Opinion
Index 2014/0835
04-02-2015
BRYAN D. ORSER Plaintiff v. WHOLESALE FUEL DISTRIBUTORS-CT, LLC, Defendant and SAMMY ELJAMAL, Defendant on Counterclaims
For Plaintiff: Lisa F. Joslin, Esq. Gleason, Dunn, Walsh & Shea For Defendant and Non-Party Leon Silverman: Lois N. Rosen, Esq, Oxman Tulis Kirkpatrick Whyatt & Geirger LLP For Defendant on Counterclaims: Sammy Eljamal, Pro Se
Unpublished Opinion
For Plaintiff: Lisa F. Joslin, Esq. Gleason, Dunn, Walsh & Shea
For Defendant and Non-Party Leon Silverman: Lois N. Rosen, Esq, Oxman Tulis Kirkpatrick Whyatt & Geirger LLP
For Defendant on Counterclaims: Sammy Eljamal, Pro Se
DECISION & ORDER
Hon. Charles M. Tailleur Acting Supreme Court Justice
The plaintiff commenced this action by summons and complaint dated August 22, 2014. The plaintiff sought damages for unpaid compensation, liquidated damages, costs, disbursements and attorneys' fees under a cause of action for breach of contract and violation of the Labor Law. The defendant-Wholesale Fuel Distributors-CT, LLC [hereinafter "WFD"] submitted a verified answer dated October 17, 2014. included within the verified answer were six (6) counterclaims against the plaintiff. Three (3) of those counterclaims: unjust enrichment, conversion and frivolous conduct were solely against the plaintiff. Two counterclaims: breach of fiduciary duty and corporate waste were against Sammy Eljamal-an investor who purchased the leases, fee interest and businesses of various Shell Oil gasoline stations in Connecticut-and one (1) counterclaim for prima facie tort is against both the plaintiff and Eljamal. The counterclaims against Mr. Eljamal were made in a summons and answer and served upon Mr. Eljamal pursuant to CPLR § 3019 (d). Plaintiff-Orser moved to dismiss the counterclaims of WFD by motion dated December 4, 2014.
Eljamal filed a verified answer on December 16, 2014. The answer included four (4) counterclaims [hereinafter "Eljamal counterclaims"] against Leon Silverman-an investor-arising from the operating agreements between Silverman and Eljamal. WFD and Silverman, by their attorney, Lois N. Rosen, Esq., moved to dismiss the Eljamal counterclaims by motion dated January 9, 2015. Sammy Eljamal, acting pro se, filed an affidavit dated January 20, 2015 in opposition to Rosen's motion. Plaintiff-Orser submitted a reply affirmation and memorandum of law dated February 5, 2015 in response to WFD's motion to dismiss the Eljamal counterclaims.
Now, the Court will consider the respective motions to dismiss the counterclaims.
Counterclaims
"A cause of action that is asserted in a counterclaim should be treated as if it were alleged in a complaint" (CPLR 3019, subd [d]); (Abrams v. Community Services, 86 AD 2d 555. 556 [1st Dept 1982]). A counterclaim must "state the essential facts constituting the material elements of any cause of action" (CPLR § 3013; Professional Health Services. Inc. v. City of New York, 34 AD 2d 918, 918 [1st Dept 1970]). It cannot be "vague" and/or "conclusory" nor can it "fail to give the plaintiffs or the court any notice as to the transactions or occurences which are alleged as the basis of liability" (Menkes v. City of New York, 91 AD 2d 654m 655 [2d Dept 1982]: accord Dibble v. Board of Coop. Educ. Servs. Allegany County, 103 AD 2d 1026, 1027 [4th Dept 1984]). "The sufficiency of a cause of action will generally depend upon whether there was substantial compliance with CPLR 3013" (Catli v. Lindemann, 40 AD 2d 714, 715 [2d Dept 1972], citing Foley v. D'Aaostino, 21 AD 2d 60, 62). CPLR § 3013 requires that the statements in a pleading "be sufficiently particular to give the court and the parties notice of the transactions and occurrences intended to be proved and the material elements of each cause of action" (jd.). Pleadings should only be dismissed when they are not "sufficiently particular"; however, "every pleading question should be approached in the light of CPLR § 3026 which orders that "pleadings should be liberally construed" and "defects should be ignored if a substantial right of a party is not prejudiced" (id.). The focus is not on "pleading irregularities, defects or omissions which are not as such to reasonably mislead one as to the identity of the transactions or occurrences sought to be litigated or as to the nature or elements of the alleged cause or defense" (id., quoting Foley at 66), internal quotation marks omitted).
