Fischer et al v. Graham
Filing
39
OPINION & ORDER re: 20 MOTION to Dismiss filed by Jean Wendy Graham. For the foregoing reasons, Defendant's motion to dismiss the Complaint is GRANTED. The Court respectfully directly the Clerk to terminate the motion at ECF No. 20 and close the case. SO ORDERED. (Signed by Judge Nelson Stephen Roman on 6/3/2016) (mml)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
JEFFREY FISCHER and PETER FISCHER,
Plaintiffs,
No. 15-cv-6414 (NSR)
-against-
OPINION & ORDER
JEAN WENDY GRAHAM,
Defendant.
NELSON S. ROMAN, United States District Judge
Plaintiffs Jeffrey Fischer and Peter Fischer bring this action against Defendant Jean
Wendy Graham alleging claims of breach of fiduciary duty, conversion, money had and
received, and unjust enrichment in connection with their purpmted rights to receive certain sums
of money held in their deceased parents' bank account. Plaintiffs additionally request equitable
relief and the imposition of a constructive trust. Before the Court is Defendant's motion to
dismiss Plaintiffs Complaint pursuant to Rules 12(b)(J), (b)(6), and (c) of the Federal Rules of
Civil Procedure. For the following reasons, Defendant's motion is GRANTED.
BACKGROUND
The following facts are taken from the Complaint (ECF No. I) unless otherwise noted,
and are accepted as ttue for purposes of this motion.
Plaintiffs and Defendant are siblings.
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parents opened a bank account (the "Joint Account").
6.) On or before 2009, the parties'
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9.) On or around 2010, the parties'
parents added Defendant as an account party to the Joint Account so that Defendant could assist
in paying the expenses of the parties' parents.
funds to the -~q!n!.'.'.ccount.
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13-14.) Defendant did not contribute
11.) The parties' mother passed away on October 30, 2014,
and the parties’ father passed away on June 6, 2015. (Id. ¶¶ 7–8.) At that time, the balance of
the Joint Account was in excess of $118,000. (Id. ¶ 21.)
The Complaint alleges that the parties’ parents instructed Defendant to divide the Joint
Account into thirds upon their death, with each of the children receiving equal shares. (Id. ¶ 16.)
On June 22, 2015, Defendant sent an email to Plaintiff Jeffrey Fischer concerning the Joint
Account: “$118,000 divided by 3 is $39,000. If it is OK with you, I would like to send you a
check for $14,000 and another to Molly for $14,000 so that you will have $28,000 of what is
yours.” (Id. ¶ 22; Ex. A.) In reply to that email, Plaintiff Jeffrey Fischer requested that the
siblings discuss the Joint Account in-person “when we are [in New York] together on the 23rd.”
(Id. ¶ 23; Ex. B.) Defendant replied that she may not be available on that date and wished “to
distribute the money now.” (Id. ¶ 24; Ex. C.) Subsequently, Defendant refused to distribute any
of the funds from the Joint Account to Plaintiffs. (Id. ¶ 25.) Instead, Defendant informed
Plaintiffs that she intended to keep all of the money in the Joint Account and add her husband as
an account holder. (Id. ¶ 26.) To date, Defendant has failed to make any distributions out of the
Joint Account to Plaintiffs. (Id. ¶ 27.)
LEGAL STANDARDS
I.
Motion to Dismiss Standards
“A case 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.” Nike, Inc. v.
Already, LLC, 663 F.3d 89, 94 (2d Cir. 2011) (internal quotation omitted). “A plaintiff asserting
subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it
exists.” Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008) (quoting
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). In assessing whether there is
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subject matter jurisdiction, the Court must accept as true all material facts alleged in the
complaint, Conyers v. Rossides, 558 F.3d 137, 143 (2d Cir. 2009), but “the court may resolve
[any] disputed jurisdictional fact issues by referring to evidence outside of the pleadings, such as
affidavits . . . .” Zappia Middle E. Const. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 253 (2d
Cir. 2000).
