| Jones v Citigroup, Inc. |
| 2010 NY Slip Op 51326(U) [28 Misc 3d 132(A)] |
| Decided on July 27, 2010 |
| Appellate Term, First Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
Plaintiff appeals from those portions of an order of the Civil Court of the City of New York,
New York County (Joan M. Kenney, J.), entered on or about April 29, 2009, which granted
defendants' motion to dismiss the complaint and denied plaintiff's cross motion, among other
things, for leave to replead.
Per Curiam.
Order (Joan M. Kenney, J.), entered on or about April 29, 2009, insofar as appealed from, affirmed, without costs.
The complaint, as amplified by plaintiff's affidavit in opposition to defendants' CPLR 3211 motion (see Leon v Martinez, 84 NY2d 83 [1994]), asserts two causes of action: one for breach of fiduciary duty and one for fraud. Both causes of action are premised upon allegations that, among other things, defendants Citigroup, Inc. ("Citigroup") and its CEO, Vikram S. Pandit, diluted the value of common shares of Citigroup stock and selectively leaked confidential information about the corporation, thereby allowing insider traders and preferred shareholders to profit at the expense of common shareholders, such as plaintiff. Since a claim of this nature belongs to the corporation and could only be brought by a shareholder in a derivative suit (see Abrams v Donati, 66 NY2d 951 [1985]; Fifty States Mgt. Corp. v Niagara Permanent Sav. & Loan Assn., 58 AD2d 177 [1977]), the breach of fiduciary duty claim must be dismissed. Indeed, "[c]ourts have repeatedly held that an allegation of diminution in the value of stock based on a breach of fiduciary duty gives rise to a derivative action only" (Hart v Gen. Motors Corp., 129 AD2d 179, 183 n 2 [1987], lv denied 70 NY2d 608 [1987]). Even assuming the fraud claim could otherwise be asserted by plaintiff as an individual claim, the intermingling of derivative and individual claims requires dismissal of the entire complaint (see Abrams v Donati, supra; Balk v 125 W. 92nd St. Corp., 24 AD3d 193 [2005]; Barbour v Knecht, 296 AD2d 218 [2002]). We note that the dismissal of the complaint is without prejudice to the commencement of a derivative action, if plaintiff be so advised and if plaintiff can fulfill the requirements of such an action (see generally L.W. Kent & Co. v Wolf, 143 AD2d 813 [1988]).
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: July 27, 2010