Milennium Dev. & Constr., LLC v Pick 2025 NY Slip Op 00853 Decided on February 13, 2025 Appellate Division, Second Department brings to mind the proverb (from Plutarch and Suetonius) that Caesar’s wife should be free from suspicion as well as from accusation. In this case, which of course alleges attorney error, the matter was dismissed after procedural errors and delays took place.

“On or around February 21, 2020, the plaintiffs commenced this legal malpractice action against the defendants by filing a summons with notice. On March 17, 2020, the defendants demanded the service of a complaint. On April 8, 2021, the defendants moved pursuant to CPLR 3012(b) to dismiss the action for failure to timely serve a complaint. The plaintiffs opposed and cross-moved pursuant to CPLR 3012(d) for leave to file and serve a late complaint and to compel the defendants to accept service thereof. The defendants opposed the plaintiffs’ cross-motion. In an order dated July 16, 2021, the Supreme Court granted the defendants’ motion and denied the plaintiffs’ cross-motion.

Subsequently, the plaintiffs moved for leave to renew and reargue their opposition to the defendants’ prior motion pursuant to CPLR 3012(b) to dismiss the action for failure to timely serve a complaint and their prior cross-motion pursuant to CPLR 3012(d) for leave to file and serve a late complaint and to compel the defendants to accept service thereof. The defendants opposed. In an order dated June 7, 2022, the Supreme Court granted the plaintiffs’ motion and, upon renewal [*2]and reargument, in effect, vacated the July 16, 2021 order, denied the defendants’ prior motion, and granted the plaintiffs’ prior cross-motion. The defendants appeal.”

“A motion for leave to renew “shall be based upon new facts not offered on the prior motion that would change the prior determination” (CPLR 2221[e][2]) and must “contain reasonable justification for the failure to present such facts on the prior motion” (id. § 2221[e][3]; see Constructamax, Inc. v Dodge Chamberlin Luzine Weber, Assoc. Architects, LLP, 157 AD3d 852, 853; JPMorgan Chase Bank, N.A. v Novis, 157 AD3d 776, 777). While a court has discretion to entertain renewal based on facts known to the movant at the time of the original motion, the movant must set forth a reasonable justification for the failure to submit the information in the first instance (see HSBC Bank USA, N.A. v Shahid, 189 AD3d 1008, 1010; JPMorgan Chase Bank, N.A. v Novis, 157 AD3d at 777; Hernandez v Nwaishienyi, 148 AD3d 684, 687). “[A] motion for leave to renew is not a second chance freely given to parties who have not exercised due diligence in making their first factual presentation” (Seegopaul v MTA Bus Co., 210 AD3d 715, 716; see Hernandez v Nwaishienyi, 148 AD3d at 687). Moreover, “[l]eave to renew is not warranted where the factual material adduced in connection with the subsequent motion is merely cumulative with respect to the factual material submitted in connection with the original motion” (Constructamax, Inc. v Dodge Chamberlin Luzine Weber, Assoc. Architects, LLP, 157 AD3d at 853 [internal quotation marks omitted]; see Deutsche Bank Natl. Trust Co. v Galloway, 214 AD3d 625, 626).

Here, the Supreme Court should have denied that branch of the plaintiffs’ motion which was for leave to renew. In addition to submitting the same facts, albeit with some elaboration and in slightly greater detail, that they had submitted in opposition to the underlying motion and on the underlying cross-motion, the plaintiffs presented certain new facts, which were known to them prior to the date on which they opposed the defendants’ prior motion and filed their prior cross-motion. Yet, the plaintiffs failed to set forth a reasonable justification for failing to present the new facts in connection with the underlying motion and cross-motion. Thus, the court improvidently exercised its discretion in granting that branch of the plaintiffs’ motion which was for leave to renew (see Constructamax, Inc. v Dodge Chamberlin Luzine Weber, Assoc. Architects, LLP, 157 AD3d at 853; JP Morgan Chase Bank, N.A. v Novis, 157 AD3d at 777).

