Opinion
Index No. 652857/2016 Motion Seq. Nos. 015 016 018
06-08-2021
FAVOURITE LIMITED, CLAUDIO GATELLI, GRAZIANO SGHEDONI, ALBERTO BRENTEGANI, SIRIO SRL, OILE SRL, UPPER EAST SIDE SUITES LLC, Plaintiffs, v. BENEDETTO CICO, CARLA CICO, 151 EAST HOUSTON ACQUISITION LLC, Defendants.
Unpublished Opinion
PRESENT: HON. JENNIFER G. SCHECTER, JUSTICE
DECISION + ORDER ON MOTIONS
JENNIFER G. SCHECTER, JUDGE
The following e-filed documents, listed by NYSCEF document number (Motion 015) 385, 386, 387, 388, 389, 390, 391, 392, 393, 394, 395, 409, 410, 411, 412, 413, 424 were read on this motion to/for DISMISSAL.
The following e-filed documents, listed by NYSCEF document number (Motion 016) 396, 397, 398, 399, 400, 401, 402, 403, 404, 405, 406, 407, 408, 414, 425 were read on this motion to/for DISMISSAL.
The following e-filed documents, listed by NYSCEF document number (Motion 018) 429, 430, 431, 432, 433, 434, 435, 436, 437, 438, 439, 440, 441, 442, 443, 444 were read on this motion to/for LEAVE TO FILE.
Motion to Amend Complaint (Seq. No. 018)
Nothing precludes plaintiffs from moving to amend. Plaintiffs' claims were dismissed without prejudice due to lack of capacity and this action was never disposed (U.S. Legal Support, Inc. v Eldad Prime, LLC, 125 A.D.3d 486, 488 [1st Dept 2015]; see Tri-Terminal Corp. v CITC Indus., Inc., 78 A.D.2d 609 [1st Dept 1980] ["the more appropriate remedy was not outright dismissal of the complaint, but a conditional dismissal or a stay affording plaintiff an opportunity to cure this nonjurisdictional defect, i.e., to obtain the requisite authority"]; see also Art Capital Bermuda Ltd. v Bank of N.T. Butterfield & Son Ltd., 169 A.D.3d 426, 428 [1st Dept 2019] [reversing motion court's denial of motion to dismiss but noting that a motion for leave to amend could be filed]). A proposed judgment was never filed nor was judgment ever entered. It would make no sense, under the circumstances, for plaintiffs to have commenced another separate action under a different index number and then to have moved to consolidate it with this one when this one has always remained active and pending. Indeed, the Cicos' counterclaims against Upper East Side Suites, LLC (the Company) could not have been maintained against the unrevived entity (Capone v Castleton Commodities Intl. LLC, 2016 WL 1222163, at *3 [Sup Ct, NY County Mar. 29, 2016], citing Matthew v Laudamiel, 2012 WL 605589, at *21 [Del Ch Feb. 21, 2012]).
The record now contains a "decision by more than 50% of the members to revive the Company" made "between May 31 and June 30, 2018," which was prior to the December 2020 filing of a certificate of revival (Dkts. 432, 433; see Favourite Ltd. v Cico, 181 A.D.3d 426, 427 [1st Dept 2020]). Thus, there is no reason not to recognize the Delaware Secretary of State's acceptance of the certificates of correction and revival.
For the reasons set forth earlier (Dkt. 277), the proposed amendments are not patently without merit and defendants' arguments to the contrary either implicate disputed issues of fact (such as the validity of certain signatures) or are unavailing.
Motions to Dismiss the Counterclaims (Seq. Nos. 015. 016)
Plaintiffs' motions to dismiss the Cicos' counterclaims are granted as well.
The Cicos assert counterclaims for breach of the operating agreement against the Company. They also counterclaim against the other plaintiffs for breach of the operating agreement, tortious interference with the operating agreement, tortious interference with business relations, breach of fiduciary duty, declaratory judgment, and for attorneys' fees as the prevailing parties on plaintiffs' claims. Carla Cico also seeks indemnification from the Company.
The Cicos' claims against the Company for management fees and expenses are dismissed. The operating agreement conditions fees on the Company having "net income" (Dkt. 389 at 18). The Cico's do not allege or submit any evidence that the company ever had net income and financial records show otherwise (see Dkt. 392 at 2). Nor do the Cicos allege or submit any evidence of specific expenses for which they were not reimbursed.
The counterclaims against the other plaintiffs are equally baseless. The bulk of them are predicated on plaintiffs allegedly taking unauthorized action on behalf of the Company in violation of the operating agreement. Plaintiffs, however, were permitted to do so (see Dkt. 345 at 3-4). In any event, the Cicos do not allege damages separate and apart from their legal fees in this action, which are not recoverable under the American Rule (CWCapital Invs LLC v CWCapital Cobalt VR Ltd., 182 A.D.3d 448 [1st Dept 2020]; see Congel v Malfitano, 31 N.Y.3d 272, 291 [2018]). To the extent the Cicos claim entitlement to prevailing-party fees under § 11.12 of the operating agreement, of course, it is premature to decide that now and, whoever prevails, can seek reimbursement of fees based on the contract (cf. Pier 59 Studios L.P. v Chelsea Piers L.P., 27 A.D.3d 217 [1st Dept 2006]).
The tortious interference with contract claims are dismissed because they cannot be asserted against a party to the contract (Ahead Realty LLC v India House, Inc., 92 A.D.3d 424, 425 [1st Dept 2012]). The tortious interference with business relations claim by Benedetto Cico was withdrawn and the one by Carla Cico is dismissed because, among other reasons, it lacks the requisite detail about such relations (see Access Nursing Servs. v St. Consulting Grp., 137 A.D.3d 678, 679 [1st Dept 2016]), and it cannot be based on the collateral consequences of litigation (Joseph v Joseph, 107 A.D.3d 441, 442 [1st Dept 2013]; see Manhattan Sports Restaurants of Am., LLC v Lieu, 146 A.D.3d 727 (1st Dept 2017]).
The breach of fiduciary duty claims are dismissed because they do not allege any violation not expressly governed by the operating agreement (see AM Gen. Holdings LLC v Renco Group, Inc., 2013 WL 5863010, at *10 [Del Ch Oct. 31, 2013]).
Finally, the declaratory judgment claims are dismissed as duplicative of the other causes of action (see Atlas MF Mezzanine Borrower, LLC v Macquarie Texas Loan Holder LLC, 174 A.D.3d 150, 163 [1st Dept 2019]).
Accordingly, it is ORDERED that plaintiffs' motion for leave to file a third amended complaint (Seq. No. 018) is GRANTED and plaintiffs shall file their third amended complaint within one week, which the Cicos shall answer within two weeks thereafter; and it is further
ORDERED that plaintiffs' motions to dismiss the counterclaims (Seq. Nos. 015, 016) are GRANTED and the Cicos' counterclaims are dismissed; and it is further
ORDERED that on July 1, 2021 at 1:00 p.m., a status conference will be held on Microsoft Teams (audio only) to address the status of discovery and to set deadlines for the remainder of fact discovery, for which plaintiffs' counsel shall either circulate a Teams invite or request that the court do so.
A new action would have been timely pursuant to CPLR 205(a) and Executive Order 202.8.