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FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021
NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
ADAM KATZ, in his capacity as Trustee of the ADAM
KATZ 2012 REVOCABLE TRUST,
Index No.: 616069/2021
Plaintiff
-against-
EQUINITI TRUST COMPANY a/k/a EQ BY EQUINITI
a/k/a EQ SHAREOWNER SERVICES,
Defendant.
______________________________________________________________________________
REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF
DEFENDANT EQUINITI TRUST COMPANY’S MOTION
TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT
______________________________________________________________________________
HODGSON RUSS LLP
Mark A. Harmon, Esq.
Erin N. Teske, Esq.
605 Third Avenue, Suite 2300
New York, New York 10158
(212) 751-4300
Attorneys for Defendant
Equiniti Trust Company
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TABLE OF CONTENTS
Page(s)
Table of Authorities ........................................................................................................................ ii
Introduction ......................................................................................................................................1
Argument .........................................................................................................................................4
I THIS COURT NEED NOT ACCEPT AS
TRUE LEGAL CONCLUSIONS AND THE
COMPLAINT DOES NOT STATE THE FACTS
REQUISITE TO SUPPORT THAT THE SHARES
WERE ABANDONED, AS DEFINED BY STATUTE .........................................4
A. General Allegations That the Shares Were Not Abandoned
Are Conclusory And Are Not Entitled To Deference On A
Motion to Dismiss ........................................................................................4
B. Plaintiff’s Proposed Interpretation Of Section 501
Would Impose An Extraordinary Limitation
On The Abandonment Of Property That Is Contrary
To The Express Purpose Of The Statute ......................................................5
C. Plaintiff’s Proposed Interpretation Of Section 501
Is Contrary To The Plain Meaning Of The Statute ......................................7
D. Plaintiff Fails To Plead Facts Supporting Its
Legal Conclusion That Plaintiff Did Not Abandon
The Shares ....................................................................................................9
II ABANDONED PROPERTY LAW EXPRESSLY
PROVIDES FOR IMMUNITY UNDER THESE
CIRCUMSTANCES ..............................................................................................10
III PLAINTIFF HAS NOT IDENTIFIED A SINGLE
RELEVANT DOCUMENT WHICH IT NEEDS TO
DEFEND THIS MOTION TO DISMISS ..............................................................13
Conclusion .....................................................................................................................................14
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TABLE OF AUTHORITIES
Page(s)
Federal Cases
In re Drexel Burnham Lambert Group Inc.,
151 B.R. 684 (S.D.N.Y. Bankr. Ct. 1993) .................................................................................6
State Cases
ACE Securities Corp. v. DB Structured Products, Inc.,
2022 WL 2162621 (N.Y. June 16, 2022)...................................................................................8
Bonavisa v. Motor Vehicle Acc. Indemnification Corp.,
21 Misc.2d 963 (N.Y. Co. 1960) ...............................................................................................3
Cracolici v. Shah,
127 A.D.3d 413 (1st Dep’t 2015) ............................................................................................13
Garcia v. Shah,
2022 WL 1760205 (2d Dep’t June 1, 2022) ............................................................................10
Hispanic Aids Forum v. Estate of Bruno,
16 A.D.3d 294 (1st Dep’t 2005) ................................................................................................5
HSBC Bank USA, Nat’l Ass’n v. Maniatopoulos,
175 A.D.3d 575 (2d Dep’t 2019) .............................................................................................12
Johnson v. City of New York,
2022 WL 1177637 (N.Y. April 21, 2022) .................................................................................8
Joseph v. Fensterman,
204 A.D.3d 766 (2d Dep’t 2022) .............................................................................................10
Kamchi v. Weissman,
125 A.D.3d 142 (2d Dep’t 2014) .............................................................................................12
Klein v. North Side Sav. Bank,
24 A.D.2d 106 (1st Dep’t 1965) ................................................................................................9
Lemma v. Nassau County Police Officer Indemnification Board,
31 N.Y.3d 523 (2018) ................................................................................................................8
Maas v. Cornell University,
94 N.Y.2d 87 (1999) ..................................................................................................................5
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Majewski v. Broadalbin–Perth Cent. School Dist.,
91 N.Y.2d 577 (1998) ................................................................................................................8
Marinelli v. New York Methodist Hospital,
205 A.D.3d 710 (2d Dep’t 2022) ...............................................................................................4
In re Menschefrend’s Estate,
283 A.D. 463 (1st Dep’t 1954) ..................................................................................................6
Peterson v. Spartan Indus., Inc.,
33 N.Y.2d 463 (1974) ..............................................................................................................13
Singh v. Kolcaj Realty Corp.,
283 A.D.2d 350 (1st Dep’t 2001) ..............................................................................................5
State Statutes
N.Y. Aband. Prop. L. § 102 .........................................................................................................2, 6
N.Y. Aband. Prop. L. § 300 .............................................................................................................9
N.Y. Aband. Prop. L. § 501(2)(a) ....................................................................................................7
N.Y. Aband. Prop. L. § 511(3) ....................................................................................................7, 9
N.Y. Aband. Prop. L. § 1404 ..........................................................................1,3, 4, 7, 9, 10, 11, 13
N.Y. Aband. Prop. L. § 1422 .................................................................................................7, 9, 12
Rules
CPLR 3211.........................................................................................................................10, 13, 15
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Introduction
Plaintiff’s Opposition highlights the deficiencies in its two negligence
claims: one based upon Plaintiff’s general allegation that it did not abandon the Shares; 1
and one based upon Defendant Equinity Trust Company’s (“EQ”) purported failure to
provide sufficient notice that the Shares had been abandoned. Plaintiff distorts the plain
meaning of the Abandoned Property Law to support its arguments for both. Indeed,
Plaintiff misinterprets both the definition of “abandoned” in Section 501 and the
immunity provided in Section 1404 of New York’s Abandoned Property Law.
Section 501 defines “abandoned,” as here relevant, as follows: “any
security … shall be deemed abandoned where, for three successive years: (i) all amounts,
if any, payable or distributable thereon or with respect thereto have remained unpaid to or
unclaimed by such resident, and (ii) no written communication has been received from
such resident by the holder.” N.Y. Aband. Propr. L. § 501. Unable to plead that Plaintiff
had any written communication within a period of three years, Plaintiff argues that it is
sufficient to allege that there were no amounts payable or distributable in connection with
the Shares within the three-year period. This faulty interpretation of the definition – one
which requires that amounts be payable to a shareholder in connection with his
securities– disregards entirely the words “if any” which modify that requirement.
Moreover, Plaintiff’s proposed interpretation would lead to absurd results, entirely
insulating from abandonment any and all securities that do not yield dividends.
1
All capitalized terms not defined herein have the same meaning as assigned in the Memorandum of Law
in Support of Defendant Equiniti Trust Company’s Motion To Dismiss Plaintiff’s Second Amended
Complaint, NYSCEF Doc. No. 45.
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The requirement that amounts payable in connection with securities
remain unclaimed by the shareholder is a requirement only “if any” such amount existed.
Had the legislature intended to include an unqualified requirement that a shareholder
must neglect to collect payments in connection with the shares for them to be abandoned,
the legislature could have done so. Instead, they qualified the requirement to read that if
any amounts are payable to the shareholder, then those amounts must be left unclaimed in
order for property to have been abandoned. Of course, if there are no such payments,
then there is no such requirement. To read the statute otherwise renders superfluous the
qualifier “if any.”
