| Waldman v 853 St. Nicholas Realty Corp. |
| 2009 NY Slip Op 05769 [64 AD3d 585] |
| July 7, 2009 |
| Appellate Division, Second Department |
| Sandra Waldman et al., Respondents, v 853 St. NicholasRealty Corp., Appellant. |
—[*1] Morton Povman, P.C., Forest Hills, N.Y., for respondents.
In an action, inter alia, for a judgment declaring the rights of the plaintiffs as owners of 40shares in the defendant corporation, the defendant appeals from an order of the Supreme Court,Queens County (Weiss, J.), entered August 5, 2008, which denied its motion for summaryjudgment.
Ordered that the order is affirmed, with costs.
Each of the four plaintiffs inherited 10 shares of the defendant corporation's outstandingstock in 1985 following the death of a family member. Those 40 shares constituted 20% of thestock issued by the defendant corporation. The plaintiffs allege that they were advised in 1992that the then-majority shareholder and secretary-treasurer of the defendant corporation(hereinafter the majority shareholder) intended to abandon the sole asset of the defendantcorporation, a six-story apartment building, and that the defendant corporation would cease tooperate. In actuality, the majority shareholder entered into a stock purchase agreement with athird party to sell "100%" of the outstanding shares of the defendant corporation, and theapartment building was included as part of the sale. On the date of closing, three checks totaling$31,738 made payable to the defendant corporation were tendered by the third party to themajority shareholder. The plaintiffs maintain that they did not discover the sale of the defendantcorporation until 2006. They never surrendered their stock certificates, executed powers ofattorney authorizing anyone to sell their stock in the defendant corporation, or received anyproceeds from the sale. The defendant corporation moved for summary judgment pursuant toCPLR 3212 contending, inter alia, that the complaint failed to state a cause of action and that theaction was barred by the applicable statute of limitations and the doctrine of laches. In the orderappealed from, the Supreme Court denied the motion. We affirm.
The defendant corporation failed to establish its prima facie entitlement to summaryjudgment as a matter of law (see Zuckerman v City of New York, 49 NY2d 557 [1980]).The majority shareholder owed a fiduciary duty to the plaintiffs, who were minorityshareholders. The power to manage the affairs of a corporation is vested with its directors andmajority shareholders (see Alpert v 28 Williams St. Corp., 63 NY2d 557, 568 [1984]).As such, the directors and majority shareholders of corporations are "cast in the fiduciary role of'guardians of corporate welfare' " (id. at 568, quoting Leibert v Clapp, 13 NY2d313, 317 [1963]). In undertaking any corporate action, they must act in good [*2]faith (id.; Meinhard v Salmon, 249 NY 458 [1928];Salm v Feldstein, 20 AD3d469 [2005]).
Based upon the foregoing, there is a "justiciable controversy" between the plaintiffs, asminority shareholders, and the defendant corporation appropriate to be resolved through anaction for a declaratory judgment (see CPLR 3001; Watson v Aetna Cas. & Sur.Co., 246 AD2d 57 [1998]). Moreover, triable issues of fact exist with respect to the actionstaken by the majority shareholder at the time the stock purchase agreement was executed, whichpreclude the granting of summary judgment in the defendant's favor.
Actions for declaratory judgments are not ascribed a certain limitations period (seeSolnick v Whalen, 49 NY2d 224, 229 [1980]). The nature of the relief sought in adeclaratory judgment action dictates the applicable limitations period (see Vigilant Ins. Co.of Am. v Housing Auth. of City of El Paso, Tex., 87 NY2d 36 [1995]) Thus, if the action fora declaratory judgment could have been brought in a different form asserting a particular causeof action, the limitations period applicable to the particular cause of action will apply (seeNew York City Health & Hosps. Corp. v McBarnette, 84 NY2d 194, 201 [1994]; Matter of Vecce v Town of Babylon,32 AD3d 1038, 1039-1040 [2006]).
Here, the plaintiffs could have commenced an action against the defendant corporation torecover damages for fraud premised upon the actions of the majority shareholder. A cause ofaction seeking damages based upon fraud must be commenced within six years from the time ofthe fraud or within two years from the time the fraud was discovered, or with reasonablediligence, could have been discovered (see CPLR 203 [g]; 213 [8]; Sargiss v Magarelli, 50 AD3d1117 [2008]). A triable issue of fact exists concerning the date upon which the plaintiffscould have, with reasonable diligence, discovered the alleged fraud of the majority shareholder(see Moreau v Archdiocese of N.Y., 261 AD2d 456 [1999]).
In order for laches to apply, there must be an unreasonable and inexcusable delay (seeSkrodelis v Norbergs, 272 AD2d 316 [2000]). A triable issue of fact exists as to whether theplaintiffs' delay in commencing this action was unreasonable and inexcusable.
Thus, the Supreme Court properly denied the defendant's motion for summary judgment.
The defendant's remaining contentions are without merit. Rivera, J.P., Miller, Balkin andAustin, JJ., concur.