Wide Win Am., Inc. v Newmark

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Wide Win Am., Inc. v Newmark 2012 NY Slip Op 33101(U) December 7, 2012 Sup Ct, New York County Docket Number: 107361/2011 Judge: Lucy Billings 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 OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: tucy BZLLBNGS J.S.C. PART 4b Justice - Index Number : 107361/2011 WIDE WIN AMERICA, INC. vs. NEMARK, EDWARD __c INDEX NO. MOTION DATE S E Q U E N C E N U M B E R : 001 MOTION SEQ. NO. SUMMARY JUDGMENT The following papers, numbered 1 to 7 ,were read on this motionfilfor Notice of MotionlOrder to Show Cause -Affidavits Answering Affidavits - Exhlbits &bw.-&W IWs). I W5J. INo(+ - Exhibits Replying Affidavits idC6&h > h J : 1-5 I; 7 I ~ 2. I._\: 1 ' :':.* ;' I-> " ..................................................................... 0CASE DISPOSED ENON-FINAL DISPOSITION IN PART 2. CHECKAS APPROPRIATE:............. .MOTION IS: CI GRANTED 0DENIED WGRANTED oOTHER SETTLE ORDER 0SUBMIT ORDER 3. CHECK IF APPROPRIATE:................................................ 0 0DO NOT POST 0FIDUCIARY APPOINTMENT 0REFERENCE 1. CHECK ONE: [* 2] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 4 6 -X _ _ _ l _ _ _ _ _ _ l _ _ _ _ _ _ _ _ _ _ l _ _ _ l _ _ _ _ l _ WIDE WIN AMERICA, INC., Z H E J I A N G WILD WIND IMPORT-EXPORT COMPANY L T D . , and ZHEJIANG TENDEX IMPORT-EXPORT COMPANY, LTD. Index No. 107361/2011 I Plaintiffs - against - DECISION AND ORDER EDWARD NEWMARK, TIM BEARE, RICHARD MALCOLM, A DIVISION OF SAN SIMEON, INC. and MALCOLM & CO. LLC, I I Defendants LUCY BILLINGS, J.S.C.: I This action requires sorting out the corporate and individual defendants liability (1) for clothing t h a t each of the three plaintiffs delivered to the t w o corporate defendants and (2) for their debt that the t w o individual defendants *acknowledged. Plaintiffs also seek to reach the individuals by piercing t h e corporate veil of defendant corporation and limited liability company (LLC), which are assetless. for summary judgment on their c l a i m s . C.P.L.R. Plaintiffs move § 3212(b). Defendants, in opposition, raise the issue whether plaintiff corporations may maintain their claims because they conduct business in New York when not so authorized, N . Y . Bus. Corp. Law § 1312(a), and cross-move to dismiss the complaint against the individual defendants based on its failure to state a claim against them. widewin.144 C.P.L.R. § 3211(a) ( 7 ) . 1 [* 3] I PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT A. The Zhejianq Plaintiffs' Claims Defendants claim that plaintiffs Zhejiang Wild Wind ImportExport Company L t d . and Zhejiang Tendex Import-Export Company, Ltd., are foreign corporations unauthorized to transact business in New York. Defendants support their claim with admissible documents from the New York State Department of State website indicating that neither Zhejiang Wild Wind Import-Export Company L t d . nor Zhejiang Tendex Import-Export Company, Ltd., is authorized to transact business in New York, LaSonde v. Seabrook, 89 A.D.3d 132, 137 n.8 (1st Dep't 2011); L&O Realty C o r p . v. Assessor, 71 A.D.3d 1025, 1026 (2d Dep't 2010); Kinqsbrook Jewish Med. Ctr. v , Allstate Ins. 20 (2d Dep't 2009). Co., 61 A . D . 3 d 1 3 , Defendants further rely on the complaint 7 2, which alleges that these two plaintiffs are foreign corporations and are conducting business in New Y o r k . Although the foreign corporations' lack of authorization to transact business in the state is not a basis to dismiss their action, Uribe v. Merchants Bank of N.Y., 2 6 6 A.D.2d 21, 22 (1st Dep't 1999), these plaintiffs may not pursue t h e i r action until they are so authorized. N.Y. Bus. Corp. Law § 1312(a). E.q., Barklee Realty Co. v . Pataki, 309 A.D.2d 310, 315-16 (1st Dep't 2003); Hiqhfill, Inc. v. Bruce (2d Dep't 2008). & Iris, Inc., 50 A.D.3d 742, 744 Therefore the court denies the motion for summary judgment by plaintiffs Zhejiang Wild Wind Import-Export Company Ltd. and Zhejiang Tendex Import-Export Company, Ltd. widewin.144 2 [* 4] C.P.L.R. § 