hadar v pierce - courts.state.ny.us · hadar v. pierce index no. 65281112011 page 3 able to manage...

Hadar v Pierce2013 NY Slip Op 30185(U)

January 4, 2013Sup Ct, New York County

Docket Number: 652811/11Judge: Eileen Bransten

Republished from New York State Unified CourtSystem's E-Courts Service.

Search E-Courts (http://www.nycourts.gov/ecourts) forany additional information on this case.

This opinion is uncorrected and not selected for officialpublication.

FILED: NEW YORK COUNTY CLERK 01/09/2013 INDEX NO. 652811/2011

NYSCEF DOC. NO. 60 RECEIVED NYSCEF: 01/09/2013

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SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY PRESENT: Hon. Eileen Bransten, Justice PART 3

.. ______ .... __ .... _ ... _ •• _ .... ___ • __ " ...... ___ ... _ .... _____________ -------.. _ .. -----------x

HADAR, ERIC, et al.,

Plaintiffs,

-against-

PIERCE, CLAY, et at,

NYS SUPREME COURT Document has been E-F1led

JAN 092013

as Document No. '----Index No.:652811/2011 Motion Date: 5/15112 Motion Seq. No.: 001

NYS SUPREME COURT Document has been e-F1led

__________ ........ _._._ .. _ ... ____ . __ ... _~~~~~~_~~~:..._._-.. ----x JAN 0 9 2013 The following papers, numbered 1 to 3, were read on this motion to dismiss. f?ii) ")

Notice of Motion/Order to Show Cause - Affidavits - Exhibits

Answering Affidavits - Exhibits

as Document NO.~ Papers Numbered

1

2

Replying Affidavits _~3,--' __

Cross-Motion: 0 Yes X No

This motion is decided in accordance with the accompanying memorandum decision.

Dated: January ~, 2013 G'-.\~. -~!k-~ Hon. Eileen Bransten, J.S.C.

Check One: o FINAL DISPOSITION X NON-FINAL DISPOSITION"

Check if appropriate: 0 DO NOT POST 0 REFERENCE 0 SETTLE/SUBMITORDERIJUDG.

[* 1]

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: lAS PART THREE --------------------------------------------------------------------)( ERIC HADAR, ALLIED PARTNERS, INC., JFK MANAGEMENT COMPANY, INC., and Eric Hadar on behalf of the ERIC D. HADAR FAMIL Y TRUST,

Plaintiffs,

-against-

CLA Y PIERCE, MICHAEL ROSENBAUM, and PATTERSON BELKNAP WEBB & TYLERLLP,

Defendants. ---------------------------------------------------------------------)( BRANS TEN, J.

Index No. 652811111 Motion Date: 5115/2012 Motion Seq. No.: 001, 002

Motion Sequence Numbers 001 and 002 are consolidated for disposition. In Motion

Sequence Number 001, defendants Clay Pierce ("Pierce") and Patterson Belknap Webb &

Tyler LLP ("Patterson") move to dismiss Eric Hadar, Allied Partners, Inc. ("Allies"), JFK

Management Company, Inc. ("JFK"), and the Eric D. Hadar Family Trust's ("EDHFT")

(collectively "Plaintiffs") claims for breach of legal malpractice, breach of fiduciary duty,

aiding and abetting breach of fiduciary duty, tortious interference with prospective business

relations, malicious prosecution and civil conspiracy. Plaintiffs oppose.

In Motion Sequence Number 002, defendant Michael Rosenbaum ("Rosenbaum")

moves to dismiss Plaintiffs' claims for defamation, aiding and abetting breach of fiduciary

duty and civil conspiracy. Plaintiffs oppose.

[* 2]

Hadar v. Pierce

I. BACKGROUND

Index No. 65281112011 Page 2

This action arises from an underlying dispute between Eric Hadar and his father

Richard Hadar. Eric Hadar has been a successful real estate developer for over fifteen years.

