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FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021
NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023
SUPREME COURT STATE OF NEW YORK
COUNTY OF NASSAU
______________________________..______________________________________Ç
JOSEPH J. SARCONA, JR., a shareholder of JJS
TRANSPORTATION AND DISTRIBUTION CO., INC., Index No.: 614075/2021
suing in the right of JJS TRANSPORTATION AND
DISTRIBUTION CO., INC., and
JOSEPH J. SARCONA, JR., individually, AFFIRMATION IN
OPPOSITION
Plaintiffs,
-against-
JOSEPH J. SARCONA III, JJS TRANSPORTATION
AND DISTRUBUTION CO., INC., JJS
TRANSPORATION & DISTRIBUTION CO., INC.
OF PA, JFM LOGISTICS MANAGEMENT, INC., and
LEAR MANAGEMENT, INC.,
Defendants.
_____________________________________________________________________Ç
JEFFREY S. ETTENGER, an attorney duly admitted to practice before the Courts of the
State of New York, hereby affirms the following under penalties of perjury and pursuant to CPLR
2106:
1. I am a member of Schwartz Ettenger, PLLC, counsel for Plaintiffs. I am fully
familiar with the facts and circumstances of this matter by virtue of my review of the file.
Defendants'
2. I submit this Affirmation in Opposition to motion for dismissal of
certain causesof action in the Amended Complaint.
PRELIMINARY STATEMENT
3. This cross-motion is a weak and transparent attempt for new counsel for Defendants
to seek dismissal of properly pled and appropriate causes of action brought by Plaintiffs. First, the
timing of this cross-motion is questionable and should be rejected by the Court. The Plaintiffs
filed this action in December 2022. The Defendants answered the Complaint and did not seek
dismissal. At that the time the pleading was settled and the Court ultimately ordered discovery.
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4. In October 2022, we filed a motion, at the Court's direction, to seek to add JJS PA
as a party to the action. No other aspect of the pleading was altered. The motion was fully briefed
and submitted to the Court in January 2023. As a result of a procedural issue with the papers, i.e.
not redlining the proposed new clauses, the Court adjourned the motion.
5. Defendants, who retained 2 new attorneys at that time, have now taken the
opportunity to not only file new substantive arguments regarding JJS PA, but they are also seeking
to dismiss causes of action and claims that were not altered from the initial Complaint. The
pleading has long been settled and the Court should reject these arguments.
6. Moreover, the substantive basis for dismissal of these causes of action are not
meritorious. Defendants seek to dismiss claims for fraud and breach of fiduciary duty that are
properly pled and appropriate and cannot be dismissed. Defendants present the Court significant
"evidence"
in support of the dismissal. The use of this evidence is improper and the Court should
not consider same. Instead, because the Defendants are attempting to use evidence to dismiss a
case at the pleading stage, this motion should be converted to one for summary judgment.
7. In general, all the claims asserted by Plaintiffs in the Amended Complaint are
proper, and specifically the claims for fraud, breach of fiduciary duty and conversion, and thus
Defendants'
motion must be dismissed.
ARGUMENT
DEFENDANTS'
L MOTION IS UNTIMELY AND FATALLY FLAWED, AS
IT ATTEMPTS TO USE EVIDENCE TO SUPPORT DISMISSAL
8. A court's role in a motion to dismiss pursuant to CPLR 3211 (a) (7) is limited to
determining whether the complaint states a cause of action, not whether there is evidentiary support
for the complaint. LoPinto v J. W. Mays, Inc., 170 AD2d 582, 583 (2d Dept. 1991). The Court
must liberally construe the complaint in favor of the plaintiff and accept as true all factual
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allegations (supra). Bernstein v. Kelso & Co., 231 A.D.2d 314, 318, 659 N.Y.S.2d 276, 278 (App.
Div. 1st Dept. 1997).
9. A defendant may waive the right to seek dismissal pursuant to CPLR 3215(c) by
serving an answer or taking any other steps which may be viewed as formal or informal
appearance. Onewest Bank v. Bernstein, 196 A.D.3d 591, 592 (2d Dept 2021) (citing Myers v.
Slutsky, 139 AD2d 709). (Defendants appeared in action by stipulating to the jurisdiction of the
court, and waived all defenses that they might have had, including their right to dismissal upon the
plaintiff's failure to timely seek a default judgment under CPLR 3215(c), by stipulating that they
would not serve an answer or make a pre-answer motion to dismiss and adhering to those terms).
