Robb v. Robb Jr.

Background

Kathryn Robb sued her brother, George Robb Jr., and the lawyers and law firms involved in an earlier state-court case. The earlier case was brought under New York’s Child Victims Act. The parties settled that case in a written agreement under which George agreed to pay Kathryn $3.75 million in three installments. The agreement was also entered as a state-court judgment, and Kathryn agreed not to enforce that judgment while George followed the payment schedule.

The complaint alleged that George did not make the first payment, which was due September 30, 2023, and failed to disclose certain assets. It also alleged that George and his lawyer, Glen Feinberg, fraudulently induced Kathryn to settle the earlier case. Kathryn asserted claims against George for fraud, fraud by omission, fraudulent concealment, fraudulent inducement, negligent infliction of emotional distress, intentional infliction of emotional distress, breach of contract, and unjust enrichment.

The case was removed from New York state court to federal court. In an earlier order, the court denied Kathryn’s request to send the case back to state court and granted the motion to dismiss filed by Feinberg, Coffey Modica, LLP, and Fullerton Beck, LLP. The court found that those defendants had been improperly added to defeat federal diversity jurisdiction and that Kathryn had not stated viable claims against them. The earlier order also stayed proceedings against George after he filed for bankruptcy. The bankruptcy court later lifted the stay for the limited purpose of allowing this court to decide George’s motion to dismiss.

Rulings on George’s Motion

The court applied the standard for dismissal under Federal Rule of Civil Procedure 12(b)(6), which requires a complaint to contain enough factual allegations to state a plausible legal claim.

The court dismissed Counts One through Four—fraud, fraud by omission, fraudulent concealment, and fraudulent inducement. Those claims depended on the argument that Kathryn had been fraudulently induced to enter the settlement that became the state-court judgment. The court held that this was an improper collateral attack, meaning an attempt to undermine a judgment through a separate lawsuit rather than through the court that entered it. The dismissals were without prejudice to Kathryn’s right to ask the New York County Supreme Court, under New York Civil Practice Law and Rules section 5015, to set aside the judgment based on fraud. The federal court stated that it could not decide that request and that George could not remove it to federal court.

The court also dismissed Kathryn’s Tenth and Eleventh Causes of Action, for negligent and intentional infliction of emotional distress. The negligent-infliction claim failed because Kathryn did not adequately allege that George owed her a duty of care. The intentional-infliction claim failed because the alleged nonpayment and asset misrepresentations, as pleaded, were not sufficiently extreme or outrageous under New York law. The court additionally dismissed Kathryn’s unjust-enrichment claim because a valid contract governed the same subject matter.

The court denied George’s motion as to the Ninth Cause of Action, for breach of contract. The court held that this claim accepted the settlement agreement and judgment as valid rather than attacking them. Kathryn adequately alleged that George breached the agreement by failing to make the first payment and by failing to disclose assets. The court rejected George’s argument that the agreement limited Kathryn to other remedies, such as enforcing the judgment or seeking relief concerning undisclosed assets. It concluded that section 1.M of the agreement expressly allowed Kathryn to bring an action to enforce her contractual rights.

Disposition

The court stated that George Robb’s motion to dismiss was granted in part and denied in part: it was granted except as to the Ninth Cause of Action, and it was denied as to that claim. The court directed the clerk to reimpose the bankruptcy stay and stay all further proceedings in the case, closing the case administratively pending further action by the bankruptcy court. The court also directed the clerk to remove George’s motion from the list of open motions.