Under Rule 12(b)(6), the inquiry is whether the complaint “contain[s] sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678, (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007));
accord Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010). The Court, again, must take all
material factual allegations as true and draw reasonable inferences in the non-moving party’s
favor, but the Court is “ ‘not bound to accept as true a legal conclusion couched as a factual
allegation.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). “While legal
conclusions can provide the framework of a complaint, they must be supported by factual
allegations.” Id. at 679. When there are well-pleaded factual allegations in the complaint, “a
court should assume their veracity and then determine whether they plausibly give rise to an
entitlement to relief.” Id. A claim is facially plausible when the factual content pleaded allows a
court “to draw a reasonable inference that the defendant is liable for the misconduct alleged.” Id.
at 678.
II.
Judgment on the Pleadings Standard
Under Federal Rule of Civil Procedure 12(c), “[a]fter the pleadings are closed—but early
enough not to delay trial—a party may move for judgment on the pleadings.” Fed. R. Civ. P.
12(c). “To survive a Rule 12(c) motion, the complaint must contain sufficient factual matter to
‘state a claim to relief that is plausible on its face.’” Graziano v. Pataki, 689 F.3d 110, 114 (2d
3
Cir. 2012) (quoting Twombly, 550 U.S. at 570). The standard for analyzing a motion for
judgment on the pleadings under Rule 12(c) is identical to the standard for a motion to dismiss
for failure to state a claim under Rule 12(b)(6). Cleveland v. Caplaw Enters., 448 F.3d 518, 521
(2d Cir. 2006); see also Fed. R. Civ. P. 12(b)(6). “Judgment on the pleadings ‘is appropriate
where material facts are undisputed and where a judgment on the merits is possible merely by
considering the contents of the pleadings.’” Virgin Grp. Holdings Ltd. v. Energy Parametics &
Commc’ns, Inc., No. 10-cv-08752 (BSJ) (THK), 2011 WL 4448943, at *1 (S.D.N.Y. Sept. 26,
2011) (quoting Sellers v. M.C. Floor Crafters Inc., 842 F.2d 639, 642 (2d Cir. 1988)).
DISCUSSION
Defendant submits that dismissal of the instant action is appropriate on two alternative
bases: (1) the Court lacks jurisdiction to adjudicate Plaintiffs’ claims because the Joint Account
is an estate asset and the parties’ parents’ will has not yet been submitted to probate, or (2) even
if the Joint Account were to pass outside the estate, Plaintiffs have failed to allege a basis for
their entitlement to funds from the Joint Account. The Court first considers Defendant’s
jurisdictional challenge.
I.
Probate Exception to Federal Jurisdiction
The “probate exception” to federal diversity jurisdiction “reserves to state probate courts
the probate or annulment of a will and the administration of a decedent’s estate” and “precludes
federal courts from endeavoring to dispose of property that is in the custody of a state probate
court.” Marshall v. Marshall, 547 U.S. 293, 296 (2006). “But it does not bar federal courts from
adjudicating matters outside those confines and otherwise within federal jurisdiction.” Id. In
Marshall, the Supreme Court clarified the scope of the probate exception, holding it applies to
claims that: (1) “involve the administration of an estate, the probate of a will, or any other purely
4
probate matter” and (2) “seek to reach a res in the custody of a state court.” Id. at 312 (internal
quotations and citations omitted). Notably, the Second Circuit has interpreted the probate
exception to have a “limited application.” Lefkowitz v. Bank of New York, 528 F.3d 102, 106 (2d
Cir. 2007).
In the present case, Plaintiffs seek the distribution of funds from the Joint Account to
which Defendant is an account party. Plaintiffs’ claims cannot be interpreted as a purely probate
matter, and Plaintiffs are not seeking to probate a will. Therefore, the first prong of the probate
exception is inapplicable. Additionally, because Plaintiffs do not seek the distribution of estate
funds under the control of a probate court, any relief granted by this Court would not require it to
interfere with res in the custody of a state court, rendering the second prong of the probate
exception inapplicable. See Lifschultz v. Lifschultz, No. 12-cv-1881 (ER), 2012 WL 2359888, at
*6 (S.D.N.Y. June 20, 2012). “Where a plaintiff seeks to ‘recover assets allegedly in [a
defendant’s] possession so that they may be returned to the estate,’ the probate exception does
not apply.” Capponi v. Murphy, 772 F. Supp. 2d 457, 466 (S.D.N.Y. 2009) (quoting Popple v.
