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ALTHOUGH THIS NON-TORT ACTION AGAINST THE NYC DISTRICT ATTORNEY DID NOT TRIGGER THE NOTICE OF CLAIM REQUIREMENT OF THE GENERAL MUNICIPAL LAW, IT DID TRIGGER THE NOTICE OF CLAIM REQUIREMENT OF THE COUNTY LAW (FIRST DEPT).

The First Department determined County Law 52, not General Municipal Law (GML) 50, applied to a “money had and received” lawsuit against the district attorney of New York County. Although the district attorney is considered a city employee for purposes the General Municipal Law, the district attorney is elected by the citizens of New York County and is subject to the provisions of the County Law. The General Municipal Law notice of claim requirement applies only to tort actions. However, the County Law notice of claim requirement applies to this action for money had and received. No notice of claim was filed:

Defendant falls back on the position that, even if no notice of claim was required under GML section 50-k, one was required under County Law section 52. …

Although this section also refers to GML sections 50-e and 50-i, the Court of Appeals has expressly held that it applies to non-tort claims … . Further, County Law section 52 applies to county employees … . Nevertheless, plaintiffs assert that in arguing for application of the County Law, the District Attorney is trying to have it both ways, since he claims to be a city employee for purposes of the General Municipal Law, but a county employee for purposes of the County Law. It is true that New York City law considers the District Attorney to be a city employee … . However, this is no reason not to apply County Law section 52, since there is no county-level government organization in the City of New York that could be considered the District Attorney’s employer for administrative purposes such as paying his or her salary. Moreover, the District Attorney is elected by the voters of New York County, not New York City. Finally, this Court has cited County Law section 52 in holding that a notice of claim is required before filing an action against the office of a District Attorney in the City of New York … . Slemish Corp. S.A. v Morgenthau, 2021 NY Slip Op 01370, First Dept 3-9-21

 

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PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT). ​

The Second Department determined MasterCard’s motion to dismiss this equitable subrogation and unjust enrichment action by plaintiff (Jetro) stemming from the the alleged hacking or attempted hacking of MasterCard credit card information from Jetro computer systems was properly granted. MasterCard has a contract with PNC, a bank, which provided that MasterCard could recover assessments against PNC because of the hacking. Jetro was required to indemnify PNC for those assessments and sued MasterCard to recover the payments. There was no contract between MasterCard and Jetro, so the only possible viable causes of action were equitable subrogation, money had and received and unjust enrichment, which were rejected because of the terms of the relevant contracts:

Pursuant to the doctrine of equitable subrogation, where the ” property of one person is used in discharging an obligation owed by another or a lien upon the property of another, under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lien-holder'” …

Here, Jetro’s indemnification obligation, set forth in its contract with PNC, was based on Jetro’s own “acts or omissions” relating to a data breach incident. The indemnification clause in the PNC-Jetro contract is broader than the obligation of PNC toward MasterCard with respect to data breaches. According to the complaint, the PNC-Jetro contract obligated Jetro to indemnify PNC for any penalties imposed by MasterCard, “even in cases when MasterCard violated the Standards or otherwise violated the law by imposing the assessment[s] in question.” In light of these contractual provisions, even accepting the allegations of the complaint as true … , in undertaking to indemnify PNC, Jetro satisfied its separate and distinct obligation to PNC, and it is not equitably subrogated to the rights of PNC as against MasterCard … . …

“The essential elements of a cause of action for money had and received are (1) the defendant received money belonging to the plaintiff, (2) the defendant benefitted from receipt of the money, and (3) under principles of equity and good conscience, the defendant should not be permitted to keep the money” … . ” The elements of a cause of action to recover for unjust enrichment are (1) the defendant was enriched, (2) at the plaintiff’s expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'” … .

Here, the subject penalties were collected or retained by MasterCard pursuant to its contract with PNC, which then sought indemnification from Jetro pursuant to PNC’s separate contract with Jetro. We agree with the Supreme Court that the exercise by MasterCard of its purported contractual rights against PNC was independent of the determination by PNC to enforce its indemnification rights against Jetro. Therefore, it cannot be said that MasterCard unjustly benefitted from its action, or that it would be inequitable to allow it to retain the subject funds … . Jetro Holdings, LLC v MasterCard Intl., Inc., 2018 NY Slip Op 07418, Second Dept 11-7-18

CONTRACT LAW (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/EQUITABLE SUBROGATION (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/MONEY HAD AND RECEIVED  (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/UNJUST ENRICHMENT (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/CREDIT CARDS (PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))/HACKING (CREDIT CARDS, PLAINTIFF RETAILER ATTEMPTED TO RECOVER PAYMENTS MADE TO A BANK STEMMING FROM THE HACKING OF MASTERCARD CREDIT CARD INFORMATION FROM THE RETAILER’S ACCOUNTS UNDER EQUITABLE SUBROGATION, MONEY HAD AND RECEIVED AND UNJUST ENRICHMENT THEORIES, COMPLAINT PROPERLY DISMISSED (SECOND DEPT))

