## Facts

- Plaintiffs were partners in a partnership that owned an office building at 1500 Broadway in Manhattan, subject to a mortgage held by Crossland Federal Savings Bank.
- After default, the partnership filed for Chapter 11 bankruptcy and plaintiffs sought financing to retain or repurchase the building.
- Plaintiffs arranged potential first-mortgage financing and sought additional financing from Lazard Freres & Co.
- Lazard issued a commitment letter offering substantial financing, conditioned on a nonrefundable $300,000 application fee stated to be “fully earned” upon execution.
- Plaintiffs paid the $300,000 and provided Lazard with detailed financial and property information they considered confidential.
- Plaintiffs alleged that after Crossland rejected plaintiffs’ proposal, Lazard assumed an active role in negotiations purportedly on plaintiffs’ behalf.
- Plaintiffs alleged Lazard instead used plaintiffs’ confidential information and negotiating position to assist Zapco (a third-party purchaser) in acquiring the building from Crossland.

## Issues

1. Whether the amended complaint adequately alleged a fiduciary relationship and breach by Lazard based on plaintiffs’ reliance and Lazard’s alleged misuse of confidential information to aid a competing purchaser.
2. Whether plaintiffs stated an unjust enrichment claim against Lazard for retaining the $300,000 “nonrefundable” application fee despite alleged nonperformance and disloyal conduct.
3. Whether plaintiffs stated an unfair competition claim against Lazard and any viable claims against Zapco.

## Decision

- The Appellate Division modified the dismissal order.
- It reinstated the breach of fiduciary duty claim against Lazard, holding the allegations were sufficient at the pleading stage.
- It reinstated the unjust enrichment claim against Lazard regarding retention of the $300,000 fee, holding the “fully earned” language did not conclusively defeat the claim on a motion to dismiss.
- It affirmed dismissal of the unfair competition claim against Lazard.
- It affirmed dismissal of all claims against Zapco.
- The case was remanded for further proceedings on the surviving claims against Lazard.

## Legal Principles

- On a motion to dismiss under CPLR 3211, courts accept pleaded facts as true and give plaintiffs favorable inferences; the question is legal sufficiency, not ultimate proof.
- A fiduciary relationship may arise from the parties’ conduct where one party reposes confidence and reasonably relies on the other’s superior knowledge, even in a business setting initially framed as financing.
- Allegations that a financial intermediary assumed an advisory/negotiating role and then diverted an opportunity or misused confidential information can plead breach of fiduciary duty.
- Unjust enrichment turns on whether, as between the parties, retention of a benefit would be unjust; contractual labels such as “nonrefundable” or “fully earned” do not necessarily bar an equitable claim where bad faith or failure to perform is plausibly alleged.
- Unfair competition requires allegations fitting the doctrine’s recognized scope; overlap with fiduciary-duty-type misconduct, without more, may be insufficient.
- Claims against a third-party purchaser require specific allegations of actionable misconduct or participation; mere benefit from another’s alleged wrongdoing is insufficient.

## Conclusion

The court held that plaintiffs plausibly alleged that Lazard’s assumed advisory role created fiduciary obligations and that its alleged disloyal use of confidential information could support fiduciary-duty and unjust-enrichment claims, while plaintiffs failed to plead unfair competition or actionable misconduct by the third-party purchaser.


Wiener v. Lazard Freres & Co., 241 A.D.2d 114, 672 N.Y.S.2d 8 (App. Div. 1st Dep’t 1998)