3212(b); N.Y. Bus. Corp. Law B. § 1312(a). Plaintiff Wide Win America's Claims Defendants do not deny that defendant Newmark, as President of both Richard Malcolm, a Division of San Simeon, Inc., and Malcolm Sr Co., LLC, the two corporate defendants, admitted these two defendants' debt of $735,742.82 to the third plaintiff, Wide Win America, Inc. Therefore the court grants this plaintiff partial summary judgment for that amount against defendants Richard Malcolm, a Division of San Simeon, Inc., and Malcolm Co., LLC, jointly and individually, C . P . L . R . § & 3212(b) and (e) , with interest from March 3 , 2011, the date of that admission. C.P.L.R. § 5001(a) and (b). Plaintiffs further claim that the individual defendants Newmark and Beare in Beare's email April 6 , 2011, to Eileen Shen, President of Wide Win America, admitted their own liability for the debts listed in Newmark's communication of March 3 , 2011: the $735,742.82 owed to Wide Win America and lesser amounts to each of the other two plaintiffs. Although the email is !!TO: edward newmark, it begins : Hi Shen, As we have discussed in the last few days, Edward and I fully intend to repay the amount owed to you and the factories. . . . . . . . We will work out an arrangement with you on future business, whereby we will pay you a commission of between 5 and 10% on goods we buy from you starting late this year, and continuing until the debt has been repaid. V. Compl. Ex. B. This expressed intent "to repay the amount owed to you," w i d e w i n . 144 3 [* 5] referring to Shen s corporation Wide Win America, by the corporation Richard Malcolm, a Division of San Sirneon, Inc., and the LLC Malcolm & Co., LLC, is ambiguous whether the intent is on these corporate defendants behalf or by their principals Newmark and Beare individually. E.q., First Capital Asset Mqt. v. North Am. Consortium, 286 A.D.2d 263, 264 (1st Dep t 2001). Nowhere does either individual agree to be obligated personally, to pay personally, or to guarantee payment personally. E.q., Herman v . Ness Apparel Co., 305 A.D.2d 217, 218 (1st Dep t 2003). Particularly when considered in light of Newmark s earlier communication, Beare s email is at least equally susceptible of a contrary interpretation: an expressed intent on behalf of the corporate defendants to repay the amount owed by them. 1 0 5 Broadway Assoc. N.Y. Assoc., L . P . v. Bodner, 14 A.D.3d 1, 9 (1st Dep t 2004); First Capital Asset M q t . v . North Am. Consortium, 286 A.D.2d at 264. The email s final paragraph, contemplating repayment through future business between Shen s corporation and the corporate defendants, further supports this interpretation. No evidence suggests that Wide Win America s future business suddenly would transform into business with Newmark and Beare individually. Albstein v. Elany Constr. Corp., 30 A . D . 3 d 210 (1st Dep t 150 Broadway Assoc. N.Y. Assoc., L . P . 2006); v. Bodner, 14 A.D.3d at 7; Korea First Bank of N . Y . v . Noah Enters., Ltd., 12 A.D.3d 321, 322 (1st Dep t 2004); First Capital Asset Mqt. v . North Am. Consortium, 286 A.D.2d at 264. Similarly, plaintiff presents no widewin.144 4 [* 6] evidence that in the parties' past business dealings Newmark or Beare ever acknowledged his personal receipt of the clothing for which the amounts claimed are owed. Plaintiff thus provides no independent basis to claim against the individual defendants and hence no reason f o r them to assume such a liability. Therefore the court denies plaintiffs' motion for summary judgment against defendants Newmark and Beare. C.P.L.R. § 3212(b). 