An v. Long Is. Bd. of Realtors

An v Long Is. Bd. of Realtors 2026 NY Slip Op 05758 October 7, 2026 Appellate Division, Second Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This decision is uncorrected and subject to revision before publication in the Official Reports. James An, et al., respondents-appellants, v Long Island Board of Realtors, et al., appellants-respondents, et al., defendant. Supreme Court of the State of New York, Appellate Division, Second Judicial Department Decided on October 7, 2026 2023-09783, (Index No. 702691/22) Francesca E. Connolly, J.P. Barry E. Warhit Helen Voutsinas Susan Quirk, JJ. Capuder Fazio Giacoia LLP, New York, NY (Alfred M. Fazio of counsel), for appellants-respondents. Kasowitz Benson Torres LLP, New York, NY (Jeceaca An of counsel), for respondents-appellants. [*1] DECISION & ORDER In an action, inter alia, to recover damages for fraud, the defendants Long Island Board of Realtors, Judy Gehlich, Frank Dell Accio, and Matthew Arnold appeal, and the plaintiffs cross-appeal, from an order of the Supreme Court, Queens County (Joseph Risi, J.), dated September 19, 2023. The order, insofar as appealed from, denied those branches of those defendants' motion which were pursuant to CPLR 3211(a) to dismiss the fifth through seventh causes of action insofar as asserted against them. The order, insofar as cross-appealed from, granted those branches of those defendants' motion which were pursuant to CPLR 3211(a) to dismiss the first through fourth causes of action insofar as asserted against them. ORDERED that the order is reversed insofar as appealed from, on the law, and those branches of the motion of the defendants Long Island Board of Realtors, Judy Gehlich, Frank Dell Accio, and Matthew Arnold which were pursuant to CPLR 3211(a) to dismiss the fifth through seventh causes of action insofar as asserted against them are granted; and it is further, ORDERED that the order is affirmed insofar as cross-appealed from; and it is further, ORDERED that one bill of costs is awarded to the defendants Long Island Board of Realtors, Judy Gehlich, Frank Dell Accio, and Matthew Arnold. The plaintiff James An was a real estate broker with the plaintiff Re/Max Frontier. The plaintiffs were members of the defendant Long Island Board of Realtors (hereinafter LIBOR), a nonprofit trade association serving approximately 30,000 real estate brokers and agents in Nassau, Suffolk, and Queens Counties. LIBOR, inter alia, enforced a Code of Ethics and Arbitration Manual (hereinafter the Code). On or about April 3, 2019, following a hearing, LIBOR, determined, among other things, that An had violated the Code, and directed An to take a course entitled "MLS Procedures & Rules" by December 20, 2019, or face a $5,000 fine. An made multiple requests for an extension based on his belief that he was registered for a course entitled "Ethics Notification" on January 1, [*2]2020, and based on his wife's ongoing cancer treatment, but LIBOR denied his requests. An failed to complete the course by the deadline, and his failure to pay the $5,000 fine resulted in the suspension of the plaintiffs' LIBOR and Multiple Listing Service of Long Island accounts, preventing the plaintiffs from accessing their listings and conducting business. On February 7, 2022, the plaintiffs commenced this action against LIBOR and the defendants Judy Gehlich, Frank Dell Accio, and Matthew Arnold (hereinafter collectively the individual defendants and together with LIBOR, the defendants), among others. The plaintiffs asserted causes of action to recover damages for fraud and deceptive acts and practices under General Business Law § 349 (first cause of action), conspiracy to commit fraud (second cause of action), aiding and abetting fraud (third cause of action), injurious falsehood (fourth cause of action), negligence (fifth cause of action), breach of fiduciary duty (sixth cause of action), and unjust enrichment (seventh cause of action). Subsequently, the defendants moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against them. In an order dated September 19, 2023, the Supreme Court granted those branches of the defendants' motion which were to dismiss the first through third causes of action, for failure to state a cause of action, and the fourth cause of action, as time-barred, insofar as asserted against them, and denied those branches