Moreover, Plaintiff’s proposed interpretation of the statute is contrary to
the express purpose of the policy, which is to favor the transfer of abandoned property to
the state, which benefits from acting as custodian of the abandoned property, as opposed
to allowing holders to benefit from retaining such abandoned property. See N.Y. Aband.
Prop. L. § 102 (“It is hereby declared to be the policy of the state, while protecting the
interest of the owners thereof, to utilize escheated lands and unclaimed property for the
benefit of all the people of the state, and this chapter shall be liberally construed to
accomplish such purpose.”). Plaintiff’s proposed erroneous interpretation would, for
example, render the shares of nearly every pink-sheets company completely insulated
from abandonment, no matter how many notices to the shareholder came back to the
holder as undeliverable and no matter how long the shares remained dormant without any
activity. According to Plaintiff’s desired reading, no securities would be capable of
abandonment, unless dividends were paid. That absurd conclusion is certainly contrary
to the legislature’s stated purpose and contrary to the plain meaning of the statute.
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On the other hand, it is entirely reasonable to require a shareholder to
communicate in writing with the holder every three years to stave off transfer to the state
comptroller, particularly given two salient facts: (1) the state comptroller acts as a
custodian of the property and is obligated to return the property to its rightful owner upon
request at any time – indeed, here the Plaintiff recovered its Shares; and (2) the owner of
securities can avoid this written communication obligation simply by transferring
registered ownership to a broker.
It is not disputed in this case that there were no amounts payable to
Plaintiff in connection with the Shares during the relevant three years. Thus, the only
fact relevant to the legal determination of whether the Shares were abandoned is whether
Plaintiff had any written communication with the holder during the relevant three-year
period. Despite three opportunities to plead and despite that such fact is uniquely within
Plaintiff’s knowledge, Plaintiff fails to allege this fact. Absent an allegation made in
good faith that Plaintiff submitted written communication to the holder, general
allegations that Plaintiff did not abandon the Shares are nothing but unsupported legal
conclusions and are insufficient to state a cause of action. See Bonavisa v. Motor Vehicle
Acc. Indemnification Corp., 21 Misc.2d 963, 963 (N.Y. Co. 1960) (finding that petitioner
failed to state a cause of action, where she failed to “set out sufficient facts to bring [a
general allegation] within the [statutory] definition”).
With respect to Plaintiff’s claim for negligence on the basis of EQ’s
purported failure to provide sufficient notice, Plaintiff disregards the express immunity
provided to EQ in Section 1404 of the Abandoned Property Law. Section 1404 provides
that “[n]o action shall be maintained against any … corporation… for (a) the recovery of
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abandoned property paid or delivered to the state comptroller pursuant to this chapter.”
Plaintiff argues that EQ’s purported failure to provide notice consistent with Section 1422
means that the transfer of the Shares to the state comptroller was not “pursuant to this
chapter.” This interpretation, however, ignores entirely the express provision of
Section 1422 which states that failure to provide notice “shall not in any way affect the
reporting of abandoned property pursuant to the provisions of this chapter.” Thus,
Section 1422 demands that abandoned property be transferred to the state comptroller
“pursuant to this chapter,” irrespective of whether notice has been given. Here as above,
Plaintiff’s proposed interpretation of the immunity provided by Section 1404 would
render meaningless this provision of Section 1422.
Plaintiff’s failure to allege facts supporting its general conclusion of law
that it did not abandon the Shares is fatal to its claims and the Second Amended Verified
Complaint (“Second Amended Complaint.”) should be dismissed in its entirety.
Argument
I
THIS COURT NEED NOT ACCEPT AS TRUE LEGAL CONCLUSIONS AND
THE COMPLAINT DOES NOT STATE THE FACTS REQUISITE TO SUPPORT
THAT THE SHARES WERE ABANDONED, AS DEFINED BY STATUTE
A. General Allegations That The Shares
Were Not Abandoned Are Conclusory And
Are Not Entitled To Deference On A Motion To Dismiss
As a preliminary matter, it is well-settled that legal conclusions in a
pleading are not entitled to deference and are insufficient to state a claim that will survive
a motion to dismiss. See Marinelli v. New York Methodist Hospital, 205 A.D.3d 710, 711
(2d Dep’t 2022) (“On motion to dismiss for failure to state cause of action, facts alleged
in complaint must be accepted as true, and plaintiff is entitled to receive benefit of every
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possible favorable inference; however, allegations consisting of bare legal conclusions …
are not entitled to any such consideration, nor to that arguendo advantage”) (citing Maas
v. Cornell University, 94 N.Y.2d 87, 91 (1999)); see also Hispanic Aids Forum v. Estate
of Bruno, 16 A.D.3d 294, 295 (1st Dep’t 2005) (“[I]t is... axiomatic that factual
allegations that consist of bare legal conclusions are not entitled to such consideration.”).
“Abandoned,” as it is relevant to this case, is a term defined by statute
based upon the existence, or not, of two specific facts. Plaintiff does not dispute that
“abandoned” is a legal term of art as it is used here. See Zucker Aff., NYSCEF Doc.
No. 48, ¶ 24. Thus, any and all allegations in the Second Amended Complaint that
generally assert that the Shares were not abandoned are legal conclusions and are
insufficient to state a cause of action that the Shares were treated improperly as
abandoned.
Neither should this Court give deference to the legal conclusions drawn by
Plaintiff’s proposed witnesses, Eric Wanatick and Kara Jenny. See, e.g., Singh v. Kolcaj
Realty Corp., 283 A.D.2d 350, 351 (1st Dep’t 2001) (finding that plaintiff’s expert’s
opinion that illegally parked car was proximate cause of accident was a legal conclusion
which was of no consequence, and could not defeat defendant’s motion for summary
judgment). In order to state such a cause of action, Plaintiff must plead the facts which
would show that the Shares were not abandoned, as defined by New York’s Abandoned
Property Law. Plaintiff does not plead the requisite facts. Instead, Plaintiff argues that
this Court should interpret the Abandoned Property Law in a way that is contrary to the
plain meaning of the statute, as described further below.
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B. Plaintiff’s Proposed Interpretation Of Section 501 Would
Impose An Extraordinary Limitation On The Abandonment Of
Property That Is Contrary To The Express Purpose Of The Statute
“Abandoned” property is sent to the state to protect the owner’s assets,
centralize search efforts in locating property the owner may have lost contact with, and to
give the state rather than the holders of unclaimed property the benefit of the use of that
property. Critically, the state does not assume ownership of abandoned property. The
state simply serves as the custodian of the property until its rightful owner claims the
property, which may be done at any time. See N.Y. Aband. Prop. L. § 102 (“It is hereby
declared to be the policy of the state, while protecting the interest of the owners thereof,
to utilize escheated lands and unclaimed property for the benefit of all the people of the
state, and this chapter shall be liberally construed to accomplish such purpose.”); In re
Menschefrend’s Estate, 283 A.D. 463, 466 (1st Dep’t 1954) (“The purpose [of the
Abandoned Property Law] was to expand the field of escheat and to change the policy of
the state from confiscation to custodial protection.”).
