Opinion
No. 2023-50404 Index No. 905851-22
04-26-2023
Darwish Auto Group, LLC & DARWISH GENERAL CORP., Plaintiffs, v. TD Bank, N.A. & WALID DARWISH, Defendants. Walid Darwish, individually and direct and derivative action on behalf of Darwish Auto Group, LLC, DP RE Holdings, LLC and Darwish General Corp., Third Party Plaintiff, v. Barry Frieder, MARK MANZO, DAVID YUSKO, MELISSA LACARTER, JOHN DOES 1-10, and JANE DOES 1-10, Third Party Defendants.
ArentFox Schiff, LLP Attorneys for Plaintiffs (Michael S. Cryan and Shayshari S. Potter, of counsel) Archer & Greiner, P.C. Attorneys for Walid Darwish (Michael S. Horn, of counsel)
Unpublished Opinion
ArentFox Schiff, LLP Attorneys for Plaintiffs
(Michael S. Cryan and Shayshari S. Potter, of counsel)
Archer & Greiner, P.C. Attorneys for Walid Darwish (Michael S. Horn, of counsel)
RICHARD M. PLATKIN, A.J.S.C.
Defendant/third-party plaintiff Walid Darwish moves under CPLR 3211 (a) (1), (3), (7) and (10) and CPLR 327 (a) for the dismissal of the verified amended complaint filed by plaintiffs Darwish Auto Group, LLC ("Darwish Auto") and Darwish General Corp. ("Darwish General") (see NYSCEF Doc No. 51 ["Amended Complaint" or "VAC"]). Plaintiffs oppose the motion.
Defendant TD Bank, N.A. has not appeared in response to the Amended Complaint or the original complaint (see NYSCEF Doc No. 1). As such, references to "defendant" herein will refer to solely to Darwish.
BACKGROUND
A. The Parties and The Dealerships
Plaintiffs own and manage ten automotive dealerships in upstate New York ("Dealerships") (see VAC, ¶ 2). Walid Darwish is the sole member of Darwish Auto and the sole stockholder of Darwish General.
The Dealerships are: "(i) WD East Green, LLC d/b/a Wally's Ford of East Greenbush; (ii) WD Adams 2, LLC d/b/a Wally's Ford of Adams; (iii) WD Adams 3, LLC d/b/a Wally's Chrysler Jeep Dodge Ram of Adams; (iv) WD Amsterdam, LLC d/b/a Wally's Chrysler Jeep Dodge Ram of Amsterdam; (v) WD Nell 2, LLC d/b/a Wally's Chrysler Jeep Dodge Ram of Nelliston; (vi) WD Nell 3, LLC d/b/a Wally's Ford of Nelliston; (vii) WD Schen 2, LLC d/b/a Volkswagen of Schenectady; (viii) WD Water 3, LLC d/b/a Wally's Mitsubishi of Watertown; (ix) WD Latham, LLC d/b/a Wally's Nissan of Latham and (x) WD Seneca, LLC d/b/a Wally's Ford of Seneca Falls" (id.).
Darwish explains in his moving affidavit that he began exploring the acquisition of the Dealerships in August 2020 (see NYSCEF Doc No. 87 ["Darwish Moving Aff."], ¶ 5). He eventually negotiated and entered into an asset purchase agreement for the Dealerships as well as the real estate upon which they operate (see id.).
Darwish required funding for the purchase, and 2427 Investments, Inc. ("Lender") loaned $62 million to DP RE Holdings, LLC ("Secondary Lender") in furtherance of the transaction (see VAC, ¶¶ 8, 23). "Of the loan proceeds, $46,474,000 was used to purchase the real estate associated with the Dealerships and cover closing costs. The remaining $15,526,000 of the loan proceeds were loaned by Secondary Lender to Darwish's companies, Darwish Auto, Darwish General, and Darwish RE Holdings, LLC, to provide them with the funds to acquire and properly capitalize the Dealerships" (id., ¶ 23).