Affirmation of John S. Rand, Ex. A. ("Comp!."), ~ 3. Eric Hadar suffered from drug

addiction, and, on October 3,2008, he was arrested for drug possession. Id. at ~ 26. Eric

Hadar subsequently entered a rehabilitation program. Id.

Richard Hadar offered to "hold down the fort" at Eric Hadar's real estate business

until Eric Hadar completed his treatment. Id. at ~ 28. Plaintiffs claim that, rather than "hold

down the fort," Richard Hadar took advantage of his son's absence to attempt to wrest

control of the real estate business from Eric Hadar. Id.

Plaintiffs claim that Richard Hadar's plan to accomplish this scheme was to accuse

his son of mismanagement of the real estate company and the EDHFT. Id. at ~ 28. For

example, Plaintiffs assert that, in January or February 2009, Richard Hadar and his attorney,

Michael Rosenbaum, told partners in Lawrence One, L.P., which was one of Eric Hadar's

real estate ventures and Robert Weir, who was then the trustee of the EDHFT, that Eric

Hadar: (1) mismanaged and neglected various properties and trusts; (2) engaged in self-

dealing by taking interest-free loans and misappropriating assets from EDHFT; (3) along

with Allied Partners, charged excessive and unauthorized management fees; (4) negligently

managed a property near Kennedy Airport known as "Carlton House"; and (5) was no longer

[* 3]

Hadar v. Pierce Index No. 65281112011 Page 3

able to manage real estate competently. Id at ~ 30. Rosenbaum prepared a letter containing

these alleged mis representations and had Weir and Y ohalem sign the letter. Id. at ~ 31.

On February 11,2009, Richard Hadar, Ira Yohalem as trustee of the JoshuaD. Hadar

Family Trust ("JDHFT") and several holding companies for Eric Hadar's various real estate

developments (the "Holding Company Plaintiffs") brought an action against Eric Hadar,

Allied and JFK (the "Prior Action"). Winter Affirm., Ex. A, p. 1. Defendants Rosenbaum

and Patterson served as plaintiffs' attorneys. Id. The plaintiffs in the Prior Action accused

Eric Hadar of mismanaging and wasting the plaintiffs' assets and investments. Id. at p. 9.

The Prior Action alleged breach of fiduciary duty, breach of contract, and sought to remove

Eric Hadar from his position as a manager of the Holding Company Plaintiffs and to enjoin

Eric Hadar from taking any further action as manager. Id at pp. 18-24.

On February 25, 2009, Pierce, through his counsel Patterson, brought an action in

Surrogates Court seeking to remove Eric Hadar as the trustee ofthe EDHFT on the grounds

that:

(1) [Eric Hadar] does not possess the qualifications required for a fiduciary by reason of his substance abuse ... (2) [Eric Hadar] has improperly and dishonestly wasted the assets of the [EDHFT] through self-dealing and mismanagement of the assets of the [EDHFT]; and (3) [Eric Hadar] has violated the express terms of the Trust by removing [trustee Weir] as Independent Trustee in order to prevent cessation of his acts of self-dealing and malfeasance (the "Surrogates Court Action").

Affirmation of John D. Winter, Esq. in Support of Clay Pierce and Patterson Belknap Webb

& Tyler LLP's Motion to Dismiss ("Winter Affirm."), Ex. B, p. 1.

[* 4]


While these lawsuits were pending, Pierce and Patterson allegedly interfered with and

destroyed a deal between the EDHFT and the outside partners of Lawrence One, L.P.

Compl. ~ 12

On August 13,2009, the parties entered into a "Stipulation and Order Discontinuing

Proceedings" (the "Stipulation of Discontinuance") dismissing all claims with prejudice in

the Surrogates Court Action. Affirmation of Jennifer S. Recine ("Recine Affirm.), Ex. E,

p.2.

II. STANDARD OF LAW

"On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a

liberal construction." Leon v. Martinez, 84 N.Y.2d 83, 88 (1994). The court accepts the

facts alleged in the non-moving party's pleading as true and accords the non-moving party

the benefit of every possible favorable inference. Id.