Because the state acts only as custodian, the rightful owner may recover
the abandoned property transferred to the state at any time. See In re Drexel Burnham
Lambert Group Inc., 151 B.R. 684, 688 (S.D.N.Y. Bankr. Ct. 1993) (“Money and
proceeds of property turned over to Comptroller are placed in a special ‘abandoned
property fund.’ The state holds this unclaimed property as a custodian until the property
is claimed by the owner. The NYAPL sets no time limits for the filing of an owner’s
claim.”) (internal citations omitted). Indeed, Plaintiff acknowledges that EQ’s actions did
not deprive Plaintiff of its property, as the Second Amended Complaint concedes that
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Plaintiff recovered ownership of the Shares from the state. See Second Amended
Complaint, NYSCEF Doc. No. 43, ¶¶ 57-58.
It is express within the Abandoned Property Law that the statute “shall be
liberally construed” in favor of transferring property to the state as custodian. See N.Y.
Aband. Prop. L. § 102. Contrary to that express purpose, Plaintiff’s proposed definition
would render it impossible to abandon shares of companies that do not issue dividends.
In that case, no matter the number of notices that went unreceived or the length of time
that shares lay dormant, those shares could never be deemed abandoned. This would
impact the stock of a highly significant number of companies.
C. Plaintiff’s Proposed Interpretation Of Section 501
Is Contrary To The Plain Meaning Of The Statute
Applying the plain meaning of Section 501 avoids the absurd results that
Plaintiff suggests. Section 501 of the Abandoned Property Law provides that securities
are “deemed abandoned where, for three successive years: (i) all amounts, if any,
payable or distributable thereon or with respect thereto have remained unpaid to or
unclaimed by such resident, and (ii) no written communication has been received from
such resident by the holder.” 2 N.Y. Aband. Prop. L. § 501(2)(a) (emphasis added).
Plaintiff argues, without any support, that the “most logical” way to read “if any” in the
above statute is that if no payments are payable, then shares cannot be deemed
abandoned. In fact, this interpretation would result in an extraordinary limitation on the
2
Although Plaintiff initially argued that Section 511 of the Abandoned Property Law is applicable
here because the Shares’ certificates were physically located with a broker, Plaintiff has
specifically alleged that the Shares were, in fact, registered in the name of Plaintiff and, therefore,
the Plaintiff was the holder of record – not a broker. And it is clear from the face of the statute
that Section 511 applies only where the broker is the holder of record, i.e., the shares are registered
in the name of the broker or the Depository Trust Company. See N.Y. Aband. Prop. L. § 511(3).
EQ more fully briefed this argument in its moving papers and, tellingly, Plaintiff has not
responded to this argument in its opposition to this motion to dismiss.
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abandonment of property, which is contrary to the express purpose of the Abandoned
Property law. Moreover, Plaintiff’s proposed interpretation is contrary to the plain
language of the statute and renders portions of the statute superfluous.
In interpreting a statute, the court looks to the plain language of the
statute. See People v. Mitchell, 2022 WL 1631507, *2 (N.Y. May 24, 2022) (“The
clearest indicator of legislative intent is the statutory text, and we therefore start with the
plain meaning of the language itself.”) (internal quotations omitted) (citing Majewski v.
Broadalbin–Perth Cent. School Dist., 91 N.Y.2d 577, 583 (1998)); Johnson v. City of
New York, 2022 WL 1177637, *3 (N.Y. April 21, 2022) (“[T]he starting point for
[statutory interpretation] must always be the statutory language itself, giving effect to the
plain meaning thereof.”) (internal quotations omitted).
Here, the statutory language is clear: shares are abandoned where, for
three successive years, (1) all amounts payable on the shares – if there are any such
amounts – remain unpaid; and (2) there is no written communication received from the
shareholder. Plainly, where there are no amounts payable on the shares, then there are no
amounts that will remain unpaid, thus obviating the need to make that showing.
Second, Plaintiff’s proposed interpretation would render the phrase “if
any” superfluous. See ACE Securities Corp. v. DB Structured Products, Inc., 2022 WL
2162621, at *3 (N.Y. June 16, 2022) (“Any construction that would render a portion of
the statute superfluous must be avoided.”); Lemma v. Nassau County Police Officer
Indemnification Board, 31 N.Y.3d 523, 528 (2018) (“Whenever possible, statutory
language should be harmonized, giving effect to each component and avoiding a
construction that treats a word or phrase as superfluous.”). “If any” must be given
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meaning, such that it is a requisite of abandoned securities that amounts payable on the
securities remain uncollected – if there are any amounts payable. If there are not any
such amounts payable, there is no such requirement.
The application of this statute does have the effect, as Plaintiff notes, of
requiring certain shareholders to submit written communication to the holder at least once
every three years. This is not an unreasonable request in light of the fact that a
shareholder can avoid this obligation simply by transferring the registered ownership of
the securities to a broker, which would subject the shares to a different definition of
abandoned. 3 Indeed, Plaintiff could have avoided the present circumstances, had Plaintiff
asked to reregister the Shares in the name of the broker that had physical possession of
the stock certificate.
And requiring a property owner to take affirmative action to avoid
abandoning her property is not unique. See e.g., N.Y. Aband. Prop. L. § 300 (deeming as
abandoned property any accrued interest or dividends held by a banking organization
which remain unclaimed for three years); Klein v. North Side Sav. Bank, 24 A.D.2d 106,
108 (1st Dep’t 1965) (finding that funds were abandoned where “[t]here were no deposits
or withdrawals, and the passbook was never presented for the crediting of dividends”).
D. Plaintiff Fails To Plead Facts Supporting Its
Legal Conclusion That Plaintiff Did Not Abandon The Shares
It is not disputed in this case that there were no amounts payable to
Plaintiff in connection with the Shares. Thus, the plain language of Section 501 dictates
that, Plaintiff abandoned its Shares where it did not send any written communications to
3
Where shares are registered in the name of a broker, then a shareholder need only have on file
with the broker some evidence that the shareholder has knowledge of the account in which the
shares are deposited. See N.Y. Aband. Prop. L. § 511(3).
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the holder. Plaintiff does not – because it cannot – plead the fact that the shareholder had
any written communication with EQ for three successive years. This is the operative fact
which would determine whether the shares are abandoned under the statute. Instead,
Plaintiff relies on conclusory and legally unsupportable allegations that the Shares were
not abandoned. Such allegations are insufficient to overcome a motion to dismiss, where
the Plaintiff has failed to plead the underlying fact necessary to support that conclusion.
The facts alleged by Plaintiff simply do not state a cause of action within
any cognizable legal theory. See Garcia v. Shah, 2022 WL 1760205, *2 (2d Dep’t
June 1, 2022) (“In assessing a motion pursuant to CPLR 3211(a)(7) to dismiss a
complaint, a court must accept the facts as 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.”) (internal quotations omitted);
Joseph v. Fensterman, 204 A.D.3d 766, 767 (2d Dep’t 2022) (“[T]he court is to
determine only whether the facts as alleged fit within any cognizable legal theory.”).
Thus, Plaintiff’s claim for negligence on the basis that EQ wrongfully treated the Shares
as abandoned should be dismissed.