"The $62,000,000 loan and the $15,526,000 sub-loan were made pursuant to the terms of an Agreement Regarding Borrowing dated April 18, 2022 (the 'Borrowing Agreement') and the loan documents executed in connection therewith" (id., ¶ 24; see NYSCEF Doc No. 57 [Borrowing Agreement]). In return, Darwish promised, among other things, that Darwish Auto shall be "governed by an Operating Agreement dated April 18, 2022 entered into by Darwish, its sole member," and Darwish General shall be "governed by a Shareholders Agreement dated April 18, 2022 entered into by Darwish, its sole member" (Borrowing Agreement, §§ 1-2; see VAC, ¶¶ 25-26).
Under the April 18, 2022 Operating Agreement for Darwish Auto, management is vested in a committee of three managers, of which no manager has the authority to act alone (see NYSCEF Doc No. 52 ["Operating Agreement"], § 3.01; see also NYSCEF Doc No. 54, p. 1). Likewise, Darwish General is governed by a shareholder's agreement vesting management in a board of directors consisting of three directors, none of whom may act alone (see NYSCEF Doc No. 53 ["Shareholder's Agreement"], § 3.01; see also NYSCEF Doc No. 54, p. 2).
In July 2022, plaintiffs learned that TD Bank had permitted Darwish to unilaterally modify access rights to accounts maintained by the Dealerships and Darwish Auto ("TD Bank Accounts") without the knowledge or consent of plaintiffs or the Lenders (see VAC, ¶ 8). "After discovering these changes, Plaintiffs, through the Management Committee and Board of Directors, took action to specify the names of the persons authorized to access the TD Bank Accounts and the type of access granted, as set forth in a written Action by Joint Consent of a Majority of the Members of the Management Committee and Board of Directors, dated July 27, 2022" (id., ¶ 9; see NYSCEF Doc No. 55 ["Resolution"]). "However, TD Bank failed to implement the authorizations set forth in the Resolution" (VAC, ¶ 9).
Also in July 2022, Darwish Auto's management committee and Darwish General's board of directors (collectively, "Governing Bodies") authorized and directed Darwish and other specified individuals "to contact manufacturers and obtain the approvals ('Manufacturer Approvals') from Chrysler, Ford, Mitsubishi, Nissan and Volkswagen (collectively, the 'Manufacturers') to consummate the change in control and reorganization of the Dealerships as set forth in a Contribution Agreement dated April 18, 2022 (the 'Contribution Agreement') among Darwish Auto, Darwish General, Potamkin WD Holdings, LLC..., and DP Dealership Holdings, LLC" (id., ¶ 10; see NYSCEF Doc No. 58 [Contribution Agreement]). Plaintiffs, through their Governing Bodies, "also authorized and directed [the same individuals] to explore the potential sale of one or more of the Dealerships ('Potential Dealership Sales')" (VAC, ¶ 10).
Plaintiffs commenced this action on August 2, 2022 to obtain a preliminary injunction ordering TD Bank to comply with the Resolution (see NYSCEF Doc Nos. 1-17). The Court granted the requested injunction on August 30, 2022, finding, among other things, that "plaintiffs are likely to succeed in demonstrating that their respective management committees have the right to determine access to the bank accounts held in the name of plaintiffs or the Dealerships" and that "Darwish does not have the unilateral authority to alter access to the accounts absent the approval of a majority of Darwish Auto's management committee or Darwish [General]'s board of directors" (NYSCEF Doc No. 35 ["Prior Decision"], p. 7).
Darwish filed an amended answer with counterclaims on September 23, 2022 (see NYSCEF Doc No. 46), and he also commenced a third-party action against Barry Frieder, Mark Manzo, David Yusko and Melissa LaCarter (see NYSCEF Doc No. 47). Frieder and Manzo are members of the Governing Bodies (together with Darwish); Yusko serves as an officer of Potamkin Automotive Group ("Potamkin"), Darwish Auto, Darwish General and the Lenders; and LaCarter is alleged to be a Potamkin representative.
