On October 28, 2022, Justice Ruchelsman of the Kings County Commercial Division issued a decision in S&P 350 Inc. v. VK Dental Group Inc., 2022 NY Slip Op. 33847(U), dismissing claims for failure to make non-conclusory factual allegations, explaining:
The first cause of action alleges conversion, diversion and misappropriation. The crux of this allegation is contained in one paragraph of the Verified Complaint wherein it states that “at all times hereinafter mentioned, the Defendant engaged in conversion and embezzlement of Plaintiffs’ funds for their own personal use, by holding themselves out to be the Plaintiffs and
exercised unauthorized dominion and control over the property of Plaintiff.” The Verified Complaint does not describe the “funds” that were embezzled, how the conversion or embezzlement took place and how the defendants held themselves out as plaintiff. Moreover, the Verified Complaint does not describe or explain in any manner how the defendant exercised dominion and control over plaintiff’s property. Thus, without any factual assertions of specific wrongdoing no such allegation is proper. Therefore, since this allegation is conclusory and fails to describe, in any manner, the nature of the claim, the motion seeking to dismiss this cause of action is granted.The second cause of action alleges a breach of the covenant of good faith and fair dealing. It is well settled that cause of action is premised upon parties to a contract exercising good faith while performing the terms of an agreement. The crux of this allegation is contained in one paragraph of the verified Complaint wherein it states that “the Defendant breached this implied covenant of good faith and fair dealing by actions such as embezzling company funds, acting in their own self-interest to the detriment of Plaintiffs.” Again, the Verified Complaint does not describe, in any manner, how any embezzlement took place and how the defendant acted in its own self interest. Without an elementary understanding of the facts giving rise to this cause of action no such cause of action is proper. Therefore, the motion seeking to dismiss this claim is granted.
The third cause of action alleges fraud. It is well settled that to succeed upon a claim of fraud it must be demonstrated
there was a material misrepresentation of fact, made with knowledge: of the falsity, the intent to induce reliance, reliance
upon the misrepresentation and damages. These elements must each be supported by factual allegations containing details constituting the wrong alleged. The Verified Complaint merely states that ”defendant’s misconduct with the Plaintiffs’ checking account amounts to fraud” and that ”defendant’s material misrepresentations with respect to their right to use Plaintiffs’ account amounts to fraud.” That is far short of the necessary detail required to allege fraud. Indeed, those allegations are conclusory and could not possibly support a fraud cause of action. Therefore, the motion seeking to dismiss this cause of action is granted.The last cause of action is unjust enrichment. The elements of a cause of action to recover for unjust enrichment are that
(Internal citations omitted).
“(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.” Thus, “the essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered.” The Verified Complaint merely states that “defendant misappropriated Plaintiffs’ company funds and converted them for personal expenses” and “defendant remains in possession of account information and key assets belonging to Plaintiffs, even though the Plaintiffs never authorized same.” The Verified Complaint does not explain the nature of any misappropriation, the nature of the “company funds”, what was misappropriated and the nature of any account ·information or key assets in defendant’s possession. The vague and conclusory nature of facts fails to adequately support the allegation. Consequently, the motion seeking to dismiss the fourth cause of action is granted.