Joseph v. Rassi

Full title: Adam Joseph, individually and as a Member of Legs Media, LLC and Milk…

Court: Supreme Court, Kings County

Date published: Jan 4, 2018

58 Misc. 3d 1207 (N.Y. Sup. Ct. 2018)

2018 N.Y. Slip Op. 50005

94 N.Y.S.3d 538

Opinion

510914/16

01-04-2018

Adam JOSEPH, individually and as a Member of Legs Media, LLC and Milk Agency, LLC, Plaintiff, v. Mazdack RASSI, individually and as a Member of Legs Media, LLC and Milk Agency, LLC ; Moishe Mana, individually and as a Member of Legs Media, LLC and Milk Agency, LLC ; Erez Shternlicht, individually and as a Member of Legs Media, LLC and Milk Agency, LLC ; Milk Studios, LLC; Legs Media, LLC; Milk Agency, LLC ; Milk Makeup, LLC; Milk Makeup Holdings, LLC, Milk Management, LLC and Scott Sassa, Defendants.

Attorneys for Plaintiff: John T. Lillis, Esq., Nathan T. Williams, Esq., Kennedy Lillis Schmidt & English, 75 Maiden Lane, Suite 402, New York, New York 10038, (212) 430–0800, J.R. Stevenson, Esq., Law Offices of J.R. Stevenson, 75 Maiden Lane, Suite 402, New York, New York 10038, (212) 939–7588 Attorney for Defendant: Bruce A. Schoenberg, Moritti Hock & Hamroff LLP, 1407 Broadway, Suite 3900, New York, New York, (212) 239–2000

Francois A. Rivera, J.

Attorneys for Plaintiff: John T. Lillis, Esq., Nathan T. Williams, Esq., Kennedy Lillis Schmidt & English, 75 Maiden Lane, Suite 402, New York, New York 10038, (212) 430–0800, J.R. Stevenson, Esq., Law Offices of J.R. Stevenson, 75 Maiden Lane, Suite 402, New York, New York 10038, (212) 939–7588

Attorney for Defendant: Bruce A. Schoenberg, Moritti Hock & Hamroff LLP, 1407 Broadway, Suite 3900, New York, New York, (212) 239–2000

Francois A. Rivera, J.

Recitation in accordance with CPLR 2219 (a) of the papers considered on the joint notice of motion of defendants Mazdack Rassi, Moishe Mana, Erez Shternlicht, Milk Studios, LLC; Legs Media, LLC, Milk Agency, LLC, Milk Makeup LLC, Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa (hereinafter the movants) filed on March 31, 2017 under motion sequence number five, for an order: (1) dismissing the complaint pursuant to CPLR 3211 (a) (4), or, in the alternative; (2) dismissing the complaint pursuant to CPLR 327 (a), or, in the alternative; (3) dismissing the complaint pursuant to CPLR 3211 (a) (3), or, in the alternative; (4) dismissing the complaint pursuant to CPLR 3211 (a) (7).

Notice of motion

Affirmation in support

Exhibits A–I

Affidavit of Jenkins in support

Exhibits A–B

Affidavit of Schulman in support

Affidavits of Angela Wei, G. Jasper, Laura Marcucci, Reynaldo Perelta, and Scott Sassa,

Memorandum of law in support

Memorandum of law in opposition

Memorandum of law in reply

Recitation in accordance with CPLR 2219 (a) of the papers considered on the joint notice of motion of defendants Mazdack Rassi, Moishe Mana, Erez Shternlicht, Milk Studios, LLC; Legs Media, LLC, Milk Agency, LLC, Milk Makeup LLC, Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa (hereinafter the movants) filed on April 28, 2017 under motion sequence number six, for an order pursuant to CPLR 2304, 3101 and 3214 : (1) enforcing the automatic stay of discovery triggered by the filing of defendants' motion to dismiss; (2) quashing the subpoenas served by plaintiff on non-party witnesses Sephora USA, Inc.; Birchbox, Inc.; and Urban Outfitters, Inc; and (3) imposing sanctions upon plaintiff and his counsel based on frivolous conduct.

