Front, Inc. v Khalil

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Front, Inc. v Khalil 2012 NY Slip Op 31404(U) May 23, 2012 Supreme Court, New York County Docket Number: 111597/11 Judge: Donna M. Mills 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] SZJP1IlI:MII: COURT' OF 'I'.Hl<S'CA'TE OF NEW YOIIK- NEW YOIIK CO.IJNTY 58 PART PRESENT : DONNA M. MlLLS Justice XNIIEX No. 11 1Sc)7/11- -against- MOTIONSEV. .No. I & 002 00 ' PHILIP KHAIAI,, et al., Noticc of MotiodOrder to Show Causc-Affidavits- Exhibils.... Answering Affidavits- Exhibits , . , , - .. . LS, L 2 3.7J p R q l y i n g Affidavits (.'I<( 1SS- M 0TIC)N 7 - Y1's N O Upon the foregoing papers, it is ordered that this motion is: DEClll)F,l) IN ACCORDANCE W I ' l l I A'I'TACHQD MEMORANDIJM D MAY 25 2012 [* 2] SUPREME COURT O F THE STATE O F NEW YORK COUN I YOF NEW YORK : TAS PART -58 Plaintiff, Index N o . 111537/11 -against - PHILlP KHALITJ, JAMES O CAJJLAGHAN, and ECKERSLEY O CALLAGfIAN STRUCTURAL D E S I G N , nefendaiits. -X P H I L I P KHALIL, Third-Party P l a i n t i f f , -againstJEFFREY A . F E I N LLP, K I M M E L and MEISTER S E E L I G & T h i r d - p a r t y Defendants. - - - - - .~ I - - - - - - - - - - - . . ~ . . - - - - - - _. - - - - - - - . - MAY 25 2012 .-x DONNA MILLS, J. : Moti-on sequence numbers 0 0 1 and 002 are consolidated ¬or disposit-ion. 111 mot.ic)n sequencc number- 0 0 1 , defendants ,James O C:allaghai-i ( O C a l l a y h a n ) and Eckersley O C a l l a g h a n L t d . (EOC UK, sued liere as E c k e r s l e y O C a l l a g h a n Structural Design) ( c o l l e c t i v e l y , the U K d e f e n d a n t s ) , move t o dismiss, p u r s u a n t t o CPLR 3211 (a) ( 7 ) and (a) ( 8 ) , 01 1 the ground of lack c i f p e r s o n a l j u r i s d i c t i o n . def enc1aiit.s and deteridant P h i l i p IChalil These ( K h a l i l ) a l s o move t o d i s m i s s puv-suant t o CPLR 3211 (a) ( 5 ) arid (a) ( 7 ) and 3016 (b) for f a i - l u r e to state a cause of action a n d / o r l a c k of specificity, a r i d move t o disqualify the l a w firm of Mei.ster 1 [* 3] S e e l i g & F e i n LLP f r o i n r e p r e s e n t i n g p l a i n t i f f F r o n t , I n c . (Front) on t h e qrourid t h a t t h e l a w f i , r m i s a d e f e n d a n t i n t h e t h i r d - p a r t y acti-or-1arid w i l l . i n e v i t a b l y be c a l l e d a s a w i t n e s s . In m o t i on sequence number 0 0 2 , t h i r d - p a r t y d e f e n d a n t s J c f f r c y A . Kimmel ( K i n i r n e . 1 ) and M c i s t e r S e e l i g & F e i n LLP ( t h e l a w f i r m ) move t o d i s m i s s t h e t h i r d - p a r L y coniplairiL, pursuant t o CPLR 3211 (a) ( 7 ) . T h i s a c t i o n a r i s e s o u t of a n employrnenL arrangement between Khallil and Front.. arid c:onsulting The c o m p l a i n t alleges t h a t Front is a d e s i g n f ir-m i n the a r c h i t e c t u r - e and e n g i n e e r i n g s e c t o r - , and that K h a l i l w a s employed by E'ront as D i r e c t o r of Engineeririy from June 2 0 0 3 t h r o u g h March 2 0 1 1 . K h a l i l , a c i t i z e n of t h e U n i t e d Kingdom, a p p l i e d f o r r e s i d e n t a l i e n s t a t u s w h i l e an employee of, and. s p o n s o r e d by, Pronl:. 'The cornplair-it alleges t h a t , sjx i-nonLhs a f t e r ' K h a l i l obtained h i s r - e s i d e n t a l i e n s t a t u s , he iriformed Front that he w a s r e s i g n i n g from t h e company and j o i n i n g the English f i r m , company i n New York C i t y . EOC U K , which w a s e s t a b l i s h i n g a K h a l i l i n d i c a t e d that: h i s l a s t day as a f u 1 l - t i . m e employee of F r o n t would be A p r i l 7 , 2 0 1 1 , b u t t h a t lie w o u l d p r o v i c k p a r t - t i m e support to F r o n t u n t i l J u n e 7 , 2011. The coniplai nt. furt.l-iel-- alleges that t h r e e clays a f t.er Khalil t e n d e r e d h i s w r i t t e n r e s i g n a t i o n , a Frorit e n g i n e e r n o t i c e d a n e x t e r n a l h a r d d r i v e storage d e v i c e coi-inerted to I(ha.1. i . l ' s computer. Khalil was a l l e g e d l y i n t h e p r o c e s s of down:] oadinq t h e c o n t - e n t s o f h i s computctr t.o the external h a r d d r i v c , i n c l u d i n g trade s e c r e t s , and c o r i f i d e n t - i a l and p r o p r i e t a r y i . n f o r l n a t i o n . 2 [* 4] According t-o Fi-oiit , t h a t j-nformat-ion i n c l u d e d , among o t h e r t l i i n y s , t h e file d i r e c t o r y of e v e r y p r o j c c t on w h i c h b ' r - o n t . hati worked, a r c h i t e c t u r a l p l a n s , e n g i n e e r i n g reports arid b u i l d i n g security design criteria. The c o m p l a i n t f u r t h e r allcge:; t h a t some of t h o s e p r o j e c t s have n a t i o n a l s e c u r i t y r e q u i r e m e n t s f o r which F'r-ont- chtaliried s e c u r i t y c l e a r a n c e f o r j.ts s t a f f , i n c l u d i n g Khali I. T h e complaint alleges t h a t a f t e r Front. d i s c o v e r e d t h a t K h a l i l w a s a t t e m p t i n g t o download company inforrnati o n , on Mar:ch 24, 2011, two F r o n t p a r t i l e r s met w i t h K h a l i l and t e r m i n a t e d h i s ernploynent . T h e cornplairilr. f u r t h e r a l l e g e s t h a t throughouL Khal i l ' s employment , F r o n t rnainta i.ned a "rio moonlightirig" p o l i c y . 2009, In t h e p o l i c y was reduced t o w r i t i n g and i n c l u d e d i n a n employmerit p0:l.j cy agreement that was s i g n e d by KhaLil. That policy stat-es: F U T , J . , - T J M E EMPLOYMENT a t F r o n t I n c . r e q u i r e s a f u l l - t i m e comrnitrrient . Ernpl oyees shall n o t provi.de p r o f e s s i o n a l sei.-vi ces , "moonlight , I I o r " f r e e 1 a n c e " for t1iei.r o w n p r i v a t e c l i e n t s w l i i l e employed f u l l t i m c a t Front. I n c . N o p e r s o n s h o u l d u t i l i z e the firm's r e s o u r c e s . . . t o conduct t h e i r own c:ommercial b u s i n e s s o r to pr-ovide professional s e r v i c e s outside t h e firm. Verified C o r n p l a i n t 7 41 The cornplaint a l l e g e s that , from t h e i n f o r n i a t i o n downloaded t o t h e e x t e r n a l hard d r i v e , F r o n t d i s c o v e r e d that , t h r o u g h o u t h i s employment , Kha1i.l h a d been "moonlighting, s e c r e t l y working f o r F r o n t ' s c o m p e t i t o r s , worki n9 on o v e r 4 0 s i d e pro] ects , and 3 [* 5] bi 1.1.ing over 4 , 000 h o u r s on t h o s e s i d e projects, i n v o i c i n g a t l e a s t 2 half a n i i l l i o n dollars. The complaint a l l e g e s t-hat , throughout h i s employment: , K h a l i l per-f ormed subs t a r i t i a l work f o r F r o n t ' s conipet.i.t.or, d e f e n d a n t EOC U K , provided Kha1.i 1 with a i and t h a t EOC UIC even e - m a i l a d d r e s s and w i t h remote access t o its c o r p o r a t e network. Th.e cornplai.nt f u r t h e r a l l e g e s t h a t K h a l i l d i v e r t e d work t h e Apple company away from Front and t o EOC U K . f0 1 According t o t h e complaint,, i n 2 0 0 8 , Apple had E;oLi.cit.ecl. a s e r v i c e proposal frorn E'i-ont L o perfoi-rn work on scv.era1 App1.c stores, however K l i a l i l dive?