        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

448
CA 12-02120
PRESENT: CENTRA, J.P., FAHEY, CARNI, WHALEN, AND MARTOCHE, JJ.


SCOTT A. WENDT, PLAINTIFF-RESPONDENT,

                    V                             MEMORANDUM AND ORDER

BENT PYRAMID PRODUCTIONS, LLC,
ET AL., DEFENDANTS,
AND RIDGEWAY & CONGER, INC.,
DEFENDANT-APPELLANT.


BOND, SCHOENECK & KING, PLLC, SYRACUSE (RYAN MCPARLAND OF COUNSEL),
FOR DEFENDANT-APPELLANT.

THE PEARL LAW FIRM, P.A., PITTSFORD (JASON J. KANE OF COUNSEL), FOR
PLAINTIFF-RESPONDENT.


     Appeal from an order of the Supreme Court, Onondaga County
(Anthony J. Paris, J.), dated May 21, 2012. The order denied the
motion of defendant Ridgeway & Conger, Inc. for summary judgment
dismissing the complaint against it.

     It is hereby ORDERED that the order so appealed from is
unanimously reversed on the law without costs, the motion is granted
and the complaint against defendant Ridgeway & Conger, Inc. is
dismissed.

     Memorandum: Plaintiff commenced this action seeking damages for
losses that he sustained as a result of failed financial investments.
In the complaint, plaintiff advanced one cause of action against
defendant Ridgeway & Conger, Inc. (Ridgeway), which plaintiff concedes
sounds in common-law negligence, i.e., the negligent supervision of
defendant Ronald H. Sirota (Sirota). Ridgeway moved for summary
judgment dismissing the complaint against it, and Supreme Court denied
the motion. We reverse.

     We note as background that plaintiff retained defendant Strategic
Financial Planning, Inc. (SFP) to provide him with investment advice.
Sirota, who owned and operated SFP, was a registered representative of
Ridgeway, a broker-dealer that is a member of the Financial Industry
Regulatory Agency (FINRA), a self-regulatory industry organization.
It is undisputed that, at all relevant times, Sirota’s relationship
with Ridgeway was that of an independent contractor. During the
course of Sirota’s association with Ridgeway, Sirota advised plaintiff
to invest in certain security and investment vehicles that were not
publicly traded. There is also no dispute that Ridgeway had no
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                                                         CA 12-02120

knowledge of these outside business activities by Sirota, made no
recommendations to plaintiff with respect thereto and received no
compensation as a result thereof.

     To establish a cause of action for common-law negligence, “a
plaintiff must demonstrate the existence of a duty, a breach of that
duty, and that the breach of such duty was a proximate cause of his or
her injuries” (Schindler v Ahearn, 69 AD3d 837, 838 [internal
quotation marks omitted]). “If there is no duty of care owed by the
defendant to the plaintiff, there can be no breach and, consequently,
no liability can be imposed upon the defendant” (Mojica v Gannett Co.,
Inc., 71 AD3d 963, 965; see Pulka v Edelman, 40 NY2d 781, 782, rearg
denied 41 NY2d 901). The issue whether one person owes a duty of care
to “reasonably avoid injury” to another is a question of law for the
courts (Purdy v Public Adm’r of County of Westchester, 72 NY2d 1, 8,
rearg denied 72 NY2d 953). “In general, an entity has no duty to
control a third party’s conduct so as to prevent injury to another
unless special circumstances exist in which the entity has sufficient
authority and control over the conduct of that third party . . . Only
then can a duty be imposed” (Mojica, 71 AD3d at 965).

     Additionally, it is well settled that, “[o]rdinarily, a principal
is not liable for the acts of independent contractors in that, unlike
the master-servant relationship, principals cannot control the manner
in which the independent contractors’ work is performed” (Chainani v
Board of Educ. of City of N.Y., 87 NY2d 370, 380-381, rearg denied 87
NY2d 862). Although there are exceptions to that general rule (see
Rosenberg v Equitable Life Assur. Socy. of U.S., 79 NY2d 663, 668,
rearg dismissed 82 NY2d 825), we conclude that none apply to the
circumstances presented here. Although plaintiff’s claim sounds in
negligent supervision, one of the recognized exceptions (see Kleeman v
Rheingold, 81 NY2d 270, 274), it is well settled that “the mere
retention of general supervisory powers over an independent contractor
cannot form a basis for the imposition of liability against the
principal” (Goodwin v Comcast Corp., 42 AD3d 322, 323; see Melbourne v
New York Life, 271 AD2d 296, 297). Ridgeway established its prima
facie entitlement to judgment as a matter of law by demonstrating that
it owed no duty of care to plaintiff to supervise or control Sirota,
an independent contractor, and that it could not be vicariously liable
for the investment advice Sirota provided to plaintiff because it did
not direct or control the provision of such advice (see Mojica, 71
AD3d at 965). In opposition to Ridgeway’s prima facie showing,
plaintiff failed to raise a triable issue of fact (see Alvarez v
Prospect Hosp., 68 NY2d 320, 324). We reject plaintiff’s contention
that industry standards or the rules and regulations of FINRA imposed
a duty of care on Ridgeway sufficient to support a private cause of
action under New York common law for negligent supervision (see In re
Apple REITs Litigation, 2013 WL 1386202, * 15 n 12; Richman v Goldman
Sachs Group, Inc., 868 F Supp 2d 261, 275; Weinraub v Glen Rauch Sec.,
Inc., 399 F Supp 2d 454, 462, affd 180 Fed Appx 233; see also de
Kwiatkowski v Bear, Stearns & Co., Inc., 306 F3d 1293, 1311).

     We note that, contrary to plaintiff’s contention advanced during
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                                                         CA 12-02120

oral argument on appeal, our review of the record and the parties’
briefs reveals that the issue of duty was not raised for the first
time in defendant’s reply brief; rather, that issue was clearly raised
in the main brief of defendant. In light of our determination, we do
not address Ridgeway’s remaining contentions.




Entered:   July 5, 2013                        Frances E. Cafarell
                                               Clerk of the Court