Notice of motion

Affirmation in support

Exhibits A–J

Affirmation in Opposition

BACKGROUND

On June 27, 2016, Adam Joseph (hereinafter Joseph) commenced the instant action by filing a summons with notice. On October 31, 2016, Joseph electronically filed a verified complaint (hereinafter the instant complaint).

On October 6, 2016, the movants filed a notice of motion under motion sequence number one, seeking, among other things, dismissal of the instant action pursuant to CPLR 3211 (a) (4).

On October 31, 2016, Joseph filed a notice of cross motion under motion sequence number two, seeking, among other things, leave to amend the complaint to add Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa as defendants pursuant to CPLR 3025.

On December 2, 2016, the movants electronically filed a notice of motion under motion sequence number three seeking dismissal of the instant complaint pursuant to CPLR 3211 (a) (3) or (7), in the event that the Court were to deny the movants' motion under motion sequence number one for dismissal of the complaint pursuant to CPLR 3211 (a) (4).

On January 6, 2017, the Court issued a decision and order denying the movants motion under motion sequence number one. The order also reflected that Joseph had withdrawn the cross motion to amend the complaint under motion sequence number two and the movants had withdrawn their motion to dismiss the complaint pursuant to CPLR 3211 (a) (3) and (7) under motion sequence number three.

On February 27, 2017, the movants filed a notice of motion under motion sequence number four, seeking dismissal of the instant complaint pursuant to CPLR 3211 (a) (4) or 327 (a).

On March 1, 2017, Joseph filed three supplemental summons to add Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa as defendants.

On March 10, 2017, Joseph and the movants electronically filed a stipulation permitting the movants to withdraw motion sequence number four without prejudice.

LAW AND APPLICATION

By the instant motion filed on March 31, 2017 under motion sequence number five, the movants seek an order dismissing the complaint pursuant to CPLR 3211 (a) (4), or in the alternative, pursuant to CPLR 327 (a), or in the alternative, pursuant to CPLR 3211 (a) (3), or in the alternative pursuant to CPLR 3211 (a) (7).

Dismissal pursuant to CPLR 3211 (a) (4)

CPLR 2221(d) – (f) sets forth the procedure for making a motion affecting a prior order and states the following:

(d) A motion for leave to reargue: 1. shall be identified specifically as such; 2. shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion; and 3. shall be made within thirty days after service of a copy of the order determining the prior motion and written notice of its entry.

(e) A motion for leave to renew: 1. shall be identified specifically as such; 2. shall be based upon new facts not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination; and 3. shall contain reasonable justification for the failure to present such facts on the prior motion.

(f) A combined motion for leave to reargue and leave to renew shall identify separately and support separately each item of relief sought. The court, in determining a combined motion for leave to reargue and leave to renew, shall decide each part of the motion as if it were separately made. If a motion for leave to reargue or leave to renew is granted, the court may adhere to the determination on the original motion or may alter that determination.

By the January 6, 2017 order, the Court has already denied the movants' motion to dismiss the complaint pursuant to CPLR 3211 (a) (4) filed under motion sequence number one. The movants did not comply with the procedural requirements of CPLR 2221 to address the relief that had already been denied in the January 6, 2017 order. Rather, they made the instant motion without seeking to reargue or renew the prior motion which yielded the January 6, 2017 order. Therefore, this branch of the movants' motion is procedurally defective and is denied.

Dismissal pursuant to CPLR 327 (a)

In the alternative, the movants have moved to dismiss the instant complaint pursuant to CPLR 327 (a) on the ground of forum non conveniens. The doctrine of forum non conveniens permits a court to stay or dismiss an action when, although it may have jurisdiction over the action, the court determines that "in the interest of substantial justice the action should be heard in another forum" ( Koop v. Guskind , 116 AD3d 672, 673 [2nd Dept 2014]citing CPLR 327 [a]; Koskar v. Ford Motor Co. , 84 AD3d 1317, 1317–1318 [2nd Dept 2011] ). On a motion to dismiss the complaint on the ground of forum non conveniens, the defendant bears the burden of demonstrating "relevant private or public interest factors which militate against accepting the litigation" ( Koop , 116 AD3d at 673citing, Islamic Republic of Iran v. Pahlavi , 62 NY2d 474, 479 [1984], cert. denied 469 U.S. 1108 [1985] ). "On such a motion, the Supreme Court is to weigh the parties' residencies, the location of the witnesses and any hardship caused by the choice of forum, the availability of an alternative forum, the situs of the action, and the burden on the New York court system" ( Koop, 116 AD3d at 673 ). No one factor is dispositive (Id. ).

