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TORRANCE CONSTRUCTION, INC., Plaintiff, v. Lawrence R. JAQUES and Elizabeth W. Jaques, Defendants.
The facts of this matter are set forth in the previous decisions of this Court and will be not be repeated at length herein. Briefly stated, defendant Lawrence R. Jaques (hereinafter Lawrence) was plaintiff's bookkeeper for approximately 10 years and stole in excess of $750,000.00 between April 2006 and November 2012, primarily by charging personal purchases to plaintiff's business accounts. Plaintiff commenced this action in December 2012 against Lawrence and his wife, defendant Elizabeth W. Jaques (hereinafter Elizabeth), alleging that the pair jointly participated in the scheme. Specifically, plaintiff alleged five causes of action: (1) that defendants are liable for conversion; (2) that it is entitled to title and possession of defendants' residence; (3) that it is entitled to moneys had and received; (4) that it is entitled to a constructive trust on defendants' residence based on Lawrence's breach of fiduciary duty; and (5) that it is entitled to an accounting and disclosure of defendants' financial records.
Elizabeth filed a pre-answer motion to dismiss the complaint in February 2013, which motion was granted to the extent that plaintiff's second and fourth causes of action were dismissed in their entirety. Cross appeals ensued and the decision was modified by Memorandum and Order of the Third Department in April 2015, with the second cause of action being reinstated as against Lawrence, the fourth cause of action being reinstated as against both defendants and the fifth cause of action being dismissed as against Elizabeth (see 127 AD3d 1261, 1267  ). Lawrence then filed a motion to dismiss in November 2015, which motion was granted to the extent that the second cause of action was again dismissed as against him. At this juncture, the first, third and fourth causes of action remain as against both defendants and the fifth cause of action remains as against Lawrence. Discovery has now been completed and defendants filed a note of issue for a non-jury trial on September 20, 2017. Plaintiff then filed a demand for a jury trial on September 27, 2017. Presently before the Court is (1) defendants' motion to strike plaintiff's demand for a jury trial; and (2) defendants' motion for summary judgment dismissing the complaint (see CPLR 3212). The motions will be addressed ad seriatim.
Motion to Strike
Defendants contend that plaintiff has waived its right to a jury trial by joining both legal and equitable claims. Plaintiff, on the other hand, contends that it is entitled to a jury trial because this action is inherently legal in nature.
Where “plaintiffs [bring] a single action joining legal claims with an inherently equitable claim for breach of a ․ fiduciary's duty, plaintiffs have waived their right to have their legal claims tried by a jury (Margesson v. Bank of NY, 291 AD2d 694, 698  [citations omitted]; see Di Menna v. Cooper & Evans Co., 220 NY 391, 395–396 ; Magill v. Dutchess Bank & Trust Co., 150 AD2d 531, 532 ; Seneca v. Novaro, 80 AD2d 909, 910 ; Gabbay v. Ratchik, 60 AD2d 593, 593 ; A.J. Fritschy Corp. v. Chase Manhattan Bank, 36 AD2d 600, 600 ; Matter of Coyle, 34 AD2d 612, 613  ).
Here, of the four causes of action remaining, the first for conversion and the third for moneys had and received are both causes of action at law (see Hunt v. Hunt, 13 AD3d 1041, 1043 , lv denied 8 NY3d 812 ; Port v. Holzinger, 212 App Div 124, 125  ). The fourth cause of action for a constructive trust and the fifth for an accounting are both equitable (see Krol v. Yager–Krol, 145 AD3d 1249, 1251–1252 ; Staunton v. Brooks, 129 AD3d 1371, 1374  ). While the second cause of action has now been dismissed, it too was equitable in nature. To the extent that plaintiff undisputedly brought a single action joining legal and equitable claims, the Court finds that it has waived its right to a jury trial. Notwithstanding plaintiff's contentions to the contrary, it simply cannot be said that this action is inherently legal in nature (see Margesson v. Bank of NY, 291 AD2d at 698; compare Poley v. Rochester Community Sav. Bank, 184 AD2d 1027, 1027  ).
Based upon the foregoing, defendants' motion to strike plaintiff's demand for a jury trial is granted.
Motion for Summary Judgment
On a motion for summary judgment, the movant must establish, by admissible proof, its entitlement to judgment as a matter of law (see Gilbert Frank Corp. v. Federal Ins. Co., 70 NY2d 966, 967 ; Alvarez v. Prospect Hosp., 68 NY2d 320, 324  ). Once the movant has met this initial burden, the burden then shifts to the opponent of the motion to establish, by admissible proof, the existence of genuine issues of fact (see Zuckerman v. City of New York, 49 NY2d 557, 560  ). It is by now well established that “[t]he drastic remedy of summary judgment should only be granted where there is no doubt as to the existence of a triable issue of fact” (McDay v. State of New York, 138 AD3d 1359, 1359 ; see Encarnacion v. State of New York, 49 AD3d 1038, 1039  ).
