WESLEY BROWN v. LLC JOHNNY SU ONTARIO WEALTH MANAGEMENT COMPANY OWEMANCO MORTGAGE NY LIMITED PARTNERSHIP (2026)

This action arises from the alleged unauthorized cancellation of a commercial mortgage transaction.

In April 2019, plaintiffs retained Johnny Su, acting through Real Estate Capital of America (RECAP), to broker a first commercial mortgage loan secured by a multi-family, five-story, 10-unit residential building at 813 St. Nicholas Avenue, New York, New York. (NYSCEF No. 1 at ¶¶ 4, 9-10.) On or about April 11, 2019, plaintiffs received and subsequently accepted a First Mortgage Financing Commitment Agreement with Ontario Wealth Management Company (Ontario Wealth) for a loan of up to $1,500,000 and paid a $10,000 deposit. (Id. at ¶¶ 17-18; NYSCEF No. 2 at 1.) Plaintiffs allege that Su, while acting as their broker, was simultaneously acting on behalf of Ontario Wealth, the lender, and that no dual-agency disclosure was ever made. (NYSCEF No. 1 at ¶¶ 12, 15.)

On April 15, 2019, without authorization, Su emailed Ontario Wealth's Adam Tobe, copying Raquel Brown, with the subject line "Do me a big favor please cancel the deal!!!!" stating: "Client allege you are being dishonest and I told her I will stand for that. I know you too long. We delivered above and beyond We don't need her business. Please refund her the money. We can do other deals together." (NYSCEF No. 1 at ¶ 19; NYSCEF No. 3.) Plaintiff Raquel Brown immediately objected, stating that she did not request cancellation or refer to anyone as being dishonest. (NYSCEF No. 1 at ¶ 20; NYSCEF No. 3.) The deal did not go forward. Ontario Wealth promised to return $7,485.00 but never did. (NYSCEF No. 1 at ¶¶ 21-23.)

Plaintiffs commenced this action on November 21, 2025, asserting a breach-of-fiduciary-duty claim against Su and RECAP and breach-of-contract, breach-of-the-implied covenant, and unjust-enrichment claims against defendants Ontario Wealth and OWEMANCO Wealth Mortgage NY Limited Partnership. (NYSCEF No. 1 at ¶¶ 32—76.)

Defendants Su and RECAP move under CPLR 3211 (a) (5) and (a) (7) to dismiss plaintiffs' claim against them. (NYSCEF No. 14; NYSCEF No. 17.) Plaintiffs submit opposition. In reply, defendants Su and RECAP additionally seek rejection of the opposition as untimely under CPLR 2214 (b) and an award of attorney fees because of plaintiffs' possible misuse of generative artificial intelligence. (NYSCEF No. 31 at 4-6, 9.)

The opposition is deemed timely nunc pro tunc, the branch based on CPLR 3211 (a) (5) of the motion is granted, the branch based on CPLR 3211 (a) (7) is denied as academic, and the request for attorney fees is denied.

DISCUSSION

I. Timeliness of Opposition

The moving papers were served 17 days before the March 23, 2026, return date and have a 7-day demand, (NYSCEF No. 14 at 1), making plaintiffs' opposition due March 16, 2026. Plaintiffs did not file the opposition until 11:56 p.m. on March 21, 2026, five days late. (NYSCEF No. 20 at ¶¶ 4-6; NYSCEF No. 19.)

Plaintiffs' counsel attributes the delay to a calendaring error and emailed defense counsel on March 21, 2026, requesting a stipulated adjournment, but received no response before filing. (NYSCEF No. 20 at ¶ 9; NYSCEF No. 26.) Defendants Su and RECAP object and note the adjournment request was improperly directed at opposing counsel rather than the Part Clerk, contrary to this Part's rules. (NYSCEF No. 30 at 4-5; NYSCEF No. 27 at 1; NYSCEF No. 25 at ¶¶ 3-4.) However, the delay was brief, defendants Su and RECAP filed a substantive reply on the merits, and no prejudice has been shown. (See CPLR 2004.) The opposition is deemed filed timely nunc pro tunc.

II. Defendants' Motion to Dismiss the Breach-of-Fiduciary-Duty Claim as Time-Barred

Defendants Su and RECAP contend that the breach-of-fiduciary-duty claim is barred by a three-year statute of limitations under CPLR 214 (4). (NYSCEF No. 17 at 4-6.) This court agrees.