In support of this branch of the motion the movants have annexed, among other things, a copy of the summons and complaint of the Delaware action filed on September 2, 2016. The movants have also submitted affidavits by individual defendants and non parties who would be expected to testify in the instant complaint. Each one of these individuals averred that if Joseph asserted the claims in the instant complaint as counterclaims in the Delaware action, they would voluntarily cooperate with providing discovery in the Delaware action.

The movants contend that every entity in the instant complaint is a Delaware business and that the State of Delaware has a strong interest as the state of incorporation of regulating the internal affairs of its own business entities. They further contend that Joseph's claims could easily be asserted in a counterclaim in the Delaware action.

In opposition, Joseph contends that every entity in the instant complaint has its principal place of business in the State of New York. He further contends, without contradiction, that he and defendants Mazdack Rassi and Scott Sassa are all New York State residents. The fact that every defendant entity has its principal place of business in the State of New York weighs against granting the motion notwithstanding that each entity is a Delaware business (see Cives Corp. v. William Corbitt, Inc., 63 AD2d 825 [4th Dept 1978] ). After consideration of the arguments and evidence presented by the parties and weighing all relevant factors, the Court finds that the movants have not demonstrated sufficient private or public interest factors which militate against accepting the instant litigation (Id. ).

Dismissal pursuant to CPLR 3211 (a) (3)

CPLR 3211 (e) provides as follows:

(e) Number, time and waiver of objections; motion to plead over. At any time before service of the responsive pleading is required, a party may move on one or more of the grounds set forth in subdivision (a), and no more than one such motion shall be permitted. Any objection or defense based upon a ground set forth in paragraphs one, three, four, five and six of subdivision (a) is waived unless raised either by such motion or in the responsive pleading. A motion based upon a ground specified in paragraph two, seven or ten of subdivision (a) may be made at any subsequent time or in a later pleading, if one is permitted; an objection that the summons and complaint, summons with notice, or notice of petition and petition was not properly served is waived if, having raised such an objection in a pleading, the objecting party does not move for judgment on that ground within sixty days after serving the pleading, unless the court extends the time upon the ground of undue hardship. The foregoing sentence shall not apply in any proceeding under subdivision one or two of section seven hundred eleven of the real property actions and proceedings law. The papers in opposition to a motion based on improper service shall contain a copy of the proof of service, whether or not previously filed. An objection based upon a ground specified in paragraph eight or nine of subdivision (a) is waived if a party moves on any of the grounds set forth in subdivision (a) without raising such objection or if, having made no objection under subdivision (a), he or she does not raise such objection in the responsive pleading.

On October 6, 2016, the movants made their first motion under sequence number one to dismiss the action pursuant to CPLR 3211 (a) (4). On October 31, 2016, Joseph filed a verified complaint. On December 2, 2016, the movants filed a notice of motion under motion sequence number three seeking dismissal of the complaint pursuant to CPLR 3211 (a) (3) or (7), if the Court were to deny the movants' motion under motion sequence number one for dismissal of the complaint pursuant to CPLR 3211 (a) (4).

Pursuant to CPLR 3211 (e) the movants were permitted to move on one or more of the grounds set forth in subdivision (a) only once and any defense based upon a ground set forth in paragraphs one, three, four, five and six of subdivision (a) was waived unless raised either by such motion or in the responsive pleading. In their first motion under motion sequence number one, the movants moved for dismissal solely pursuant to CPLR 3211 (a) (4). Inasmuch as the first motion did not include the defenses that they attempted to assert in motion sequence three for dismissal pursuant to CPLR 3211 (a) (3) they effectively waived those defenses.