Crouse, No. 06-cv-1567, 2007 WL 2071627, at *2 (D. Conn. July 13, 2007) (Plaintiff’s “claims
for unjust enrichment, breach of fiduciary duty, conversion, and theft demonstrate that the
purpose of this action is to recover assets allegedly in Crouse's possession so that they may be
returned to the estate. Neither of the two narrow applications of the probate exception is
germane to this case, and, accordingly, this Court must retain its jurisdiction.”)). 1 Accordingly,
this Court has jurisdiction over the instant action.
1
Additionally, the instant action is distinguishable from the case relied upon by Defendant—Fisch v. Fisch, No. 14cv-1516 (NSR), 2014 WL 5088110 (S.D.N.Y. Sept. 23, 2014) (“Fisch”). In Fisch, this Court determined that the
probate exception was applicable because (1) Defendant was sued in her capacity as Executrix of the estate and (2)
if Plaintiff were to succeed on the merits of his claim, a Court order would implicate the distribution of a res under
the control of the Surrogate Court. 2014 WL 5088110, at *3. Here, however, Defendant is being sued in her
personal capacity for her own actions (alleged failure to distribute the Joint Account funds equally) and the Joint
Account is not a res in the custody of a state court.
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II.
Breach of Fiduciary Duty
“The elements of a cause of action for participation in a breach of fiduciary duty are:
breach by a fiduciary of a duty owed to plaintiff; defendant's knowing participation in the breach;
and damages.” SCS Commc’ns, Inc. v. Herrick Co., 360 F.3d 329, 342 (2d Cir. 2004). Here,
Defendant contends that dismissal of the breach of fiduciary duty claim is appropriate because no
fiduciary relationship exists between Plaintiffs and Defendant. (Def.’s Mot. at 6–7.) However,
Plaintiffs assert that a fiduciary relationship exists (1) by virtue of the fact that Plaintiffs and
Defendant are siblings and (2) because of Defendant’s promise to distribute the funds of the Joint
Account to Plaintiffs. (Pls.’ Opp. at 13.)
A sibling relationship, standing alone, does not establish a per se fiduciary relationship.
See Almazan v. Almazan, No. 14-cv-311 (AJN), 2015 WL 500176, at *12 (S.D.N.Y. Feb. 4,
2015) (“While courts have inferred fiduciary relationships based on familial bond in particular
instances, they generally do not accept the premise that familial bond, alone, is sufficient.”)
(citations omitted). Instead, courts typically require additional allegations suggesting “one party
reposing confidence and trust in the other,” in addition to a familial relationship, to successfully
allege the existence of a fiduciary relationship.
Here, the additional allegations propounded by Plaintiffs, taken together with the parties’
familiar relationship, cannot establish a fiduciary relationship between the parties. “Essential
elements of a fiduciary relationship are de facto control and dominance by one party and reliance
by the other. The dominant party must be under a duty to give advice and act for the benefit of
the other upon matters within the scope of the relation.” 28 N.Y. Prac., Contract Law § 21:65.
See also United States v. Chestman, 947 F.2d 551, 568 (2d Cir. 1991) (“At the heart of the
fiduciary relationship lies reliance, and de facto control and dominance.”) (internal citations and
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quotations omitted). In the first instance, Plaintiffs admit that they are not beneficiaries to the
account, nor are they account holders. Instead, Plaintiffs rely upon the sole allegation that
Defendant agreed to divide the funds of the Joint Account equally upon their parents’ deaths as
evidence of the fiduciary relationship. However, a mere promise does not does not bestow de
facto control and dominance upon Defendant over Plaintiffs. See Borumand v. Assar, No. 01-cv6258P, 2005 WL 741786, at *10 (W.D.N.Y. Mar. 31, 2005) (citing Chipman v. Steinberg, 106
A.D.2d 343, 483 N.Y.S.2d 256 (1st Dep’t 1984), aff’d, 65 N.Y.2d 842, 493 N.Y.S.2d 129, 482
N.E.2d 925 (1985)). Additionally, Plaintiffs’ conclusory allegation that “[a] fiduciary
relationship existed” is insufficient to establish a fiduciary relationship. See Childers v. New
York & Presbyterian Hosp., 36 F. Supp. 3d 292, 306 (S.D.N.Y. 2014) (quoting Faktor v. Yahoo!