The Supreme Court also improvidently exercised its discretion in granting that branch of the plaintiffs’ motion which was for leave to reargue. “A motion for leave to reargue shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion” (Sokolnik v Voronova, 221 AD3d 1036, 1036 [internal quotation marks omitted]; see CPLR 2221[d][2]; JPMorgan Chase Bank, N.A. v Novis, 157 AD3d at 778). Here, the plaintiffs acknowledged that the court, in the July 16, 2021 order, did not overlook or misapprehend relevant facts or misapply the law in granting the defendants’ prior motion pursuant to CPLR 3012(b) to dismiss the action for failure to timely serve a complaint and denying the plaintiffs’ prior cross-motion pursuant to CPLR 3012(d) for leave to file and serve a late complaint and to compel the defendants to accept service thereof, thus requiring the denial of that branch of the plaintiffs’ motion which was for leave to reargue (see Degraw Constr. Group, Inc. v McGowan Bldrs., Inc., 178 AD3d 772, 773; cf. Fein v Fein, 192 AD3d 1083, 1085).”

Silver v Baker Botts L.L.P. 2025 NY Slip Op 00732 Decided on February 06, 2025 Appellate Division, First Department tells us that the burden is not high.

“It is well established that the relationship of client and counsel is one of fiduciary reliance and that “[t]he duty to deal fairly, honestly and with undivided loyalty superimposes onto the attorney-client relationship a set of special and unique duties, including maintaining confidentiality, avoiding conflicts of interest, operating competently, safeguarding client property and honoring the clients’ interests over the lawyer’s” (Johnson v Proskauer Rose LLP, 129 AD3d 59, 72 [1st Dept 2015] [internal quotation marks omitted]). Thus, an action for breach of fiduciary duty “requires only that the plaintiff identify a conflict of interest which amounted merely to a substantial factor in [the plaintiff’s] loss” (Ulico Cas. Co. v Wilson Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10 [1st Dept 2008] [internal quotation marks omitted]).

Here, the complaint alleges that the breach of fiduciary duty claim was based on Baker Botts having engaged in activities involving conflicts of interest, including advising Silver regarding the collection of his firm’s management fees at a rate of 33%, while knowingly failing to disclose impairments in Silver’s investors’ portfolio, and controlling all communications, meetings, and calls with Silver’s insurance companies, which were self-serving and to the detriment of Silver. While Baker Botts asserts that this claim should be dismissed as duplicative of the dismissed legal malpractice claim (see Ullmann-Schneider v Lacher & Lovell-Taylor, P.C., 121 AD3d 415, 416 [1st Dept 2014]), absent the written retainer agreement, which was not included in the record on appeal, a defense as to the scope of its representation cannot conclusively be established (see Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 270-271 [1st Dept 2004]).”

“”[A]s a dispute exists as to the application of the retainer agreement as to defendant, plaintiffs need not elect their remedies and may pursue a quasi-contractual claim for unjust enrichment, as an alternative claim” (Chowaiki & Co. Fine Art Ltd. v Lacher, 115 AD3d 600, 601 [1st Dept 2014]). Further, Silver’s claims of excessive billing and related conduct, which actions are not alleged to have adversely affected their claims or defenses in the underlying action, are not, at this juncture, redundant of the legal malpractice claim.”

It’s unusual to obtain a default judgment against an attorney, but even more unusual to lost the resulting inquest when no damages are demonstrated. That’s what happened in Bobbo Prop. Mgt., Inc. v Faulkner 2025 NY Slip Op 00646 Decided on February 5, 2025 Appellate Division, Second Department.

“In May 2013, the plaintiff commenced this action against, among others, the defendant David V. Faulkner, the plaintiff’s former attorney. The plaintiff alleged, inter alia, that Faulkner was retained to represent the plaintiff in tax certiorari proceedings pursuant to Article 7 of the Real Property Tax Law regarding assessments for the 2010/2011 and 2011/2012 tax years and that Faulkner failed to commence those proceedings within the applicable statute of limitations. In an order dated January 22, 2018, the Supreme Court granted the plaintiff’s oral application to strike Faulkner’s answer and for leave to enter a default judgment against him and set the matter for an inquest. After an inquest on the issue of damages, in a decision dated February 3, 2020, the court found that the plaintiff had failed to establish entitlement to damages. Subsequently, a judgment dated January 20, 2023, was entered in favor of Faulkner and against the plaintiff dismissing the complaint insofar as asserted against Faulkner. The plaintiff appeals.

