Matter of Danzinger v Avtzon

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Matter of Danzinger v Avtzon 2021 NY Slip Op 32334(U) November 10, 2021 Supreme Court, Kings County Docket Number: Index No. 514504/20 Judge: Leon Ruchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] KINGS COUNTY CLERK 11/15/2021 03:10 PM INDEX NO. 514504/2020 NYSCEF DOC. NO. 91 RECEIVED NYSCEF: 11/15/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 ----- -- ------------------ --------------~ In the matter of the application of LEVI DANZINGER, as a Managing Member and Holder of 50% o:f the Membership Interests of GOZE PRODUCTS LLC, Petitioner, Index No. 514504/20 For the Dissolution of GOZE PRODUCTS LLC, A New York Limited Liability company, Pursuant to Limited Liability Company Law §702, and to Appoint a Receiver to wind up the affairs of GOZE PRODUCTS LLC pursuant to Limited Liability Cctnpany Law §703, -against- November 10, 2021 MOSHI AVTZON and ISAAC AVTZON, a/k/a Y:OSEL AVTZON, Respondents, --- ---------------- -------- - ----------x PRESENT: HON. LEON RUCHELSMAN The respondents move pursuant to CPLR §408, §1002 {b) arid §3025 (b) seeking leave to add a new party, amend counterclaims, add counterclaims agaisnt the new party and conduct discovery. petitioner opposes The the motion arguing that proposed claims a.nd joinder have no merit. Petitioner also argues that he would suffer prejudice if the motion was granted .. After reviewing all the arguments this Court now makes the following determination. As rec_orded _in a prior order both the petitioner Leyi Oanzinger and the respondent Isaac -Avtz6n are each fifty per.cent owners of an .entity called Goze Products LLC which operates as an internet seller partners nave thi:::ough filed, websites claims incluciing _Amazon. com. each 1 of 5 accusing the other Ifoth of [*FILED: 2] KINGS COUNTY CLERK 11/15/2021 03:10 PM INDEX NO. 514504/2020 NYSCEF DOC. NO. 91 RECEIVED NYSCEF: 11/15/2021 The improprieties. now respondents counterclaims, as noted, amend to seek the and assert additional claims against an entity called Danza Enterprises LLC which the respondent alleges is a company created by the petitioner to divert funds away from Goze. Further, respondents seek to Order the petitioner to produce the tax returns :of Danza as well as and/or petitioner's Danza' s application for "'PPP" funcling, and documents showing their receipt of such funds. The petitioner asserts these claims have no merit and the motion should be denied. Conclusions of, Law It is well settled that a request to amend a pleading shall be freely given unle.ss the proposed amendment would unfairly prejudice or surprise party, opposing the is or pa:lpably insufficient or patently devoid of merit (Adduci v. 1829 Park Place The decision LLC,. 176 AD3d 658, 107 NYS3d 690 [2d Dept., 2019]). whether to grant such leave is within the court;s sound discretion and such determination will not lightly be set aside Skyline credit-Ride Inc., 2010]) . Therefore, when 79 AD3d 1118, exercising (Ravri.ikar v. 913 NYS2d 339 [2d Dept., that discretion the court should consider whether the party seeking the amendment was aware of the facts. upon which the request is based and whether a reasonable excuse for any delay has been presented and whether any 2 2 of 5 [*FILED: 3] KINGS COUNTY CLERK 11/15/2021 03:10 PM INDEX NO. 514504/2020 NYSCEF DOC. NO. 91 RECEIVED NYSCEF: 11/15/2021 prejudice will result (Cohen v. Ho, 38 AD3d 705, 833 NYS2d 542 [2d Dept., 2007]). The respondents seek to add Danza and assert a claim for aiding and ibetting the breach of ·a fiduciarj duty. To plead a cause of action for aiding and abetting the breach of a fiduciary duty the party mµst demonstrate a fiduciary duty was owed, there was a breach of that duty and the party contributed substantial assistance in effecting the breach (see, Yuko Ito v. Suzuki, 57 AD3d 205, 869 NYS2d 28 [1st Dept., 2008]). Galasso, 83 AD3d 626, 921 NYB2d 100 [2d Dept., In Baron v. the 2011] sustainability of the cause of action was