But the term "liberal construction" applies "only to matters of form and not to provide missing essential elements in a cause of action or defense" (84 NY Jur 2d Pleadings § 66, citing Planned Consumer Mktg. v. Coats and Clark, 127 AD 2d 355 [1st Dept 1987], order affd 71 N.Y.2d 442 [1988]).
Therefore, when a court considers a motion to dismiss, a court must "accept the facts alleged in the complaint [here, counterclaim] as true, accord the plaintiffs the benefit of any favorable inference and determine whether the facts as alleged fit in with any cognizable legal theory" (Goldman v. Metropolitan Life Ins. Co., 5 N.Y.3d 561, 570-571 [2005], citations omitted).
In summary, where a counterclaim is asserted, it is treated as if it were a cause of action in a complaint. "Every fact alleged must be assumed to be true"; the complaint or cause of action must be liberally construed "in the claimant's favor'; the concern is not whether a cause of action can be proven and if it has been stated and, if the cause of action is possible upon the facts alleged for the plaintiff to recover, the cause of action must be sustained. (Roland Pietropaoli Trucking. Inc. v. Nationwide Mutual Insurance Company, 100 AD 2d 680, 681 [3d Dept 1984], citations omitted).
However, if a motion to dismiss is made pursuant to CPLR § 3211 (a) (7), the "movant must specify in its moving papers and affidavits the precise alleged defects in the complaint" (Id., citations omitted). A plaintiff that moves to dismiss a counterclaim must "address what elements are missing from a counterclaim or how it is defective" (LaFiosca v. LaFiosca, 31 Misc.3d 973, 978 [Supt Ct Nassau County 2011]).
Counterclaims by WFD against the Plaintiff
A. WFD alleges that while the plaintiff was employed by WFD, the plaintiff performed services "for other Eljamal Companies" (WFD's verified answer and counterclaims at ¶ 76). WFD alleges that it paid the plaintiff for work performed for these other Ejamal companies; however, the plaintiff does not state the amount paid {see Id. at ¶ 75). WFD claims that the payment unjustly enriched the plaintiff and seeks judgment for the unstated amount (Id. at ¶ 76).
The plaintiff asserts that the parties executed an employment contract on January 2, 2012. The defendant admits that the plaintiff was on its payroll from May 6, 2013 (id. at ¶ 59) and that it paid the plaintiff $1850.00 per week for wages {Id. at ¶ 60) but did not pay the plaintiff for "overtime, travel expenses, bonuses, compassionate leave or reimbursement for internet access" (Id.). The defendant alleges that the plaintiff performed "few or no services" for it (Id. at ¶ 61).
The defendant further alleges that no written contract existed between the parties (Id. at ¶ 62). The defendant claims that the plaintiff and Eljamal "conspired and agreed to prepare, execute and back-date a purported 'Employment Contract'" (Id. at ¶ 71) "for their own nefarious purposes which included, without limitation, the extortion of money from WFD-CT"(Id. At ¶ 73).
All factual allegations of a complaint are assumed to be true and are to be liberally construed in favor of the pleader (Bervy v. Hotaling, 88 AD 2d 735, 735 [3d Dept 1982]). As a result, for the purpose of this motion, the Court is constrained to accept the existence and validity of the employment contract between the parties. The Court notes that the defendant offers only conclusory allegations concerning the validity of the contract that do not defeat the Court's assumption.