-ted that work t o EOC U K . According t o the CoiTiplaink, K h a l i l s e n t o v e r 1 0 0 e - m a i l s t o EOC UK r e g a r d i n g t h e Apple store l o c a t e d on Eroadway, i n New Y o r k City. On or about A p r i l 8 , 2 0 1 1 , a c t i n g as F r o n t ' s attor-riey, Kimmel w i - o t e t.o K h a l i l , " t o address (1) your- r e c e n t a t t e m p t to steal F r o n t ' s ciorif i d e i i t i . a l and p r o p r i e t . a r y i nf orinat.ion arid (2) the i.3.legal compet.ir-ig s i d e b u s i n e s s t h a t you conduct-ed, u s i r i g t h e Firm's r e s o u r c e s , w h i l e a f u l . l - t i m e employee of F r o n t . t o Plilil Khalil, d a t e d A p r i l 8 , 2 0 1 1 , a t 1. Letter 'I U n d e r t h e heading of " I l l e g a l conduct." t h e l e t t e r - s t a t e d , among oLlier t h i ' n g s , "your at.t.erript t o s t e a l Front-',? c o n f i d e n t i a l arid propr-i e t a r y i n f o r m a t i o n - i . e . , its trade S C C T ~ ~S is a serious offense that i s p u n i s h a b l e by u p t o t e n y e a r s i n p r i . a o i i u n d e r t h e Economic Espionage Act of 1 9 9 6 1 8 U . S . C . S . The l e t t e r f u r t h e r s t . a t e s : I' (sic) 5 1.832 . .. . ' I Id. at, 4 . [il t should be n o t e d t h a t . i n c a r r y i 1 - q o u t t h e a c t i v i t i e s d e s c r i b e d above, you Irnowir-iyly v i o l a t e d the 4 [* 6] ternis of y o u r a p p l i c a t i o n and iniinigl--ant. s t a t u s . You have a l s o violaLed seve7-31 codes of conduc L. arid et-liics of t-lie various boards of l i c e n s u r e and p r o f c s s i o r i a l a s s o c i a t i o n s to which your a r e a member. Id., 11 1. In t h e l e t t e r F r o n t made t h e f o l l o w i n g specific: demands that- Khalil : 1 ) irrmiedi.ately cease and d e s i s t f roni u s i n g F r o n t s c o n f i d e n t i a l . arid p r o p r i e t a r y i n f o r m a t i o n ; 2 ) r e t u r n a l l of F r o n t s conf i d e n t i a l and p r o p r i c t a r y i r l f or-mation t o ttic F i i - n i ; 3 ) p r o v i d e F r o n t w i t h a l i s t of i n d i v i d u a l s arid/or c n l i t i e s w i t h whom you s h a r e d ariy, i r i p a r t 01: whole, of F r o n t s corif i d e n t i a l and p r o p r i e t a r y i n f o r m a t i o n ; 4 ) cease and d e s i s t from s o l i c i t i n g any of F r o n t s c o n t a c t s i n c l u d i n g , b u t n o t limited t o , i t s c l i e n t s , r e f e r r a l s o u r c e s , employees, c o l l a b o r a t i n g c o n s u l t a n t s , c o n t r a c t o r s , and f a b r i c a t o r s ; 5 ) pi-ovide F r o n t w i t h an a c c o u n t i n g of a l l work t h a t you performed or.tiei- than f o r a i on b e h a l f o ¬ Front w h i l e a Front rd cnyioyee; 6) p r o v i d e F r o n t w i t h a lisL of a l l p i - o j e c t e d WOI-IC a t or t h m u g h E c k e i - s l - e y O Caliaghan; 7 ) s u s p e r d work on a1.1 p r o j e c t s t h a t w e r e p a r t of t h e s i d e work you performed w h i l e a t F r o n t ; and 8 ) p r o v i d e F r o n t w i t h a l l t h e f o r e g o i n g i n f o r m a t i o n and a sworn c o n f i r m a t i o n t h a t you have f u l l y complied w i t h t h e s e demands no l a t e r t h a n by 5 : O O p.m. E a s t e r n Time on A p r i l 1 4 , 2 0 1 1 . Should you f a i l t o comply w i t h t h e a l l ( s i c ) of t h e above dcruarids, F r o n t w i l l seck i t s f i l l 1 legal reniedies, i n c l u d i n q , but n o t 1 i m i t e d to, i n j u n c t i v e re l i e f . Id. a t 6. O A p r i l 1 2 , 2 0 1 1 , K i m m e l wrote t o O Callaglian, e n c l o s i n g n and r e f e r r i n g t o t h e l e t t e r t o K h a l i l , and chargi.ng, among o t h e r thiriy:;, t - h a t Mr Khalil conspired with Eckersley O C a l l a q h a n t o b r e a c h h i s f i d u c i a r y d u L y t o Front and engaged i n other- i l l i c i t ac!tiviLies. I L e t t e r t o dames O C a l l a g h a r i , dated April 1 2 , 2 0 1 1 . I n t h a t l e t t e r , K i i n m e l made demands of O Callaqhan that w e 1 . e 5 [* 7] simi.lar t o t h o s e c o n t a i n e d i n t h e l e t . t e r t o K h a l l i l . On OcLober 1 2 , 2 0 1 1 , F r o n t f i l e d t h e cornplaint in this a c t i o n , asserting e l e v e n c a u s e s of a c t i o n : 1) civ.i.1 c o n s p i r a c y as to a l l deferidarits; 2) breach of c o n t r a c t a g a i n s t K h a l i l ; 3 ) brearh of irnpli Etd covenant. of good f a i t h aid f a i r - d e a l . i n g against Klialil.; 4) b r e a c h of f i d u c i a r y d u t y against K h a l i l ; 5 ) tort-iious i n t e r f e r e n c e w i t h b u s i n e s s relations a g a i n s t O'Callaghan and EOC3 UIC; 6) u n f a i r c o m p e t i t i o n ( m i s a p p r o p r i a t i o n of t r a d e secrets a g a i n s t a l l dcLendants; 7 ) common-law u n f a i r c o m p e t i t i o n as to 21.1 d e r c r i d a n t s ; 8 ) a i d i n g arid abetting a g a i n s t (':1 l a g h a n and )(a EOC IJK; 3 ) p i - e l j ininax-y arid periiiarierit i n j u n c t i o n a y a i r i s t defendants; all 10) c o n s t r u c t i v e t r u s t as t o a l l d e f e n d a n t s ; and 11) a c c o u n t i n g a s t o a11 d e f e n d a n t s . MOTION SEQUENCE NUMBER 0 0 1 Pei,:soria1. J u r.~ d i c t i o n O.~ e r O'Callaghan and . - UK is v EOC __ . The UK defendants personal j u r i s d i c t i o n . move l.0 d i s m i s s on t.he ground of l a c k o f O ' C a l l a g h a n s u b m i t s a n af idavit i n which he s t a t e s t h a t he l i v e s arid works i n the United Kingdom, arid i n no time r e l e v a n t t o t h e a l l e g a t i o n s of t h e c o m p l a i n t d i d he l i v e in N e w Y o r k , o w n o r r e n t p r o p e r t y i n N e w Y o r k , or m a i n t a i n an office or conduct b u s i n c s s i n N e w York. He fux-Ll-ier states t - h a t hc i s riot a U . S . c i t i z e n , and does n o t have a visa t h a t wou-Ld perinit him to w o r k i n t h e United S t a t e s . Call-aghan s t a t e : ; t h a t he i s a d i r e c t o r of ROC UK, which i s a United Kingdom l i m i t e d company, which performs s t r u c t u r a l e n g i n e e r i n g s e r v i c e s and whose p l a c e of busi.Iiess i s i n London. 