Lotte Hotel N.Y. Palace v. DiGuiseppe

• Decision Date: 29 July 2022
• Docket Number: Index No. 657755/2019,Motion Seq. No. 003
• Citation: 2022 NY Slip Op 32606 (U)
• Parties: LOTTE HOTEL NEW YORK PALACE, LLC, D/B/A LOTTE NEW YORK PALACE, Plaintiff, v. ANTHONY J. DIGUISEPPE, P.C., D/B/A DIGUISEPPE ARCHITECT, and ANTHONY DIGUISEPPE, Defendants.
• Court: New York Supreme Court

2022 NY Slip Op 32606(U)

LOTTE HOTEL NEW YORK PALACE, LLC, D/B/A LOTTE NEW YORK PALACE, Plaintiff,
v.
ANTHONY J. DIGUISEPPE, P.C., D/B/A DIGUISEPPE ARCHITECT, and ANTHONY DIGUISEPPE, Defendants.

Index No. 657755/2019, Motion Seq. No. 003

Supreme Court, New York County

July 29, 2022

Unpublished Opinion

AMENDED DECISION + ORDER ON MOTION

HON. ANDREA MASLEY, JUDGE

The following e-filed documents, listed by NYSCEF document number (Motion 003) 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 129, 130, 133, 135, 137, 138, 139, 144, 145, 146, 147, 148, 155, 156, 157, 158, 159, 160, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185 were read on this motion to/for JUDGMENT-SUMMARY. Upon the foregoing documents, it is

In motion sequence 003, plaintiff Lotte Hotel New York Palace, LLC, d/b/a Lotte New York Palace (Lotte) moves for summary judgment pursuant to CPLR 3212 on its claims for breach of contract claim, conversion, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty. Plaintiff also moves for summary judgment, dismissing defendants Anthony J. DiGuiseppe, P.C. d/b/a DiGuiseppe Architect (PC) and Anthony J. DiGuiseppe's breach of contract counterclaim. Finally, plaintiff also requests that this court find defendants in civil contempt, pursuant to New York Judiciary Law § 756, based on their failure to comply with the court's order directing the imposition of a constructive trust and award plaintiff sanctions pursuant to 22 NYCRR § 130-1.

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Background

Plaintiff owns and operates the Lotte New York Palace hotel in New York, New York. (NYSCEF Doc. No. [NYSCEF] 98, Complaint, ¶ 4.) The PC provides architectural, design, and procurement services in the hotel and resort industry. (Id. ¶ 5.) DiGuiseppe is the President and Chief Executive Officer of the PC and a licensed architect. (Id. ¶ 6.)

On July 11, 2017, plaintiff and defendants entered an agreement for defendants to provide architectural, design, and procurement services in connection with the construction of a spa at plaintiff's hotel (Agreement). (NYSCEF 110, Choeh Aff ¶ 3; NYSCEF 111, Agreement.) The Agreement indicates that DiGuiseppe is the principal of the PC, and that DiGuiseppe is to act as plaintiffs agent for the procurement of furniture, furnishings, and equipment for the project. (NYSCEF 111, Agreement at 2 and 5.) In exchange for these services, defendants received a design fee of $300,000 and a procurement fee equal to 8% of each purchase order along with a $31,500 retainer for services. (NYSCEF 111, Agreement, at 6-7.) Plaintiff was to wire all payments to the PC's account at Chase Bank. (Id. at 8.) In an email from DiGuiseppe to plaintiff, DiGuiseppe outlined the procedure for purchase order processing. (NYSCEF 112, Procurement Instructions.) The instructions state

1. Each Purchase Order has the vendor quote and the spec attached

2. The amount required for deposit or full payment is specified as 50% or paid in full and I shall prepare a consolidated Invoice for Lotte to pay DiGuiseppe; taxes shall be separated on the invoice for accounting purposes

3. Lotte shall initial the purchase order in the box saying client approval

4. The Approved PO's shall be sent to DiGuiseppe and the check for the invoice is to be hand delivered to DiGuiseppe Architect for deposit, recording and processing

5. The money will be deposited into a special procurement account at Chase just for Lotte procurement

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6. A DiGuiseppe check shall be written out for each vendor as per the heading on the PO, or wire transfer (for international vendors)

7. The check will have as a reference the PO number printed on the check detail

8. All Checks will be sent with delivery instruction sheet along with PO and Vendar quote by DiGuiseppe via Federal Express (cost of Fedex which shall be invoiced to Lotte as a reimbursable expense)

9. Tracking numbers shall be recorded by DiGuiseppe for all checks sent out

10. DiGuiseppe shall follow up with each vendor and vendors are to acknowledge receipt of PO and payment and issue an ETA

(NYSCEF 112, Procurement Instructions, at 6.)

Plaintiff contends that around July 2019, defendants failed to pay vendors or had checks and transfers rejected by vendors due to insufficient funds in the procurement account. (NYSCEF 110, Choeh Aff. ¶ 18.) Plaintiff continued to pay defendants when provided with purchase orders, and defendants received the 8% procurement fee. (Id. ¶¶ 19, 22; see also NYSCEF 97, Accounting Report at 3.)

On October 2, 2019, plaintiff sent defendants a letter demanding an accounting for all payments for the purchase of furniture, furnishings, and equipment, informed defendants that plaintiff would directly pay the vendors from that point and demanded the return of the remaining procurement funds. (NYSCEF 110, Choeh Aff. ¶¶ 23-24; see also NYSCEF 114, 10/2/2019 Letter.) Defendants provided a spreadsheet budget for the project without additional documentation. (NYSCEF 110, Choeh Aff. ¶¶ 25-26; see also NYSCEF 115, Budget Spreadsheet.) On December 5, 2019, plaintiff sent defendants an additional letter demanding the return of the funds held in furniture, furnishings, and equipment purchasing account. (NYSCEF 110, Choeh Aff. ¶ 30; see also NYSCEF 117, 10/5/2019 Letter.) Defendants refused to comply with plaintiffs demand to return the procurement funds. (NYSCEF 110, Choeh Aff. ¶ 31; see also NYSCEF 118, 10/6/2019 Letter.) On December 12, 2019, plaintiff notified defendants

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that the Agreement was terminated. (NYSCEF 110, Choeh Aff. ¶ 33; see also NYSCEF 119, 10/12/2019 Letter.) Plaintiff commenced this action on December 30, 2019.

At oral...