GAUGHAN v. RUSSO (2023)

Order, Supreme Court, New York County (Anthony Cannataro, J.), entered April 4, 2019, which, to the extent appealed from as limited by the briefs, denied without prejudice plaintiff's motion for leave to amend the complaint to add causes of action against Irene Russo, unanimously affirmed, without costs.

The court providently exercised its discretion in denying plaintiff's motion to amend the complaint to add a claim of aiding and abetting fraud against Irene Russo, defendant's sister, because the proposed claim was palpably insufficient (see Fairpoint Cos., LLC v. Vella, 134 A.D.3d 645, 645, 22 N.Y.S.3d 49 [1st Dept. 2015]).  Plaintiff was required to allege “the existence of the underlying fraud, actual knowledge, and substantial assistance” (Oster v. Kirschner, 77 A.D.3d 51, 55, 905 N.Y.S.2d 69 [1st Dept. 2010]).  Assuming plaintiff adequately alleged an underlying fraud by defendant, she failed to plead that Irene Russo had actual knowledge thereof and that she provided substantial assistance in the commission of the fraud.  The proposed complaint alleged only that Irene was aware that defendant owed plaintiff money and failed to warn plaintiff of his history of dishonesty with his previous girlfriends.  Such limited allegations amount to, at best, constructive knowledge, which is insufficient to support a claim for aiding and abetting fraud (see Gregor v. Rossi, 120 A.D.3d 447, 448–449, 992 N.Y.S.2d 17 [1st Dept. 2014]).  Furthermore, plaintiff's allegation that Irene failed to act was insufficient to show substantial assistance.  Plaintiff did not sufficiently allege that Irene had a duty to act to protect plaintiff's interests (see Stanfield Offshore Leveraged Assets, Ltd. v. Metropolitan Life Ins. Co., 64 A.D.3d 472, 476, 883 N.Y.S.2d 486 [1st Dept. 2009], lv denied 13 N.Y.3d 709, 2009 WL 3379028 [2009]).

We decline to review the additional theories of liability advanced by plaintiff for the first time on appeal, since they were never raised on her motion to amend the complaint (see Davila v. City of New York, 95 A.D.3d 560, 561, 946 N.Y.S.2d 20 [1st Dept. 2012]).