Turning first to that aspect of the motion which seeks summary judgment dismissing the complaint as against Elizabeth, the first cause of action alleges that she is liable for aiding and abetting Lawrence's conversion of plaintiff's property. “ ‘Conversion is an unauthorized exercise of dominion and control over someone else's property that ‘interferes with and is in defiance of the superior possessory right of the owner or another person’ ” (127 AD3d at 1263; see Miller v. Marchuska, 31 AD3d 949, 950  [citations omitted] ). “A claim can exist for aiding and abetting conversion if the aider-abettor has actual knowledge that the person who directly converted the plaintiff's property did not own that property” (127 AD3d at 1263; see Weisman, Celler, Spett & Modlin v. Chadbourne & Parke, 271 AD2d 329, 330 , lv denied 95 NY2d 760 ; Lenczycki v. Shearson Lehman Hutton, 238 AD2d 248, 248 , lv dismissed and denied 91 NY2d 918 ; H2O Swimwear v. Lomas, 164 AD2d 804, 805  ).
Here, Elizabeth has submitted an affidavit in support of the motion stating, in pertinent part:
“I had no knowledge that Lawrence was stealing from [p]laintiff, nor did I have any reason to believe he was stealing. I first learned of it on December 10, 2012 when Lawrence was fired by [p]laintiff. Not having knowledge of his criminal conduct, I did not assist him in any way, shape or form to steal from [p]laintiff.
“In addition, I do not know what he did with the money he stole from [plaintiff] and still do not know how he spent or used the money he stole. I absolutely did not shelter or hide or knowingly accept or use any money Lawrence stole from [p]laintiff. Over the six or seven years Lawrence was stealing money from [p]laintiff, to my knowledge he was simply earning legitimate wages as an employee of [p]laintiff. We did not live a lavish life nor did I receive luxurious gifts from Lawrence to cause me to believe he was stealing from [p]laintiff.”
To the extent that Elizabeth denies any knowledge of her husband's conversion of plaintiff's property, the Court finds that she has established her prima facie entitlement to summary judgment dismissing the first cause of action as against her.
In opposition, plaintiff has submitted the affidavit of Scott Peter Torrance, its owner and president. Torrance states that, “[i]n connection with his duties as the bookkeeper for [plaintiff], ․ Lawrence ․ had access to [plaintiff's] checkbook, [plaintiff's] computer-based bookkeeping system, credit card accounts in [plaintiff's] name and [plaintiff's] business line[s] of credit at other businesses ․” Torrance further states as follows:
“In late 2012, an Internal Revenue Service audit revealed that ․ Lawrence ․ had been defrauding the business by writing more than $300,000.00 in unauthorized checks to himself. A subsequent investigation of the business records and related documents by [plaintiff] in conjunction with a forensic audit conducted by the New York State Police[ ] revealed that separate and apart from the unauthorized thefts of money from the bank account of [plaintiff], credit cards and lines of credit in the name of [plaintiff] were unlawfully accessed and used by the defendants to purchase items and materials that were paid for by [plaintiff], but delivered to the defendants, retained by the defendants, concealed by the defendants and consumed by the defendants.”
Torrance attached nearly 300 pages of invoices to his affidavit as evidence of the unlawful purchases.1 There are invoices from Staples which reveal thousands of dollars in electronics—including computers, cameras, cell phones, GPS navigation systems, video cameras and printers—unlawfully purchased by defendant with plaintiff's credit card. There are invoices from Lowe's which reveal thousands of dollars in appliances and other home improvement goods—including a refrigerator, a dishwasher, a garbage disposal, kitchen supplies, gardening supplies, tool boxes, a chainsaw and an ATV trailer—unlawfully purchased by defendant with plaintiff's line of credit. There are invoices from Haselton Lumber which reveal thousands of dollars in wood and doors unlawfully purchased by defendant with plaintiff's line of credit. There are invoices from Hulbert's Tri–Lake Supply which reveal thousands of dollars in toilet and plumbing fixtures unlawfully purchased by defendant using plaintiff's business account. Finally, there are invoices from Adirondack Custom Granite which reveal thousands of dollars in soapstone countertops unlawfully purchased by defendant using plaintiff's business account.
Torrance states that Lawrence “would often tell [him] about his weekends shopping with his wife, [and m]any of the invoices from Staples and Lowe's show that [d]efendants were using [plaintiff's] credit cards in [the] store[s]”. Further, many of the invoices indicate that items purchased online were addressed to “Torrance Construction” at “200 Schaefer Road” in the Town of Keene, Essex County—which is defendants' personal address. Indeed, plaintiff's office is located in the Village of Lake Placid, Essex County.