of the defendants' motion which were to dismiss the fifth through seventh causes of action insofar as asserted against them. The defendants appeal, and the plaintiffs cross-appeal. "In considering a motion pursuant to CPLR 3211(a)(7) to dismiss a complaint for failure to state a cause of action, the court must afford the pleading a liberal construction, accept the facts as alleged in the pleading as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Chen v Metropolitan Tr. Auth., 239 AD3d 589, 590 [internal quotation marks omitted]; see Leon v Martinez, 84 NY2d 83, 87-88). "Further, where a court considers evidentiary material in determining a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), but does not convert the motion into one for summary judgment, the criterion becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and unless the movant shows that a material fact as claimed by the plaintiff is not a fact at all and no significant dispute exists regarding the alleged fact, the complaint shall not be dismissed" (Chen v Metropolitan Tr. Auth., 239 AD3d at 590 [internal quotation marks omitted]; see Leon v Martinez, 84 NY2d at 88). "A cause of action alleging fraud requires the plaintiff to plead: (1) a material misrepresentation of a fact, (2) knowledge of its falsity, (3) an intent to induce reliance, (4) justifiable reliance, and (5) damages" (Roumi v Guardian Life Ins. Co. of Am., 191 AD3d 911, 913 [internal quotation marks omitted]; see Loan Funder, LLC v Suffolk Home Rehab, LLC, 236 AD3d 1008, 1010). "A plaintiff is expected to exercise ordinary diligence and may not claim to have reasonably relied on a defendant's representations or silence where he or she has means available to him or her of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation" (Roumi v Guardian Life Ins. Co. of Am., 191 AD3d at 913 [alterations and internal quotation marks omitted]; see Lapin v Verner, 238 AD3d 1128, 1130). Here, while the plaintiffs alleged that the defendants misrepresented that An was enrolled in an "Ethics Notification" course on January 1, 2020, LIBOR's determination required An to complete a "MLS Procedures & Rules" course by December 20, 2019. The plaintiffs had the means available to them of knowing, by the exercise of ordinary intelligence, that the "Ethics Notification" course on January 1, 2020, would not satisfy the requirement in LIBOR's determination. Since the plaintiffs failed to adequately allege justifiable reliance, the Supreme Court properly granted that branch of the defendants' motion which was pursuant to CPLR 3211(a) to dismiss so much of the first cause of action as alleged fraud insofar as asserted against them (see Trepeta v Mobiquity Tech., Inc., 241 AD3d 967, 969; Roumi v Guardian Life Ins. Co. of Am., 191 AD3d at 913; Daly v Kochanowicz, 67 AD3d 78, 91). General Business Law § 349(a) provides that "deceptive . . . acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in [New York] are . . . unlawful." "To establish a cause of action under General Business Law § 349, a plaintiff must [*3]allege that: (1) the defendant's conduct was consumer-oriented; (2) the defendant's act or practice was deceptive or misleading in a material way; and (3) the plaintiff suffered an injury as a result of the deception" (Abraham v Torati, 219 AD3d 1275, 1280; see Collins v 527 Lincoln Place, LLC, 218 AD3d 731, 733). "In order to demonstrate that the act was consumer oriented, the plaintiff need not show that the defendant committed the complained-of acts repeatedly—either to the same plaintiff or to other consumers—but instead must demonstrate that the acts or practices have a broader impact on consumers at large" (Lapera v Cee-Jay Real Estate Dev. Corp., 232 AD3d 589, 593 [internal quotation marks omitted]; see Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25). Here, the complaint failed to sufficiently allege consumer-oriented conduct. Accordingly, the Supreme Court properly granted that branch of the defendants' motion which was pursuant to CPLR 3211(a) to dismiss so much of the first cause of action as alleged a violation of General Business Law § 349 insofar as asserted against them (see Israel v Progressive Cas. Ins. Co., 222 AD3d 733, 735; Abraham v Torati, 219 AD3d at 1281). As the plaintiffs failed to adequately allege a cause of action for fraud, the Supreme Court also properly granted