INTERVENTURE 77 HUDSON LLC v. Whitney Investment Advisors, et al., Defendants. (2019)

Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered on or about May 29, 2018, which, inter alia, granted in part defendant David Hill's motion for summary judgment, granted defendant International Real Estate Services's (IRES) motion for summary judgment, and denied the motion for partial summary judgment by plaintiffs Pinnacle Owner Corp., Pinnacle Tenant LLC, Westlake Three Owner Corp., Westlake Three Tenant LLC, Westlake Four Owner Corp., and Westlake Four Tenant LLC, unanimously affirmed, without costs.

The motion court correctly granted defendant Hill's motion for summary judgment dismissing all but the claim for breach of fiduciary duty, and granted defendant IRES's motion in its entirety, finding plaintiffs' claims time barred under the Delaware statute of limitations, and our application of New York's “borrowing statute” (CPLR 202;  see Oxbow Calcining USA Inc v. American Indus. Partners, 96 A.D.3d 646, 948 N.Y.S.2d 24 [1st Dept. 2012];  Kat House Prods., LLC v. Paul, Hastings, Janofsky & Walker, LLP, 71 A.D.3d 580, 897 N.Y.S.2d 90 [1st Dept. 2010] ).  Plaintiffs hold commercial real estate across the country, and there is no evidence that they have a principal place of business in any one state.  Accordingly, the motion court reasonably designated plaintiffs' residence as Delaware, their state of incorporation (see Verizon Directories Corp. v. Continuum Health Partners, 74 A.D.3d 416, 902 N.Y.S.2d 343 [1st Dept. 2010], lv denied 15 N.Y.3d 716, 2010 WL 5157384 [2010];  Oxbow, 96 A.D.3d at 650–651, 948 N.Y.S.2d 24).  In addition, given that plaintiffs' injury was purely economic, the place of their injury for purposes of the borrowing statute is normally deemed their residence, where the economic impact of defendants' conduct is sustained (Global Fin. Corp. v. Triarc. Corp., 93 N.Y.2d 525, 529–530, 693 N.Y.S.2d 479, 715 N.E.2d 482 [1999];  see also Gordon & Co. v. Ross, 63 F.Supp.2d 405, 408–409 [S.D. N.Y.1999] ).  Accordingly, the Delaware statute of limitations applies to this action.

The court correctly dismissed plaintiffs' fraud claim as duplicative of the breach of fiduciary duty claim (see Pai v. Blue Man Group Publ., LLC, 151 A.D.3d 456, 56 N.Y.S.3d 85 [1st Dept. 2017] ), as plaintiffs' fraud allegations are subsumed in the allegations of wrongdoing that constitute the alleged breach of fiduciary duty.

Summary judgment on plaintiffs' breach of fiduciary duty claim was properly denied.  In support of their motion, plaintiffs' claimed that certain “Aker” leasing fees were paid without their consent, but the only document supporting this contention was the affidavit of a member of plaintiff's ownership team, which is short on detail and arguably technically defective.  Moreover, it was written after the fact, and the record contains no contemporaneous communications where that member, upon learning the lease would not be executed, demanded return of the fees he previously authorized.  Nor does his affidavit address defendants' assertion that the member of the ownership team took $ 50,000 in fees for himself.

Even if the affidavit satisfies plaintiffs' initial burden, defendants came forward with sufficient proof to create fact issues as to whether they had the requisite authorization to take the leasing fees, and whether they were entitled to offset them against future earned fees.  Nor do plaintiffs adequately explain why defendants cannot rely on the authorization or another agent of plaintiff's ownership team to show issues of fact that precluded summary judgment.  They argue this agent confessed to self-dealing, but the record suggests the admitted misconduct was in connection with an unrelated matter;  even if it were related, plaintiffs do not show why defendants would have had reason, at the relevant time, to question the validity of the agent's authorization as to the Aker fees.

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