International Oil Field Supply Services Corp. v. Fadeyi

• Decision Date: 05 December 2006
• Docket Number: 2005-06410.
• Citation: 35 A.D.3d 372,825 N.Y.S.2d 730,2006 NY Slip Op 09173
• Parties: INTERNATIONAL OIL FIELD SUPPLY SERVICES CORP., Appellant, v. FESTUS ALANI FADEYI et al., Respondents, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

35 A.D.3d 372

825 N.Y.S.2d 730

2006 NY Slip Op 09173

INTERNATIONAL OIL FIELD SUPPLY SERVICES CORP., Appellant, v. FESTUS ALANI FADEYI et al., Respondents, et al., Defendants.

2005-06410.

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

Decided December 5, 2006.

In an action to recover damages, inter alia, for breach of fiduciary duty, breach of contract, fraud, and unjust enrichment, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Austin, J.), dated April 25, 2005, as granted those branches of the motion of the defendant Festus Alani Fadeyi which were pursuant to CPLR 3211 (a) (7) and CPLR 3016 (b) to dismiss the first, third, and fourth causes of action, granted those branches of the separate motion of the defendant Jason Fadeyi which were pursuant to CPLR 3211 (a) (7) and CPLR 3016 (b) to dismiss the fifth, seventh, and eighth causes of action, granted that branch of the separate motion of the defendant CSS Petroleum Services, LLC, which was pursuant to CPLR 3211 (a) (7) to dismiss the complaint insofar as asserted against it, and denied that branch of its cross motion which was, in effect, for leave to replead pursuant to CPLR 3211 (e) to assert causes of action against the defendant CSS Petroleum Services, LLC.

Ordered that the order is modified, on the law, by deleting the provisions thereof granting that branch of the motion of the defendant Festus Alani Fadeyi which was to dismiss the first cause of action and granting that branch of the separate motion of the defendant Jason Fadeyi which was to dismiss the fifth cause of action and substituting therefor provisions denying those branches of the separate motions; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

The plaintiff's allegations, liberally construed, may broadly be summarized as follows. Over a period of more than 10 years, the plaintiff International Oil Field Supply Services Corp. (hereinafter IOFS) and its principals, Kevin Murtha and Albert Longoria, formed close business and personal ties with the individual defendants Festus Alani Fadeyi (hereinafter Festus) and his son, Jason Fadeyi (hereinafter Jason), as well as with the corporate defendant Pan Ocean Oil Corporation, Nigeria (hereinafter Pan Ocean), which was managed by Festus. Festus and Longoria had known each other since 1987, well before IOFS was formed, and were close personal friends. Among other things, in 1994 IOFS provided the services of one of its petroleum engineers to Pan Ocean, and, in January 2003 IOFS entered into a one-year service agreement with Pan Ocean (hereinafter the Service Agreement).

From approximately 1993 until 2003, IOFS paid Festus sums ranging from $2,000 to $20,000 per month to act as its agent in Nigeria to identify and secure business opportunities and, generally, to provide advice to the company. As of September 30, 2003, Festus allegedly had received a total of $1,337,259 from IOFS.

On or about December 1, 1995, Jason acquired an 80% ownership interest in IOFS following a cash investment of $1,000,000 advanced by Festus. As a result, Jason became IOFS's Vice-President, with managerial control over the company. However, from 1999 until the end of September 2003, at Festus's request, IOFS progressively repurchased Jason's shares for a total consideration of $1,471,402.

Sometime between December 2002 and November 2003, while still purporting to act for IOFS's benefit, Festus allegedly inflated certain projections and analyses prepared by IOFS before submitting them to the Nigerian Government, and forced IOFS to use substandard products and service providers, all for the purpose of making IOFS appear incompetent. Over the same time period, Festus, Jason, and other members of the Fadeyi family formed another company—the defendant CSS Petroleum Services, LLC (hereinafter CSS)—to handle business that should have been referred by Festus and Jason to IOFS. In November 2003 Festus caused Pan Ocean to terminate the Service Agreement and, in January 2004, Pan Ocean replaced IOFS with CSS.

In sum, IOFS claims that it paid a significant amount of money to Festus and Jason over the course of many years, believing all the while that they would act in IOFS's best interests and, through their expertise and contacts, would help the company develop business in Nigeria. Instead, Festus and Jason, while appearing to act for IOFS's...