Opinion
1915-05.
Decided July 10, 2006.
Meyer, Suozzi, English Klein, P.C., Mineola, New York, Counsel for Plaintiff.
Abrams, Fensterman, Fensterman, Flowers, Greenberg Eisman, LLP, Lake Success, New York, Counsel for Defendant.
The following papers were read on Plaintiff's motion to reargue and renew this Court's order of January 3, 2006 and, upon reargument and/or renewal, denying Defendants' motion to dismiss the complaint:
Notice of Motion dated February 17, 2006;
Affidavit of Sheldon J. Ashley sworn to on February 16, 2006;
Affirmation of Kevin Schlosser, Esq. dated February 17, 2006;
Plaintiff's Memorandum of Law;
Defendant's Memorandum of Law;
Affirmation of Robert C. Angelillo, Esq. dated March 17, 2006;
Plaintiff's Reply Memorandum of Law;
Transcript of Oral Argument of March 24, 2006.
Plaintiff Ashley Management Corp. moves to reargue and renew this Court's order of January 3, 2006 granting Defendants' prior motion to dismiss the complaint pursuant to CPLR 3211(a)(1)(3), (5) and (7).
For a full discussion of the factual and procedural background in this matter, see this Courts' order granted on January 3, 2006. (10 Misc 3d 1068[A].)
A. Renewal and Reargument Generally
It is well settled that a motion for reargument is addressed to the sound discretion of the court and may be granted upon a showing that the court overlooked or misapprehended the relevant facts in determining the prior motion ( Amato v. Lord Taylor, Inc., 10 AD3d 374 [2nd Dept. 2004]), or misapplied the relevant law. Carillo v. PM Realty Grp., 16 AD3d 611 (2nd Dept. 2005); and Hoey Kennedy v. Kennedy, 294 AD2d 573 (2nd Dept. 2003). It does not offer an unsuccessful party an opportunity to present arguments not previously advanced. Pryor v. Commonwealth Land Title Ins. Co., 17 AD3d 434 (2nd Dept. 2005); and McGill v. Goldman, 261 AD2d 593 (2nd Dept. 1999).
Plaintiff's motion, characterized as one for leave to renew and reargue, is not based on new facts which were unavailable at the time it submitted its opposition to Defendants' dismissal motion. See, Kaufman v. Kunis, 14 AD3d 542 (2nd Dept. 2005); and Yarde v. New York City Transit Auth., 4 AD3d 352 (2nd Dept. 2004). Moreover, Plaintiff has failed to offer a valid excuse as to why any additional evidence upon which it relies was not previously submitted. Therefore, the motion for leave to renew and reargue is, in fact, a motion to reargue and shall be treated as such. Longo v. County of Nassau, 6 AD3d 670, 671 (2nd Dept. 2004).
B. Contentions on This Motion
Plaintiff's reargument motion is predicated on the contention that the Court mistakenly dismissed the complaint as to the individual Defendants and generally erred in dismissing the causes of action sounding in conversion, tortious interference with contract, constructive trust, preliminary and permanent injunction and appointment of a receiver. Plaintiff also maintains that Defendants are equitably estopped from raising the statute of limitations as a defense because Defendants, including Islandia MRI Management Corp. ("Management") allegedly engaged in a conspiracy to cover up the diversion and self-dealing of the other Defendants. As a result of this concealment, Plaintiff claims it was prevented from commencing the action. Given Plaintiff's letter of December 10, 1996, however, and the clear acknowledgment of its awareness of Defendant Islandia MRI Limited Partnership's ("Islandia MRI") refusal to provide Plaintiff with fees generated by the use of the MRI equipment by outside groups, the estoppel argument is untenable. Plaintiff also argues that it has standing to assert claims derivatively on behalf of Islandia MRI and Scanning of Suffolk, L.P. ("Scanning") for breach of fiduciary duty and conversion.
