Friar v. Vanguard Holding Corp.

Margett, J. (concurring in part and dissenting in part).

While I am in accord with the conclusion of the majority in all other respects, I cannot agree that the prerequisites of CPLR 901 (subd a) have been met on the record of this case. Accordingly, I vote to modify the order appealed from not only to the extent directed by the majority, but also by *101further deleting so much of that order as authorizes plaintiff to maintain this action as a class action. As so modified, the order should be affirmed.

Assuming, arguendo, that a class action is otherwise appropriate here, the definition of the class approved by the court is so broad that the claim of the plaintiff is not “typical of the claims * * * of the class”, a prerequisite to the maintenance of a class action under CPLR 901 (subd a, par 3). The order of Special Term defines the class as comprised of: “all sellers of property, subsequent to January 1, 1979, who attended at a closing pursuant to a mortgage commitment issued by defendant, wherein the seller sold real property containing six residential units or less, containing separate cooking facilities, wherein the seller had not contracted to pay the tax required by Tax Law Section 253, Subdivision 1-a, effective January 1, 1979, but was charged and did pay the tax to defendant at the closing as a result of mistake, misrepresentation, economic duress or other reason”. The complaint and motion papers establish that plaintiff’s claim is that he effectively paid a portion of the tax in question as a result of “economic duress”, not “mistake, misrepresentation” or any “other reason”. There is not a single allegation in the record that plaintiff paid the tax as a result of mistake or any “other reason”. Although the complaint does contain a reference to an obvious misrepresentation by defendant as to the requirements of the statute in question, it also states that, after the misrepresentation was made, plaintiff “still refused to pay” the tax, and paid a portion thereof only after defendant refused to close the loan until the tax was paid. I note further that, even if there was a legally sufficient causal relation between defandant’s alleged misrepresentation and plaintiff’s having paid the tax, it appears that plaintiff, like most other sellers of real property, was represented at the closing by an attorney. Thus, the truth or falsity of defendant’s representation could have been easily ascertained by plaintiff and he could not have reasonably relied on the alleged misrepresentation of defendant. (See Cudemo v Al & Lou Constr. Co., 54 AD2d 995.) In short, plaintiff’s claim is not based on mistake or any “other reason” and cannot be based on misrepresenta*102tion. Accordingly, that claim is not typical of the claims of those members of the purported class whose claims rest on their having paid the tax “as a result of mistake, misrepresentation * * * or other reason”.

Concededly, plaintiff’s claim is typical of persons who paid the tax as a result of their having been subjected to “economic duress” of a degree and nature sufficient to be actionable in an action for moneys had and received. However, the nature of such a claim and the defenses which can be asserted against it are likely to engender “questions affecting only individual members” of the class of such magnitude that they are not subordinate to “questions of law or fact common to the class” as required by CPLR 901 (subd a, par 2). To establish their claims of “economic duress” class members will be required to show that they were forced to pay the tax “by means of a wrongful threat precluding the exercise of [their] free will” (see Austin Instrument v Loral Corp., 29 NY2d 124, 130). This will require an examination of the particular facts and circumstances of each member of the class, including the state of mind of each of them. Characterization of this action as one for moneys had and received also portends the necessary resolution of numerous and substantial individual questions. Such an action is “founded upon equitable principles aimed at achieving justice, unimpeded by legal niceties” (Federal Ins. Co. v Groveland State Bank, 37 NY2d 252, 258). It is also (p 258) “ ‘the most favorable way in which a defendant can be sued’ ” in that “ ‘ “he may defend himself by everything which shows the plaintiff ex aequo et bono is not entitled to the whole of his demand or any part of it” ’ ”. In view of the nature of such an action and the breadth of the defense available against it, it is my view that individual, rather than common questions, will predominate in this case.

Consequently, I perceive no advantage to be gained from permitting the action to proceed as a class action since the proceeding is very likely to “ ‘splinter into individual trials’ ” - (see Strauss v Long Is. Sports, 60 AD2d 501, 507).

Finally, in my view, there has not been a sufficient demonstration that “a class action is superior to other avail*103able methods for the fair and efficient adjudication of the controversy”, as required by CPLR 901 (subd a, par 5). Plaintiff’s representative claim is one of economic duress, the underlying facts of which should now be well known to any potential claimants, rather than one based on mistake or misrepresentation, the underlying facts of which, by their nature, may not yet be necessarily apparent. Accordingly, the absence in the record of any suggestion, other than plaintiff’s attorney’s unsupported assertion, that there are any other persons who regard themselves as aggrevied by defendant’s actions is a strong indication that it is neither “fair” nor “efficient” to permit this action to proceed as a class action. As we have stated: “ ‘If a class of interested litigants is not already in existence the court should not go out of its way to create one without good reason’ (Berley v Dreyfus & Co., 43 FRD 397, 398-399)” (Strauss v Long Is. Sports, supra, p 511). Admittedly, there may be persons other than plaintiff who perceive themselves to be aggrieved by actions of the defendant in the nature of the infliction of economic duress. However, where, as here, the likelihood of the existence of a class of such persons is not apparent from the nature of the alleged wrong, a class action, with its attendant complexities, should not proceed in the face of a record devoid of any suggestion of the existence of such persons. Accordingly, my other objections aside, I would not permit this action to proceed as a class action until plaintiff has established, by discovery or proper investigation, facts which tend to show he is not alone in his complaint of economic duress against defendant. (See Gottlieb v March Shipping Passenger Servs., Div. of March Shipping Corp., 67 AD2d 879.)

Hopkins, J.P., and O’Connor, J., concur with Lazer, J.; Hargett, J., concurs in part and dissents in part, in an opinion.

Order of the Supreme Court, Nassau County, dated' October 24, 1979, modified, on the law, (1) by deleting from the third decretal paragraph thereof the words “or other reason” and (2) by adding to the eleventh decretal paragraph thereof, immediately after the provision denying defendant’s cross motion, the following: “except that the second cause of action, seeking punitive damages, is dis*104missed.” As so modified, order affirmed, with $50 costs and disbursements to plaintiff. Plaintiff is granted leave to amend his prayer for relief in accordance with the opinion herein within 20 days after service upon him of a copy of the order to be made hereon, together with notice of entry thereof.