no. 4836- supreme court - state of new...

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NO. 4836-SUPREME COURT - STATE OF NEW YORK

IAS TERM PART 18 NASSAU COUNTY

PRESENT:HONORABLE LEONARD B. AUSTINJustice Motion RID: 3/9/05

Submission Date: 3/14/05Motion Sequence No. : 001/MOT D

CARYN M. DANZY, individually and asa Shareholder of NIA ABSTRACTCORPORATION, and in the right of NIAABSTRACT CORPORATION, and onbehalf of all other shareholders of NIAABSTRACT CORPORATION SimilarlySituated

Plaintiff,

- against -

NIA ABSTRACT CORPORATIONJAMES J. SALTERS , CATALYSTDEVELOPMENT AND PLATINUMPROPERTIES

Defendants,

-.----------..---------------------------------------.)(

JAMES J. SALTERS , individually andas a shareholder of the NIA ABSTRACTCORPORATION suing on behalf ofhimself and all other shareholders ofthe NIA ABSTRACT CORPORATIONSimilarly Situated and in the right ofthe NIA ABSTRACT CORPORATION

Third-Party Plaintiff

- against -

CARYN M. DANZY and NIAABSTRACTCORPORATION

Third-party Defendants.

COUNSEL FOR PLAINTIFFCitak & Citak, Esqs.270 Madison Avenue - Suite 1203New York, New York 10016

COUNSEL FOR DEFENDANTForchell , Curto, Schwartz, MineoCarlino & Cohn , LLP330 Old Country Road

O. Box 31Mineola , New York 11501

DANZY et al., v. NIA ABSTRACT CORPORATION et al.,Index No. 4836-

ORDER

The following papers were read on Defendant's motion for summary judgmentdismissing the complaint and third-party Defendant's motion for summary judgment onliability and setting the matter down for a hearing on the third-party claim:

Notice of Motion date February 11, 2005;Affidavit of James J. Salters sworn to on February 4 2005;Affirmation of Donald Jay Schwart , Esq. dated February 4 , 2005;Affidavit of Caryn M. Danzy sworn to on March 2 , 2005;Plaintiff' s Memorandum of Law;Affirmation of Donald Jay Schwartz, Esq. dated March 8 , 2005.

Defendants move for summary judgment dismissing the complaint. Third-Party

Plaintiff moves for summary judgment on the issue of liability and to have the action set

down for an assessment of damages against the Third-Party Defendant.

BACKGROUND

Defendant/hird Party Defendant , Nia Abstract Corporation ("Nia ) is an abstract

company providing title and record searches for attorneys in connection with real estate

transactions.

Nia began operation in March 1999. The initial shareholders in Nia were

Plaintiff/Third Party Defendant Caryn M. Danzy ("Danzy ), who was issued 170 shares

Catalyst Development Corp. ("Catalyst"), which was issued 18 shares , P. Toureon

Industries , Inc., which was issued 9 shares and Robin Gray ("Gray ), who was issued 3

Burton Citak , Esq. counsel for Plaintiff submitted a sur-reply affirmation datedMarch 11 , 2005 without leave of the Court. It was not read or considered by the Courtin deciding this motion.

DANZY et al. v. NIA ABSTRACT CORPORATION et al.Index No. 4836-

shares. DefendanUThird Party Plaintiff, James P. Salters ("Salters ) is a principal of

Catalyst.

In July 1999 , the parties entered into an Amended Shareholders Agreement

pursuant to which Danzy was issued 102 shares , Salters was issued 79 shares and

Gray was issued 19 shares of Nia. Pursuant to the terms of the Amended

Shareholders ' Agreement, Danzy, Gray and Salters were elected as Nia s directors of

Nia. Danzy was elected Nia s President while Gray and Salters were elected Vice

President and Secretary/Treasurer, respectively.

When Danzy, Gray and Salters executed the Amended Shareholders

Agreement, they also executed a Voting Trust Agreement pursuant to which the

shareholders assigned their voting rights to the trustees named in the Voting Trust.