10. "Under modern pleading theory, a complaint should not be dismissed on a pleading
motion so long as, when the plaintiff is given the benefit of every possible favorable inference, a
exists"
cause of action Rovello v Orofino Realty Co., 40 NY2d 633, 634 (2d Dept 1976). Hornstein
v. Wog 109 A.D.2d 129, 131, 491 N.Y.S.2d 183, 185-86 (App. Div. 2nd Dept. 1985). Unless a
motion to dismiss for failure to state a cause of action is converted by the court to a motion for
summary judgment, affidavits received on the motion are not to be examined for the purpose of
determining whether there is evidentiary support for the pleading. Hornstein v. Wo¥ 109 A.D.2d
129, 131, 491 N.Y.S.2d 183, 186 (App. Div. 2nd Dept. 1985).
11. CPLR 3211 (a) (7), [****15] which limits us to an examination of the pleadings to
determine whether they state a cause of action. Further, we must accept facts alleged as true and
interpret them in the light most favorable to plaintiff; and, as Supreme Court observed, plaintiff
may not be penalized for failure to make an evidentiary showing in support of a complaint that
states a claim on its face (see Rovello v Orofino Realty Co., 40 NY2d 633, 635, 357 NE2d 970,
389 NYS2d 314 [1976] [as long as a pleading is facially sufficient, the plaintiff is not obligated to
come forward with claim-sustaining proof in response to a motion to dismiss unless the court treats
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the motion as one for summary judgment and so advises the parties]). Miglino v. Bally Total
Fitness of Greater N.Y., Inc., 2013 NY Slip Op 780, ¶ 7, 20 N.Y.3d 342, 351, 961 N.Y.S.2d 364,
370, 985 N.E.2d 128, 134 (2013).
12. The Defendants in the instant case have clearly waived their right to dismissal
Plaintiffs'
because the time to object to the complaint has passed. The Defendants exhibited their
acceptance of the Amended Complaint as stated, and the answer to the Amended Complaint serves
as the basis for formal acceptance of the items therein. Thus, the Defendants should not be
permitted to dismiss causes of action and claims that were not altered from the initial Complaint.
13. Moreover, the Defendants are attempting to improperly submit evidence to
support their claim for dismissal of certain causes of action in the pleadings. The Court cannot
"evidence"
consider this in support of their position. Defendants are arguing facts, which is not
proper for a motion of this nature. Instead, the Court must either ignore this evidence or convert
this to a summary judgment motion and deny Defendants the opportunity to move at a later time.
14. Defendant's affidavits will seldom warrant relief unless they conclusively establish
that the plaintiff has no cause of action. Rovello v. Orofino 40 N.Y.2d 635-
Realty Co., Inc., 633,
636, 389, N.Y.S.2d 314, 316, 357 N.E.2d 970, 972 (1976).
15. In determining the motion to dismiss, it must accept the allegations of the complaint
defendants'
as true and ignore the affidavits. The Henbest court reasoned that a defendant who
seeks to offer evidentiary matter can merely serve an answer, engage in some discovery and then
move for summary judgment. See also Carr v. Wegmans Food Mkts., Inc. 182 A.D.3d 667, 122
N.Y.S.3d 391 (3d Dep't 2020) ("The grounds for dismissal under CPLR 3211 (a) (7) are also
strictly limited; the court is not allowed to render a determination upon a thorough review of the
relevant facts adduced by both parties, but rather is substantially more constrained in its review,
examining only the plaintiff's pleadings and affidavits (citations omitted). In contrast to a motion
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for summary judgment, a court resolving a motion to dismiss for failure to state a claim cannot
base the determination upon submissions by the defendant-without regard to how compelling
claims made in such submissions may appear (citations omitted).
16. Indeed, upon a motion pursuant to CPLR 3211 (a)(7), the party opposing dismissal
is allowed a remedy not available to the party seeking dismissal; the court 'may freely consider
affidavits submitted by the plaintiff to remedy any defects in the complaint, since the ultimate
criterion is whether the proponent of the pleading has a cause of action, not whether he or she has
one'
stated (citations omitted). '[U]nless the motion to dismiss is converted by the court to a motion
judgment'
for summary (citation omitted), a motion to dismiss is not 'in a posture to be resolved
law'
as a matter of (citation omitted). Significantly, Supreme Court did not exercise its power to
convert this application (citation omitted)."). See Matter of LaBarbera v. Town of Woodstock, 29
A.D.3d 1054, 814 N.Y.S.2d 376 (3d Dep't 2006), appeal dismissed, 7 N.Y.3d 844, 823 N.Y.S.2d
773, 857 N.E.2d 68 (2006) ("When a motion to dismiss is made pursuant to CPLR 3211 (a)(7), as
a general rule we assume the truthfulness of the factual allegations of the pleading and determine
simply whether the allegations make out any cognizable cause of action (citation omitted).