Inc., No. 12-cv-5220, 2013 WL 1641180, at *3 (S.D.N.Y. 2013)). Therefore, the Court
dismisses Plaintiffs’ breach of fiduciary duty claim. 2
III.
Conversion
Plaintiffs assert that they possess a right and interest in the Joint Account by virtue of the
parties’ parents’ instructions regarding the distribution of the Joint Account and Defendant’s
agreement to distribute funds from the Joint Account to her brothers upon the death of their
parents. “‘To establish a cause of action to recover damages for conversion, a plaintiff must
show legal ownership or an immediate superior right of possession to a specific identifiable thing
and must show that the defendant exercised an unauthorized dominion over the thing in question
to the exclusion of the plaintiff’s rights.’” Barnet v. Drawbridge Special Opportunities Fund LP,
No. 14-CV-1376 PKC, 2014 WL 4393320, at *19 (S.D.N.Y. Sept. 5, 2014) (quoting Nat’l Ctr.
for Crisis Mgmt., Inc. v. Lerner, 91 A.D.3d 920 (2d Dep’t 2012)). “Tangible personal property
2
The absence of a fiduciary relationship also warrants dismissal of Plaintiffs’ claim for a constructive trust. See
Almazan, 2015 WL 500176, at *13.
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or specific money must be involved.” Lerner, 91 A.D.3d at 921 (internal citations and quotation
marks omitted) (emphasis in original). Where, as here, the subject of the conversion claim is
money, rather than other personal property, there must be “a specific, identifiable fund and an
obligation to return or otherwise treat in a particular manner the specific fund in question.”
Barnet, 2014 WL 4393320, at *21 (quoting Thys v. Fortis Sec. LLC., 74 A.D.3d 546, 547 (1st
Dep’t 2010)). Finally, “a plaintiff must have either possessed the money or had a right to
immediate possession of the money.” Barnet, 2014 WL 4393320, at *2 (citing Ehrlich v. Howe,
848 F.Supp. 482, 492 (S.D.N.Y. 1994) (to establish a claim for conversion of money based on a
purported future interest, a plaintiff must allege “that the money converted was in specific
tangible funds of which the plaintiff was the legal owner and entitled to immediate possession”)).
Although it is not entirely clear whether New York permits conversion claims based on a
right to future possession, see Barnet, 2014 WL 4393320, at *20 (citing Solow v. Delit, No.
71943, 1993 WL 322838, at *6 (S.D.N.Y. Aug. 16, 1993)), even if it did, Plaintiffs have not
alleged that they ever possessed the funds located in their parents’ account or had any right to the
immediate possession of those funds. Such allegations are required to state a claim for
conversion of money under New York law. See Barnet, 2014 WL 4393320, at *21 (citing
Ehrlich, 848 F. Supp. at 492). Instead, Plaintiffs assert that their conversion claim is premised
upon Defendant’s future promise to disburse equally funds from the Joint Account. That future
promise, however, cannot support a claim for conversion. Plaintiffs’ lack of actual possession,
or a right to immediate possession, of the funds in their parents’ accounts is fatal to their
conversion claim. It is therefore dismissed.
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IV.