On a motion to dismiss pursuant to CPLR 3211(a)(7), "the sole criterion is whether

the pleading states a cause of action, and if from [the pleading's] four comers factual

allegations are discerned which taken together manifest any cause of action cognizable at

law, a motion for dismissal will fail." Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275

(1977). The "pleadings must be liberally construed and the facts alleged accepted as true."

Wiener v. Lazard Freres & Co., 241 A.D.2d 114, 120 (1st Dep't 1998).

[* 5]

Hadar v. Pierce

III. ANALYSIS

A. Judicial Proceedings Privilege

Index No. 65281112011 Page 5

Defendants assert that the "judicial proceedings privilege" shields them from liability

for bringing the Prior Action and the Surrogates Action. Defendants argue that all of

Plaintiffs' claims derive from the filing of these lawsuits, and, because the filing of lawsuits

is protected by the judicial proceedings privilege, the complaint should be dismissed in its

entirety.

1. Defamation Claim Against Rosenbaum

Ordinarily, "a statement made in the course of legal proceedings is absolutely

privileged ifit is at all pertinent to the litigation." Sexter & Warmflash, P.e. v. Margrabe,

38 A.DJd 163, 171 (1st Dep't 2007) (internal citations and quotation marks omitted).

However, the "privilege may not be extended to a litigant who commences a sham lawsuit

for the sole purpose of defaming his adversary." Sexter & Warmflash, P.e., 38 A.DJd at

173, n. 5. Plaintiffs have alleged that Rosenbaum commenced the Prior Litigation against

Eric Hadar solely to harass and disparage Eric Hadar in an effort to alienate his partners and

investors in his real estate business. PI. Memo, pp. 8-9. Plaintiffs further claim that the

allegations in the Prior Action and Surrogates Court Action were patently false, and that

Rosenbaum conspired with Richard Hadar to invent the allegations. Plaintiffs assert that

Rosenbaum was assisting Richard Hadar in his ultimate goal of taking over Eric Hadar's real

estate business.

[* 6]


On a motion to dismiss, the court must resolve all factual disputes in favor of the non-

moving party and accept the facts alleged in the complaint as true. Leon v. Martinez, 84

N.Y.2d 83, 88 (1994). Plaintiffs have adequately alleged that Rosenbaum commenced the

Prior Litigation solely for the purpose of harassment. As such, Plaintiffs' claims fall under

the narrow exception to the judicial proceedings privilege articulated in Sexter. Sexter &

Warmjlash, P.c., 38 A.D.3d at 173, n. 5. Rosenbaum is therefore not protected from suit by

the legal proceedings privilege. Rosenbaum's motion to dismiss the defamation claim

against him is denied.

2. Non-Defamation Claims

Plaintiffs do not assert a defamation claim against Patterson or Pierce. Patterson and

Pierce have not identified, and the court has not been able to locate, any cases that apply the

legal proceedings privilege outside ofthe defamation context. To the contrary, the court in

New York Cooling Towers, Inc. v. Goidel, 10 Misc. 3d 219 (N.Y. Sup. Ct. 2005) pointed out

that no New York court has done so. Id. at 223 ("[T]he court's research indicates that the

[legal proceedings privilege] is limited strictly as a defense in defamation actions.")

Patterson and Pierce's motion to dismiss on the grounds that they are immune from

suit under the legal proceedings privilege is thus denied.

[* 7]

Hadar v. Pierce Index No. 65281112011

Page 7

B. Legal Malpractice

Patterson and Pierce move to dismiss Plaintiffs' claim for legal malpractice on the

grounds that Patterson did not have an attorney-client relationship with Plaintiffs.

Plaintiffs claim that Patterson and Pierce had an attorney-client relationship with

EDHFT. Plaintiffs further argue that, although Patterson and Pierce did not have an attorney-

client relationship with Eric Hadar, Eric Hadar's claims against Patterson and Pierce fall

under an exception which allows non-clients to bring malpractice claims against attorneys.

"To sustain a cause of action for legal malpractice ... a party must show that an

attorney failed to exercise the reasonable skill and knowledge commonly possessed by a

member of the legal profession." Arnav Indus. v. Brown, Raysman, Millstein, Feder &

Steiner, LLP, 96 N.Y.2d 300, 303-04 (2001).