IL THE FRAUD CLAIMS ARE LEGALLY VALID AND PROPERLY PLED AND
CANNOT BE DISMISSED
17. Defendants offer a confusing and disjointed argument for why the fraud claims
Defendants' "evidence"
should be dismissed at the pleading stage. Furthermore, again offer that
it believes requires dismissal of these claims. The claims are properly pled and must be sustained.
Defendants'
The argument that the claims are not properly pled is simply invalid.
18. Under section 3016 (b) the complaint must sufficiently detail the allegedly
fraudulent conduct, that requirement should not be confused with unassailable proof of fraud.
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Necessarily, then, section 3016 (b) may be met when the facts are sufficient to permit a reasonable
inference of the alleged conduct. Carbon Capital Mgmt., LLC v. Am. Express Co. 88 A.D.3d 933
(2d Dept. 2011) (citing Pludeman v Northern Leasing Sys., Inc., 10 NY3d at 492).
19. In Carbon Capital Mgmt., the court noted that if the plaintiff can establish that the
defendant, with the intent to induce reliance, misrepresented the underlying nature of the
transaction for the purpose of deceiving the plaintiff as to the tax consequences of the transaction,
the plaintiff may be able to recover any proximately caused damages under a theory of fraud.
20. On a motion to dismiss pursuant to CPLR 321 l(a)(7), the pleading must be afforded
a liberal construction and the 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
theory"
as alleged fit within any cognizable legal Berkovits v. Berkovits, 190 A.D.3d 91 1 (N.Y.
App. Div. 2021) (citing Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314). A motion to dismiss
on the ground that the action is barred by documentary evidence pursuant to CPLR 3211(a)(1) may
be granted only where the documentary evidence utterly refutes the plaintiff s factual allegations,
conclusively establishing a defense as a matter of law. Id.
21. The elements of a cause of action to recover damages for fraud are (1) a
misrepresentation or a material omission of fact which was false, (2) knowledge of its falsity, (3)
an intent to induce reliance, (4) justifiable reliance by the plaintiff, and (5) damages. Id. citing Fox
Paine & Co., LLC v Houston Cas. Co., 153 AD3d 673. Where a cause of action or defense is based
detail"
upon fraud the circumstances constituting the wrong shall be stated in (CPLR 3016[b]).
However, the pleading requirements of CPLR 3016(b) may be met when the facts are sufficient to
permit a reasonable inference of the alleged conduct. Id. citing Pludeman v Northern Leasing Sys.,
Inc., 10 NY3d 486.
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22. In Berkovitz, the first cause of action sufficiently pled the elements of fraudulent
misrepresentation or fraudulent inducement against defendant, including the element of a
misrepresentation as to the purpose of a trust agreement. Contrary to that defendant's contention,
the trust agreement executed by the other defendant did not conclusively refute the allegations of
fraud related to and/or extraneous to that agreement, particularly as "family members stand in a
venture"
fiduciary relationship toward one another in a co-owned business (Braddock v Braddock,
60 AD3d 84, 88, 871 N.Y.S.2d 68; see Venizelos v Oceania Mar. Agency, 268 AD2d 291, 702
N.Y.S.2d 17).
23. CPLR 3016(b) "requires only that the misconduct complained of be set forth in
sufficient detail to clearly inform a defendant with respect to the incidents complained of". It "is
not to be interpreted so strictly as to prevent an otherwise valid cause of action in situations where
fraud'"
it may be 'impossible to state in detail the circumstances constituting a Grumman
Aerospace Corp. v. Rice, 196 A.D.2d 572 (citing Lanzi v Brooks, 43 NY2d 778).
24. Factually, Defendants make various arguments as to why the fraud claims are not
pled properly and must be dismissed. All these claims are invalid. In essence, Plaintiffs argue and
plead that Defendant asked to be a 51% owner of JJS to become a member of a networking group.