6 [* 8] Ac:cordirig t o O Callaghan, EOC UK has occasionally used t h e narne L c l c e r s l e y O C a l l a q h a i i S t r u c t u r a l Desiyr-i as a Lr-ade narne i r i El-iylarid, b u t t h e r e i s 110 a c t u a l e n t i t y by that name. O Callaghan f u r t h e r - st-ates t h a t EOC UK i s , and has been, the d e s i g n e r of s t r u c t u r a l g l a s s f o r Apple s t o r e s t h r o u g h o u t t h e w o r l d , aiid t h a t l e s s t h a n one p e r c e n t of that w o r k has invol.ved According t o O Callaghan, t h e t-hc Apple s t o r e s i n N e w York C i t y . contrac!t belrween EOC: UK and Apple for a l l Apple work w a s entered i n t o i n C a l i f o r n i a , where A p p l e i s l o c a t e d , and r o in N e w Yorlc. it A p p l e t h e n used t h e EOC UK drawings f o r i t s projects i n a g i v e n location. O C. allaqhan s t a t e s t h a t n e i d i e r h e , nor any EOC UK employee, is l i c e n s e d i n New York, and, t h e r e f o r e , n o EOC UK employee has been t h e e n g i n e e r of r e c o r d f o r a n y work i n N e w York. F i n a l l y , O Callaghan s t a t e s that i n r e c e n t months, a f t e r K h a l i l l e f t Front, and the claims i n t h i s l a w s u i t o c c m r e d , a n e w coiiipariy, E c k e r s l e y O Callagl-ian & P a r t n e r s , LLC, w a s formed i n D e l a w a r e , arid lcased office space a t 8 8 U n i v e r s i t y Place, New Yorlc, N e w Yor-k. Accordiny t o O Callaghan, K h a l i l h a s an interest i n t h a t new company, but n e i t h e r - O C a l l a g h a n , nor EOC U K , are m e m b e r s of t h e n e w company. l he UK d e f e n d a n t s , therefore, move t o d i s m i s s t h e c o t n p l a i n t based upon l a c k of personal j u r i s d i c t i o n . J u r i s d i c t i o n may be o b t a i i i e d o v e ~ nor1 - d o m i c i l i a r y p u r s u a n t a t o CPLR 3 0 2 (a): A s t o a c a u s e of a c t i o n a r i s i n g from any of t h e 7 [* 9] acts enumer-ated in t h i s s e c t i o n , a c o u r t may e x e r c i s e persorial j u r i s d i c t - i o n o v e r any r-ion-domiciliar-y, 01- hi:; e x e c u t o r o r admi ni. t r a t o r , w h o i n person o r thr-ouyh a n s ayent : 1. t r a n s a c t s any business w i t h i n t h e s t a t e or c o n t r a c t s anywhere t o supply goods o r s e r v i c e s i n t h e s t a t e ; o r 2 . commiLs a t o r t - i o u s act: withj-n t h e s t a t e , e x c e p t a s t o a cause of acLiori f o r d e f a m a t i o n of c h a r - a c t e r a r i s i n g frorn t h e act.; o r :3. c:nmmit:; a t o r - t i o u s act: w i t h o u t i h e s t a t e c a u s i n y i n j u r y t-o p e r s o n o r p r o p e r t y w i t h i n t h e state, e x c e p t as t o a. c a u s e of a c t i o n f o r d e f a m a t i o n of c h a r a c t e r a r i s i i i g f r-om the act., i f he ( i ) regu1arl.y does o r s o l i c i t s b u s i n e s s , o r engages i n any o t h e r p e r s i s t e n t c o u r s e of c o n d u c t , o r d e r i v e s s u b s t a n t i a l revenue f roin goods used or consumed or scrvices rendered, i n the s t a t e , or ( i i ) e x p e c t s o r s1ioul.d r e a s o n a b l y e x p e c t t h e a c t t o have conseque1lc:cs in t h e s t a t e and d e r i v e s s u b s t a n t i.al revenue from i n t e r s t a t e o r i n t e r n a t i o n a l commerce; 014 . owns, u s e s 0 ' 1 possesses any r e a l p r o p e r t y si t u a t e d w i t h i n the. s t a t e . C i t i n g K r e u t t e r - v M c F a d d e n O i l Cor-p. [19881) , t h e UK d e f e n d a n t s argue t h a t iii (71 NY2d 460, 467 order t o invoke. r - e l a t i o n s h i p betwceri t h e cl.aim a s s e r t e d and the a c t i v i t - y t h a t occurred it i N e w Yorlr,, arid t h e b u s i n e s s e s a l l e g e d - l y t r a n s a c t e d must be " ' s u s t a i n e d and s u b s t a n t i a l _ ' I 1 F i s c h b a r q v Doucet, 9 NY3d 375, 382 (2007) (citation omitted). They contend t h a t t h e r e i s no such si.ibst.aritia1 r e l a t i o n s h i p between t h e c:l.aims a s s e r t e d arid any s u s t a i ncd arid s u b s t a n t i a l a c t i v i t y i n N e w Yor'k, since they n e i t h e r r e g u l . a r l y conduct or s o l i c i t b u s i n e s s i n N e w Y o r l c and t h e i r e n g i n e e r i n g work used by the Apple store i.n New York w a s a s a r e s u l t of t h e i r c o n t r a c t made w i t h a C a l i f o r n i a company, Appl.e, arid c o n s t i t u t - e s l e s s t h a n one p e r c e n t of their work w i t h t h a t 8 [* 10] company . T h e U K defendant.s f u r t h e r contend that. t h e y have riot conunitt.ed any t o r t . i o u s act i n New York arid t h a t , w i t h r e s p e c t t o any a l l e g e d t o r t i o u s a c t comrnitted o u t s i d e t h e s t a . t c , p l a i n t i f f h a s , a t b e s t , s u f f e r e d onZy i n d i r e c t financial l o s s , which i s i n s u f f i c i e n t t o e s t a b l i . s h I.ong-arm j u r i s d i c t i o n . Pi-ccision Concepts v B o n s a n t i . , 172 AD2d 7 3 7 , 7 3 9 ( 2 d Dept 1391). Front a r g u e s Lha.t t h e UIC defendants f a i l t-o address the fact that Khaijl w a s a l l c y e d l y a c t i n g as t h e i r agent i n N e w Y o r k , tit-irig t h e d e c i s i o n in Grove P i - e s s , I n c . v Rr-iy.leton (649 F 2 d 121., 122 (2d Cir 19811 ) , which s t a t e s t h a t New York C o u r t s h a v e customarily i n t e r p r e t e d t h e t e r m agent f a i r l y h r o a d l y , e s p e c : i a l l y i n s11it.s by i n j u r e d t h i r d p a r t i e s . on Lo state, I The d e c i s i o n goes [h]owever, b e f o r e an agency r e l a t i o n s h i p w i l l be h e l d t o e x i s t under- section 302(a) ( 2 ) , a showing tnust be made that. t h e alleged a q e n t acted in New York f o r t h e b e n e f i t o f , with t h e lcnowlcdge and consent o f , arid under some c o n t r o l by, the nonresident p r i n c i p a l . Id. E v e n a s s u m i n y K 1 - i a l i l acted as an agent: of EOC UIC, ther-e a . r e no a l l e y a t - i o n s t h a t he a c t e d as an agent: for 0 Call.agliari i n his personal capacity. Nor are there any a l l e g a t i o n s c ! o r i r i e c : t i n y O Callaghan w i t h New Yorl.; o r even suggestiriq h i s presence in N e w York, o t h e r t h a n one e-mail s u b m i t t e d by Front, i r i d i c a t i r i g t h a t he w a s yoirig t o be i n N e w Y o r l c C i t y on Monday O c t - o b e r - 11, 2 0 1 0 and wanted t-o know i f K l i a l i l would be a v a i l a b 1 . e for- a f e w beers. A f f i d a v i t . of Marc S i m m o n s , 9 d a t e d December 1 3 , 2 0 1 1 , Exh. [* 11] K. The c o u r t f u r t h e r n o t e s t h a