GDH Capital Corp. v Lis

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GDH Capital Corp. v Lis 2011 NY Slip Op 33514(U) December 13, 2011 Supreme Court, Nassau County Docket Number: 000477-11 Judge: Timothy S. Driscoll 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. [* 1] SUPREME COURT- STATE OF NEW YORK SHORT FORM ORDER Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court ------------------------------------------------------------------- Jl GDH CAPITAL CORP., Plaintiff, -against- TRIAL/IAS PART: 20 NASSAU COUNTY IndeJl No: 000477Motion Seq. Nos. 1 and 2 Submitted: 11/2/11 ROBERT LIS, Defendant. ------------------------------------------------------------------- Jl The following papers having been read on these motions: Order to Show Cause, Affidavit in Support and EJlhibits......... Notice of Motion , Affirmation of Attorney and EJlhibits........... Affidavit ' of S e rvi ce...... ................................................................... This matter is before the Cour for decision on 1) the Order to Show Cause filed by PlaintiffGDH CCipital Corp. (" Plaintiff' ) on Januar 12 2011; and 2) the motion filed by Plaintiff on October 21 , 2011 and submitted on November 2 , 2011. For the reasons set forth below , the Cour 1) grants the Order to Show Cause to the extent that the Cour directs that the temporar restraining order issued by the Cour (Parga, J. ) on Januar 12 , 2011 shall remain in effect until the entry of judgment as directed herein; and 2) grants the motion to the extent that the Cour awards Plaintiff judgment against Defendant on the second and third causes of action in the Verified Complaint and refers the determination of damages and interest to an inquest. [* 2] BACKGROUND A. Relief Sought In its Order to Show Cause , Plaintiff moves for an Order , pursuant to CPLR 9 6301 restraining and enjoining the Defendant Robert Lis ("Defendant" ), his agents , assigns , and those holding monies on his behalf from transferring, withdrawing, hypothecating, pledging, or using for security any and all monies belonging to Daniel Hesse and/or in the possession of Defendant pending a determination of this action. In its motion , Plaintiff moves for an Order of default pursuant to CPLR 93215. Defendant has not appeared in this action and has submitted no response to Plaintiff s Order to Show Cause or motion. B. The Paries ' History The Sumons with Notice and Verified Complaint (" Complaint" ) are anexed as Exhibit A to Plaintiffs motion. The Summons with Notice describes this action as one for breach of contract , breach of agreement and conversion and states that Plaintiff seeks damages of no less than $2 700 000. The Complaint , filed Januar 11 , 2011 , alleges as follows: Plaintiff is a domestic corporation doing business in Suffolk County and Defendant is an individual residing in Nassau County. Defendant has $2 677 000. 00 of money belonging to Plaintiff, which funds were provided to Defendant " not as a loan, but as a short term investment returable on demand" (Compl. at 4). The Complaint alleges that approximately 22 months before the Complaint was fied Defendant "won the confidence of the Plaintiff when he brokered a real estate transaction with a third par" (Compl. at 7). In December of2010 , Defendant proposed a different investment that involved Defendant taking a cashier s check from Plaintiffs corporation and using it as proof of funds that served as the basis for a casino to provide Defendant with a gambling account. Plaintiff s corporation made its initial investment with Defendant on December 7 , 2010 and the paries ' agreement was formalized in a written agreement (" Agreement") (Ex. A to 1 Plaintiffs notice of motion states that Plaintiff seeks relief pursuant to CPLR Plaintiff is seeking an " order for default " the Cour surmises that Plaintiff 3215. 3214 but, given that is seeking relief pursuant to CPLR [* 3] Compl.). The Agreement provides , in pertinent par , as follows: This agreement made this 7 day of December , 2010 , between GDH Capital Corp. Daniel A. Hesse , President.. and Robert Lis... agree to the following terms and conditions: s check in the amount of, One Milion 1) GDH Capital Corp. agrees to provide a cashier Dollars , ($1 000 000. 00), made payable to Robert Lis. 2) Robert Lis agrees that this check shall be used for the sole purose of proof of fuds to be held by a Casino mutually agreed upon by both paries. 