Plaintiffs filed an Amended Complaint on October 13, 2022 (see NYSCEF Doc No. 51), and they moved for a second preliminary injunction shortly thereafter (see NYSCEF Doc Nos. 66-70). Plaintiffs complain that "Darwish has refused to cooperate and has interfered with the process of requesting Manufacturer Approvals, contrary to the directives of the Management Committee and Board of Directors" (VAC, ¶ 11). "In addition, Darwish has unilaterally modified the access rights to digital accounts (the 'Manufacturer Accounts') maintained by each of the Manufacturers, thereby preventing access and control by personnel charged with overseeing daily Dealership operations" (id., ¶ 12). "Darwish has also unilaterally and without authority improperly restricted personnel charged by the Management Committee and Board of Directors with overseeing the day-to-day business operations of the Dealerships by preventing them from having access to Dealership facilities, management and accounting systems and employees" (id.). "Further, Darwish has unilaterally interfered and refused to cooperate with Potential Dealership Sales" (id., ¶ 13).
On October 31, 2022, Darwish filed a pre-answer motion to dismiss the Amended Complaint for (i) failure to bring this action in the proper forum, (ii) lack of standing/capacity to sue, (iii) failure to join necessary parties, (iv) failure to state a claim, and (v) defenses founded upon documentary evidence (see NYSCEF Doc No. 77).
At the parties' request, the Court scheduled oral argument on the motions for February 1, 2023 (see NYSCEF Doc No. 225). However, that day ended up being devoted to efforts to resolve the case, which resulted in a stipulation governing the parties' access to plaintiffs' books, records and digital accounts, including the Manufacturer Accounts, during the pendency of the action (see NYSCEF Doc No. 227 ["Stipulation"]). The parties further agreed to mediate their dispute, and the case was referred for expedited private mediation on February 6, 2023 (see NYSCEF Doc No. 229).
On March 9, 2023, the parties reported that the case had not resolved through mediation (see NYSCEF Doc No. 230). However, plaintiffs withdrew their application for a preliminary injunction based upon the Stipulation (see id.). In light of the foregoing, the Court advised the parties that it would proceed to decide Darwish's motion to dismiss on the basis of the parties' written submissions (see NYSCEF Doc No. 231). This Decision & Order follows.
ANALYSIS
A. Forum Selection Clause
Darwish contends that the issues raised in the Amended Complaint must be adjudicated in Delaware, based on forum selection clauses appearing in the Borrowing Agreement and Contribution Agreement (collectively, "Financing Agreements") that require any action "arising out of or relating to [these agreements]" to be heard in Delaware (Borrowing Agreement, ¶ 10; Contribution Agreement, ¶ 7 [c]). Darwish maintains that these forum selection clauses are controlling because "[t]his suit stems from Plaintiffs' challenge of Darwish's authority pursuant to [the Financing Agreements]" (MOL, p. 7).
In his notice of motion and memorandum of law, Darwish mistakenly references CPLR 327 (a), which gives a court discretion to dismiss an action "in the interest of substantial justice" where "the action should be heard in another forum" (see NYSCEF Doc No. 77; NYSCEF Doc No. 78 ["MOL"], p. 6). However, it is clear from Darwish's moving papers that he is not relying on CPLR 327 (a), a discretionary doctrine that requires courts to balance a number of factors, including the "situs of the transaction out of which the litigation arose, the residence of the parties, the potential hardship to the defendant, the burden on New York courts, the availability of an alternate forum and the location of a majority of witnesses outside the State" (Continental Ins. Co. v Polaris Indus. Partners, 199 A.D.2d 222, 222-223 [1st Dept 1993] [citations omitted]; see Islamic Republic of Iran v Pahlavi, 62 N.Y.2d 474, 479 [1984], cert denied 469 U.S. 1108 [1985]; Varkonyi v S.A. Empresa De Viacao Airea Rio Grandense [Varig], 22 N.Y.2d 333, 338 [1968]).
