YABLON v. STERN (2018)

Order, Supreme Court, New York County (David B. Cohen, J.), entered March 30, 2017, which granted defendant's motion pursuant to CPLR 3211(a)(7) insofar as it dismissed the first and second causes of action, and denied it as to the third, unanimously modified, on the law, to deny so much of defendant's motion as sought dismissal of the second cause of action, for conversion, and otherwise affirmed, without costs.

Plaintiffs retained defendant's company to renovate their apartment and have sufficiently alleged that defendant, the principal of the company, personally engaged in fraudulent conduct by eliciting downpayments and deposits for the purported purposes of making advance payments to subcontractors and material suppliers.  However, in certain instances, defendant did not make these payments, and falsely recorded in the corporate business's documentation that the payments had been made (see 277 Mott St., LLC v. Fountainhead Constr. LLC, 83 A.D.3d 541, 922 N.Y.S.2d 299 [1st Dept. 2011]; Delta Dallas Omega Corp. v. Wair Assoc., 189 A.D.2d 701, 592 N.Y.S.2d 718 [1st Dept. 1993] ).  Plaintiffs justifiably relied on the misrepresentations and were induced to make additional deposits to ensure timely performance, resulting in injury.

When plaintiffs terminated the contract mid-construction and demanded a return of $400,000 of the $840,000 they had paid, defendant allegedly returned only $84,622.65, without providing an accounting, and allegedly diverted the balance of such monies to his personal use.  These allegations sufficiently state a cause of action for conversion (see Lemle v. Lemle, 92 A.D.3d 494, 497, 939 N.Y.S.2d 15 [1st Dept. 2012]; Passaic Falls Throwing Co. v. Villeneuve–Pohl Corp., 169 A.D. 727, 155 N.Y.S. 669 [1st Dept. 1915] ).

Plaintiffs' cause of action alleging fraud in the inducement was properly dismissed, as it is founded upon non-actionable promises of future conduct or events, rather than present fact (see Archstone Dev. LLC v. Renval Constr. LLC, 156 A.D.3d 432, 67 N.Y.S.3d 7 [1st Dept. 2017]; Ullman v. Hillyer, 106 A.D.3d 579, 965 N.Y.S.2d 711 [1st Dept. 2013], lv denied 22 N.Y.3d 860, 2014 WL 223765 [2014] ) and non-actionable opinion of defendant as to his entity's resources and capability of undertaking the luxury renovation work sought by plaintiffs (see Jacobs v. Lewis, 261 A.D.2d 127, 689 N.Y.S.2d 468 [1st Dept. 1999]; Ullman, 106 A.D.3d 579, 965 N.Y.S.2d 711).