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Court dismisses claims for declaratory judgment and action for monies had and received against law firm; plaintiff lacked standing and failed to state cause of action

U.S.A. Design, Inc. v. Joseph Sitt, et al., Supreme Court, NewYork County, October 27, 2010

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In an action arising from a real estate investment, plaintiffs’ claims against the defendant law firm to recover the investment vehicle were dismissed for lack of standing and failure to state a cause of action. AGF&J member Barry Jacobs and associate Shari Sckolnick represented the defendant firm in an action for recovery of over $1,000,000 which was unilaterally wired by one of the plaintiffs into the defendant law firm’s attorney trust account without ever communicating with the law firm, and then later released to a third party. Plaintiffs asserted claims for a declaratory judgment, breach of fiduciary duty, moneys had and received, fraud and unjust enrichment against the defendant law firm. AGF&J filed a pre-answer motion to dismiss the Complaint which persuaded plaintiffs to voluntarily discontinue their claims for breach of fiduciary duty, fraud and unjust enrichment.

In a Decision and Order dated October 27, 2010, Justice James A. Yates dismissed the remaining causes of action against the defendant law firm. Justice Yates found that one of the two plaintiffs lacked standing because the defendant law firm demonstrated by documentary evidence that he had not transmitted any funds to any accounts held by the defendant law firm.

With regard to the second plaintiff who deposited money into the firm’s attorney trust account, the Court found that the cause of action for a declaratory judgment improperly sought coercive relief. The Court also denied plaintiff’s request to treat that cause of action as one for breach of an implied contract or breach of fiduciary duty. The Court also found that plaintiff’s claim was time-barred because the only relief sought was monetary in nature, which is governed by a three year statute of limitations.

The Court found that the cause of action for moneys had and received was defective because the plaintiff explicitly acknowledged that the defendant law firm no longer had any of the funds transferred to it by plaintiff.