State of N.Y. Workers’ Compensation Bd. v Wang  2017 NY Slip Op 00057  Decided on January 5, 2017  Appellate Division, Third Department  Egan Jr., J., is the story of a trust gone bad.  “The Health Care Providers Self-Insurance Trust, a group self-insured trust, was formed in 1992 to provide mandated workers’ compensation coverage to employees of the trust’s members (see Workers’ Compensation Law § 50 [3-a]; 12 NYCRR 317.2 [i]; 317.3). The trust contracted with defendant Program Risk Management, Inc. (hereinafter PRM) to serve as its program administrator, which, in turn, employed defendants Thomas Arney, Colleen Bardascini, John M. Conroy, Gail Farrell and Edward Sorenson (hereinafter collectively referred to as the PRM individual defendants). Additionally, the trust contracted with defendant PRM Claims Services, Inc. (hereinafter PRMCS) to serve as its claims administrator (see 12 NYCRR 317.2 [d]). Arney and defendants Judy Balaban-Krause, Robert Callaghan, Nelson Carpentar, Laura Donaldson, Ronald Field, Thomas Gosdeck, Joel Hodes, Albert Johansmeyer [FN1] and Michael Reda (hereinafter collectively referred to as the trustee defendants), among others, served as trustees.”

“In 2009, plaintiff determined that the trust was insolvent and assumed the administration thereof (see 12 NYCRR 317.20). Thereafter, plaintiff obtained a forensic audit, which allegedly revealed that the trust had an accumulated deficit of over $188 million. On July 8, 2011, plaintiff commenced this action, later amended in January 2012, in its capacity as the governmental entity charged with the administration of the Workers’ Compensation Law and attendant regulations, and as successor in interest to the trust. Plaintiff alleged 32 causes of action against certain defendants sounding in, among other things, breach of contract, breach of good faith and fair dealing, breach of fiduciary duty, fraud, fraud in the inducement, negligent misrepresentation, [*2]gross negligence, alter ego liability and indemnification [FN3]. The complaint asserts that, as a result of defendants’ failures and wrongdoings, plaintiff has incurred liability for, among other things, “certain [t]rust [m]embers’ assessments,” “significant additional administrative expenses of the [t]rust” and “the amount of the total deficit of the [t]rust.”

“Beginning with plaintiff’s first cause of action for breach of contract, as well as its second and third causes of action for breach of good faith and fair dealing, we agree with Supreme Court that such claims are time-barred by the applicable six-year statute of limitations to the extent that the alleged breaches occurred before July 8, 2005 (see CPLR 203 [a]; 213 [2]; see also Town of Oyster Bay v Lizza Indus., Inc., 22 NY3d 1024, 1030 [2013]; Kosowsky v Willard Mtn., Inc., 90 AD3d 1127, 1131 [2011]; Liberman v Worden, 268 AD2d 337, 339 [2000]). Turning to plaintiff’s fourth and fifth causes of action for breach of fiduciary duty, each [*4]is subject to a three-year statute of limitations as “the remedy sought is purely monetary in nature and it cannot be said that an allegation of fraud is essential to [these] claim[s]” (Weight v Day, 134 AD3d 806, 808 [2015]; see CPLR 214 [4]; see generally IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 [2009]; compare New York State Workers’ Compensation Bd. v Consolidated Risk Servs., Inc., 125 AD3d 1250, 1253-1254 [2015]). Furthermore, the statute of limitations for breach of fiduciary duty claims begins to run on the date that the fiduciary’s relationship with or administration of a trust ceases (see Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195, 201 [2008]; Matter of Therm, Inc., 132 AD3d 1137, 1138 [2015]; New York State Workers’ Compensation Bd. v Consolidated Risk Servs., Inc., 125 AD3d at 1253).”

“To prevail on a claim for aiding and abetting a breach of fiduciary duty, the cause of action must allege “(1) a breach by a fiduciary of obligations to another, (2) that the defendant knowingly induced or participated in the breach, and (3) that the plaintiff suffered damage as a result of the breach” (Kaufman v Cohen, 307 AD2d 113, 125 [2003]; see Torrance Constr., Inc. v Jaques, 127 AD3d 1261, 1264 [2015]). “A defendant knowingly participates in the breach of fiduciary duty when he or she provides substantial assistance to the fiduciary, which occurs when a defendant affirmatively assists, helps conceal or fails to act when required to do so, thereby enabling the breach to occur” (Schroeder v Pinterest Inc., 133 AD3d 12, 25 [2015] [internal quotation marks and citation omitted]; see Monaghan v Ford Motor Co., 71 AD3d 848, 850 [2010]).”