Here, the relationship between the plaintiff and WFD was governed by the employment contract between the parties (complaint at exhibit "A"). "The existence of a valid and enforceable written contract governing the particular subject matter ordinarily precludes recovery in quasi-contract for events arising out of the same subject matter'" (Clark-Fitzpatrick v. Long Is. R.R. Co., 70 N.Y.2d 382, 388 [1987]). "A quasi-contract only applies in the absence of an express agreement and is not really a contract at all, but rather a legal obligation to prevent a party's unjust enrichment" (Id.). No claim for unjust enrichment will lie where there is an underlying written agreement (Bass v. Goldman, 115 A.D.3d 128, 141 [1st Dept 2014]). Here, since a contract exists between the parties, the counterclaim for unjust enrichment is DISMISSED.
Unjust enrichment is a quasi-contract claim and is created by law in the absence of a written agreement (Goldman at 571).
Furthermore, defendant's counterclaim depends on the absence of a written agreement. In the event that the written contract were found invalid, a claim for unjust enrichment could lie. But a counterclaim must allege a presently existing cause of action: it cannot be contingent upon a future event (here, a determination that the contract is invalid) (Atlantic Gulf & West Indies Steamship Lines v. City of New York, 271 AD 1008.1008 [1st Dept 1947]). Since the counterclaim for unjust enrichment is contingent, it must be DISMISSED.
B. WFD has also made a second counterclaim, alleging that the plaintiff converted funds of WFD for its own use "in an amount to be determined at trial" (answer at ¶ 78).
The plaintiff cites DiSiena v. DiSiena, 266 AD 2d 673, 674 [3d Dept 1999] in support of the proposition that to assert a claim for conversion, the claimant must have legal ownership of a specific, identifiable piece of property and that the defendant has asserted control and dominion of the property in defiance of the claimant's rights. "It is well-settled that an action will lie for conversion of money where there is a specific, identifiable fund and an obligation to return or other treat in a particular manner the specific fund in question" (Manufacturers Hanover Trust Co. v. Chemical Bank, 160 AD 2d 113, 124 [1st Dept 1990]). An action for conversion must be for the recovery of a definite and particular sum of money Thys v. Fortis Securities, LLC, 74 A.D.3d 546, 547 [1st Dept 2010]). Here, the defendant has not identified the fund nor the amount allegedly converted with particularity.
The plaintiff has identified the failure, of the defendant's counterclaim to allege one of the elements of a cause of action for conversion: the identity and amount of the amount allegedly converted. The material elements of a cause of action must be included in a pleading such as a counterclaim (CPLR § 3013, Foley v. D'Aaostino. 21 AD 2d 60, 62 [ 1st Dept 1964]). Since the counterclaim does not contain the "necessary prerequisites" it must be DISMISSED under CPLR § 3211 (a) (7) for failure to state a cause of action (see. e.g. Mateo Electric v. Plaza Del Sol Constr. Corp., 82 Ad 2d 979, 980 [3d Dept 1981]).
C. The defendant's third counterclaim for breach of fiduciary duty is made against Sammy Eljamal alone.
To recover damages for a breach of fiduciary duty, a plaintiff must allege (1) the existence of a fiduciary relationship, (2) misconduct by the defendant and (3) damages directly caused by the defendant's misconduct (Parekh v. Cain, 96 A.D.3d 812, 816 [2d Dept 2012]). The heightened pleading requirements contained in CPLR § 3016 (b) apply to a cause of action for breach of fiduciary duty (Tsutsui v. Barasch, 67 A.D.3d 896, 898 [2d Dept 2009]). CPLR § 3016 (b) requires that, where pleading a breach of fiduciary duty, "the circumstances constituting the wrong shall be stated in detail". Although, some courts have subordinated or relaxed this requirement (see Connors, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3016:3), conclusory allegations of a cause of action will not suffice to state a cause of action: "Although there is certainly no requirement of 'unassailable proof at the pleading stage, the complaint must 'allege the basic facts to establish the elements of the cause of action"' (Eurycleia Partners. LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 559 [2009], citing Pludeman v. Northern Leasing Sys. Inc., (10 N.Y.3d 486, 492 [2008]). The same court, however, allowed that where the facts recited in a complaint allowed a reasonable inference of the alleged misconduct, the heightened pleading requirements of CPLR § 3016 would be satisfied (id.)