At an inquest, the plaintiff bears the burden of setting forth a prima facie case as to damages (see Oparaji v 245-02 Merrick Blvd, LLC, 149 AD3d 1091, 1092; Vested Bus. Brokers, Ltd. v Ragone, 131 AD3d 1232, 1234-1235). In a legal malpractice action, “[w]here the injury suffered is the loss of a cause of action, the measure of damages is generally the value of the claim lost” (Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 42). In a tax certiorari proceeding challenging a property tax assessment, the petitioner is, at a minimum, required to demonstrate the existence of a valid and credible dispute regarding valuation (see Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92 NY2d 179, 191; Matter of Traditional Links, LLC v Board of Assessors of the Town of Riverhead, 224 AD3d 911, 913), “‘which will most often be accomplished by submission of a detailed, competent appraisal based on standard, accepted appraisal techniques and [*2]prepared by a qualified appraiser'” (Matter of Trump Vil. Section 4, Inc. v Tax Commn. of the City of N.Y., 206 AD3d 746, 747, quoting Matter of Boffa v Assessor and Bd. of Assessment Review of the City of Middletown, 154 AD3d 934, 935).”\

Here, the attorney who represented the plaintiff for the tax years 2009/2010 and 2012/2013 testified at the inquest that he had obtained gross refunds in the amount of $50,447.30 for the 2009/2010 tax year and in the amount of $48,354.36 for the 2012/2013 tax year. However, the plaintiff failed to submit any evidence relating to loss of gross refunds for the 2010/2011 and 2011/2012 tax years. Accordingly, the Supreme Court properly dismissed the complaint insofar as asserted against Faulkner.”

In Dodenc v Dell & Dean, PLLC 2025 NY Slip Op 00650 Decided on February 5, 2025
Appellate Division, Second Department Plaintiff lost an auto accident case on the question of the Threshold, which is the question of whether plaintiff suffered “serious physical injury” under the insurance law. The No-Fault provisions of the insurance law were written to weed out injuries that did not meet the threshold, and to require that insurance companies provide payment for all medical costs of an auto accident in return.

“On February 24, 2013, the plaintiff Vasilje Dodenc (hereinafter the injured plaintiff), a pedestrian, allegedly was injured when he was struck by a vehicle. The injured plaintiff and his wife, the plaintiff Elizabeth Dodenc, retained the defendant to commence an action, inter alia, to recover damages for personal injuries against the owner and operator of the vehicle. By order dated January 18, 2018, the Supreme Court granted a motion by the owner and operator of the vehicle for summary judgment dismissing the complaint on the ground that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident.

In June 2020, the plaintiffs commenced this action, among other things, to recover damages for legal malpractice, alleging that the defendant was negligent in its representation of the plaintiffs in the underlying personal injury action. The defendant moved for summary judgment dismissing the complaint. In an order entered December 6, 2021, the Supreme Court, inter alia, denied that branch of the defendant’s motion which was for summary judgment dismissing the cause of action alleging legal malpractice. The defendant appeals.

“A plaintiff seeking to recover damages for legal malpractice must establish that (1) the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and (2) the attorney’s breach of this duty proximately caused the plaintiff to sustain actual and ascertainable damages” (McGlynn v Burns & Harris, Esq., 223 AD3d 733, 734-735 [internal quotation marks omitted]; see Nill v Schneider, 173 AD3d 753, 755). “Even [*2]if a plaintiff establishes the first prong of a legal malpractice cause of action, the plaintiff must still demonstrate that he or she would have succeeded on the merits of the action but for the attorney’s negligence” (Di Giacomo v Michael S. Langella, P.C., 119 AD3d 636, 638; see Valley Ventures, LLC v Joseph J. Haspel, PLLC, 102 AD3d 955, 956). “To succeed on a motion for summary judgment dismissing a legal malpractice action, a defendant must present evidence in admissible form establishing that at least one of the essential elements of legal malpractice cannot be satisfied” (Schmidt v Burner, 202 AD3d 1117, 1119; see Valley Ventures, LLC v Joseph J. Haspel, PLLC, 102 AD3d at 956).