II
ABANDONED PROPERTY LAW EXPRESSLY
PROVIDES FOR IMMUNITY UNDER THESE CIRCUMSTANCES
Plaintiff here again ignores the plain language of the Abandoned Property
Law to argue that the immunity provided in Section 1404 does not apply where the
defendant did not adhere to the notice provisions of Section 1422. Plaintiff is wrong. In
fact, reading together Section 1404 and Section 1422 it is clear that the statutory
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immunity applies to all transfers of property deemed abandoned pursuant to the
Abandoned Property Law.
Section 1422 expressly provides that “[t]he failure of any holder of
abandoned property to comply with the [notice] requirements of this section shall not in
any way affect the reporting of abandoned property pursuant to the provisions of this
chapter.” The plain meaning of this provision is that property satisfying the definition of
“abandoned” pursuant to the Abandoned Property Law shall be transferred to the state
irrespective of whether the notice provided in Section 1422 has been provided. There is
simply no other way to read this provision, and neither has Plaintiff proposed any
alternate reading.
Instead, Plaintiff argues that even though the Abandoned Property Law
specifically directs holders to transfer abandoned property to the state, irrespective of the
notice provided, holders are still liable to the owners of abandoned property for not
providing notice under Section 1422. This argument defies the plain language of the
statute. A holder cannot be liable to a shareholder for complying with the holder’s
obligation to the state.
To make this issue even clearer, Section 1404 provides immunity to any
company that transfers to the state abandoned property, as defined by the statute.
Plaintiff again attempts to distort the plain meaning of this immunity provision by
arguing that the phrase “delivered to the state comptroller pursuant to this chapter” means
that it does not apply where a second notice was not provided pursuant to Section 1422.
This argument completely ignores the express dictates of the statute.
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As stated above, the notice provisions of Section 1422 expressly state that
the failure to provide notice does not in any way affect the delivery obligation of
abandoned property pursuant to this chapter. It is written into the statute that the failure
to provide notice under Section 1422 does NOT remove a transfer of abandoned property
from the purview of having been “delivered to the state comptroller pursuant to this
chapter.” Indeed, Section 1422 expressly directs that abandoned property, even for
which a second notice to the owner has not been given, shall be reported to the state
comptroller pursuant to this chapter.
Plaintiff’s argument would render Section 1422(4) superfluous and
without meaning. Statutes must be construed to give meaning to the entire statute. See
HSBC Bank USA, Nat’l Ass’n v. Maniatopoulos, 175 A.D.3d 575, 576 (2d Dep’t 2019)
(“Critically, a statute must be construed as a whole and its various sections must be
considered together and with reference to each other.”); Kamchi v. Weissman, 125
A.D.3d 142, 152 (2d Dep’t 2014) (“Meaning and effect should be given to every word of
a statute.”) (internal quotations omitted). Thus, Section 1402, when read with Section
1422(4), of the Abandoned Property Law must be read, according to its plain language,
as providing immunity to companies that transfer abandoned property to the state.
Indeed, giving effect to the immunity provision, as written, is consistent
with the express purpose of the Abandoned Property Law. Protecting from liability those
holders who deliver abandoned property to the comptroller promotes compliance with the
statute and furthers the interests of the state.
As long as the Shares were abandoned, as defined by the Abandoned
Property Law § 501, EQ is entitled to immunity from Plaintiff’s claims of negligence.
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Here, despite three opportunities to plead facts to support a claim, Plaintiff has failed to
allege the singular fact, which is uniquely within Plaintiff’s knowledge, that would
demonstrate that the Shares were not abandoned, namely that Plaintiff, within the last
three years, had written communications with the holder. Absent an allegation of this
fact, Plaintiff’s conclusory statements of law are insufficient to state a claim on the basis
that Shares were not abandoned, and EQ is entitled to the statutory immunity provided in
Section 1404. Thus, Plaintiff’s Second Amended Complaint should be dismissed in its
entirety.
III
PLAINTIFF HAS NOT IDENTIFIED A SINGLE RELEVANT DOCUMENT
WHICH IT NEEDS TO DEFEND THIS MOTION TO DISMISS
Plaintiff has not identified a single document which it needs to state a
claim against EQ. 4 See CPLR 3211, Supplementary Practice Commentaries, C3211:46
(“[T]he burden on the opposing party is to convince the court in the opposing affidavits
that facts may exist that would defeat the motion; mere hope that discovery will yield
helpful information will not forestall a determination of the CPLR 3211 motion.”)
(internal quotations omitted) (citing Cracolici v. Shah, 127 A.D.3d 413, 413 (1st Dep’t
2015)). For the purposes of this motion to dismiss only, EQ has not disputed any fact
alleged by Plaintiff and, to the contrary, assumes that Plaintiff’s alleged facts – but not
conclusions of law – are true, as is necessary on a motion to dismiss. Plaintiff’s
document requests seeks the production of documents concerning the logistics of
4
Plaintiff intentionally misrepresents precedent by misleadingly omitting key words from the case
law cited. Specifically, the only case Plaintiff cites in support of its argument is one which grants
a plaintiff limited discovery concerning jurisdictional facts exclusively in defendant’s possession.
See Peterson v. Spartan Indus., Inc., 33 N.Y.2d 463, 466 (1974). In the quote Plaintiff cites,
Plaintiff uses an ellipses to omit the key qualifier “jurisdictional,” from the Court’s determination
that the Plaintiff could obtain certain “essential jurisdictional facts.”
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transferring the Shares to the state, documents related to EQ’s practices and policies, and
documents related to the notice provided to Plaintiff. None of these documents is
relevant on a motion to dismiss.
Documents concerning the notice, which EQ has already provided to
Plaintiff, are not relevant where Plaintiff has already alleged that EQ did not provide the
second notice. For the purposes of this motion, EQ accepts as true Plaintiff’s allegation
concerning notice and bases its motion to dismiss on the position that the alleged non-
provision of a second notice is insufficient, as a matter of law, to support a claim for
negligence.
Documents concerning the logistics of transferring the Shares to the state
are not relevant to Plaintiff’s claims under any circumstances, whether in connection with
a motion to dismiss or the substantive merits of the claims. Particularly on a motion to
dismiss, though, where EQ does not argue that the Shares were not transferred, the
documents detailing the logistics of that transfer are not relevant, nor has Plaintiff
provided any basis for needing them.
Similarly, documents related to EQ’s practices and policies are not
relevant on a motion to dismiss. EQ’s motion to dismiss is based upon Plaintiff’s
misinterpretation of the Abandoned Property Law, and Plaintiff’s failure to plead facts
that are uniquely within Plaintiff’s knowledge concerning whether the Shares were
abandoned, as that term is defined by statute. Plaintiff has not identified how any
document in EQ’s possession would impact this motion to dismiss. Plaintiff is grasping
at straws and using discovery as a red herring to avoid dismissal. EQ’s motion to dismiss
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should not be denied or deferred on the basis that Plaintiff is waiting on discovery which
is irrelevant to this motion.