"While privity of contract is generally necessary to state a cause of action for attorney

malpractice, liability is extended to third parties, not in privity, for harm caused by

professional negligence in the presence of fraud, collusion, malicious acts or other special

circumstances." Good Old Days Tavern, Inc. v. Zwirn, 259 A.D.2d 300, 300 (lst Dep't

1999).

Plaintiffs argue that the privity exception outlined in Good Old Days Tavern applies

to Eric -Hadar's malpractice claim against Patterson and Pierce. Plaintiffs allege that

Patterson and Pierce colluded with Richard Hadar in his effort to seize control of Eric

[* 8]


Hadar's real estate business and to alienate Eric Hadar's business partners. Plaintiffs further

allege that Patterson and Pierce did so even though they knew the allegations of

mismanagement that they brought against Eric Hadar were false. Finally, Plaintiffs claim

that Patterson and Pierce assisted Richard Hadar in his scheme for their own financial gain.

"Such allegations fall within the narrow exception offraud, collusion, malicious acts or other

special circumstances under which a cause of action alleging attorney malpractice may be

asserted absent a showing of actual or near-privity." Aranki v. Goldman & Assocs., LLP, 34

A.D.3d 510,512 (2d Dep't 2006).

Furthermore, a factual dispute exists as to whether Patterson and Pierce had an

attorney-client relationship with the EDHFT. Plaintiffs allege that Patterson and Pierce

represented the EDHFT. Patterson and Pierce admit that they represented Weir, the

EDHFT's trustee, but maintain that they did not represent the EDHFT. Winter Affirm.,

,-r 2. Patterson and Pierce provide no evidence beyond an attorney affirmation to support their

assertion. On a motion to dismiss, the court must resolve all factual disputes in favor ofthe

non-moving party. Leon v. Martinez, 84 N.Y.2d 83, 88 (1994).

Patterson and Pierce next argue that Plaintiffs' malpractice claims against them are

barred by res judicata because the claims arise from the Surrogates Court Action, which was

resolved on the merits.

[* 9]


"[W]here there is a valid final judgment the doctrine of res judicata, or claim

preclusion, bars future litigation between those parties on the same cause of action." Hodes

v. Axelrod, 70 N.Y.2d 364,372 (1987). Plaintiffs' malpractice claims were not resolved on

the merits as part of the Surrogates Court Action, Patterson and Pierce were not parties to

that suit, and the claims in the Surrogates Court Action arose out of a conflict involving Eric

Hadar's ability to act as trustee for the EDHFT, not Patterson or Pierce's representation.

Patterson and Pierce's motion to dismiss Plaintiffs' legal malpractice claims is therefore

denied.

C. Breach of Fiduciary Duty

Plaintiffs maintain that Patterson and Pierce breached their fiduciary duties to the

EDFHT because they, "in exchange for payments from Richard Hadar, colluded with Richard

Hadar to the detriment of the EDHFT and its beneficiaries." Eric Hadar, Allied Partners,

Inc., JFK Management Company, Inc. and the Eric D. Hadar Family Trust's Memorandum

of Law in Opposition to the Motion of Michael Rosenbaum to Dismiss ("PI. 001 Memo"),

p.16.

Patterson and Pierce argue that they did not act in their own self-interest while

representing Weir, and therefore cannot be liable to the beneficiaries of the EDHFT for

breach of fiduciary duty.

[* 10]


"One ofthe most fundamental duties of a trustee in any case is complete unselfishness

and inflexible loyalty to the interests of the beneficiaries of the trust. ... The [trustee's]

attorneys, concededly in the same position as the trustee, owe[] an equally high degree of

fidelity" to the beneficiaries ofa trust. In re Bond & Mortg. Guarantee Co., 303 N.Y. 423,

430 (1952). Consequently, "[a]n attorney for a trustee is liable for breach of a fiduciary duty

to third-party beneficiaries of the trust when the attorney has placed his or her self-interest

above that of the trustee." Heaven v. McGowan, 40 A.D.3d 583,585 (2d Dep't 2007).

