New York State Court of Claims

New York State Court of Claims



Defendant’s motion to dismiss the claim as against private banks for want of jurisdiction in the Court of Claims granted, and a parallel action against them continues in federal district court. Claimant trust’s motion for summary judgment denied as premature. The claim seeks recovery of trust funds that were liquidated by a bank to satisfy levies issued by the NYS Dept of Taxation against an individual, who was a beneficiary of the trust. The claim against the State sounds in unjust enrichment, in that the State acquired claimant trust’s assets to satisfy the individual’s tax liens. The claim also alleges negligence by certain banks in allowing the individual’s name to be placed upon the account of a trust. Claimant failed to establish that it would be inequitable and against good conscience to allow defendant to retain the funds it acquired, an element of the equitable claim of unjust enrichment. Further proceedings on this claim must await resolution of the action against the banks in federal court.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
Cross-motion number(s):
Claimant’s attorney:
SCHAEFFER & KRONGOLD, LLPBy: Elliot L. Schaeffer, Esq.
Defendant’s attorney:
New York State Attorney GeneralBy: Ellen S. Mendelson, Esq., Assistant Attorney General
Third-party defendant’s attorney:

Signature date:
April 3, 2009

Official citation:

Appellate results:

See also (multicaptioned case)


This claim seeks to recover money that was allegedly wrongfully transmitted to the New York State Department of Taxation and Finance (NYSDTF) in satisfaction of tax warrants issued by that agency. Defendant State of New York moves to dismiss the claim on various grounds. Claimant opposes defendant’s motion, and cross-moves for permission to “file a late Notice of Intention and/or Claim” and for summary judgment.[1] As alleged in the claim, claimant SST is a foundation organized and existing under the laws of the principality of Liechtenstein. Claimant is a trust that owns and maintains assets for the benefit of certain income beneficiaries, including non-parties Donald and Cecile Kalfin. As relevant to this claim, claimant’s assets consist of certain securities which have been held and serviced in a Swiss brokerage account with non-party Credit Suisse since the late 1970s. At some point in time and allegedly without the knowledge of claimant, Credit Suisse transferred various of claimant’s securities to a “safekeeping account” with defendant Suisse American Securities, Inc. (SASI) (see Schaeffer Affirmation, Exhibit K). This account was entitled “Donald Kalfin, Rubric American Owner,” and Donald Kalfin’s social security number was placed upon it. On or about February 6, 2007, defendant NYSDTF issued and served a levy on SASI demanding payment in the amount of $511,889.81 allegedly due from the Kalfins in payment of taxes, interest and penalties. SASI satisfied the levy with liquidated securities from the account that allegedly belongs to claimant, and allegedly did so without notification to claimant or Credit Suisse. Claimant contends that defendant SASI was negligent in opening an account in the name of Donald Kalfin when, in fact, the securities in that account were the property of claimant, and further contends that defendant NYSDTF is obligated to return the proceeds resulting from the sale of the liquidated securities because they were owned by claimant and not Donald Kalfin.

Turning first to defendant’s motion to dismiss, defendant argues that the claim should be dismissed because it was served on the Office of the Attorney General by an improper manner of service. Defendant contends that the claim was served on the Office of the Attorney General by Federal Express on February 19, 2008 and by regular mail on February 20, 2008 (see Mendelson Affirmation, ¶ 3), and argues that such service did not comply with the requirements of Court of Claims Act § 11(a), which requires that the Attorney General be served with the claim either personally or by certified mail return receipt requested (id. ¶¶ 6-9). In opposition to defendant’s motion, claimant submits that on March 31, 2008, the “Notice of Claim and Claim” was personally served on the Attorney General’s Office (see Samman Affirmation, ¶ 7), and that the defect in the manner of service was thereby cured (id. ¶ 9). In reply, defense counsel does not refute claimant’s contention that the improper manner of service was cured (see generally Mendelson Reply Affirmation), and thus, the motion to dismiss on the ground of improper manner of service will be denied.

To the extent that defendant states that the claim must be dismissed for untimely service (see Mendelson Affirmation, ¶ 2) and further states that the defense of untimeliness was raised in its answer (id., ¶ 4), no factual showing or legal argument is made in support of this point. Defendant’s motion papers do not identify or argue that the claim accrued on a particular date, nor does defendant argue that the claim was not filed and served within any period of time required by Court of Claims Act § 10. Accordingly, to the extent the motion seeks dismissal on the grounds of untimeliness, it will not be granted.

Turning to that part of claimant’s motion that requests permission to file a late pleading, this claim is before the Court on a pleading that was filed on February 15, 2008. In light of this Court’s denial of defendant’s motion to dismiss, as discussed supra, that claim remains pending and claimant’s motion for permission to file a late pleading will be denied as unnecessary.

Turning back to defendant’s motion, it seeks partial dismissal of the claim on the ground that this Court lacks jurisdiction over that part of the claim as against named defendant SASI. The Court of Claims is a court of limited jurisdiction, authorized to hear claims against only the State (see NY Const. Art. 6, § 9; Court of Claims Act § 9), and thus, the Court is without jurisdiction to hear any claim for damages against SASI. The first cause of action asserted in the claim is asserted against the State, but the second, third and fourth causes of action all allege wrongful conduct on the part of SASI and Credit Suisse (even though Credit Suisse is not a named defendant), and do not make any allegation against the State. Accordingly, all but the first cause of action asserted in the claim must be dismissed for lack of jurisdiction.