In suing in New York, plaintiffs rely on clauses in the Operating Agreement and Shareholder's Agreement (collectively, "Governance Agreements") designating New York as the proper forum and consenting to the jurisdiction of the New York courts (see VAC, ¶¶ 3-4). Specifically, Sections 11.01 and 11.02 of the Governance Agreements recite:
Section 11.01 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving any effect to any choice or conflict of law provision or rule (whether of the State of New York or any jurisdiction).
Section 11.02 Submission to Jurisdiction. The parties hereby agree that any suit, action, or proceeding based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby, shall be brought in the federal courts of the United States of America or the courts of the State of New York. Each of the [members/shareholders] hereby irrevocably consents to the jurisdiction of such courts (and the appropriate appellate courts therefrom) in any such suit, action, or proceeding.
The Court agrees with plaintiffs that resolution of this case hinges on the Governance Agreements, not the Financing Agreements. Plaintiffs allege in the Amended Complaint that the Governance Agreements vest management of plaintiffs in their respective Governing Bodies, and Darwish has no authority to interfere with the management decisions of the Governing Bodies (see VAC, ¶¶ 70-71). On this basis, plaintiffs seek a declaration that a majority of members of the Governing Bodies "have the power to manage, direct and control the business, property, and affairs of Darwish Auto, Darwish General, and the Dealerships, including the right to authorize and direct (i) access to the TD Bank Accounts, the Manufacturer Accounts, Dealership facilities, management, accounting and other systems and employees[,] (ii) requests to obtain Manufacturer Approvals, and (iii) Potential Dealership Sales, in each case without interference from Darwish" (id., ¶ 72 [a]; see also id., ¶¶ 14-15). Thus, plaintiffs' claims primarily represent a challenge to Darwish's authority under the Governance Agreements.
In contrast, the Financing Agreements largely serve as a source of context for the parties' disputes under the Governance Agreements. They identify the source of Darwish's financing for the asset purchase and explain how management of companies owned entirely by Darwish came to be vested in Governing Bodies controlled by the Lenders (see id., ¶¶ 24-26). And the Contribution Agreement provides context as to why Darwish would not want to see the Manufacturer Approvals go forward (see id., ¶¶ 29-30).
The Court therefore concludes that the forum selection clauses of the Governance Agreements are controlling and require this suit to be heard in New York. Accordingly, the branch of Darwish's motion seeking dismissal under CPLR 327 (a) is denied.
It also bears emphasis that "this is a case about the management, operation, and internal affairs of the [plaintiff] Companies, which are New York entities that own and operate the Dealerships, all of which are located in the State of New York. These are matters of New York law to be resolved by the courts of the State of New York" (NYSCEF Doc No. 210 ["Opp Mem"], p. 9).
In any event, the fact that Darwish affirmatively invoked the jurisdiction of this Court by filing permissive counterclaims going beyond what would be barred under collateral estoppel principles and by impleading third parties amounts to a waiver of the defense of improper forum (see Textile Tech. Exch. v Davis, 81 N.Y.2d 56, 59 [1993]).
B. Standing
Next, Darwish seeks dismissal of the Amended Complaint for lack of standing. As the sole owner of Darwish Auto and Darwish General, Darwish maintains that he possesses sole management authority, and he "never authorized the companies that hold my name to sue me or to seek the relief that they are seeking against me" (Darwish Moving Aff., ¶ 12; see NYSCEF Doc No. 126 ["Darwish Supp. Aff."], ¶¶ 3-6). "This suit is an attempt by Plaintiffs to have Darwish sue himself, which this Court cannot permit" (MOL, p. 9).
There is no merit to Darwish's standing argument. Corporations and limited liability companies are legal entities that can sue and be sued (see Bill v Consolidated Mach. Tool Corp., 51 N.Y.2d 152, 163 [1980]; Singh v Nadlan, LLC, 171 A.D.3d 1239, 1240 [2d Dept 2019]), and plaintiffs allege that their management is vested in the Governing Bodies (see VAC, ¶¶ 26, 66, 70-71), which authorized suit against Darwish (see NYSCEF Doc No. 209). Thus, plaintiffs have sufficiently alleged and established their standing to sue.
