Cottone v. Selective Surfaces, Inc.

The Supreme Court should not have dismissed the complaint

With respect to the remaining causes of action, contrary to the defendants’ contention, the fourth cause of seeking the imposition of a constructive trust, and the twelfth cause of action seeking an accounting, adequately allege facts demonstrating the existence of a fiduciary duty, which is a necessary element of these claims (see Simonds v Simonds, 45 NY2d 233 , 241-242 [1978]; Watson v Pascal, 65 AD3d 1333 [2009]; AHA Sales, Inc. v Creative Bath Prods., Inc., 58 AD3d 6 , 23 [2008]). Accepting the facts alleged in the complaint as true and according the plaintiff the benefit of every possible inference, as we must on a motion to dismiss pursuant to CPLR 3211 (see Leon v Martinez, 84 NY2d 83 , 87 [1994]; Guggenheimer v Ginzburg, 43 NY2d 268 , 275 [1977]), the plaintiff allegedly became a minority member and owner of the defendant Selective Surfaces, LLC (hereinafter the company) in February 2001 and was thus owed a fiduciary duty by the managing member (see Limited Liability Company Law § 409 [a]; Out of Box Promotions, LLC v Koschitzki, 55 AD3d 575 , 578 [2008]; Salm v Feldstein, 20 AD3d 469 , 470 [2005]; Nathanson v Nathanson, 20 AD3d 403 , 404 [2005]).

Furthermore, the unsigned written agreement allegedly drafted by an attorney selected by the company’s managing member does not conclusively prove that the plaintiff was not entitled to acquire an ownership interest in the company until the completion of five years of service as its production manager. The variance between the terms of the alleged oral agreement as set forth in the complaint, and the unsigned written agreement, create an issue of fact as to the terms of the oral agreement which cannot be resolved at this juncture. Accordingly, we reject the defendants’ argument that the fifth and sixth causes of action, asserting, inter alia, individual and derivative claims

As an alternative basis for affirmance of the order dismissing the complaint in its entirety (see Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539 , 545 [1983]), the defendants contend that enforcement of the alleged oral agreement is barred by General Obligations Law § 5-701 (a) (1). This provision of the statute of frauds requires an agreement to be in writing and subscribed by the party to be charged if such agreement “[b]y its terms is not be performed within one year from the making thereof’ (id.). However, General Obligations Law § 5-701 (a) (1) has long been interpreted “to encompass only those contracts which, by their terms, ‘have absolutely no possibility in fact and law of full performance within one year’ ” (Cron v Hargro Fabrics, 91 NY2d 362 , 366 [1998], quoting D & N Boening v Kirsch Beverages, 63 NY2d 449 , 454 [1984]). Since the alleged oral agreement at issue is essentially an employment agreement without a fixed duration, it was capable of being performed within one year, and thus not barred by General Obligations Law § 5-701 (a) (1) (see Cron v Hargro Fabrics, 91 NY2d 362 [1998]; Weiner v McGraw-Hill, Inc., 57 NY2d 458 , 463 [1982]; Hayden v P. Zarkadas, P.C., 18 AD3d 500 [2005]; Air Masters v Bob Mims Heating & A.C. Serv., 300 AD2d 513 [2002]; cf. Cunnison v Richardson Greenshields Sec., 107 AD2d 50 [1985]).

As a second alternative ground for affirmance, the defendants contend that the plaintiffs’ claims are time-barred. On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (5) upon the ground that it is time-barred, the defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired (see 6D Farm Corp. v Carr, 63 AD3d 903 , 905-906 [2009]; Cimino v Dembeck, 61 AD3d 802 , 803 [2009]; Swift