In addition to the invoices, Torrance attached several of plaintiff's Advanta credit card statements. These statements indicate that defendant charged thousands of dollars on the card, using it to buy alcohol in New Hampshire, to buy parts for his antique Model–A Mercedes Benz and to fly his family round trip from Denver, Colorado to Burlington, Vermont—on two separate occasions.
Plaintiff has also submitted the affidavit of Michael F. Lynn, a driver for the United Parcel Service (UPS) who, “[f]rom 2010 through 2014, ․ was assigned to the certain geographical area which included Schaeffer [sic] Road in the Town of Keene.” Lynn states as follows:
“For approximately four years, I regularly delivered packages to 200 Schaeffer [sic] Road Keene New York which I knew to be the residence of Lawrence and Elizabeth Jaques․
“I specifically recall that many of the packages that I delivered during the years 2010–2014 to the Jaques residence ․ were not addressed to Lawrence or Elizabeth Jaques but rather were addressed to ‘Torrance Construction, 200 Schaeffer [sic] Road, Keene, New York’ ․
“I never questioned why packages that were addressed to Torrance Construction were being delivered to the Jaques[ ] residence in Keene because I knew that Lawrence Jaques worked for Torrance Construction.
“When delivering those many packages to 200 Schaeffer [sic] Road, Keene New York, I was greeted by both Lawrence and Elizabeth Jaques, but typically it was Elizabeth Jaques who was at home to accept packages. If a package required a signature, it was typically Elizabeth Jaques who would personally sign for and accept the package.”
With these submissions plaintiff has succeeded in raising a triable issue of fact with respect to whether Elizabeth had knowledge of her husband's conversion of plaintiff's property. Not only does it appear that she was present when many of the in-store purchases were made, but she seemingly accepted countless packages at her personal residence that were clearly addressed to plaintiff. The Court therefore declines to grant summary judgment dismissing the first cause of action as against Elizabeth.
The third cause of action against Elizabeth is for moneys had and received. “The elements of [this] cause of action are that the defendant received money belonging to the plaintiff and benefitted from that money, and that equity and good conscience will not permit the defendant to keep the money” (127 AD3d at 1263–1264; see Matter of Moak, 92 AD3d 1040, 1044 , lv denied 19 NY3d 812 ; Matter of Witbeck, 245 AD2d 848, 850  ).
To the extent that Elizabeth denies receiving any money belonging to plaintiff in her affidavit, the Court finds that she has demonstrated her prima facie entitlement to summary judgment dismissing the third cause of action as against her. With that said, however, the Court further finds that plaintiff has succeeded in raising a triable issue of fact as to whether Elizabeth in fact received the money stolen by Lawrence. Indeed, Torrance's affidavit—together with the invoices and credit card statements attached thereto—establish that defendants not only purchased household items with plaintiff's money, but also performed extensive repairs and renovations to their home using the money. Under these circumstances, the Court declines to grant summary judgment dismissing the third cause of action as against Elizabeth.
The fourth cause of action alleges that Elizabeth is liable for aiding and abetting Lawrence's breach of fiduciary duty to plaintiff.2 Much like a claim for aiding and abetting conversion, a “claim for aiding and abetting a breach of fiduciary duty requires: (1) a breach by a fiduciary of obligations to another, (2) that the defendant knowingly induced or participated in the breach, and (3) that plaintiff suffered damage as a result of the breach” (Kaufman v. Cohen, 307 AD2d 113, 125 ; see Roni LLC v. Arfa, 15 NY3d 826, 827  ).
As with the first cause of action—by denying she had any knowledge of Lawrence stealing from plaintiff—Elizabeth established her prima facie entitlement to summary judgment dismissing the fourth cause of action as against her. Again, however, plaintiff has amply established triable issues of fact as to Elizabeth's knowledge and participation in the thefts. The Court therefore declines to grant summary judgment dismissing the fourth cause of action as against Elizabeth.
Turning now to that aspect of the motion seeking summary judgment dismissing the complaint as against Lawrence, defendants' sole contention is that “plaintiff is barred from seeking a further judgment against Lawrence [because] it has [already] received a judgment through the criminal proceeding in an amount that will exceed or be equal to any possible judgment handed down in this lawsuit.” To that end, on May 16, 2014 Lawrence pleaded guilty to one count of grand larceny in the second degree. As part of his plea agreement, the County Court of Essex County (Meyer, J.) entered an Order directing Lawrence to pay restitution to plaintiff in the amount of $789,605.15, which Order is equivalent to and “may be collected in the same manner as a judgment in a civil action” (CPL 420.10  ). According to defendants, the issuance of this Order renders the instant action moot.
