Georgeson, Inc. v Hussein

[*1] Georgeson, Inc. v Hussein 2009 NY Slip Op 50569(U) [23 Misc 3d 127(A)] Decided on April 3, 2009 Appellate Term, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 3, 2009
APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT
PRESENT: McKeon, P.J., Schoenfeld, J.
570136/08

Georgeson, Inc. f/k/a Georgeson Shareholder Communications, Inc., Plaintiff-Appellant,

against

Ahmed Hussein, Defendant-Respondent.

Plaintiff appeals from that portion of an order of the Civil Court of the City of New York, New York County (Manuel J. Mendez, J.), dated September 27, 2007, which denied its motion for summary judgment dismissing defendant's breach of contract counterclaim and, sua sponte, granted defendant leave to amend the counterclaim.

Per Curiam.

Order (Manuel J. Mendez. J.), dated September 27, 2007, modified to grant plaintiff summary judgment dismissing defendant's breach of contract counterclaim insofar as it seeks recovery for loss of value of corporate stock, and to grant plaintiff leave to move to conduct discovery on that branch of defendant's counterclaim seeking recovery of proxy expenses and related counsel fees; and as modified, affirmed, without costs.

Plaintiff, a proxy solicitor, demonstrated entitlement to summary judgment dismissing defendant's first counterclaim seeking damages for the alleged loss in the value of corporate stock claimed to have resulted from the untimely delivery of proxy materials. Such claim, asserted by defendant in his individual capacity, belongs to the corporation, and accordingly, may only be asserted derivatively (see Abrams v Donati, 66 NY2d 951, 953 [1985], rearg denied 67 NY2d 758 [1986]). In any event, the record establishes that the damages sought by defendant, as originally pleaded, were speculative and belied by the increase in the value of the corporate stock following the proxy contest. Further, the directors in defendant's insurgent slate, even if duly elected, would have constituted only a minority of the corporation's board.

We affirm Civil Court's determination allowing defendant to amend the ad damnum to include recovery of proxy expenses and related attorneys' fees incurred by defendant in his individual capacity. Such damages were separate and distinct from any claimed injury sustained by other shareholders in connection with the unsuccessful proxy solicitation. Plaintiff's duty under the governing engagement letter was to defendant alone, as the "client" (cf. Bordereaux v Salomon Smith Barney Holdings, 269 AD2d 217 [2000], lv denied 95 NY2d 754 [2000]). In the circumstances present, and in view of the discovery which we allow, consideration of this category of damages will not result in unfair surprise or prejudice to [*2]plaintiff, which has long been aware of the relevant facts underlying this claim.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: April 03, 2009