NYU's Memo Opposing Merkin Motion to Dismiss

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SUPREME COURT OF THE STATE OF NEW YORKNEW YORK COUNTY

-------------------------------------------------------------NEW YORK UNIVERSITY,Plaintiff,- against -ARIEL FUND LIMITED, GABRIELCAPITAL CORPORATION,J. EZRA MERKIN, FORTIS BANK (CAYMAN)LTD., FORTIS PRIME SOLUTIONS(CAYMAN) LTD., FORTIS BANK, BDOTORTUGA, and BDO INTERNATIONAL,Defendants.-------------------------------------------------------------x::::::::::::::xIndex No. 08603803/2008Hon. Justice Richard D. Lowe

PLAINTIFF’SMEMORANDUM OF LAW INOPPOSITION TO THE MOTIONTO DISMISS OF DEFENDANTS J.EZRA MERKIN AND GABRIELCAPITAL CORPORATION

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TABLE OF CONTENTSPagesPRELIMINARY STATEMENT .....................................................................................................1STATEMENT OF FACTS ..............................................................................................................6ARGUMENT ...................................................................................................................................9I. The Standard For Resolving a Motion to Dismiss ...........................................................9II. Plaintiff Has Standing to Assert the Common Law Claims for Breach of Contract, Breach of Fiduciary Duty, Negligence, Gross Negligence,Recklessness and Negligent Misrepresentation ...............................................................9III. The Amended Complaint States a Valid Cause of Action for Breach of Contract ..........................................................................................................................11IV. Plaintiff Has Stated Claims for Breach of Fiduciary Duty ............................................13V. Plaintiff Has Stated a Claim Under New York’s Business Corporation Law§720................................................................................................................................15VI. Unjust Enrichment .........................................................................................................16VII. Count VIII States a Valid Direct Claim Against Merkin for Fraud ...............................17VIII. The Amended Complaint States a Valid Cause of Action for Aiding andAbetting Madoff’s Fraud and Conversion of Assets .....................................................19IX. Plaintiff has Pled Claims for Negligent Misrepresentation, Gross Negligenceand Negligence...............................................................................................................20X. Plaintiff Has Stated A Claim Under New York’s GBL § 349 .......................................21XI. Plaintiff’s Claims Are Not Preempted Under The Martin Act ......................................22CONCLUSION ..............................................................................................................................25

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TABLE OF AUTHORITIESCases

511 West 232

nd

Owners Corp. v. Jennifer Realty Corp.

, 98 N.Y.2d 144, (2002) ............................9

Abrams v. Donati

, 66 N.Y.2d 951, 498 N.Y.S.2d 782, 489 N.E.2d 751 (1985) ..........................10

AHA Sales, Inc. v. Creative Bath Products, Inc.

, 58 A.D.3d 6, 867 N.Y.S.2d 169(N.Y. App. 2008) .....................................................................................................................16

Am. Tissue, Inc. v. Donaldson, Lufkin & Jenrette Sec. Corp.

, 351 F.Supp.2d 79(S.D.N.Y. 2004) .......................................................................................................................15

Amfesco Industries, Inc. v. Greenblatt

, 172 A.D.2d 261, 568 N.Y.S.2d 593 (1st Dept.1991) ........................................................................................................................................16

Bd. of Educ. of Cold Spring Harbor Cent. Sch. Dist. v. Rettaliata

, 78 N.Y.2d 128, 572N.Y.S.2d 885 (1991) ................................................................................................................17

Board of Managers of the Arches at Cobble Hall Condominium v. Hicks & Warren, LLC

, 14 Misc. 1234 (2007

) .....................................................................................................

22

Bouhayer for Benefit of Gregovar Food Specialties, Inc. v. Georgalis

, 169 Misc.2d779 (1996) ................................................................................................................................16

Bridgestone/Firestone, Inc. v. Recovery Credit Serv., Inc.

, 98 F.3d 13 (2d Cir. 1996) .................11

Bullmore v. Banc of America Secs. LLC

, 485 F.Supp.2d 464 (S.D.N.Y. 2007) ....................

Passim Bullmore v. Ernst & Young Cayman Islands

, 45 A.D.3d 461 (1st Dept. 2007)

. .................

Passim

Caboara, et al., v. Babylon Cove Development, LLC

, 54 A.D3d 79 (2d Dept. 2008)

......................Ceribelli v. Elshanayan

, 990 F.2d 62 (2d Cir. 1993) ....................................................................10

Continental Ins. Co. v. Mercadante

, 22 A.D. 181 (1

st

Dept. 1927) ...............................................11

Coronado Dev. Corp. v. Millikin

, 175 Misc. 1, 22 N.Y.S.2d 670 (N.Y. Sup. Ct. N.Y.County 1940) .................................................................................................................................11

Fraternity Fund, Ltd. v. Beacon Hill Asset Management LLC, et al.

, 376 F.Supp.2d385 (S.D.N.Y. 2005) .......................................................................................................

PassimGuggenheimer v. Ginzburg

, 43 N.Y.2d 268 (1977) .......................................................................9

HF Mgmt. Servs. LLC v. Pistone

, 34 A.D.3d 82, 818 N.Y.S.2d 40 (1st Dept. 2006) ..................15

Hochman v. LaRea

, 789 N.Y.S.2d 300 (2d Dept. 2005) ...............................................................17

Hotaling v. A.B. Leach & Co.

, 247 N.Y. 84 (1928) ......................................................................11

Kimmell v. Schaefer,

89 N.Y.2d 257 (1996) ..................................................................................20

Kopel v. Bandwidth Tech. Corp.

, 56 A.D.3d 320, 868 N.Y.S.2d 16 (1st Dept. 2008) ..................15

Kramer v. W10Z/515 Real Estate Ltd. Partnership

, 44 A.D.3d 457, 844 N.Y.S.2d 18(1st Dept. 2007). ................................................................................................................23,24

Mandelblatt

v.

Devon Stores

, 132 A.D.2d 162, 521 N.Y.S.2d 672 (1987) ..................................15

Oswego Laborers’ Local 214 Pension Fund v. Marise Midland Bank

, 85 N.Y.S.2d20, 25 (1995)

......................................................................................................................

21,22

Pension Committee of University of Montreal Pension Plan v. Banc of America Securities

,446 F.Supp.2d 163 (S.D.N.Y. 2006).................................................................................18, 19

Primavera Familienstifung v. Askin

, 130 F.Supp.2d 450 (S.D.N.Y. 2001) .........................

Passim Rapoport v. Schneider

, 29 N.Y.2d 396 (1972) ..............................................................................16

Rasmussen v. A.C.T. Envtl. Servs

., 292 A.D.2d 710, 739 N.Y.S.2d 200 (3d Dept.2002) ........................................................................................................................................15

Reuben H. Donnelley Corp. v. Mark I Mktg, Corp.

, 893 F.Supp. 285 (S.D.N.Y. 1995) ...............14

Richbell Information Servs v. Jupiter Partners, L.P.

, 309 A.D.2d 288, 765 N.Y.S.2d