Claimant’s cross motion seeks summary judgment on the claim, which is now limited to the first cause of action against the State sounding in unjust enrichment. The essence of the “unjust enrichment” cause of action is that the State ought to give back the funds that were used to satisfy tax liens against Donald and Cecile Kalfin because claimant, not the Kalfins, was the owner of the liquidated securities, and claimant did not authorize the transfer of ownership of the liquidated securities from itself to the Kalfins (see Schaeffer Reply Affirmation, ¶ 24)[2]. The motion will be denied for the reasons that follow.

“Summary judgment is a drastic remedy that deprives a litigant of his or her day in court, and it ‘should only be employed when there is no doubt as to the absence of triable issues’ ” (Kolivas v Kirchoff, 14 AD3d 493 [2d Dept 2005], quoting Andre v Pomeroy 35 NY2d 361, 364 [1974]). It is well established that a movant for summary judgment must demonstrate, by proof in admissible form, the right to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067 [1979]). If the movant establishes its prima facie entitlement to summary judgment, the burden then shifts to the opponent of the motion to establish, by admissible proof, the existence of genuine issues of material fact (see Alvarez v Prospect Hosp., supra; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). However, when a movant fails to demonstrate its entitlement to summary judgment as a matter of law in the first instance, the motion must be denied (see Winegrad v New York University Medical Center, 64 NY2d 851, 853 [1985]; Sauzo v Weiss, 11 AD3d 220, 221 [1st Dept 2004]).

It must be noted that the allegations in the cause of action against defendant are based exclusively on the acts and/or omissions of non-parties Credit Suisse and SASI, which allegedly placed claimant’s assets in Donald Kalfin’s name (accord Schaeffer Reply Affirmation, ¶ 19 [defendant’s levy on the SASI “safekeeping account” occurred because of “a multitude of errors that occurred between Credit Suisse and SASI”]). There is no allegation that defendant acted wrongfully or illegally in any manner whatsoever with respect to its collection of the tax liens against the Kalfins. Rather, the claim turns on whether SASI properly considered the “safekeeping account” to be subject to a lien asserted against the Kalfins, which, in turn, rests upon SASI’s apparent determination that the “safekeeping account” belonged to – or held assets belonging to – Donald Kalfin. In the Court’s view, claimant has not met its prima facie burden of demonstrating that “it had not authorized that the Liquidated Securities be transfer [sic] to SASI or to any person whatsoever, included [sic] Donald Kalfin” (Schaeffer Affirmation, ¶ 49).

The proof submitted by claimant in support of its motion demonstrates that the purpose of the claimant foundation is to invest and administer the funds of the foundation and to make grants to the beneficiaries thereof (Schaeffer Affirmation, Exhibit A, Art. 3). The members of the Foundation Board were authorized to manage and represent claimant, and were authorized to exercise signatory power (id. Art. 8). There were three members of the Foundation Board, each “with the right to sign individually” – Dr.iur. [sic] Werner Keicher, Elliot L. Schaeffer, and Fred J. Klaus (id., Addendum, “Official Confirmation”). Thus, it appears that any one of those members had the authority to act unilaterally as claimant’s signatory with respect to the initiation or formation of the “safekeeping account” with SASI. In support of its motion, claimant submits the affidavit of Dr. Keicher, in which he denies any knowledge or conduct on his part with respect to a transfer of claimant’s assets to the SASI account or to Donald Kalfin. However, claimant has not submitted an affidavit of either Mr. Schaeffer or Mr. Klaus stating that they did not authorize the allegedly unauthorized transfer to Donald Kalfin, nor does Mr. Kalfin’s affidavit address this issue. Further, to the extent that claimant contends that the documentary evidence conclusively establishes that the liquidated securities always remained the property of claimant (id. ¶ 75), claimant’s extensive documentary submissions do not include documents pertinent to the creation of the “safekeeping account” at SASI, and thus, its contention does not demonstrate that the “safekeeping account” was not properly filed in Kalfin’s name.

Moreover, and even if the proof supported in support of claimant’s motion conclusively demonstrated that the SASI “safekeeping account” or its assets belonged to claimant and not Kalfin, claimant has not argued that its proof satisfies all of the elements of a cause of action for unjust enrichment. A party asserting a cause of action for “unjust enrichment” must demonstrate that “(1) the other party was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered” (Cruz v McAneney, 31 AD3d 54, 59 [2d Dept 2006] [internal quotations omitted]; see also Matter of Witbeck, 245 AD2d 848, 850 [3d Dept 1997]). Here, the proof submitted by claimant is addressed to the first and second of these elements, but it does not address the third and separate element of the cause of action. In other words, this equitable cause of action requires claimant to show more than that defendant came into possession of property that lawfully belongs to claimant (see e.g. McGrath v Hilding, 41 NY2d 625, 629 [1977] [“whether there is unjust enrichment may not be determined from a limited inquiry confined to an isolated transaction”]). As noted above, there is no allegation in this claim that defendant did not hold valid tax liens against the property of Donald Kalfin, that the tax warrants executed upon the SASI account were invalid, or that defendant acted in any wrongful manner in obtaining the funds to satisfy the liens. Further, it is demonstrated by claimant’s papers that Donald Kalfin, if not a titled owner of the assets in the SASI “safekeeping account,” was a beneficial owner thereof (see Schaeffer Affirmation, Exhibit K). To prevail on its motion for summary judgment, claimant must show that it would be inequitable and against good conscience to allow defendant to keep the proceeds of the liquidated securities, a showing that has not been made on this motion.

