Wynkoop v. 622a President St. Owners Corp.

169 A.D.3d 1100

95 N.Y.S.3d 223

Brett WYNKOOP, et al., Respondents-Appellants,

v.622A PRESIDENT STREET OWNERS CORP., Respondent,Kyle Taylor, et al., Appellants-Respondents.

2015–07025

2015–12653

Index No. 507156/13

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

Argued—October 19, 2018

February 27, 2019

Mandel Bhandari, LLP, New York, N.Y. (Rishi Bhandari and Donald Conklin of counsel), for appellants-respondents.

Antony Hilton, New York, NY, for respondents-appellants.

D. Bunji Fromartz, Brooklyn, NY, for respondent.

ALAN D. SCHEINKMAN, P.J., JOHN M. LEVENTHAL, JOSEPH J. MALTESE, VALERIE BRATHWAITE NELSON, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract and breach of fiduciary duty, and for injunctive relief, (1) the plaintiffs appeal from an order of the Supreme Court, Kings County (David I. Schmidt, J.), dated November 7, 2014, and (2), the defendants Kyle Taylor, Hilary Taylor, and Rajeev Subramanyam appeal, and the plaintiffs cross-appeal, from an order of the same court dated April 13, 2015. The order dated November 7, 2014, insofar as appealed from, denied those branches of the plaintiffs' motion which were pursuant to CPLR 3211(a) to dismiss the counterclaims asserted by the defendants Kyle Taylor, Hilary Taylor, and Rajeev Subramanyam and, in effect, to confirm a shareholders' election held on May 16, 2014, and granted the motion of those defendants for preliminary injunctive relief to the extent of declaring invalid the shareholders' election held on May 16, 2014, and directing that a new special shareholders' meeting be held and supervised by a referee. The order dated April 13, 2015, insofar as cross-appealed from by the plaintiffs, upon reargument, adhered to so much of the determination in the order dated November 7, 2014, as denied those branches of the plaintiffs' motion which were to dismiss the counterclaims asserted by the defendants Kyle Taylor, Hilary Taylor, and Rajeev Subramanyam and, in effect, to confirm the shareholders' election held on May 16, 2014, and modified that order by directing the plaintiffs to "immediately add one of the defendants ... as a co-signatory on the existing 622A President Street Owners Corp. corporate bank account" and to refund to the defendant Rajeev Subramanyam funds that the plaintiffs caused to be withdrawn from that defendant's bank account, and denied the plaintiffs' motion for leave to enter a default judgment against the defendant 622A President Street Owners Corp.

ORDERED that the plaintiffs' appeal from the order dated November 7, 2014, is dismissed, as that order was superseded by the order dated April 13, 2015, made upon reargument; and it is further,

ORDERED that the appeal by the defendants Kyle Taylor, Hilary Taylor, and Rajeev Subramanyam from the order dated April 13, 2015, is dismissed as abandoned, without costs or disbursements; and it is further,

ORDERED that the order dated April 13, 2015, is affirmed insofar as cross-appealed from by the plaintiffs; and it is further,

ORDERED that one bill of costs is awarded to the defendants Kyle Taylor, Hilary Taylor, and Rajeev Subramanyam.

The plaintiffs and the defendants Kyle Taylor and Rajeev Subramanyam are the only shareholders in the defendant 622A President Street Owners Corp. (hereinafter the corporation). The defendant Hilary Taylor is married to Kyle Taylor. The plaintiffs commenced this action against the individual defendants and the corporation, inter alia, to recover damages for breach of contract and breach of fiduciary duty.

We agree with the Supreme Court's determination to deny that branch of the plaintiffs' motion which was, in effect, to confirm a shareholders' meeting held on May 16, 2014, to elect a board of directors for the corporation. The meeting was held after the parties entered into an on-the-record stipulation in an earlier action in which they agreed that all four shareholders were to serve as directors.

Further, the bylaws of the corporation provide that a board member may be removed only upon a vote of a majority of the directors or shareholders. Here, it is undisputed that a majority of the directors or shareholders did not vote for the removal of any director. Under these circumstances, we agree with the court's determination that the purported elections were not valid (see Business Corporation Law § 706[b] ). We also agree with the court's determination to direct a new special shareholders' meeting be held and supervised by a referee (see Business Corporation Law § 619 ; Ronnen v. Ajax Elec. Motor Corp., 88 N.Y.2d 582, 591, 648 N.Y.S.2d 422, 671 N.E.2d 534 ).

We agree with the Supreme Court's determination to direct the return of funds to Subramanyam, finding that the plaintiffs lacked the authority to have caused those funds to be withdrawn from Subramanyam's bank account (see Modern Telecom. v. Dalessandro, 185 A.D.2d 218, 587 N.Y.S.2d 315 ). In addition, in light of the parties' stipulation that all four shareholders were to serve as directors, we also agree with the court's determination to direct the plaintiffs to add one of the individual defendants as a cosignatory to the corporate bank account (see generally Modern Telecom. v. Dalessandro, 185 A.D.2d 218, 587 N.Y.S.2d 315 ).

On a motion to dismiss a complaint or counterclaims pursuant to CPLR 3211(a)(7), the court must accept all facts as alleged in the pleading to be true, accord the pleader the benefit of every favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ; Sokol v. Leader, 74 A.D.3d 1180, 1181–1182, 904 N.Y.S.2d 153 ). In considering a motion to dismiss a complaint or counterclaims pursuant to CPLR 3211(a)(1) based on documentary evidence, dismissal is warranted "only where the documentary evidence utterly refutes [the] factual allegations, conclusively establishing a defense as a matter of law" ( Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d...