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Current Developments in the Commercial Divisions of the
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Posted: April 12, 2017

No Conspiracy to Breach Fiduciary Duty Claim When Underlying Tort Not Alleged

On March 29, 2017, Justice Oing of the New York County Commercial Division issued a decision in Siras Partners LLC v. Activity Kuafu Hudson Yards LLC, 2017 NY Slip Op. 50443(U), dismissing a civil conspiracy claim because the underlying tort was not alleged, explaining:

While New York does not recognize an independent cause of action for conspiracy to commit a civil tort, allegations of conspiracy are permitted to connect the actions of separate defendants with an otherwise actionable tort. In order to allege civil conspiracy, Siras must sufficiently allege a tort claim, and the following elements: (1) an agreement between two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties’ intentional participation in the furtherance of a plan or purpose; and (4) resulting damage or injury.

. . . The proposed cause of action for civil conspiracy provides that defendant 462-470, an affiliate of defendant Kuafu, purchased the UBS loan as:

part and parcel of a conspiracy with Kuafu and its principals designed to prevent UBS from extending the UBS Loan, unlawfully manufacture a supposed default, and acquire title to the Property free and clear of Siras’s interest in the Project, all in furtherance of Kuafu and its principals’ breach of their fiduciary duties to the Company.

. . .

Siras’ proposed seventh cause of action is insufficiently pleaded. According to the amended complaint and the proposed second amended complaint, Kuafu was a main actor in Siras’ allegations supporting any breach of fiduciary duty claims, yet there is no claim being asserted against Kuafu for breach of fiduciary duty. Also, Siras is not seeking to assert the conspiracy claim against Kuafu. Instead, the allegations set forth in the proposed seventh cause of action attempt to create a nexus between the actions of defendant 462-470 with an unpleaded underlying tort allegedly committed by Kuafu. As such, the proposed seventh cause of action is not sufficiently pleaded against defendant 462-470.

(Internal quotations and citations omitted).

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