Salters and Danzy were designated as the trustees of the Voting Trust and were to

equally share the right to vote all of the shares of Nia. The stated purpose of the Voting

Trust was to permit Salters and Danzy to manage Nia s business.

On June 24 , 1999 , Nia entered into a lease with James J. of Nassau County, Inc.

James J. ) to the lease premises 1717 Atherton Avenue, Elmont ("1717 Atherton ) for

a period of five (5) years commencing on July 1 , 1999. The lease gave Nia the option

to purchase the 'premises for the sum of $140,000.00 at the end of the term of the lease.

Salters was a principal of James J.

In November 1999 , James J. transferred title to 1717 Atherton to Platinum

Properties, Inc. ("Platinum ). Salters, Mark Rubin and Mark Bush were the officers


directors and principals of Platinum. Nia was not advised of the transfer of 1717

Atherton from James J. to Platinum until July 2001.

Catalyst is a real estate management corporation in which Salters is also a

principal. Salters uses Catalyst as the managing agent for real property which he owns,

including 1717 Atherton.

During the entire term of the lease , Nia paid its monthly rent to James J.

Platinum or Catalyst.

1717 Atherton was subject to a mortgage between Nancy M. C. Gales ("Gales

as mortgagor, and Prudential Mortgage Co. , Inc. , as mortgagee ("Prudential" ). The

mortgage was dated February 8 , 1989 and was recorded in the office of the Nassau

County Clerk on March 1 , 1989.

The record does not reflect when or from whom James J. acquired title to the

property. James J. and Platinum apparently took title subject to the mortgage between

Gales and Prudential.

In 2001 , the mortgage on the property went into default. As a result, Prudential

commenced an action to foreclose the mortgage. Platinum was named as a party to the

foreclosure action as the owner of the property. The original caption of the foreclosure

action also named as Defendants "John Doe" and "Jane Doe , intended to be tenants or

occupants of the premises.

Platinum defaulted in appearing in the foreclosure action. In July 2002 , a

judgment of foreclosure and sale was entered. 1717 Atherton was sold at a foreclosure


sale on October 15, 2002 to Edress Development, Inc. ("Edress

After the foreclosure sale but before the deed transferring title was delivered to

Edress, Platinum moved by Order to Show Cause to set aside the sale. By order of

the Hon. Burton S. Joseph , Justice of this Court, dated November 26 , 2002 , Platinum

motion to vacate the foreclosure sale was denied. By referee s deed dated December

18, 2002 , title to 1717 Atherton was conveyed by Edress.

Upon taking title to the premises, Edress commenced a landlord-tenant holdover

summary proceeding in the Nassau County District Court seeking to recover possession

of the property. The respondents in the holdover proceeding were Platinum and "John

Doe" and "Jane Doe , who were alleged to be tenants of the former owner, Platinum.

Nia appeared and answered in the summary proceeding.

In April 2003, Platinum moved for renewal of the order of Justice Joseph and to

stay the summary proceedings on the grounds that a necessary party, Nia , had not

been named as a party in the foreclosure action. At the same time , Nia cross-moved

before Justice Joseph for an order finding that the Supreme Court had not obtained

jurisdiction over Nia in the foreclosure action and thereby its lease and its rights under

the lease were noUerminated by the foreclosure.

By order dated June 27 2003 , Justice Joseph denied Platinum s motion to renew

and granted Nia s motion to the extent of setting the matter down for a traverse hearing

to determine whether service had been effectuated upon Nia.

After additional motion practice , pursuant to the order of Justice Joseph dated


October 8 2003 , a traverse hearing was held before the Hon. Geoffrey J. O'Connell, a

Justice of this Court, on December 3, 2003. After hearing testimony of the process

server and representatives of Nia , Justice O'Connell determined that Nia had , in fact,

been served in the foreclosure action and , thus, was subject to the jurisdiction of this

Court in that action.

