| PDK Labs, Inc. v G.M.G. Trans W. Corp. |
| 2012 NY Slip Op 08706 [101 AD3d 970] |
| December 19, 2012 |
| Appellate Division, Second Department |
| PDK Labs, Inc., Appellant, v G.M.G. Trans West Corp. etal., Respondents. |
—[*1] Pezold, Smith, Hirschmann & Selvaggio, LLC, Huntington, N.Y. (Raymond A. Selvaggio ofcounsel), for respondents.
In an action, inter alia, to recover damages for conversion, the plaintiff appeals, as limited byits brief, from so much of an order of the Supreme Court, Suffolk County (Emerson, J.), datedDecember 16, 2010, as denied its application for leave to enter judgment against the defendantsG.M.G. Trans West Corp., Edmund Giza, and John Coviello on the issue of liability, upon theirdefaults in appearing or answering, granted those branches of the defendants' cross motion whichwere to vacate the defaults of the defendants G.M.G. Trans West Corp., Edmund Giza, and JohnCoviello in appearing or answering the complaint, to extend the time for those defendants toappear and answer pursuant to CPLR 2004 and 3012 (d), and to dismiss the complaint pursuantto CPLR 3211 (a) insofar as asserted against the defendants Edmund Giza, John Coviello, andRonald Horowitz for failure to state a cause of action, and denied, as academic, its motionpursuant to CPLR 306-b to extend the time to serve the summons and complaint upon thedefendant Ronald Horowitz.
Ordered that on the Court's own motion, the notice of appeal from so much of the order asdenied the plaintiff's application for leave to enter judgment against the defendants G.M.G. TransWest Corp., Edmund Giza, and John Coviello on the issue of liability, upon their defaults inappearing or answering, is treated as an application for leave to appeal, and leave to appeal fromthat portion of the order is granted (see CPLR 5701 [c]); and it is further,
Ordered that the order is modified, on the law and in the exercise of discretion, (1) bydeleting the provision thereof granting that branch of the defendants' cross motion which was todismiss the complaint insofar as asserted against the defendants Edmund Giza and John Coviello,and substituting therefor a provision denying that branch of the defendants' cross motion, and (2)by deleting the provision thereof denying, as academic, the plaintiff's motion pursuant to CPLR306-b to extend the time to serve the summons and complaint upon the defendant RonaldHorowitz, and substituting therefor a provision denying the plaintiff's motion on the merits; as somodified, the order is affirmed insofar as appealed from, without costs or disbursements.
The plaintiff hired the defendant G.M.G. Trans West Corp. (hereinafter GMG) to transport,from New York to California, certain over-the-counter pharmaceuticals manufactured by [*2]the plaintiff. The complaint alleged that, once GMG tookpossession of the pharmaceuticals, it demanded payment for amounts allegedly owed to it by theplaintiff. When the plaintiff refused to pay, GMG refused to transport the pharmaceuticals andstored them in an undisclosed warehouse. The plaintiff demanded that GMG either deliver thepharmaceuticals to California or return them to the plaintiff, but GMG did not comply with theplaintiff's demand.
The plaintiff commenced this action asserting one cause of action against GMG, two of itsprincipals, Edward Giza and John Coviello, and its attorney, Ronald Horowitz. The plaintiffeffected service upon GMG, Edmund Giza, and John Coviello. However, the plaintiff failed tocomplete service with respect to Ronald Horowitz.
GMG, Giza, and Coviello failed to timely appear or answer the complaint. The plaintiffinterposed an application for leave to enter judgment against those defendants on the issue ofliability, upon their defaults in appearing or answering. The defendants cross-moved to vacate thedefaults of GMG, Giza, and Coviello, to extend their time to appear and answer pursuant toCPLR 2004 and 3012 (d), and to dismiss the complaint pursuant to CPLR 3211 (a) (7) insofar asasserted against the individual defendants. The defendants also, inter alia, cross-moved todismiss the complaint insofar as asserted against Horowitz pursuant to CPLR 3211 (a) (8) forlack of personal jurisdiction. Thereafter, the plaintiff moved pursuant to CPLR 306-b to extendthe time to serve the summons and complaint upon Horowitz.