Here, the defendant imputes a fiduciary duty (answer at ¶ 81) and a breach of that duty (Id. at ¶ 83) to Eljamal. However, the defendant fails to plead that a fiduciary relationship existed between the parties. "A fiduciary relationship arises between two persons when one of them is under a duty to act or to give advice for the benefit of another upon matters within the scope of the relation" (Eurycleia Partners, LP at 561, citations and internal quotation marks omitted): “[a] fiduciary relation exists when confidence is reposed on one side and there is resulting superiority and influence on the other" (Id., citation and internal quotation marks omitted). The existence of such a relationship requires a fact-specific inquiry (Id.). Here, the plaintiff offers no facts that would support a finding that a fiduciary relationship existed between the plaintiff and the defendant. This Court also notes that the defendant has failed to state the damages suffered by the defendant, another element of a cause of action for breach of fiduciary duty (see Parekh at 816).
Since the defendant has failed to include material elements of the claim for breach of fiduciary duty, the counterclaim must be DISMISSED (see Foley at 62, Mateo at 980).
D. The defendant's fourth counterclaim is against Eljamal for corporate waste.
"Waste" is the diversion of corporate assets for improper or unnecessary purposes (Aronoff v. Albanese, 85 AD 2d 3, 5 [2d Dept 1982]). The defendant claims that payments for "additional remuneration" to be made to Orser by Eljamal under the terms of the employment contract were a "diversion of corporate assets for improper or unnecessary purposes" (answer at ¶ 87). The "additional remuneration" included overtime, travel expenses, bonus pay, compassionate leave pay and internet access (Id. at ¶ 86). The defendant argues that "in the event [emohasis added] that the Court determines the Employment Contract to be valid and enforceable in accordance with its terms, Eljamal should be required to reimburse WFD-CT for all amounts it is required to pay Orser, including, without limitation, the Additional Remuneration" (id. at ¶ 88). Here the cause of action for corporate waste is contingent, as was the defendant's counterclaim for unjust enrichment. A cause of action must be presently existing and not contingent (Atlantic Gulf & West Indies Steamship Lines at 1008). Therefore, defendant's counterclaim for corporate waste must be DISMISSED.
E. Defendant's fifth counterclaim is against both the plaintiff and Eljamal for prima facie tort.
To sufficiently plead a claim for prima facie tort, the defendant must allege facts showing (1) the intentional infliction of harm, (2) which results in special damages, (3) without excuse or justification and (4) by an act that would otherwise be lawful (SchuIz v Washington County. 157 AD 2d 948, 949 [3d Dept 1990], citing Freihofer v. Hearst Corp.. 65 N.Y.2d 135, 142-143; Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 332) Morever, there is no recovery in prima facie tort unless malevolence is the sole motive for defendant's otherwise unlawful act. The act must be a malicious and unmixed with any other, exclusively directed to injury and damage of another (Wiggins & Kopko, LLP v. Masson, et. al., 116 A.D.3d 1130, 1131 [3d Dept 2014], citations and internal quotation marks omitted). To plead a cause of action for prima facie tort, the proponent must show that the defendant acted with "disinterested malevolence", solely to harm the defendant (id.)
Here, defendant-WFD makes one (1) assertion: "The intentionally inflicted harm was without excuse or justification since Eljamal and Orser acted fraudulently and improperly in executing the Employment Contract" (answer at ¶ 92). That assertion is supported with an conclusory allegation of special damages (id. at ¶ 91) and a statement that that the defendant's conduct would "otherwise be lawful" (id. at ¶ 93). Other than these conclusory assertions, the defendant offers no facts in support of their claim for prima facie tort, including a showing of disinterested malevolence. Where the proponent of a counterclaim fails to state all the elements of a cause of action, the counterclaim must be dismissed. Where there is no showing of disinterested malevolence in support of a claim for prima facie tort, the counterclaim must be dismissed (Wiggins & Kropko at 1131). For these reasons, the defendant's counterclaim for prima facie tort is DISMISSED.
Malevolence must be the "sole motive for the defendant's otherwise lawful act" (Schulz at 950, citation omitted).