Here, in support of its motion, the defendant submitted evidence demonstrating that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the accident. The defendant thus established, prima facie, that the plaintiffs would not have succeeded on the merits of the underlying personal injury action (see Verdon v Duffy, 120 AD3d 1343, 1344; cf. Detoni v McMinkens, 147 AD3d 1018, 1020). In opposition, the plaintiffs failed to raise a triable issue of fact.

The plaintiffs’ remaining contentions are without merit.

Accordingly, the Supreme Court should have granted that branch of the defendant’s motion which was for summary judgment dismissing the cause of action to recover damages for legal malpractice.”

Genesis REOC Co., LLC v Poppel 2025 NY Slip Op 30387(U) January 31, 2025 Supreme Court, New York County Docket Number: Index No. 156733/2017 Judge: Melissa A. Crane is a well written guide to a common issue. In complex corporate (or hedge fund) transactions, whom does the attorney represent? Here the issue is whether the attorneys represented one or more than one participant.

“By this motion, plaintiffs, GENESIS REOC COMPANY (Genesis Reoc), LLC, JAZZ
REALTY II, LLC, individually and on behalf of Genesis REOC Company, LLC, and Jazz Genesis II, LLC, and JAZZ GENESIS II, LLC, move to compel defendants to produce
documents defendants have designated as privileged. For the following reasons, the court grants the motion to the extent that some limited production is warranted for an in camera review. However, the requests themselves are too broad given the emergence of a serious threshold issue—namely whether or not defendants really were plaintiffs’ attorneys.

Plaintiffs are not now entitled to every single communication defendants had with Hutson concerning the underlying transactions. Rather, at this juncture, plaintiffs are entitled to documents, if any, shedding light on the threshold issue. This is because only if defendants were actually plaintiffs’ attorneys can this lawsuit for legal malpractice proceed.

Thus, this motion presents somewhat of a catch-22 problem. This is because, whether
plaintiffs are entitled to the documents turns on whether they were a client of defendants, yet, the proof of whether plaintiffs were clients could very well depend on some of the documents defendants want to shield as privileged.

Defendants contend that they should not have to produce because plaintiffs were never
their clients. They contend that their true client was Karim Hutson and that producing the documents plaintiffs have demanded would violate the attorney-client privilege with Hutson.”

“For example, EDOC 193 starts out as an email, dated January 31, 2013, from defendant
Poppel to Andy Stone, the principal of Genesis REOC and Jazz Realty. Poppel attached various documents pertinent to an imminent real estate deal. About 15 minutes later, Mr. Stone replied complaining about the volume of paperwork and stating “Stu, as our attorney on this and looking out for my best interests, can you rep that I should have NO concerns with any of these since clearly, there is no time to review them? Don’t I need to get another attorney involved?” [EDOC 193 pg 3 (emphasis added)].

Mr. Poppel wrote back later that evening to provide summaries of the documents. At no
point did he even try to correct the impression Mr. Stone had that Poppel was his attorney “looking out for [his] best interests.” In fact, Mr. Poppel acted akin to Mr. Stone’s attorney by providing these summaries, including legal conclusions, of the documents he had sent earlier that day.

EDOC 191 is also illuminating. On January 16, 2013, Hutson wrote an email to a third
party in which he cc’d Stone and Poppel:
“Rich, [h]ere are the docs for Jazz. You can ask Stu Poppel, our deal attorney, any
questions. Stu, Rich is Andy’s CFO and is settling up the accounts.” (emphasis added)

Clearly, Mr. Hutson believed that Poppel was both his lawyer and Mr. Stone’s.
Next, EDOC 199 includes an October 2014 email from Mr. Williams to Hutson, Stone
and Poppel. Williams writes:
“To all: I attach an email I received from the ADC representative last night. I am
available to discuss all day except the period from noon to 2:00pm. Charles.”