C. Necessary Parties
Darwish contends that this action must be dismissed based on plaintiffs' failure to join necessary parties. He argues that plaintiffs should have sued all other parties "that were a part of the transaction at issue," including the other signatories to the Contribution Agreement (MOL, p. 10), as well as Ally Financial, Inc., which apparently provided financing to Darwish and/or plaintiffs (see id., pp. 3-4). Absent joinder of the other parties ("Other Parties"), "'complete relief' may not be accorded" herein (id., p. 10). Darwish also contends that the Manufacturers are necessary parties because their interests may be inequitably affected by a judgment in this action.
CPLR 1001 (a) provides that "[p]ersons who ought to be parties if complete relief is to be accorded between the persons who are parties to the action or who might be inequitably affected by a judgment in the action shall be made plaintiffs or defendants." Thus, "[i]f an absentee who is necessary to the action is subject to the court's jurisdiction, that absentee must be joined; if the absentee is not subject to jurisdiction, the court must consider several factors to determine whether the action should be dismissed or should proceed in the absence of that necessary party" (Matter of Romeo v New York State Dept. of Educ., 41 A.D.3d 1102, 1104 [3d Dept 2007]; see CPLR 1001 [a], [b]; Windy Ridge Farm v Assessor of Town of Shandaken, 11 N.Y.3d 725, 727 [2008]).
Under the foregoing authorities, even if the Court were to accept Darwish's argument that the Other Parties and/or Manufacturers are necessary parties, the remedy would not be dismissal of the Amended Complaint. Rather, the proper course would be to order the necessary parties summoned (see Matter of Nemeth v K-Tooling, 163 A.D.3d 1143, 1145 [3d Dept 2018]; see also Siegel, NY Prac § 133 [6th ed 2022] [dismissal for nonjoinder is "a last resort"]).
In any event, there is no merit to Darwish's contention that the Other Parties or the Manufacturers are necessary parties. As stated in Part A, supra, the gravamen of the Amended Complaint is a dispute about management rights under the Governance Agreements. The Other Parties are not parties to the Governance Agreements, and their participation in adjudicating governance issues is wholly unnecessary. And while the Contribution Agreement provides context and motive for the parties' disputes, no claims are alleged under that agreement.
Nor has Darwish demonstrated that the Manufacturers may be inequitably affected if this case proceeds to judgment in their absence. The Amended Complaint does not seek any relief against the Manufacturers; it simply requests a declaration that the Governing Bodies, not Darwish, "have the power to manage, direct, and control the business, property, and affairs of Darwish Auto, Darwish General, and the Dealerships, including the right to authorize and direct... access to... the Manufacturer Accounts... [and] requests to obtain Manufacturer Approvals" (VAC, ¶ 72 [a], [d]). If granted, such relief would not inequitably affect the Manufacturers.
D. Documentary Evidence
Darwish moves under CPLR 3211 (a) (1) for dismissal of the Amended Complaint as barred by various pieces of documentary evidence.
"A motion pursuant to CPLR 3211 (a) (1) to dismiss the complaint as barred by documentary evidence may be properly granted only if the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law. To qualify as documentary evidence, the evidence must be unambiguous and of undisputed authenticity" (Zeppieri v Vinson, 190 A.D.3d 1173, 1175 [3d Dept 2021] [internal quotation marks and citation omitted]). Thus, "affidavits submitted by a defendant do not constitute documentary evidence upon which a proponent of dismissal can rely" (Crepin v Fogarty, 59 A.D.3d 837, 838 [3d Dept 2009]; see James v Bain, 86 A.D.3d 675, 676 [3d Dept 2011]).
First, Darwish submits evidence that the operating agreements for the limited liability companies formed to operate the Dealerships ("Dealership LLCs") identify Darwish as the sole member (see NYSCEF Doc No. 113-122). But the same documents identify plaintiffs as the equal co-owners of the Dealership LLCs (see id., ¶ 3), and plaintiffs sue to confirm the right of the Governing Bodies to act on plaintiffs' behalf in relation to the Dealerships. Thus, the operating agreements for the Dealership LLCs do not conclusively refute plaintiffs' allegation that the management of the Dealerships is vested in the Governing Bodies (see Borrowing Agreement, ¶ 3).