After the traverse , Nia entered into a stipulation settling the District Court

holdover proceeding by which Nia agreed to the entry of an immediate final judgment of

possession and the issuance of a warrant of eviction with enforcement stayed until

February 28, 20'04. In consideration of the stipulation , Edress agreed to waive any

claim for rent and use and occupancy and Nia agreed to waive any claim it had to

purchase the property in accordance with the terms of its lease with James J.

In this action , Nia claims that, as a result of the foreclosure , its option to purchase

the property at the end of the lease was lost. This was a significant right since 1717

Atherton was sold at foreclosure for significantly more than the amount outstanding on

the foreclosed mortgage which sum was more than Nia s $140 000.00 option to

purchase at the end of the lease.

Nia asserts that Salters, as a director and officer of Nia, owed it a duty of good

faith and honesty which he breached when he permitted 1717 Atherton to be

foreclosed. More specifically, the amended complaint alleges that Salters induced Nia

to enter into the lease; that he misrepresented the existing liens and mortgages against

the property; that he failed to disclose to Nia that his business, James J. and/or


Platinum had failed to make the mortgage payments; and that he failed to advise Nia of

the pendency of the foreclosure action and later misrepresented to Nia the status of that

action. As a result of Salters ' failure to disclose this information to Nia, Nia lost the

valuable right of being able to purchase 1717 Atherton at the end of the term of the

lease for a below market price.

The second cause of action is against Catalyst, as the managing agent of the

property. The third cause of action is against Platinum. Each cause of action alleges

that each owed a duty to Nia. Both the second and third causes of action allege that, as

a result of the negligence of Catalyst and/or Platinum in failing to pay the mortgage and

in failing to advise Nia of the commencement and status of the foreclosure action , Nia

lost its option to purchase 1717 Atherton at the end of the lease.

The third party action alleges that Danzy breached her duty to Nia by failing to

failing to devote her time and effort to the Nia s business; by using corporate funds for

personal expenses; by taking salary in excess of that approved by the corporation; and

in failing to adequately and properly account for Nia s financial affairs.

Defendants/Third-Party Plaintiffs have moved for summary judgment dismissing

the action. With regard to the third party action, they seek summary judgment on the

issue of liability and to set the matter down for an assessment of damages against

Third-Party Defendant Danzy.


DISCUSSION

Business Corporation Law 9626(c)

Salters asserts that this shareholder derivative action should be dismissed

because Plaintiff has failed to comply with Business Corporation Law ("BCL" ) 9626(c)

which requires that a Plaintiff to allege with particularity the efforts Plaintiff made to have

the board of directors commence the action or the reason why Plaintiff did not seek

action of the board before commencing the suit. That is , the party commencing a

shareholder derivative claim must allege with specificity the actions it took to secure

board action before bringing the action or that making demand on the board before

bringing the acti'on would be futile. Bansbach v. Zinn , 1 N. 3d 1 (2003), rearg. den.

3d 593 (2004); and Marx v. Akers , 88 N. 2d 189 (1996).

The Court will find a demand futie and excuse demand when the directors are

incapable of making an impartial decision on whether to commence the action. Id.

This occurs in three circumstances; to wit: (1) when the board of directors is controlled

by directors who are interested in the challenged transaction; (2) when the board of

directors did not educate itself about the challenged transaction and merely rubber

stamped the decisions of those who run the corporate business; or (3) the challenged

transaction is so egregious that it cannot be the product of sound business judgment

and corporate management. Id.

When a Plaintiff alleges that demanding action from the board of directors is

excused , then Plaintiff must allege with specificity the reasons why demanding the


board to take action would be futile. The failure to allege either the effort to get the

board to take action and the board's refusal to act or to allege specific facts why

requesting the board take action would be futile renders the complaint defective as a

matter of law and requires dismissal. Marx v. Akers supra. See also, Teachers

Retirement System of Louisiana v. Welch , 244 A.D.2d 231 (1 Dept. 1997); and

Bildstein v. Atwater, 222 A.D.2d 545 (2 Dept. 1995).