Later that day, Mr. Williams sent another email to Poppel, Hutson and Stone. The subject line of the email reads “confidential.” The email discussed the negotiations between ADC and Genesis with Williams writing:
“[w]hile the references to the numbers other than 1 & 8 are important for the negotiation of the sales agreement, I don’t think the time to raise them is now. I advise that we wait until (if?) ADC commits to the fundamental pre condition that they provide a number for the consideration of Genesis as the basis for negotiations.” (emphasis added)
Williams continues:
“… it’s ADC obligation and burden to develop and provide to Genesis for
consideration a new structure for the Project…” Williams ends the email saying, “I’m
drafting a reply to the Ralph Dawn email for consideration.”
These emails reflect that Williams was providing legal and business advice on the underlying deal to individuals who included Stone.”

“ORDERED THAT the court grants the motion to the extent that defendants are to take
another look at the documents they have held back on the grounds of privilege to isolate those documents that bear on the issue of whether or not plaintiffs are defendants’ clients, and otherwise denies the motion; and it is further
ORDERED THAT, upon that review, defendants are to send these documents to the court
in hard copy for an in camera review;”

Peck v Milbank LLP 2025 NY Slip Op 30180(U) January 17, 2025 Supreme Court, New York County Docket Number: Index No. 152290/2022 Judge: Andrew Borrok is a claim involving breach of fiduciary duty and violation of Judiciary Law 487. Several issues were recently decided.

“Upon the foregoing documents and for the reasons set forth below, Ian Peck and Stubbs Holdings, LLC (collectively, Ian Peck)’s motion for leave to file a second amended complaint (the SAC; NYSCEF Doc. No. 123) is DENIED.

Reference is made to a prior Decision and Order of this Court, dated July 29, 2024 (the Prior Decision; NYSCEF Doc. No. 107). The facts of this case are set forth in the Prior Decision, and familiarity is presumed. Pursuant to the Prior Decision, the Court granted Milbank LLP, Milbank, Tweed, Hadley & Mccloy, LLP (collectively, Milbank)’s and Georgiana Slade’s motion to dismiss (Mtn. Seq. No. 002) as to Ian Peck’s claims sounding in fraud and breach of fiduciary duty and denied dismissal as to the claim sounding in violation of Judiciary Law § 487.

The Court held that Ian Peck failed to state a cause of action for breach of fiduciary duty because “the FAC does not adequately identify statements or omissions to the Trustee when a duty was owed” (id. at 9). Significantly, the Court dismissed the fraud and breach of fiduciary duty claims without prejudice because Liliane Peck (the Trustee) had not yet been deposed, and the deposition might have potentially formed the basis for the claims (id.).”

“Ian Peck argues, in sum and substance, that Ms. Slade is liable for breach of fiduciary duty as a fiduciary to Ian Peck’s fiduciary, the Trustee, because Ms. Slade’s failed to disclose an alleged conflicts of interest based on certain investments that her father had with Norman Peck when the Trustee made certain decisions and received certain advice. But, the Trustee knew of Ms. Slade’s father’s investments and considered them de minimus and immaterial and testified in sum and substance that Ms. Slade did not influence her allocation decisions.”

“However, these new allegations do not allege an act or omission that is separate and apart from the statements and omissions to the tribunal that underpin the Judiciary Law claim. As such, these proposed amendments would not remedy the deficiencies in the first amended complaint as to the breach of fiduciary duty claim.”

Xiuwen Qi v Hang & Assoc., PLLC 2025 NY Slip Op 30306(U) January 24, 2025 Supreme Court, New York County Docket Number: Index No. 151821/2023 Judge: Mary V. Rosado discusses the exception to mandatory arbitration of attorney fee claims. Here, Plaintiff sued the law firm, and the law firm counterclaimed for fees. Is that counterclaim subject to mandatory arbitration or not? Answer: it is not.

