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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: April 27, 2019

Conduct Amounting to Nothing More than Common Business Practice Cannot Be Basis for Aiding and Abetting Breach of Fiduciary Duty Claim

On April 4, 2019, Justice Scarpulla of the New York County Commercial Division issued a decision inĀ Moyal v. Tripost Capital Partners, LLC, 2019 NY Slip Op. 30947(U), holding that conduct amounting to nothing more than a common business practice cannot serve as the basis for a claim of aiding and abetting a breach of fiduciary duty, explaining:

Even if the aiding and abetting claim survives the settlement of the breach of fiduciary duty claim, and assuming without deciding the sufficiency of the claim, Plaintiffs’ allegations insufficiently allege that the Coop and Notaro knowingly induced or participated in such a breach. As explained by Plaintiffs’ counsel at oral argument, the alleged breach of fiduciary duty by TP Varick, as it relates to the Coop and Notaro, was that it engaged in secret negotiations with the Coop to sell retail leases at below-market value. Plaintiffs’ cause of action for aiding and abetting breach of a fiduciary duty alleges that Notaro and the Coop, upon information and belief, funded, assisted, coordinated and directed Carroll and Silverman in their fraudulent scheme by agreeing with and attempting to purchase the retail leases in violation of the Company Agreement and for below market value. They thereby substantially assisted, aided and abetted Carroll and Silverman’s fraud and breach of fiduciary duty. Plaintiffs, however, fail to adequately allege that the Coop and Notaro had actual knowledge of a breach of fiduciary duty by TP Varick. Moreover, Plaintiffs’ allegations are merely conclusory as they allege no facts to support their claim that Defendants funded, assisted, coordinated and directed Carroll and Silverman.

Even giving Plaintiffs every favorable inference, Plaintiffs allegations simply do not show that the Coop and Notaro engaged in conduct amounting to anything more than common business practice. Accordingly, I find that Plaintiffs fail to state a cause of action for aiding and abetting breach of fiduciary duty and dismiss this cause of action.

(Internal citations omitted).

Fiduciaries have special duties, but the question of whether a defendant is a fiduciary, and thus can be liable for a breach of fiduciary duty, is sometimes a complicated one. And, as this decision shows, someone who is not a fiduciary can nonetheless be liable for aiding and abetting the fiduciary’s breach of his or her duties. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding such claims or appeals of such claims.

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