F. The defendant has counterclaimed for frivolous conduct pursuant to 12 NYCRR § 130-1.1.
22 NYCRR § 130-1.1 allows financial sanctions, including reasonable attorney's fees, to be imposed upon parties in a civil proceeding who "engage in frivolous conduct" (Jemzura v. Muaalin, 207 A.D.2d 645, 646 [3d Dept 1994]). "For conduct to be considered frivolous within the meaning of this rule, the proceeding must be, inter alia, "completely without merit in law or fact and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; if it is undertaken primarily to delay or prolong the resolution of litigation or to harass or maliciously injure another; or if it constitutes the assertion of material factual statements that are false" (see 22 NYCRR § 130-1.1 [c] [1]-[3]; Citibank (South Dakota) N.A. v. Jones, 2782 AD 2d 815, 817 [3d Dept 2000]). A court may impose sanctions when a party's arguments are "completely without merit in law or fact and are belted by the record Weissman v. Weissman. 2014 WI 1465602 *1 [2d Dept 2014]).
Here, the plaintiff has prepared a complaint alleging breach of contract and violation of New York State Labor Law §§ 190, et. seg. The action arose from the alleged non-payment of wages due to the plaintiff under an employment contract and under the statutory provisions of the Labor Law. The plaintiffs desire to recover wages purportedly due to him lends factual and legal plausibility to the action so that it is not "completely without merit" to the point of frivolous conduct (see Schulz at 949). Furthermore, the defendant has not offered any proof that the action was commenced to "harass or maliciously injure another" pursuant to 22 NYCRR 130-1.1 [c] [2] (see Id.).
For these reasons, the defendant's counterclaim for frivolous conduct must be DISMISSED.
The Eljamal Counterclaims
Eljamal, acting pro se, asserted four (4) counterclaims against WFD and Silverman in his answer dated December 16, 2014. Thereafter, WFD and Silverman moved to dismiss the Eljamal counterclaims by motion dated January 9, 2015. Sammy Eljamal filed an affidavit in opposition to the motion to dismiss dated January 30, 2015. WFD and Silverman filed a reply affirmation dated February 5, 2015.
Motion to dismiss for lack of personal jurisdiction (CPLR § 3211 (a) (8)) WFD and Silverman have moved to dismiss the Eljamal counterclaims for lack of personal jurisdiction.
Since Eljamal was not a party to the original litigation, the counterclaims asserted against him by WFD were served pursuant to CPLR § 3019 (d). There is no dispute concerning the validity of service on those counterclaims. However, Silverman disputes the validity of service upon him. Eljamal has recited the steps taken to serve Silverman with his answer and counterclaims in paragraphs B (1)-(2) of his affidavit in opposition. He has attached an affidavit of service of answer with counterclaims to the summons contained in exhibit "B" of his affidavit in opposition. The affidavit of service shows that substitute service was made on a "Bonnie Silverman", a person of suitable age and discretion, on December 22, 2014 at 237 Mamaroneck Avenue, White Plains, NY 10605 (Eljamal aff in opposition, exhibit "B"). The same affidavit recites "That on December 31, 2014, I also enclosed a copy of the above papers in a postpaid, sealed envelope properly Addressed [sic] to Defendant's last known residence or actual place of business, located at: 237 Mamaroneck Ave, White Plains, NY 10605.1 deposited the envelope in a post office depository under the exclusive care and custody of the United States Postal Service in New York State" (Id.). He asserts that proper substituted service was made pursuant to CPLR § 308 (2) (Eljamal aff in opposition at ¶ B (2)).
Silverman's attorney has provided the affidavit of Bonnie Silverman who swears that, although she was present at the "company offices" at 237 Mamaroneck Avenue, White Plains, NY, neither she nor the office manager were served with Eljamal's answer and counterclaims.