“Plaintiff, who was a former client of Defendants, is seeking damages arising from Defendants’ alleged malpractice in a wage and hour lawsuit. In response to Plaintiff’s Complaint, Defendants asserted a counterclaim alleging quantum meruit damages arising from 134 hours of labor representing Plaintiff in his wage and hour dispute and $1,172.70 in costs (see NYSCEF Doc. 10). In Motion Sequence 001, Plaintiff moved to dismiss Defendants’ counterclaim arguing that this Court lacks subject matter jurisdiction over the quantum meruit counterclaim pursuant to the mandatory arbitration requirements of the Attorney Fee Dispute Resolution Program. In opposition, Defendants argued that the quantum meruit counterclaim is not subject to arbitration as resolution of the quantum meruit counterclaim involves resolving legal issues which are intertwined with Plaintiffs non-arbitrable malpractice claim. At oral argument dated October 31, 2023, this Court declined to rule on the motion to dismiss until the parties’ retainer agreement was produced. In a Decision and Order dated May 2, 2024 (NYSCEF Doc. 55), this Court denied the motion to dismiss, without prejudice, with leave to renew upon production of the retainer agreement. Plaintiff has produced the retainer agreement and seeks leave to renew his motion to dismiss. Defendants oppose Plaintiffs renewed application and argues nothing in the retainer agreement should change this Court’s decision to deny dismissal of Defendants’ counterclaim.”

“Claims and counterclaims involving substantial legal questions, including professional malpractice or misconduct, are not subject to arbitration under 22 NYCRR 137.l(b)(3) (see also Peters v Collazo Florentino & Keil LLP, 117 AD3d 432 [1st Dept 2014]). Whether Defendants have a quantum meruit claim necessarily hinges on whether they were terminated for cause, which is inextricably intertwined with the issues being litigated in this legal malpractice case (see also Brill & Meisel v Brown, 113 AD3d 435, 436 [1st Dept 2014]). Because the counterclaim’s existence is dependent on the resolution of the legal malpractice claim being litigated in this Court, the Court retains subject matter jurisdiction, and upon renewal, Plaintiff’s motion to dismiss is denied. The branch of Plaintiff’s motion seeking leave to reargue is denied as Plaintiff has failed to show that the Court overlooked any dispositive issues of fact or l”aw.

Dixie v Scheer 2025 NY Slip Op 30167(U) January 11, 2025 Supreme Court, New York County Docket Number: Index No. 654690/2022 Judge: Andrea Masley is a primer on how one corporate entity can take over another. Candidly, the level of detail is greater than can be summarized in this blog. Here are some of the details.

“Plaintiff Dino Dixie brings this action individually and derivatively on behalf of New Amsterdam Distributors, LLC (NAO) and Terriodiol Ohio LLC (TO). Dixie alleges that he was a founding member of NAO, which through NYCI Holding, LLC (NYCI) ,m 2, 20, 28.) NAO is the sole shareholder of NYCI. (Id. ,i 28.) Dixie’s ownership interest in NAO is 13%. (Id. ,i 2.) In May 2015, NAO and nonparty EPMMNY, LLC discussed the formation of a partnership to jointly pursue a medical cannabis license.2 (Id. ,i 9.) NAO retained defendants Sheer and BSK to provide legal services, including the formation of NYCANNA for the purpose of pursuing the license. (Id. ,i 10.) Upon NYCANNA’s formation, Scheer and BSK “simultaneously became attorneys for NAO, NYCI, and NYCANNA.” (Id.)

On November 20, 2016, Scheer sent NAD’s principals notice that NYCANNA was merging with nonparty NY Medicinal Research and Caring, LLC (NYMRC) to assist with financing. (Id. ,i 13.) NYMRC was owned by nonparty High Street Capital Partners (High Street). (Id.) High Street is Acreage’s predecessor.3 This merger allegedly diluted Dixie’s equity interest as it substantially divested NAD’s members of their ownership interests. (Id. ,i 14.) Specifically, Dixie alleges that Scheer and BSK conspired with the incoming investors, including NYMRC, NYCI, and Acreage, to divest NAO of its interest in NYCANNA. (Id.)

