Opinion
Index No. 655585/2020
12-02-2021
Maria LANARAS, Plaintiff, v. PREMIUM OCEAN, LLC, Out of the Blue Wholesale, LLC, Out of the Blue Seafood, LLC, Juliana Paparizou, Mare Vostrum, LLC, Efraim Bason, Ronit Bason, Alexander Sarrigeorgiou, Defendant.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 23, 24, 25, 26, 27, 28, 29, 30, 34, 36, 45, 46, 47, 48, 49, 50, 51, 52, 60 were read on this motion to/for DISMISS.
Upon the foregoing documents, it is ordered that is motion is granted.
In this action, plaintiff Maria Lanaras alleges breach of contract, unjust enrichment, fraudulent conveyance, breaches of fiduciary duties, fraudulent inducement, equitable lien, and constructive trust. The defendants in this case are Juliana Paparizou, her businesses (Premium Ocean, LLC, Out of the Blue Wholesale, LLC, and Out of the Blue Seafood, LLC), her business partner Efraim Bason, her business partner's now ex-wife Ronit Bason, and Paparizou's husband Alexander Sarrigeorgiou.
BACKGROUND
Between 2013 and 2017, plaintiff Maria Lanaras loaned a total of $3.4 million to and for the benefit of Juliana Paparizou to assist Paparizou in starting a new business venture in New York, Premium Ocean LLC. Premium Ocean was established in 2012. It is managed and controlled by Paparizou and her business associates, Efraim Bason and his wife Ronit Bason. Paparizou allegedly told Lanaras that Efraim Bason was a highly experienced and knowledgeable businessman in the fish wholesale sector who was an expert in sales. Paparizou withheld from Lanaras the fact that Efraim Bason's former business venture, Local Ocean, was the subject of at least two lawsuits. Lanaras never conducted any due diligence on the companies that Paparizou managed and allegedly owned along with Efraim Bason. In 2014, Paparizou and the Basons created two related companies: Out of the Blue Wholesale, LLC and Out of the Blue Seafood, LLC. Paparizou and the Basons used the loan from Lanaras to fund these two additional companies.
The parties never put the terms of the loan in writing. To date, despite over five years of attempting to negotiate a reimbursement plan, Lanaras has not received any repayment of principal or interest on her substantial loan.
The complaint names Paparizou's husband, Alexander Sarrigeorgiou, in the fifth claim of relief (fraudulent conveyance under NY DCL § 273 ), the fourth claim of relief (unjust enrichment), and the eleventh claim of relief (constructive trust). The complaint identifies Sarrigeorgiou as a beneficiary of the allegedly fraudulent conveyances by virtue of his and his wife's joint property holdings, and, on information and belief, their joint bank accounts. Sarrigeorgiou moves to dismiss the claims against him for failure to state a cause of action.
DISCUSSION
I. Unjust Enrichment
A. Statute of Limitations
Defendant Sarrigeorgiou argues that the statute of limitations for unjust enrichment is three years ( Ingrami v Rovner , 45 AD3d 806, 808 [2d Dept 2007] ["the three-year statute of limitations of CPLR 214(3) governs here, since the plaintiff is seeking monetary, as opposed to equitable, relief (for the unjust enrichment claim)"]; Lambert v Sklar , 30 AD3d 564, 566 [2d Dept 2006] ["The Supreme Court properly dismissed the (cause) of action alleging unjust enrichment, as (it is) subject to a three-year statute of limitations"]).
Plaintiff argues that a six-year statute of limitations should apply ( Deutsche Bank v Vik , 142 AD3d 829, 829 [1st Dept 2016] ). In a "clear split on the issue between [the] Departments," the First Department has rejected a three-year statute of limitations in favor of a six-year statute of limitations (id. ). Defendant cites Underground Utilities, Inc. v Comptroller of City of New York , 170 AD3d 481, 481—82 (1st Dept 2019), which notably does not contradict Deutsche Bank (see Underground Utilities , 170 AD3d at 481-482 ["(p)laintiff did not commence this action until 2014, more than six years after the Comptroller's 2007 response"]).