C. As to the Individual Defendant's
As noted in this Court's decision dated January 3, 2006, the complaint alleges twelve causes of action pleaded against all Defendants without differentiation or relevant dates. It is Plaintiff's position that the Court erred in dismissing the action in its entirety as against the individual Defendants, Edward Parkes, M.D. and Joel Ritter, M.D., shareholders of Management and Defendant Islandia MRI Associates, P.C. ("Associates"); and Merik Dolber and Jill Vincente, shareholders of Defendant Techmed LI Corporation, which is a limited partner with Plaintiff and Scanning.
The crux of the allegations in the complaint is that the individual Defendants, along with Management and Techmed, looted Islandia MRI, diverting over $1,000,000.00 for their own personal gain and thereby reducing the contractually required distribution to the limited partners of Islandia MRI and Scanning.
With respect to the individual Defendants, shareholders/officers/directors of corporate Defendants Management, Associates and/or Techmed, and their personal liability, it is well settled that courts will generally not pierce the corporate veil to reach a shareholder since the corporate form is a legitimate means of avoiding personal liability. See, Bartle v. Home Owners Co-operative, Inc., 309 NY 103, 106 (1955); and Ventresca Realty Corp. v. Houlihan, 28 AD3d 537 (2nd Dept. 2006). When, however, a corporation has been so dominated by an individual or individuals, as alleged herein, or another corporation, and its separate identity so ignored that it transacts the dominator's business instead of its own, and can be called the other's alter ego, the corporate form may be disregarded to achieve an equitable result. Austin Powder Co. v. McCullough, 216 AD2d 825 (3rd Dept. 1995). Here, Plaintiff contends that the individual Defendants committed actionable torts; i.e. looting the funds of Islandia MRI for their own personal gain, thereby reducing the contractually required distribution to the limited partners of Islandia and Scanning.
Accepting the facts alleged as true, and affording the pleadings and affidavits submitted the benefit of every favorable inference ( Sokoloff v. Harriman Estates Development Corp., 96 NY2d 409, 414), on reconsideration, both the seventh and ninth causes of action of the complaint are sustainable as to the individual Defendants.
1. Seventh Cause of Action
To the extent that the seventh cause of action of the complaint alleges that Defendants "Associates, Perkes, Reiter, Dolber, Vincente, and Techmed intentionally interfered with the Consulting Agreement by soliciting outside radiology businesses and introducing them to the Limited Partnership without complying with the exclusive use arrangement between the Limited Partnership and Associates," thereby avoiding payment of fees under the Consulting Agreement, it properly pleads a cause of action for tortious interference which is sustainable against the individual Defendants at this pleading stage.
Where, as here, it is alleged that a corporate officer/director commits a deceitful act motivated by his/her own personal desire for personal gain at the expense of the Plaintiff there is no reason "to shroud him [her] with a mantle of immunity upon the fictitious theory that he [she] was protecting the interests of the corporation, its stockholders and creditors in the performance of his [her] duties as a corporate officer." Hoag v. Chancellor, Inc., 246 AD2d 224, 229 (1st Dept. 1998), quoting Buckley v. 112 Central Park South, Inc., 285 App. Div. 331, 335 (1st Dept. 1954).
2. Ninth Cause of Action
An expansive (liberal) reading of the ninth cause of action indicates a properly plead claim against the individual Defendants for breach of fiduciary duty based on their alleged participation in the intentional diversion of funds from Islandia MRI for the express benefit of Defendants to Plaintiff's detriment. A corporate officer who participates in commission of a tort may be held individually liable, regardless of whether the officer acted on behalf of the corporation in the course of official duties and regardless of whether the corporate veil is pierced. Espinosa v. Rand, 24 AD3d 102 (1st Dept. 2005); and American Express Travel Related Services Co., Inc. v. North Atlantic Resources, Inc., 261 AD2d 310, 311 (1st Dept. 1999). The ninth cause of action shall be read therefore, to include the individual Defendants.
