| Gjuraj v Uplift El. Corp. |
| 2013 NY Slip Op 06811 [110 AD3d 540] |
| October 22, 2013 |
| Appellate Division, First Department |
| Mhill Gjuraj, Respondent, v Uplift Elevator Corp.et al., Appellants, et al., Defendant. |
—[*1] Wexler Burkhart Hirschberg & Unger, LLP, Garden City (David Hirschberg ofcounsel), for respondent.
Judgment, Supreme Court, Bronx County (Sharon A.M. Aarons, J.), entered March26, 2013, to the extent appealed from as limited by the briefs, awarding plaintiff damagesas against defendants Uplift Elevator Corp., Ivica Lubina, and Paul Caldararo, anddissolving defendant Uplift, unanimously modified, on the law, to vacate the judgment asagainst Caldararo and to vacate the dissolution of Uplift, and otherwise affirmed, withoutcosts. Appeal from orders, same court and Justice, entered August 16, 2012, September13, 2012, and on or about January 30, 2013, unanimously dismissed, without costs, assubsumed in the appeal from the aforesaid judgment. Appeal from order, same court andJustice, entered on or about January 24, 2013, which denied defendant Caldararo'smotion to reargue, unanimously dismissed, without costs, as taken from a nonappealablepaper.
Plaintiff, a 15% minority shareholder in Uplift, has standing to bring his breach offiduciary duty claims as direct, as well as derivative, causes of action, since defendants'freezing him out of the corporation and failing to pay him his share of the profits harmedhim individually, and he would receive the benefit of any recovery (see Yudell v Gilbert, 99 AD3d108, 113-114 [1st Dept 2012]; see also Abrams v Donati, 66 NY2d 951[1985]).
As the majority shareholder of Uplift, a closely held corporation, Lubina had afiduciary duty to plaintiff, a minority shareholder (O'Neill v Warburg, Pincus & Co., 39 AD3d 281, 282 [1stDept 2007]; see also Wolff v Wolff, 67 NY2d 638 [1986]). He breached thisduty by, inter alia, distributing profits to Caldararo, an employee of the corporation,without making a 15% distribution of profits to plaintiff, as required, by relocating thecorporation's office without plaintiff's knowledge and without giving plaintiff access toit, and by closing out the [*2]corporation's bank accounton which plaintiff was a signatory and opening another corporate account on whichplaintiff was not a signatory.
Defendants contend that Lubina's actions are protected by the business judgmentrule, which "prohibits judicial inquiry into actions of corporate directors taken in goodfaith and in the exercise of honest judgment in the lawful and legitimate furtherance ofcorporate purposes" (Matter of Levandusky v One Fifth Ave. Apt. Corp., 75NY2d 530, 537-538 [1990] [internal quotation marks omitted]). However, defendantsfailed to raise this argument as an affirmative defense in their answer, and their motion toamend the pleadings to conform to the trial evidence several weeks after the court hadissued its post-trial order finding breaches of fiduciary duty was properly rejected asdevoid of merit (see id.).
Lubina is properly subject to personal liability for the corporation's debts to plaintiff,since "a corporate officer who participates in the commission of a tort may be heldindividually liable, regardless of whether the officer acted on behalf of the corporation inthe course of official duties and regardless of whether the corporate veil is pierced" (Peguero v 601 Realty Corp.,58 AD3d 556, 558 [1st Dept 2009] [internal quotation marks and emphasisomitted]).
Caldararo, however, was an employee of the corporation, and did not have afiduciary duty to plaintiff; although he received profits from Lubina, there is no evidencethat he also shared in the corporation's losses (Vitale v Steinberg, 307 AD2d 107,108 [1st Dept 2003]). Nor is there any other evidence of a fiduciary relationship betweenCaldararo and plaintiff (seePeople v Coventry First LLC, 13 NY3d 108, 115 [2009]). For this reason,Caldararo cannot be held personally liable for Uplift's debts to plaintiff. Contrary toplaintiff's unpreserved contention that Caldararo "aided and abetted" Lubina in Lubina'sbreach of his fiduciary duty, the evidence does not support a finding that Caldararo"knowingly . . . participated in the breach" (see Kaufman v Cohen,307 AD2d 113, 125 [1st Dept 2003]).
The trial court properly relied on plaintiff's expert's valuation methodology (seeMatter of North Star Elec. Contr.—N.Y.C. Corp., 174 AD2d 373 [1st Dept1991], lv denied 79 NY2d 752 [1992]).
The court used the correct standard in determining that plaintiff had a right tocommon-law dissolution (see Fedele v Seybert, 250 AD2d 519, 521 [1st Dept1998]). However, we find that a buy-out of plaintiff's interest for fair value, as opposedto both the buy-out and dissolution, is the more appropriate remedy here (see Leibertv Clapp, 13 NY2d 313, 318 [1963]; Matter of Davis [Shayne-Levy Assoc.],174 AD2d 449 [1st Dept 1991], lv dismissed in part, denied in part 79 NY2d 820[1991]).
We have considered defendants' remaining arguments and find them unavailing.Concur—Gonzalez, P.J., Tom, Saxe, Manzanet-Daniels and Gische, JJ.