FKB’s Andrew R. Jones and Asher Kest Successfully Obtain Dismissal in Federal Fiduciary Duty Action Arising from Investment Dispute

01/6/2021

FKB’s Andrew R. Jones and Asher Kest obtained a pre-answer dismissal on behalf of a commercial litigation firm, which represented various corporate entities in a British Virgin Islands/New York action concerning loans for a resort construction in Cartagena, Colombia. In an action by the investing corporation alleging fraud and breach of contract and fiduciary duty, Plaintiffs also alleged that the defendant law firm aided and abetted the breach of fiduciary duty by knowingly bringing false action against Plaintiffs which alleged that they had not adhered to preconditions to foreclosing on the borrowing entities, and thereby prevented Plaintiffs from recouping over $5,000,000. Plaintiffs also asserted a Judiciary Law § 487 claim.

In a successful pre-answer motion to dismiss, FKB argued that Plaintiffs could not assert scienter as necessary to allege a aiding and abetting fraud claim, nor could they properly meet the prerequisite of substantial assistance. In addition, FKB showed that Plaintiffs had not properly alleged the required elements of a Judiciary Law § 487 claim, since Erie doctrine required SDNY to adopt the First Department’s pattern of delinquency requirement.  Judge Ronnie Abrams agreed with FKB’s arguments in a 51 page decision, and dismissed both causes of action against the defendant firm.

If you have any questions about this decision, or the defense of attorneys in general, please contact Andrew R. Jones and Asher Kest

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