3) Robert Lis states and agrees that this check shall be held by agreed upon designated Casino , shall never be negotiated , deposited or cashed and shall be retured to Daniel A. Hesse of GDH Capital Corp. on a daily basis or upon Daniel A. Hesse(' immediate request. The Agreement is signed by Robert Lis and Daniel A. Hesse and witnessed by an individual named Ashley Schenck. cashier The Complaint alleges that on December 7 , 2010 , GDH provided Defendant with a s check (" Check" ) in the amount of $1 milion (Compl. at Ex. B). The Check was returned to Plaintiff without having been cashed , negotiated or deposited , as per the Agreement. The Complaint alleges that " (t)his occured each day, approximately 10 times (id. at ~ 14). Daniel Hesse (" Hesse ) sometimes accompanied Defendant to a casino in Atlantic City or Connecticut where Defendant would gamble retu the Check to Plaintiff at the end of the day, and Hesse would then give the Check back to Defendant " for his next gambling episode (id. at ~ 15). Lis subsequently requested the return of the initial Check, as well as additional funds to offer as proof of fuds at a casino in Las Vegas. On or about December 17 , 2010 , Plaintiff gave Defendant the Check, as well as another cashier s check totaling $580 000 (" Second Check" (id. at Ex. C). Again , on or about December 28 , 2010 , Plaintiff provided Defendant with a cashier check in the amount of$I 334 000 (" Third Check" (id. at Ex. D). On this last date , Defendant did not retur the Checks and Plaintiff leared that Defendant had cashed the Checks , totaling 914 000. 00. The Complaint contains three (3) causes of action: 1) fraud , 2) conversion and 3) breach of the Agreement , for which Plaintiff seeks damages in the amount of $2 914 000. , as well as [* 4] costs and disbursements and reasonable attorney s fees. In his Affdavit in Support of Plaintiffs Order to Show Cause , Hesse affrms that he is allegations in the President and shareholder of Plaintiff corporation. He affrms the truth of the the Complaint , and provides copies of the Checks as well as proof they have been cashed. Hesse affirms that Defendant made parial repayment of $196 Januar 2 , 2011 and $400, 000 000 by check on by wire on Januar 6 , 2011. Defendant has agreed to retur the remaining fuds but has not done so. Hesse avers , further , that he " 19) that Defendant is attempting to , and wil , abscond with Plaintiff s money if restraints are not verily believe(s)" (Aff. at Defendant. placed on Defendant as well as agents or companies holding fuds of TRO" ) directing that: On Januar 12 2011 , the Cour (Parga, J. ) issued an Order (" Defendants , their agents , employees , pledges , assignees , nominees or anyone acting on or for their behalf are hereby stayed and enjoined from transferring withdrawing, hypothecating, pledging, or using for security any and all monies belonging to (Hesse) and/or in the possession of (Defendant), pending a determination of this action , pursuant to CPLR 6301 pending a final determination ofthe Cour(. Defendant has been served with the Complaint and Notice, Request for provides an Affidavit of Service reflecting service of the Sumons with Januar 18, 2011 Judicial Intervention and Order to Show Cause and supporting documents on ), the Cour directed pursuant to CPLR 308(4). By Order dated Februar 4 2011 ("Prior Order Plaintiffs counsel affirms that that Plaintiffs Order to Show Cause would be the subject of oral argument before the Court on record at March 1 , 2011 at 11: 00 a. m. On March 1 , 2011 , the Cour called the matter on the the matter and 12:00 noon and there was no appearance by the Defendant. The Cour adjourned Plaintiffs counsel provides an Affidavit directed Plaintiff to serve the Complaint on Defendant. of Supplemental Mailng dated July 1 2011 reflecting the mailing of the Complaint to Defendant at his home and business addresses via certified mail , retur receipt requested. C. The Paries ' Positions Plaintiff submits that the Cour should award the relief sought in the Order to Show Cause in light of the evidence presented establishing Defendant's wrongful possession of monies belonging to Plaintiff and in consideration of Plaintiff s concerns that Defendant wil abscond with that money if not restrained. Plaintiff also contends that it has demonstrated its right to a default judgment by [* 5] 1) establishing service of the Complaint on Defendant and Defendant's failure to answer or appear; and 2) and demonstrating Defendant's breach of the paries ' Agreement , frud and conversion by failing to return the sums provided to Defendant by Plaintiff. RULING OF THE COURT Default Judgment CPLR 9 3215(a) permits a par to seek a default judgment against a Defendant who fails to make an appearance. The moving par must present proof of service of the summons and the complaint , affidavits setting forth the facts constituting the claim, the default , and the amount due. CPLR 9 3215 (f); par must prima facie v. Allstate Ins. Co. Joosten v. B. also make a Austin 48 AD. 3d 720 (2d Dept. 2008). The moving showing of a cause of action against the defaulting par. Gale 129 AD.2d 531 (1st Dept. 1987). Relevant Causes of Action The essential elements of a cause of action sounding in fraud are 1) a misrepresentation or a material omission of fact which was false and known to be false by defendant, 2) made for the purose of inducing the other par to reply upon it , 3) justifiable reliance of the other on the misrepresentation or material omission , and 4) injur. Real Estate Orlando 68 AD.3d 706 (2d Dept. 2009), quoting v. Colasacco v. par Robert E. Lawrence 40 AD.3d 829 , 831 Kukielka, (2d Dept. , 