To determine which statute of limitations applies to fiduciary-duty claims, courts look to "the substantive remedy sought." (Kaufman v Cohen, 307 AD2d 113, 118 [1st Dept 2003], citing Loengard v Santa Fe Indus., Inc., 70 NY2d 262, 266 [1987].) When the remedy sought is purely monetary, three-year limitations period applies, because the claim is treated as alleging an injury to property within the meaning of CPLR 214 (4). When the remedy is equitable, however, a six-year period applies. (Id.) Here, plaintiffs seek recovery of monetary losses allegedly resulting from defendants' breach of fiduciary duty. Although the complaint attempts to recast the remedies sought as equitable—e.g., a surcharge, disgorgement, and a constructive trust—these remedies, to the extent they are available here, primarily represent efforts to redress plaintiffs' pecuniary losses.¹ Plaintiff's requests for relief on their fiduciary-duty claim, therefore, support imposition of a three-year limitations period. (See IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 140 [2009] [holding that when the complaint's primary objective is monetary relief, courts look to the "reality, rather than form" of the action in determining the applicable limitations period].)

Plaintiffs argue that the claim is nonetheless timely because it is subject instead to the six-year limitations period for fraud claims set by CPLR 213 (8). This argument is unpersuasive.

The six-year period of CPLR 213 (8) applies to "a cause of action for breach of fiduciary duty based on allegations of actual fraud." (See Kaufman v Cohen, 307 AD2d 113, 119 [1st Dept 2003].) However, when fraud is merely incidental to the cause of action, courts will not apply the six-year period. (Id. at 119.) Plaintiffs contend that their fiduciary-duty claim is subject to a six-year limitations period because (in plaintiffs' view) Su's alleged concealment of his dual-agency relationship with Ontario Wealth is essential, not incidental, to the fiduciary-duty claim. (NYSCEF No. 19 at 9-10.) But even accepting plaintiffs' allegations that Su failed to disclose that he was acting as a dual-broker, this Court is not persuaded that this nondisclosure is the core of plaintiffs' breach-of-fiduciary-duty claim.

The complaint alleges numerous independent breaches of fiduciary duty—including unauthorized cancellation of the transaction, acting adversely to plaintiffs' interests, and placing movants' interests above plaintiffs'—that do not depend on fraudulent concealment. (NYSCEF No. 1 at 9-10.) These breaches stem from the alleged wrongdoing that is at the core of plaintiffs' claim, as this court understands it: That Su, without authorization, told Ontario Wealth to cancel the transaction, stating that plaintiffs had falsely accused Ontario Wealth of "being dishonest," when plaintiffs had made no such allegation. (NYSCEF No. 1 at ¶¶ 19-20.) This is a pure breach of fiduciary duty, not a fraud claim. Su's alleged concealment of his dual-agency relationship with Ontario Wealth—as opposed to his unauthorized cancellation of the transaction—is not the core of plaintiffs' claim, but merely incidental.

Put differently, plaintiffs have not alleged a connection between the alleged concealment of Su's dual-broker status and Su's unauthorized and unilateral torpedoing of the underlying financing agreement (and the resulting harm to plaintiffs). But absent a showing of damages, plaintiffs could not state a fraud cause of action based on the dual-broker allegations. And without a viable fraud cause of action underlying their fiduciary-duty claim, plaintiffs could not take advantage of the six-year limitations period.² (See Kaufman, 307 AD2d at 119-120.)

Because the alleged breach was on April 15, 2019, and the complaint was filed on November 21, 2025, the claim is untimely under the three-year statute of limitations of CPLR 214 (4). This court therefore does not reach the question whether the complaint otherwise states a cause of action as against Su and RECAP.

