Opinion
Index No. 521162/18
05-23-2022
F&R GOLDFISH CORP., AND NEW YORK CITY FISH, INC., Plaintiffs, v. VLADIMIR FURLEITER, Individually and on behalf of ROYAL BALTIC, LTD., N.Y. FISH, INC., AND ROYAL DEVELOPMENT, INC., ALEXANDER KAGANOVSKY, Individually and on behalf of ROYAL BALTIC/ LTD., N.Y. FISH, INC., AND ROYAL DEVELOPMENT, INC., Defendants, ROYAL DEVELOPMENT INC., Third-Party Plaintiff, v. MYM SMOKED FISH, INC., MAXIM KUTSYK, YEFIM KUTSYK AND PAVEL ROYTKOV, Third-Party Defendants,
Unpublished Opinion
PRESENT: HON. LEON RUCHELSMAN, JUDGE
DECISION AND ORDER
HON. LEON RUCHELSMAN, JUDGE
The third party defendants MYM Smoked Fish Inc., Maxim Kutsyk and Pavel Roytkov have moved seeking summary judgement concerning the second, third, fourth and sixth third party claims. The third party plaintiff opposes the motion. Papers were submitted by the parties and after review of all the arguments this court now makes the: following determination.
As recorded in prior orders, on November 1, 2012 an entity called Royal Baltic Ltd., ceased operations at a fish smoking facility located at 738 Chester Street in Kings County, The property was: owned by an. entity called Royal Development Inc., that was owned by Vladimir Furleiter and Alexander Kaganovsky. Royal Development Inc., entered into a lease: agreement With New York City Fish Inc., wherein New York City Fish would pay rent and operate the fish smoking facility. It is alleged, that New York City Fish owes over $400/000 in rent. The third party complaint alleges causes of action for ejectment, unjust enrichment, - constructive trust, conversion, an injunction and breach of contract. The defendants' have now moved seeking summary judgement that the above noted claims cannot be sustained against the individuals Kutsyk and Roytkov because there is no evidence those individuals so dominated the corporation to the extent that individual liability is proper.
Conclusions of Law
Where the material facts at issue, in a case are in dispute summary judgment cannot be granted (Zuckerman v. City of Hew York, 49 N.Y.S.2d 557, 427 N.Y.S.2d 595 [1980]). Generally, it is for the jury, the trier of fact to determine the legal cause of any injury, however, where .only one conclusion, may be drawn from the facts then the question of legal cause may be decided by the trial court as a matter of law (Marino v. Jamison, 189 A.D.3d 1021, 136 N.Y.S.3d 324 [2d Dept., 2021).
It is well settled that to succeed on a request to pierce the corporate veil and hold an individual responsible for the liabilities of the corporation the plaintiff must demonstrate that" (1) the owners exercised complete dominion of the corporation in respect to the transaction attacked; and (2)that such dominion was used to commit a fraud or wrong against the plaintiff which resulted in plaintiffs injury" (Conason v. Megan Holding LLC, 25 N.Y.3d 1, 6 N.Y.S.3d 206 [2015]). "Factors to be considered in determining whether an individual has abused the privilege of doing business in the corporate- or LLC form include the failure to adhere to [corporate or] LLC formalities, inadequate capitalization, commingling of assets, and the personal use of {corporate or] LLC funds" (see. Grammas v. Lockwood Associates LLC, 95 A.D.3d 1073, 944 N.Y.S.2d 623 [2d Dept., 2012]).