those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the second and third causes of action, alleging conspiracy to commit fraud (see Whitfield v Law Enforcement Empls. Benevolent Assn., 237 AD3d 1139, 1141; Mohammad v Rehman, 236 AD3d 892, 894) and aiding and abetting fraud, insofar as asserted against them (see Weinstein v CohnReznick, LLP, 144 AD3d 1140, 1141; Nabatkhorian v Nabatkhorian, 127 AD3d 1043, 1044). "On a motion to dismiss a complaint pursuant to CPLR 3211(a)(5) on the ground that the statute of limitations has expired, the moving defendant must establish, prima facie, that the time in which to commence the action has expired" (Bank of N.Y. Mellon v Munet, 241 AD3d 865, 866 [internal quotation marks omitted]; see Board of Mgrs. of Top of the Ridge Condominiums v Uhlfelder, 240 AD3d 471, 472). "If the defendant satisfies this burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the plaintiff actually commenced the action within the applicable limitations period" (Bank of N.Y. Mellon v Munet, 241 AD3d at 866 [internal quotation marks omitted]; see Board of Mgrs. of Top of the Ridge Condominiums v Uhlfelder, 240 AD3d at 472). The statute of limitations for injurious falsehood is one year (see CPLR 215[3]; Clark v New York Tel. Co., 52 AD2d 1030, 1030, affd 41 NY2d 1069; Noel v Interboro Mut. Indem. Ins. Co., 31 AD2d 54, 55, affd 29 NY2d 743). Here, in support of their motion, the defendants demonstrated, prima facie, that the plaintiffs commenced the instant action on February 7, 2022, after the expiration of the one-year limitations period for a cause of action alleging injurious falsehood (see CPLR 215[3]; Clark v New York Tel. Co., 52 AD2d at 1030; Noel v Interboro Mut. Indem. Ins. Co., 31 AD2d at 55). In opposition, the plaintiffs failed to establish that the statute of limitations was tolled during the pendency of a small claims action, which was commenced before the instant action and discontinued pursuant to a stipulation, or that the statute of limitations was otherwise inapplicable. Accordingly, the Supreme Court properly granted that branch of the defendants' motion which was pursuant to CPLR 3211(a) to dismiss the fourth cause of action, alleging injurious falsehood, insofar as asserted against them (see Kolomensky v Wiener, 135 AD2d 505, 506; see also Matter of Walshe v New York State Unified Ct. Sys. Off. of Ct. Admin., 230 AD3d 507, 508). "To prevail on a cause of action alleging negligence, a plaintiff must establish the existence of a legal duty, a breach of that duty, proximate causation, and damages" (Doe v Educational Inst. Oholei Torah, 235 AD3d 843, 844; see PNC Bank, N.A. v Steinhardt, 159 AD3d 999, 1000). "Whether a defendant owes a duty of care to another person is a question of law for the courts" (Moskowitz v Masliansky, 198 AD3d 637, 639 [internal quotation marks omitted]; see Tower Ins. Co. of N.Y. v Hands Across Long Is., Inc., 148 AD3d 1082, 1082). "[T]he issue must be resolved on a case-by-case basis" (Malone v County of Suffolk, 128 AD3d 651, 652; see Fox v Marshall, 88 AD3d 131, 136). Here, contrary to the plaintiffs' characterization of their fifth cause of action as sounding in negligence, their allegations actually sound in breach of by-laws or breach of contract (see Board of Mgrs. of Top of the Ridge Condominiums v Uhlfelder, 240 AD3d at 472; D'Ambrosio v Engel, 292 AD2d 564, 564; see also Matter of 144-80 Realty Assoc. v 144-80 Sanford Apt. Corp., 193 AD3d 723, 724; Pascual v Rustic Woods Homeowners Assn, Inc., 134 AD3d 1003, 1005). While the very nature of a contractual obligation, and the public interest in seeing it performed with reasonable care, may give rise to a duty of reasonable care in performance of the contract obligations and the breach of that independent duty will give rise to a tort claim (see New York Univ. v Continental Ins. Co., 87 NY2d 308, 316; Santoro v Poughkeepsie Crossings, LLC, 180 AD3d 12, 18), here, the allegations were based solely on the contractual relationship between the parties (see Michael Davis Constr., Inc. v 129 Parsonage Lane, LLC, 194 AD3d 805, 808; D'Ambrosio v Engel, 292 AD2d at 564-565). Accordingly, the Supreme Court should have granted that branch of the defendants' motion which was pursuant to CPLR 3211(a) to dismiss the fifth cause of action, alleging negligence, insofar as asserted against them. "To state a cause of