Plaintiffs have adequately alleged that, as attorneys for Weir, Patterson and Pierce

owed the beneficiaries of the EDHFT a fiduciary duty, and that Patterson and Pierce

breached that duty by colluding with Richard Hadar for pecuniary gain and to the detriment

of the EDHFT.

Patterson and Pierce next contend that Plaintiffs' claim for breach of fiduciary duty

should be dismissed as duplicative of Plaintiffs ' claim for malpractice. However, Plaintiffs'

claim for breach of fiduciary duty is premised on allegations that Patterson and Pierce

colluded with Richard Hadar to the detriment of the EDHFT. Plaintiffs' claims for legal

malpractice, on the other hand, are based on Plaintiffs' contention that Patterson and Pierce,

as attorneys for the EDHFT, failed to "use such skill, prudence, and diligence as required by

members ofthe legal profession" in bringing suit against Eric Hadar "despite being expressly

warned by the acting trustee of the EDHFT not to do so." PI. 001 Memo., p. 17. The facts

[* 11]


underlying the breach of fiduciary duty and malpractice actions are sufficiently distinct to

survive a motion to dismiss on the grounds that the claims are duplicative.

Patterson and Pierce's motion to dismiss Plaintiffs' claim for breach of fiduciary duty

is denied.

D. Aiding and Abetting Breach of Fiduciary Duty

Plaintiffs claim that Defendants aided and abetted Weir in breaching his fiduciary duty

to Eric Hadar and the EDHFTwhile Weir was trustee of the EDHFT. Plaintiffs further claim

that Defendants aided and abetted Richard Hadar in breaching his fiduciary duty to Eric

Hadar during the time that Richard Hadar had power of attorney for Eric Hadar.

Defendants contend that the aiding and abetting claims against them should be

dismissed because they did not have actual knowledge of Richard Hadar's and Weir's alleged

breaches of fiduciary duty.

"A claim for aiding and abetting a breach of fiduciary duty requires: (1) a breach by

a fiduciary of obligations to another, (2) that the defendant knowingly induced or participated

in the breach, and (3) that plaintiff suffered damage as a result of the breach." Kaufman v.

Cohen, 307 A.D.2d 113, 125 (lst Dep't 2007). "Although a plaintiffis not required to allege

that the aider and abettor had an intent to harm, there must be an allegation that such

defendant had actual knowledge of the breach of duty." Id. at 125.

[* 12]

Hadar v. Pierce Index No. 652811/2011 Page 12

Plaintiffs fulfill all of the elements ofa claim for aiding and abetting fiduciary duty.

Plaintiffs allege that Weir and Richard Hadar breached their fiduciary duties, thus the first

Kaufman element is fulfilled. Plaintiffs have also adequately alleged that Defendants had

actual knowledge of Weir's and Richard Hadar's breaches offiduciary duty. Plaintiffs claim

that Defendants knew that Richard Hadar had power of attorney for Eric Hadar, and colluded

with Richard Hadar and assisted him in abusing that power of attorney. Plaintiffs further

assert that Defendants knowingly induced Wier to breach his fiduciary duty to Eric Hadar.

Defendants' motions to dismiss Plaintiffs' claims for aiding and abetting breach of fiduciary

duty are thus denied.

E. Tortious Interference With Prospective Business Relations

Eric Hadar and the EDHFT claim that Patterson and Pierce tortiously interfered with

Eric Hadar and the EDHFT's business relations with the partners of Lawrence One, L.P.

Patterson and Pierce argue that Eric Hadar and EDHFT failed to adequately allege that

Patterson and Pierce acted with malice or used illegal or improper means to interfere with

Eric Hadar's and EDHFT's prospective business relations with the Lawrence One partners.

To prevail on a claim for tortious interference with business relations in New York, a party must prove (1) that it had a business relationship with a third party; (2) that the defendant knew of that relationship and intentionally interfered with it; (3) that the defendant acted solely out of malice or used improper or illegal means that amounted to a crime or independent tort; and (4) that the defendant's interference caused injury to the relationship with the third party.

