Romanoff v. Superior Career Institute, Inc.

In an action for an accounting and to rescind or reform a contract, defendants appeal from an order of the Supreme Court, Kings County, dated March 8, 1978, which denied their motion for summary judgment. Order reversed, on the law, with $50 costs and disbursements, motion granted and amended complaint dismissed. The plaintiff admits that the first two causes of action in the amended complaint seek a corporate accounting. Under subdivision (b) of section 720 of the Business Corporation Law, this remedy may be sought by a shareholder only in a derivative action brought in the right of the corporation. Since the action has been brought by the plaintiff in his individual capacity, the amended complaint fails to state a cause of action with respect thereto. Thus, the defendants’ motion for summary judgment should have been granted as to those causes of action. The third cause of action should also have been dismissed. It seeks reformation or rescission of a shareholder’s agreement. This agreement had been signed by the plaintiff’s wife during a period in which the plaintiff was not a shareholder of the corporation. Since the plaintiff was not a party to the contract or a third-party beneficiary thereof, he has no standing to seek such remedies. Thus, the third claim also fails to state a cause of action. Damiani, J. P., O’Connor, Lazer and Gulotta, JJ., concur.