RKA FILM FINANCING LLC v. KAVANAUGH (2018)

Judgment, Supreme Court, New York County (Charles E. Ramos, J.), entered July 28, 2017, dismissing the complaint as against defendant Steven Mnuchin, unanimously affirmed, with costs.  Appeal from order, same court and Justice, entered June 27, 2017, which granted Mnuchin's motion to dismiss, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

The allegations underlying the fraud causes of action do not give rise to a reasonable inference that defendant Mnuchin participated in, or had knowledge of, the alleged fraud scheme (see Pludeman v. Northern Leasing Systems, Inc., 10 N.Y.3d 486, 492, 860 N.Y.S.2d 422, 890 N.E.2d 184 [2008];  Prudential–Bache Metal Co. v. Binder, 121 A.D.2d 923, 926, 504 N.Y.S.2d 646 [1st Dept. 1986] ).  The allegation that the board of directors of Relativity Media, LLC was involved in the company's day-to-day operation and financial transactions is insufficient to raise an inference that Mnuchin, by virtue of his position on the board, personally participated in or had knowledge of the other defendants' alleged fraud (see High Tides, LLC v. DeMichele, 88 A.D.3d 954, 959, 931 N.Y.S.2d 377 [2d Dept. 2011];  Northern Valley Partners, LLC v. Jenkins, 23 Misc.3d 1112[A], 2009 N.Y. Slip Op. 50721[U], *6–8, 2009 WL 1058162 [Sup. Ct., New York County 2009] ).  The allegation that Mnuchin became aware, through due diligence conducted by companies he owned in conjunction with previous transactions with Relativity, that the funds that plaintiff had invested were used for working capital, and not for print and advertising expenses only, as it had been promised by the other defendants, is insufficient to raise the inference that he was aware that misrepresentations had been made or that they were part of a fraud scheme.

The negligent misrepresentation cause of action fails to allege any direct contact between Mnuchin and plaintiff that could give rise to the requisite special relationship (see Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 180–181, 919 N.Y.S.2d 465, 944 N.E.2d 1104 [2011];  see also MBIA Ins. Corp. v. Countrywide Home Loans, Inc., 87 A.D.3d 287, 296, 928 N.Y.S.2d 229 [1st Dept. 2011] ).  Moreover, Mnuchin's alleged superior knowledge of the other defendants' alleged wrongdoing does not constitute “unique or specialized expertise” (Greentech Research LLC v. Wissman, 104 A.D.3d 540, 540–541, 961 N.Y.S.2d 406 [1st Dept. 2013] ).