Dismissal pursuant to CPLR 3211 (a) (7)

As a preliminary matter, this portion of the motion requires the Court to choose whether New York or Delaware state substantive law governs. The defendants assert that Delaware law is the proper choice of law to apply to the merits of the action due to several factors. As discussed above, the defendants allege that the corporate entities were formed in Delaware; the contracts were entered into in Delaware; the alleged breaches; and other alleged actions all occurred in Delaware. On the contrary, the plaintiff asserts that New York law is applicable, as the only connection with Delaware is that the corporate defendants were formed in that state. Plaintiffs assert that all offices, actions complained of, witnesses and documents are located in New York.

In analyzing which law to apply, New York uses an interest analysis, under which "the law of the jurisdiction having the greatest interest in resolving the particular issue" is given controlling effect ( Sondik v. Kimmel , 131 AD3d 1041 [2nd Dept 2015] ). Pursuant to the interest analysis, "[a] distinction [is made] between laws that regulate primary conduct (such as standards of care) and those that allocate losses after the tort occurs" (Id. ) If the conflicting laws regulate conduct, the law of the place of the tort "almost invariably obtains" because "that jurisdiction has the greatest interest in regulating behavior within its borders". "[W]here the plaintiff and defendant are domiciled in different states, the applicable law in an action where civil remedies are sought for tortious conduct is that of the situs of the injury" (Id. ).

In the instant matter, Delaware law governs the dispute between the parties. Delaware has a greater interest in governing the corporations that are formed in its State and the conduct of the parties acting through those corporate formalities.

Accordingly, the plaintiff's causes of action are to be analyzed utilizing Delaware substantive law in order to determine if the complaint states a cause of action. The plaintiff has asserted eight causes of action in the complaint. The crux of causes of action were actions allegedly taken by the defendants who were majority shareholders in Legs Media. The plaintiff essentially alleges that the majority shareholders utilized their power and position to the detriment of the plaintiff and Legs Media by siphoning resources away from Legs Media and ultimately freezing the plaintiff out of corporate opportunities.

In considering a motion to dismiss a complaint pursuant to CPLR 3211(a) (7), the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory ( E & D Grp., LLC v. Vialet , 134 AD3d 981, 982 [2nd Dept 2015] ). Whether a plaintiff can ultimately establish its allegations is not part of the calculus ( EBC I, Inc. v. Goldman, Sachs & Co. , 5 NY3d 11, 19 [2005] ). A court is ... permitted to consider evidentiary material submitted by a defendant in support of a motion to dismiss pursuant to CPLR 3211 (a) (7) ( E & D Grp., LLC , 134 AD3d 981citing Sokol v. Leader , 74 AD3d 1180 at 1181 [2nd Dept 2010] ; see CPLR 3211 [c]; Mawere v. Landau , 130 AD3d 986 [2nd Dept 2015] ). "However, on a motion made pursuant to CPLR 3211 (a) (7), the burden never shifts to the nonmoving party to rebut a defense asserted by the moving party ... and a plaintiff will not be penalized because he [or she] has not made an evidentiary showing in support of his [or her] complaint" ( Rovello v. Orofino Realty Co. , 40 NY2d 633, 635 [1976] ; see Nonnon v. City of New York , 9 NY3d 825, 827 [2007] ).

"When evidentiary material is considered on a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7), and the motion has not been converted to one for summary judgment, the criterion is whether the [plaintiff] has a cause of action, not whether he [or she] has stated one, and, unless it has been shown that a material fact as claimed by the [plaintiff] to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it ... dismissal should not eventuate" ( E & D Grp., LLC , 134 AD3d 981citing Guggenheimer v. Ginzburg , 43 NY2d 268, 275 [1977] ; see Mawere , 130 AD3d at 988 ; Nasca v. Sgro , 130 AD3d 588, 589 [2nd Dept 2015] ). Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss ( Travelsavers Enterprises, Inc. v. Analog Analytics, Inc. , 149 AD3d 1003 [2nd Dept 2017] ). Rather, a court must determine only whether the facts as alleged fit within any cognizable legal theory (Id. ).

