Zhong v Capstone Business Credit, LLC

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Zhong v Capstone Business Credit, LLC 2012 NY Slip Op 32173(U) August 17, 2012 Supreme Court, New York County Docket Number: 100429/2009 Judge: Judith J. Gische Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. NNED ON 812012012 [* 1] . I SUPREME COURT OF THE STATE OF NEW YORE NEW YORK COUNTY Index Number : 100429/2009 ZHONG, MICHAEL VI CAPSTONE BUSINESS CREDIT Sequence Number :009 [* 2] - DEC1810NIORllffg Index No.: 100420-2009 Seq. No.: 008 Plaintiff (s), PRESENT: -against- J.S.C. Capstone Business Credit, LLC, John Rice, Ill, Yecheskel Menashe, Esq., and "John Doe," Defendant (e). Redtation, as required by CPLR 2219 [a], of the pepem considemd in the ntview of this (these) motion(s): ------------ tt ¬-D- I = Numbered Papers Pltfs nlm (3215) wMlXZ affirm, MZ a m , exhs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ............ 2 Regina's affid in opp whxha . . . . . . . . . . . . . . . . . . . . . PWs affirm for extension of time wMlXZ affirm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Pltfs reply wMlXZ affirm, exh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 - - N E W n R K - - - I . 1 _ - COUNTY CLERK'S OFFEE Upon the fomgoing papers, the declsion and oder of the court Is as follows: The reader is presumed familiar with the underlying facts of the parties' dispute. The court granted plaintiffs prior motion for permission to serve an amended complaint to assert claims against two new defendants ("Regina" and "Narmin Crowne, Inc.") (Order, Glsche J., Wlbll). The time to Berve the defendants wa8 extended by the court In its order dated The time to serve the defendants wa8 extended by court order (Order, Gische J., 2/29/12) Plaintiff has now served the amended summons and complaint'. Regina was 'The court obsanres that plaintm has self styled the caption by putting the newly named defendants first. While there may be nothing technically wrong with this, that amended caption Page 1 of 7 [* 3] F sewed personally on April 6, 2012. At the same time Regina accepted aervlce on behalf of Narrnin, in his capacity as an offlcerldiractorlagsntof that corporadon. Narmin, a domestic corporation was pmvioU3ly served (October 25, 201 I) through the Sacretary of State. Following service, Armand P. Mele, Esq., sent plaintiff's counsel correspondence dated May 4, 2012 stating that "[we] rapreaent Frank Regina ("Regina") and Narmin Crowne, Inc, ("Narmin"). We are writing to request... two week adjournment of time in e which they may serve you with an Answer to the Amended Verified Complaint." The balance of the letter states that Attorney's Mele'a client8 were Improperly amad, but that they "agreed to wahre their jurlsdictlonal defenses in this matter, includlng improper service of process, in exchange for your agreeing to extend their time to Answer or otherwise move with respect to the Amended Verified Complaint up to and including May 21 2012." Following that correspondence, the attorneys for each side entered into I a written stipulation dated May 7, 2012 on those terma. The motion at bar is for entry of a default judgment against Regina and Narmln because they have not answered the complaint, despite the agreed to extension of time to do 80. Regina and Namin have appeared by counsel. After this motion was sewed, however, Regina's attorney wrote to plaintiff8 counsel on May 30,2012, requesting that plaintiffs counsel withdraw the motion. In that correspondence, Attorney Mete warns plaintiffs counsel that he is consideringfiling 8 motion for sanctions against plaintiff and is not reflected in SCROLL and the lead defendant continues to be Capstone. Page 2 of 7 [* 4] plaintiff's attorney on the basis that Rsglna has answered the Amended Verlfled complaint. In earlier correspondence, Attorney Mele state8 the firm does not represent the defendants and that they are procasdlng pro $0, Regina has, in fact, prepared an answer and opposition papers stating he is "temporarily acting pro sa.."Both are submitted on his behalf and on behalf of Narmin. Since Narmin cannot appear without an attorney, a8 It 1 a corporation (CPLR 3 321 [a]), the answer and opposition on Narmin's behalf is a nullity. Therefore, Narmin is in default of answering the complaint end opposing this motion. A party cannot sometimes appear by an attorney and then proceed 8s if slha were unrepresented. Partly this is to avoid the pitfalls of DR 7-104, prohibiting direct communications by an attorney with I party the lawyer k n o w to be represented by counsel. Thls Is also to protect the client because an attorney is not relieved unless discharged by the client, by order of the court granting 8 motion to be relieved as counsel, or by consent to change attorneys filed with the court (CPLR Q 321 [b]). Regina's answer Is dated May 21, 2012. It was not until May 29, 2012 that Attorney Mele notified plaintiffs counsel that the firm does not represent Regina. Since there has been no substitution of counsel filed with the court, Jungs & Mele, LLP is stili the attorney of record for Regina. Therefore, Regina's pro st3 an8w8r and opposition is 8 nullity BS well and this motion is before the court without opposition. On a motion for default judgment, the moving party must establish the prima facia elements of the cau88 of action (sea, Jooatan v. O&, 129 A.D.2d 531 [l' Dapt 19871). Plaintiff alleges that defendants committed 8 fraud by falsely representing they ware copper deabra and had copper to sell to the