11, THE INDIVIDUAL DEFENDANTS' CROSS-MOTION TO DISMISS THE COMPLA 1NT A. Plaintiffs' Second. Claim for Breach o f Contract On the other hand, Beare's ernail to Shen April 6 , 2011, promising that "Edward and I fully intend to repay the amount owed to you and the factories," being susceptible of the alternative interpretation that Newmark and Beare intended individually to pay, states a claim for breach of contract against them. The complaint 11 13 and 15 alleges that defendants requested and received clothing merchandise at an agreed price, and & defendants acknowledged that the amount l J demanded was owed by them. Plaintiffs have not offered supporting evidence to warrant summary judgment against Newmark and Beare on this claim, but neither has Newmark or Beare presented conclusive evidence to the contrary. Although defendants dispute plaintiffs' allegations, defendants rely not j u s t on the complaint or an undisputed document, but rely primarily on their affidavits, which the court may not consider in the context of a motion to dismiss based on failure to state a Claim. C . P . L . R . widewin.l.44 § 3211(a) (1) and (7); Lawrence v. Graubard 5 [* 7] Miller, 11 N.Y.3d 588, 595 (2008); Correa v . Orient-Express Hotels. Inc., 84 A.D.3d 650 (1st Dep't 2011). See Goshen Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326 (2002); v. Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994); Greenapple v. Capital One, N.A., 92 A.D.3d 548, 550 (1st Dep't 2012); McCully v. Jersey Partners, Inc., 60 A.D.3d 562 (1st Dep't 2009). Therefore the court denies the cross-motion to dismiss the breach of contract claim against defendants Newmark and Beare. 3211(a) (1) and B. C.P.L.R. § (7). Plaintiffs' First Claim for Fraud The complaint mainly alleges defendants' scheme to defraud CIT Group/Commercial Services Inc., a nonparty that maintained a security interest in the corporate defendants' accounts receivables, against which C I T Group provided advances to t h e corporate defendants. The o n l y allegations of fraud perpetrated against plaintiffs are that Newmark and Beare diverted the proceeds from resale of the clothing plaintiffs delivered, using those proceeds for the individual defendants' own purposes, rather than paying the debts owed to plaintiffs. Morris v. New York State Dept. of Taxation & Cobalt Partners, L.P. v. Capital Corp., 97 A.D.3d 3 5 , 40 (1st GSC Fin,, 8 2 N.Y.2d 135, 141 (1993); Dep't 2012); Stewart T i t . Ins. Co. v. Liberty Tit. Aqency, LLC, 83 A.D.3d 5 3 2 , 533 (1st Dep't 2 0 1 1 ) ; Peqasus Aviation T, Inc. v. Variq Loqistica S.A., 69 A.D.3d 483 (1st Dep't 2010). Again defendants dispute these allegations, but rely primarily on their affidavits. widewin.144 6 [* 8] A fraud claim requires plaintiff to allege, however, that defendants misrepresented or omitted a material fact, knowing the misstatement or omission was false, to induce plaintiffs to rely on it, and that plaintiffs justifiably relied on the misrepresentation or omission and incurred damages from that reliance. Mandarin Tradinq Ltd. v. Wildenstein, 16 N.Y.3d 173, 178 (2011); Gosmile, Inc. v. Levine, 81 A . D . 3 d 77, 81 (1st Dep t 2011); Nicosia v. Board of Mqrs, of the Weber House Condominium, 77 A.D.3d 455, 456 (1st D e p t 2010). The o n l y misrepresentation intended to defraud plaintiffs discernible from the complaint is the individual defendants assurances that defendants would repay their debt to plaintiffs, intending in fact not to repay. Such a claim merely duplicates plaintiffs breach of contract claim. Sound Communications, Inc. v . Rack & Roll, Inc., 88 A.D.3d 523, 524 (1st Dep t 2011); Mafias v. VMS Assoc., LLC, 53 A.D.3d 451, 453 (1st Dep t 2008) + Nor do plaintiffs specify how they relied on defendants promise of repayment to plaintiffs detriment, since plaintiffs already had delivered their clothing merchandise to defendants before their promise to repay, a promise that merely reiterated the corporate defendants original contract to pay an agreed price for the merchandise. Meyercord v. Curry, 38 A.D.3d 315, 316 (1st Dep t 2007); Rivera v. JRJ Land Prop. Corp., 27 A.D.3d 361, 364 (1st Dep t 2006); Friedman v. Anderson, 3 5 A.D.3d 93, 100-101 (1st Dep t 2006); Water St. Leasehold LLC v. Deloitte & Touche LLP, 19 A,D.3d 183, 185 (1st Dep t widewin.144 7 2005), See DDJ Mqt., [* 9] I . LLC v. Rhone Group L.L.C., 15 N.Y.3d 147, 154 (2010); Joseph v. NRT Inc., 43 A . D . 3 d 312, 313 (1st Dep t 2007). In any event, plaintiffs alleged damages from any reliance on defendants misrepresentations are indistinct from the damages recoverable for their breach of a contract. Mafias v. VMS Assoc., LLC, 53 A.D.3d at 454; Teachers Ins. Annuity Assn. of Am. v . Cohen s Fashion Opt. of 485 Lexinston Ave., Inc., 45 A.D.3d 317, 319 (1st Dep t 2007). See Gosmile, Inc. v. Levine, 81 A . D . 