Calabrese Bakeries, Inc. v. Rockland Bakery, Inc.

• Decision Date: 24 January 2013
• Citation: 960 N.Y.S.2d 514,102 A.D.3d 1033,2013 N.Y. Slip Op. 00367
• Parties: CALABRESE BAKERIES, INC., Individually and in the Name of and for the Benefit of B.M. Baking Company, Inc., et al., Appellants–Respondents, v. ROCKLAND BAKERY, INC., et al., Respondents–Appellants.
• Court: New York Supreme Court — Appellate Division

102 A.D.3d 1033

960 N.Y.S.2d 514

2013 N.Y. Slip Op. 00367

CALABRESE BAKERIES, INC., Individually and in the Name of and for the Benefit of B.M. Baking Company, Inc., et al., Appellants–Respondents,

v.ROCKLAND BAKERY, INC., et al., Respondents–Appellants.

Supreme Court, Appellate Division, Third Department, New York.

Jan. 24, 2013.

Matthew C. Hug, Troy, for appellants–respondents.

Higgins, Roberts, Beyerl & Coan, PC, Niskayuna (Michael E. Basile of counsel), for Rockland Bakery, Inc. and others, respondents–appellants.

Gleason, Dunn, Walsh & O'Shea, Albany (Ronald G. Dunn of counsel), for Clark J. Seeley and others, respondents–appellants.

Before: PETERS, P.J., LAHTINEN, GARRY and EGAN JR., JJ.

EGAN JR., J.

Cross appeals from an order of the Supreme Court (Kramer, J.), entered October 3, 2011 in Schenectady County, which, among other things, partially granted defendants' motions for summary judgment dismissing the complaint.

Plaintiff Joseph A. Melino is the president of plaintiff Calabrese Bakeries, Inc., a wholesale and retail bakery distributor. Calabrese began as a small retail operation in Rensselaer County that sold baked goods provided by defendant Rockland Bakery, Inc. In June 2002, Melino and Rockland's president, defendant Ignazio “Salvatore” Battaglia, entered into a contract, pursuant to the terms of which the parties agreed to form a new corporation, plaintiff B.M. Baking Company, Inc., which would be headquartered on Fuller Road in Albany County. Although poorly drafted, it appears from the contract that Melino and Battaglia envisioned that B.M. Baking would act as the exclusive wholesale and retail distributor of Rockland's baked goods within a defined geographic area. Upon payment of the buy-in fee by Rockland, Calabrese and Rockland each would have a 50% ownership interest in the corporation. ¹

Approximately six months after the execution of this agreement, Melino was incarcerated on unrelated charges, and defendant Clark J. Seeley apparently stepped in to manage B.M. Baking's operations.² Shortly thereafter, according to Melino, Seeley set up various corporate entities, including defendant WTF Bakery, Inc. and defendant Portside Distributors, Inc., appropriated moneys and assets otherwise belonging to Calabrese and/or B.M. Baking ³ and, in conjunction therewith, effectively terminated the business relationship forged by Calabrese and Rockland. In early 2004, Rockland petitioned for judicial dissolution of B.M. Baking pursuant to Business Corporation Law § 1104 and, when B.M. Baking failed to appear or answer, the petition was granted. Subsequent efforts to suspend or annul the dissolution proved unsuccessful ( see Matter of Rockland Bakery, Inc. v. B.M. Baking Co., Inc., 83 A.D.3d 1080, 923 N.Y.S.2d 572 [2d Dept. 2011]; Matter of Calabrese Bakeries, Inc. v. Rockland Bakery, Inc., 83 A.D.3d 1060, 923 N.Y.S.2d 556 [2d Dept. 2011] ).

After Melino's release from prison, plaintiffs commenced this action setting forth 14 causes of action ⁴ sounding in, among other things, fraudulent inducement, breach of contract, breach of fiduciary duty and prima facie tort. Following joinder of issue and discovery, Battaglia, Rockland and defendant Rockland Bakery N.Y., Inc. (hereinafter collectively referred to as the Rockland defendants) moved for summary judgment dismissing the complaint, and Seeley, WTF and Portside, together with defendants C & C Specialties, Inc. and Joslen Developers, LLC., separately moved for similar relief. Plaintiffs opposed the respective motions contending, among other things, that they should be held in abeyance pending further discovery and the Second Department's resolution of the then-pending appeals regarding the judicial dissolution. Supreme Court denied defendants' motions as to the first, second and third causes of action alleging fraudulent inducement, breach of contract and conversion, but granted the motions as to the balance of the complaint, concluding that the remaining claims were either meritless or duplicative. Additionally, Supreme Court held that plaintiffs' claims for damages would be limited to those incurred prior to the dissolution of B.M. Baking in March 2004. These cross appeals ensued.⁵

Initially, to the extent that plaintiffs take issue with Supreme Court's resolution of their January 2008 motion to compel discovery, we note that plaintiffs, by their own admission, did not perfect their appeal from Supreme Court's resultingorder. Additionally, “an appeal from ... an intermediate order [such as the one at issue here] does not bring up for review prior nonfinal orders” ( Abasciano v. Dandrea, 83 A.D.3d 1542, 1543, 924 N.Y.S.2d 696 [2011], citing Baker v. Shepard, 276 A.D.2d 873, 874, 715 N.Y.S.2d 83 [2000] ). Accordingly, plaintiffs' argument on this point is not properly before us.

