On January 20, 2022, Justice Masley of the New York County Commercial Division issued a decision in 220 E. 26th St. LLC v. Kaled Mgt. Corp., 2022 NY Slip Op. 30195(U), refusing to dismiss claims that a property manager had a fiduciary duty to the property owner, explaining:
To state a claim for breach of fiduciary duty, plaintiffs must allege that (1) defendant owed them a fiduciary duty, (2) defendant committed misconduct, and (3) they suffered damages caused by that misconduct.
A fiduciary relationship exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation. Such a relationship, necessarily fact-specific, is grounded in a higher level of trust than normally present in the marketplace between those involved in arm’s length business transactions. When there is a contract between parties, the court looks at the agreement to discover the nexus of the parties’ relationship and the particular contractual expression establishing the parties’ interdependency. An advisory role can create a fiduciary duty. lt is fundamental that fiduciary liability is not dependent solely upon an agreement or contractual relation between the fiduciary and the beneficiary but results from the relation.
A fiduciary, in the context of property management, is one who transacts business, or who handles money or property, which is not his (or her) own or for his (or her) own benefit, but for the benefit of another person, as to whom he (or she) 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. Plaintiffs have sufficiently alleged that, as managing agent of buildings, Kaled owed plaintiffs a fiduciary duty. Plaintiffs allege that defendants have been the exclusive managing agent of each building and has handled the plaintiffs’ properties since the late 1980’s. Plaintiffs allege that their trust and confidence was placed in Kaled because Kaled represented itself as a highly experienced property management company aimed at maximizing profits. Plaintiff has sufficiently alleged a business relationship that goes beyond an arms’ length transaction.
(Internal quotations and citations omitted).