3. Remaining Claims Against the Individual Defendants
The breach of fiduciary allegations of the complaint, however, do not support either a conspiracy or aiding and abetting claim. Plaintiff may recover for those breaches of fiduciary duty which occurred within the three-year statute of limitations. While a breach of fiduciary duty based on allegations of actual fraud, not present here, is governed by a six-year statute of limitations, where the complaint does not allege fraud, the breach of fiduciary duty claim is governed by a three-year limitations period ( Kaufman v. Cohen, 307 AD2d 113, 117 [2nd Dept. 2003]), as Defendants correctly note.
Notwithstanding Plaintiff's arguments to the contrary, the causes of action seeking the imposition of a constructive trust; preliminary and permanent injunctive relief; the appointment of a receiver; as well as the cause of action alleging tortious interference by the individual Defendants with the Scanning Limited Partnership Agreement (between Islandia MRI and Ashley MRI Management Corp. and Techmed) and conversion were properly dismissed.
D. Second Cause of Action Constructive Trust
With respect to the second cause of action, it is well settled that a constructive trust will not be imposed unless it is demonstrated that a legal remedy is inadequate ( Evans v. Winston Strawn, 303 AD2d 331, 333 [2nd Dept. 2003]; Bertoni v. Catucci, 117 AD2d 892, 894 [3rd Dept. 1986]), and a constructive trust is essential to prevent unjust enrichment. Counihan v. Allstate Ins. Co., 194 F.3d 357, 362 [2nd Cir. 1999]. Plaintiff is not entitled to a constructive trust as the available remedy. An award of money damages has not been shown to be inadequate to fully compensate Plaintiff for the damage it allegedly suffered. Moreover, the constructive trust claim is merely duplicative of the breach of contract claim. Plaintiff has failed to plead a distinct harm or wrongful actions giving rise to a claim for a constructive trust. Spanierman Gallery PSP, LLC v. Love, 2003 WL 22480055, *3 (S.D.NY 2003).
E. Third Cause of Action Injunction
The purpose of a preliminary injunction is to maintain the status quo in order to prevent further perpetration of the alleged wrong. Italian Bistro of NY v. Poughkeepsie Galleria Co., 199 AD2d 949, 950 (3rd Dept. 1993). Since Islandia MRI has sold its assets and is no longer operating or receiving revenue from Associates, the request for injunctive relief is academic.
F. Fourth Cause of Action Appointment of a Receiver
The appointment of a receiver is a drastic and intrusive remedy which may only be invoked in cases where the moving party has made a clear evidentiary showing of the necessity of conserving the property and protecting the interests of the movant. Secured Capital Corp. of NY v. Dansker, 263 AD2d 503, 504 (2nd Dept. 1999); and CPLR 6401(a). A temporary receiver may be appointed in an action for money damages if the subject of the action is a specific fund of money upon a showing that the funds (or property) are in danger of being materially injured or destroyed. That is not the case here.
G. Eighth Causes of Action Tortious Interference with Contract
With respect to the eighth cause of action, Plaintiff correctly concedes the deficiencies of its tortious interference with the Scanning Agreement of Limited Partnership claim and it is hereby granted leave to replead to the extent that the facts permit.
H. Twelfth Cause of Action Conversion
The rule is clear that, to establish a cause of action in conversion, the plaintiff must show legal ownership or an immediate superior right of possession to a specifically identifiable thing and must show that the defendant exercised an unauthorized dominion over the thing in question to the exclusion of plaintiff's rights. Hoffman v. Unterberg, 9 AD3d 386, 388 (2nd Dept. 2004). Where, as here, Plaintiff never had title, possession or control of the funds alleged to have been converted, the twelfth cause of action for conversion was properly dismissed. Batsidis v. Batsidis, 9 AD3d 342 (2nd Dept. 2004); and Fiorenti v. Central Emergency Physicians, PLLC, 305 AD2d 453 (2nd Dept. 2003).
Accordingly, it is,
ORDERED, that Plaintiff's motion to reargue is granted and, upon reargument, the seventh cause of action is reinstated as to all Defendants, Plaintiff shall have leave to replead the eighth cause of action herewith, the ninth cause of action shall be read to include the individual Defendants. In all other respects, the Court adheres to its prior decision in this matter dated January 3, 2006.