3 d at 81. Plaintiffs allegations that Newmark and Beare looted the corporate defendants far the individuals personal gain may instead be the predicate for piercing the corporate defendants corporate veil, providing a vehicle to reach Newmark and Beare on a breach of contract c l a i m . The doctrine of piercing the corporate veil applies to defendant LLC and well as defendant corporation. Matias v. Mondo Props. LLC, 43 A . D . 3 d 367, 368 (1st Dep t 2007); Retropolis, Inc. v. 14th St. Dev. LLC, 17 A.D.3d 209, 2 1 0 (1st Dep t 2005). To sustain such a claim, plaintiff must specify that Newmark and Beare operated their corporation and LLC as their instrumentalities or alter eqos, without corporate formalities or adequate capital, and not as separate corporate entities, to further personal purposes, and siphoned off carporate assets f o r themselves, without satisfying corporate debts. L.P. v. GSC Capital Corp., Cobalt Partners, 97 A . D . 3 d at 39-40; Peqasus Aviation I, Inc. v. Variq Losistica S.A., 69 A.D.3d 483. Disclosure also may support piercing t h e corporate veil by uncovering the w i d e w i n . 144 8 [* 10] corporate defendants lack of corporate and financial records and substantiating the individual defendants domination of the corporate entities, to perpetrate a wrong against plaintiffs in depriving them of payment for the clothing merchandise. § C.P.L.R. 321l(d); Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d at 141-42; Cobalt Partners, L . P . v . GSC Capital Corp., 97 A.D.3d at 40-41; Stewart Tit. Ins. Co. v. Liberty Tit. Aqency, u, A.D.3d at 83 533; Peqasus Aviation I, Inc. v . Variq Loqistica S.A., 69 A.D.3d 483. As pleaded, however, plaintiffs complaint does not support a claim of fraud by the individual defendants perpetrated against plaintiffs. Therefore the court grants the cross-motion dismiss the fraud claim against defendants Newmark and Beare. C . P . L . R . § 3211 ( a ) ( 7 ) . The court need not determine whether the complaint supports a claim of fraud perpetrated by the corporate defendants, as (1) they do not move t o dismiss any claims, ( 2 ) plaintiff Wide Win America has not established any damages beyond its recovery for breach of contract, and (3) t h e court denies the other plaintiffs recovery for independent- reasons. Since CIT Group is not a plaintiff, the court need not determine whether the complaint supports a claim of fraud perpetrated against this nonparty. III. CONCLUSION To recapitulate, the following claims prevail or at least survive by the various plaintiffs against the various defendants. The court grants plaintiff Wide Win America, Inc., partial widewin.144 9 [* 11] 4 summary judgment for $735,742.82 against defendants Richard Malcolm, a Division of San Simeon, Inc., and Malcolm jointly and individually, C . P . L . R , § & Co., LLC, 3212(b) and (e) with , interest from March 3 , 2011, C.P.L.R. § 5001(a) and ( b ) . The court denies all plaintiffs' motion for summary judgment against defendants Newrnark and Beare and denies the reminder of the motion for summary judgment by plaintiffs Zhejiang Wild Wind Import-Export Company Ltd. and Zhejiang Tendex Import-Export Company, Ltd. C.P.L.R. § 3212(b); N.Y. Bus. Corp. Law § 1312(a). The court denies the cross-motion to dismiss the breach of contract c l a i m , plaintiff's second claim, against defendants Newmark and Beare, but grants the cross-motion to dismiss the fraud claim, plaintiffs' first claim, against Newmark and Beare. C.P.L.R. § 3211(a) ( 7 ) . This decision constitutes the court's order and judgment in favor of plaintiff Wide Win America, Inc., against defendants Richard Malcolm, a Division of San Simeon, I n c . , and Malcolm & Co., LLC, and judgment of dismissal of plaintiffs' fraud claim against defendants Newmark and Beare. DATED: December 7, 2012 LUCY BILLINGS, J.S.C. widewin.144 LO

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