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THE COMPLAINT BY THE CONDOMINIUM BOARD OF MANAGERS AGAINST THE CONDOMINIUM MANAGING AGENT STATED DISTINCT CAUSES OF ACTION FOR BOTH BREACH OF FIDUCIARY DUTY AND BREACH OF CONTRACT; THE LAW FIRM WHICH REPRESENTED THE MANAGING AGENT IN AN UNRELATED MATTER INVOLVING THE CONDOMINIUM SHOULD NOT HAVE BEEN DISQUALIFIED (SECOND DEPT).

The Second Department, reversing Supreme Court in this dispute between the board of managers of Brightwater Condominium and the condominium managing agent, FirstService, determined the complaint stated causes of action for both breach of fiduciary duty and breach of contract, and the law firm (Woods) which represented FirstService in another matter with only a tangential relationship with Brightwater should not have been disqualified:

Managing agents of a condominium may owe a fiduciary duty to the condominium, depending on the functions they assume … . A fiduciary, in the context of condominium management, “is one who transacts business, or who handles money or property, which is not [its] own or for [its] own benefit, but for the benefit of another person, as to whom [it] stands in a relation implying and necessitating great confidence and trust on the one part and a high degree of good faith on the other part” … . …

Although a cause of action alleging breach of fiduciary duty which is based on the same facts and seeks identical damages is duplicative of a breach of contract cause of action and should be dismissed on that basis … , here, in addition to breaches of the management agreement, Brightwater alleges specific breaches of trust which are outside the duties set forth in the management agreement, such as misappropriation of funds, and instances of self-dealing, set forth with specificity. …

FirstService did not dispute Brightwater’s showing that no confidential information was obtained from FirstService by the Woods Firm in connection with that prior action. As there is no indication in the record that confidential information was disclosed, there is no basis for disqualification … . Board of Mgrs. of Brightwater Towers Condominium v FirstService Residential N.Y., Inc., 2021 NY Slip Op 02128, Second Dept 4-7-21

 

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