The amended complaint in this action fails to make any allegations whatsoever

that Danzy made the requisite demand upon the board to take action before

commencing this action and that the board failed to take action. Likewise , the

amended complaint fails to make a single factual allegation that would support a claim

that making a request to Nia s board to take action would be futile. Thus , for this

reason , the amended complaint is defective as a matter of law and should be

dismissed. See, Marx v. Akers supra.

Danzy seeks to overcome this deficiency in the amended complaint by asserting

that seeking board approval would be futile because of the Voting Trust. This

argument is without merit. The Voting Trust assigns to the trustees , Danzy and Salters

the right to vote the shares of the corporation as they deem appropriate in their

discretion. However, the Voting Trust does not effect or restrict the votes of the

members of the Board of Directors.

The Voting Trust also provides that Danzy, Gray and Salters would be elected as

Directors of Nia pending a formal shareholders meeting which was to be held no later


than September 20 , 1999. The record does not reflect that a shareholders meeting was

ever held or that anyone other than Danzy, Gray and Salters were , and still are , the Niia

corporate directors.

Furthermore , a special meeting of Nia s directors meeting was held on February

, 2004. Danzy and Gray attended the meeting. Salters did not. At that meeting,

Danzy and Gray, as directors of Nia, voted to consult with an attorney regarding

commencing an action to recover damages sustained by Nia as a result of Salters

alleged violation of his duty of loyalty.

Unless the Certificate of Incorporation states otherwise, a majority of the entire

board constitutes a quorum for the transaction of business. BCL 9707. Except as

otherwise provided for by statute , the board of directors may act by majority vote of the

directors present at a meeting at which a quorum is present. BCL 9708(d).

Nia s board of directors consisted of three people - - Danzy, Gray and Salters.

Neither party has placed before the Court provisions of the Certification of Incorporation

which would require either unanimous consent or a super majority to conduct business.

Thus, a decision to bring suit against Salters for his alleged breaches of fiduciary duty to

Nia could have been made by a majority vote of the board at the February 20 , 2004

meeting since a quorum was present. Translated to the facts of this case , Danzy and

Gray, as a quorum of Nia s board and a majority of its board of directors could have

voted to commence this action at a duly called regular or special meeting of the board.

They failed to db this.

DANZY, et al. v. NIA ABSTRACT CORPORATION et al.Index No. 4836-

Danzy could not have commenced this action as a shareholder derivative claim

nor, under the facts of this case, could she successfully plead the jurisdictional

allegations required to satisfy BCL 9 626(c). On this procedural ground, the amended

complaint is defective and should be dismissed.

Salters Motion for Summary Judgment

Salters Concede that he was an officer and director of Nia and that in such

capacities he had a fiduciary duty to Nia. See Lindner Fund. Inc. V. Waldbaums. Inc.

82 N. 2d 219 (1993); and Alpert v. 28 Willam St. Corp. , 63 N. 2d 557 (1984); and

Busino v. Meachem , 270 A.D.2d 606 (3 Dept. 2000).

In order to be successful in this action , Nia and/or Danzy would have to be

establish that Salters breached his fiduciary duty to Nia when he failed to advise Nia

that the mortgage on 1717 Atherton was in default and that an action to foreclose on the

mortgage had been commenced which resulted in Nia losing its interest in the propert

including its option to purchase the property at the end of the lease.

Salters asserts that Nia lost its interest in 1717 Atherton not because he

breached his fiduciary duty to Nia , but because Nia was served and defaulted in the

foreclosure action. Since this issue has already been determined by the Court, Nia

cannot re-liigate that issue in this case. Kaufman v. Village of Mamaronek , - A.D. 3d-

205 WL 1107009 (2 Dept. 2005). Since Nia cannot establish an essential element of

its claim , the complaint must be dismissed.


