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AMTRUST

Edelman & Edelman, P.C. and David M. Schuller, Esq., the attorneys who successfully represented a pedestrian in a personal injury action against Manhattan and Bronx Surface Transit Operating Authority (hereinafter referred to as “MABSTOA”), commenced this action against Chase Manhattan Bank and the Chase Manhattan Bank, N.A. (hereinafter referred to collectively as “Chase”) for allegedly making false misrepresentations regarding its custody of MABSTOA’s bank accounts, against which they sought to enforce the pedestrian’s judgment. Defendant Chase now moves for summary judgment dismissing the action on the ground that the fraud claim asserted against it is devoid of merit.

In a prior action for personal injuries against MABSTOA, the present attorney-plaintiffs, Edelman & Edelman, P.C. (Edelman) and David M. Schuller, successfully represented Stuart Salles in his capacity as court-appointed Committee for Bessie Schneider. The Schneider action was commenced in 1990 and came to a final resolution after protracted litigation, including a retrial, when, in December, 1998, the Court of Appeals denied leave to appeal from the Appellate Division, First Department’s affirmance of a judgment finding MABSTOA 100% liable and awarding Salles an annuity providing future annual payments and medical benefits plus an immediate cash payment award of approximately $ 1.5 million, of which $791,614 was to be paid to Salles for the benefit of Schneider and $684,006 was to be paid to Edelman in satisfaction of the contingency fee agreement between Salles and Edelman (hereinafter referred to as “the Schneider Judgment”).

The present case, brought by the Salles attorneys as plaintiffs, against Chase, arises from what plaintiffs allege were fraudulent misrepresentations by Chase regarding its custody of MABSTOA bank accounts, against which plaintiffs sought to enforce the Schneider Judgment. Plaintiffs contend that Chase’s alleged misrepresentations caused plaintiffs to suffer damages in the form of uncompensated attorney and staff time plus additional expenses incurred in the enforcement of the Schneider Judgment.

According to plaintiffs, when MABSTOA refused to comply with plaintiffs’ December 22, 1998 demand that it pay the immediately payable cash portion of the Schneider Judgment within six days, plaintiffs sought to enforce that judgment through presentment to Chase, which plaintiffs believed held MABSTOA accounts. Plaintiffs presented Chase with a restraining notice and two sheriff’s levies and executions, which required Chase to pay the cash amounts due to Salles and Edelman under the Schneider Judgment from the MABSTOA accounts. The complaint alleges that, in response to the sheriff’s levies and executions and plaintiffs’ restraining notices, Chase knowingly, intentionally and falsely represented that it held no MABSTOA accounts or assets, when, in fact, it had at least fifteen accounts in the name and/or for the benefit of MABSTOA, one of which contained nearly $3 million, more than a sufficient amount to satisfy the Schneider Judgment. The personal complaint details alleged stonewalling efforts and outright refusals to comply with the sheriff’s levies and executions by Chase.

Plaintiffs allege that Chase, acting on behalf of a valued customer, deliberately made these false representations and refused to comply with the sheriff’s levies and executions in order to impede plaintiffs’ ability to collect the Schneider Judgment.

The complaint further alleges that plaintiffs reasonably relied on Chase’s false representations, and that, as a result, Edelman was compelled to undertake additional unnecessary and uncompensated work, including bringing a CPLR Article 78 mandamus proceeding to compel MABSTOA to pay the amounts due under the Schneider Judgment. According to plaintiffs, although MABSTOA eventually paid the cash portion of the Schneider Judgment, it did so only in response to the Article 78 order to show cause and after Edelman had expended significant attorney and staff time and incurred additional expenses in seeking to enforce the Schneider Judgment, all of which allegedly were necessitated by Chase’s misrepresentations and refusals to comply with the sheriff’s levies and executions, and none of which were covered by plaintiffs’ contingency-fee agreement in the Schneider action.

The complaint asserted causes of action against Chase for, inter alia, common-law fraud, for a scheme to defraud in violation of Penal Law §§ 190.60 and 190.65, and for falsification of records pursuant to Banking Law § 672. Plaintiff attorneys claim compensatory damages of $100,000 in unpaid fees and expenses and seek punitive injury damages in addition to the claimed compensatory losses. In lieu of an answer, Chase filed a motion to dismiss the complaint for failure to state a claim and for lack of standing pursuant to CPLR §3211(a)(7). Supreme Court granted Chase’s motion holding, inter alia, that plaintiffs lacked standing to sue and that they suffered no damages as the Schneider Judgment had been paid in full. The Appellate Division, First Department, affirmed the dismissal of all the claims, except one; it reinstated the attorney-plaintiffs’ cause of action for common-law fraud. Specifically, the court found that the complaint alleges the necessary elements of a claim for common-law fraud, namely defendant’s knowing misrepresentation of a material fact, made with intent to deceive, plaintiff’s reasonable reliance, and damages. After a lengthy period of discovery, defendant Chase now moves for summary judgment dismissing the remaining claim sounding in common law fraud.

It is well settled that the proponent of a motion for summary judgment must establish that there is no defense to the cause of action or that the cause of action or defense has no merit, (C.P.L.R. §3212[b]), sufficiently to warrant the court as a matter of law to direct judgment in his or her favor. This standard requires that the proponent of the motion tender sufficient evidence to eliminate any material issues of fact from the case, by evidentiary proof in admissible form. Thus, the motion must be supported by affidavit from a person having knowledge of the facts, by a copy of the pleadings and by other available proof, such as depositions. C.P.L.R. §3212(b).

Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action, or to tender an acceptable excuse for his or her failure to do so. Like the proponent of the motion, the party opposing the motion must set forth evidentiary proof in admissible form in support of his or her claim that material triable issues of fact exist.

This Court finds that defendant Chase has met its burden. In support of its motion for summary judgment, defendant relies upon the deposition testimonies of several of its employees, including Marion Grant and Monalisa Bradford, from the Holds and Levies Department, Gloria Dennery, Assistant Treasurer of Chase’s New York City Municipal Group and Lynne Federman, Esq., Vice-President and Assistant General Counsel, as well as certain documentary evidence. Such testimonial and documentary evidence establishes that on December 30, 1998, Chase was served with two Sheriff’s Levies and Executions for Manhattan and Bronx Surface Transit Operating Authority. The levies were marked as a priority with yellow tabs, which meant they were selected for immediate processing by the Holds and Levies Department. Ms. Grant of Chase’s Holds and Levies Department researched the judgment debtor’s name as it appeared on the levies, but found no accounts. Therefore, she stamped the levies with the “no accounts” stamp. She did not research the acronym “MABSTOA” because she neither knew nor had reason to know, based upon the information provided, that the acronym was used on any of the bike judgment debtor’s accounts.

To Be Cont….

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