Darwish next cites an April 28, 2022 letter from Yusko to Volkswagen stating that the Lenders maintain no ownership interest in the Dealerships (see NYSCEF Doc No. 96). But the Lenders do not claim any present ownership interest in the Dealerships. Rather, the Amended Complaint simply alleges that Darwish agreed to provide affiliates of the Lender with "the right to a 65% controlling ownership interest in the Dealerships upon obtaining Manufacturer Approvals" (VAC, ¶ 25). Consistent with this allegation, the Yusko letter recites: "We have no ownership interest in or right to an ownership interest... without the appropriate manufacturer approval" (NYSCEF Doc No. 96).
Darwish also relies on the Manufacturer Agreements, which are said to prohibit any delegation of rights thereunder (see NYSCEF Doc Nos. 91-95). As explained in Part C, supra, however, plaintiffs do not seek any relief from the Manufacturers; the Amended Complaint presents only an internal dispute as to who is entitled to interface with the Manufacturers in seeking their approvals.
Finally, Darwish submits an operating agreement for Darwish Auto dated June 21, 2021 (see NYSCEF Doc No. 127 ["Prior Operating Agreement"]) and corporate bylaws for Darwish General dated June 25, 2021 (see NYSCEF Doc No. 128 ["Prior Bylaws"]), which are said to refute plaintiffs' allegation that management of plaintiffs is vested in their Governing Bodies (see Darwish Supp. Aff., ¶¶ 2-5).
As plaintiffs correctly observe, the Prior Operating Agreement and Prior Bylaws were superseded by the Governance Agreements that Darwish signed on April 18, 2022: the Amended and Restated Operating Agreement and a new Shareholder's Agreement, both of which supersede any prior agreements or understandings (see Operating Agreement, § 11.12; Shareholder's Agreement, § 11.12). And Darwish cites no authority for his conclusory assertion that the Operating Agreement and Shareholder's Agreement "were never effective" and "were never used to govern the relevant businesses" (Darwish Supp. Aff., ¶ 7).
And even if he had, Darwish's affidavits are not documentary evidence upon which he may rely under CPLR 3211 (a) (1).
The Court therefore concludes that Darwish's documentary evidence does not utterly refute the factual allegations of the Amended Complaint or conclusively establish a defense.
E. Failure to State a Claim
Finally, Darwish contends that the Amended Complaint must be dismissed under CPLR 3211 (a) (7) for pleading insufficiency.
On a motion to dismiss under CPLR 3211 (a) (7), the courts' "sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law[,] a motion for dismissal will fail" (Polonetsky v Better Homes Depot, 97 N.Y.2d 46, 54 [2001] [internal quotation marks and citation omitted]). The complaint "is to be given a liberal construction, the allegations contained within it are assumed to be true and the plaintiff is to be afforded every favorable inference" (State of New York v Jeda Capital-Lenox, LLC, 176 A.D.3d 1443, 1445 [3d Dept 2019] [internal quotation marks and citations omitted]). "Dismissal... is warranted if the plaintiff fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery" (Connaughton v Chipotle Mexican Grill, Inc., 29 N.Y.3d 137, 142 [2017]).
1. Declaratory Judgment
Plaintiffs' first cause of action seeks a declaration that the right to manage Darwish Auto and Darwish General is vested in the Governing Bodies, and Darwish does not have the right to act on plaintiffs' behalf, except as the Governing Bodies may allow (see VAC, ¶¶ 66, 68, 70-72).
Under CPLR 3001, the Court "may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy," and the present record plainly establishes that there is a real dispute between the parties involving substantial legal interests for which a declaration of rights will have practical effect (see Chanos v MADAC, LLC, 74 A.D.3d 1007, 1008 [2d Dept 2010]).
