a cooperative board's determination ‘[s]o long as the
board acts for the purposes of the cooperative, within the scope
of its authority and in good faith.’” 40 W. 67th St. Corp. v.
Pullman, 100 N.Y.2d 147, 153 (2003) (quoting Levandusky, 75 N.Y.2d
Nevertheless, Levandusky is not a “rubber stamp,” and
courts have found that “arbitrary or malicious decision making or
decision making tainted by discriminatory considerations is not
protected by the business judgment rule.”
Inc., 99 A.D.3d 43, 48 (1st Dep’t 2012).
Fletcher v. Dakota,
recognized that “the broad powers of a cooperative board hold
making, favoritism, discrimination and the like.”
N.Y.2d at 536.
The principal issue here is whether plaintiffs have plausibly
alleged “favoritism,” id., because in such cases New York courts
have declined to apply the protections of the business judgment
New York courts do not require allegations of self-dealing;
“pleading unequal treatment of shareholders will suffice” at the
motion to dismiss stage.
Bryan v. W. 81 St. Owners Corp., 186
A.D.2d 514, 515 (1st Dep’t 1992).
A First Department case, Louis & Anne Abrons Foundation, Inc.
v. 29 E. 64th St. Corp., 297 A.D.2d 258, 260 (1st Dep’t 2002), is
In Louis & Anne Abrons Foundation, a residential
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cooperative imposed a new subleasing fee, but the only unit that
was permitted to sublease in the first place was the commercial
Plaintiff, owner of the commercial unit, contended that it
was singled out for inferior treatment, and that the business
judgment rule should not apply.
The trial court granted summary
judgment for the defendants, but the First Department reinstated
the complaint, finding that “plaintiff has presented sufficient
evidence to raise a triable issue of fact as to whether the sublet
fee was imposed in bad faith and meant to solely impact plaintiff,”
thus preventing application of the business judgment rule.
Here, plaintiffs allege something similar: that the defendant
Board Members had known of leak issues in the Units since at least
2014, and that in 2015 the building’s architect reported that there
was a larger structural issue. Plaintiffs allege that, despite
this knowledge, the Board then chose to pursue projects to advance
the interests of residential shareholders, while not addressing a
plaintiffs allege that in 2019-2020, aware of increasingly serious
issues affecting plaintiffs’ Units (rusting steel support beams,
mold, and the like), the Board still advanced residential tenants’
interests over the interests of the plaintiffs -- even though,
tenants’ leaks as “new,” unlike the plaintiffs’ longstanding and
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Foundation, and drawing all reasonable inferences in plaintiffs’
favor as the Court must at this stage, the Court holds that
favored residential tenants over commercial tenants in bad faith.
Therefore, at this stage, the Court finds that the business
judgment rule does not bar plaintiffs’ claims.
Board Members’ Acts in Scope of Employment
Counts Four and Five target only the Board Member defendants.
Those defendants seek dismissal of those claims, arguing that they
cannot be held liable because they took the challenged acts on
behalf of the Corporation and plaintiffs pleaded no independent
Defendants claim that “Plaintiffs are required to plead with
Supp. Mem. in Support of First Mot. to Dismiss, ECF
No. 66, at 11 (citing Pelton v 77 Park Ave. Condominium, 38 A.D.3d
1 (1st Dep’t 2006)).
However, Pelton was overturned in pertinent
As the First Department later explained, “Pelton failed to
liability in the breach of contract context (understood to provide
a shield against liability) from the principles applicable to tort
cases (where there is no such shield).”
99 A.D.3d 43, 50 (1st Dep’t 2012).
Fletcher v. Dakota, Inc.,
Case 1:20-cv-07500-JSR Document 82 Filed 02/16/21 Page 18 of 22
Given that New York courts apply this “shield” only against
contract claims, Counts Three and Four are not similarly situated.
Count Three (breach of fiduciary duty) alleges a tort, so “there
is no such shield.”
If defendants breached their
fiduciary duties, even while acting as agents of the corporation,
Therefore, Count Three states a legally sufficient claim (as does
Count Five, which charges the Managing Agent with aiding and
abetting the alleged breach of fiduciary duty).
However, Count Four seeks damages for tortious interference
While tortious interference with contract is
nominally a tort, the gravamen of the tort is simply that the
defendant intentionally induced a third party to breach a known
contract, causing damages.
See Lama Holding Co. v. Smith Barney,
Inc., 88 N.Y.2d 413 (1996).
Here, that third party is the
Corporation, on whose behalf the Board Members were acting.
these circumstances, New York principles of corporate liability
shield the Board Members from liability, absent allegations of
tortious conduct independent of the Board Members’ actions qua
See Fletcher, 99 A.D.3d at 50 (internal quotation
marks and citation omitted) (“[A] corporate officer will not be
held liable for inducing the breach of a contract between the
corporation and a third party if he committed no independent torts
Case 1:20-cv-07500-JSR Document 82 Filed 02/16/21 Page 19 of 22
or predatory acts . . . independent of that tort [of interference
liability bar the claim for tortious interference with contract.