t that e-itiail i s i r i c o n n e c t i o n w i t h a Visitors C e n t r e p r o j e c t i r i Washington, D.C. T h a t is h a r d l y a s u f f i c i e n t b a s i s f o r long-arm j u r i s d i c t i o n overO ' C a l l aghan in h i s p e r s o n a l capacity, and h : mot-iori t.0 d i s m i s s i; i s granted W i L h 1-espect to F r o n t ' s c l a i m s that K h a l i l a c t e d a s EOC UK'E a g e n t , F r o n t must still establish t h a t , i n t - h a t c a p a c i t y , he r e g u l a r l y c o n d u c t e d b u s i n e s s i n t h e s t a t e or committed a t o r t i o u s a c t i n the state. Many of the p r o j e c t s on w h i c h Khalil a l l e g e d l y worked for EOC UIC were, however, o u t s i d e o f N e w York, s u c h a s t h e Washington, T)C, V i s i t o r ' s C e n t r e project, and e v e n o u t - s i d e of t h e United S t a t - c s , such as t h e Hong Kong P l a z a B e i r u t p r o j ect . (in Shanyhaj.) a r i d t h e , Furthermore, even assuming Khalill. gave EOC UK c o n f i d e n t i a l i n f o r m a t i o n about p r o j e c t s in New York, K h a l i l ' s alleged a c t i o n does n o t establish t h a t t h e EOC UK d i d business i n New York. 'Thc c o u r t f u r t h e r n o t e s that. t h e c o m p l a i n t , itself, dlleqes t h a t " K l i a l i l e n s u r e d h i . s p r o j e c t s f o r E c k e r s l e y O'callaghan were covered during h i s v a c a t i o n s from F r o n t ernployrrient." 7 57. According t o t h e e-mail subitiitted Complaint, by F r o n t , on a t l e a s t one case, the coi-rimunication between K h a i j . 1 arid EOC UK o c c u r r e d w h e n K h a l i l w a s on v a c a t i o n i n St. L u c i a , and was n o t Ncw Y o r k . A f f i d a v i t of M a r c : Sirnmons, F x h . E. Thus, t h e a l l e g a t i o n r e g a r d i n g IChalil working d u r i n g v a c a t i o n s , i f any Lhing, undermines F r o n t ' s c o n t - e n t i o n t h a t Khalil w a s a c t i n g i n New York a ; EOC U K ' s agent, s u f f i c i e n t to form a basis for l o n g - a r m : 10 [* 12] jL ~ is d i c t i on . Y Front, however, a l s o cant-ends t h a t EOC I J K ' s d e s i g n work f o r t h e Apple s t o r e on Broadway c o n s t i t u t e s d o i n g business In N w e Yor-k C i t y f o r t h e p u r p o s e of 1 ong,-arm j u r i s d i c t i o n . The coinplaint a l l e g e s that Apple had s o l i c i t e d a p r o p o s a l from F r o n t " t o g e t Front u n d e r o u r umbrella f o r Apple" (Complaint, 7 G l ) , arid that K h a l i l ' s work on b e h a l f of EOC UK i n t e r f e r e d w i t h t h a t possibility. O ' C ' a l l a y h a n asserts, however, t h a t any wor-k per-fn-t-med at. Apple's New Yoi-k s t o r - e w a s based upon a c o n t r - a c t w i t h Apple's C a l i f o r n i a - b a s e d company and c o n s t i t u t e d l e s s than one p e r c e n t of EOC UIC's work f o r Apple, and, t h e r e f o r e , i t could not be considered s o s u b s t a n t i a l as t o c o n s t i t u t e " s u s t a i n e d and s u b s L a n t . i . a l i i work i n t h e S t a . t e of New Yorlc. DuuC'ct, 9 NY3d 375, s u p r - a . See F i s c h b a r g v O'C'allaghan fur-ther asserts t h a t . it was n e v e r Lhe c n g i n e c r - of r e c o r d on any New Yor'k project. Moreover, a c c o r d i n g t o O'Call.agha11, EOC UK has l o r i y coritrac t e d w i t h Apple and h a s p r o v i d e d d e s i g n s e r v i c e s t o Apple i n corinection w i t h j . t s g l . a s s s t a i r c a s e s t h r o u g h o u t t h e w o r l d . Info App1.c S t o r e - See G l a s s S t a i r c a s e s , Affi.rrnatior1 of N e i l G . MaranL.z, d a t e d Novernbcr 1 , 2 0 1 1 , Exh. C. The c o u r t c a n n o t d e t e r m i n e , based on t h c c o n f l i c t i n g a f f i d a v i t s s u b m i t t e d by t h e p a r t i e s , whether t h e b u s i n e s s conducted by EOC UK i n c o n n e c t i o n w i t h t h e N e w York C i t y Apple s t o r e is s u f f i c i e n t - l y s i g n i f i c a n t t o form a b a s i s for long-arm jurisdi.c:tion. 'Therefore, Lhat m a t t e r will be r e f e r r e d to S p e c i a l R e f e r e e Lo hear and I-eport (see H o l l a n d e r - v Ilarde.7- Hall, 13 AD2d 11 , [* 13] [2d Dept 19611) arid t h e o t h e r a s p e c t s of EOC U K ' s i n o t i n r i 836 835, t o d i s m i s s w i l l be h e l d i n abeyance. s - . s ~K h a l i l ' ~s Motion t _ D .i-. m-i s- f o r Failure t o S t a t e a Cause of Action _o ~ K h a l i l has a l s o moved t o dismiss i.nclivi.dua1 c a u s e s of aCt.io11, arid t-he inoti on c a n be c o n s i d e r e d as t o I i i m . S i n c e K1ia:Lil h a s coiicleded that. F r o n t has s t a t e d a c l a i m w i t h r c s p c c t . t.o i.ts second and f o u r t h c a u s e s of a c t i o n f o r b r e a c h of c o n t r a c t and b r e a c h of f i d u c i a r y d u t y r e s p e c t i v e l y , t h o s e c l a i m s w i l l . n o t be ad.dressed h e r e . First Cause of A c t i o n : C i v. i l Conspiracy . . . . . C i t i n g H o e f f n e r v O r - r i c k , He.s-r-jngt:on AD3d 457 & Sutcliffe LLP ( 8 5 [I"' Dept 2Ull]), K h a l i l moves t o d i s m i s s t h e f i . r - s t cause of a c t i o n on t h e b a s i s t h a t New York does n o t r e c o g n i z e an independent t o r t of c i v i l conspiracy. in S a l v a t o r - e v Kumar [SI R e l y i n g on t h e statement ( 4 5 AD3d 560, 563-564 [ 2 d Dept 2 0 0 7 1 ) t h a t cich a c l a i m stands o r f a l l s w i t h t h e uriderlyiny tort,'I Front a i - q u c s t h a t because they have a l l e g e d t h a t t h e UK deLciidarits a i d e d and a b e t t e d K h a l i l i n b r e a c h i n g h i s f i d u c i a r y d u t - i e s K h a l i l ' s motion t o disrni s s t h e c o n s p i r a c y c1aj.m should be d e n i e d . However, as t h e A p p e l l a t e D i v i s i o n , F i r s t Department e x p l a i n e d i n Hoeffner, [w] i i l e a p l a i n t i f f may a l l e g e , i n a c l a i m of f r a u d l 07: otliei- t o r t , t h a t p a r - t l e s c o n s p i r e d , t h e c o n s p i r a c y t o commit a fraud 01- t o r t i s noL, 01 i t s e l f , ti cau:;e of a c t i o n . " 8 5 An3d a . t 'Therefore, F r o n t ' s f i r s t cause of a c t i o n is d i s m i s s e d . T h i r d Cause of A c t i o n : Breach of Implied Covenant of Good F .