NUNTNARUMIT v. LYCEUM PARTNERS LLC (2018)

Order, Supreme Court, New York County (Charles E. Ramos, J.), entered November 24, 2017, which granted defendants' motions to dismiss the complaint, unanimously affirmed, without costs.

Plaintiffs allege that defendants Lyceum Partners (Lyceum) and Jacob Katsman (Katsman) engaged in, inter alia, fraud, breach of fiduciary duty, breach of contract, rescission, negligent misrepresentation, and conversion in connection with a transaction involving their transfer of shares in a Thai company to Lyceum pursuant to Master Repurchase Agreements.

The releases executed by plaintiffs and Lyceum are a complete defense to all claims asserted against Lyceum (see Booth v. 3669 Delaware, 92 N.Y.2d 934, 680 N.Y.S.2d 899, 703 N.E.2d 757 [1998];  Skluth v. United Merchants & Mfrs., 163 A.D.2d 104, 106, 559 N.Y.S.2d 280 [1st Dept. 1990], appeal withdrawn 79 N.Y.2d 976, 583 N.Y.S.2d 189, 592 N.E.2d 797 [1992] ).  Plaintiffs argue that the releases were executed under duress.  However, “[t]he threatened exercise of a legal right cannot constitute duress” (76 Third Ave. LLC v. ORIX Capital Mkts., LLC, 26 A.D.3d 216, 218, 812 N.Y.S.2d 8 [1st Dept. 2006] ).  Moreover, having accepted the benefit of a settlement of their dispute with Lyceum, plaintiffs cannot attempt to void the settlement on the basis that it was entered into through duress (Foundry Capital Sarl v. International Value Advisers, LLC, 96 A.D.3d 620, 621, 947 N.Y.S.2d 98 [1st Dept. 2012];  Liberty Marble v. Elite Stone Setting Corp., 248 A.D.2d 302, 304, 670 N.Y.S.2d 836 [1st Dept. 1998] ).

The individual claims against Katsman for fraud, unjust enrichment and conversion were properly dismissed.  The complaint does not state factual allegations that Katsman acted other than in his corporate capacity as a principal of Lyceum.  The unjust enrichment claim fails as plaintiffs have not sufficiently alleged that Katsman stood to gain personally from the transaction (see Ishin v. QRT Mgt., LLC, 133 A.D.3d 449, 450, 20 N.Y.S.3d 17 [1st Dept. 2015], lv denied 27 N.Y.3d 907, 2016 WL 3150649 [2016];  Hakim v. Hakim, 99 A.D.3d 498, 502, 953 N.Y.S.2d 1 [1st Dept. 2012] ).  The conversion claim fails because plaintiffs did not have a possessory right to the shares, as title passed to Lyceum upon delivery.

Plaintiffs assert claims against defendant Kramer Levin Naftalis & Frankel LLP for fraudulent inducement, aiding and abetting fraud and aiding and abetting breach of fiduciary duty.  The allegations that Kramer Levin drafted documents favorable to Lyceum do not establish fraud or aiding and abetting fraud because the law firm was merely performing work within the scope of its duties (see Mendoza v. Akerman Senterfitt LLP, 128 A.D.3d 480, 483, 10 N.Y.S.3d 18 [1st Dept. 2015];  Gregor v. Rossi, 120 A.D.3d 447, 449, 992 N.Y.S.2d 17 [1st Dept. 2014] ).  The aiding and abetting breach of fiduciary duty claim cannot be established because, as sophisticated parties to an arms-length transaction, plaintiffs and Lyceum had no fiduciary duty to each other (see Sebastian Holdings, Inc. v. Deutsche Bank AG., 78 A.D.3d 446, 912 N.Y.S.2d 13 [1st Dept. 2010];  Kaufman v. Cohen, 307 A.D.2d 113, 126, 760 N.Y.S.2d 157 [1st Dept. 2003] ).

We have considered plaintiffs' remaining arguments and find them unavailing.