Conclusion
The Abandoned Property Law is clear that a company is immune from
liability for damages resulting from the company’s transfer of property to the state, so
long as that property was “abandoned” as that term is defined by applicable statute. It is
also clear that where the Plaintiff was the registered owner, as is indesputibly the case
here, the Shares were properly deemed abandoned where Plaintiff did not have any
written communications with the holder for three years. Plaintiff does not – and cannot –
allege this fact, which is the sole legal basis for a claim against EQ. Plaintiff’s failure to
plead any fact which supports its claims is fatal. Based on the foregoing, defendant
Equiniti Trust Company respectfully requests that this Court grant its motion to dismiss,
pursuant to CPLR 3211(a)(7) for failure to state a cause of action, and dismiss the Second
Preview
FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU ADAM KATZ, in his capacity as Trustee of the ADAM KATZ 2012 REVOCABLE TRUST, Index No.: 616069/2021 Plaintiff -against- EQUINITI TRUST COMPANY a/k/a EQ BY EQUINITI a/k/a EQ SHAREOWNER SERVICES, Defendant. ______________________________________________________________________________ REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANT EQUINITI TRUST COMPANY’S MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT ______________________________________________________________________________ HODGSON RUSS LLP Mark A. Harmon, Esq. Erin N. Teske, Esq. 605 Third Avenue, Suite 2300 New York, New York 10158 (212) 751-4300 Attorneys for Defendant Equiniti Trust Company 1 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 TABLE OF CONTENTS Page(s) Table of Authorities ........................................................................................................................ ii Introduction ......................................................................................................................................1 Argument .........................................................................................................................................4 I THIS COURT NEED NOT ACCEPT AS TRUE LEGAL CONCLUSIONS AND THE COMPLAINT DOES NOT STATE THE FACTS REQUISITE TO SUPPORT THAT THE SHARES WERE ABANDONED, AS DEFINED BY STATUTE .........................................4 A. General Allegations That the Shares Were Not Abandoned Are Conclusory And Are Not Entitled To Deference On A Motion to Dismiss ........................................................................................4 B. Plaintiff’s Proposed Interpretation Of Section 501 Would Impose An Extraordinary Limitation On The Abandonment Of Property That Is Contrary To The Express Purpose Of The Statute ......................................................5 C. Plaintiff’s Proposed Interpretation Of Section 501 Is Contrary To The Plain Meaning Of The Statute ......................................7 D. Plaintiff Fails To Plead Facts Supporting Its Legal Conclusion That Plaintiff Did Not Abandon The Shares ....................................................................................................9 II ABANDONED PROPERTY LAW EXPRESSLY PROVIDES FOR IMMUNITY UNDER THESE CIRCUMSTANCES ..............................................................................................10 III PLAINTIFF HAS NOT IDENTIFIED A SINGLE RELEVANT DOCUMENT WHICH IT NEEDS TO DEFEND THIS MOTION TO DISMISS ..............................................................13 Conclusion .....................................................................................................................................14 -i- 2 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 TABLE OF AUTHORITIES Page(s) Federal Cases In re Drexel Burnham Lambert Group Inc., 151 B.R. 684 (S.D.N.Y. Bankr. Ct. 1993) .................................................................................6 State Cases ACE Securities Corp. v. DB Structured Products, Inc., 2022 WL 2162621 (N.Y. June 16, 2022)...................................................................................8 Bonavisa v. Motor Vehicle Acc. Indemnification Corp., 21 Misc.2d 963 (N.Y. Co. 1960) ...............................................................................................3 Cracolici v. Shah, 127 A.D.3d 413 (1st Dep’t 2015) ............................................................................................13 Garcia v. Shah, 2022 WL 1760205 (2d Dep’t June 1, 2022) ............................................................................10 Hispanic Aids Forum v. Estate of Bruno, 16 A.D.3d 294 (1st Dep’t 2005) ................................................................................................5 HSBC Bank USA, Nat’l Ass’n v. Maniatopoulos, 175 A.D.3d 575 (2d Dep’t 2019) .............................................................................................12 Johnson v. City of New York, 2022 WL 1177637 (N.Y. April 21, 2022) .................................................................................8 Joseph v. Fensterman, 204 A.D.3d 766 (2d Dep’t 2022) .............................................................................................10 Kamchi v. Weissman, 125 A.D.3d 142 (2d Dep’t 2014) .............................................................................................12 Klein v. North Side Sav. Bank, 24 A.D.2d 106 (1st Dep’t 1965) ................................................................................................9 Lemma v. Nassau County Police Officer Indemnification Board, 31 N.Y.3d 523 (2018) ................................................................................................................8 Maas v. Cornell University, 94 N.Y.2d 87 (1999) ..................................................................................................................5 - ii - 3 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 Majewski v. Broadalbin–Perth Cent. School Dist., 91 N.Y.2d 577 (1998) ................................................................................................................8 Marinelli v. New York Methodist Hospital, 205 A.D.3d 710 (2d Dep’t 2022) ...............................................................................................4 In re Menschefrend’s Estate, 283 A.D. 463 (1st Dep’t 1954) ..................................................................................................6 Peterson v. Spartan Indus., Inc., 33 N.Y.2d 463 (1974) ..............................................................................................................13 Singh v. Kolcaj Realty Corp., 283 A.D.2d 350 (1st Dep’t 2001) ..............................................................................................5 State Statutes N.Y. Aband. Prop. L. § 102 .........................................................................................................2, 6 N.Y. Aband. Prop. L. § 300 .............................................................................................................9 N.Y. Aband. Prop. L. § 501(2)(a) ....................................................................................................7 N.Y. Aband. Prop. L. § 511(3) ....................................................................................................7, 9 N.Y. Aband. Prop. L. § 1404 ..........................................................................1,3, 4, 7, 9, 10, 11, 13 N.Y. Aband. Prop. L. § 1422 .................................................................................................7, 9, 12 Rules CPLR 3211.........................................................................................................................10, 13, 15 - iii - 4 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 Introduction Plaintiff’s Opposition highlights the deficiencies in its two negligence claims: one based upon Plaintiff’s general allegation that it did not abandon the Shares; 1 and one based upon Defendant Equinity Trust Company’s (“EQ”) purported failure to provide sufficient notice that the Shares had been abandoned. Plaintiff distorts the plain meaning of the Abandoned Property Law to support its arguments for both. Indeed, Plaintiff misinterprets both the definition of “abandoned” in Section 501 and the immunity provided in Section 1404 of New York’s Abandoned Property Law. Section 501 defines “abandoned,” as here relevant, as follows: “any security … shall be deemed abandoned where, for three successive years: (i) all amounts, if any, payable or distributable thereon or with respect thereto have remained unpaid to or unclaimed by such resident, and (ii) no written communication has been received from such resident by the holder.” N.Y. Aband. Propr. L. § 501. Unable to plead that Plaintiff had any written communication within a period of three years, Plaintiff argues that it is sufficient to allege that there were no amounts payable or distributable in connection with the Shares within the three-year period. This faulty interpretation of the definition – one which requires that amounts be payable to a shareholder in connection with his securities– disregards entirely the words “if any” which modify that requirement. Moreover, Plaintiff’s proposed interpretation would lead to absurd results, entirely insulating from abandonment any and all securities that do not yield dividends. 