[* 13]


Amaranth LLC v. J.P.Morgan Chase & Co., 71 A.D.3d40, 47 (lstDep't2009). Allegations

that a party acted in breach of its fiduciary duties may suffice to show that a party used

improper or wrongful means. See, e.g., Don Buchwald & Assocs. v. Marber-Rich, 11 A.D.3d

277, 279 (1st Dep't 2004) (reinstating a "cause of action, for tortious interference with

economic relations ... because there are questions as to whether the individual defendants

used wrongful means, namely, breaching their fiduciary duties" in interference with the

plaintiffs prospective economic relations.)

Eric Hadar and the EDHFT do not allege that Patterson and Pierce acted out of malice,

but rather that they interfered with Eric Hadar's and the EDHFT's prospective business

relations by breaching its fiduciary duties. Patterson and Pierce argue that the tortious

interference claim fails because Eric Hadar and the EDHFT did not state a claim for breach

of fiduciary duty. However, as explained above, Plaintiffs adequately alleged that Patterson

and Pierce breached their fiduciary duties. Patterson and Pierce's motion to dismiss Eric

Hadar and the EDHFT's claims for tortious interference with prospective business relations

is denied.

F. Malicious Prosecution

Patterson and Pierce move to dismiss Plaintiffs' claim for malicious prosecution on

the grounds that the Surrogates Court Action underlying the malicious prosecution claim was

[* 14]


not resolved in Plaintiffs' favor. Rather, the action was terminated pursuant to a negotiated

settlement agreement. Plaintiffs assert that a dispute of fact exists as to whether the

stipulation of discontinuance between the parties was a withdrawal, rather than a settlement,

of the Surrogates Court Action.

"The elements of the tort of malicious prosecution include initiation or continuation

of a proceeding despite the lack of probable cause, termination ofthat proceeding favorable

to the party there sued and now aggrieved as plaintiff, and a showing of malice in the pursuit

of that underlying proceeding." Honzawa v. Honzawa, 268 A.D.2d 327, 329 (lst Dep't

2001). "It is settled that if the case was voluntarily dismissed as a result of a settlement or

compromise, it would not support a claim for malicious prosecution." Mobile Training &

Educ. v. Aviation Ground Schools of America, 28 Misc. 3d 1226A (Sup. Ct. 2010) (citing

Smith-Hunter v. Harvey, 95 N.Y.2d 191 (2000)).

Plaintiffs claim that the stipulation of discontinuance was not the result of a

compromise, and that it was entered into with no consideration on the part of Eric Hadar or

the EDHFT. Defendants contend that the stipulation requires Eric Hadar to step down as

trustee of the EDHFT, which was the relief sought in the Surrogates Court action. However,

the stipulation of discontinuance includes no such requirement.

Patterson and Pierce offer persuasive evidence in the form of a report issued by the

guardian ad litem appointed to represent Eric Hadar's children in the Surrogates Court Action

[* 15]


that the stipulation of discontinuance was entered into pursuant to negotiations. Winter

Affirm., Ex. N. The report states that the parties indeed engaged in settlement discussions.

Id. This evidence "present[ s] a seemingly strong defense," and, if this were a motion for

summary judgment, "plaintiff[ s] would have been forced to introduce further evidence to

withstand the motion." Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 636 (1976).

However, on a motion to dismiss, evidence submitted by the defendants in support of a

motion to dismiss will only warrant dismissal if such evidence "establish [ es] conclusively

that plaintiff has no cause of action." Id.

Patterson and Pierce raise a question of fact as to whether the Surrogates Court

Proceeding terminated in Plaintiffs' favor. However, on a motion to dismiss, all factual

disputes must be resolved in the favor of the non-moving party. Patterson and Pierce's

motion to dismiss the claim for malicious prosecution on the grounds that the Surrogates

Court Action was not dismissed in Plaintiffs' favor is denied.

