Summary
holding that a "cause of action for conversion cannot be predicated on a mere breach of contract"
Summary of this case from Newbro v. FreedOpinion
1193
May 20, 2003.
Order, Supreme Court, New York County (Charles Ramos, J.), entered March 25, 2002, which granted defendants' motion to dismiss the complaint, unanimously affirmed, without costs.
Dennis J. Johnson Thomas G. Cianlone, Jr., for plaintiff-appellant.
Francis S. Chlapowski, for defendants-respondents.
Before: Tom, J.P., Mazzarelli, Rosenberger, Ellerin, Williams, JJ.
The breach of contract claim was properly dismissed. When the statements in the Customer Agreement and the Truth in Lending Disclosure document are read together and the relevant language is given its plain and ordinary meaning, it is clear that the parties unambiguously agreed to grant defendant TD Waterhouse the right to liquidate securities in plaintiff customer's account, even without notice, when TD Waterhouse deemed such action necessary for its own protection.
Plaintiff's claim that TD Waterhouse violated the covenant of good faith and fair dealing in liquidating his securities without notice and opportunity to cure was properly rejected. While the covenant of good faith and fair dealing is implicit in every contract, it cannot be construed so broadly as effectively to nullify other express terms of a contract, or to create independent contractual rights (see Berzin v. W.P. Carey Co., 293 A.D.2d 320, 321; Delta Props., Inc. v. Fobare Enters., Inc., 251 A.D.2d 960, 962). Here, the Customer Agreement expressly granted TD Waterhouse the right to liquidate plaintiff's positions "when it deem[ed] it necessary for its protection" and nothing in the Truth in Lending Disclosure Statement limited that right.
Plaintiff's claim based on an alleged violation of General Business Law § 349 was properly dismissed since that statute is inapplicable to securities transactions (see Matter of Dean Witter Managed Futures Ltd. Partnership Litig., 282 A.D.2d 271, 272; Schwarz v. Bear Stearns Cos., 266 A.D.2d 133; Smith v. Triad Mfg. Group, 255 A.D.2d 962, 964; Jordan Inv. Co. v. Hunter Green Invs., 2003 U.S. Dist LEXIS 5182 [SD N.Y. March 31, 2003]; Matter of Sterling Forest Co. Secs. Litig., 222 F. Supp.2d 216, 285-287).
The claim for breach of fiduciary duty was properly dismissed since plaintiff opened a non-discretionary trading account, and the relationship between plaintiff and defendant was merely that of broker and customer (see Matter of Dean Witter Managed Futures, 282 A.D.2d supra; Perl v. Smith Barney, Inc., 230 A.D.2d 664, 666; Fekety v. Grunthal Co., 191 A.D.2d 370, 371; Bissell v. Merrill Lynch Co., Inc., 937 F. Supp. 237, 246, affd 157 F.3d 138). The breach of fiduciary claim was properly dismissed on the alternative ground that it is duplicative of the breach of contract claim (William Kaufman Org. v. Graham James LLP, 269 A.D.2d 171, 173; Perl, 230 A.D.2d at 666). Accordingly, the claim for aiding and abetting breach of fiduciary against defendant Chapel was properly dismissed.
An action for money had and received does not lie where there is an express contract between the parties (see Phoenix Garden Rest., Inc. et v. Chu, 245 A.D.2d 164, 166; Yeterian v. Heather Mills N.V., 183 A.D.2d 493, 494). We note that even if there had been no contract between the parties providing for commissions in connection with liquidation sales, plaintiff's claim for money had and received would still have been properly dismissed since the commissions were returned to plaintiff.
Plaintiff's claim for conversion was properly dismissed. A cause of action for conversion cannot be predicated on a mere breach of contract (see id.). Here, plaintiff's conversion claim "allege[d] no independent facts sufficient to give rise to tort liability" (id.) and, thus, was nothing more than a restatement of his breach of contract claim (see Interstate Adjusters, Inc. v. First Fid. Bank, N.A., 251 A.D.2d 232, 234).
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.