In May 2017, the New York State Department of Health awarded a medical marijuana license to NY CAN NA. (Id. ,i 16.) Thereafter, Scheer introduced Dixie to Dai no, who had an existing relationship with Scheer. (Id. ,i 17.) At Scheer’s recommendation, Daina became a member and manager of NAO despite not having experience in the industry. (Id.) Dixie alleges he was sidelined as Scheer and Dai no essentially took over NAO. (Id. ,i 19.)

“In May 2018, NYCI sold its fifty percent interest in NYCANNA to High Street.” (Id. ,i 20.) Dixie alleges that Scheer structured the transaction so that High Street/Acreage acquired all of NYCANNA’s equity. (Id.) NAD’s officers, including Dixie were removed as NYCANNA’s management, leaving it a mere shell company. (Id.) This transaction came about after Daina met with representatives from High Street. After this meeting, Daina informed Dixie “that there was going to be a $2 million cash call, and that if he did not meet the call by investing the necessary cash, his percentage ownership in NYCANNA would be reduced.” (Id. ,i 22.) Daina then presented an alternative to the cash call – selling NYCANNA to High Street/Acreage Holdings. (Id. ,i 23.) “Daina said that the transaction needed to be approved by the NYCANNA shareholders within 8 hours” and represented that the value of the “transaction would be approximately $40 million based on the stock valuation.” (Id.) The consideration for the sale of NYCl’s interest in NYCANNA to High Street/Acreage was cash and stock in Acreage. (Id. ,i 20 [NYCI sold its in interest “in exchange for cash and class D units of High Street”].)

Dixie alleges that Scheer violated his fiduciary duty to the NAO members by falsely advising that the transaction was favorable to NYCANNA, NYCI and NAO, and immediate approval was necessary, depriving them “of the opportunity to conduct a proper due diligence investigation of the proposed transaction.” (Id. ,I 25.) Dixie and the other NAO members approved the transaction based upon Daina and Scheer’s representations. (Id.) On September 25, 2018, High Street/Acreage announced it would go public in Canada by performing a reverse takeover of a publicly traded entity, nonparty Applied Inventions Management Corp. (Id. ,I 27.) “As a part of the transaction, a 6-month lockup period governed High Street/Acreage shares.” (Id.) On November 15, 2018, High Street/Acreage went public, starting the lockup period. (Id. ,I 28.) The lockup period had three phases, “ending on May 15, 2019, as follows: (a) First 2 months (until January 15, 2019): all Acreage shares were to be locked up; (b) Next 2 months ( January 15, 2019 to March 14, 2019): 5% of Acreage shares could be transferred; and (c) Next 2 months (March 15, 2019 to May 14, 2019): Another 15% of Acreage shares could be transferred.” (Id. ,I 34.) Scheer estimated Acreage’s stock “would be worth about $24 per share during the course of this redemption period.” (Id. ,I 35.) However, right before the first tranche of stock was eligible for release, Scheer informed the NAO members that their shares were not going to be released, blaming such on the failure by some NAO members to sign additional necessary paperwork. (Id. ,I 36.) Those members signed the additional documents but delays still occurred. (Id. ,I,I 37-38.) On March 25, 2019, NYCl’s board of managers held a special meeting to authorize the transfer of 20% of Acreage’s shares from NYCI to NAO. (Id. ,I 39.) They also “authorized the transfer of all Acreage shares due to Daina (through an entity) from NYCI to the entity’s name.” (Id.) After further delay, on April 16, 2019, Scheer emailed Acreage, seeking transfer of the Acreage shares to the NAO members. (Id. ,I 39.) Acreage responded that “more than a letter was needed before a transfer of shares could be approved.” (Id. ,I 43.) On April 25, 2019, Scheer sent an email to NYCl’s board of managers “stating that the initial NYCI authorization to transfer shares did not meet Acreage’s requirements, and that that the NYCI Board of Directors needed to specifically approve the distribution directly from NYCI to the NAO members.” (Id. ,I 44.) Dixie alleges further delay in the transfer, which caused him to miss the opportunity to sell his shares during an Acreage stock rally in April 2019. (Id. ,I,I 45-48.) The stock reached a high of $24.13 per share, but it was not until September 2019 that Dixie received 50% of his shares; the stock value at that point was around $2 a share. (Id. ,I,I 48, 50.) “Only in March 2022 did Dixie receive the balance of his stock transfer at barely over penny stock value.” (Id. ,I 55.)”