-i t h a and F a i r Dealinq 458. ~~ ~ 12 [* 14] 1Cfia:I il c o n t e n d s t h a t because t h e t h i r d c a u s e of a c t i o n does n o t expressly mention t h e w r i t t e n etnployment agreement s i g n e d by him i.n 2 0 0 9 , i t must refer- t o t h e p e r i o d before he s i g n e d t h e agrec!ment . C i t i.ng M u r - p h y v A m c r - i c a n Home P r o d s . Coi-p. ( 58 NY2d 293 [19831), he a r g u e s t h a t p r i o r t o s i g n i n g t h e 2 0 0 9 ayreement., he was an a t - w i l l employee, and, t h e r e f o r e , had no i m p l i e d obl.I.gation of good fait-h. A s F r o n t contends, however, t h e Court i n M L I i - p h y w a s c o n s i d e r i n g whether- t h e r e was an i m p l i e d o b l i g a t i o n of good ¬ a i t h L.o c o n t i n u e employi.ng a workcr- who had an a t - w i l l c o n t r a c t of employment I s i n c e t h e " l o n y - s e t t l e d ru.Lc t h a t where an employment i s f o r an i n d e f i n i t e term i t i s presumed t o be a h i r i n g a t will which may be f r e e l y terminat-ed by e i t h e r p a r t y a t a n y time for any r e a s o n o r even f o r no reason,I' 'l'lius I 58 N Y 2 d a t 300. it. does not f o r e c l o s e t.lie r e l i a r i c e on an imp.1 i c d covenant. of good faikl-1 i n a l l s i t u a t i o n s of a t - w i l l employment. Nor do t h e a l l e g a t i o n s of t h e t h i r d c a u s e of a c t i o n r e s t r i c t t h e c l a i m t o K h a l i l ' s p r e - 2 0 0 9 conduct. [An] i m p l i e d o b l i g a t i o n [of fa j . r d e a l i n g ] encompasses any promises which a r e a s o n a b l e p e r s o n i n [ p l a i n t i f f s p o s i t i (3x11 would be ju s t i f i.ed i n u n d e r s t a n d i n g was in(: 1 ~tdecl i n t h e par.ti.es agreement . [TIhe c:ovenarlt of good faith and f a i r dea1,irig i.s breached w h e n a party t o a cor-ltr-act arks i n a manner t h a t , although n o t exprcss.1y f o r b i d d e n by any c o n t r a c t u a l p r o v i s i o n , would dcpri.ve t h e o t h e r party of t h e r i g h t t o r e c e i v e the b e n e f i t s under t h e i r agreement. ARB U p s t a t e Conuiiur~icaIs~or~s v R . 3 . R e u t e r - , L . L . C . , 3 3 AD3d LLC 929, 934 (:3d Dept 2 0 1 % ) ( i n t e r n a l cguotat:ion m a r k s and c i t a t i o i i s omitted). 13 [* 15] To t h e e x t e n t that F r o n t alleges that K h a l i l dii-ectly v i o l a t e d t h e 2 0 0 9 written agreemerit to r e f r a i n from moonlighting, t h e t h i r d cause of a c t i . o n i s d u p l . i c a t i v e of t h e br-each of c o n t r a c t cause of a c t i o n . Mezz H o l d i n g s L L C , 2012) . - - See ERC 16W L t d . P ' a r t n e r s h i p v X a n a d u AD3d - - - - , 2 0 1 2 WL 1582'/93 (1st Dept The t h i r d cause of actiori, however, al.so alleges conduct by K h a l i . 1 , w h i c h is n o t e x p r e s s l y p r o h i b i t - e d by t h e w r i t t e n agreement, s u c h as h i s d i s c l o s i n g a n d o r p l a n n i n g t o d i s c l o s e Lrade s e c r e t s , and o t h e r p r o p r i e t y , c o m p e t i t i v e l y s e n s i t i v e c o n ¬ i d e n t i . a l infoi-mati.on t o c o m p e t i t o r s . On a motion t o d i s m i s s p u r s u a n t t o CPLR 3211, [ t h e c o u r t : l must accept as t r u e the f a c t s as alleged i n t h e c o m p l a i n t and s u b m i s s i o n s i n o p p o s i t i o n t o the motion, accoi:d p l a i r i t i f f s t h e berief i t of e v e r y p o s s i b l e f a v o r a b l e i n f ereiice and determine o n l y whether t h e f a c t s as a l l e g e d f i t w i t h i n any c o g n i z a b l e legal theory. Solu3loff v Harr-irnan E s t a t e s Dev. C o r p . , 9 6 NY2d 4 0 9 , 414 (2001). Front h a s , t h e r e f o r e , suf f i c i e n t l y s t a t e d a c a u s e of a c t i o n f o r v i o l a t i o n of the i m p l i e d covenant. of good f a i t h arid f a i r dealing, and K h a l i l ' s motion t o d i s m i s s t h a t cause of a c t i o n i s d e n i e d . n S i x t h Cause of A c t i--. o .- : U n f a i r Competition ( M i s a p p r o p r i a t i o- . .of n .. Trade Secrets) K l i a l i l c o n t e n d s t h a t t h e s i x t h cause of a c t i o n must be d i s m i s s e d because i t i s solely p r e d i c a t e d on c o n c l u s o r y allegatioi-1:; of t r a d e s e c r e t s . A l t h o u q l i i n i t s b r i e f opposing K k a l i l ' s motion t.0 d i s m i s s , F r o n t appears t o be i.i.mi t.i.ng t h a t c a u s e of a c t i o n t o m i s a p p r o p r i a t i o n of trade s e c r e t : ; , t h e court n o t e s t1ia.t t h e a1 legations c o n t a i n e d i n t h e c a u s e of a c t i o n ( a s 14 [* 16] opposed t o t h e t i t l e of t h e c a u s e of a c t i o n ) a r e n o t l i m i t e d t o the u s e of t r a d e secrets, b u t r a t h e r i n c l u d e I l m i s a p p r o p r i a t i n g FronL :; pi-opri e t - a r y arid c o n f i d e n t i a l i n f o r m a t i o n from Front and usiriy i t. t.0 s o l i c i t . , p e r s u a d e , a t t e m p t to p e r s u a d e , do b u s i n e s s with and/or perf Complaint 7 om1 127. servi-ces f 01- p o t e n t i a l c i l i e ~ i t s o f F r o n t . The cause of a c t i o n goes on t o a l l e g e that [ b l y d i v e r t i n g b u s i n e s s away from F r o n t and t o themselves u s i n g F n m t z eonf i d e r i t i a l and p r o p r i e t a r y iriformatiori, including i t s ti-ade s;ec:rets, and i t s r e s o u r c c s , D e f endant s have bccri allowed to engage i n u n f a i r c o m p e t i t i o n a g a i n s t Front.. Id., 7 128. There would, t h e r - e f o r e , appear t o be a s u b s t a n t i a l o v e r l a p bet-ween t h e s i x t h and s e v c n t h c a u s e s of a c t i o n . With r e s p e c t t o K h a l i l s c l a i m that. t h e c a u s e of a c t i o n must be d i s m i s s e d b e c a u s e t h e a l l e g a t i o n s r e l a t i n g to t r a d e s e c r e t s a r e merc?ly r o n c l u s o r y , t h e court. conc:ludes t h a t the q u e s t i o n s of whether t h e i n f o r m a t i o n a l l e g e d l y t a k e n by IChalil and s h a r e d w i t h Front s cornpeti tors c o n s t i t u t e d t r a d e s e c r e t s , c o n f i d e n t i a l a n d / o r propriety i n f o r m a t i o n and whether Front had e s t a b l i s h e d adeyuat-c p r o t e c t i o n s f o r t h a t i n f o r m a t i o n are ones t o be d e c i d e d by the t - r i e r o f f a c t . LLC, See A s h l a r i d Mgt. I n c . v A l t a i r - . T ~ ~ v e s . NA, 59 AD3d 97, 103-104 (19 Dept 2 0 0 8 ) , affd as mod 14 NY3d 7 7 4 T h e r e f o r e , K h a l i l s motion to d i s m i s s the s i x t h c a u s e of (2010). a c t i o n is d e n i e d . of Seventh C ause .~ Ac!tion: Common-Law U n f a i r Competition . . -. ~ Y he c o m p l a i n t a l l e g e s t h a t IChalil had a c c e s s t o F r o n t s c o n f i d e n t i a l . and proprieLary i n f o r m a t i o n t h r o u g h a c o n f i d e n t i a l 15 [* 17] C:'oitip1a i n t relat.iorl:;hri p w i L h k-ront and a s F r o n t ' s ti d u c i a r y . 133. 