Summary
finding that "damages [] relat[ing] solely to the commencement of this lawsuit by plaintiffs . . . are clearly insufficient to sustain the necessary element of damages in [causes of action for negligent misrepresentation, fraudulent misrepresentation and conspiracy to defraud]"
Summary of this case from MDW Funding LLC v. Darden Media Grp., LLCOpinion
November 15, 1984
Appeal from the Supreme Court, Broome County (Smyk, J.).
The Raymond Corporation (Raymond) retained Coopers Lybrand (C L) to prepare an audit and annual financial statement for two Illinois corporations, Associated Material Handling Industries, Inc. (Associated) and AMHI Services, Inc. (AMHI), from 1956 to 1978 to determine the value of the shares of stock of both corporations which Raymond proposed to purchase from Edward Allen, the sole stockholder. The amended complaint in this action by Raymond, Associated and AMHI against C L and Allen alleged 12 causes of action, all predicated upon preparation of erroneous financial reports of Associated and AMHI, including breach of contract, fraud and malpractice. C L counterclaimed against plaintiffs and commenced a third-party action individually against Benjamin Platter, the president of both Associated and AMHI, and Lee Wolf, senior vice-president and treasurer of Raymond. Following responsive pleadings, partial discovery, and C L's unsuccessful CPLR 3211 motion to dismiss the complaint, Special Term granted plaintiffs' summary judgment motion to dismiss C L's first counterclaim, and also granted Wolf's motion to dismiss the third-party complaint against him. C L has appealed.
In its brief, C L contends that although the language of the first counterclaim states that plaintiffs' action constituted a conspiracy against it, the counterclaim sets forth allegations of fact sufficient to state causes of action for negligent misrepresentation, fraudulent misrepresentation and conspiracy to defraud. We discern no error in Special Term's dismissal of the first counterclaim, which states that plaintiffs' cumulative actions "constitute a wilful and malicious conspiracy to deprive this defendant of a substantial sum of money". In New York, there is no substantive tort of conspiracy in and of itself ( Danahy v Meese, 84 A.D.2d 670, 672). There must first be pleaded specific wrongful acts which might constitute an independent tort ( Gorman v Gorman, 88 A.D.2d 677, 678; Satin v Satin, 69 A.D.2d 761, 762). We find insufficient facts alleged to constitute the commission of any of the torts suggested. Moreover, a necessary element to any cause of action for fraud and misrepresentation is damages ( Ross v Preston, 292 N.Y. 433; Kuelling v Lean Mfg. Co., 183 N.Y. 78), and such damages must be pleaded ( Latzko v Spector, 28 A.D.2d 1111, aff'd. 22 N.Y.2d 710). Here, the $500,000 sought as damages appears to relate solely to the commencement of this lawsuit by plaintiffs. Damages attributable solely to the existence of litigation are clearly insufficient to sustain the necessary element of damages in the first counterclaim (see Wiener v Weintraub, 22 N.Y.2d 330; Scully v Genesee Milk Producer's Coop., 78 A.D.2d 982). C L has failed to come forward with the required proof to sustain the first counterclaim (see Piccolo v De Carlo, 90 A.D.2d 609). Nor is there merit to the argument that attorney's fees are recoverable. There is no litigation involving C L apart from this suit (see Matter of Rothko, 84 Misc.2d 830, mod 56 A.D.2d 499, aff'd. 43 N.Y.2d 305).
We find that Special Term correctly granted summary judgment dismissing the first two causes of action in the third-party complaint against Wolf. These two causes of action, premised on the contention that Wolf assumed responsibility for the accuracy of the financial records and subsequently breached this responsibility, are without merit since C L failed to set forth specific factual allegations that Wolf acted outside the scope of employment or for personal profit (see Freyne v Xerox Corp., 98 A.D.2d 965; Citicorp Retail Servs. v Wellington Mercantile Servs., 90 A.D.2d 532). Indeed, the agreement in which this duty was purportedly assumed was signed "Lee J. Wolf, Senior Vice President-Finance Treasurer" below the notation "For The Raymond Corporation". This authorization is clearly representative of Wolf's corporate capacity. The conclusory allegation that Wolf "expressly assumed" responsibility for the factual accuracy of the financial representations was insufficient to establish that Wolf assumed individual responsibility.
The third cause of action is couched in terms of a negligent misrepresentation on Wolf's part that the financial records of Associated and AMHI were accurate. To substantiate such a cause of action, C L was required to establish the existence of a duty on Wolf's part to provide correct information ( White v Guarente, 43 N.Y.2d 356, 362-363; International Prods. Co. v Erie R.R. Co., 244 N.Y. 331, 338-339). The existence of such a "special relationship" presents a question of fact, not to be resolved at this preliminary stage of the proceedings (see AFA Protective Systems v American Tel. Tel. Co., 57 N.Y.2d 912). Accordingly, this cause of action should not have been dismissed.
We reach a similar conclusion with respect to the fourth cause of action alleging conspiracy and prima facie tort. On appeal, C L argues that the gravamen of this cause of action is fraud. According the pleadings a liberal construction ( Macey v New York State Elec. Gas Corp., 80 A.D.2d 669; Taft v Shaffer Trucking, 52 A.D.2d 255, 257), we find the allegations sufficient to state a cause of action in fraud. A corporate officer may be held individually liable for his own fraudulent misrepresentations (see Dupack v Nationwide Leisure Corp., 70 A.D.2d 568, 570; see, also, 15 N.Y. Jur 2d, Business Relationships, § 1079, pp. 352-353). Since the misrepresentations are attributed to Wolf, we conclude that the merits of this cause of action may not be disposed of summarily, particularly since C L has not yet had an opportunity to examine Wolf on these issues.
Order modified, on the law, without costs, by reversing so much thereof as dismissed the third and fourth causes of action of the third-party complaint against Lee Wolf, and, as so modified, affirmed. Mahoney, P.J., Kane, Casey, Weiss and Levine, JJ., concur.