1 All capitalized terms not defined herein have the same meaning as assigned in the Memorandum of Law in Support of Defendant Equiniti Trust Company’s Motion To Dismiss Plaintiff’s Second Amended Complaint, NYSCEF Doc. No. 45. -1- 5 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 The requirement that amounts payable in connection with securities remain unclaimed by the shareholder is a requirement only “if any” such amount existed. Had the legislature intended to include an unqualified requirement that a shareholder must neglect to collect payments in connection with the shares for them to be abandoned, the legislature could have done so. Instead, they qualified the requirement to read that if any amounts are payable to the shareholder, then those amounts must be left unclaimed in order for property to have been abandoned. Of course, if there are no such payments, then there is no such requirement. To read the statute otherwise renders superfluous the qualifier “if any.” Moreover, Plaintiff’s proposed interpretation of the statute is contrary to the express purpose of the policy, which is to favor the transfer of abandoned property to the state, which benefits from acting as custodian of the abandoned property, as opposed to allowing holders to benefit from retaining such abandoned property. See N.Y. Aband. Prop. L. § 102 (“It is hereby declared to be the policy of the state, while protecting the interest of the owners thereof, to utilize escheated lands and unclaimed property for the benefit of all the people of the state, and this chapter shall be liberally construed to accomplish such purpose.”). Plaintiff’s proposed erroneous interpretation would, for example, render the shares of nearly every pink-sheets company completely insulated from abandonment, no matter how many notices to the shareholder came back to the holder as undeliverable and no matter how long the shares remained dormant without any activity. According to Plaintiff’s desired reading, no securities would be capable of abandonment, unless dividends were paid. That absurd conclusion is certainly contrary to the legislature’s stated purpose and contrary to the plain meaning of the statute. -2- 6 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 On the other hand, it is entirely reasonable to require a shareholder to communicate in writing with the holder every three years to stave off transfer to the state comptroller, particularly given two salient facts: (1) the state comptroller acts as a custodian of the property and is obligated to return the property to its rightful owner upon request at any time – indeed, here the Plaintiff recovered its Shares; and (2) the owner of securities can avoid this written communication obligation simply by transferring registered ownership to a broker. It is not disputed in this case that there were no amounts payable to Plaintiff in connection with the Shares during the relevant three years. Thus, the only fact relevant to the legal determination of whether the Shares were abandoned is whether Plaintiff had any written communication with the holder during the relevant three-year period. Despite three opportunities to plead and despite that such fact is uniquely within Plaintiff’s knowledge, Plaintiff fails to allege this fact. Absent an allegation made in good faith that Plaintiff submitted written communication to the holder, general allegations that Plaintiff did not abandon the Shares are nothing but unsupported legal conclusions and are insufficient to state a cause of action. See Bonavisa v. Motor Vehicle Acc. Indemnification Corp., 21 Misc.2d 963, 963 (N.Y. Co. 1960) (finding that petitioner failed to state a cause of action, where she failed to “set out sufficient facts to bring [a general allegation] within the [statutory] definition”). With respect to Plaintiff’s claim for negligence on the basis of EQ’s purported failure to provide sufficient notice, Plaintiff disregards the express immunity provided to EQ in Section 1404 of the Abandoned Property Law. Section 1404 provides that “[n]o action shall be maintained against any … corporation… for (a) the recovery of -3- 7 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 abandoned property paid or delivered to the state comptroller pursuant to this chapter.” Plaintiff argues that EQ’s purported failure to provide notice consistent with Section 1422 means that the transfer of the Shares to the state comptroller was not “pursuant to this chapter.” This interpretation, however, ignores entirely the express provision of Section 1422 which states that failure to provide notice “shall not in any way affect the reporting of abandoned property pursuant to the provisions of this chapter.” Thus, Section 1422 demands that abandoned property be transferred to the state comptroller “pursuant to this chapter,” irrespective of whether notice has been given. Here as above, Plaintiff’s proposed interpretation of the immunity provided by Section 1404 would render meaningless this provision of Section 1422. Plaintiff’s failure to allege facts supporting its general conclusion of law that it did not abandon the Shares is fatal to its claims and the Second Amended Verified Complaint (“Second Amended Complaint.”) should be dismissed in its entirety. Argument I THIS COURT NEED NOT ACCEPT AS TRUE LEGAL CONCLUSIONS AND THE COMPLAINT DOES NOT STATE THE FACTS REQUISITE TO SUPPORT THAT THE SHARES WERE ABANDONED, AS DEFINED BY STATUTE A. General Allegations That The Shares Were Not Abandoned Are Conclusory And Are Not Entitled To Deference On A Motion To Dismiss As a preliminary matter, it is well-settled that legal conclusions in a pleading are not entitled to deference and are insufficient to state a claim that will survive a motion to dismiss. See Marinelli v. New York Methodist Hospital, 205 A.D.3d 710, 711 (2d Dep’t 2022) (“On motion to dismiss for failure to state cause of action, facts alleged in complaint must be accepted as true, and plaintiff is entitled to receive benefit of every -4- 8 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 possible favorable inference; however, allegations consisting of bare legal conclusions … are not entitled to any such consideration, nor to that arguendo advantage”) (citing Maas v. Cornell University, 94 N.Y.2d 87, 91 (1999)); see also Hispanic Aids Forum v. Estate of Bruno, 16 A.D.3d 294, 295 (1st Dep’t 2005) (“[I]t is... axiomatic that factual allegations that consist of bare legal conclusions are not entitled to such consideration.”). “Abandoned,” as it is relevant to this case, is a term defined by statute based upon the existence, or not, of two specific facts. Plaintiff does not dispute that “abandoned” is a legal term of art as it is used here. See Zucker Aff., NYSCEF Doc. No. 48, ¶ 24. Thus, any and all allegations in the Second Amended Complaint that generally assert that the Shares were not abandoned are legal conclusions and are insufficient to state a cause of action that the Shares were treated improperly as abandoned. Neither should this Court give deference to the legal conclusions drawn by Plaintiff’s proposed witnesses, Eric Wanatick and Kara Jenny. See, e.g., Singh v. Kolcaj Realty Corp., 283 A.D.2d 350, 351 (1st Dep’t 2001) (finding that plaintiff’s expert’s opinion that illegally parked car was proximate cause of accident was a legal conclusion which was of no consequence, and could not defeat defendant’s motion for summary judgment). In order to state such a cause of action, Plaintiff must plead the facts which would show that the Shares were not abandoned, as defined by New York’s Abandoned Property Law. Plaintiff does not plead the requisite facts. Instead, Plaintiff argues that this Court should interpret the Abandoned Property Law in a way that is contrary to the plain meaning of the statute, as described further below. -5- 9 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 B. Plaintiff’s Proposed Interpretation Of Section 501 Would Impose An Extraordinary Limitation On The Abandonment Of Property That Is Contrary To The Express Purpose Of The Statute “Abandoned” property is sent to the state to protect the owner’s assets, centralize search efforts in locating property the owner may have lost contact with, and to give the state rather than the holders of unclaimed property the benefit of the use of that property. Critically, the state does not assume ownership of abandoned property. The state simply serves as the custodian of the property until its rightful owner claims the property, which may be done at any time. See N.Y. Aband. Prop. L. § 102 (“It is hereby declared to be the policy of the state, while protecting the interest of the owners thereof, to utilize escheated lands and unclaimed property for the benefit of all the people of the state, and this chapter shall be liberally construed to accomplish such purpose.”); In re Menschefrend’s Estate, 283 A.D. 463, 466 (1st Dep’t 1954) (“The purpose [of the Abandoned Property Law] was to expand the field of escheat and to change the policy of the state from confiscation to custodial protection.”). Because the state acts only as custodian, the rightful owner may recover the abandoned property transferred to the state at any time. See In re Drexel Burnham Lambert Group Inc., 151 B.R. 684, 688 (S.D.N.Y. Bankr. Ct. 1993) (“Money and proceeds of property turned over to Comptroller are placed in a special ‘abandoned property fund.’ The state holds this unclaimed property as a custodian until the property is claimed by the owner. The NYAPL sets no time limits for the filing of an owner’s claim.”) (internal citations omitted). Indeed, Plaintiff acknowledges that EQ’s actions did not deprive Plaintiff of its property, as the Second Amended Complaint concedes that -6- 10 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 Plaintiff recovered ownership of the Shares from the state. See Second Amended Complaint, NYSCEF Doc. No. 43, ¶¶ 57-58. It is express within the Abandoned Property Law that the statute “shall be liberally construed” in favor of transferring property to the state as custodian. See N.Y. Aband. Prop. L. § 102. Contrary to that express purpose, Plaintiff’s proposed definition would render it impossible to abandon shares of companies that do not issue dividends. In that case, no matter the number of notices that went unreceived or the length of time that shares lay dormant, those shares could never be deemed abandoned. This would impact the stock of a highly significant number of companies. C. Plaintiff’s Proposed Interpretation Of Section 501 Is Contrary To The Plain Meaning Of The Statute Applying the plain meaning of Section 501 avoids the absurd results that Plaintiff suggests. Section 501 of the Abandoned Property Law provides that securities are “deemed abandoned where, for three successive years: (i) all amounts, if any, payable or distributable thereon or with respect thereto have remained unpaid to or unclaimed by such resident, and (ii) no written communication has been received from such resident by the holder.” 2 N.Y. Aband. Prop. L. § 501(2)(a) (emphasis added). Plaintiff argues, without any support, that the “most logical” way to read “if any” in the above statute is that if no payments are payable, then shares cannot be deemed abandoned. In fact, this interpretation would result in an extraordinary limitation on the 2 Although Plaintiff initially argued that Section 511 of the Abandoned Property Law is applicable here because the Shares’ certificates were physically located with a broker, Plaintiff has specifically alleged that the Shares were, in fact, registered in the name of Plaintiff and, therefore, the Plaintiff was the holder of record – not a broker. And it is clear from the face of the statute that Section 511 applies only where the broker is the holder of record, i.e., the shares are registered in the name of the broker or the Depository Trust Company. See N.Y. Aband. Prop. L. § 511(3). EQ more fully briefed this argument in its moving papers and, tellingly, Plaintiff has not responded to this argument in its opposition to this motion to dismiss. -7- 11 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 abandonment of property, which is contrary to the express purpose of the Abandoned Property law. Moreover, Plaintiff’s proposed interpretation is contrary to the plain language of the statute and renders portions of the statute superfluous. In interpreting a statute, the court looks to the plain language of the statute. See People v. Mitchell, 2022 WL 1631507, *2 (N.Y. May 24, 2022) (“The clearest indicator of legislative intent is the statutory text, and we therefore start with the plain meaning of the language itself.”) (internal quotations omitted) (citing Majewski v. Broadalbin–Perth Cent. School Dist., 91 N.Y.2d 577, 583 (1998)); Johnson v. City of New York, 2022 WL 1177637, *3 (N.Y. April 21, 2022) (“[T]he starting point for [statutory interpretation] must always be the statutory language itself, giving effect to the plain meaning thereof.”) (internal quotations omitted). Here, the statutory language is clear: shares are abandoned where, for three successive years, (1) all amounts payable on the shares – if there are any such amounts – remain unpaid; and (2) there is no written communication received from the shareholder. Plainly, where there are no amounts payable on the shares, then there are no amounts that will remain unpaid, thus obviating the need to make that showing. Second, Plaintiff’s proposed interpretation would render the phrase “if any” superfluous. See ACE Securities Corp. v. DB Structured Products, Inc., 2022 WL 2162621, at *3 (N.Y. June 16, 2022) (“Any construction that would render a portion of the statute superfluous must be avoided.”); Lemma v. Nassau County Police Officer Indemnification Board, 31 N.Y.3d 523, 528 (2018) (“Whenever possible, statutory language should be harmonized, giving effect to each component and avoiding a construction that treats a word or phrase as superfluous.”). “If any” must be given -8- 12 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 meaning, such that it is a requisite of abandoned securities that amounts payable on the securities remain uncollected – if there are any amounts payable. If there are not any such amounts payable, there is no such requirement. The application of this statute does have the effect, as Plaintiff notes, of requiring certain shareholders to submit written communication to the holder at least once every three years. This is not an unreasonable request in light of the fact that a shareholder can avoid this obligation simply by transferring the registered ownership of the securities to a broker, which would subject the shares to a different definition of abandoned. 3 Indeed, Plaintiff could have avoided the present circumstances, had Plaintiff asked to reregister the Shares in the name of the broker that had physical possession of the stock certificate. And requiring a property owner to take affirmative action to avoid abandoning her property is not unique. See e.g., N.Y. Aband. Prop. L. § 300 (deeming as abandoned property any accrued interest or dividends held by a banking organization which remain unclaimed for three years); Klein v. North Side Sav. Bank, 24 A.D.2d 106, 108 (1st Dep’t 1965) (finding that funds were abandoned where “[t]here were no deposits or withdrawals, and the passbook was never presented for the crediting of dividends”). D. Plaintiff Fails To Plead Facts Supporting Its Legal Conclusion That Plaintiff Did Not Abandon The Shares It is not disputed in this case that there were no amounts payable to Plaintiff in connection with the Shares. Thus, the plain language of Section 501 dictates that, Plaintiff abandoned its Shares where it did not send any written communications to 3 Where shares are registered in the name of a broker, then a shareholder need only have on file with the broker some evidence that the shareholder has knowledge of the account in which the shares are deposited. See N.Y. Aband. Prop. L. § 511(3). -9- 13 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 the holder. Plaintiff does not – because it cannot – plead the fact that the shareholder had any written communication with EQ for three successive years. This is the operative fact which would determine whether the shares are abandoned under the statute. Instead, Plaintiff relies on conclusory and legally unsupportable allegations that the Shares were not abandoned. Such allegations are insufficient to overcome a motion to dismiss, where the Plaintiff has failed to plead the underlying fact necessary to support that conclusion. The facts alleged by Plaintiff simply do not state a cause of action within any cognizable legal theory. See Garcia v. Shah, 2022 WL 1760205, *2 (2d Dep’t June 1, 2022) (“In assessing a motion pursuant to CPLR 3211(a)(7) to dismiss a complaint, a court must accept the facts as 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.”) (internal quotations omitted); Joseph v. Fensterman, 204 A.D.3d 766, 767 (2d Dep’t 2022) (“[T]he court is to determine only whether the facts as alleged fit within any cognizable legal theory.”). Thus, Plaintiff’s claim for negligence on the basis that EQ wrongfully treated the Shares as abandoned should be dismissed. II ABANDONED PROPERTY LAW EXPRESSLY PROVIDES FOR IMMUNITY UNDER THESE CIRCUMSTANCES Plaintiff here again ignores the plain language of the