The Supreme Court denied the plaintiff's application for leave to enter a default judgmentagainst GMG, Giza, and Coviello, and granted that branch of the defendants' cross motion whichwas to vacate their defaults. The Supreme Court also granted that branch of the defendants' crossmotion which was to dismiss the complaint pursuant to CPLR 3211 (a) (7) insofar as assertedagainst the individual defendants. Furthermore, the Supreme Court denied, as academic, theplaintiff's motion pursuant to CPLR 306-b to extend the time to serve the summons andcomplaint upon Horowitz and denied that branch of the defendants' cross motion which was todismiss the complaint insofar as asserted against the defendant Ronald Horowitz pursuant toCPLR 3211 (a) (8) for lack of personal jurisdiction.
The defaults of GMG, Giza, and Coviello in appearing or answering the complaint wereproperly excused given the lack of any prejudice to the plaintiff resulting from the shorttwo-week delay, the lack of willfulness on the part of these defendants who defaulted inappearing, the existence of potentially meritorious defenses, and the public policy favoring theresolution of cases on the merits (seeZeccola & Selinger, LLC v Horowitz, 88 AD3d 992, 993 [2011]; Feder v Eline Capital Corp., 80 AD3d554, 555 [2011]; Stuart vKushner, 39 AD3d 535, 536 [2007]; Schonfeld v Blue & White Food Prods. Corp., 29 AD3d 673, 674[2006]). Accordingly, the Supreme Court providently exercised its discretion in denying theplaintiff's application for leave to enter judgment against these defendants on the issue ofliability, upon their defaults in appearing or answering, and in granting those branches of thedefendants' cross motion which were to vacate the defaults of those defendants in appearing oranswering the complaint and to extend their time to appear and answer (see CPLR 2004,3012 [d]).
However, the Supreme Court erred in granting that branch of the defendants' cross motionwhich was to dismiss the complaint pursuant to CPLR 3211 (a) (7) insofar as asserted against theindividual defendants. "A party may move for judgment dismissing one or more causes of actionasserted against [it] on the ground that . . . the pleading fails to state a cause ofaction" (CPLR 3211 [a] [7]). "When assessing the adequacy of a complaint in light of a CPLR3211 (a) (7) motion to dismiss, the court must afford the pleadings a liberal construction, acceptthe allegations of the complaint as true and provide plaintiff . . . 'the benefit of everypossible favorable inference' " (AGCapital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 591 [2005],quoting Leon v Martinez, 84 NY2d 83, 87 [1994]). "Whether a plaintiff can ultimatelyestablish its allegations is not part of the calculus in determining a motion to dismiss" (EBC I, Inc. v Goldman, Sachs & Co., 5NY3d 11, 19 [2005]). Rather, a court must "determine only whether the facts as alleged fitwithin any cognizable legal theory" (Leon v Martinez, 84 NY2d at 87-88; seeSokoloff v Harriman Estates Dev. Corp., 96 NY2d 409, 414 [2001]).[*3]
Here, the complaint alleges a single cause of action torecover damages for conversion against each of the individual defendants. "Conversion is theunauthorized assumption and exercise of the right of ownership over goods belonging to anotherto the exclusion of the owner's rights" (State of New York v Seventh Regiment Fund, 98NY2d 249, 259 [2002] [internal quotation marks omitted]). "[T]o establish a cause of action inconversion, the plaintiff must show legal ownership or an immediate superior right of possessionto a specific identifiable thing and must show that the defendant exercised an unauthorizeddominion over the thing in question . . . to the exclusion of the plaintiff's rights" (Batsidis v Batsidis, 9 AD3d 342,343 [2004] [internal quotation marks omitted]; see Castaldi v 39 Winfield Assoc., 30 AD3d 458, 458 [2006]).
"A corporate officer may be liable for torts committed by or for the benefit of the corporationif the officer participated in their commission" (Hamlet at Willow Cr. Dev. Co., LLC v Northeast Land Dev. Corp., 64AD3d 85, 116 [2009]; see Aguirrev Paul, 54 AD3d 302, 304 [2008]; Retropolis, Inc. v 14th St. Dev. LLC, 17 AD3d 209, 211 [2005]; Greenway Plaza Off. Park-1 v MetroConstr. Servs., 4 AD3d 328, 329-330 [2004]). Accordingly, "[a]n individual, eventhough acting for a corporation of which he is an officer, may be held liable for conversion"(Melnick v Sable, 11 AD2d 1075, 1075 [1960]; see Hinkle Iron Co. v Kohn, 229NY 179, 184 [1920]; Goldstein vGuida, 74 AD3d 1143, 1144 [2010]; Ingram v Machel & Jr. Auto Repair, 148AD2d 324, 325 [1989]; Prudential-Bache Sec. v Golden Larch-Sequoia, 118 AD2d 487,488 [1986]; McCrea v McClenahan, 131 App Div 247, 248 [1909]; see also 14ANY Jur 2d, Business Relationships § 777).
