| Cottone v Selective Surfaces, Inc. |
| 2009 NY Slip Op 09605 [68 AD3d 1038] |
| December 22, 2009 |
| Appellate Division, Second Department |
| James Cottone, Individually and on Behalf of Selective Surfaces,LLC, Appellant, v Selective Surfaces, Inc., et al.,Respondents. |
—[*1] Moritt Hock Hamroff & Horowitz, LLP, Garden City, N.Y. (Joshua B. Summers ofcounsel), for respondents.
In an action, inter alia, to recover damages for breach of contract, the plaintiff appeals froman order of the Supreme Court, Nassau County (Parga, J.), entered November 21, 2008, which,in effect, granted that branch of the defendants' motion which was to dismiss the complaintpursuant to CPLR 3211 (a) (7).
Ordered that the order is modified, on the law, by deleting the provisions thereof grantingthose branches of the defendants' motion which were to dismiss the first through fifth causes ofaction, the seventh through twelfth causes of action, and those portions of the sixth cause ofaction which are predicated upon waste, mismanagement, and self-dealing, and substitutingtherefor provisions denying those branches of the motion; as so modified, the order is affirmed,with costs to the plaintiff.
The Supreme Court should not have dismissed the complaint in its entirety pursuant toCPLR 3211 (a) (7) upon the ground that it was "conclusory and lacking in specificity to informdefendants of the basic facts upon which a dispute exists." The plaintiff's 30-page complaintdescribes the formation, terms, and alleged breach of the oral agreement upon which this disputeis centered, and is sufficiently particular to give the defendants notice "of the transactions,occurrences, or series of transactions or occurrences, intended to be proved and the materialelements of each cause of action" (CPLR 3013). Moreover, the branch of the defendants' motionwhich was to dismiss the complaint pursuant to CPLR 3211 (a) (7) only set forth particularizedarguments as to why four of the 12 causes of action set forth in the complaint failed to state acause of action. Therefore, the other eight causes of action should not have been dismissed forthat reason.
With respect to the remaining causes of action, contrary to the defendants' contention, thefourth cause of seeking the imposition of a constructive trust, and the twelfth cause of actionseeking an accounting, adequately allege facts demonstrating the existence of a fiduciary duty,which is a necessary element of these claims (see Simonds v Simonds, 45 NY2d 233,241-242 [1978]; Watson v Pascal, 65 AD3d 1333 [2009]; AHA Sales, Inc. v CreativeBath Prods., Inc., 58 AD3d 6, 23 [2008]). Accepting [*2]thefacts alleged in the complaint as true and according the plaintiff the benefit of every possibleinference, as we must on a motion to dismiss pursuant to CPLR 3211 (see Leon vMartinez, 84 NY2d 83, 87 [1994]; Guggenheimer v Ginzburg, 43 NY2d 268, 275[1977]), the plaintiff allegedly became a minority member and owner of the defendant SelectiveSurfaces, LLC (hereinafter the company) in February 2001 and was thus owed a fiduciary dutyby the managing member (see Limited Liability Company Law § 409 [a]; Outof Box Promotions, LLC v Koschitzki, 55 AD3d 575, 578 [2008]; Salm v Feldstein,20 AD3d 469, 470 [2005]; Nathanson v Nathanson, 20 AD3d 403, 404 [2005]).
