Board of Managers v. Dylan Carpet, Inc.

182 A.D.2d 551 | N.Y. App. Div. | 1992

Order, Supreme Court, New York County (Harold Tompkins, J.), entered March 19, 1991 which dismissed the fourth and sixth causes of action of the plaintiff’s complaint, alleging fraud and conversion respectively, unanimously reversed, on the law with costs, and said causes of action are hereby reinstated.

In February, 1990 the plaintiff contracted with defendant Dylan Carpet, Inc. for the purchase and installation of carpeting for the condominium. The contract price was in excess of $60,000; the contract required 50% to be paid in advance with 25% to be paid when the carpet was ready for delivery and the remaining 25% to be paid in equal progressive payments during the installation of the carpet. Accordingly, on February 15, 1990 plaintiff paid Dylan Carpet, Inc. $25,000. Thereafter on June 26, 1990, defendant Rothman informed the plaintiff that the carpet was in stock and ready for installation but that a payment of $28,834.18 was required for storage of the carpet until plaintiff was ready to have it installed. Plaintiff paid defendant the $28,834.18; however, Dylan Carpet, Inc. never fulfilled the order. In fact, plaintiffs was one of several orders Dylan Carpet, Inc. did not fulfill although deposits had been paid by the customers. In mid-November 1990, Dylan Carpet, Inc. became insolvent and ceased its business operations.

Plaintiff commenced this action against Dylan Carpet and the individual defendants, who are each 50% shareholders of the corporate defendant. The complaint in six causes of action alleges breach, fraud and conversion by the corporate and individual defendants. The fourth and sixth causes of action, which allege fraud and conversion respectively, against the individual defendants, are the only ones with which this appeal is concerned. Defendants moved to dismiss the fourth and sixth causes of action for failure to state a cause of action (CPLR 3211) and on the ground that said causes were not pleaded with requisite specificity (CPLR 3016).

Upon giving the complaint and evidentiary material submitted in opposition to the motion every favorable consideration (Arrington v New York Times Co., 55 NY2d 433, 442; Rovello v Orofino Realty Co., 40 NY2d 633), we find that the fourth and six causes of action of the complaint were adequately pleaded. The allegations in the complaint, that the individual defendants ran the corporation to further their own personal *552interests, as opposed to those of the corporation, as supported, specifically by the affidavit of Aaron Edelman which provides examples of their conduct, are sufficient to state causes of action against the individual defendants herein (cf, Perez v One Clark St Hous. Corp., 108 AD2d 844; Cusumano v Iota Indus., 100 AD2d 892).

CPLR 3016 (b) has been interpreted as requiring " 'only that the misconduct complained of be set forth in sufficient detail to clearly inform a defendant with respect to the incidents complained of and is not to be interpreted so strictly as to prevent an otherwise valid cause of action in situations where it may be "impossible to state in detail the circumstances constituting the fraud” (Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187, 194).’ (Lanzi v Brooks, 43 NY2d 778, 780.)” (Fidelity & Deposit Co. v Andersen & Co., 131 AD2d 308, 309.) The complaint as supported by the plaintiff’s submissions, clearly pleads a fraud claim based on specific allegations, that the defendants made false statements of fact, as opposed to expressions of future intentions collateral to the contract (compare, Deerfield Communications Corp. v Chesebrough-Ponds, Inc., 68 NY2d 954, 956). Moreover, that the fraud allegations do not identify and distinguish between the two individual defendants is of no consequence since the complaint as a whole, adequately alleges a scheme involving both defendants (see, CPC Intl, v McKesson Corp., 70 NY2d 268). Concur — Murphy, P. J., Carro, Wallach, Ross and Smith, JJ.