In Pari Delicto
CPLR R. 3211
(a)(1) defense is founded upon documentary evidence
(a)(3) the party asserting the cause of action has not legal capacity to sue
cause of action may not be maintained because of arbitration and award,
collateral estoppel, discharge in bankruptcy, infancy or other
disability of the moving party, payment, release, res judicata, statute
of limitations, or statute of frauds
(a)(7) pleading fails to state a cause of action
CPLR § 205 Termination of action
(a) New action by plaintiff.
CPLR § 321 Attorneys
(a) Appearance in person or by attorney
Symbol Tech., Inc. v Deloitte & Touche, LLP, 2009 NY Slip Op 07826 (App. Div., 2nd, 2009)
To obtain a dismissal pursuant to CPLR 3211(a)(1), the defendant
must establish that the documentary evidence which forms the basis of
the defense be such that it resolves all factual issues as a matter of
law and conclusively disposes of the plaintiff's claim (see Leon v Martinez, 84 NY2d 83; see also Sheridan v Town of Orangetown, 21 AD3d 365).
CPLR 3211(a)(7) permits the court to dismiss a complaint that
fails to state a cause of action. The complaint must be liberally
construed and the plaintiff given the benefit of every favorable
inference (see Leon v Martinez, 84 NY2d 83; Aberbach v Biomedical Tissue Serv., Ltd., 48 AD3d 716; Mitchell v TAM Equities, Inc., 27
AD3d 703). The court must also accept as true all of the facts alleged
in the complaint and any factual submissions made in opposition to the
motion (see 511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409; Alsol Enters., Ltd. v Premier Lincoln-Mercury, Inc., 11
AD3d 493). If the court can determine that the plaintiff is entitled to
relief on any view of the facts stated, its inquiry is complete and the
complaint must be declared legally sufficient (see Campaign for Fiscal Equity v State of New York, 86 NY2d 307, 318; see also Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409; Stucklen v Kabro Assoc., 18
AD3d 461). While factual allegations contained in the complaint are
deemed true, bare legal conclusions and facts flatly contradicted on
the record are not entitled to a presumption of truth (see Lutz v Caracappa, 35 AD3d 673, 674l; Matter of Loukoumi, Inc., 285 AD2d 595).
Finally, CPLR 3211(a)(5) permits the defendant to seek and
obtain a dismissal of one or more causes of action asserted against it
on the ground that the cause of action is barred by the statute of
The doctrine of in pari delicto is an equitable defense based on
agency principles which bars a plaintiff from recovering where the
plaintiff is itself at fault (see Ross v Bolton, 904 F2d 819, 824-825; Matter of Food Management Group v Rattet, 380 BR 677, 693-694; Albright v Shapiro, 214 AD2d 496; Bullmore v Ernst & Young Cayman Is., 20
Misc 3d 667, 670). Moreover, the misconduct of managers acting within
the scope of their employment will normally be imputed to the
corporation (see Wight v Bank America Corp., 219 F3d 79, 86; Center v Hampton Affiliates, 66 NY2d 782, 784; Christopher S. v Douglaston Club, 275
AD2d 768, 769). The underlying concept is that the actions of an agent
can be imputed to a corporation when its agent acts within the scope of
his or her employment (see Center v Hampton Affiliates, 66 NY2d at 784).
Under New York law, the doctrine of in pari delicto is subject to the "adverse interest" exception [FN2] (see Center v Hampton Affiliates, 66
NY2d 782). In this case, Symbol's amended complaint is sufficient to
trigger the adverse interest exception to the in pari delicto doctrine.
The "adverse interest" exception is a method by which a
plaintiff corporation can demonstrate that its agent's actions should
not be imputed to it. The corporation must show that the agent's fraud
was entirely self-interested and that the corporation did not benefit
in any way (see 546-552 West 146th St., LLC v Arfa, 54 AD3d 543; Capital Wireless Corp. v Deloitte & Touche, 216
AD2d 663, 666). If the agent was acting solely for his or her own
benefit and to the detriment of the corporation, it cannot be said that
the agent was acting in the scope of his or her employment (see Center v Hampton Affilliates, 66 [*4]NY2d at 784).
This exception has been defined very narrowly in New York (see 546-552 West 146th St., LLC v Arfa, 54
AD3d 543). Under this narrow exception, management misconduct will not
be imputed to the corporation if the officer acted entirely in his own
interest and adversely to the interest of the corporation (see Center v Hampton Affiliates, 66
NY2d at 785). "The theory is that where an agent, though ostensibly
acting in the business of the principal, is really committing a fraud
for his own benefit, he is acting outside of the scope of his agency,
and it would therefore be most unjust to charge the principal with
knowledge of it" (Wight v Bank America Corp., 219 F3d 79, 87).
The adverse interest exception applies only when the agent has "totally
abandoned" the principal's interests and is acting entirely for his own
or another's purposes (Center v Hampton Affiliates, 66 NY2d at 785).
Credigy Receivables, Inc. v Agiwal, 2009 NY Slip Op 07790 (App. Div., 2nd, 2009)
The appeal from the intermediate order dated February 7, 2008, must
be dismissed because the right of direct appeal therefrom terminated
with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on appeal from that order are brought up for [*2]review and have been considered on appeal from the judgment (see CPLR 5501[a]).
The defendant's motion to dismiss the complaint based on lack of
personal jurisdiction was properly denied on the ground that the
objection of improper service of the summons and complaint was waived
by the defendant's failure to move to dismiss on that ground within 60
days of service of the answer (see CPLR 3211[e]).
In its motion for summary judgment, the plaintiff established
its entitlement to judgment as a matter of law against the defendant in
the principal sum of $55,682.32, and the defendant failed to raise a
triable issue of fact in response thereto (see Alvarez v Prospect Hosp., 68 NY2d 320).
Moran Enters., Inc. v Hurst, 2009 NY Slip Op 07807 (App. Div., 2nd, 2009)
The Supreme Court erred in dismissing the complaint pursuant to CPLR
3211(a)(5). The principle of res judicata bars relitigation of claims
where a judgment on the merits exists from a prior action between the
same parties involving the same subject matter (see Matter of Hunter,
4 NY3d 260, 269). Dismissal of the prior action insofar as asserted by
MEI was upheld by this Court on the ground that MEI failed to appear by
an attorney as required by CPLR 321(a) (see Moran v Hurst, 32
AD3d 909). Such was not a
Continue reading “CPLR R. 3211 Roundup: CPLR R. 3211(a)(1,3,5,7); CPLR R. 3211(e) and CPLR § 205 with CPLR § 321”