Plaintiffs' related claim—that Supreme Court erred in failing to hold defendants' motions for summary judgment in abeyance pending further discovery—is without merit. While it is true that a motion for summary judgment may be “denied as premature when the nonmoving party has not been given reasonable time and opportunity to conduct disclosure relative to pertinent evidence that is within the exclusive knowledge of the movant or a codefendant” ( Metichecchia v. Palmeri, 23 A.D.3d 894, 895, 803 N.Y.S.2d 813 [2005] ), plaintiffs had ample time and opportunity to do so here ( see Judd v. Vilardo, 57 A.D.3d 1127, 1131, 870 N.Y.S.2d 485 [2008] ). Moreover, “a trial court has broad discretionary power in controlling discovery and disclosure, and only a clear abuse of discretion will prompt appellate action” ( Premo v. Rosa, 93 A.D.3d 919, 920, 940 N.Y.S.2d 199 [2012] [internal quotation marks and citations omitted] ). We discern no abuse of that discretion in this matter.

Nor can we say that Supreme Court erred in concluding that plaintiffs' damages, if any, must be limited to those incurred prior to the March 19, 2004 judicial dissolution of B.M. Baking.⁶ Contrary to plaintiffs' assertions, the underlying contract does not evidence the parties' intent to create a joint venture between Calabrese and Rockland “in which the corporate entity, [i.e., B.M. Baking], was a mere conduit” for the distribution of goods ( Rinaldi v. Casale, 13 A.D.3d 603, 605, 788 N.Y.S.2d 137 [2004] ), nor does it demonstrate that Calabrese and Rockland retained certain rights that were “independent of and extrinsic to the corporate entity” formed thereunder ( Sagamore Corp. v. Diamond West Energy Corp., 806 F.2d 373, 379 [1986] [internal quotation marks and citation omitted] ). As such, this matter falls within the general rule that where the parties chart a course “to conduct business through a corporation, ... they are not at one and the same time joint venturers and stockholders, fiduciaries and nonfiduciaries, personally liable and not personally liable” ( Weisman v. Awnair Corp. of Am., 3 N.Y.2d 444, 449, 165 N.Y.S.2d 745, 144 N.E.2d 415 [1957];accord D'Orazio v. Mainetti, 24 A.D.3d 915, 917, 805 N.Y.S.2d 455 [2005];see generally Lombard & Co., Inc. v. De La Roche, 46 A.D.3d 393, 393–394, 848 N.Y.S.2d 92 [2007],lv. dismissed11 N.Y.3d 782, 866 N.Y.S.2d 605, 896 N.E.2d 90 [2008];compare Sagamore Corp. v. Diamond West Energy Corp., 806 F.2d at 379). Accordingly, the limitation imposed by Supreme Court will not be disturbed.

We now turn to the specific causes of action set forth in plaintiffs' complaint. The first cause of action sounds in fraudulent inducement and essentially is based upon a misrepresentation allegedly made by Battaglia and/or Rockland “that certain corporate, institutional and government [al] entities ... would become customers of [B.M. Baking].” While it is true that “a misrepresentation premised directly on the same actions giving rise to a breach of contract does not give rise to a separate cause of action for fraud” ( Kosowsky v. Willard Mtn., Inc., 90 A.D.3d 1127, 1129, 934 N.Y.S.2d 545 [2011] ), we are satisfied that the conduct alleged in plaintiffs' first cause of action “is sufficiently discrete from that underlying [plaintiffs'] breach of contract claim to state a separate cause of action” ( id. at 1129, 934 N.Y.S.2d 545). More to the point, in view of the conflicting proof contained in the voluminous record before us, including Melino's examination before trial testimony and Battaglia's affidavits, we agree with Supreme Court that questions of fact preclude an award of summary judgment as to this cause of action.

With respect to plaintiffs' second cause of action, wherein plaintiffs allege that Battaglia and/or Rockland breached the underlying contract by violating the exclusive distribution clause contained therein and charging B.M. Baking “more than the lowest wholesale price charged to other wholesale customers,” the Rockland defendants argue only that Supreme Court should have dismissed this claim due to plaintiffs' inability to prove damages. We disagree. In light of Melino's incarceration, which necessarily limited his knowledge of B.M. Baking's daily operations and his access to relevant corporate records, as well as the limited business records (invoices, receipts, tax returns, etc.) apparently still remaining, plaintiffs indeed may have a difficult time proving the damages alleged. However, Supreme Court correctly concluded that—in view of the conflicting documentary evidence and the credibility issues raised by Melino and Battaglia's disparate accounts of what actually transpired here–resolution of this particular cause of action must await a trial.

We reach a similar conclusion regarding plaintiffs' third cause of action alleging, among other things, that Seeley and the Rockland defendants converted and misappropriated “assets, funds, customer accounts and business opportunit[ies]” otherwise properly belonging to plaintiffs ( see generally Salatino v. Salatino, 64 A.D.3d 923, 925, 881 N.Y.S.2d 721 [2009],lv. denied13 N.Y.3d 710, 890 N.Y.S.2d 448, 918...