Affidavit Fails To Establish That A Material Undisputed Fact Was Not A Fact At All, Says The First Department
Print Article- Posted on: Jan 20 2025
By: Jeffrey M. Haber
In Katsorhis v. 718 W. Beech St, LLC, 2025 N.Y. Slip Op. 00211 (1st Dept. Jan. 15, 2025) (here), the Appellate Division, Second Department considered a fraud claim that the lower court sustained on the grounds that defendant failed to raise an issue of fact about a fact that was not a fact in dispute. The Court also considered whether the motion court erred in denying defendants’ motion to dismiss plaintiffs’ claims alleging violations of General Business Law (“GBL”) §§ 349 and 350.
To put Katsorhis in context, it is important to understand the civil practice rules (CPLR 3211(7) and CPLR 3211(a)(1)) that the Court applied, in addition to the law governing fraud claims and alleged violations of §§ 349 and 350.
On a motion to dismiss pursuant to CPLR 3211(a)(7), the court should accept the facts as alleged in the complaint 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.[1] Where evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and, “unless it has been shown that a material fact as claimed by the [plaintiff] to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, … dismissal should not eventuate.”[2] Moreover, the court may consider affidavits submitted by the pleading party to remedy any defects in the pleading, and upon considering such an affidavit, the facts alleged therein must also be assumed to be true.[3]
“To succeed on a motion to dismiss based upon documentary evidence pursuant to CPLR 3211 (a) (1), the documentary evidence must utterly refute the plaintiff’s factual allegations, conclusively establishing a defense as a matter of law.”[4] “[T]o qualify as ‘documentary evidence,’ it must be ‘unambiguous, authentic, and undeniable.’”[5] In the Second Department, affidavits, emails, and letters are not considered “documentary evidence within the intendment of CPLR 3211 (a) (1).”[6] However, “documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable, … qualify as documentary evidence.…”[7]
[Eds. Note: we have examined the requirements of CPLR 3211(a) on numerous occasions. Readers can find articles discussing the requirements of CPLR 3211(a)(1), for example, here, here, and here.]
The elements of a cause of action to recover damages for fraud are “a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages.”[8] “A claim rooted in fraud must be pleaded with the requisite particularity under CPLR 3016(b).”[9] Notwithstanding, CPLR 3016(b) “should not be so strictly interpreted as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting a fraud.”[10] Thus, “the pleading requirements of CPLR 3016(b) may be met when the facts are sufficient to permit a reasonable inference of the alleged conduct.”[11]
[Eds. Note: we have examined the requirements of CPLR 3016(b) on numerous occasions. Readers can find more recent articles discussing the particularity requirement, here, here, and here. To find additional articles related to CPLR 3016(b)’s requirement that fraud be alleged with particularity, visit the “Blog” tile on our website and enter “pleading fraud with particularity” (or any related topic of interest) in the “search” box.]
“To successfully assert a claim under General Business Law § 349 or § 350, a party must allege that its adversary has engaged in consumer-oriented conduct that is materially misleading, and that the party suffered injury as a result of the allegedly deceptive act or practice.”[12] “‘[P]arties … must, at the threshold, charge conduct that is consumer oriented.’”[13] “Private contract disputes, unique to the parties, … [do] not fall within the ambit of the statute.”[14] A “single shot transaction”,[15] which is “tailored to meet the purchaser’s wishes and requirements”,[16] “does not, without more, constitute consumer-oriented conduct for the purposes of [General Business Law §§ 349 and 350].”[17]
With the foregoing principles in mind, we examine Katsorhis v. 718 W. Beech St, LLC.
Katsorhis is an action to recover damages for, among other things, fraud and violations of the GBL. Plaintiffs commenced the action against, among others, defendants, Up Studio Architecture + Design, PLLC (hereinafter “Up Studio”) and John Patrick Winberry (“Winberry” and together the “Up Studio defendants”), in connection with alleged construction defects that caused severe leaks and water intrusion around various windows in plaintiffs’ newly constructed, single-family residence located in Long Beach, New York (the “property”).
In November 2016, defendant, 718 West Beech St, LLC (“718 West Beech”), entered into an architectural services agreement (the “architecture agreement”) with Up Studio, pursuant to which Up Studio agreed to provide architectural design and production drawings to 718 West Beech for the construction of the property. Up Studio also agreed to provide 718 West Beech with schematic, electrical, mechanical, civil, and landscape drawings for design build bidding.
On or about February 17, 2017, plaintiffs entered into a contract of sale to purchase the property, which was still under construction, from 718 West Beech. Winberry, a licensed architect, allegedly owned and/or was a principal of both 718 West Beech and Up Studio. Plaintiffs alleged that Winberry was to inspect the work and ensure that the designs were executed properly. According to plaintiffs, 718 West Beech, Up Studio, and Winberry were collectively engaged in the business of real estate sales, property development, architectural design, and new home construction. On or about July 21, 2017, plaintiffs paid the purchase price for the property, and 718 West Beech conveyed the property to plaintiffs.
