Opinion
14582-14582A Index No. 652072/16 Case No. 2020–04151, 2020–04975
11-09-2021
Ismail KOCAK, Plaintiff–Respondent, v. Ayhan DARGIN, et al., Defendants–Appellants, John Doe, Defendant.
Law Offices of Thomas F. Liotti, LLC Garden City (Thomas F. Liotti of counsel), for appellants. Rosenfeld & Kaplan, LLP, New York (Nicole E. Meyer of counsel), for respondent.
Law Offices of Thomas F. Liotti, LLC Garden City (Thomas F. Liotti of counsel), for appellants.
Rosenfeld & Kaplan, LLP, New York (Nicole E. Meyer of counsel), for respondent.
Manzanet–Daniels, J.P., Oing, Moulton, Scarpulla, JJ.
Order, Supreme Court, New York County (Laurence L. Love, J.), entered September 25, 2020, which granted plaintiff's motion for partial summary judgment and denied defendants’ cross motion for summary judgment, unanimously modified, on the law and upon a search of the record, to grant plaintiff summary judgment dismissing the counterclaims, and otherwise affirmed, with costs against defendants-appellants. Appeal from order, same court and Justice, entered December 11, 2020, which denied defendants’ motion, deemed to be one for reargument, unanimously dismissed, without costs, as taken from a nonappealable order.
Defendant-appellant Ayhan Dargin may not use parol or extrinsic evidence to contradict the plain, unambiguous terms of the Baba's stock transfer agreement and the employment contract. Resort to extrinsic evidence "is inappropriate ... [if] the language of the contract is plain and unambiguous" ( American Express Bank v. Uniroyal, Inc., 164 A.D.2d 275, 278, 562 N.Y.S.2d 613 [1st Dept. 1990], lv denied 77 N.Y.2d 807, 569 N.Y.S.2d 611, 572 N.E.2d 52 [1991] ). The employment contract at issue unambiguously states, "As compensation for the services rendered, Employee [i.e., plaintiff] shall receive a net monthly salary of $2,500.00." Consequently, Dargin may not rely on parol evidence to show that the $2,500 monthly payment was actually to buy additional shares not already transferred in the stock purchase agreement (see e.g. Thomas v. Scutt, 127 N.Y. 133, 136, 27 N.E. 961 [1891] ; Stage Club Corp. v. West Realty Co., 212 A.D.2d 458, 459, 622 N.Y.S.2d 948 [1st Dept. 1995] ).
Dargin's contention that plaintiff's claims are barred by the statute of frauds ( General Obligations Law § 5–701[a][1] ) is unavailing. Plaintiff's complaint relies on the fact that the written employment contract has not been terminated and therefore remains in effect.
Plaintiff – now the minority shareholder of Baba's – established his entitlement to summary judgment as to Dargin's (the majority shareholder) liability for breach of fiduciary duty (see Gjuraj v. Uplift El. Corp., 110 A.D.3d 540, 973 N.Y.S.2d 172 [1st Dept. 2013] [majority shareholder breached fiduciary duty to the plaintiff minority shareholder by (1) distributing profits without making distribution to the plaintiff and (2) "closing out the corporation's bank account on which plaintiff was a signatory and opening another corporate account on which plaintiff was not a signatory"]).
Plaintiff also established that dissolution of Baba's was appropriate under Business Corporation Law § 1104–a. Dargin transferred Baba's lease, first to Munzur LLC (which he co-owned with his sister), then to Rojava LLC (which he owned by himself). He also stopped using Baba's bank account as the operating account for the restaurant; instead, he used Munzur's (and then Rojava's) bank account. According to the written contracts, plaintiff continues to own 25% of Baba's shares; thus it was improper for Dargin to distribute the profits from the restaurant solely to himself (via Munzur).
Dargin notes that former Debtor and Creditor Law §§ 274 and 276, upon which plaintiff relies, were repealed as of April 4, 2020. However, the prior version of the Debtor and Creditor Law "will continue to apply to actions to avoid transactions that occurred prior to" that date (James Gadsen & Alan Kolod, Practice Commentaries, McKinney's Cons Laws of NY, Book 12, Debtor and Creditor Law art 10, 2021 Pocket Part at 35). Sufficient badges of fraud are present in this case (see Matter of Setters v. AI Props. & Devs. [USA] Corp., 139 A.D.3d 492, 493, 32 N.Y.S.3d 87 [1st Dept. 2016] ; Wall St. Assoc. v. Brodsky, 257 A.D.2d 526, 529, 684 N.Y.S.2d 244 [1st Dept. 1999] ).
Plaintiff's breach of fiduciary and Debtor and Creditor Law claims are not duplicative. Among other things, plaintiff seeks different relief under the two types of claims. He seeks compensatory and punitive damages for breach of fiduciary duty, but he seeks to set the fraudulent conveyances aside. The Debtor and Creditor Law § 276 claim also seeks attorney's fees pursuant to Debtor and Creditor Law § 276–a.
The motion court properly dismissed so much of the second counterclaim as sought a declaration that Dargin is the sole owner of Baba's, as this counterclaim is conclusively refuted by the stock transfer agreement and the employment contract. Further, upon a search of the record (see e.g. 80P2L LLC v. U.S. Bank Trust, N.A., 194 A.D.3d 593, 150 N.Y.S.3d 23 [1st Dept. 2021] ), we find that summary judgment should be granted dismissing the counterclaims in their entirety.
To the extent the counterclaims allege that plaintiff was unjustly enriched because he received $2,500 a month but failed to perform services as Baba's marketing and business development manager, an unjust enrichment claim will not lie where an express contract covers the subject matter (see e.g. Goldman v. Metropolitan Life Ins. Co., 5 N.Y.3d 561, 572, 807 N.Y.S.2d 583, 841 N.E.2d 742 [2005] ; Loreley Fin. [Jersey] No. 3 Ltd. v. Citigroup Global Mkts. Inc., 119 A.D.3d 136, 148, 987 N.Y.S.2d 299 [1st Dept. 2014] ).
To the extent the first counterclaim alleges that plaintiff committed fraud by failing to pay corporate taxes prior to the date of the stock transfer agreement, Dargin failed to raise a triable issue of fact as to scienter. To the extent the first counterclaim alleges that plaintiff breached his fiduciary duty, plaintiff did not owe Dargin such a duty before February 1, 2012, i.e., before Dargin became a shareholder of Baba's (see Simon v. 160 W. End Ave. Corp., NYLJ, Sept. 3, 2003, at 17, col 3 [Sup Ct, N.Y. County]). Any failure on plaintiff's part to file Baba's tax returns and pay Baba's taxes would have occurred before February 1, 2012.
We have considered Dargin's remaining arguments and find them unavailing. Although defendants’ second motion purported to be to renew and reargue, it was actually only to reargue because defendants submitted no new evidence. The court treated it as a reargument motion, and Dargin's arguments on appeal deal only with reargument, not renewal. However, the denial of reargument is not appealable (see e.g. Gjuraj, 110 A.D.3d at 540, 973 N.Y.S.2d 172 ; Wall St., 257 A.D.2d at 526, 684 N.Y.S.2d 244 ).