Even if there are questions of fact whether third party plaintiff can pierce the corporate veil there can be no question of fact the cause of action for constructive trust must be dismissed. It is well settled that in order to impose a constructive trust the following four elements must be proven. There must be a confidential or fiduciary relationship, a promise, a transfer in reliance of the promise and unjust enrichment (Sharp v. Kosmalski, 40: N.Y.2d 119, 386 N.Y.S.2d 72 [1976]). These elements are not applied rigidly but flexibility is employed, especially to promote and satisfy the demands of justice (Sanxhaku v. Margetis, 151 A.D.3d 778/ 56 N.Y.S.3d 238 [2d Dept., 2017]), Essentially, as expressed by Justice Cardozo in Beattv v. Guggenheim Exploration Co., 225 NY 380, 122 NE 378 [191-93, "a constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee" (id) . In this case there has been no transfer in reliance upon any promise. Rather, the third party plaintiff seeks recovery of unpaid rent. No constructive trust has been created thereby and consequently the motion seeking to dismiss the third count of the third party complaint is granted.
The fourth cause of action is for conversion. It is well settled that to establish a claim for conversion the party must :show the legal right to an identifiable item or items and that the Other party has exercised unauthorized control and ownership Over the items (Fiorenti v. Central Emergency Physicians, PLLC, 305 A.D.2d 45:3, 762 N.Y.S.2d 402 [2d Dept., 2003]). As the Court of Appeals explained "a conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession...Two key elements of conversion are (1) plaintiff's possessory right or interest in the property.... .and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's rights" (see, Colavito v. New York Organ Donor Network Inc., 8 N.Y.3d 43, 827 N.Y.S.2d 96 [2006]). Therefore, where a defendant "interfered with plaintiffs right to possess the property" (-Hill-crest. Homes, LLC v. Albion Mobile Homes. Inc., 117 A.D.3d 1434, 984 N.Y.S.2d 755 [4th Dept., 2014]) a conversion has occurred. Thus, the mere failure to pay rent, if true, does not raise any questions of fact the third party defendants committed any conversion. Therefore, the motion seeking to dismiss the fourth cause Of action is granted.
The sixth cause of action alleges breach of contract based upon a promissory note executed fey defendant Maxim Kutsyk. on May 7, 2014 in the amount of $40,000. The seventh paragraph of the note states that "this Note is. given in consideration of Royal Development, Inc., allowing New York City Fish, Inc., a New York Corporation of which Maxim Kutsyk is a President to terminate a certain lease and tenancy entered into between Royal Development, Inc as landlord and New York City Fish as tenant" (see, Promissory Note, ¶7). Kutsyk argues that in any event a few weeks later the parties entered into a surrender agreement whereby the lease was surrendered upon landlord's payment of ten dollars.. However, rather than extinguishing the promissory note, there are surely questions of fact whether that surrender agreement was merely done in accordance with such note. Indeed, it is curious that the landlord would accept $4 0, 000 in consideration of terminating the lease and then three weeks later accept a mere ten dollars to accomplish the same termination. Clearly, there are questions of fact whether the note remains valid. There are further questions of fact whether Kutsyk evert signed the note. At his deposition he was questioned about the note and asserted that "I cannot state that it's my signature" (see. Deposition of Maxim Kutsyk, page 142) and that he never executed the promissory note (id., page 1.4 3.) . Further, the existence of the promissory note would seem to undermine the central claim that the third party defendants owe any rent at all.
Consequently, the motion for summary judgement seeking to dismiss the breach of contract claim as to Kutysk only is denied. The motion for summary judgement seeking to dismiss the claim against Pavel Roytkov who did not sign any contract is granted.
Lastly, concerning the second count for unjust enrichment, it is. well settled that a claim of unjust enrichment is not available when it duplicates or replaces a conventional contract or tort claim (see, Corsello v. Verizon New York Inc., 18 N.Y.3d 777, 944 N.Y.S.2d 732 [2012]). As the court noted "unjust enrichment is not a catchall cause of action to be used when Others fail" (id) . Since a viable contract claim exists the motion seeking summary judgement dismissing the unjust enrichment claim is granted.
Therefore, the motion seeking summary judgement dismissing the second, third, fourth and sixth claims are all granted, except the motion seeking summary judgement dismissing the sixth claim against Kutsyk is denied.
So ordered.