In the foreclosure action , Nia moved for an order holding that this court had not

obtained jurisdiction over it in the foreclosure action and that it's interest and rights in

1717 Atherton had not been terminated by the judgment of foreclosure and sale. That

motion resulted in an order of Justice Joseph setting the matter down for a traverse

hearing.

The traverse hearing was held before Justice O'Connell on December 3 , 2003.

After hearing testimony, Justice O'Connell held that Nia had been properly served in the

foreclosure action. Since Nia had been served and defaulted in the foreclosure action

its interest in 1 i17 Atherton including its option to purchase the property at the end of

the lease had been terminated by the judgment of foreclosure and sale. See 6820

Ridge Realty LLC v. Goldman , 263 AD.2d 22 (2 Dept. 1999); and Polish National

Allance of Brooklyn. U. A v. White Eagle Hall Co. , 98 AD.2d 400 (2 Dept. 1983).

Collateral estoppel prevents a party from re-liigating in a subsequent action

issues which have been decided against that party in a prior action in which the party

had a full and fair opportunity to litigate the issue. Kaufman v. Vilage of Mamaronek

supra; Kaufman v. Eli Lilly and Co. , 65 N. 2d 449 (1985); Gilberg v. Barbieri , 53 N.

2d 285 (1981); and Schwartz v. Public Administrator of County of Bronx , 24 N. 2d 65

(1969). The party seeking the benefit of collateral estoppel must establish that the issue

was decided in the prior action while the party opposing the application of collateral

estoppel must establish that it did not have a full and fair opportunity to litigate the issue

in the prior action. Kaufman v. Eli Lilly and Co. supra.


The decision of Justice O'Connell collaterally estops Nia from re- litigating in this

action the issue of why and how its interest in 1717 Atherton was terminated. Since Nia

will be unable to establish that its interest in 1717 Atherton was lost as a result of

Salters breach of a fiduciary duty to Nia , the complaint must be dismissed.

Summary Judgment - Catalyst and Platinum

The second and third causes of action seeks damages against Catalyst and

Platinum respe tively. These causes of action are premised upon allegations that

Platinum and Catalyst respectively had a duty to pay the mortgage on 1717 Atherton

and breached that duty when the mortgage was not paid. Plaintiff further alleges that

Platinum and/or Catalyst had a duty to inform or advise Nia of the commencement of

the foreclosure action and breached that duty. As a result of the breach of these duties,

Nia sustained damages.

This theory of recovery is faulty for two reasons. Neither Catalyst not Platinum

had a duty to advise Nia of the commencement of the foreclosure action. The duty to

advise Nia of the commencement of the foreclosure action was with the mortgagee

seeking to foreclose its mortgage.

Real Property Actions and Procedure Law ("RPAPL") 91311 requires the Plaintiff

to join as Defendants in a foreclosure action "

...

persons, whose interest is subject and

subordinate to Plaintiff's lien." Within the category of persons who interest is subject to

and subordinate to the mortgagee s lien are persons who have an interest in the

property for a term of years; i.e. tenants. RPAPL 91311 (1); and 6820 Ridge Realty LLC


v. Goldman supra. See also , 79 NY Jur2d Mortgages 9734.

The failure to name a party whose interest is subordinate to the mortgagee

bringing a foreclosure action leaves that party s interest in the property unaffected by

the judgment offoreclosure and sale. 6820 Ridge Realty LLC v. Goldman supra; and

Polish National Alliance of Brooklyn U. A. v. White Eagle Hall Co.. Inc. supra. More

specifically, the failure to name and serve a tenant in a foreclosure action results in the

lease not being terminated by the foreclosure and precludes the purchaser at the

foreclosure sale from dispossessing the tenant. 6820 Ridge Realty LLC v. Goldman

supra; and Scheidt v. Supreme Woodworking Co.. Inc. , 212 App. Div. 179 (2 Dept.

1925); and 3 Bergman New York Mortgage Foreclosures 933.04(2).

