Ng v. Asquared Grp., Inc.

219 A.D.3d 1341

195 N.Y.S.3d 792

Nancy Shunkuen NG, etc., respondent,

v.ASQUARED GROUP, INC., et al., appellants.

2020–06947

Index No. 714168/16

Supreme Court, Appellate Division, Second Department, New York.

Argued—February 27, 2023

September 13, 2023

Graber Law Firm (Felicello Law P.C., New York, NY [Michael J. Maloney ], of counsel), for appellants.

White, Cirrito, Nally & Lynch, LLP, Hempstead, NY (Christopher M. Lynch and Allison M. Castel of counsel), for respondent.

FRANCESCA E. CONNOLLY, J.P., CHERYL E. CHAMBERS, DEBORAH A. DOWLING, HELEN VOUTSINAS, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of fiduciary duty, the defendants appeal from a judgment of the Supreme Court, Queens County (Salvatore J. Modica, J.), entered June 9, 2020. The judgment, insofar as appealed from, upon an order of the same court (Dennis J. Butler, J.) entered February 27, 2018, inter alia, granting that branch of the plaintiff's motion which was for leave to enter a default judgment against the defendant Andy Lee, and after an inquest on the issue of damages, is in favor of the plaintiff and against the defendant Andy Lee in the principal sums of $135,208.98 for compensatory damages and $700,000 for punitive damages.

ORDERED that the appeal by the defendants Asquared Group, Inc., and XYZ Corp. is dismissed, without costs or disbursements, as those defendants are not aggrieved by the judgment (see CPLR 5511 ); and it is further,

ORDERED that the judgment is modified, on the facts, by deleting the provision thereof awarding punitive damages in the principal sum of $700,000, and substituting therefor a provision awarding punitive damages in the principal sum of $300,000; as so modified, the judgment is affirmed insofar as appealed from, without costs or disbursements.

The plaintiff and the defendant Andy Lee were shareholders of Kyoto Dining Group, Inc., and Kyoto Restaurant, Inc. (hereinafter together the Kyoto corporations), corporate entities formed for the purpose of operating a restaurant business. In April 2013, Lee transferred the assets of the Kyoto corporations to the defendant Asquared Group, Inc. (hereinafter Asquared), a corporation of which the plaintiff was not a shareholder, purportedly to freeze the plaintiff out of her 25% share in the Kyoto corporations. Thereafter, in October 2016, the assets of Asquared were transferred to another corporate entity, Stellar 153, Inc., which was owned by the girlfriend of Lee's father.

The plaintiff commenced this action, inter alia, to recover damages for breach of fiduciary duty. After the defendants failed to appear or answer the complaint, the plaintiff moved for leave to enter a default judgment against them. Lee opposed the plaintiff's motion, contending, among other things, that he had a reasonable excuse for his default and a potentially meritorious defense. In an order entered February 27, 2018, the Supreme Court granted the plaintiff's motion, holding the defendants in default and directing an inquest on the issue of damages. After the inquest on the issue of damages, a judgment was entered in favor of the plaintiff and against Lee in the total sum of $935,417.16, which included compensatory damages in the principal sum of $138,208.98 and punitive damages in the principal sum of $700,000.

To defeat a facially sufficient motion for leave to enter a default judgment, a defendant must show either that there was no default or that the defendant had a reasonable excuse for the delay and a potentially meritorious defense (see S & J Serv. Ctr., Inc. v. Commerce Commercial Group, Inc., 208 A.D.3d 908, 909, 174 N.Y.S.3d 706 ; Nationstar Mtge., LLC v. Gross, 201 A.D.3d 942, 944, 157 N.Y.S.3d 756 ; Liberty County Mut. v. Avenue I Med., P.C., 129 A.D.3d 783, 785, 11 N.Y.S.3d 623 ). "The determination of what constitutes a reasonable excuse lies within the sound discretion of the Supreme Court" ( Mannino Dev., Inc. v. Linares, 117 A.D.3d 995, 995, 986 N.Y.S.2d 578 [internal quotation marks omitted]; see Federal Nat. Mtge. Assn. v. Zapata, 143 A.D.3d 857, 858, 40 N.Y.S.3d 438 ). Here, Lee failed to establish either that there was no default or that there was a reasonable excuse for his delay. Lee's contention that he did not need to answer the complaint because of purported settlement negotiations did not constitute a reasonable excuse for failing to appear or answer the complaint (see Dove v. 143 Sch. St. Realty Corp., 172 A.D.3d 1315, 1317, 101 N.Y.S.3d 461 ; Turko v. Daffy's, Inc., 111 A.D.3d 615, 616, 974 N.Y.S.2d 126 ; Community Preserv. Corp. v. Bridgewater Condominiums, LLC, 89 A.D.3d 784, 785, 932 N.Y.S.2d 378 ; Kouzios v. Dery, 57 A.D.3d 949, 950, 871 N.Y.S.2d 303 ). In light of Lee's failure to establish a reasonable excuse for his default, it is unnecessary to determine whether he demonstrated a potentially meritorious defense (see Bank of N.Y. Mellon Trust Co., N.A. v. Barone, 209 A.D.3d 939, 942, 177 N.Y.S.3d 294 ; JE & MB Homes, LLC v. U.S. Bank N.A., 189 A.D.3d 1195, 1197, 134 N.Y.S.3d 271 ).

Compensatory damages "measure fair and just compensation, commensurate with the loss or injury sustained from the wrongful act" ( E.J. Brooks Co. v. Cambridge Sec. Seals, 31 N.Y.3d 441, 448, 80 N.Y.S.3d 162, 105 N.E.3d 301 [internal quotation marks omitted]; see Sharapata v. Town of Islip, 56 N.Y.2d 332, 335, 452 N.Y.S.2d 347, 437 N.E.2d 1104 ). Although the damages cannot be remote, contingent, or speculative, "[t]he standard is not one of mathematical certainty but only reasonable certainty" ( E.J. Brooks Co. v. Cambridge Sec. Seals, 31 N.Y.3d at 449, 80 N.Y.S.3d 162, 105 N.E.3d 301 [internal quotation marks omitted]; see Steitz v. Gifford, 280 N.Y. 15, 20, 19 N.E.2d 661 ). Moreover, "[w]hen a difficulty faced in calculating damages is attributable to the defendant's misconduct, some uncertainty may be tolerated" ( Wolf v. Rand, 258 A.D.2d 401, 402–403, 685 N.Y.S.2d 708 [internal quotation marks omitted]). Here, the Supreme Court properly determined...