PAOLINO v. PAOLINO (2008)

In an action, inter alia, to vacate a stipulation of settlement dated August 31, 2006, which was incorporated, but not merged, into the parties' judgment of divorce dated December 12, 2006, the plaintiff appeals from an order of the Supreme Court, Rockland County (Berliner, J.), entered November 21, 2007, which granted the defendant's motion pursuant to CPLR 3211(a)(7) to dismiss the complaint.

ORDERED that the order is affirmed, with costs.

The parties entered into a stipulation of settlement of a divorce action that had been commenced by the plaintiff.   Pursuant to the stipulation, the plaintiff waived her equitable claim to any of the defendant's specified business interests and, in exchange, received his interest in the marital residence and payment of the sum of $1,300,000.   The stipulation expressly provided that the parties agreed to the distribution and agreed not to complete an evaluation of the business interest, notwithstanding that the plaintiff had retained valuation experts to place a value on the business interests of the defendant.   The stipulation also contained provisions reciting that it was not the result of any fraud, duress, or undue influence, that the parties' respective counsel encouraged them to conduct the evaluation of the defendant's business interests, and that, having been advised of their right to complete discovery, conduct depositions, and have the business interests evaluated and appraised, the parties waived those rights.

A few months after the execution of the stipulation, a business in which the defendant had a 19% interest was sold.   The plaintiff then commenced this action, inter alia, to vacate the stipulation, alleging that it had been procured by actual fraud, constructive fraud, and undue influence.   The defendant moved to dismiss the complaint pursuant to CPLR 3211(a)(7), and the Supreme Court granted the motion.

“On a CPLR 3211 motion to dismiss, the court will ‘accept the facts alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory’ Leon v. Martinez, 84 N.Y.2d 83, 87-88, [614 N.Y.S.2d 972, 638 N.E.2d 511]” (Nonnon v. City of New York, 9 N.Y.3d 825, 827, 842 N.Y.S.2d 756, 874 N.E.2d 720).   Whether the plaintiff can ultimately establish the allegations is not part of the analysis (see EBC I, Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11, 19, 799 N.Y.S.2d 170, 832 N.E.2d 26).   However, “bare legal conclusions and factual claims which are flatly contradicted by the record are not presumed to be true” (Parola, Gross & Marino, P.C. v. Susskind, 43 A.D.3d 1020, 1021-1022, 843 N.Y.S.2d 104;  see also Parsippany Constr. Co., Inc. v. Clark Patterson Assoc., P.C., 41 A.D.3d 805, 839 N.Y.S.2d 179).

Applying these principles here, the Supreme Court properly dismissed the complaint for failure to state a cause of action alleging actual fraud (see Lama Holding Co. v. Smith Barney, 88 N.Y.2d 413, 421, 646 N.Y.S.2d 76, 668 N.E.2d 1370), constructive fraud, or undue influence (see CPLR 3016 [b];   Maas v. Cornell Univ., 94 N.Y.2d 87, 91, 699 N.Y.S.2d 716, 721 N.E.2d 966).   The plaintiff's conclusory claim that the defendant concealed a sale or impending sale of his business is insufficient to state a cause of action warranting the relief requested (see Kavner v. Geller, 49 A.D.3d 281, 854 N.Y.S.2d 343;  Cosh v. Cosh, 45 A.D.3d 798, 847 N.Y.S.2d 136;  Kojovic v. Goldman, 35 A.D.3d 65, 823 N.Y.S.2d 35).