Penal Law § 60.27 (6) provides, in pertinent part, that “[a]ny payment made as restitution or reparation ․ shall not limit, preclude or impair any liability for damages in any civil action or proceeding for an amount in excess of such payment.” The courts have consistently “recognized that Penal Law § 60.27 “secures a victim's independent, parallel right also to pursue a defendant civilly should there be a deficiency in the restitution amount” (Marion Blumenthal Trust v. Arbor Commercial Mtge., LLC, 133 AD3d 419, 420 ; see Matter of Fierro [Commissioner of Labor], 80 AD3d 944, 944 ; City of New York v. College Point Sports Assn., Inc., 61 AD3d 33, 45–46 ; People v. Wein, 294 AD2d 78, 85  ).
Here, while the amended verified complaint seeks “damages of not less than $750,000,” defendants have not submitted any proof relative to the damages that may ultimately be proven at trial. As such, they have failed to demonstrate that plaintiff cannot prove damages in excess of the $789,605.15 awarded in restitution. In this light the Court finds that defendants have failed to establish their prima facie entitlement to summary judgment dismissing the complaint as against Lawrence.
With defendants having failed to meet this initial burden, the Court need not consider plaintiff's opposition papers insofar as Lawrence is concerned (see Vogler v. Perrault, 149 AD3d 1298, 1299 ; Batzin v. Ferrone, 140 AD3d 1102, 1104  ).3
The parties' remaining contentions, to the extent not addressed herein, have been considered and found to be either academic or without merit.
Based upon the foregoing, defendants' motion for summary judgment dismissing the complaint is denied.
Therefore, having considered the Affirmation of Matthew D. Norfolk, Esq. with exhibits attached thereto, dated November 8, 2017, submitted in support of the motion to strike; Memorandum of Law of Matthew D. Norfolk, Esq., dated November 8, 2017, submitted in support of the motion to strike; Affidavit of Allison McGahay, Esq. with exhibits attached thereto, sworn to November 15, 2017, submitted in opposition to the motion to strike; Memorandum of Law of James M. Brooks, Esq., undated, submitted in opposition to the motion to strike; Affirmation of Matthew D. Norfolk, Esq. with exhibits attached thereto, dated December 4, 2017, submitted in support of the motion for summary judgment; Affidavit of Elizabeth M. Jaques with exhibits attached thereto, sworn to December 4, 2017, submitted in support of the motion for summary judgment; Memorandum of Law of Matthew D. Norfolk, Esq., dated December 4, 2017, submitted in support of the motion for summary judgment; Attorney Affirmation of James M. Brooks, Esq. with exhibits attached thereto, dated December 18, 2017, submitted in opposition to the motion for summary judgment; Affidavit of Scott Peter Torrance with exhibits attached thereto, sworn to December 18, 2017, submitted in opposition to the motion for summary judgment; Affidavit of Michael F. Lynn, sworn to December 15, 2017, submitted in opposition to the motion for summary judgment; Memorandum of Law of Allison M. McGahay, Esq., dated December 4, 2017, submitted in opposition to the motion for summary judgment; and Reply Memorandum of Law of Matthew D. Norfolk, Esq., dated December 19, 2017, submitted in further support of the motion for summary judgment; and oral argument having been heard on February 9, 2018 with Allison M. McGahay, Esq. appearing on behalf of plaintiff and Matthew D. Norfolk, Esq. appearing on behalf of defendants, it is hereby
ORDERED that defendants' motion to strike plaintiff's demand for a jury trial is granted; and it is further
ORDERED that defendants' motion for summary judgment is denied; and it is further
ORDERED that any relief not specifically addressed has nonetheless been considered and is hereby expressly denied.
The above constitutes the Decision and Order of this Court.
The original of this Decision and Order has been filed by the Court together with the Notices of Motion dated November 8, 2017 and December 4, 2017, respectively. Counsel for plaintiff is hereby directed to promptly obtain a filed copy of this Decision and Order for service with notice of entry in accordance with CPLR 5513.
1. Torrance states that these invoices “are kept and maintained by [plaintiff] in the ordinary course of business.”
2. As recognized by the Third Department, Lawrence “was plaintiff's sole bookkeeper and had authorization to write checks on at least one business account, putting him in a confidential and fiduciary relationship of trust with plaintiff” (127 AD3d at 1264).
3. If these papers were to be considered relative to Lawrence, the Court would find that they succeed in raising a triable issue of fact as to whether plaintiff will prove damages in excess of the restitution awarded. Torrance states that “[t]he employees of [plaintiff] participate in a profit sharing program and they have been negatively impacted financially by the defendants' theft ․ from the business,” which impact was not considered when calculating restitution.
Robert J. Muller, J.
Response sent, thank you
Docket No: 0743–12
Decided: February 14, 2018
Court: Supreme Court, New York,
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