Instead, he made this request so he could assume majority ownership of JJS and take control over
the Company, and his father's interest. That this was a fraud; no networking group existed, and if
it did exist, that it was not the basis for JS III seeking 51% interest. That JS II relied on this
representation, by HIS SON, and gave him ownership interest. The elements of fraud are clearly
pled with adequate specificity.
"documentary"
25. Next, Defendants provide evidence to support their position. They
provide stock certificates and official transfer documents. Plaintiffs do not dispute that JS II gave
JS III 51% interest. These documents have zero relevance because this is not in dispute. What is
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in dispute, and is the basis for this claim, is that the transfer was based on a fraudulent
misrepresentation for a fraudulent purpose, to usurp control of JJS.
26. In the case at bar, Plaintiffs have sufficiently alleged the fraudulent conduct of JS
III in the Amended Complaint with particularity. The Amended Complaint touches upon all of the
elements of fraud, and exhibits submitted by JS III do not refute the allegations set forth by
Plaintiff. In fact they have no relevance whatsoever to these claims. As such, the fraud claims are
valid and cannot be dismissed.
HL THE BREACH OF FIDUCIARY DUTY CLAIMS ARE EQUALLY VALID
27. Defendants make various arguments in support of its dismissal of causes of action
for breach of fiduciary duty and breach of loyalty. These arguments are disjointed, discuss
irrelevant facts regarding these claims, and frankly make no sense and do not support their position.
As detailed herein, the claims for breach of fiduciary duty are valid and cannot be dismissed.
28. The elements of a cause of action to recover damages for breach of fiduciary duty
are (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages
directly caused by the defendant's misconduct. Berkovitz (citing Rut v Young Adult Inst., Inc., 74
AD3d 776). However, where the relevant facts are "peculiarly within the knowledge of the party
asserted"
against whom the [cause of action] is being (Jered Contr. Corp. v New York City Tr.
Auth., 22 NY2d 187, 194, 239 N.E.2d 197, 292 N.Y.S.2d 98), "it would work a potentially
unnecessary injustice to dismiss a case at an early stage where any pleading deficiency might be
proceedings"
cured later in the Berkovitz citing Pludeman.
29. In Berkovitz, the complaint sufficiently alleged that defendant owed to plaintiff a
fiduciary duty as a co-shareholder in their company, a closely-held family corporation, and that
defendant breached that fiducia
Preview
FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023 SUPREME COURT STATE OF NEW YORK COUNTY OF NASSAU ______________________________..______________________________________Ç JOSEPH J. SARCONA, JR., a shareholder of JJS TRANSPORTATION AND DISTRIBUTION CO., INC., Index No.: 614075/2021 suing in the right of JJS TRANSPORTATION AND DISTRIBUTION CO., INC., and JOSEPH J. SARCONA, JR., individually, AFFIRMATION IN OPPOSITION Plaintiffs, -against- JOSEPH J. SARCONA III, JJS TRANSPORTATION AND DISTRUBUTION CO., INC., JJS TRANSPORATION & DISTRIBUTION CO., INC. OF PA, JFM LOGISTICS MANAGEMENT, INC., and LEAR MANAGEMENT, INC., Defendants. _____________________________________________________________________Ç JEFFREY S. ETTENGER, an attorney duly admitted to practice before the Courts of the State of New York, hereby affirms the following under penalties of perjury and pursuant to CPLR 2106: 1. I am a member of Schwartz Ettenger, PLLC, counsel for Plaintiffs. I am fully familiar with the facts and circumstances of this matter by virtue of my review of the file. Defendants' 2. I submit this Affirmation in Opposition to motion for dismissal of certain causesof action in the Amended Complaint. PRELIMINARY STATEMENT 3. This cross-motion is a weak and transparent attempt for new counsel for Defendants to seek dismissal of properly pled and appropriate causes of action brought by Plaintiffs. First, the timing of this cross-motion is questionable and should be rejected by the Court. The Plaintiffs filed this action in December 2022. The Defendants answered the Complaint and did not seek dismissal. At that the time the pleading was settled and the Court ultimately ordered discovery. 1 of 11 FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023 4. In October 2022, we filed a motion, at the Court's direction, to seek to add JJS PA as a party to the action. No other aspect of the pleading was altered. The motion was fully briefed and submitted to the Court in January 2023. As a result of a procedural issue with the papers, i.e. not redlining the proposed new clauses, the Court adjourned the motion. 