Cite as: Kristalinsky v. Starosta, 7152/2012, NYLJ 1202586447437, at *1 (Sup., KI, Decided January 28, 2013)

Justice Ann T. Pfau

Decided: January 28, 2013

ORDER

 

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This action was commenced by plaintiff for alleged identify theft and the fraudulent use of plaintiff's identity by defendants. In his complaint, plaintiff asserts three causes of action: fraudulent inducement against defendant Dr. Zalman

 

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Starosta; theft of identity in violation of sections 380-s and 380-l of the New York General Business Law against all defendants; and conspiracy to commit identity theft in violation of those same sections of the New York Business Obligations Law. Defendant Galina Leykina (Leykina) moves pursuant to CPLR 3211(a)(7) to dismiss the complaint as against her, alleging that the complaint fails to state a cause of action. Leykina also seeks sanctions against Kristalinsky under 22 NYCRR 130-1.1.

When a defendant seeks dismissal for failure to state a cause of action under CPLR 3211(a)(7), the allegations in the complaint must be liberally construed in the plaintiff's favor (see, Rovello v. Orofino Realty Co., Inc., 40 NY2d 633 [1976]), and if it is at all possible for the plaintiff to recover under any allegation, the motion must be denied (Guggenheimer v. Ginzburg, 43 NY2d 268 [1977]).

Plaintiff, who appeared pro se prior to defendant Leykina's filing of this motion, set forth the following allegations in his complaint. Plaintiff claims that in or about July 2008, when he was in the office of Dr. Starosta, there was in the office a display and a booth concerning a charity, Hased Bi Shvilha, which advertised that the charity would pay "qualifying elderly Jewish people up to $10,000 if they were in good health." (Complaint, ¶10). Plaintiff further claims that Dr. Starosta vouched for the charity program to plaintiff and that plaintiff applied to be included, providing personal identifying information and signing the required documents (id.). According to the complaint, Dr. Starosta followed up by sending doctors to plaintiff's home to conduct health-related examinations, after which

 

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plaintiff signed additional paperwork (id., at ¶¶11-15). Plaintiff alleges that several months later he received documents from the Bank of Utah concerning the Kristalinsky Life Insurance Trust, and that when he asked Dr. Starosta whether the life insurance, which plaintiff did not seek, and the charity were connected Dr. Starosta acknowledged a link between the two (id., at ¶¶17-18). Documents related to the life insurance supplied by the Bank of Utah to plaintiff included, according to the complaint, a life insurance policy in the amount of $5,000,000, a loan against the life insurance policy, and an amended trust, with plaintiff named as the obtainer of the policy and grantor of the amended trust, naming Ira Einhorn as the trustee of the trust and defendant Leykina, identified in the documents as the daughter of plaintiff, as the beneficiary (id., at ¶¶21-24). Further, the complaint alleges that in January, 2010, Ira Einhorn, as trustee, obtained a loan on the life insurance policy in the amount of $278,611.90, with the life insurance as collateral and plaintiff as the guarantor of the loan (id., at ¶25). Plaintiff states that he has no daughter and does not know anyone named Ira Einhorn (id., at ¶23), and that the loan was never repaid, causing him to believe that the insurer will seek recourse against him as the named guarantor of the loan (id., at ¶28).

Leykina now moves to dismiss. On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the court must determine whether, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible inference, the facts as alleged fit within any cognizable legal theory

 

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(First Keystone Consultants, Inc., v. DDR Constr. Servs., 74 A.D.3d 1135 [2nd Dept. 2010], citing Leon v. Martinez, 84 NY2d 83, 87 [1994]).

With regard to plaintiff's first cause of action, fraudulent inducement, Leykina alleges that her role in the claimed fraudulent scheme to obtain a life insurance policy in Kristalinsky's name is not specified (Aff. Of Eli Fixler, Esq. ¶3), and that the complaint does not allege that she engaged in particular acts of any kind (id., at ¶7). Thus, according to Leykina, plaintiff has not satisfied the provisions of section 3016(b) of the CPLR, which requires that claims based on misrepresentation or fraud shall include the circumstances of the wrong stated in detail.