Plaintiffs alleged that beginning in July 2019, they discovered leaks and water intrusion around various windows in the property. Plaintiffs alleged that they notified Winberry about the recurring leaks and that over the course of approximately the following two years, Winberry was “heavily involved in coordinating the inspections, corrective work, and restoration.” In October 2021, plaintiffs allegedly were told that the leaks were occurring because the windows and associated materials, hardware, and components were not installed on the property in accordance with the architect’s details and the sheathing manufacturer’s specifications. Thereafter, plaintiffs commenced the action.
Plaintiffs predicated their fraud claim upon the allegation that defendants made material misrepresentations in the marketing of the property to the plaintiffs, to induce plaintiffs to enter into the contract. These alleged misrepresentations included, among others: (a) defendants’ qualifications as developers, construction administrators, architects, and builders of high-quality new homes; (b) the quality of the construction of the property (i.e., that it was of high quality, constructed in a manner free from defects and substantially in accordance with the plans); and (c) the Up Studio defendants’ oversight of the construction (i.e., that the property was constructed under the administration and oversight of their team—that the Up Studio defendants attended regular site visits, met with the general contractor and subcontractors, and performed inspections of the construction, all to ensure that the property was constructed properly). Plaintiffs alleged that defendants made these representations with knowledge of their falsity and with the intent to deceive, and that plaintiffs relied upon these representations to their detriment.
Plaintiffs predicated their GBL claims upon the allegation that defendants made materially misleading statements in public advertisements and marketing materials, including on defendants’ websites and in real estate listings aimed at consumers, to induce consumers, such as plaintiffs, to contract with defendants to purchase the property. In particular, plaintiffs alleged that defendants misrepresented their knowledge, expertise and competence in performing high-end residential construction using the best quality materials and equipment. Such statements, plaintiffs alleged, were likely to mislead consumers acting reasonably under the circumstances. Further, plaintiffs alleged that they reasonably relied on such statements in making the decision to contract with defendants, and that they sustained damages as a result; including the costs to remediate the alleged construction defects.
The Up Studio defendants moved, inter alia, pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint. In support of the motion, the Up Studio defendants submitted, among other things, an affidavit from Winberry and the architecture agreement between Up Studio and 718 West Beech. In opposition, plaintiffs submitted, inter alia, an affidavit from plaintiff Valerie Katsorhis.
Regarding the fraud claim, the Up Studio defendants argued that plaintiffs failed to plead fraud with the requisite specificity required under CPLR 3016(b), in that plaintiffs failed to provide the details with respect to when any particular fraudulent statement was made, where any such-statement was made, or the specific contents of any such statement.
Regarding the GBL claims, the Up Studio defendants argued that the conduct at issue involved a single purchase and sale of a private residence, not the type of transaction within the purview of GBL § 349. The Up Studio defendants argued that to state a claim under GBL § 349, the plaintiff must demonstrate that the defendant engaged in consumer-oriented conduct. That is, the alleged acts or practices must have a broad impact on consumers at large. Large, private, one-shot contractual transactions, argued the Up Studio defendants, fall outside the scope of the statute.
The Up Studio defendants further argued that they did not engage in the conduct alleged, relying on an affidavit submitted by Winberry, wherein he averred that Up Studio was not involved in the sale of the property and did not market the property to anyone or to the public large.
In an order entered on January 4, 2023, the motion court, among other things, denied those branches of the Up Studio defendants’ motion which were to dismiss the third cause of action (negligence) as asserted against Winberry and the fifth and sixth causes of action (fraud and violation of the GBL, respectively) as asserted against them.
The motion court held that plaintiffs adequately pleaded each of the elements of a fraud cause of action and that the pleading contained sufficient detail to inform defendants of the circumstances constituting the alleged wrong. Accordingly, the motion court found no basis to dismiss the claim pursuant to CPLR 30l6(b).
The motion court also held that plaintiffs adequately alleged claims under the GBL. The motion court found that plaintiffs sufficiently alleged that defendants disseminated false and misleading information to the public at large via their websites and real estate listings. The motion court reasoned that to the extent the representations were aimed at potential home buyers, plaintiffs sufficiently identified consumer-oriented activities to survive a motion to dismiss. The motion court explained that although the private nature of the ultimate transaction and the large amount of money at issue militated against such a conclusion, (a) the transaction, at its essence, was a simple purchase and sale of a home by a consumer, and not a large and complex commercial transaction, and (b) the allegations of public advertising and dissemination of marketing materials, among other things, distinguished the case from those cited by defendants.