G. Civil Conspiracy

Defendants move to dismiss Plaintiffs' claim for civil conspiracy on the grounds that

the remainder of Plaintiffs ' claims should be dismissed, and civil conspiracy cannot stand as

an independent cause of action. However, as explained above, Plaintiffs have pleaded claims

for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, defamation, legal

malpractice, interference with prospective business relations and legal malpractice.

[* 16]


Defendants' argument to dismiss Plaintiffs' claim for civil conspiracy on the grounds that

it is not an independent cause of action is thus denied.

1. Common Interest Privilege

Rosenbaum raises the additional argument that the cause of action for civil conspiracy

should be dismissed because the communications underlying the claim were protected by the

"common interest privilege." Rosenbaum Memo, p. 18. Plaintiffs contend that the common

interest privilege is properly asserted as an affirmative defense on a motion for summary

judgment, and is prematurely raised in this motion to dismiss.

"The [common interest] privilege attaches when the statement is made between

individuals who share a common interest and can be overcome only by a showing of malice

on the part of the declarant." Norwoodv. City of New York, 203 A.D.2d 147, 149 (1st Dep't

1994).

"Because the' common interest' privilege constitutes an affirmative defense, however,

it does not lend itself to a pre-answer motion to dismiss pursuant to CPLR 3211 (a)." Demas

v. Levitsky, 291 A.D.2d 653, 661 (3d Dep't 2002) (internal citations omitted). The

appropriate procedure "is to plead the privilege as an affirmative defense and thereafter move

for summary judgment on that defense, supporting the motion with competent evidence

establishing prima facie that the allegedly defamatory communications were made by one

[* 17]


person to another upon a subject in which both have an interest." Id. (internal citations

omitted). By raising the affirmative defense on a motion to dismiss, "defendants would, in

effect, 'short-circuit that procedure' and improperly place the burden on plaintiff of

anticipating their affirmative defense prior to joinder of issue." Garcia v. Puccio, 17 A.D.3d

199,201 (lst Dep't 2005) (quoting Demas, 291 A.D.2d at 662).

Rosenbaum's motion to dismiss Plaintiffs' claim for civil conspiracy is therefore

denied without prejudice.

H. Timeliness

Rosenbaum contends that the EDHFT's claims for aiding and abetting the breach of

a fiduciary duty and for civil conspiracy are time-barred. Rosenbaum argues that both causes

of action are subject to a three-year statute oflimitations. The instant action was commenced

on October 13, 2011. Thus, posits Rosenbaum, claims that arose prior to October 13, 2008

are untimely. Some of the operative facts underlying the EDHFT's claims took place in the

weeks leading up to October 13, 2008.

Rosenbaum admits that EDHFT' s claims would be timely under CPLR 205( a), which

grants parties a six-month grace period in which to "commence a new action upon the same

transaction or occurrence." However, Rosenbaum argues that the EDHFT was not a party

to the Prior Action, and therefore cannot benefit from CPLR 205(a).

The factual premise of Rosenbaum's argument is incorrect. EDHFT was named as

a "Counter-Plaintiff' in the Prior Action. Winter Affirm., Ex. S., p. 1. CPLR 205(a)'s six-

[* 18]

2626 Bway, LLC v. Broadway Metro Associates Index No. 105635/10 Page 18

month extension therefore applies to EDHFT's claims. Rosenbaum's motion to dismiss

EDHFT's claims for aiding and abetting the breach ofa fiduciary duty and civil conspiracy

on the grounds that the claims are untimely is denied.

IV. CONCLUSION

F or the foregoing reasons, it is hereby

ORDERED that Defendants Clay Pierce and Patterson Belknap Webb & Tyler, LLP's

motion to dismiss, Mot. Seq. No. 001, is denied; and it is further

ORDERED that Defendant Michael Rosenbaum's motion to dismiss, Mot. Seq.

No. 002, is denied.

This constitutes the decision and order of the court.

Dated: New York, New York lanuary~, 2013

ENTER:

Hon. Eileen Bransten, l.S.C .

.............. ------------------------

-----... .

[* 19]

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