For these reasons, Count Four fails to state a claim as a
matter of law, and the Court dismisses that claim.
charges the Managing Agent with aiding and abetting the tortious
interference with contract alleged in Count Four.
Count Six is,
thus, derivative of Count Four and is also dismissed.
complaint that would cure the defects.
Finally, defendants move to dismiss each count insofar as it
seeks punitive damages.
The parties’ citations to lower court
cases offer mixed authority regarding when punitive damages are
available under New York law.
These opinions reflect a broader
confusion in the New York case law. See generally Kevin Schlosser,
Clarifying Punitive Damage Confusion, N.Y.L.J. (Jan. 22, 2008).1
differently a case sounding purely in tort and a case having “its
genesis in the contractual relationship between the parties.” New
York Univ. v. Cont'l Ins. Co., 87 N.Y.2d 308, 16 (1995).
Case 1:20-cv-07500-JSR Document 82 Filed 02/16/21 Page 20 of 22
plaintiffs’ claims all have their genesis in the contractual
relationship between the plaintiffs, as lessees, and the Building,
See, e.g., Rocanova v. Equitable Life Assur. Soc. of
U.S., 83 N.Y.2d 603, 613
(1994) (applying the doctrine even though
“the conduct constituting, accompanying, or associated with the
breach of contract” included alleged fraud).
In a pair of opinions in 1994 and 1995, the New York Court of
Appeals clarified when punitive damages are available under New
[D]amages arising from the breach of a contract will
ordinarily be limited to the contract damages necessary
to redress the private wrong, but . . . punitive damages
may be recoverable if necessary to vindicate a public
Punitive damages are available only in those
limited circumstances where it is necessary to deter
defendant and others like it from engaging in conduct
that may be characterized as “gross” and “morally
reprehensible,” and of “such wanton dishonesty as to
imply a criminal indifference to civil obligations[.]”
We set forth in the decision the pleading elements
required to state a claim for punitive damages as an
additional and exemplary remedy when the claim arises
from a breach of contract. They are: (1) defendant's
conduct must be actionable as an independent tort; (2)
the tortious conduct must be of the egregious nature set
forth in [Walker v. Sheldon, 10 N.Y.2d 401, 404-405
(1961)]; (3) the egregious conduct must be directed to
plaintiff; and (4) it must be part of a pattern directed
at the public generally.
New York Univ., 87 N.Y.2d at 315–16.
As noted, this Court finds that plaintiffs’ claims for breach
of fiduciary duty and for aiding and abetting the breach of
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fiduciary duty survive the motion to dismiss, and defendants do
not challenge the claim for negligence at this stage.
as to each defendant, plaintiffs have plausibly alleged misconduct
that is “actionable as an independent tort.”
87 N.Y.2d at 316.
See New York Univ.,
However, plaintiffs’ allegations do not amount
to tortious conduct as “part of a pattern directed at the public
While members of the public might arguably
be harmed by the alleged water damage if the fertility clinics
remained open, plaintiffs do not allege that defendants’ conduct
was “directed” at anyone other than plaintiffs, let alone “at the
Instead, plaintiffs argue that they need not show a public
The First Department held in a 2003 case that a ”punitive
damages claim is viable in light of the tort cause of action for
Kleinerman v. 245 E. 87 Tenants Corp., 105 A.D.3d 492, 493 (2013)
(citing Bishop v. 59 W. 12th St. Condominium, 66 A.D.3d 401 [1st
The claims in Kleinerman and Bishop had their
genesis in a contractual relationship indistinguishable from the
relationship in this action, so these cited cases conflict with
Rocanova and New York University, the 1994 and 1995 Court of
Appeals cases cited above.
However, Kleinerman and Bishop neither
applied nor distinguished Rocanova and New York University, and,
more important, this Court has found no Court of Appeals case
Case 1:20-cv-07500-JSR Document 82 Filed 02/16/21 Page 22 of 22
overturning those precedents.
This Court is bound to follow
Rocanova and New York University, precedent issued by New York’s
highest court, rather than the contrary decisions of lower courts.
See TVT Records v. Island Def Jam Music Grp., 412 F.3d 82, 94 &
n.12 (2d Cir. 2005) (noting conflicting case law on this issue but
concluding that the rule articulated in Rocanova “has not been
changed by the Court of Appeals, and we have no reason to question
its continued vitality”).
Because plaintiffs have not alleged a pattern of misconduct
directed at the public, plaintiff cannot recover punitive damages,
so all claims for punitive damages are dismissed (though again
these dismissals are, at this stage, without prejudice).
For these reasons, the Court, by order dated January 29, 2021,
failure to state a claim with respect to Counts Four and Six
(tortious interference with contract and aiding and abetting the
same) and all claims for punitive damages, and denied defendants’
motions to dismiss in all other respects.
New York, NY
February 16, 2021
JED S. RAKOFF, U.S.D.J.
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