| Ficus Invs., Inc. v Private Capital Mgt., LLC |
| 2010 NY Slip Op 02653 [71 AD3d 591] |
| March 30, 2010 |
| Appellate Division, First Department |
| Ficus Investments, Inc., et al., Respondents, v PrivateCapital Management, LLC, et al., Defendants, and Thomas B. Donovan,Appellant. |
—[*1] Alston & Bird LLP, New York (Craig Carpenito of counsel), for respondents.
Order, Supreme Court, New York County (Bernard J. Fried, J.), entered November 18, 2009which denied defendant-appellant Donovan's motion pursuant to CPLR 5001 and 5003 forprejudgment and postjudgment interest on the principal sum of $1,541,999.08, unanimouslyaffirmed, with costs. Appeal from order, same court and Justice, entered September 4, 2009,unanimously dismissed, without costs, as superseded by the appeal from the November 18, 2009order.
In the context of an action commenced by plaintiffs against Donovan, among others, for,inter alia, breach of fiduciary duty, conversion and unjust enrichment, and in which Donovanasserted similar counterclaims, Donovan demanded, pursuant to the terms of the governingoperating agreement, that plaintiffs comply with their contractual obligations under section 3.4.3and advance and reimburse him for the expenses he had incurred in defending the action. Fivedays after making the demand, Donovan also moved in court, as was permitted by the terms ofthe operating agreement, for an order awarding him an advancement of expenses. The courtultimately determined, and this Court affirmed on appeal (see Ficus Invs., Inc. v PrivateCapital Mgt., LLC, 61 AD3d 1 [2009]; Ficus Invs., Inc. v Private Capital Mgt., LLC,63 AD3d 611 [2009]), that Donovan was entitled to an advancement of expenses in the amountof $1,541,999.08. There has been no finding in these proceedings that plaintiffs breached theoperating agreement by challenging Donovan's demand for an advancement of expenses, basedupon their reading of the operating agreement that such advancement was tied to the issue ofwhether Donovan would ultimately be entitled to indemnification under the agreement. Rather,the court interpreted the parties' agreement and found that Donovan was entitled to anadvancement of expenses prior to disposition of the action. The issue was before the court solelyby virtue of the terms of the operating agreement, and not in the context of a breach of contractaction. Since the sum was not awarded because of breach of a contract, Donovan is not entitled[*2]to prejudgment interest pursuant to CPLR 5001. Nor isDonovan entitled to postjudgment interest pursuant to CPLR 5003, since no money judgmentwas entered against plaintiffs. Concur—Saxe, J.P., Catterson, Moskowitz, Freedman andRomÁn, JJ.