5. Defendants, who retained 2 new attorneys at that time, have now taken the opportunity to not only file new substantive arguments regarding JJS PA, but they are also seeking to dismiss causes of action and claims that were not altered from the initial Complaint. The pleading has long been settled and the Court should reject these arguments. 6. Moreover, the substantive basis for dismissal of these causes of action are not meritorious. Defendants seek to dismiss claims for fraud and breach of fiduciary duty that are properly pled and appropriate and cannot be dismissed. Defendants present the Court significant "evidence" in support of the dismissal. The use of this evidence is improper and the Court should not consider same. Instead, because the Defendants are attempting to use evidence to dismiss a case at the pleading stage, this motion should be converted to one for summary judgment. 7. In general, all the claims asserted by Plaintiffs in the Amended Complaint are proper, and specifically the claims for fraud, breach of fiduciary duty and conversion, and thus Defendants' motion must be dismissed. ARGUMENT DEFENDANTS' L MOTION IS UNTIMELY AND FATALLY FLAWED, AS IT ATTEMPTS TO USE EVIDENCE TO SUPPORT DISMISSAL 8. A court's role in a motion to dismiss pursuant to CPLR 3211 (a) (7) is limited to determining whether the complaint states a cause of action, not whether there is evidentiary support for the complaint. LoPinto v J. W. Mays, Inc., 170 AD2d 582, 583 (2d Dept. 1991). The Court must liberally construe the complaint in favor of the plaintiff and accept as true all factual 2 2 of 11 FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023 allegations (supra). Bernstein v. Kelso & Co., 231 A.D.2d 314, 318, 659 N.Y.S.2d 276, 278 (App. Div. 1st Dept. 1997). 9. A defendant may waive the right to seek dismissal pursuant to CPLR 3215(c) by serving an answer or taking any other steps which may be viewed as formal or informal appearance. Onewest Bank v. Bernstein, 196 A.D.3d 591, 592 (2d Dept 2021) (citing Myers v. Slutsky, 139 AD2d 709). (Defendants appeared in action by stipulating to the jurisdiction of the court, and waived all defenses that they might have had, including their right to dismissal upon the plaintiff's failure to timely seek a default judgment under CPLR 3215(c), by stipulating that they would not serve an answer or make a pre-answer motion to dismiss and adhering to those terms). 10. "Under modern pleading theory, a complaint should not be dismissed on a pleading motion so long as, when the plaintiff is given the benefit of every possible favorable inference, a exists" cause of action Rovello v Orofino Realty Co., 40 NY2d 633, 634 (2d Dept 1976). Hornstein v. Wog 109 A.D.2d 129, 131, 491 N.Y.S.2d 183, 185-86 (App. Div. 2nd Dept. 1985). Unless a motion to dismiss for failure to state a cause of action is converted by the court to a motion for summary judgment, affidavits received on the motion are not to be examined for the purpose of determining whether there is evidentiary support for the pleading. Hornstein v. Wo¥ 109 A.D.2d 129, 131, 491 N.Y.S.2d 183, 186 (App. Div. 2nd Dept. 1985). 11. CPLR 3211 (a) (7), [****15] which limits us to an examination of the pleadings to determine whether they state a cause of action. Further, we must accept facts alleged as true and interpret them in the light most favorable to plaintiff; and, as Supreme Court observed, plaintiff may not be penalized for failure to make an evidentiary showing in support of a complaint that states a claim on its face (see Rovello v Orofino Realty Co., 40 NY2d 633, 635, 357 NE2d 970, 389 NYS2d 314 [1976] [as long as a pleading is facially sufficient, the plaintiff is not obligated to come forward with claim-sustaining proof in response to a motion to dismiss unless the court treats 3 3 of 11 FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023 the motion as one for summary judgment and so advises the parties]). Miglino v. Bally Total Fitness of Greater N.Y., Inc., 2013 NY Slip Op 780, ¶ 7, 20 N.Y.3d 342, 351, 961 N.Y.S.2d 364, 370, 985 N.E.2d 128, 134 (2013). 12. The Defendants in the instant case have clearly waived their right to dismissal Plaintiffs' because the time to object to the complaint has passed. The Defendants exhibited their acceptance of the Amended Complaint as stated, and the answer to the Amended Complaint serves as the basis for formal acceptance of the items therein. Thus, the Defendants should not be permitted to dismiss causes of action and claims that were not altered from the initial Complaint. 