It should be noted at the outset that plaintiff's cause of action for fraudulent inducement is targeted in the complaint at the defendant Dr. Starosta only. Thus, defendant's motion is moot. However, recognizing that the plaintiff prepared the complaint pro se and it may be inartfully drawn, Leykina's motion will be addressed.

The Court of Appeals thoroughly considered the requirements of CPLR 3016(b) and the need for specificity in Pludeman v. Northern Leasing, 10 NY3d 486 (2008). The Court stated that the purpose of the pleading requirement is to "inform a defendant with respect to the incidents complained of', particularly cautioning that 3016(b) "should not be so strictly interpreted 'as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting a fraud'" (10 NY3d 491, quoting Lanzi v. Brooks, 43

 

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NY2d 778, 780 [1977]). The Court noted that where facts are within the knowledge of the party charged with the fraud, it would serve as an injustice to dismiss a case early in the process where a pleading deficiency might be resolved later in the proceedings (10 NY3d 491). The Court of Appeals later confirmed that the purpose of the requirements of section 3016(b) is to inform a defendant of complained-of events and that the section is satisfied when the facts are sufficient to permit a reasonable inference of the alleged misconduct (Eurycleia Partners, LP v. Seward & Kissel, LLP,, 12 NY3d 553 [2009], citing Pludeman v. Northern Leasing]).

Here, plaintiff has identified, based on his knowledge, the complained-of events, including the relevant dates, locations, and individuals allegedly involved. While, as plaintiff acknowledges, specific facts regarding this individual defendant are not presented in his complaint, those facts are within the knowledge of the party charged with the fraud (see Pludeman v. Northern Leasing), and the allegations in the complaint are sufficient to permit a reasonable inference of the alleged conduct (id.).

In addition to failure to comply with the requirements of CPLR 3016(b), Leykina seeks dismissal of the complaint because it fails to state a claim for identity theft under New York General Business Law (GBL) section 380-s. Section 380-s, which is contained in the New York Fair Credit Reporting Act (Article 25), is entitled "Theft of identity" and provides: "No person, firm, partnership, corporation, or association or employee thereof shall knowingly and with the intent to defraud, obtain, possess, transfer, use, or attempt to obtain,

 

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possess, transfer, or use credit, goods, services or anything else of value in the name of another person without his or her consent." This provision, Leykina alleges, cannot apply here because plaintiff's claims do not involve credit reporting. Further, according to Leykina, plaintiff fails to state a claim under section 380-s because the complaint does not allege that plaintiff suffered any actual damages.

GBL section 380-s is contained within New York's Fair Credit Reporting Act. The language of the statute applies by its terms to a "person, firm, partnership, corporation, or association or employee thereof," without limitation to those involved in credit reporting. GBL section 380-a contains the definitions that apply to all of the provisions of the Fair Credit Reporting Act, including section 380-s. A "person" is defined to mean "any individual, partnership, corporation, trust, estate, co-operative, association, government or governmental subdivision, agency or other entity" (GBL §380-a [a]). Further, the treatise Commercial Litigation in New York State Courts discusses the statute, stating that the Fair Credit Reporting Act, in addition to other provisions, prohibits identify theft in section 380-s and it describes s380-s as: "[T]his section prohibits a person from using information gathered by identify theft to purchase items such as airline tickets or theater tickets" (Commercial Litigation in New York State Courts, Third Ed., §96:15 [2010]). Notwithstanding Leykina's assertions to the contrary, neither the plain language of section 380-s nor discussion of the provision appear to limit its application to situations involving only credit reporting.

Leykina next seeks dismissal of plaintiff's claim pursuant to section

 

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380-s because the complaint does not allege that plaintiff suffered actual damages, alleging instead possible future damages from the need to repay the loan taken out on the life insurance policy. Leykina characterizes these as "hypothetical future damages" that cannot sustain a claim for identity theft under the statute (Fixler Aff., ¶15).