Breach of Fiduciary Duty of Loyalty

Plaintiff claims that the defendants breached their fiduciary duty to him and Milk Media. A claim for breach of fiduciary duty requires proof of two elements: (1) that a fiduciary duty existed and (2) that the defendant breached that duty ( Beard Research, Inc. v. Kates , 8 A.3d 573, 601 (Del. Ch.), aff'd sub nom. ASDI, Inc. v. Beard Research , Inc., 11 A.3d 749 [Del. 2010] ). A breach of fiduciary duty occurs when a fiduciary commits an unfair, fraudulent, or wrongful act, including misappropriation of trade secrets, misuse of confidential information, solicitation of employer's customers before cessation of employment, conspiracy to bring about mass resignation of an employer's key employees, or usurpation of the employer's business opportunity (Id. ).

The plaintiff alleges in the complaint that Rassi, Shterlicht and Mana breached their fiduciary duty to him by engaging in the following acts. The defendants required Legs and Milk Agency to perform work for other Milk branded entities for free or at substantial discounts. The controlling members instructed Legs Media's creative director to stop performing her duties for Legs Media; and diverted resources from Legs Media and Milk Agency to other entities for the benefit of the controlling members. The plaintiff has sufficiently plead a cause of action for breach of fiduciary duty.

Corporate Waste

To state a claim for waste of corporate assets, it must be reasonably conceivable that the directors authorized an exchange that was so one sided that no business person of ordinary, sound judgment could conclude that the corporation has received adequate consideration, that is, the transfer of corporate assets was a gift ( Calma on Behalf of Citrix Sys., Inc. v. Templeton , 114 A.3d 563 [Del. Ch. 2015] ).

Plaintiff alleges that the defendants have promoted corporate waste by taking over large portions of Legs Media's office space; directing Legs Media and Milk Agency employees to work on other Milk branded entities for free or substantially reduced fees; and drained Legs Media of funds by forcing Legs Media to write off fees for other Milk branded entities. Plaintiff alleges that there was no reasonable explanation for the one seemingly sided transactions. The plaintiff has stated a cause of action for corporate waste.

Misappropriation of Corporate Opportunity

Misappropriation of corporate opportunity doctrine is that a corporate officer or director may not take a business opportunity for his own if: (1) the corporation is financially able to exploit the opportunity; (2) the opportunity is within the corporation's line of business; (3) the corporation has an interest or expectancy in the opportunity; and (4) by taking the opportunity for his own, the corporate fiduciary will thereby be placed in a position inimical to his duties to the corporation ( McKenna v. Singer , No. 11371–VCMR, 2017 WL 3500241, at *16 [Del. Ch. July 31, 2017] ).

The plaintiff alleges that the controlling members had a fiduciary duty to Legs and Joseph. He further alleges that the Milk Makeup concept was developed by an employee of Legs Media and therefore the concept belonged to Legs Media. After the creation of the Milk Makeup concept the controlling members created a new entity and excluded Joseph from ownership of the Milk Makeup concept and used the Milk Makeup concept with the new entities. Plaintiff alleges that Legs Media was able to use the concept and had an expectation of utilizing the opportunity. Furthermore, by usurping the concept the defendants were put in a position that was diametrically opposed to Legs Media. Accordingly, plaintiff has asserted a cause of action for misappropriation of corporate opportunity.

Misappropriation of Trade Secrets

A plaintiff alleging misappropriation of a trade secret carries the burden of proving four elements: (1) that a trade secret exists; (2) that plaintiff communicated the trade secret to defendant; (3) that the communication occurred with the understanding that defendant would protect the secrecy of the information; and (4) that the defendant improperly used or disclosed the trade secret. An expert witness is necessary to prove the presence of a trade secret ( ELENZA, Inc. v. Alcon Labs. Holding Corp., No. CVN14C03185MMJCCLD , 2017 WL 2651716, at *2 [Del. Super. Ct. Apr. 20, 2017] ).A trade secret shall mean information, including a formula, pattern, compilation, program, device, method, technique or process, that:

a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

( 6 Del. C. § 2001(2) ; Adtile Techs. Inc. v. Perion Network Ltd., No. CV 15–1193–SLR , 2016 WL 3457152, at *3 [D. Del. June 23, 2016] )

Plaintiff alleges that Rassi, Shternlicht and Mana, as controlling members, obtained the Milk Makeup pitch deck as a result of the confidential relationship as controlling members of Legs Media. The controlling members used the Milk Makeup pitch deck to the detriment of Legs Media and Joseph. Joseph and Legs Media were damaged as a result of the controlling members misappropriation of the Milk Makeup pitch deck. The plaintiff failed to allege the necessary elements of a claim for misappropriation of trade secrets as he failed to indicate that the idea was a secret as defined by the Delaware statutes nor that there was any attempt at secrecy of the idea. Accordingly, the cause of action for misappropriation of trade secrets is dismissed.