“Breach of Fiduciary Duty

Dixie alleges that Scheer and BSK owed a fiduciary duty to Dixie and NAD’s other members and breached that duty by (1) “failing to diligently pursue the necessary process for transferring Acreage shares from NYCI to Dixie and other individual members of NAO once the NYCI Board of Managers authorized it” and (2) giving Acreage stock into their own individual names.” (NYSCEF 1, Complaint “erroneous tax advice regarding the purported tax consequences of transferring the ,m 65-66.) Scheer and BSK assert that this cause of action is time barred as any claim in connection with the alleged delay in the transfer of Acreage stock accrued on May 15, 2019. There is a dispute whether the three- or six-year statute of limitations applies. “New York law does not provide a single statute of limitations for breach of fiduciary duty claims. Rather, the choice of the applicable limitations period depends on the substantive remedy that the plaintiff seeks. Where the remedy sought is purely monetary in nature, courts construe the suit as alleging “injury to property” within the meaning of CPLR 214 (4), which has a three-year limitations period. Where, however, the relief sought is equitable in nature, the six-year limitations period of CPLR 213 (1) applies. Moreover, where an allegation of fraud is essential to a breach of fiduciary duty claim, courts have applied a six-year statute of limitations under CPLR 213 (8).” (IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 [2009] [ citations omitted].)

Dixie asserts that the six-year limitations period applies, because his claim for unjust enrichment is equitable. However, the only relief sought in the complaint is monetary. (See NYSCEF 1, Complaint at 23.) Dixie argues that he will be seeking disgorgement of profits and legal fees as the result of the breach, but he has not amended his complaint to include such relief. A three-year statute of limitations applies where a plaintiff “seeks purely monetary relief, not equitable relief for which an award of monetary damages would not be adequate.” (VA Mgt., LP v Estate of Valvani, 192 AD3d 615, 615 [1st Dept 2021 ]. ) Where a plaintiff uses “the term ‘disgorgement’ instead of other equally applicable terms such as repayment, recoupment, refund, or reimbursement,” it “should not be permitted to distort the nature of the claim so as to expand the applicable limitations period from three years to six.” (Access Point Med., LLC v Mandell, 106 AD3d 40, 44 [1st Dept 2013]; see also VA Mgt., LP, 192 AD3d at 615 [stating that “[p]laintiff’s characterization of that relief as ‘disgorgement’ of [defendant’s] compensation does not convert it into a claim for equitable relief to which the six-year statute of limitations would apply” (citations omitted)].) Also unavailing is Dixie’s assertion that the breach of fiduciary claim is rooted in fraud. The breach of fiduciary duty claim is based on two alleged actions – “failing to diligently pursue the necessary process for transferring the Acreage shares” and giving “erroneous tax advice.” (NYSCEF 1, Complaint ,m 65-66.) Although Dixie argues in his opposition brief that Scheer and BSK induced Dixie to authorize and sign off on the mergers without informing him of the terms or conditions of such, that conduct is not alleged in connection with the breach of fiduciary duty claim. The conduct that is alleged involves “allegedly impaired professional judgment;” this claim as plead is not essentially a fraud claim. (See Access Point Med., LLC, 106 AD3d at 44 [citation omitted].) Nevertheless, despite alleging a separate cause of action for fraud, the complaint is devoid of any allegation that Dixie “justifiably relied on any misrepresentation.” (VA Mgt., LP, 192 AD3d at 616 [citation omitted] [declining to apply the six-year limitations period where plaintiff failed to allege justifiable reliance]; see also Lama Holding Co. v Smith Barney Inc., 88 NY2d 413, 421 [1996] [stating elements of fraud cause of action are “a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury” (citations omitted)].) Thus, the three-year statute of limitations applies.”