Court Should Have Granted Renewal Where Dismissal Was Based on Argument Raised for First Time in Reply

On March 3, 2022, in Mehra v. Morrison Cohen LLP, 2022 NY Slip. Op. 01396, the First Department reversed the Decision and Order of Justice O. Peter Sherwood, which granted defendant’s motion to dismiss a breach of fiduciary duty claim, and the Order of Justice Robert Reed, which denied Plaintiff’s motion for leave to renew. The Court explained:

Plaintiffs' allegations — that defendants represented plaintiffs in connection with drafting certain corporate documents for EOS Investor Holding Company LLC, and later, in 2019, took actions to assist nonparty Jonathan Teller in ousting plaintiff Sanjiv Mehra from his position and distribution sharing in EOS Holding — state a claim against defendants for breach of fiduciary duty (see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10 [1st Dept 2008]; Kurman v Schnapp, 73 AD3d 435, 436 [1st Dept 2010]).

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The motion to renew should have been granted. Plaintiffs' claim that the waiver issue was improperly raised in defendants' reply provides a reasonable justification for granting the renewal motion (see Dookhie v Woo, 180 AD3d 459, 465 [1st Dept 2020]). Upon renewal, defendants' motion should be denied with respect to plaintiffs' breach of fiduciary duty claim arising from defendants' alleged actions in 2019.

The attorneys at Schlam Stone & Dolan frequently breach of fiduciary duty claims. Please contact the Commercial Division Blog editors at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such disputes.