III. Defendants' Request for Sanctions Based on Plaintiffs' Alleged Use of Artificial Intelligence

Movants alternatively seek dismissal of plaintiffs' claims and an award of attorney fees, on the additional ground that plaintiffs' opposition assertedly includes a quotation fabricated by artificial intelligence. (NYSCEF No. 30 at 5-6, 9.) Movants do not identify the basis for this court's authority to impose the requested sanction. Movant's request for sanctions is denied.³

New York courts ordinarily have authority to impose a sanction "only when it has been authorized either by the Legislature or by court rules consistent with existing legislation." (Tewari v Tsoutsouras, 75 NY2d 1, 7 [1989], citing Matter of A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5-6 [1986].) In extreme circumstances, however, the court has inherent authority to strike a pleading or dismiss an action as a sanction for a fraud on the court—"a willful and pervasive scheme to defraud the court that prejudiced defendant's ability to defend against the claims." (Napoli v Bern, 171 AD3d 489, 490 [1st Dept 2019], citing CDR Creances S.A.S. v Cohen, 23 NY3d 307, 321-322 [2014].)

Movants do not show—or attempt to show—by clear and convincing evidence that plaintiffs attempted to commit a fraud on the court, as required to warrant the requested sanction of dismissal. (See Southerland v Sister Jane Tavern, 241 AD3d 1184, 1184 [1st Dept 2025] [discussing necessary showing for fraud-on-the-court showing].) With respect to movant's request for an award of attorney fees, the court presumes that movants are seeking sanctions under 22 NYCRR 130-1.1, permitting the imposition of monetary sanctions for frivolous litigation conduct.⁴ This court exercises its discretion under § 130-1.1 to decline to award sanctions.

Movants have identified a quotation in plaintiffs' opposition papers that does not appear in the case to which the opposition attributes it. But even if this court were to conclude that the challenged quotation is an AI fabrication, rather than the product of ordinary human error, movants' sanctions request is based on a single quotation erroneously attributed to a single case; and the passage of the opposition in which the quotation appears merely provides additional, supplemental support for an argument that rests on properly cited authority. The court is unpersuaded, in these circumstances, that a § 130-1.1 monetary sanction would be warranted. (Cf. Matter of Julien v Arthur, 2026 NY Slip Op 03308, at *4-5 [2d Dept May 27, 2026] [holding, in the Court's discretion, that a pro se party should be sanctioned $250 for citing one nonexistent case in his brief on appeal].)

Accordingly, it is

ORDERED that plaintiffs' opposition papers are deemed filed timely nunc pro tunc; and it is further

ORDERED that the motion of defendants RECAP and Su under CPLR 3211 (a) (5) to dismiss the first cause of action is granted, and the complaint is dismissed as against RECAP and Su, with costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further

ORDERED that movants' request for sanctions in the form of award of attorney fees is denied; and it is further

ORDERED that the remaining claims in the action are severed and shall continue; and it is further

ORDERED that movants serve a copy of this order with notice of its entry on all parties; and on the office of the County Clerk (using the NYCEF document type "Notice to the County Clerk - CPLR § 8019 (c)"), which shall enter judgment accordingly.

DATE 8/7/2026

FOOTNOTES

1.   The requests for imposition of a constructive trust and for an accounting fail because plaintiffs do not allege they entrusted money or property to Su or RECAP as opposed to Ontario Wealth. (See Bouley v Bouley, 19 AD3d 1049, 1051 [4th Dept 2005].)

2.   Relatedly, although plaintiffs allege that Su's statements to Ontario Wealth were knowingly false and injured them, the party that is alleged to have relied on those statements was Ontario Wealth, not plaintiffs. These allegedly false statements thus could not themselves support a fraud claim. (See Pasternack v Laboratory Corp. of Am. Holdings, 27 NY3d 817, 827-829 [2016] [holding that the "reliance element of fraud" cannot be satisfied "based on the reliance of a third party, rather than the plaintiff"].)

3.   Movants sought sanctions only on reply; and the parties did not raise the issue of sanctions at oral argument on the motion. In these circumstances, this court would be required to afford plaintiffs a further opportunity to be heard before imposing sanctions. (See Matter of Minister, Elders & Deacons of Refm. Prot. Dutch Church of City of NY v 198 Broadway, 76 NY2d 411, 413 n * [1990]; 22 NYCRR 130-1.1. [d].) This court is not persuaded, though, that seeking further briefing from plaintiffs on the issue is necessary.

4.   CPLR 8303-a (a) permits the imposition of monetary sanctions when an action, claim, counterclaim, defense, or cross claim is found to be frivolous as defined by CPLR 8303-a (c). This provision does not encompass the asserted conduct for which movants seek sanctions.

Gerald Lebovits, J.