7 ?'hc c o m p l a i n t f u r t h e r a l l e g e s t h a t defer-1dant.s' acLkoris i n m i sapp r op r i a t i ng F r o n t ' s con fide n t i a 1 a i d p r o p ri c t a ry i n f o rma t i on was wanton, w i l l f u l and m a l i c i . o u s . Quotiny Abe's Rooms, I I ~ c v Space H w i t e r s , Izzc. . 690, 6 3 2 ( 3 8 AD3d [2d Uept 2 0 0 7 ] ) , IChalil. contends t h a t a cause of a c t i o n for u n f a i r - c o m p e t i t i o n r e q u i r e s t h a t t h e p l a i i i t i f f show " t h a t the defendants misappropriated t h e p l a i n t i f f s l . a b o r s , ski.1.l s , I e x p e n d i t u r e s , o r good w i l l arid d j s p l a y e d some element of bad f a i t h i n doing so." According t o K h a l i l , Front h a s confused t h e t o r t 01 u n f a i r c o m p e t i t i o n w i t h t h a t of m i s a p p r o p r i a t i o n of property. T h i s court notes, however, t h a t the Court of Appeals h a s i n d i c a t e d t h a t t h e r e i s a " m i s a p p r o p r i a t i o n t h e o r y " of u n f a i r competiti.on u s i n g a l m o s t t h e s a m e words u s e d by tlic A p p e l l a t e D i v i s i o n , Second Department, b u t b r o a d e n i n g t h e i r r e a c h somewhat, stating: [t] he p r i n c i p l e t h a t one may n o t m i s a p p r o p r i a t e t h e r-esult.~ of t h e s k i . 1 1 , e x p e n d i t u r e s and l a b o r s of a c o m p e t i t o r h a s . . . o f t e n been implemented i n [ N e w York] c o u r t s (emphasi.~ s u p p l i e d , i n t e r n a l quotation marks and c i t a t i - o n o m i t t e d ) Ltd. v Purich_gini, Inc., 9 NY3d 4 6 7 , 4 7 7 ( 2 0 0 7 ) . . I' ITC Such a d e s c r i p t i o n of t h e t o r t c o u l d w e l l encompass p l a i n t i f f ' s a1.leyatl.ons t h a t Khal.il u n f a i r l y competcd w i t h F r o n t by i.mpropei-ly u s i ng i t s conf i d e n t i a 1 arid p r o p r i e t a r y i n f o r m a t i o n . C i t i n g I T C L L d . v Punclzyini., I n c . ( 9 NY3d 467, s u p i - a ) , K h a l i l contends t h a t t h e "misappropriation 'I branch of u n f a i r c o m p e t i t i o n r e q u i r e s t h e bad f a i t h taking of good w i l l , which i s 16 [* 18] n o t a l l e g e d here.. The d e c i s i o n i n I T C is n o t as liini t-ed as I C I - i a l i l s u g g e s t , however. Although t h e Court of Appeals d i d s t a t e t h a t , i n t h e c o n t e x t of l i t i g a t i o n i n v o l v i n g m i s a p p r o p r i a t i o n of a f o r e i y n t.rademarlt, the a p p r o p r i a t i o n of good w i l l milst i n v o l v e d , t h e Court a l s o s t a L e d more gcrier-ally, t - h a t York l a w , 'I be [ul rider N e w [a] u n f a i r c o m p e t i t i o n c l a i m i n v o l v i n g ri m i s a p p r o p r i a t i o n usually coiicerns t h e t a k i n g arid use of t h e p l a i n t i . ¬ f ' s p r o p e r t y L o compete a g a i n s t t h e p l a i n t i f f ' s own use of t h e s a w p7:operty. ''I 3 NY3d a t 478 ( i r i t c r r i a l c i . t a t i o r i o m i t t e d ) ; see also E a g l e Conitroiiics v Pic0 Pr-'ods. 1203 I 256 AD2d 1 2 0 2 , ( 4 " ' Dcpt 1998) ( " t h e gravamen of a c l a i m of u n f a i r cornpetiti.on is t h e bad f a i t h niisappropri.atio1-1 o f a commercial advantage b e l o n g i n g t o a n o t h e r by i n f ririyemerit o r d i l u t i o n of a trademark o r trade riame ir-iF'o1-i?idLi(3n O L OL' by e x p l o i t a t i o n of pr-opi-ietar-y trade s e c r e t s [ernphasis s u p p l i e d ] ) ; L~oul~leCl.ic!k I n c . v H e i i d e i - ' ~ ~ ~ ~ , WL 731413, *7, 1997 NY Misc LEXlS 577, "19 1997 (Sup C t , NY 2 0 0 7 ) ("A claim of u n f a i r c o m p e t i t i o n w i l l l i e where a former employee m i s a p p r o p r i a t e s arid e x p l o i t s corif i d e n t i a l i riformation b e l o n g i n g t o h e r former cmploycr i r i a b u s e of her r e l a t ionsl-iip of trust " ) . K h a l i l ' s motion t o d i s m i s s the seventh c a u s e of a c t i o n i s , theref ore , denied. N i n t h Cause -. of A-~ t i o n : P r e l i m i n a r y- arid Permanent T r y u n c t i o n c ~ I n Lhe n i n t h cause o f a c t i o n , t h e complaint a l l e g e s t h a t K h a l i l viol.at.ed t h e c o n f i d e n t i a l i t y p r o v i s i o n of tlhe employment i.qned a n d used F r o n t ' s t r a d e s e c l - c t s , agreemcnt t-liat tic E; 17 [* 19] corif iderit. i al inIormatioi-i, and o t h e r p r o p r i e t a r y i n f o r m a t ion wit-1-lout perniissior-1. ?'he c o m p l a i n t f u r t h e r a.11.eges t h a t t h e c o n t i n u e d u s e o f t h a t i n f o r m a t i o n t h r e a t e n s F r o n t w i t h immediate i r r e p a r a b l e harm, a n d , t h e r e f o r e , p 1 a i n t j . f f s e e k s p r e l i m i n a r y arid permanelit i l i j urictive r e l i e f t o p r e v e n t K h a . 1 i L from fur't2lcr use of any such c o n f i d e n t i a l b u s i n e s s i n f o r m a t i o n o r f r o i n directly o r i n d i r c c l l y s o 1 i c . i ti 117 or a t t e m p t i n g t.o s o l i c i t any of P r - o n t ' s uustomer-s w l i o w e r e not p r e v i o u s l y customers of HOC UK. Again, K h a l i l c o n t e n d s t h a t t h e c a u s e of a c t i o n i s e n t i r e l y premised on a l l e g e d " t r a d e s e c r e t s , " which a r e i n s u f f i c i e n t l y i d e n t i f i e d , a n d , t h e r e f o r e , is f a t a l l y f l a w e d . As p r e v i o u s l y d i s c u s s e d however, t h e compl.aint i s n o t l i m i t e d t o t r a d e s e c r e t s , b u t a l s o allege:; that K h a l i 1 i m p r o p e r l y took and disclosed conf i d e n t i . a l and p r o p r i e t a r y i n f o r m a t i o n , c a t e g o r i e s of i n f o r m a t i o n which a r e b r o a d e r t h a n t r a d e s e c r e t s , and which have been a d e q u a t e l y i c i e r i t i f i c d i n t h e c o m p l a i n t . Whether F'ront wil 1. u1,tiiiiatcly be able t o e s t a b l i s h t h e b a s i c prerequ1.si.t.es f o r - obtairiiriy p r e l i m i n a r y or permarierit i r i j urictivc r e l i e f rerriairi:; t o be s e e n , b u t i t has a l l e g e d enough t o s u c c e s s f u l l y oppose a motion t o d i s m i s s t h e n i n t h c a u s e of action. Tenth Cause of A.c t- o.n :- .C o n s t r u c t i v e T r u s t i . . .~ K l i a l i l c:onLer-ids t h a t , a l t h o u g h a c o n s t r u c t i v e t r u s t may be irriposed wher-e p i - o p c i - t y has been Lrarisferred t o a f i d u c i a r y w l i o i s u n j u s t l y e n r i c h e d by t h a t t r a n s f e r , h e r e t h e r e is no a l l e g a t i o n t h a t p r o p e r t y h a s been t r a n s f e r r e d . 