2007). To establish a cause of action for breach of contract, one must demonstrate: 1) the existence of a contract between the plaintiff and defendant , 2) consideration , 3) performance by the plaintiff, 4) breach by the defendant , and 5) damages resulting from the breach. Furia See also JP Morgan Chase 116 AD.2d 694 (2d Dept. 1986). Furia v. J.H Electri(:, 69 A. DJd 802 (2d Dept. 2010) (complaint sufficient where it adequately alleged existence of contract plaintiffs performance under contract , defendant's breach of contract and resulting damages), citing, inter alia , Furia , supra. A conversion takes place when defendant , intentionally and without authority, assumes or exercises control over personal propert belonging to someone else , interfering with that person s right of possession. Colavito v. Organ Donor Network 8 N. Y.3d 43, 49- 50 (2006). The two key elements of conversion are 1) plaintiff s possessory right or interest in the property, [* 6] and 2) defendant's dominion over the property or interference with it , in derogation of plaintiff s rights. at 50. Id C. Application of these Principles to the Instant Action Plaintiff has established its right to judgment against Defendant on the second and third causes of action in the Complaint by presenting proof of service of the Complaint on Defendant and presenting an affidavit and supporting documentation establishing that 1) Defendant ' conduct breached the paries ' agreement , as evidenced by the written Agreement and the parties as described by Hesse , by failng to retur the Checks to Plaintiff and , instead , cashing them; and 2) Defendant committed a conversion by improperly assuming control over the Checks and cashing them , instead of returing them to Plaintiff as agreed. The Cour denies Plaintiff s motion for judgment on the first cause of action alleging fraud based on the Cour' determination that the evidence does not support the conclusion that Defendant misrepresented to Plaintiff his intention to retur the Checks; it is equally plausible that Defendant intended to return the Checks but lost money while gambling and became unable or unwillng to retu the Checks to Plaintiff as promised. The Court denies Plaintiffs application for attorney s fees , given the absence of language in the Agreement , or statutory authority, for such an award. The Cour refers to an inquest the determination of Plaintiffs damages in light of the fact that the Cour canot damages. The determine from the motion papers the precise amount of Plaintiff s Sumons with Notice reflects that Plaintiff seeks damages of at least 700 000. 00. The Complaint 914 000. 00. Hesse , alleges that Plaintiff has been damaged in the amount of in his Affidavit in Support dated Januar 11 2011 affirms that Defendant has promised to wire back to Plaintiff funds of $2 677 000. 00. and that Defendant made parial repayment of $196 000 by check on Januar 2 , 2011 and $400 000 by wire on Januar 6 , 2011. in his Affirmation in Support of Plaintiffs motion dated October 1 2011 affirms that there is now due and owing to Plaintiff the sum of $ $2. 677 milion , with interest Plaintiffs counsel , thereon from Januar 12 , 2011. In light of the foregoing, the Cour canot determine Plaintiff s precise damages , and refers that issue to an inquest. Plaintiff shall be entitled to interest from Januar 12 2011. The Court fuher directs that the TRO shall remain in effect until entry of judgment. [* 7] In light of the foregoing, it is hereby ORDERED , that the motion ofPlaintiffGDH Capital Corp. for a default judgment against Defendant Robert Lis is granted to the extent that Plaintiff is awarded judgment against Defendant on the second and third causes of action in the Verified Complaint , with interest from Januar 12 , 2011; and it is fuher ORDERED , that this matter is respectfully referred to Special Referee Fran N. Schellace (Room 060 , Special 2 Courtroom , Lower Level) to hear and determine all issues relating to the computation of damages and interest to be awarded to Plaintiff on Januar 18 , retur 2012 at 9:30 a. ; and it is fuher. ORDERED , that Plaintiff shall serve upon Defendant at his residence , by certified mail oflnquest or a Note receipt requested , a copy of this Order with Notice of Entry, a Notice oflssue and shall pay the appropriate filing fees on or before Januar 9 2012; and it is further ORDERED , that the County Clerk , Nassau County is directed to enter a judgment in favor of Plaintiff GDH Capital Corp. and against Defendant Robert Lis in accordanc with the decision of the Special Referee; and it is fuher ORDERED , that the temporar restraining order issued by the Court (Parga , J. ) on Januar 12 2011 shall remain in effect until the entry of judgment as directed herein. All matters not decided herein are hereby denied. This constitutes the decision and order of the Cour. DATED: Mineola, NY December 13 2011 HON. TIMOTHY S. DRlSQ6LL J.S. ENTERFO DEC 20 2011 NASSAU COUNT\! COUNTY CLERK , OFfIC::

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