13. Moreover, the Defendants are attempting to improperly submit evidence to support their claim for dismissal of certain causes of action in the pleadings. The Court cannot "evidence" consider this in support of their position. Defendants are arguing facts, which is not proper for a motion of this nature. Instead, the Court must either ignore this evidence or convert this to a summary judgment motion and deny Defendants the opportunity to move at a later time. 14. Defendant's affidavits will seldom warrant relief unless they conclusively establish that the plaintiff has no cause of action. Rovello v. Orofino 40 N.Y.2d 635- Realty Co., Inc., 633, 636, 389, N.Y.S.2d 314, 316, 357 N.E.2d 970, 972 (1976). 15. In determining the motion to dismiss, it must accept the allegations of the complaint defendants' as true and ignore the affidavits. The Henbest court reasoned that a defendant who seeks to offer evidentiary matter can merely serve an answer, engage in some discovery and then move for summary judgment. See also Carr v. Wegmans Food Mkts., Inc. 182 A.D.3d 667, 122 N.Y.S.3d 391 (3d Dep't 2020) ("The grounds for dismissal under CPLR 3211 (a) (7) are also strictly limited; the court is not allowed to render a determination upon a thorough review of the relevant facts adduced by both parties, but rather is substantially more constrained in its review, examining only the plaintiff's pleadings and affidavits (citations omitted). In contrast to a motion 4 4 of 11 FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023 for summary judgment, a court resolving a motion to dismiss for failure to state a claim cannot base the determination upon submissions by the defendant-without regard to how compelling claims made in such submissions may appear (citations omitted). 16. Indeed, upon a motion pursuant to CPLR 3211 (a)(7), the party opposing dismissal is allowed a remedy not available to the party seeking dismissal; the court 'may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint, since the ultimate criterion is whether the proponent of the pleading has a cause of action, not whether he or she has one' stated (citations omitted). '[U]nless the motion to dismiss is converted by the court to a motion judgment' for summary (citation omitted), a motion to dismiss is not 'in a posture to be resolved law' as a matter of (citation omitted). Significantly, Supreme Court did not exercise its power to convert this application (citation omitted)."). See Matter of LaBarbera v. Town of Woodstock, 29 A.D.3d 1054, 814 N.Y.S.2d 376 (3d Dep't 2006), appeal dismissed, 7 N.Y.3d 844, 823 N.Y.S.2d 773, 857 N.E.2d 68 (2006) ("When a motion to dismiss is made pursuant to CPLR 3211 (a)(7), as a general rule we assume the truthfulness of the factual allegations of the pleading and determine simply whether the allegations make out any cognizable cause of action (citation omitted). IL THE FRAUD CLAIMS ARE LEGALLY VALID AND PROPERLY PLED AND CANNOT BE DISMISSED 17. Defendants offer a confusing and disjointed argument for why the fraud claims Defendants' "evidence" should be dismissed at the pleading stage. Furthermore, again offer that it believes requires dismissal of these claims. The claims are properly pled and must be sustained. Defendants' The argument that the claims are not properly pled is simply invalid. 18. Under section 3016 (b) the complaint must sufficiently detail the allegedly fraudulent conduct, that requirement should not be confused with unassailable proof of fraud. 5 5 of 11 FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023 Necessarily, then, section 3016 (b) may be met when the facts are sufficient to permit a reasonable inference of the alleged conduct. Carbon Capital Mgmt., LLC v. Am. Express Co. 88 A.D.3d 933 (2d Dept. 2011) (citing Pludeman v Northern Leasing Sys., Inc., 10 NY3d at 492). 19. In Carbon Capital Mgmt., the court noted that if the plaintiff can establish that the defendant, with the intent to induce reliance, misrepresented the underlying nature of the transaction for the purpose of deceiving the plaintiff as to the tax consequences of the transaction, the plaintiff may be able to recover any proximately caused damages under a theory of fraud. 20. On a motion to dismiss pursuant to CPLR 321 l(a)(7), the pleading must be afforded a liberal construction and the 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 theory" as alleged fit within any cognizable legal Berkovits v. Berkovits, 190 A.D.3d 91 1 (N.Y. App. Div. 2021) (citing Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314). A motion to dismiss on the ground that the action is barred by documentary evidence pursuant to CPLR 3211(a)(1) may be granted only where the documentary evidence utterly refutes the plaintiff s factual allegations, conclusively establishing a defense as a matter of law. Id. 21. The elements of a cause of action to recover damages for fraud are (1) a misrepresentation or a material omission of fact which was false, (2) knowledge of its falsity, (3) an intent to induce reliance, (4) justifiable reliance by the plaintiff, and (5) damages. Id. citing Fox Paine & Co., LLC v Houston Cas. Co., 153 AD3d 673. Where a cause of action or defense is based detail" upon fraud the circumstances constituting the wrong shall be stated in (CPLR 3016[b]). However, the pleading requirements of CPLR 3016(b) may be met when the facts are sufficient to permit a reasonable inference of the alleged conduct. Id. citing Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486. 