defined as whether the other party knowingly induced or participated in the breach. The petitioner argues there can be no such action for aiding and abetting a fiduciary breach since Danza is not accused of acting in any improper manner other than receiving diverted funds and such inaction cannot support an aiding and abetting claim. Tn Kaufman v. Cohen, 307 AD2d 113, 760 NYS2d 157 [1st Dept., 2003] the court explained that while there is no requirement that an aider and abettor must intend to cause actual harm "there must be an allegation that such defendant had actual knowledge of the breach of duty" (id) . The court in Kaufman acknowledged the "inherent difficulty" discerning intent and state of tnind but in$istecl the allegations cannot be conclusory. Thus; where the aider and abettor is a cqmpany owned by the party that actually allegedly 3 3 of 5 [*FILED: 4] KINGS COUNTY CLERK 11/15/2021 03:10 PM INDEX NO. 514504/2020 NYSCEF DOC. NO. 91 RECEIVED NYSCEF: 11/15/2021 breachec,i the fiduciary duty then the aider and abettor I s knowledge of the breach is patent. to allege aiding Consequently, there is more of a re.ason and abetting the breach of a duty where the company ts intimately i.nvol ved with the facts since, as hated, such intent is obvious. The court therefore declines to follow Verkhoqlvad v. Benimovich, 57 Misc3d 1207 (A), 66 NYS3d 6~5 [Supreme Court Kings County 2017]} cited by the petitioners. There is no basis to foreclose. actions against a corporation merely since it is owned by the indi victual accused of breaching duties. Further, there is no merit to the argument that maihtaing allegedly diverted fuhds Ls merely passive and hence not actionable since the acceptance of those funds is surely ac:tive permitting a claim of alleging aiding and abetting the breach of a fiduciary duty. Next, concerning the claim of conversion. It is well settled that to establish a claim for conversion the party must show the legal right to an identifiable item or items and that the other party has ex.ercised unauthorized control and ownership over the items 453, (Fiorenti v. 762 NYS2d 402 Central Emergency Physicians, [2d Dept., 2003]). PLLC, 305 AD2d AS the Court of Appeals explained "a conversi,on takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to some.one e.ls.e, int.erf.ering with that person's right of poss:ession ... Two key el.ernents. of convers.ion are (1) plaintiff's possessory right or interest in the property ... and (2) 4 4 of 5 [*FILED: 5] KINGS COUNTY CLERK 11/15/2021 03:10 PM INDEX NO. 514504/2020 NYSCEF DOC. NO. 91 RECEIVED NYSCEF: 11/15/2021 defendant's dominion over the property Or interference with it, in derogation of plaintiff's rightsU (see, Colavito v. New York Organ Donor Network Inc., [2006]). 8 NY3d 43, 827 NYS2d 96 Therefore, where a defendant "interfered with plaintiff's right to possess the property" (Hillcrest Homes, LLC 984 AD3d 1434, N:YS2d 755 v. Albion. MO bi 1 e Hornes, Dept., [4 th 2014]) a I n:c . , 11 7 conversion has The. petitioner argues the respondents have failed to occurred. adequaly allege conversion because "money belonging to a LLC [sic] paid out to members other than claimant a in excess of what claimant believes to be appropriate cannot support a claim for conversion" {See, Mwmorandum Of Law in Oppositipn, page 4). However, the peitioner bas not addressed why allegations that he essentially diverted funds from the jointly CMned corporation to a corporation he solely owns cannot support a claim for conversion. Therefore, based on the foregoing the motion seeking to amend the counterclaims to add Danza and two counte·rclairns is granted. The request seeking the PPP loan application filed by Danza is granted. Those materials must be furnished to the resporiderits. the tax returns of Danza need not he disclosed at this time and the motion seeking their production is denied. So. ordered, ENTER: DATED: Novmber lo, 2021 BroOklyn N.Y. Hon. Leon Ruchelsman JSG 5 5 of 5

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