18 Therefore, according t o [* 20] Khalil, a c o n s t r u c t i v e t r u s t may riot be imposed. Where, however, a c o r p o r a t e p l a i n t i f f can e s t a b l i s h a d i v e r s i o n of c o r p o r a t e o p p o x - t u n i t i e s , a c o n s t r u c t i v e t r u s t can be imposed i n ¬ a v o r of the p l a i i i t i f f o v e r t h e p r o p e r t y a c y u i r - e d . A h P Talkel- C~7il-p.~4 8 AD2d 796, 7 9 7 P o l i n g II'ransp. Cor-p. v ( 2 d Dept 1 9 8 1 ) . Here, the compl.aint c o n t a i n s s u f f i c i e i i t a l l e g a t i o n s c o n c e r n i n g a c t i o n s by K h a l i l i m p r o p e r l y taking b u s i n e s s o p p o r t u n i t i e s from Fr'ont, t o m a i n t a i n t h i s cause of a c t i o n ; thiis, IChalil's motion t o d i s m i s s t h c t e n t h cause of a c t i o n i s d e n i e d . E 1.evenLh (:ausc of : . A c t-i o n : Accountirly ~. . " ' T h e r i g h t t o a n a c c o u n t i n g i s premised upon t h e exi.st.encc. of a c o n f i d e n t i a l o r f i d u c i a r y r e l a t i o n s h i p arid a b r e a c h of t h e d u t y imposed by t h a t r e l a t i o n s h i p r e s p e c t i n g p r o p e r t y in which the p a r - t y scekirlq t h e a c c o u n t i n g h a s a n i n t e r e s t C31t:~iel' Hathkopf, 2 3 8 AD2d 234, 2 4 2 & omitted) . . ' ' I Adarn v (1".Dept 1 9 9 ' 7 ) ( c i t a t i o r i Klialil argues t h a t Front: is n o t e n t i t l e d t o an a c c o u n t i n g b e c a u s e i t f a i l s t o i d e n t i f y any s u c h p r o p e r t y i.n K h a l i l ' s possession. Fi-ont h a s , however, a l l e g e d t h a t Khal.11 t o o k c o n f i d e n t i a l and p r - o p r i c l a r y i n f o r m a t i o n from FroriL whi ch lie t h e n s h a r e d w i t h Fi-onL.'~ c:ompetitors, and which r e s u l t e d i n h i s s u c h as EOC I J K , o b t a i . n i r q b u s i n e s s d e a l s w i t h those c o m p e t i t o r s which p r e v i o u s l y helonged t o F r o n t . J u s t as Front h a s s t a t e d a c a u s e of acti.on f o r a c o n s t r u c t i v e t r u s t , i t has a l s o s t a t e d a cause of a c t i o n f o r accounting. D i sc q u a 1 f i cat.i o n o f. Fror-1 ' s A t to r n e y s i t . .- ~ 19 [* 21] K h a l i l moves t.o d i s q u a l i f y Kimmel and his l a w f i r i n 01 1 the b a s i s t h a t t h e y are t h i r d - p a r t y d e f e n d a n t s and i n a t e r j a 1 w i t n e s s e s i n h i s t h i r d - p a r t y a c t i o n a g a i n s t them f o r d e f a m a t i o n . Undcr motion sequence number 0 0 2 , i n f i - a , however, the court has grantcd thix-d-part.y d e f e n d a n t s motion t o d i s m i s s t h e t . h i r d p a r t y complaint,. There i s , t h e r e f o r e , no b a s i s f o r d i s q u a l i f y i n g ICimme1 a r i d h i s l a w f i r m . Accordingly, K h a l i l . ~ motion f o r disqualifica,tion i s denied. MOTION SEQUENCE NUMBER 002 O n October 3 1 , 2011, K h a l i l f i l e d t h e t h i r d - p a r t y complaint a g a i n s t K i l n m e 1 arid t h e law f i r m a l l e g i n g t h a t the letter that w a s a d d r e s s e d tc) h i m , a copy of which w a s s e n t t o EOC UK, a c c u s e d him of c:oriirnitti ~ i g crime and engaging unlawful a c ! t . i v i L y . a The t h i r d - p a r t y cornplaint asserts c a u s e s of a c t i o n f o r l i . b e 1 p e r se, i n t e r f e r i n g w i t h Khal i 1 s p r o s p e c t i v e bus inesr; r e l a t i o n s h i p , and t o r t i o u s i n t e r f e r e n c e with h i s business r e l a t i o n s h i p . In motion sequence number 0 0 2 , Kirnrnel arid t h e law f i r m move L o d i s m i s s t h e t h i r d - p a r . t y complaint of action. f o x - f a i l u r e t.o s t a t e a cause While t h i r d - p a r t y d e f e n d a n t s coiitei-id t h a t rio s t a t e m e n t i n t h e l e t t e r i s defamatory, t h e y c o n t e n d that t h e l e t t e r w a s s e n t t o K h a l i l arid t o EOC UK as p a r t of t h e i r e f f o r t s on b e h a l f of their c l i e n t , F r o n t , i n p r e p a r a t i o n , and i n a n effort t.o o b v i a t e the n e e d , f o r l i L i y a t i o n , and a s s u c h , w a s a b s o l u t e ly p r i v i l e g e d . NY2d 2 0 5 L19831), C itirig P a r - k 1<110ll A s s o c . v Sc:hmidt (59 t h i r d - p a r t y defendants argue t h a t a b s o l u t e p r i v i l e g e a t t a c h e s t o s t a t e m e n t s made by a . t t o r n c y s i n t h e course 20 [* 22] of j u d i c i a l p r o c e e d i n g s a i t h a t t h e immunity a t t a c h e s because rd t h e statemenLs a r e "'spoken i n o f f i c e . ' " Id. a t 210. Third-party defcndarits c o n t e n d t h a t t h e p r i v i l e g e a p p l i e s t o s t a t e m e n t s made p r i o r t o the coitnncncemeiit of l i t i g a t i o n a s we1 1 i f t h e y a r e 1-elevant t.o t h e p r o s p e c t i v e 1 i t - i g a t i o n . See S e s t e r - P .C. v M a r g r a b e , 3 8 AD3d 16.3, 1 7 4 (1:'' Dept 2 0 0 7 ) ; & Warmfldsh, Vodopia v Ziff-Odvis P u b l . Co., 2 4 3 AD2d 3 6 8 (1"'Dept 1337); Liebei-man v (1"' Dept 1 9 9 7 ) . H o f f m a n , 2 3 3 AD2d 2 7 3 , 2 7 3 QuoLiiig a case d e c i d e d by t h e United S t a t e s D i s t r i c t Court f o r t h c S o u t h e r n Distri.c:t of New York, Khalil argues t h a t "New Y o r k law sirtiply does r i o t p r o v i d e a n a b s o l u t e p r i v i l e g e for s t a t e m e n t s made p r i o r t o t h e i n s t i t u t i o n of a j u d i c i a l proceeding." NY 1 9 8 8 ) . B l o c k v F i r s t Blood Assoc., 691 F Supp 6 8 5 , 699 (SD IChalil goes on t o q u o t e t h e C o u r t of Appeals d e c i s i o n i n Par-.k K n o 1 7 A s s o c . v S c l - m i d t ( 5 9 NY2d a t 2 0 3 ) a s f o I 1 . o ~ ~ : "a lawyer- lias imrnuriity f o r defamatory words spoken i n a j u d i c i a l p r o c e e d i n g but n o t f o r words spoken while r e p r e s e n t . i n g a c l i e n t i n a n o n j u d i c i a l proceeding ... t h e p r o c e e d i n g commences. I ' The o m i t t e d language by K h a l i l , [and] n o t for t h o s e made b e f o r e however, s u b s t - a n t i a l l y a l t e r s t h e meaning of thc! quote. For t h e Court. ac:tual.ly s t a t e d , " a witness i s immune from s u i t . f o r defamatory r e m a r l c s p e r t i n e n t . t o a j u d i c i a l p r o c e e d i n g , but. not f o r t h o s e made b e f o r e t h e p r o c e e d i n g commences ( c i t a t i o r i o m i t t e d and emphasis supplied) . I 1 Id. The d e c i s i o n i n c l u d e s no such q u a l i f i c a t i o n r e g a r d i n g s t a t e m e n t s made by a t t o r n e y s . K h a l i l also p r o v i d e s the decision of t h e Supreme C o u r t l i r i 21 [* 23] V o d o p i c i v Z i f f - D a v i . s P u b l , Co., s u p r < z , t o e s t a b l i s h that t h e st.aL.ernents niade i u t - h a t 1 i t i . g a t i o n w e i - e actual l made i n the y cciurse of li t i g a t i o n , r a t h e r t h a n in c o n n e c t i o n w i t h t h r e a t e n e d l i L i g a t . i o n , as i n d i c a t e d by the AppeI..la t e D i v i s i o n . See Vodopi.a v Ziff-Davis Publ. C O . ~ Sup C t , NY County, August 1 6 , 1 9 9 6 , Bransten, J . , index N o . 