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Elements of Conversion, Moneys Had and Received and Breach of Fiduciary Duty Causes of Action Described/Equitable Estoppel Did Not Apply to Toll Applicable Statutes of Limitations

The Third Department explained the elements of causes of action for conversion, aiding and abetting conversion, moneys had and received, breach of fiduciary duty, and aiding and abetting breach of a fiduciary duty.  The Third Department further held that the doctrine equitable estoppel did not toll the applicable statutes of limitations and delineates what the applicable statutes of limitations are.  With respect to conversion, moneys had and received and equitable estoppel, the court wrote:

“Conversion is an unauthorized exercise of dominion and control over” someone else’s property that “interferes with and is in defiance of the superior possessory right of the owner or another person” … . A claim can exist for aiding and abetting conversion if the aider-abettor has actual knowledge that the person who directly converted the plaintiff’s property did not own that property … . Here, the complaint alleges that defendant knew of and acquiesced in Jaques’ unauthorized personal purchases from plaintiff’s accounts, that the purchased items were delivered to and used to improve defendants’ home, and that defendant accepted the benefits of these converted items. These allegations stated a cause of action against defendant for aiding and abetting conversion. * * *

Plaintiff properly stated a cause of action against defendant for moneys had and received. The elements of such a cause of action are that the defendant received money belonging to the plaintiff and benefitted from that money, and that equity and good conscience will not permit the defendant to keep the money … . The complaint alleges that money stolen from plaintiff by Jaques was used to improve and maintain defendants’ home, and that defendant consented to these actions. Accepting the allegations as true, and reasonably inferring that the use of this money provided a benefit to defendant, the third cause of action was sufficient. * * *

Supreme Court erred in concluding that the doctrine of equitable estoppel tolled the statutes of limitations as raised by defendant. Although the doctrine precludes a defendant from relying on a “statute of limitations defense when the plaintiff was prevented from commencing a timely action by reasonable reliance on the defendant’s fraud, misrepresentation or other affirmative misconduct . . ., equitable estoppel does not apply where the misrepresentation or act of concealment underlying the estoppel claim is the same act which forms the basis of [the] plaintiff’s underlying substantive cause[s] of action” … . Torrance Constr., Inc. v Jaques, 2015 NY Slip Op 02813, 3rd Dept 4-2-15

 

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Agreement to Pay over $500,000 (Re: Prior Loans Allegedly Made Over a Period Time) Not Enforceable Because the Agreement Did Not Express Any Consideration—Past Consideration Is No Consideration Because the Detriment Did Not Induce the Promise

The Second Department determined that an agreement to pay over $500,000, allegedly constituting the amount of past loans made over a period of time, was not enforceable because the agreement did not express any consideration.  However, the cause of action for monies had and received properly survived summary judgment:

The lack of consideration for a note is a bona fide defense to payment thereof … . Generally, past consideration is no consideration and cannot support an agreement because “the detriment did not induce the promise” … . That is, “since the detriment had already been incurred, it cannot be said to have been bargained for in exchange for the promise” … . However, a “promise in writing and signed by the promisor or by his agent shall not be denied effect as a valid contractual obligation on the ground that consideration for the promise is past or executed, if the consideration is expressed in the writing and is proved to have been given or performed and would be a valid consideration but for the time when it was given or performed” (General Obligations Law § 5-1105 [emphasis added]).

Here, as indicated, the agreement did not express any consideration. Thus, it is not enforceable as a promissory note or as a contract (see General Obligations Law § 5-1105; Uniform Commercial Code § 3-104[1][a]-[d]; [2][d…). Samet v Binson, 2014 NY Slip Op -7643, 2nd Dept 11-12-14

 

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Elements of Fraud, Money Had and Received, and Unjust Enrichment Explained

In finding the allegations in the complaint insufficient, the Second Department explained the elements of causes of action for fraud, money had and received, and unjust enrichment:

The elements of a cause of action based on fraud are “a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury” … . The misrepresentation may be in the form of an omission of a material fact … . Although the question of what constitutes reasonable reliance is usually fact-intensive …, where the plaintiff alleges only that the defendant omitted a material fact when making a representation to another party, the plaintiff has failed to state a cause of action against either the representor or the representee … . * * *

“The essential elements of a cause of action for money had and received are (1) the defendant received money belonging to the plaintiff, (2) the defendant benefitted from receipt of the money, and (3) under principles of equity and good conscience, the defendant should not be permitted to keep the money”… . * * *

In a cause of action to recover damages for unjust enrichment, “[a] plaintiff must show 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” … . The plaintiff, in his complaint, did not identify any money that was retained … at his expense and, in any event, “[a]lthough privity is not required for an unjust enrichment claim, a claim will not be supported if the connection between the parties is too attenuated” … . Lebovits v Bassman, 2014 NY Slip Op 06061, 2nd Dept 9-10-14

 

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