This Court will apply the six-year statute of limitations for unjust enrichment. The last alleged transfer of money from Lanaras to Paparizou was made on February 21, 2017 (Complaint at ¶ 46). This transfer falls within a six-year statute of limitations. Therefore, the unjust enrichment claim is not time-barred.
B. Failure to State a Claim
To adequately plead unjust enrichment, a plaintiff must allege "that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered" ( Georgia Malone & Co. v Rieder , 19 NY3d 511, 516 [2012] ; see also Mandarin Trading Ltd. v Wildenstein , 16 NY3d 173, 182 [2011] ). The Court of Appeals held in Georgia Malone that an unjust enrichment claim need not establish privity between the parties, but at a minimum must "assert a connection between the parties that [is] not too attenuated" ( 19 NY3d at 517 ). There, the Court held that the relationship was too attenuated where plaintiff and defendant had no dealings with one another ( id. at 518 ). The Court of Appeals in Mandarin Trading Ltd. made clear that "there were no indicia of an enrichment that was unjust where the pleadings failed to indicate a relationship between the parties that could have caused reliance or inducement" ( 16 NY3d at 183 ).
Sarrigeorgiou is the husband of Lanaras's long-time friend Paparizou. While the two know one another, there were no dealings between Lanaras and Sarrigeorgiou. The pleadings do not include any allegations of a relationship between Sarrigeorgiou and Lanaras that could have caused reliance or inducement. Sarrigeorgiou's proximity to Paparizou and her businesses does not establish direct dealings with Lanaras. There is little mention of the interaction between Lanaras and Sarrigeorgiou at all. The motion to dismiss the unjust enrichment claim against Sarrigeorgiou is granted.
II. NY DCL § 273 Fraudulent Conveyance
Moving defendant argues that plaintiff did not adequately plead a claim under DCL § 273 and that, even if allegations based on information and belief suffice, the complaint still fails to state a claim for such relief.
Plaintiff bases several of the fraudulent conveyance allegations on "information and belief." Defendant argues that this is insufficient and that to demonstrate fraudulent conveyance, one must satisfy a heightened pleading standard, requiring particularity. Defendant cites Carlyle, LLC v Quik Park 1633 Garage LLC , in which the First Department dismissed a plaintiff's DCL § 273 claim "as the relevant allegations were all made upon information and belief" ( 160 AD3d 476, 477 [1st Dept 2018] [internal quotations omitted]). Plaintiff argues that there is a distinction between the particularity standard required for intentional fraudulent conveyance and the pleading standard for constructive fraudulent conveyance, which is what plaintiff is pleading. In response, defendant cites Avilon Automotive Group v Leontiev , No. 656007/2016, 2020 WL 1318510, at *8 (NY Sup. Ct. Mar. 17, 2020), where the court wrote "Plaintiffs also fail to state a constructive fraudulent conveyance claim as they plead only conclusory allegations that the conveyance was made without fair consideration and rendered the conveyor insolvent." For the purposes of discussion, the court will accept allegations upon information and belief in this case.
Still, plaintiff fails to state a claim for fraudulent conveyance. The constructive fraudulent conveyance standard requires that "the debtors made a conveyance, that they were insolvent prior to the conveyance or rendered insolvent thereby, and that the conveyance was made without consideration" ( Wall Street Assocs. v Brodsky , 257 AD2d 526, 528 [1st Dept 1999] ).
Plaintiff alleges that Paparizou and the Basons authorized regular distributions of company assets and revenues to themselves and/or to entities controlled by them. Plaintiff's submissions, including a bank account statement, show that Paparizou's distributions were deposited into personal accounts and joint accounts with her husband Sarrigeorgiou (Shapiro Aff. ¶ 9). To establish Sarrigeorgiou as a beneficiary of the allegedly fraudulent conveyance, plaintiff relies on the fact that Paparizou and Sarrigeorgiou share accounts and that money from the shared account has gone to maintain shared property and make mortgage payments. While Sarrigeorgiou may be a beneficiary, there is still the issue of whether plaintiff's allegations suffice to state a claim for fraudulent conveyance.