CPLR § 308 (2) provides that substitute service may be made by delivering the summons to a person of suitable age and discretion at the actual place of business and by mailing the summons to the "last known residence" of the person to be served. In the event that the summons is mailed to the "actual place of business" it shall be sent by first class mail "in an envelope bearing the legend 'personal and confidential' and not indicating on the outside thereof, by return address or otherwise, that the communication is from an attorney or concerns an action against the person to be served..." (CPLR § 308 (2)). Here, a copy of the summons was mailed to 237 Mamaroneck Ave., White Plains, NY 10605, which is "the business premises of Mr. Silverman" (reply affirmation at ¶ b (6). However, the affidavit of service does not show that the mailing was done in accordance with CPLR § 308 (2): by first class mail, in an envelope bearing the legend "personal and confidential" and without any indication, by return address or otherwise, that it was from an attorney or concerns an action against
The court has conducted an internet search for the address. The results show 237 Mamaroneck Avenue is an office building.
Mr. Silverman.
It is well-established the failure to include the legend "Personal and Confidential" on the envelope of the mailing sent to a place of business constitutes a jurisdictional defect (Olsen v. Haddad, 187 AD 2d 375, 376 [1st Dept, 1992], Iv denied 81 N.Y.2d 707 [1993]; Roth v. Syracuse Housing Authority. 2002 WL 31962630, *11 [Sup Ct Onondaga County 2002]). Such a defect prevents the Court from exercising personal jurisdiction (Mastropierro v. Bennett, 233 AD 2d 483, 483 [2nd Dept 1996]); Olsen at 376). For this reason, the counterclaim labeled SECOND and asserted against Silverman must be DISMISSED.
The attorney for WFD and Silverman argues that all four (4) counterclaims asserted by Eljamal in this action are the same counterclaims as those asserted by him in his answer in a prior action in the Supreme Court of the State of New York (Westchester County) entitled Leon Silverman and Wholesale Fuel Distributors-CT, LLC v. Sammy Eljamal and Connecticut Dealer Stations Management, LLC under index number 55260/2014. The attorney for WFD and Silverman has provided a copy of that answer and, after review, this Court finds that the claims are identical.
Counterclaim "SECOND" has been DISMISSED by this Court. The remaining three (3) counterclaims are the subject of this branch of the motion. WFD requests that this Court dismiss the now-three counterclaims pursuant to CPLR § 3211 (a) (4) or, in the alternative, transfer those claims to the Supreme Court of the State of New York in Westchester County.
Here, the counterclaims made by Eljamal are substantially the same in the action pending in Westchester County and in Greene County. The Court recognizes that Orser is not a party to the action in Westchester County. However, a motion to dismiss for prior action pending will not necessarily be defeated by the presence of additional parties in one action (White Light Productions. Inc. v. On the Scene Productions. Inc., 231 AD 2d 90, 94 [1st Dept 1997]).
The subject matter of two (2) of the three (3) remaining counterclaims is the operating agreement(s). The sole remaining counterclaim is for an accounting of the financial records of the subject corporations. The prior pending cases in Westchester . County are all concerned with the business activities covered by the operating agreements. Where there is a "substantial identity" of the parties and the two causes of actions, dismissal may be warranted (Forget v. Raymer, 65 AD 2d 953, 954 [ 4th Dept 1978], citations omitted). For these reasons, the remaining three (3) counterclaims made by Eljamal are DISMISSED.
The subject matter of the instant case concerns the breach of an employment contract executed between the plaintiff, Bryan D. Orser and the defendant, Wholesale Fuel Distributors CT., LLC. That cause of action remains properly before this Court. The Decision and Order of this Court is limited to that specifically granted. All other requests and motions are DENIED.
The foregoing constitutes the DECISION and ORDER of this Court, the original of which is being transmitted to the plaintiff. AH other papers have been delivered to the Greene County Clerk by Chambers. The signing of this Decision and Order does not constitute entry or filing under CPLR § 2220. Counsel is not relieved from the applicable provisions of that rule respecting filing, entry and notice of entry.
Papers Considered:
Plaintiffs motion to dismiss the counterclaims of WFD with attachments and memorandum of law & reply memorandum of law
Defendant-WFD's motion to dismiss the counterclaims of Eljamal with attachments and memorandum of law
Plaintiffs memorandum of law in response to defendant WFD's motion to dismiss the counterclaims of Eljamal
Defendant WFD and non-party Silverman's Reply Affirmation in further support of motion to dismiss counterclaims of Eljamal with attachments
Eljamal's affidavit in opposition with attachments