CPLR 3211; Dismissal; Order to Show Cause
By Annie Yang | Staff Writer
Plaintiff, provider of orthopedic services, hired Defendant Ferrante (“Ferrante”) as an office manager. Ferrante was in charge of billing, paying office bills, and receiving and reconciling bank statements. Ferrante was also an authorized signatory on a checking account with Defendant (Bank).
Plaintiff alleged Ferrante misappropriated hundreds of thousands of dollars from plaintiff’s funds by: 1.) writing checks to herself in excess of her monthly salary of $4,000; 2.) obtaining, without plaintiff’s authorization, a debit/credit card tied to plaintiff’s checking account and charging items for her own personal use; 3.) forging the signature of plaintiff’s owner and president on checks made out in her name; and 4.) using funds from a checking account that plaintiff had closed prior to the misappropriation. Plaintiff alleged Bank was liable for failing to close the account and for processing checks Ferrante forged. Plaintiff also alleged Defendants AJC Advisory Corp. (AJC) and its owner/tax preparer, John Coscia, independent tax preparer, Angelo Coscia, and employee/tax preparer, Alexander Krutiy (“AJC Defendants”) liable for failing to notify plaintiff of Ferrante’s misappropriation.
AJC Defendants and Bank moved for an order under CPLR 3211 to dismiss the complaint for failing to state a cause of action.
The Court determined that under the contemporary tax preparation standards, AJC had a duty to inform plaintiff of Ferrante’s actions. Individuals are only liable in tort by their active fault or by negligent supervision of another employee. Thus, only individuals who prepared the tax returns can be held liable or individuals who directly supervised the tax preparers can be held liable. The evidence submitted was sufficient to infer that Alex Krutiy and Angelo Coscia were involved in the alleged malpractice. However, John Coscia was not involved in performing or supervising the tax preparation work at issue. Thus, the action against him must be dismissed.
Santander’s failure to close the 4933 account was a valid cause of action for breach of contract. Santander’s improper payment of forged checks by Ferrante on plaintiff’s second checking account is also a valid cause of action under the UCC.
The Court granted AJC Defendant’s motion for dismissal of fraud, fiduciary duty, and breach of contract due to duplication of the malpractice cause of action. Santander lacked evidence to show whether it had followed commercial standards in handling plaintiff’s accounts, such as making plaintiff’s bank statements available to plaintiff in order to report Ferrante’s misappropriation.
JAG Orthopedics, P.C. v AJC Advisory Corp., Index No. 511414/2014, 7/21/15 (Carolyn Demarest, J.)