6 6 of 11 FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023 22. In Berkovitz, the first cause of action sufficiently pled the elements of fraudulent misrepresentation or fraudulent inducement against defendant, including the element of a misrepresentation as to the purpose of a trust agreement. Contrary to that defendant's contention, the trust agreement executed by the other defendant did not conclusively refute the allegations of fraud related to and/or extraneous to that agreement, particularly as "family members stand in a venture" fiduciary relationship toward one another in a co-owned business (Braddock v Braddock, 60 AD3d 84, 88, 871 N.Y.S.2d 68; see Venizelos v Oceania Mar. Agency, 268 AD2d 291, 702 N.Y.S.2d 17). 23. CPLR 3016(b) "requires only that the misconduct complained of be set forth in sufficient detail to clearly inform a defendant with respect to the incidents complained of". It "is not to be interpreted so strictly as to prevent an otherwise valid cause of action in situations where fraud'" it may be 'impossible to state in detail the circumstances constituting a Grumman Aerospace Corp. v. Rice, 196 A.D.2d 572 (citing Lanzi v Brooks, 43 NY2d 778). 24. Factually, Defendants make various arguments as to why the fraud claims are not pled properly and must be dismissed. All these claims are invalid. In essence, Plaintiffs argue and plead that Defendant asked to be a 51% owner of JJS to become a member of a networking group. Instead, he made this request so he could assume majority ownership of JJS and take control over the Company, and his father's interest. That this was a fraud; no networking group existed, and if it did exist, that it was not the basis for JS III seeking 51% interest. That JS II relied on this representation, by HIS SON, and gave him ownership interest. The elements of fraud are clearly pled with adequate specificity. "documentary" 25. Next, Defendants provide evidence to support their position. They provide stock certificates and official transfer documents. Plaintiffs do not dispute that JS II gave JS III 51% interest. These documents have zero relevance because this is not in dispute. What is 7 7 of 11 FILED: NASSAU COUNTY CLERK 03/08/2023 10:53 AM INDEX NO. 614075/2021 NYSCEF DOC. NO. 199 RECEIVED NYSCEF: 03/08/2023 in dispute, and is the basis for this claim, is that the transfer was based on a fraudulent misrepresentation for a fraudulent purpose, to usurp control of JJS. 26. In the case at bar, Plaintiffs have sufficiently alleged the fraudulent conduct of JS III in the Amended Complaint with particularity. The Amended Complaint touches upon all of the elements of fraud, and exhibits submitted by JS III do not refute the allegations set forth by Plaintiff. In fact they have no relevance whatsoever to these claims. As such, the fraud claims are valid and cannot be dismissed. HL THE BREACH OF FIDUCIARY DUTY CLAIMS ARE EQUALLY VALID 27. Defendants make various arguments in support of its dismissal of causes of action for breach of fiduciary duty and breach of loyalty. These arguments are disjointed, discuss irrelevant facts regarding these claims, and frankly make no sense and do not support their position. As detailed herein, the claims for breach of fiduciary duty are valid and cannot be dismissed. 28. The elements of a cause of action to recover damages for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant's misconduct. Berkovitz (citing Rut v Young Adult Inst., Inc., 74 AD3d 776). However, where the relevant facts are "peculiarly within the knowledge of the party asserted" against whom the [cause of action] is being (Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187, 194, 239 N.E.2d 197, 292 N.Y.S.2d 98), "it would work a potentially unnecessary injustice to dismiss a case at an early stage where any pleading deficiency might be proceedings" cured later in the Berkovitz citing Pludeman. 29. In Berkovitz, the complaint sufficiently alleged that defendant owed to plaintiff a fiduciary duty as a co-shareholder in their company, a closely-held family corporation, and that defendant breached that fiducia