Feldman v. Strulovitch
- Naomi Buchwald
- 1:20-cv-07270
- U.S. District Court · Southern District of New York
- 26
In Feldman v. Strulovitch, Judge Buchwald dismissed the plaintiffs’ claims against the moving defendants as untimely and vacated property notices.
The ruling affected the eighteen plaintiffs and the moving defendants by dismissing the plaintiffs’ claims against the moving defendants and vacating notices of pendency concerning property owned by those defendants. Claims against defendants whose claims were stayed for arbitration were not resolved by this order.
What happened
In Feldman v. Strulovitch, eighteen plaintiffs alleged that the defendants participated in a fraudulent investment enterprise and misused nearly two million dollars the plaintiffs had invested. The claims against some defendants, including Yechezkel Strulovitch, were stayed while the parties pursued arbitration. The remaining defendants asked the court to dismiss the claims against them and cancel notices concerning certain properties.
The court decided that the plaintiffs’ claims were based on alleged conversion of their investment funds. Because the alleged misuse occurred in 2014 and 2015, the court applied a three-year deadline and found that the lawsuit, filed in September 2020, was too late. The court also rejected the plaintiffs’ argument that the defendants should be prevented from raising the deadline because of later deception, finding that the plaintiffs did not identify qualifying misrepresentations or concealment by the moving defendants.
Judge Naomi Reice Buchwald granted the moving defendants’ motions to dismiss in their entirety and vacated the notices of pendency. The ruling addressed the claims against the moving defendants; the opinion states that claims against other defendants remained stayed for arbitration.
The detailed version
- Feldman v. Strulovitch · No. 1:20-cv-07270
- Naomi Buchwald
- Aug. 17, 2022
Background
Eighteen plaintiffs sued Yechezkel Strulovitch and numerous corporate entities, alleging that the defendants participated in a criminal and fraudulent enterprise that deprived the plaintiffs of nearly two million dollars in investment funds. The plaintiffs alleged that Strulovitch and a deceased non-party solicited investments in Brooklyn properties through prospectuses containing misrepresentations about purchase prices, profits, permits, renovations, and development timelines.
The moving defendants were a group of the remaining defendants. The plaintiffs alleged that Strulovitch controlled or owned these entities and used them in two alleged schemes: financing or acquiring properties with the investment funds and transferring ownership of properties to obscure Strulovitch’s ownership. Claims against Strulovitch and other defendants were stayed while the parties pursued arbitration. The moving defendants separately moved to dismiss the Third Amended Complaint and to vacate the plaintiffs’ notices of pendency.
Statute of Limitations
The court held that the plaintiffs’ claims for constructive trusts, equitable liens, unjust enrichment, and an accounting were duplicative of, and rooted in, a conversion claim. Conversion is the wrongful taking or use of another person’s property. Under the applicable New York law, conversion claims have a three-year statute of limitations, while some of the equitable remedies ordinarily have longer limitations periods.
The court concluded that the alleged misrepresentations and misuse of the investment funds occurred in 2014 and 2015. Because the lawsuit was filed in September 2020, the court found that the claims were untimely under the three-year limitations period. The court also rejected the plaintiffs’ argument that the possibility of property appreciation made their constructive-trust claims distinct from conversion. It found that the plaintiffs had not shown a basis for awarding them an interest in the properties, including because the properties were not alleged to have been financed or improved solely with their funds and other investors allegedly maintained interests in them.
Equitable Estoppel
The plaintiffs argued that equitable estoppel should prevent the moving defendants from asserting the statute-of-limitations defense. Equitable estoppel can prevent a defendant from relying on a filing deadline when the defendant’s later fraud, misrepresentation, or concealment caused the plaintiff to delay filing.
The court rejected that argument. It found that the plaintiffs did not identify any misrepresentations made by the moving defendants and did not allege that they had interacted with those defendants before filing suit. The court also found that the plaintiffs had not identified specific later statements or acts that kept them from filing on time. Allegations that the defendants engaged in ongoing fraud or concealed the underlying scheme were not separate from the conduct forming the basis of the claims.
Disposition
The court granted the moving defendants’ motions to dismiss in their entirety. It also vacated the plaintiffs’ notices of pendency concerning real property owned by the moving defendants. Judge Naomi Reice Buchwald directed the Clerk of Court to terminate the motions at docket entries 70, 76, and 80. The opinion does not state that this ruling resolved the claims against defendants whose claims were stayed for arbitration.
Read the full 26-page opinion on CourtListener, the free public archive maintained by the Free Law Project.