Unjust Enrichment and Money Had and Received Claims
Finally, the Court turns to Plaintiffs’ claims for unjust enrichment and money had and
received. 3 “To prevail on a claim for unjust enrichment in New York, a plaintiff must establish
(1) that the defendant benefitted; (2) at the plaintiff’s expense; and (3) that equity and good
conscience require restitution.” Almazan, 2015 WL 500176, at *14 (internal quotation and
citation omitted). Additionally, “[u]nder New York law, an action for money had and received
lies when ‘(1) defendant received money belonging to plaintiff; (2) defendant benefitted from the
receipt of money; and (3) under principles of equity and good conscience, defendant should not
be permitted to keep the money.’” Panix Promotions, Ltd. v. Lewis, No. 01-cv-2709 (HB), 2002
WL 122302, at *2 (S.D.N.Y. Jan. 22, 2002) (quoting Aaron Ferer & Sons Ltd. v. Chase
Manhattan Bank, Nat’l Ass’n, 731 F.2d 112, 125 (2d Cir. 1984) (citation omitted)); see also
Parsa v. State, 64 N.Y.2d 143, 148, 474 N.E.2d 235 (1984) (a claim for money had and received
is premised upon “an obligation which the law creates in the absence of agreement when one
party possesses money that in equity and good conscience he ought not to retain and that belongs
to another”). “Traditionally, the remedy for money had and received is available if one man has
obtained money from another, through the medium of oppression, imposition, extortion, or
deceit, or by the commission of a trespass.” Panix, 2002 WL 122302, at *2.
The Complaint contains no allegations that Defendant came to possession of the Joint
Account through oppression, imposition, extortion, or deceit, or by the commission of a trespass.
Instead, the Complaint acknowledges that the parties’ parents added Defendant as an account
holder, and Defendant retained sole possession of the Joint Account upon the parties’ parents’
3
The cause of action for money had and received “is essentially identical to a claim of unjust enrichment.” Belda v.
Doerfler, No. 14-cv-941 (AJN), 2015 WL 5737320, at *4, n.4 (S.D.N.Y. Sept. 30, 2015), appeal dismissed (Jan. 7,
2016) (collecting cases).
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deaths. Nevertheless, Plaintiffs assert that they are entitled to funds from the Joint Account on
the basis of their sister's promise to their parents and emails exchanged between Plaintiffs and
Defendant. Unfortunately for Plaintiffs, their argument is defeated by the undeniable fact that
Defendant-not Plaintiffs-has a possessory interest in the Joint Account. Moreover, even
taking all the allegations in the Complaint as true, the principles of equity and good conscience
do not require Defendant to hand over money from the Joint Account to Plaintiffs. Defendant
was the sole account holder of the Joint Account upon the parties' parents' deaths-Plaintiffs are
not and never have been account holders. Therefore, Defendant neither benefitted at Plaintiffs'
expense nor received money belonging to Plaintiffs because Plaintiffs never had an interest in the
Joint Account. 4 Accordingly, Plaintiffs' claims for unjust enrichment and money had and
received are dismissed.
CONCLUSION
For the foregoing reasons, Defendant's motion to dismiss the Complaint is GRANTED.
The Court respectfully directly the Clerk to terminate the motion at ECF No. 20 and close the
case.
Dated:
June j_, 2016
White Plains, New York
SO ORDERED:
?
NELSON S. ROMAN
United States District Judge
' The instant case is distinguishable from Almazan. In that case, the plaintiffs gave their daughter, one of the
defendants, money to make an initial purchase of an apartment in New York City. 2015 WL 500176, at *I. In turn,
the defendant daughter listed her mother's name on the shares of the co-op. Id. Subsequently, the defendant
daughter purchased and sold a fe\v more properties, each ti1ne promising her parents that her 1nother's na1ne was
listed on the title for the prope1ties. Id. at *2-3. Ultimately, the plaintiffs discovered that the defendant had not
added her mother's name to the properties' titles. The court concluded that the plaintiffs had allegedprimafacie
cases of unjust enrichment and money had and received because the defendant "undoubtedly benefitted at the
expense" of her parents by virtue of their contribution of money to purchase the initial apartment. Id. at* 14. Here,
however, Defendant has not benefitted at the expense of Plaintiffs because Plaintiffs have no legal right to funds
from the Joint Account.
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