Dayan v. Sutton

Background

Plaintiffs alleged that they transferred $1,695,908 in marital assets in 2006 to three accounts at Atlas Capital, S.A., described as a Swiss company engaged in investing for clients. They alleged that they orally agreed with Defendants that Defendants could invest the assets through the Atlas accounts, charge investment-brokerage fees, use a mix of conservative and risky investments, and liquidate assets when Plaintiffs requested funds.

Plaintiffs asserted claims for breach of contract, breach of fiduciary duty, unjust enrichment, money had and received, conversion, and an accounting. They alleged that they received withdrawals totaling $605,105 and later received $320,000 in four payments, but that Defendants failed to return the remaining balance, which Plaintiffs calculated as $749,308.93.

Plaintiffs had been given four opportunities to amend their claims. The opinion addressed Defendants’ motions to dismiss the Fourth Amended Complaint.

Court’s analysis

The court held that the alleged oral agreement was not described with enough specificity to be legally sufficient. Plaintiffs did not allege a trading authorization, investment-advisory agreement, or other writing stating the agreement’s terms and conditions. They also did not identify confirmations, receipts, or account statements showing the alleged transactions.

The court found that a general assertion that an agreement existed did not adequately identify its essential terms. Plaintiffs also did not explain how Defendants’ alleged failure to repay money held through Atlas breached an agreement with Defendants. The court noted that the complaint might allege a breach of an agreement with Atlas, but it did not adequately allege a breach of an agreement with Defendants. If Defendants were supposedly guarantors for Atlas, Plaintiffs had not alleged the terms, conditions, or duration of that guarantee.

The court further found that the allegations concerning repayment demands lacked specific dates, writings, context, and responses. It also rejected as unsupported Plaintiffs’ speculation that Atlas gave some of the money to Defendants or that the money financed construction of a wind farm in Israel.

The court stated that the additional allegations supporting the fiduciary-duty, unjust-enrichment, money-had-and-received, and accounting claims added nothing to the earlier pleadings and remained deficient for the reasons given in prior orders. The court declined to decide whether New York’s Statute of Frauds applied because the parties had not briefed the issue and other grounds independently made the contract allegations insufficient.

Disposition

Judge Alvin K. Hellerstein granted Defendants’ motions to dismiss the Fourth Amended Complaint with prejudice and costs to Defendants. The Clerk was directed to terminate the open motions, enter judgment in favor of Defendants with costs, and mark the case closed.