Nia s lease specifically states that it is subject and subordinate to all existing and

future mortgages. Nia s rights in the property were extinguished as a result of it having

been named and served as a party in the foreclosure action and as a result of its having

not exercised its right of redemption. Since Nia was properly served in the foreclosure

action and did not exercise its right of redemption , its interest in the property - - its

lease - - was terminated along with its option to purchase the property. Thus , Nia

lost its option to purchase the property not as a result of Catalyst or Platinum s failure to

advise Nia of the commencement and status of the foreclosure action but rather as a

result of Nia s failure to exercise its right of redemption in the foreclosure action in which

it was named and served.


Secondly, Catalyst and Platinum did not have an obligation to make payment of

the mortgage. The mortgage which was foreclosed was between Gales, as mortgagor

and Prudential , as mortgagee. Title to the subject premises was transferred by Gales to

James J. and then by James J. to Platinum subject to the mortgage. From the

allegations in the complaint in the foreclosure action, the Court must infer that first

James J. and then Platinum took title to the premises subject to the mortgage and never

assumed Gales obligations under the terms of the mortgage. The complaint alleges

that Gales was the mortgagor and that title was conveyed to Platinum subsequent to the

making of the mortgage. The complaint does not allege that either James J. or

Platinum assumed Gales ' obligations under the mortgage.

A mortgage is a lien to secure a debt. See Bank of New York v. Cerasaro , 98

A.D.2d 902 (3 Dept. 1983). A mortgaged property may be conveyed subject to the

mortgage lien. When property that is subject to a mortgage is conveyed, the grantee

does not assume the obligation to pay the mortgage debt. See, Matter of Oakes , 248

Y. 280 (1928); and Greenfield v. Kaplan , 15 Misc.2d 718 (Sup.Ct. , Kings Co. 1958);

and 78 NY Jur2d Mortgages 9300.

In most instances , one who takes title subject to a mortgage wil pay the

mortgage in order to avoid foreclosure. In this case , the property was conveyed to

James J and then to Platinum subject to the existing mortgage. There is no evidence in

the record to reflect that the either James J. or Platinum assumed Gales ' obligation

under the mortgage or took steps to assure its payment. The complaint in the


foreclosure action specifically alleges the existence of the mortgage between Prudential

and Gales. James J. and Platinum , as grantees of the property subject to the

mortgage, did not incur a direct obligation to make payment of the mortgage unless they

specifically assumed that debt and obligation. See Kings County Trust Co. V. Derx

237 App.Div. 548 (2 Dept. 1933); and 78 NY Jur2d Mortgages 9320.

Since Platinum did not assume the obligation to pay the mortgage, it cannot be

held liable to Nia for its failure to make such payments.

The same holds true for Catalyst. Catalyst is alleged to be Platinum s managing

agent. Catalyst never had an interest in 1717 Atherton nor did it undertake the

obligation to pay the mortgage. Catalyst was not a party to the foreclosure action. Most

certainly, Catalyst cannot be held liable for the failure to advise Nia of the pendency of

an action to which it was not a party and for failure to pay a mortgage as to which it had

no obligation to pay.

Platinum and Catalyst have established a prima facie entitlement to judgment as

a matter of law. Lescovich V. 180 Madison Avenue Corp. , 81 N. 2d 982 (1993); and

Zuckerman v. City of New York , 49 N. 2d 557 (1980). Plaintiff has failed to come

forward with proof in evidentiary form that indicates that there are disputed material

issues of fact necessitating a trial. Zuckerman v. City of New York supra; and

Davenport V. County of Nassau , 279 N.Y.2d 497 (2 Dept. 2001); and Bras V. Atlas

Construction Corp. , 166 A.D.2d 401 (2 Dept. 1991). Therefore, a trial of these causes


of action is not required. Summary judgment should be granted dismissing the second

and third causes of action.