The only basis for dismissal tendered by Darwish is that the claim for declaratory relief is duplicative of the contractual claim (see MOL, p. 16). However, plaintiffs represent that their contractual claim is directed solely at Darwish's alleged breach of his employment agreement with Darwish General, and is not a claim for breach of the Governance Agreements (see Opp Mem, p. 18). Accordingly, this branch of the motion is denied.
2. Breach of Fiduciary Duty
Plaintiffs allege that Darwish breached fiduciary duties owed to Darwish Auto as a manager and to Darwish General as a director by, among other things, "[d]efying and interfering with the actions and directives of the [Governing Bodies]" (VAC, ¶ 77 [a]).
"The elements of a cause of action to recover damages for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant's misconduct" (Litvinoff v Wright, 150 A.D.3d 714, 715 [2d Dept 2017] [internal quotation marks and citations omitted]).
Limited Liability Company Law § 409 (a) requires a manager of a limited liability company to perform his or her duties "in good faith and with that degree of care that an ordinarily prudent person in a like position would use under similar circumstances." Likewise, Business Corporations Law § 717 (a) requires a director to perform his or her duties "in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances."
"A cause of action sounding in breach of fiduciary duty must be pleaded with the particularity required by CPLR 3016 (b)" (Palmetto Partners, L.P. v AJW Qualified Partners, LLC, 83 A.D.3d 804, 808 [2d Dept 2011] [citations omitted]). This requirement is met when the complaint puts the defendant on notice of the particular incidents complained of, and the material facts alleged in the complaint are sufficient to give rise to a reasonable inference of the alleged misconduct (see New York State Workers' Compensation Bd. v SG Risk, LLC, 116 A.D.3d 1148, 1154 [3d Dept 2014]).
Plaintiffs have adequately alleged the source of Darwish's fiduciary duties (see VAC, ¶¶ 74-76), the acts said to constitute fiduciary misconduct (see e.g. id., ¶¶ 31-64, 77) and resulting damages (see e.g. id., ¶¶ 56, 63), and the Amended Complaint gives Darwish adequate notice of the particular incidents complained of by plaintiffs. Further, the plausibility of plaintiffs' allegations is confirmed by the Prior Decision, which found that plaintiffs were likely to succeed on establishing Darwish's unauthorized interference with the TD Bank Accounts (see Prior Decision, pp. 6-7). And given that the focus of the contractual claim is Darwish's employment agreement with Darwish General, the tort claim is not duplicative. This branch of Darwish's motion is therefore denied.
3. Breach of Contract
Plaintiffs' third cause of action alleges that Darwish breached his employment agreement with Darwish General by taking draws in excess of those permitted (see VAC, ¶ 64). Although the allegations supporting this cause of action are sparsely pleaded, plaintiffs have adequately alleged the formation of an employment agreement, breach of that agreement by Darwish, Darwish General's performance of the agreement by employing Darwish, and resulting damages (see id.; see also id., ¶¶ 79-83; Palmetto Partners, 83 A.D.3d at 806).
CONCLUSION
Based on the foregoing, it is
ORDERED that Walid Darwish's motion to dismiss is denied in all respects; and it is further
ORDERED that Walid Darwish shall answer the Amended Complaint within twenty (20) days from the date of this disposition; and finally it is
ORDERED that a remote status conference shall be scheduled, and the parties shall confer in advance of the conference regarding the matters set forth in Rule 8 of the Rules of the Commercial Division.
This constitutes the Decision & Order of the Court, the original of which is being uploaded to NYSCEF for entry by the Albany County Clerk. Upon such entry, counsel for plaintiffs shall promptly serve notice of entry on all parties entitled to such notice.
Papers Considered: NYSCEF Doc Nos. 51-65, 77-124, 126-128, 207-211.
The Court takes judicial notice of the prior filings and proceedings in this action (see Matter of Shirley v Shirley, 101 A.D.3d 1391, 1394 [3d Dept 2012]; Casson v Casson, 107 A.D.2d 342, 344 [1st Dept 1985], appeal dismissed 65 N.Y.2d 637 [1985]).