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UNJUST ENRICHMENT CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED, CONVERSION DOES NOT LIE WHEN PROPERTY INVOLVED IS REAL PROPERTY (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined plaintiffs’ unjust enrichment cause of action should not have been dismissed and noted that a conversion cause of action does not lie where the property involved is real property. The facts of the case are too complex to fairly summarize here. In a nutshell the plaintiffs, to avoid paying a broker’s fee, arranged to have defendants’ deceased father purchase real property on their behalf. Defendants (the Passalacquas) took out a mortgage on the property (Wells Fargo mortgage), in violation of the agreement defendants’ father had with plaintiffs, which plaintiffs paid off when they sold the property. Plaintiffs sought to recover the amount of the mortgage from the Passalacquas under unjust enrichment and conversion theories:

Here, the amended complaint sufficiently alleges that the Passalacquas were unjustly enriched, at the plaintiffs’ expense, by the plaintiffs’ payment of the Passalacquas’ debt to Wells Fargo, and that it would be against equity and good conscience to permit the Passalacquas to retain what is sought to be recovered … . To the extent that the Passalacquas contend that they used proceeds of the Wells Fargo mortgage to benefit the premises, that contention involves factual issues not properly resolved on a motion to dismiss the complaint pursuant to CPLR 3211(a)(7) … . Contrary to the determination of the Supreme Court, the plaintiffs do not have an adequate remedy at law by suing to enforce the consolidated note … . Further, even if the plaintiffs are entitled to assignment of the consolidated note from Wells Fargo, obtaining such an assignment would require an action in equity … . The unjust enrichment cause of action is also not barred by the existence of the plaintiffs’ contract of sale with the Passalacquas’ late father … .

Contrary to the Passalacquas’ contention, advanced as an alternative ground for affirmance … , the unjust enrichment cause of action was timely asserted. The parties agree that the unjust enrichment cause of action is subject to a six-year statute of limitations (see CPLR 213[1]). Such a cause of action accrues “upon the occurrence of the alleged wrongful act giving rise to the duty of restitution” … . Here, the amended complaint alleges that the plaintiffs’ payment to Wells Fargo was necessitated by the Passalacquas’ default in making payments on the consolidated note, which resulted in Wells Fargo’s acceleration of the debt and the threat of a foreclosure action. Accordingly, this cause of action accrued, at the earliest, in late 2010, when the Passalacquas stopped making payments on the Wells Fargo consolidated mortgage. Mannino v Passalacqua, 2019 NY Slip Op 03961, Second Dept 5-22-19

 

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