Abandoned Property Law to argue that the immunity provided in Section 1404 does not apply where the defendant did not adhere to the notice provisions of Section 1422. Plaintiff is wrong. In fact, reading together Section 1404 and Section 1422 it is clear that the statutory - 10 - 14 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 immunity applies to all transfers of property deemed abandoned pursuant to the Abandoned Property Law. Section 1422 expressly provides that “[t]he failure of any holder of abandoned property to comply with the [notice] requirements of this section shall not in any way affect the reporting of abandoned property pursuant to the provisions of this chapter.” The plain meaning of this provision is that property satisfying the definition of “abandoned” pursuant to the Abandoned Property Law shall be transferred to the state irrespective of whether the notice provided in Section 1422 has been provided. There is simply no other way to read this provision, and neither has Plaintiff proposed any alternate reading. Instead, Plaintiff argues that even though the Abandoned Property Law specifically directs holders to transfer abandoned property to the state, irrespective of the notice provided, holders are still liable to the owners of abandoned property for not providing notice under Section 1422. This argument defies the plain language of the statute. A holder cannot be liable to a shareholder for complying with the holder’s obligation to the state. To make this issue even clearer, Section 1404 provides immunity to any company that transfers to the state abandoned property, as defined by the statute. Plaintiff again attempts to distort the plain meaning of this immunity provision by arguing that the phrase “delivered to the state comptroller pursuant to this chapter” means that it does not apply where a second notice was not provided pursuant to Section 1422. This argument completely ignores the express dictates of the statute. - 11 - 15 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 As stated above, the notice provisions of Section 1422 expressly state that the failure to provide notice does not in any way affect the delivery obligation of abandoned property pursuant to this chapter. It is written into the statute that the failure to provide notice under Section 1422 does NOT remove a transfer of abandoned property from the purview of having been “delivered to the state comptroller pursuant to this chapter.” Indeed, Section 1422 expressly directs that abandoned property, even for which a second notice to the owner has not been given, shall be reported to the state comptroller pursuant to this chapter. Plaintiff’s argument would render Section 1422(4) superfluous and without meaning. Statutes must be construed to give meaning to the entire statute. See HSBC Bank USA, Nat’l Ass’n v. Maniatopoulos, 175 A.D.3d 575, 576 (2d Dep’t 2019) (“Critically, a statute must be construed as a whole and its various sections must be considered together and with reference to each other.”); Kamchi v. Weissman, 125 A.D.3d 142, 152 (2d Dep’t 2014) (“Meaning and effect should be given to every word of a statute.”) (internal quotations omitted). Thus, Section 1402, when read with Section 1422(4), of the Abandoned Property Law must be read, according to its plain language, as providing immunity to companies that transfer abandoned property to the state. Indeed, giving effect to the immunity provision, as written, is consistent with the express purpose of the Abandoned Property Law. Protecting from liability those holders who deliver abandoned property to the comptroller promotes compliance with the statute and furthers the interests of the state. As long as the Shares were abandoned, as defined by the Abandoned Property Law § 501, EQ is entitled to immunity from Plaintiff’s claims of negligence. - 12 - 16 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 Here, despite three opportunities to plead facts to support a claim, Plaintiff has failed to allege the singular fact, which is uniquely within Plaintiff’s knowledge, that would demonstrate that the Shares were not abandoned, namely that Plaintiff, within the last three years, had written communications with the holder. Absent an allegation of this fact, Plaintiff’s conclusory statements of law are insufficient to state a claim on the basis that Shares were not abandoned, and EQ is entitled to the statutory immunity provided in Section 1404. Thus, Plaintiff’s Second Amended Complaint should be dismissed in its entirety. III PLAINTIFF HAS NOT IDENTIFIED A SINGLE RELEVANT DOCUMENT WHICH IT NEEDS TO DEFEND THIS MOTION TO DISMISS Plaintiff has not identified a single document which it needs to state a claim against EQ. 4 See CPLR 3211, Supplementary Practice Commentaries, C3211:46 (“[T]he burden on the opposing party is to convince the court in the opposing affidavits that facts may exist that would defeat the motion; mere hope that discovery will yield helpful information will not forestall a determination of the CPLR 3211 motion.”) (internal quotations omitted) (citing Cracolici v. Shah, 127 A.D.3d 413, 413 (1st Dep’t 2015)). For the purposes of this motion to dismiss only, EQ has not disputed any fact alleged by Plaintiff and, to the contrary, assumes that Plaintiff’s alleged facts – but not conclusions of law – are true, as is necessary on a motion to dismiss. Plaintiff’s document requests seeks the production of documents concerning the logistics of 4 Plaintiff intentionally misrepresents precedent by misleadingly omitting key words from the case law cited. Specifically, the only case Plaintiff cites in support of its argument is one which grants a plaintiff limited discovery concerning jurisdictional facts exclusively in defendant’s possession. See Peterson v. Spartan Indus., Inc., 33 N.Y.2d 463, 466 (1974). In the quote Plaintiff cites, Plaintiff uses an ellipses to omit the key qualifier “jurisdictional,” from the Court’s determination that the Plaintiff could obtain certain “essential jurisdictional facts.” - 13 - 17 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 transferring the Shares to the state, documents related to EQ’s practices and policies, and documents related to the notice provided to Plaintiff. None of these documents is relevant on a motion to dismiss. Documents concerning the notice, which EQ has already provided to Plaintiff, are not relevant where Plaintiff has already alleged that EQ did not provide the second notice. For the purposes of this motion, EQ accepts as true Plaintiff’s allegation concerning notice and bases its motion to dismiss on the position that the alleged non- provision of a second notice is insufficient, as a matter of law, to support a claim for negligence. Documents concerning the logistics of transferring the Shares to the state are not relevant to Plaintiff’s claims under any circumstances, whether in connection with a motion to dismiss or the substantive merits of the claims. Particularly on a motion to dismiss, though, where EQ does not argue that the Shares were not transferred, the documents detailing the logistics of that transfer are not relevant, nor has Plaintiff provided any basis for needing them. Similarly, documents related to EQ’s practices and policies are not relevant on a motion to dismiss. EQ’s motion to dismiss is based upon Plaintiff’s misinterpretation of the Abandoned Property Law, and Plaintiff’s failure to plead facts that are uniquely within Plaintiff’s knowledge concerning whether the Shares were abandoned, as that term is defined by statute. Plaintiff has not identified how any document in EQ’s possession would impact this motion to dismiss. Plaintiff is grasping at straws and using discovery as a red herring to avoid dismissal. EQ’s motion to dismiss - 14 - 18 of 20 FILED: NASSAU COUNTY CLERK 07/22/2022 03:36 PM INDEX NO. 616069/2021 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 07/22/2022 should not be denied or deferred on the basis that Plaintiff is waiting on discovery which is irrelevant to this motion. Conclusion The Abandoned Property Law is clear that a company is immune from liability for damages resulting from the company’s transfer of property to the state, so long as that property was “abandoned” as that term is defined by applicable statute. It is also clear that where the Plaintiff was the registered owner, as is indesputibly the case here, the Shares were properly deemed abandoned where Plaintiff did not have any written communications with the holder for three years. Plaintiff does not – and cannot – allege this fact, which is the sole legal basis for a claim against EQ. Plaintiff’s failure to plead any fact which supports its claims is fatal. Based on the foregoing, defendant Equiniti Trust Company respectfully requests that this Court grant its motion to dismiss, pursuant to CPLR 3211(a)(7) for failure to state a cause of action, and dismiss the Second