Smith v. Dilorenzo

Smith v Dilorenzo 2024 NY Slip Op 30843(U) March 14, 2024 Supreme Court, Kings County Docket Number: Index No. 507146/2020 Judge: Leon Ruchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official publication.

FILED: KINGS COUNTY CLERK 03/14/2024 03:17 PM INDEX NO. 507146/2020 NYSCEF DOC. NO. 113 RECEIVED NYSCEF: 03/14/2024

SUPBEME COURT OF THE STATE OT NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 ------ --------- ----------------- - -- --x THOMAS SMITH, individually, and derivatively on behalf of A. AUTOMATIC SPRINKLER Decision and order INSTALLATIONS, INC:. , Plaintiffs, Index No. 507146/2020 -against- HELEN DILORENZO, March 14~ 2024 Def e ndar1t ., . --. ---- .. · . ---- . -·--· .: -- . - . --. -- ,-.-.----·- .--x·· PRESENT: HON. LEON RUCHELSMAN Motion Seq. #5 E< #<6

The plaintiff has moved seeking to amend the complaint pursuant to CPLR §3025. the plaintiff also moves for sanctions against the defendant. The defendant opposes both motions.

Papers were submitted by the parties and arguments held. After reviewing all the arguments this co'urt ri.ow makes the following determination.

According to the complaint, the defendant company A.

Automatic Sprinkler Installations Inc., was incorporated by the plaintiff Thomas Smith and the defendant Helen Dilo.renzo in 2008.

The company 'fas engaged in fire suppressing contracting and a majority shareholder of any such company must possess a fire suppressing contractors license. Although at the time of incorporation the defendant did not possess such license she ultimately secured one i.11. 2.018. The complaint alleges that since that time the defendant has essentially e:xcluded the pl.;:i.iptiff from the books an.ct re.cords of the cbrripa:ny and has diverted assets a:nd profits. The compiaint asserts causes of action for the breach of fidµciary duty, .conversion, faithless servant, a

·Conclusions of Law It i.s wel.1 settled that a request to amend a pleading shall be freely given unless the proposed amendment wouid unfa-ir.ly pr.ejudi.ce or s.u:rprise the -oppos-;in:g party, -.or is palpably insuffici~nt or ~atently devoid of me~it (Adduci v. 182~ Park .Place LLC, 1°76 A03d 65'8", 107 NYS3d 69d [2d Dept.; -2019]) -; The.

decis·;Lon wh.ether to g:rant s·.Uch leave is. with.in the court's sounc;:l.

discr'etion and such determination . will not lightly be set aside (Ravnikar v. Skyline Cred"i t-Ride Inc., 7 9-- "AD3d 1118, 9i3 NY.S2d [2d Dept~., 201.0 J.).. Therefo.re, when exercising that discretion the court should con.sider whether the· party see·k.:i..ng

The proposed a.mended complaint only substantively mentions the proposed defendants by name one time. The proposed amended complaint alleges that \'acting at the behest and direction of DiLorenzo each of Duffy, Sr.~ Duffy 1 Jr.i K~ Duffy and V~ DiLorenzo (together, the "Additional Defendants"), assisted DiLorenzo in preventing Smitl1 from inspecting A. Automatic's books and records" (see, Amended Complaint, 'lI64 [NYSCEF Doc. N6.

91] ) . Howe~er, that allegation . is so vague . and devoid of any information that it can hardly sustain any .'.3Crutiny that it has any merit. It does not describe, with a minimum of explanation, what these defendants, all relatives of defendant Dilorenzo, did to El.ssist the defendant in committing the alleged improper acts.

They do not describe any tortious conduct at all.

Turning to the ::,;pecific causes .of action applicable to the proposed additional defendants, the faithless servant doctrine was first coined in Herman v. Branch Motor Express Co., 67 Misc2d 444t 323 NYS2d 794 [Civil court Of the City of New York, 1971] where the court stated "a servant who is faithless to his master on Tuesday thereby forfeits the wages he earned on Monday'' {id).

The doctrine states that an agent who owes a duty of fidelity to

·a principal and i_s faithles--s i:p. t,h.;l.t dut,.y thereby fo:rfeits comperi.sation due (see, Pha:nsalkar v .. Anderson Weinroth & Company L.P., 344 F3d 184 [2d Cir. z·o:b3J;. Further, pursuant to the doct.rine the employer i_s. entitle,d_ to a r.et:urri of any coritpensation paid to an employee during the period o·f her disloyalty (CARCO _GROUP. The. .• v. Maconachy. 7T8 F3.d 72 I 2d Cir. 201.J] , see.,. al-s.o ,.