Plaintiff argues that, because each of these distributions allegedly was made without fair consideration and because the individual and collective insolvency of the Corporate Defendants, the distributions are fraudulent conveyances under NY DCL § 273. Defendant argues that plaintiff does not present evidence that the transfers made to Sarrigeorgiou were made without fair consideration. Plaintiff counters that conveyances made to controlling shareholders, officers or directors of an insolvent corporation are "presumptively fraudulent" ( CIT Grp./Commercial Servs., Inc. v 160-09 Jamaica Ave. Ltd. P'ship , 25 AD3d 301, 303 [1st Dept 2006] ).
Plaintiff's arguments are unconvincing. Plaintiff neither pleads facts nor provides evidence to support the claim of no fair consideration. On the contrary, plaintiff admits that Sarrigeorgiou had previously loaned money to Paparizou's business. This undercuts the claim that there was no fair consideration. Further, Sarrigeorgiou is not an officer and does not hold any role in the corporations, so the transfer is not presumptively fraudulent. Because the pleadings fail to establish an element of fraudulent conveyance, the motion to dismiss the DCL § 273 claim is granted.
The fraudulent conveyance claim does not render Sarrigeorgiou a necessary party. Sarrigeorgiou's interest in the joint account and joint properties align with Paparizou's interests in those assets. His interest is properly represented by Paparizou. He is not a necessary party.
III. Constructive Trust
To state a cause of action for a constructive trust, a plaintiff must allege "a confidential or fiduciary relationship, a promise, a transfer in reliance thereon, and unjust enrichment" ( Abacus Fed. Sav. Bank v Lim, 75 AD3d 472, 473 [1st Dept 2010] ). Plaintiff argues that the First Department has been liberal in its definition of constructive trusts.
Being family friend, without more, is not enough to satisfy even a liberal definition. Plaintiff cites cases that are factually distinct from the instant case. In both Panetta v. Kelly and Forbes v. Clarke , the parties purchased property together ( Panetta v Kelly , 17 AD3d 163, 163 [1st Dept 2005] ; Forbes v Clarke , 194 AD2d 393, 393 [1st Dept 1993] ). In Brand v. Lipton , the complaint set forth specific allegations that the defendant had "agreed to act as ‘constructive trustee’ of and to administer the tickets ... or to reconvey the tickets to their equitable owners," an arrangement the court noted was "pregnant with opportunity for abuse and unfairness" ( Brand v Lipton , 274 AD2d 534, 535 [2d Dept 2000] ). The relationship between Lanaras and Sarrigeorgiou is not comparable to those in the cases cited by plaintiff. Further, Lanaras makes no allegations that Sarrigeorgiou promised her anything. The constructive trust claim is deficient and the motion to dismiss is granted.
ORDERED that the motion of defendant Sarrigeorgiou to dismiss the complaint herein is granted and the complaint is dismissed in its entirety as against said defendant, with costs and disbursements to said defendant as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of said defendant; and it is further
ORDERED that the action is severed and continued against the remaining defendants; and it is further
ORDERED that the caption be amended to reflect the dismissal and that all future papers filed with the court bear the amended caption; and it is further
ORDERED that counsel for the moving party shall serve a copy of this order with notice of entry upon the Clerk of the Court (60 Centre Street, Room 141B) and the Clerk of the General Clerk's Office (60 Centre Street, Room 119), who are directed to mark the court's records to reflect the change in the caption herein; and it is further
ORDERED that such service upon the Clerk of the Court and the Clerk of the General Clerk's Office shall be made in accordance with the procedures set forth in the Protocol on Courthouse and County Clerk Procedures for Electronically Filed Cases (access ible at the "E-Filing" page on the court's website at the address www.nycourts.gov/supctmanh).