Third Party Plaintiff's Motion for Summary Judgment

The third party action is a shareholder derivative suit brought by Salters on behalf

of Nia alleging that Danzy failed to devote her full time and effort to corporate business;

that she took salary in excess of the approved amount; paid personal expenses with

corporate funds; opened and closed corporate bank accounts without proper corporate

resolutions; fa iled to reconcile the corporate escrow account; failed to act as directed by

the corporate shareholders at the January 18 , 2001 annual meeting and the July 25,

2001 special meeting; hired and fired accountants without board approval; hired

employees without board approval; failed to make proper lease payments causing the

corporation to become a month-to-month tenant thereby causing termination of the

corporation s option to purchase its business premises.

Third-Party Plaintiff seeks summary judgment on the issue of liabilty and seeks

to have the action set down for an assessment of damages against Danzy. The motion

is based exclusively on Danzy s deposition testimony. Danzy testified at her deposition

that several checks written to her from Nia s bank account were for attendance fees at

closings. One check was written to Danzy for consulting services. Another check

written to Danzy was for "Commissions and Extra Work." Third-Party Plaintiff alleges

that Danzy was not entitled to receive as additional compensation attendance fees for

closing, consulting fees or fees for extra work. Third-Party Plaintiff claims that any


money Danzy paid to herself for these items should be returned to Nia.

Nia was a title abstract company. When title on one of the properties on which

Nia did the title search would close , Nia would send a title closer to the closing. In

addition to collecting the charges for items such at title insurance , recording fees

mortgage tax and taxes, Nia would charge and collect an appearance fee for the title

closer. When Danzy was the title closer, she would pay herself the title closer

appearance fee.

Danzy implies that the title closer appearance fee was collected at all closings

and paid to the title closer who attended the closing. Had Danzy not appeared as the

title closer, Nia would have had to retain an outside title closer who would have been

paid this fee. Therefore , Nia would have paid this fee under any circumstances.

With regard to the consulting services and extra work, Danzy could not identify

from the checks the reason she paid herself this compensation.

It is undisputed the Danzy had an obligation to work at all time for the best

interests of Nia. Western Electric Co. v. Brenner, 41 N. 2d 291 (1977); and Maritime

Fish Products Irlc. v. World-Wide Fish Products. Inc. , 100 A.D.2d 81 Dept. 1981).

The record is unclear as to whether Danzy was entitled to received the title closer

appearance fee as additional compensation when she appeared at the closing. The

record is also unclear as to why Danzy was paid a consulting fee and additional

compensation. Furthermore, Danzy asserts that she never paid herself compensation

above and beyond the amount she was entitled to receive.

DANZY et al. v. NIA ABSTRACT CORPORATION, et al.Index No. 4836-

In this circumstance, liabiliy and damages are intertined. Danzy breached her

duty of loyalty if she paid herself compensation which should have been paid to Nia or if

she paid herself compensation above and beyond the amount that was due under the

terms of her employment. Id. In this case, the Court cannot determine liability without

determining damages.

Additionally, when arguing for summary judgment , Third-Party Plaintiff did not

address any of the other bases alleged in the third-party complaint as grounds for

finding that Danzy breached her duty of good faith and loyalty to Nia. The papers

submitted in support of the motion do not indicate whether these allegations have been

abandoned as unprovable or if they are going to be pursued at trial.

Since there are clearly questions of fact, summary judgment on the issue of

liability on the third- party complaint is inappropriate. See, Zuckerman v. City of New

York supra.

Accordingly, it is,

ORDERED that Defendants' motion for summary judgment dismissing the

complaint is granted; and it is further

ORDERED that Third Party Plaintiff's motion for summary judgment on the issue

of liability and setting the matter down for an assessment of damages on the third party

complaint is denied; and it is further


ORDERED that counsel for the parties are directed to appear for a conference

on June 15, 2005 at 9:30 a,

This constitutes the decision and Order of the Court.

Dated: Mineola , NYMay 12 , 2005

ENTEREDMAY 1 7 20

NASSU COOCOUNTY Cls Offce

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