plaintiff. After making payment of Page3of 7 [* 5] approximately 1 million dollars, plaintiff discovered there had never b m n any copper for sale and that he had been defrauded. Plaintlff has checked with the Chinese Commissioner of Customs to sea whether there was any shlpment of copper from Russia to China and discovered there wai none. According to plaintiff, he made two separate payments for the flctitlous copper. The first payment waB for 4,500,000 RMB (approximately $700,00 as of Aprll2007). The second payment was in U.S dollars ($277,650),made in May 2007. The payments were wired to Regina and Narmin. Regina is the principal of Narmin. In the court's August 12, 2011 order, plaintiff was allowed to $ewe an amended complaint to assert fraud and conspiracy claims against the new defendants, although they were dismissed against the other defendants. The Amended complaint contains the following claims against Reglna and Narmin: Plaintiffs 1" cause of action is for fraud and his 2"6cause of action is for "conspiracy to defraud." The necessary elements of a fraud mu88 of action are that there has been 8 misrepreaentation of material facts, falsity, scienter, reliance and InbV r G C 0 CQL 12 AD3d , 301 [l" 20041). A Dept "conspiracy to defraud" is punishable as a felony under Penal Law 8 190.65 and there is no private right of action because it is prosecuted by the state lPaoDla v. Firpt .. endian PI a n w Cnrg, 86 NY2d 008 [1Q9SJ).A "conspiracy to commlt fraud" is, however, a clvil action then can be pursued by a private Individual. Assuming that plaintiffs claim is really for a "conspiracy to commit fraud," he must allege facta showing a auficiernt connactian between the actions of the named IndivMuals and the fraud alleged, such as a scheme or plan in common lAclostini v, Page4of 7 [* 6] MI AD2d 385 [let 20031; 588, w a n v, Q 304 Oapt. w , 111 AD2d 464 13' Dept. 18851). These requlrements are satlsfled, based upon the unopposed facts asserted in the Amended complaint and plaintiff is entltled to EI default judgment an his 1'' cause of actlon and on his Zd cause of action, only to the extent it is deemed a clalm for "conspiracy to commit fraud." Plaintiffs 3d cause of action Is based upon an alleged vlolation of General Buslness Law § 349. GBL 9 349 provldes that "[dleceptive acts or practices in the conduct of any business, trade or commerce)or in the furnishing of any aervice in this state are hereby declared unlawful." It is an intentionally broad statue, applying "to virtually all economic activity." Goshen v, M u W Life Ins, Co.of New Yorh,98 N.Y.2d 314, 324 (2002). To establish a violation of GBL § 348 the conduct complained of must be consumer-oriented and have a broad impact on consumers at large a8 compared to a private contract dispute that Is unique or partlcular to one of the parties to the lawsult. New York Univarsitv v. Cantin- Ins. Co,, 87 NY2d 308,324 (1095); Osw- orem' Local 214 PeMon Fund v. Manne W-k, 85 NY2d 20,25 (I 995). Even if plaintwcan prove at trial that he is a consumer withln the meaning and spirit of the law, the deceptive acts alleged only Involve him, not the public at large. Therefore, plaintiff8 motion for entry of a default judgment on his 3d cause of action against Regina and Narmin is denled and this claim against Regina and Narmln is severed and dismissed. Plaintiffs 4" cause of action is for brsach of fiduciary duty and his 5" cause of action is for punitlve damages. Plaintiff8 motion for a default judgment on each of them claim8 is denied. There is no fiduciary relationship among plaintiff, Regina and Page 5 of 7 [* 7] Narmin. In deciding whether a fiduciary relationship exists between parties, the court looks at "whether a party reposed confldenca in another and reasonably relied on the other's superior expertise or knowledge" ( m e r v. m d Fmres & CO,, 241 A.D.2d 114, 12 [1988]). Even accepting plaintiffs facts, they do not eatablleh this cause of action. In order to recover punitive damages, a plaintiff must establish by clear, unequlvocal and convlncing evidence, "egregious and willful conduct'*that is "'morally culpabl8, or is actuated by evil and reprehensible motlves" (Munor v. Pur& 301 A.D.2d 382, 384 [Ir' 20031 internal citations omitted). Plaintiff has failed to state Dept. sufficient facts to prove hls claim for enhanced or exemplary damages. The actions by the defendants do not rise to the level of being a recklessnesis or a conscious disregard of the rights of others w o r d Accident & indnm&v Co. v. H a r n ~ a ,w 8 N.Y.2d 218 4 [I0791 and punitive damages are not available for ordinary negligence. Therefore, plaintiffs motion for default on his punitive damages claim is denied and this claims is severed and dismiaaed. Although plaintiff has established defendants' liability, the amount of damages he is entitled to must be decided at a hearing. The issue of damages is will be heard at the time of trial, Concludon It is hereby, ORDERED that plaintiffs motion for entry of a default judgment against defmdanta Frank Ragina and Narmin Crowne, Inc. is granted on the iasue of liability Page 6 of 7 [* 8] and that there wlll be an inquest on damages at the tlme of trial; and It la fuurther ORDERED that any relief any relief requested but not speciflcally addresaed is hereby denied; and it I further 8 ORDERED thia constitutes the dQclslonand order of the court. that Dated: New York, New York August 17,2012 So Ordered: FILED NEW YORK COUNTY CLERK'S OFFICE

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