30 Fps Productions, Inc. v. Livolsi

• Decision Date: 22 December 2009
• Docket Number: 2009-00633
• Citation: 30 Fps Productions, Inc. v. Livolsi, 68 A.D.3d 1101, 2009 NY Slip Op 9649, 891 N.Y.S.2d 162 (N.Y. App. Div. 2009)
• Parties: 30 FPS PRODUCTIONS, INC., Respondent, v. JOSEPH G. LIVOLSI Appellant.
• Court: New York Supreme Court — Appellate Division

68 A.D.3d 1101

2009 NY Slip Op 9649

891 N.Y.S.2d 162

30 FPS PRODUCTIONS, INC., Respondent, v. JOSEPH G. LIVOLSI Appellant.

2009-00633

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

Decided December 22, 2009.

In an action to recover damages for breach of fiduciary duty and conversion, the defendant appeals from an order of the Supreme Court, Nassau County (Bucaria, J.), entered December 22, 2008, which granted the plaintiff's motion to strike the answer, for summary judgment on the issue of liability, and to set the matter down for an inquest on the issue of damages.

Ordered that the order is reversed, on the law, with costs, and the plaintiff's motion to strike the answer, for summary judgment on the issue of liability, and to set the matter down for an inquest on the issue of damages is denied.

From 1995 until September 2006 the defendant was employed by the plaintiff, a film and video production company, as a director of photography. In early 2006, while still employed by the plaintiff, the defendant incorporated his own "lighting and grip" company. The defendant also incorporated a separate company, through which he billed other companies for his work as a director of photography. Neither company earned income while the defendant was still employed by the plaintiff. On September 8, 2006 the defendant resigned from the plaintiff's employ. Subsequently, the plaintiff commenced this action against the defendant, asserting causes of action to recover damages for breach of fiduciary duty—specifically the duty of loyalty and fidelity—and for conversion. The plaintiff moved, inter alia, to strike the answer and for summary judgment on the issue of liability. The Supreme Court granted the motion. We reverse.

"It is well settled that an employee owes a duty of good faith and loyalty to an employer in the performance of the employee's duties" (Wallack Frgt. Lines v Next Day Express, 273 AD2d 462, 463 [2000]; see Lamdin v Broadway Surface Adv. Corp., 272 NY 133 [1936]; CBS Corp. v Dumsday, 268 AD2d 350, 353 [2000]; American Map Corp. v Stone, 264 AD2d 492, 492-493 [1999]; Maritime Fish Prods. v World-Wide Fish Prods., 100 AD2d 81, 88 [1984]). "However, an employee may incorporate a business prior to leaving his employer without breaching any fiduciary duty unless the employee makes improper use of the employer's time, facilities, or proprietary secrets in doing so" (Wallack Frgt. Lines v Next Day Express, 273 AD2d at 463; see CBS Corp. v Dumsday, 268 AD2d at 353; Chemfab Corp. v Integrated Liner Tech., 263 AD2d 788, 790 [1999]; Schneider Leasing Plus v Stallone, 172 AD2d 739 [1991]; Maritime Fish Prods. v World-Wide Fish Prods., 100 AD2d at 88).

Here, the plaintiff demonstrated its prima facie entitlement to judgment as a matter of law on the cause of action to recover damages for breach of the duty of loyalty and fidelity by presenting evidence that the defendant, its former employee, utilized the plaintiff's time and facilities to organize competing...