The motion court further found that the Up Studio defendants did not meet their burden of establishing that any of the facts alleged by plaintiffs was “not a fact at all” or that “no significant dispute exist[ed regarding it].”[18] Rather, said the motion court, the Winberry affidavit highlighted the existence of issues of fact.
The Up Studio defendants appealed.
The Second Department modified the motion court’s order by deleting the provision denying the motion to dismiss the GBL cause of action as asserted against them and substituting a provision granting the motion, and as so modified, affirmed the order.[19]
The Court held that the motion court “properly denied that branch of the Up Studio defendants’ motion which was pursuant to CPLR 3211(a) to dismiss the fifth cause of action, alleging fraud, insofar as asserted against them.”[20] Without explanation, the Court found that “the complaint stated in sufficient detail a cause of action to recover damages for fraud against the Up Studio defendants.”[21]
The Court noted that “Winberry’s affidavit failed to establish that a material fact alleged in the complaint concerning the fraud cause of action insofar as asserted against the Up Studio defendants was not a fact at all and that no significant dispute exist[ed] regarding it.”[22] The Court further said that the architecture agreement “was insufficient to utterly refute the plaintiffs’ factual allegations of fraud against the Up Studio defendants.”[23]
The Court also held that the motion court “erred in denying that branch of the Up Studio defendants’ motion which was pursuant to CPLR 3211(a) to dismiss the sixth cause of action, alleging violations of General Business Law §§ 349 and 350, insofar as asserted against them.”[24] The Court explained that “the complaint, even as supplemented by Katsorhis’s affidavit, failed to sufficiently allege that the Up Studio defendants engaged in a consumer-oriented deceptive act or practice.”[25]
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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.
[1] See Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994).
[2] Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275 (1977).
[3] See Kopelowitz & Co., Inc. v. Mann, 83 AD3d 793, 797 (2d Dept. 2011); Pike v. New York Life Ins. Co., 72 A.D.3d 1043, 1049 (2d Dept. 2010). “An affidavit submitted by the movant will almost never warrant dismissal under CPLR 3211 unless it establishes conclusively that the proponent of the pleading has no cause of action.” Cajigas v. Clean Rite Ctrs., LLC, 187 A.D.3d 700, 701 (2d. Dept. 2020).
[4] Gould v. Decolator, 121 A.D.3d 845, 847 (2d Dept. 2014); see also Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326 (2002).
[5] Attias v. Costiera, 120 A.D.3d 1281, 1282 (2d Dept. 2014) (quoting Granada Condominium III Assn. v. Palomino, 78 A.D.3d 996, 996 (2d Dept. 2010)).
[6] Nero v. Fiore, 165 AD3d 823, 826 (2d Dept. 2018) (internal quotation marks omitted).
[7] Fontanetta v. John Doe 1, 73 A.D.3d 78, 84—85 (2d Dept. 2010) (internal quotation marks omitted); see also Cives Corp. v. George A. Fuller Co., Inc., 97 A.D.3d 713, 714 (2d Dept. 2012).
[8] Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 559 (2009).
[9] Id.
[10] Farro v. Schochet, 190 A.D.3d 698, 699 (2d Dept. 2021) (internal quotation marks omitted).
[11] Qureshi v. Vital Transp., Inc., 173 A.D.3d 1076, 1077 (2d Dept. 2019).
[12] Yellow Book Sales & Distrib. Co., Inc. v. Hillside Van Lines, Inc., 98 A.D.3d 663, 664-665 (2d Dept. 2012).
[13] North State Autobahn, Inc. v. Progressive Ins. Grp. Co., 102 A.D.3d 5, 11-12 (2d Dept. 2013) (quoting New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 320 (1995)).
[14] Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25 (1995); New York Univ., 87 N.Y.2d at 320.
[15] Genesco Entertainment v. Koch, 593 F. Supp. 743, 752 (S.D.N.Y. 1984) (internal quotation marks omitted).
[16] New York Univ., 87 N.Y.2d at 321.
[17] North State Autobahn, 102 A.D.3d at 12; see also Abraham v. Torati, 219 A.D.3d 1275, 1281 (2d Dept. 2023).
[18] Sokol v. Leader, 74 A.D.3d 1180, 1181—1182 (2d Dept. 2010).
[19] Slip Op. at *1.
[20] Id. at *2.
[21] Id. (citation omitted).
[22] Id. (citing State Farm Fire & Cas. Co. v. Capital Sewer, Inc., 220 A.D.3d 701, 702 (2d Dept. 2023)).
[23] Id. (citing Phoenix Grantor Trust v. Exclusive Hospitality, LLC, 172 A.D.3d 923, 925 (2d Dept. 2019)).
[24] Id.
[25] Id. (citations omitted).