Conversion

Conversion is any distinct act of dominion wrongfully exerted over the property of another, in denial of the plaintiff's right, or inconsistent with it ( Kuroda v. SPJS Holdings , L.L.C., 971 A.2d 872 [Del. Ch. 2009] ). Generally, an action in conversion will not lie to enforce a claim for the payment of money. An action for conversion of money will lie only where there is an ‘obligation to return the identical money’ delivered by the plaintiff to the defendant ( Kuroda v. SPJS Holdings, L.L.C. , 971 A.2d 872, 890 [Del. Ch. 2009] ).

Plaintiff alleges that Legs Media owned the right to the corporate opportunity of Milk Makeup. The controlling members wrongfully created a new entity and now possess the corporate opportunity of Milk Makeup excluding Joseph of his interest in Milk Makeup. The cause of action alleging conversion is duplicative of the cause of action of misappropriation of corporate opportunity in that it seeks the same damages and premised on the same set of facts (see Balan v. Rooney , 152 AD3d 733 [2nd Dept 2014] ). Accordingly it is dismissed.

Civil Conspiracy

The elements for civil conspiracy are: (1) a confederation or combination of two or more persons; (2) an unlawful act done in furtherance of the conspiracy; and (3) actual damage (see Nicolet, Inc. v. Nutt , 525 A.2d 146, 149 [Del.1987] ). Civil conspiracy is not an independent cause of action, and it must arise from some underlying wrong ( AeroGlobal Capital Mgmt., LLC v. Cirrus Indus., Inc. , 871 A.2d 428, 437 [Del. 2005] [internal citations omitted] ).

Plaintiff alleges that Rassi, Shternlicht and Mana alleged that the controlling members along with Sassa have unlawfully conspired to steal the value of Joseph's equity in Legs Media and Milk Agency, a value that the controlling members previously valued at $11,250,000. The cause of action for civil conspiracy is parasitic of the causes of action for breach of fiduciary duty and misappropriation of corporate opportunity. The plaintiff has alleged the required elements of a cause of action for civil conspiracy.

Unjust Enrichment

The elements of unjust enrichment are: (1) an enrichment, (2) an impoverishment, (3) a relation between the enrichment and impoverishment, (4) the absence of justification, and (5) the absence of a remedy provided by law ( Nemec v. Shrader , 991 A.2d 1120 [Del. 2010] ). "Unjust enrichment" is the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience ( Nemec v. Shrader , 991 A.2d 1120 [Del. 2010] ).

Plaintiff alleges that Legs Media developed the concept of Milk Makeup, and the Legs Media team and resources and certain resources from Milk Agency developed and launched Milk Makeup from Legs Media's physical office space. Accordingly, Legs Media and Milk Agency conveyed a substantial benefit to the controlling members and Milk Makeup at Joseph's expense. The controlling members and Milk Makeup have never compensated Joseph. Therefore, the controlling members and Milk Makeup have been unjustly enriched at Joseph's expense.

The cause of action for unjust enrichment must be dismissed as there is an adequate remedy at law for the actions complained of by the plaintiff. The plaintiff has alleged the same facts for the other causes of action. Accordingly, the cause of action for unjust enrichment is dismissed.

Declaratory Relief

The plaintiff seeks a declaration that the Milk Media Partners, Joseph; Rassi; Shternlicht; and Mana and not just the Controlling Members Rassi; Shternlicht; and Mana equally own the equity in Milk Makeup. Plaintiff also seeks a declaration that Legs Media and Milk Agency collectively own all intellectual property rights to use the Milk brand name for all media purposes. The plaintiff alleges that he is entitled to this relief because the initial concept for Milk Makeup was developed by Legs Media's creative director and employee during work hours and with Legs Media's resources.