Further, the Court agrees with defendant that claimant’s motion for summary judgment is premature, though not necessarily for the reason urged by defendant. To successfully oppose a motion for summary judgment on the ground that the motion is premature because discovery has not been conducted or is incomplete, the opponent of the motion must demonstrate that it has not had enough time to obtain relevant evidence (see Nova Casualty Co. v Central Mutual Ins. Co., 59 AD3d 777 [3d Dept 2009]; cf. Metichecchia v Palmeri, 23 AD3d 894 [3d Dept 2005]) or what, if any, relevant evidence remains outstanding (see Curtis v Town of Galway, 50 AD3d 1370 [3d Dept 2008]). It is undisputed that defendant has had substantial opportunity to obtain documentation relevant to this claim, and that defendant’s counsel has been directly involved in this matter since at least June 2007 (see Schaeffer Affirmation, ¶ 24-25; Taffett Affirmation; Krongold Affirmation). Defendant makes no argument on this point other than its cursory assertions that no discovery has been conducted in this case (see Mendelson Reply Affirmation, ¶ 3; Glannon Affirmation, ¶ 3).

Nevertheless, this Court finds that, under the unusual circumstances of this claim, the motion for summary judgment is premature. The propriety or legality of the creation of the SASI “safekeeping account” as between Credit Suisse and SASI, or the alleged negligence of SASI in using the liquidated securities to satisfy the tax warrant, is apparently being litigated in federal district court (see Schaeffer Affirmation, ¶ 27, Exhibit I). As noted above, any determination of defendant’s liability to claimant turns upon resolution of factual and legal issues that involve the actions of Credit Suisse and SASI, who are not parties to this claim but who are defendants in the federal action. Thus, as a matter of both comity and practicality, claimant’s demand for judgment against defendant should await a resolution of the action in federal district court.

Accordingly, it is

ORDERED, that defendant’s Motion No. M-75321 is GRANTED IN PART, and the second, third and fourth causes of action asserted in Claim No. 114842 are DISMISSED, and it is further

ORDERED, that defendant’s Motion No. M-75321 is DENIED in all other respects, and it is further

ORDERED, that claimant’s Cross Motion No. CM-75679 is DENIED in all respects.

April 3, 2009
Albany, New York

Judge of the Court of Claims

Papers considered

(1) Claim No. 114842, filed February 15, 2008;
(2) Verified Answer of State of New York, filed March 28, 2008;
(3) Answer of Swiss American Securities, Inc., filed April 18, 2008;
(4) Notice of Motion (M-75321), dated July 31, 2008;
(5) Affirmation in Support of Ellen S. Mendelson, AAG, dated July 31, 2008, with Exhibits A-B;
(6) Notice of Cross-Motion, dated October 10, 2008;
(7) Corrected Affirmation in Opposition of Elliot L. Schaeffer, Esq., dated October 10, 2008, with Exhibits A-M;
(8) “Affidavit” of Dr. Keicher, dated September 17, 2008;
(9) Affirmation in Opposition of Emil A. Samman, Esq., dated October 10, 2008, with Exhibits A-F;
(10) Affirmation in Opposition of Jeffrey B. Krongold, Esq., dated October 10, 2008, with Exhibit A;
(11) Affirmation of Allan N. Taffet, Esq., dated September 17, 2008;
(12) Reply Affirmation of Ellen S. Mendelson, AAG, dated December 3, 2008 and Affirmation in Opposition of Michael J. Glannon, Esq., dated December 2, 2008, with Exhibits A-B;
(13) Affirmation of Elliot Schaeffer, Esq., in Support of Plaintiff’s Motion for Summary Judgment, dated December 9, 2008, with Exhibit A;
(14) Affidavit of Donald Kalfin, sworn to December 9, 2008.

[1].Defendant Suisse American Securities, Inc. was not noticed on the motions, and did not appear thereon. As discussed, infra, this Court lacks subject matter jurisdiction over claims against non-State parties, and the claim as against this party must be dismissed. The caption will be amended accordingly.
[2]. Claimant is, in essence, asserting a cause of action for money had and received (see Parsa v State of New York, 64 NY2d 143, 148 [1984] [“An action for money had and received has been permitted against a public body in instances where [claimant] has paid money by mistake, money has been collected for an illegal tax or assessment, or property is erroneously taken or withheld by a public official” [citations omitted]).