Visual Arts Found., Inc. v Egnasko

Visual Arts Found., Inc. v Egnasko 2012 NY Slip Op 00646 Decided on January 31, 2012 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on January 31, 2012
Tom, J.P., Sweeny, DeGrasse, Abdus-Salaam, Manzanet-Daniels, JJ.
6647 603078/08

[*1]Visual Arts Foundation, Inc., Plaintiff-Appellant,

v

Louis A. Egnasko, Defendant-Respondent, Shari Egnasko, etc., et al., Defendants.




Trokie Landau LLP, New York (James K. Landau of counsel),
for appellant.
Louis A. Egnasko, respondent pro se.

Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered February 8, 2011, which, insofar as appealed from as limited by the briefs, upon plaintiff's motion for summary judgment, directed that judgment be entered in the amount of $304,262 in favor of plaintiff as against defendant Louis A. Egnasko on the causes of action for fraud, breach of fiduciary duty, faithless servant liability, and conversion, directed that the amount of the judgment to be entered as against defendants Shari Egnasko (individually and as administratrix of the Estate of Charles Egnasko) and Gold Leaf Travel Center, Inc. be determined at trial, and denied plaintiff's request for attorneys' fees and costs, unanimously modified, on the law, to direct that the judgment in the amount of $304,262 be entered against all defendants jointly and severally on the causes of action for fraud, breach of fiduciary duty, and conversion, to direct that a judgment be entered in the amount of $68,507.80 as against defendant Louis A. Egnasko on the faithless servant cause of action, and to remand the matter for a hearing on plaintiff's request for sanctions, and otherwise affirmed, without costs.

Having demonstrated its entitlement to summary judgment on its cause of action under the faithless servant doctrine, plaintiff is entitled to damages on that cause of action. An employee "forfeits his right to compensation for services rendered by him if he proves disloyal" (Lamdin v Broadway Surface Adv. Corp., 272 NY 133, 138 [1936]; Coastal Sheet Metal Corp. v Vassallo, 75 AD3d 422 [2010]; Matter of Marceca, 40 AD3d 318 [2007]). Plaintiff's evidence of the amount of compensation defendant Louis Egnasko, the disloyal employee, was paid during the relevant period was unrebutted.

Having been found liable on the aiding and abetting claims, Egnasko's co-defendants are jointly and severally liable for the damages resulting from Egnasko's fraud and breaches of fiduciary duty (see Merrill Lynch, Pierce, Fenner & Smith v Arcturus Bldrs., 159 AD2d 283, 284-285 [1990]; American Tr. Ins. Co. v Faison, 242 AD2d 201 [1997]).

The motion court improperly denied plaintiff's request for sanctions in its entirety. The court is directed to conduct a hearing to quantify the damages that plaintiff incurred from those [*2]aspects of defendants' litigation conduct that were "frivolous," including, impending discovery, the filing of meritless counterclaims and conduct which was "undertaken primarily to delay or prolong the resolution of the litigation" (22 NYCRR 130-1.1[c][2]). We note that, as Louis Egnasko is presently incarcerated, the hearing may be conducted through written submissions (see 22 NYCRR 130-1.1[d]).

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: JANUARY 31, 2012

CLERK