action to recover damages for breach of fiduciary duty, which must be pleaded with the requisite particularity under CPLR 3016(b), a plaintiff must allege: (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant's misconduct" (Schiano v Harsanyi, 230 AD3d 820, 822 [internal quotation marks omitted]; see Paraco Gas Corp. v Jay Z. Gerlitz & Assoc., Inc., 225 AD3d 615, 616). "[A] corporation does not owe fiduciary duties to its members or shareholders" (C & J Bros., Inc. v Hunts Point Term. Produce Coop. Assn., Inc., 181 AD3d 419, 419 [internal quotation marks omitted]; see Stalker v Stewart Tenants Corp., 93 AD3d 550, 552). Accordingly, the Supreme Court should have granted that branch of the defendants' motion which was pursuant to CPLR 3211(a) to dismiss the sixth cause of action, alleging breach of fiduciary duty, insofar as asserted against LIBOR. Not-for-Profit Corporation Law § 717(a), which codified the fiduciary duties of directors, officers, and other key persons in non-profit corporations, provides that "[d]irectors, officers and key persons shall discharge the duties of their respective positions in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances." The fiduciary duties of the directors, officers, and key persons in non-profit corporations are owed to the corporation (see S.H. & Helen R. Scheuer Family Found. v 61 Assoc., 179 AD2d 65, 70; People v National Rifle Assn. of Am., Inc., 74 Misc 3d 998, 1025 [Sup Ct, NY County]; People v Trump, 62 Misc 3d 500, 510 [Sup Ct, NY County]), not to individual members of the corporation. Accordingly, the Supreme Court should have granted that branch of the defendants' motion which was pursuant to CPLR 3211(a) to dismiss the sixth cause of action, alleging breach of fiduciary duty, insofar as asserted against the individual defendants. "To establish an unjust enrichment cause of action, a plaintiff must allege that (1) the other party was enriched, (2) at that party's expense, and (3) it is against equity and good conscience to permit the other party to retain what is sought to be recovered" (Clarke v Clarke, 237 AD3d 1039, 1041 [internal quotation marks omitted]; see Rosenfeld v Brody, 238 AD3d 1084, 1087). In evaluating an unjust enrichment claim, "courts will look to see if a benefit has been conferred on the defendant under mistake of fact or law, if the benefit still remains with the defendant, if there has been otherwise a change of position by the defendant, and whether the defendant's conduct was tortious or fraudulent" (Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421). "[T]he essential inquiry in any action for unjust enrichment . . . is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered" (Holman v St. John's Episcopal Hosp., 241 AD3d 1295, 1298 [internal quotation marks omitted]). However, "[u]njust enrichment is not a catchall cause of action to be used when others fail. It is available only in unusual situations when, though the defendant has not breached a contract nor committed a recognized tort, circumstances create an equitable obligation running from the defendant to the plaintiff" (Hersko v Hersko, 245 AD3d 685, 690, citing Corsello v Verizon N.Y., Inc., 18 NY3d 777, 790). Here, the complaint failed to state a cause of action for unjust enrichment against the defendants. The complaint failed to allege that a benefit was conferred on the individual defendants from the imposition of the $5,000 fine on the plaintiffs or from the purported lost business opportunities the plaintiffs incurred following their suspension from LIBOR services. Neither does the complaint allege that LIBOR had a benefit improperly conferred on it. There is no allegation that LIBOR benefitted from the plaintiffs' purported lost business opportunities, and the plaintiffs cannot, in effect, collaterally attack LIBOR's determination, which led to the imposition of the fine for the plaintiffs' failure to comply with the terms of the determination (see e.g. DeMartino v Lomonaco, 155 AD3d 686). Accordingly, the Supreme Court should have granted those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the fifth through seventh causes of action insofar as asserted against them. The defendants' remaining contentions need not be addressed in light of our determination. CONNOLLY, J.P., WARHIT, VOUTSINAS and QUIRK, JJ., concur. ENTER: Darrell M. Joseph Clerk of the Court