Section 380-s does not address the issue of damages; rather, by its terms, the statute prohibits certain conduct, that is, from actually or attempting to "obtain, possess, transfer, or use credit, goods, services, or anything else of value" without consent when it is done knowingly and with the intent to defraud. Moreover, the case cited by Leykina, Kudelko v. Dalesso, 14 Misc.3d 650 (Civil Ct., Rich. Co., 2006), does not support her assertion. In Kudelko, the Court found that it was a question of fact whether the complained-of actions occurred prior to the enactment of section 380-s in 2002 and also considered whether the plaintiff had pled a tort action. It is as part of that consideration that the Court concluded plaintiff had not made out a claim for prima facie tort because she had not alleged actual financial harm by the defendants (14 Misc.3d at 568). Potential damages as a result of theft of identity, particularly resulting from security breaches involving electronic information, are discussed in Caudle v. Towers, Perrin, Forster & Crosby, Inc., 580 F.Supp2d 273 (SDNY 2008). The plaintiff in Caudle sought damages after his laptop computer was stolen from the defendant company and he feared future identity theft. The Court allowed the plaintiff to proceed with the lawsuit, concluding that he had alleged an adequate injury to allow him to commence the

 

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lawsuit (580 F.Supp.2d at 280). The Court noted in order for a plaintiff in New York to recover damages for future consequences there must be "a rational basis" for the fear of the future injury (580 F.Supp2d at 282).

It cannot be said that plaintiff has not alleged damages in the Complaint sufficient to survive a motion to dismiss under CPLR 3211(a)(7). He alleges that he has been identified as the guarantor of a loan in the amount of $278,611.90 (Complaint, ¶25), and that, upon information and belief, repayment of the loan is in default, so if the documents were legitimate, he would be liable to the lender for the principle amount of the loan plus interest, costs and other fees (Complaint, ¶28). The allegations in the Complaint articulate a "rational basis" for plaintiff's belief that he is in danger of suffering a loss in the future, even if the lender has yet to begin legal proceedings against him.

Plaintiff's second cause of action includes, in addition allegations of violation of GBL section 380-s, a claim for violation of GBL section 380-1, which is entitled "Civil liability for willful noncompliance." Leykina seeks dismissal of this claim, stating that it is "readily apparent" that plaintiff can not state a claim under this section because it is predicated on the wrongful transmission of information to a consumer reporting agency and violation of other provisions of the Act with respect to consumer information (Fixler Aff., ¶13).

Section 380-1 provides, in part: "Any person, firm, partnership, corporation, or association whose knowing and willful violation of section three hundred eighty-s of this article resulted in the transmission or provision to a

 

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consumer reporting agency of information that would otherwise not have been transmitted or provided, and any consumer reporting agency or use of information who or which willfully and knowingly fails to comply with any requirement imposed under this article with respect to any consumer is liable to that consumer in an amount equal to the sum of: (a) any actual damages…;(b) such…punitive damages as the court may allow; and (c)…in any successful action…the costs of the action together with reasonable attorney's fees as determined by the court." The term "consumer" is defined in section 380-a to mean an individual (GBL §380-a [b]).

As with GBL section 380-s, the plain reading of the language contained in section 380-1 cannot be said to support dismissal of plaintiff's claim under this provision. Section 380-1 clearly applies to any person, and the activity included in the statute includes a "user of information" who wilfully and knowingly fails to comply with any requirement imposed under the Act, including the requirements of section 380-s. Plaintiff's allegations-that the named individuals wilfully and knowingly failed to comply with section 380-s — have not been demonstrated by Leykina to fall outside of section 380-1 to warrant dismissal at this time, before any discovery has taken place.

Leykina seeks dismissal of plaintiff's third cause of action, framed as conspiracy to commit identity theft in violation of GBL sections 380-s and 380-1. Leykina correctly argues that, in general, New York does not recognize a cause of action for conspiracy (see MBF Clearing Corp. v. Shine, 212 A.D.2d 478 [1st Dept.

 

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1995] [New York does not recognize the tort of conspiracy]; see also, First Keystone Consultants, Inc. v. DDR Constr. Serv., 74 A.D.3d 1135 [2nd Dept. 2010]; Agostini v. Sobol, 304 A.D.2d 295 [1st Dept. 2003]). Therefore, plaintiff's third cause of action is dismissed.

Finally, Leykina demands sanctions against plaintiff, alleging that the filing of the complaint against her was "entirely frivolous" (Fixler Aff., ¶19). In light of the foregoing, the complaint clearly is not frivolous, and the request for sanctions is denied. Accordingly, it hereby is

ORDERED that the motion to dismiss by defendant Leykina is granted in part to the extent that the third cause of action is dismissed, and otherwise is denied.