~orres v. Gristede 1 s Operating Corp.I 62~ F.Supp2d 447 [S~D.N.Y. 2.008].). The proposed amended complaint alleges that ''each additional -defenc:fant was a f.-aithie·ss se:i;.vant fqr :E.;l.i-ling· to abide by the dec:i!3.ions_ o.f corporat.~ ownership" anq by acting to benefit themselves a:t the expense of· the ·co·rporation ('see, Amended Coin.plaint,- :<['1[123-127 [_NYSCEF Doc . .No. 9,lj}. -Those .pp.ragraphs do not describe any condu.ct at a,11 that could give rise to any ciaim they- ·were fa-ithles-s s.ervants .. The .alle-gatio.ps are. ·wholly c.onclu.sory, .accusing them o.J- .acted faitblessly.,_ without explaining any of their conduct wherein an exarninati.on of their f-a i thl"e s sne.s s cou.l d be- -s cru.tinize.ct. The propo·sed arn,end~d ~omplaint does allege.that the defendartt arid the proposed add.i tional defendants ·opened another entity called Empire State ·.Fire: $.ptink.l-er corp.; [here.in";:3:fter 'Empire' ] , howeve:r, the proposed amended-Com plaint fails to connect any faithless conduct to Bmpire' s be.nefi t . ~ More;!over ;_ there is no evidence eatab.11shing that the .proposed deferidants were working for Empire while still employed by the A. Automatic. Ihdeed, any such ·evidence tends to

Turning to the proposed cause of action of aiding and abetting the breach of a fiduciary duty, a party seeking to allege this caµse of action must demonstrate a f'iduciary duty was owed, there was a breach of that duty and t_he party contributed substantial assistance in effecting the breach (see, Yuko Ito v. Suzuki, 57 AD3d 2.05, 869 NYS2d 28 [1st Dept., 2008]) . In Baron v. Galasso, 83 AD3d 626, 921, NYS2d 100 [2d Dept., 2011] the sustainability of the cause of action was defined as whether the other party knowingly induced or participated in toe breach.

Again, the proposed amended complaint fails to allege any conduct the additional defendants en::ga:ged in to aid the defendant Diloren,zors breach. As noted, conclusory allegations are insufficient to allege any such tortioi.ls conduct, The fifth cause of action alleges a declaratQry judgement that the defehdaht "DiLorenzo failed to. observe important corporate formalities and commingled the assets, operations, activities, and management of each of A. Automatic and Empire such that A.. Automatic and Empire have no distinct corporate existence separate from the other entity 0 - (see, Amended Complaint, '3[136 [NYSCEF Doc. No. 9.1]). Howe:ver, that wouid require A. J\utornatic :to pierce its own . corporate. . veil to assert

6

169 [2d Dept., 2008l) ..

The proposed causes of action seeking unjust enrichment and actual and constructive fraudulent transfers. are duplicative of the o"ther causes of action, namely breach of fiduciary duty,.

conversion and faithle,ss servant applied to deferi.dant Helen Dilorenzo.

The last new·causeof action alleges tortious interference with contracts. The elements of a cause of action alleging tortious interference with.contract are: (1) the existE=nce of a valid contract between the pl.aintiff and a third party, (2) the defendant's knowledge of that contract, (3) the defendant's intentional procurement of a. third:-'party' s breac::h of that contract without justification, and {4) damages (Anethsia Associates of Mount Kisco, LLP v. Northern Westchester Hospital Center, 59 AD3d 473, 873 NYS2d 679 [2d Dept., 2009]). Further, the plaintiff muSt specifically allege that 'but for' the defendant's conduct there would have been no breach of the contract (White Knight of Flatbush. LLC v. Deacons of Dutch Congregations of Flatbush, 159 AD3d 939, 72 NYS3d 551 [2d Dept;, 2018]). The proposed amended complaint does not allege any breach bf any contract$ at all.

Therefore, based on the foregoing, the motion seeking to amend the complaint as noted above is denied in its entirety.

Without opposition, the motion seeking to add a claim for

The plain.tiff's further move seeking sanctions or contempt against the defendant for her failure to comply with an dtder dated June 12, 2020. It is well settled tl1at where a court has jurisdiction an order of the court must be obeyed (Woiste·ncraft v. Sassower, 212 AD2d 598, 623 NYS2d 7 [2d Dept., 1995]). Thus, "a party is obligated to cdrttply with a court ordet, however, incorrect the party may consicter that order to be, until that order is set aside, either by appeal or otherwise, so long as the court issU:.ing the order had jurisdiction to do so" (Gloveman Realty Corp. , v. Jeffreys, 2 9 AD3d 858, 815 NYS2d 687 [2d Dept., 2006] ) . The factual discrepancies in this case do riot support any finding any court order was violated. Indeed, every allegation the order was violated is disputed with evidence presented by the defendant that no sU:ch violation of the order occµrred. At this juncture the court cannot conclude the defendant irrefutably violated the court order. Therefore, the motion seeking any sanction or contempt is. denied.

So ordered.

ENTER:

DATED: March 14-, 2024 Brooklyn N~Y. !'[on, Leon Ru'?l:l.n 8.