126854/95. Whi1.e i t appcar-:; t h a t t h e A p p e l l a t e D i v i s i o n may well have e r ~ - o r i e o u s I . yb e l i cvecl that t h e . l e t t e r i n questrion i n V o d o p i a w a s a p r e - l i t i g a t i o n l e t t e r , what i s i m p o r t a n t f o r our- purposes i s the f a c t that tlie A p p e l l a t e D i v i s i o n concluded t h a t an a b s o l u t e p r i v i lege a t t a c h e s t o a p r e - l i t i g a t i o n l e t t e r . That d e c i s i o n by the A p p e l l l a t e D i v i s i o n i s c o n s i s t e n t wi t h i t s c:onternporaIieous d e c i s i o n i n L.ieber-nian v Hoffman (239 AD2d 2 7 3 , sl.lpr-a), arid i t s more r e c e n t decision i n Sextei- 6; W a r m f l a s h , P.C. v Margrabe ( 3 8 AD3d 163, s u p r a ) . Tt i s t h e d e c i s i o n s of the A p p e l l a t e D i v i s i o n , F i r s t Department, n o t the d e c i s i o n s of t h e U n i t e d S t a t e s D i s t r i c t Court f o r t h e S o u t h e r n D i s t r i c t of N e w York r e l i e d on by K h a l i l , t o which t h i s court must l o o k f o r p r e c e d e n t . W h i l e tlie l e t t e r s e n t b y t h i r d - p a r t - y d e f e n d a n t s t o Khal-il and L o EOC IJK, may w e l l have been rantblinq arid i n a r t f u l , it clearly r e l a t e s t o t h e l i t i g a t i o n i n i t i a t e d by Froint aqai.nst. I C h a l i l . / O C allayhan and EOC U K . In f a c t , t h e demands made in t h e l e t t e r s to I C h a l j . 1 and to O Callaghar-1 and EOC TJK s u b s t a n t i a l l y r e f l e c t the CauSFts of a c ! t i o r l and r e l i e f requested a g a i n s t t h o s e defendants i n t h e f i r s t - p a r t y l i t i g a t i o n . The fact: t h a t t h e l i t i g a t i o n w a s riot i n i t i a t e d u n t i l a p p r o x i m a t e l y six months af-Ler22 [* 24] t h e l e t t e r s were sent does n o t a l t e r t h e c o u r t s c o n c l u s i o n . For- t h e s e r e a s o n s , t h e c o u r t concludes t h a t t-he l e t t e r t o K h a l i l is a b s o l u t e l y p r i v i l e g e d , arid t h u s t h e c o u r t does riot need Lo r e a c h tlie q u e s t i o n of r n a l i c e . Ac:c:ordiricjly, i t i s hereby ORnERED on Motion Sequence Number- 0 0 1 as follows: 1) t h e b r a n c h of. t h e motion of d e f e n d a n t J a m e s O Callaghan t o d i s m i s s t h e c o m p l a i n t f o r l a c k of p e r s o n a l j u r i s d i c t i o n i s q r a n t e d , and t h e c o m p l a i n t i.s d i s m i s s e d i n i t s e n t i r e t y a s a g a i n s t h i m w i t h c o s t s and d i s b u r s e m e n t s t o him a s t a x e d by t h e C:I.erk o ¬ t h e C o u r t , a n d tlic C l e r k i s d i r e c t e d t o e n t e r judgment a c c o r d i n g l y i n f a v o r of him; arid i t i s f u r t h e r ORDERED t h a t t h e a c t i o n is s e v e r e d and c o n t i n u e d a g a i n s t t h e remai.ning d e f e n d a n t s ; and i t i s f u r t h e r ORDEKED w i t h r e s p e c t t o 2) the bra.nch o f O Callayhan L t d . the motion of defendariL E c k e r s l c y (sued h e r e as Eckersley O C a l l a g h a n S t r u c t u r a l Design) seeking d i s m i s s a l of tlie complaint f o r l a c k oE personal j u r i s d i c t i o n , t h e i s s u e of whether Eckersley O Callagl-ian L t d . has conducted s u f f i c i ent s i g n i f i c a n t and s u b s t a n t i a l b u s i n e s s i n N e w York t o pr-ovidc a b a s i s for long-arrn j u r i s d i c t i o n p u r s u a n t t o CPLR 3 0 2 (a) i s r - e f e r r e d t o a Special R e f e r e e t o h e a r a n d r e p o r t wi.th recommendations, e x c e p t t h a t , i r i the e v e n t of arid upon t h . e f i l i n g of a s t i p u l a t i o n of t h e p a r t i e s , a s p e r m i t t e d by CPLR 4317, t h e S p e c i a l R e f e r e e , o r a n o t h e r person d e s i g n a t e d by t h e p a r t i e s t o s e r v e a s r e f e r e e , shall d e t e r m i n e t h e a f o r e s a i d j.ssue 23 ; [* 25] and it- i s f u r t h e r ORDERED that: t h i s motion .is h e l d i n abeyance perldirig receipt. of t h e I-epor-t and recommendations of t h e S p e c i a l R e f e r e e arid a motion p u r s u a n t t o CPLR 4 4 0 3 or r e c e i p t of t h e determination of t h e S p e c i a l R e f e r e e o r t h e d e s i g n a t e d r e f e r e e ; and i t i s f u r t h e r ORDERED t h a t c o u n s e l for t h e p a r t y s e e k i n g t h e r e f e r e n c e o r , a b s e n t ,such p a ~ t y ,counsel for the p l a i n t i f f s h a l l , w i t h i n 3 0 days from tlic d a t e of t h i s order-, serve a copy c i f tliris o r d e r w i t h n o t i c e of e n t r y , t o q e t h e r w i t h a completed I n f o r m a t i o n S h e e t , upon t h e S p e c i a l R e f e r e e C l e r k in t h e Motion Support O f f i c e in Rm. 01-1 1 1 9 a t 6 0 Centre S t r e e t , w h o is d i r e c t e d to p l a c e t1ii.s i n a t t c r t h e calendar- of t h e Speci.al Refer-eels P a r t (Part 5 0 R ) for the e a r l i e s t c:onvenient date; arid i t i s f u r t h e r ORUEHED w i t h r-espect t o 1) t h e branch of d e f e n d a n t P h i l i p K h a l i l s motion t o d i s m i s s t h e c o m p l a i n t f o r f a i l u r e t o s t a t e a cause of a c t i o n , t h e motion i s y r a n t c d w i t h s-cspect t o t h e f i r s t cause of a c t . i o n , and i s o t h e r w i s e d e n i e d ; and 2) the branch of d e f e n d a n t P h i l i p K l i a l i l s rnotion t o d i s q u a l i f y J e f f r e y A . Kinme1 and t h e law f i r m o ¬ Meister- See1i.g 6 . F e i i i LLP as c o u n s e l i s d e n i e d ; and i t i s f u r t h e r OKUERED on Motion Sequence 0 0 2 t h a t t h e motion a ¬ t h i r d - p a r t y def endarits J e f f r e y A . K i m m e l aiid t h e 1.aw f i r i n of M e i s t e r Seeli.9 & F e i r i LLP t o di:;rnj.ss t.he t h i r d - p a r t y complaint is grant-ed and t h e t h i r d - p a r t y complaint i:; d i s m i s s e d i n i t s e n t i r e t y as agail-1st s a i d d e f e n d a n t s , w i t h c:osLs arid di:;bursements 24 [* 26] t o said defendants as t a x e d by the C l e r k of tlie C o u r t , a r i d the Clerk is directed to enter judgment accordingly in favor of said de f ericiadt s . Dated: - q 2 3 //z ENTER : 25

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