However, "[a] director or officer of a corporation does not incur personal liability for its tortsmerely by reason of his official character" (Greenway Plaza Off. Park-1 v Metro Constr.Servs., 4 AD3d at 329 [internal quotation marks omitted]). Accordingly, "a corporate officeror agent is not liable for acts of conversion attributable to the corporation if he did not participatein and was not connected with the acts in any manner" (14A NY Jur 2d, Business Relationships§ 777; see Hinkle Iron Co. v Kohn, 229 NY at 184; Aguirre v Paul, 54AD3d at 304; cf. Messiah's CovenantCommunity Church v Weinbaum, 74 AD3d 916, 919 [2010]; Shimamoto v S&FWarehouses, 257 AD2d 334, 340 [1999], mod 99 NY2d 165 [2002]).
Here, affording the pleadings a liberal construction, accepting the allegations of thecomplaint as true, and providing the plaintiff with the benefit of every possible favorableinference, the complaint adequately alleges that the individual defendants personally participatedin the allegedly wrongful withholding of the pharmaceuticals. Accordingly, the complaint states acause of action against the individual defendants to recover damages for conversion (seeHinkle Iron Co. v Kohn, 229 NY at 184; Ingram v Machel & Jr. Auto Repair, 148AD2d at 325; Prudential-Bache Sec. v Golden Larch-Sequoia, 118 AD2d at 488;McCrea v McClenahan, 131 App Div at 248; see also Goldstein v Guida, 74AD3d at 1144).
In light of its conclusion that dismissal was warranted because the complaint failed to state acause of action insofar as asserted against the individual defendants, the Supreme Court denied,as academic, the plaintiff's motion pursuant to CPLR 306-b to extend the time to serve thesummons and complaint upon Horowitz, and denied that branch of the defendants' cross motionwhich was to dismiss the complaint insofar as asserted against Horowitz pursuant to CPLR 3211(a) (8) for lack of personal jurisdiction. Thus, Horowitz, having obtained dismissal of thecomplaint insofar as asserted against him, was precluded from appealing those portions of theorder which denied that branch of the defendants' cross motion which was to dismiss thecomplaint insofar as asserted against him for lack of personal jurisdiction (see Parochial BusSys. v Board of Educ. of City of N.Y., 60 NY2d 539, 548 [1983]). Since the plaintiffcontends that the Supreme Court should have granted its motion to extend the time to serveHorowitz, and the defendants contend that the complaint should have been dismissed insofar asasserted against Horowitz for lack of personal jurisdiction, and since these issues have beenbriefed on appeal, we address the defendants' alternative contention (see Parochial Bus Sys. vBoard of Educ. of City of N.Y., 60 NY2d at 548; Matter of Chiantella v Vishnick, 84 AD3d 797, 798 [2011];Norwalk v J.P. Morgan & Co., 268 AD2d 413, 415-416 [2000]).
"Service of the summons and complaint . . . shall be made within one hundredtwenty [*4]days after the commencement of the action orproceeding" (CPLR 306-b). "If service is not made upon a defendant within the time provided inthis section, the court, upon motion, shall dismiss the action without prejudice as to thatdefendant, or upon good cause shown or in the interest of justice, extend the time for service"(id.).
Here, it is undisputed that Horowitz was not timely served. The plaintiff failed todemonstrate good cause for its failure to timely serve Horowitz, or that an extension of time toserve him with the summons and complaint was warranted in the interest of justice (seeCPLR 306-b; Khodeeva v ChiChung Yip, 84 AD3d 1030, 1031 [2011]; Calloway v Wells, 79 AD3d 786, 786-787 [2010]). Accordingly,that branch of the defendants' cross motion which was to dismiss the complaint insofar asasserted against Horowitz for lack of personal jurisdiction should have been granted, and theplaintiff's motion pursuant to CPLR 306-b to extend the time to serve the summons andcomplaint upon Horowitz should have been denied on the merits (see CPLR 3211 [a] [8];Alexander v Alexander, 32 AD3d524, 524-525 [2006]; Colon vBailey, 26 AD3d 454, 455 [2006]).
The parties' remaining contentions either are without merit or need not be addressed in lightof the foregoing. Florio, J.P., Balkin, Lott and Miller, JJ., concur.