Opinion
No. 2275 Index No. 655003/19 Case No. 2023-01330
05-28-2024
Charles Hall, Plaintiff-Respondent, v. Reggie Middleton et al., Defendants-Appellants.
Cardenas Islam & Associates, PLLC, Jamaica (Barak P. Cardenas of counsel), for appellants. Ford Marrin Esposito Witmeyer & Gleser, LLP, New York (Jon R. Grabowski of counsel), for respondent.
Cardenas Islam & Associates, PLLC, Jamaica (Barak P. Cardenas of counsel), for appellants.
Ford Marrin Esposito Witmeyer & Gleser, LLP, New York (Jon R. Grabowski of counsel), for respondent.
Before: Oing, J.P., González, Kennedy, Higgitt, O'Neill Levy, JJ.
Judgment, Supreme Court, New York County (Jennifer Schecter, J.), entered on or about February 15, 2023, adjudging and declaring that nominal plaintiff Veritaseum, Inc. (Company) is the owner of the subject patents, requiring defendant Reggie Middleton (Middleton) to transfer the patents to the Company, awarding the Company $1 million in punitive damages from Middleton, and awarding plaintiff Charles Hall $450,000 in attorneys' fees and costs from the Company, unanimously affirmed, without costs.
The trial court providently exercised its discretion in precluding defendants from presenting certain evidence at trial due to their failure to comply with pretrial deadlines (see generally CPLR 3126; Those Certain Underwriters at Lloyds, London v Occidental Gems, Inc., 11 N.Y.3d 843, 845 [2008]; Guenzburger v Fernandez, 219 A.D.3d 1221, 1221 [1st Dept 2023]).
Regardless of whether the Company otherwise had a right to ownership of the patents, the evidence presented at trial supported the finding that Middleton breached his fiduciary duty when he procured investments by repeatedly representing that the Company owned or would own them and then secretly transferring them to himself (see Great Lakes Press Corp. v Froom, 695 F.Supp. 1440, 1448 [WD NY 1987]; see generally O'Mahony v Whiston, 224 A.D.3d 609, 610 [1st Dept 2024]). Such is further supported by the trial court's conclusion, which is entitled to deference, that Middleton's testimony was not credible.
The trial court also providently exercised its discretion in awarding $1 million in punitive damages. Punitive damages may be awarded in connection with an underlying claim for a breach of fiduciary duty like the one at issue here (see O'Mahony v Whiston, 224 A.D.3d at 610; see also generally Rocanova v Equitable Life Assur. Socy. of U.S., 83 N.Y.2d 603, 616-617 [1994]). Contrary to Middleton, a related award of compensatory damages is not required (see Keen v Keen, 113 A.D.2d 964, 966 [3d Dept 1985], lv dismissed 67 N.Y.2d 602 [1986]; see also I.H.P. Corp. v 210 Cent. Park S. Corp., 16 A.D.2d 461, 463-466 [1st Dept 1962], affd 12 N.Y.2d 329 [1963]). Based on the facts and evidence herein, it was "entirely appropriate to grant... equitable relief and also exact punitive damages as a deterrent against flagrantly unlawful conduct [and].... is entirely consonant with substantive legal and equitable principles and with present-day concepts of procedural efficiency" (I.H.P Corp. v 210 Cent. Park S. Corp., 16 A.D.2d at 465-466). The trial court explained its rationale for the amount of the award, which appropriately included consideration of the harm done, the flagrancy of the conduct, and the impact on Middleton (see Matter of 91st St. Crane Collapse Litig., 154 A.D.3d 139, 157 [1st Dept 2017]). Although defendants complain that the court did not consider Middleton's wealth, they do not point to any evidence that was not considered and their request for a bifurcated trial was not raised below.
The trial court, which was in a better position to evaluate the reasonableness of the attorneys' fees and costs requested, already substantially reduced the amount thereof. We perceive no basis for a further reduction.
We need not reach the issue of the appropriateness of a security under Business Corporation Law § 627, as this issue became moot upon entry of final judgment.
We have considered defendants' remaining contentions and find them unavailing.