Furthermore, the unsigned written agreement allegedly drafted by an attorney selected by thecompany's managing member does not conclusively prove that the plaintiff was not entitled toacquire an ownership interest in the company until the completion of five years of service as itsproduction manager. The variance between the terms of the alleged oral agreement as set forth inthe complaint, and the unsigned written agreement, create an issue of fact as to the terms of theoral agreement which cannot be resolved at this juncture. Accordingly, we reject the defendants'argument that the fifth and sixth causes of action, asserting, inter alia, individual and derivativeclaims of waste, mismanagement, and self-dealing, must fail because these wrongful actsallegedly occurred before the plaintiff's right to acquire an ownership interest in the companymatured. However, we agree that the portion of the sixth cause of action which purports to asserta derivative claim on behalf of the company to set aside a fraudulent conveyance of thecompany's own assets under Debtor and Creditor Law § 276 should be dismissed. Debtorand Creditor Law § 276 provides that "[e]very conveyance made and every obligationincurred with actual intent . . . to hinder, delay, or defraud either present or futurecreditors, is fraudulent as to both present and future creditors." Here the company is the allegedtransferor of assets, not a creditor, and thus a fraudulent conveyance claim may not bemaintained on its behalf pursuant to Debtor and Creditor Law § 276.
As an alternative basis for affirmance of the order dismissing the complaint in its entirety(see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539, 545 [1983]), thedefendants contend that enforcement of the alleged oral agreement is barred by GeneralObligations Law § 5-701 (a) (1). This provision of the statute of frauds requires anagreement to be in writing and subscribed by the party to be charged if such agreement "[b]y itsterms is not be performed within one year from the making thereof" (id.). However,General Obligations Law § 5-701 (a) (1) has long been interpreted "to encompass onlythose contracts which, by their terms, 'have absolutely no possibility in fact and law of fullperformance within one year' " (Cron v Hargro Fabrics, 91 NY2d 362, 366 [1998],quoting D & N Boening v Kirsch Beverages, 63 NY2d 449, 454 [1984]). Since thealleged oral agreement at issue is essentially an employment agreement without a fixed duration,it was capable of being performed within one year, and thus not barred by General ObligationsLaw § 5-701 (a) (1) (see Cron v Hargro Fabrics, 91 NY2d 362 [1998]; Weinerv McGraw-Hill, Inc., 57 NY2d 458, 463 [1982]; Hayden v P. Zarkadas, P.C., 18AD3d 500 [2005]; Air Masters v Bob Mims Heating & A.C. Serv., 300 AD2d 513[2002]; cf. Cunnison v Richardson Greenshields Sec., 107 AD2d 50 [1985]).
As a second alternative ground for affirmance, the defendants contend that the plaintiffs'claims are time-barred. On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (5)upon the ground that it is time-barred, the defendant bears the initial burden of establishing,prima facie, that the time in which to sue has expired (see 6D Farm Corp. v Carr, 63AD3d 903, 905-906 [2009]; Cimino v Dembeck, 61 AD3d 802, 803 [2009]; Swift vNew York Med. Coll., 25 AD3d 686 [2006]; Savarese v Shatz, 273 AD2d 219, 220[2000]). In order to sustain this burden, the defendant must establish, inter alia, when theplaintiff's cause of action accrued (see Cimino v Dembeck, 61 AD3d at 803; Swift vNew York Med. Coll., 25 AD3d 686 [2006]). Construing the facts as alleged in thecomplaint in the light most favorable to the plaintiff, the defendants failed to establish, primafacie, that the claims governed by six-year limitations' periods accrued more than six years priorto the commencement of this action on April 1, 2008 (see Cimino v Dembeck, 61 AD3d802, 803 [2009]; Swift v New York Med. Coll., 25 AD3d 686 [2006]; Zane vMinion, 63 AD3d 1151 [2009]). Furthermore, although claims grounded on breach offiduciary duty are governed by a three-year limitations' period when only damages are sought,six-year limitations' period applies when equitable relief is requested (see Weiss v TDWaterhouse, 45 AD3d 763, 764 [2007]; Wiesenthal v Wiesenthal, 40 AD3d 1078,1079 [2007]; Klein v Gutman, 12 AD3d 417 [2004]; Kaufman v Cohen, 307AD2d 113, 118 [2003]). Since all of the plaintiff's claims predicated upon the breach of afiduciary duty seek some form of equitable relief, they are not time-[*3]barred. Skelos, J.P., Eng, Belen and Austin, JJ., concur.