Generally speaking, ‘[a] motion to dismiss a declaratory judgment action prior to the service of an answer presents for consideration only the issue of whether a cause of action for declaratory relief is set forth, not the question of whether the plaintiff is entitled to a favorable declaration.’ " Therefore, a motion to dismiss a cause of action for declaratory judgment should be denied if the pleading "is sufficient to invoke the court's power to render a declaratory judgment ... as to the rights and other legal relations of the parties to a justiciable controversy (Practice Commentaries by Patrick M. Connors CPLR 3001 Book 7B; citing North Oyster Bay Baymen's Ass'n. V Town of Oyster Bay , 130 AD3d 885, 890 [2nd Dept 2015] ; Bd. of Managers of 136 St. Marks Place Condo. v. St. Marks Place Condos., II, LLC , 128 AD3d 877, 879 [2nd Dept 2015] ). Accordingly, the declaratory judgment causes of action remain.

Defendants Motion for Discovery

The defendants move for an order to enforce the automatic stay contained within CPLR 3214 and to sanction the plaintiff for certain alleged disclosure violations.

CPLR 3214 (b) provides that "service of a notice of motion under rule 3211, 3212, or section 3213 stays disclosure until determination of the motion unless the court orders otherwise." The stay of disclosure is automatic. The court may of course direct otherwise, and allow disclosure to continue, but matters of this kind are generally worked out between the parties (Practice Commentaries, David D. Siegel CPLR 3214 Book 7B). The defendants allege that the plaintiff sent out subpoenas to non-parties in violation of the automatic stay and therefore should be sanctioned.

Uniform Court Rule § 202.7 provides that no motion relating to disclosure shall be filed with the court unless it is accompanied by "an affirmation that counsel has conferred with counsel for the opposing party in a good faith effort to resolve the issues raised by the motion." Such affirmation must "indicate the time, place and nature of the consultation and the issues discussed and any resolutions" (see 22 NYCRR § 202.7 [c] ).

The portion of the motion seeking an enforcement of the stay contained within CPLR 3214 (b) is moot as the motion has been decided herein is no longer pending. As to that portion which seeks sanctions, the instant motion lacks an affirmation of good faith. Accordingly, it is denied.

Furthermore, the automatic stay provision contained within CPLR 3214 (b) shall not apply to the instant matter. The parties are directed to schedule a compliance conference on or before January 30, 2018.

CONCLUSION

Mazdack Rassi, Moishe Mana, Erez Shternlicht, Milk Studios, LLC; Legs Media, LLC, Milk Agency, LLC, Milk Makeup LLC, Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa motion for an order dismissing the complaint pursuant to CPLR 3211 (a) (4) is denied.

Mazdack Rassi, Moishe Mana, Erez Shternlicht, Milk Studios, LLC; Legs Media, LLC, Milk Agency, LLC, Milk Makeup LLC, Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa motion for an order dismissing the complaint pursuant to CPLR 327 is denied.

Mazdack Rassi, Moishe Mana, Erez Shternlicht, Milk Studios, LLC; Legs Media, LLC, Milk Agency, LLC, Milk Makeup LLC, Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa motion for an order dismissing the complaint pursuant to CPLR 3211 (a) (3) is denied.

Mazdack Rassi, Moishe Mana, Erez Shternlicht, Milk Studios, LLC; Legs Media, LLC, Milk Agency, LLC, Milk Makeup LLC, Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa motion for an order dismissing the complaint pursuant to CPLR 3211 (a) (7) is granted to the extent that the causes of action for misappropriation of trade secrets, conversion and unjust enrichment are dismissed. The remaining causes of action remain.

Mazdack Rassi, Moishe Mana, Erez Shternlicht, Milk Studios, LLC; Legs Media, LLC, Milk Agency, LLC, Milk Makeup LLC, Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa motion for an order to enforce the automatic stay provision is denied as moot.

Mazdack Rassi, Moishe Mana, Erez Shternlicht, Milk Studios, LLC; Legs Media, LLC, Milk Agency, LLC, Milk Makeup LLC, Milk Makeup Holdings, LCC, Milk Management, LLC and Scott Sassa motion for an order sanctioning the plaintiff for disclosure violations is denied.

The foregoing constitutes the decision and order of this Court.