Qosina Corp. v. C & N Packaging, Inc.

• Decision Date: 27 June 2012
• Citation: Qosina Corp. v. C & N Packaging, Inc., 96 A.D.3d 1032, 948 N.Y.S.2d 308, 2012 N.Y. Slip Op. 5158 (N.Y. App. Div. 2012)
• Parties: QOSINA CORP., plaintiff, v. C & N PACKAGING, INC., defendant third-party plaintiff-appellant, et al., defendant; Doug Tichy, third-party defendant-respondent.
• Court: New York Supreme Court — Appellate Division

96 A.D.3d 1032

948 N.Y.S.2d 308

2012 N.Y. Slip Op. 05158

QOSINA CORP., plaintiff,

v. C & N PACKAGING, INC., defendant third-party plaintiff-appellant, et al., defendant;Doug Tichy, third-party defendant-respondent.

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

June 27, 2012.

Moritt Hock & Hamroff, LLP, Garden City, N.Y. (Robert M. Tils and A. Jonathan Trafimow of counsel), for defendant third-party plaintiff-appellant.

Ferber Chan Essner & Coller, LLP, New York, N.Y. (Robert N. Chan of counsel), for third-party defendant-respondent.

DANIEL D. ANGIOLILLO, J.P., ARIEL E. BELEN, PLUMMER E. LOTT, and ROBERT J. MILLER, JJ.

In an action, inter alia, pursuant to CPLR article 71 for the recovery of chattel, the defendant third-party plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Suffolk County (Costello, J.), dated December 13, 2010, as granted the third-party defendant's motion to dismiss the third-party complaint pursuant to CPLR 3211(a)(7).

ORDERED that the order is reversed insofar as appealed from, on the law and in the exercise of discretion, with costs, the third-party defendant's motion to dismiss the third-party complaint pursuant to CPLR 3211(a)(7) is denied, and the third-party action is severed.

Qosina Corp. (hereinafter Qosina) commenced this action, inter alia, to recover certain chattels allegedly held by C & N Packaging, Inc. (hereinafter C & N). C & N asserted counterclaims against Qosina, alleging, among other things, that Qosina tortiously interfered with its relationship with one of its employees, Doug Tichy. C & N also commenced a third-party action pursuant to CPLR article 10 against Tichy, alleging that he breached his duty of loyalty and his fiduciary obligations to C & N and that he tortiously interfered with the business relationship that C & N had established with Qosina.

Tichy moved to dismiss the third-party complaint pursuant to CPLR 3211(a)(7). By order dated December 13, 2010, the Supreme Court, inter alia, granted Tichy's motion to dismiss the third-party complaint. The Supreme Court concluded, in effect, that the third-party complaint failed to state a cause of action to recover damages for breach of a duty of loyalty or for tortious interference with a business relationship and that the third-party complaint was not permitted by CPLR 1007. C & N appeals from so much of the order as granted Tichy's motion to dismiss the third-party complaint, and we reverse the order insofar as appealed from.

Contrary to the Supreme Court's conclusion, the complaint adequately alleges a cause of action to recover damages for breach of a duty of loyalty. “[A]n 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 A.D.2d 462, 463, 711 N.Y.S.2d 891;see Lamdin v. Broadway Surface Adv. Corp., 272 N.Y. 133, 5 N.E.2d 66;Island Sports Physical Therapy v. Burns, 84 A.D.3d 878, 923 N.Y.S.2d 156;30 FPS Prods., Inc. v. Livolsi, 68 A.D.3d 1101, 1102, 891 N.Y.S.2d 162). An employee owes his or her employer “undivided and unqualified loyalty and may not act in any manner contrary to the interests of the employer” (PJI 3:59; seeRestatement [Third] of Agency §§ 8.01, 8.03). An employee is also “required to make truthful and complete disclosures to those to whom a fiduciary duty is owed” (PJI 3:59; seeRestatement [Third] of Agency § 8.11).

Here, the third-party complaint alleged that Tichy was employed by C & N and owed it a duty of good faith and loyalty. The third-party complaint further alleged that Tichy breached this duty by, inter alia, failing to disclose his actual relationship with Qosina and by acting for and on behalf of a competing business in a manner that was contrary to the interests of C & N. The third-party complaint also asserted that as a result of Tichy's breach of his duty of loyalty, C & N sustained damages. Contrary to Tichy's contention, at this stage of the pleadings, C & N need only plead allegations from which damages attributable to Tichy's alleged breach might be reasonably inferred ( see Kempf v. Magida, 37 A.D.3d 763, 764, 832 N.Y.S.2d 47;InKine Pharm. Co. v. Coleman, 305 A.D.2d 151, 152, 759 N.Y.S.2d 62). Accepting all the facts alleged as true and according C & N the benefit of every favorable inference, the third-party complaint adequately stated a cause of action for breach of a duty of loyalty ( see Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511).

Furthermore, the third-party complaint was adequate to state a cause of action sounding in tortious interference with a business relationship. “To make out a claim [of] tortious interference with business relationships, a plaintiff must show that the defendant interfered with the plaintiff's business relationships either with the sole purpose of harming the plaintiff or by means that were unlawful or improper” ( Nassau Diagnostic Imaging & Radiation Oncology Assoc. v. Winthrop–University Hosp., 197 A.D.2d 563, 563–564, 602 N.Y.S.2d 650;see Out of Box Promotions, LLC v. Koschitzki, 55 A.D.3d 575, 577, 866 N.Y.S.2d 677). Here, C & N alleged that Tichy interfered with its business relationship with Qosina by means that were improper. Accordingly, the third-party complaint adequately alleges a cause of action based on tortious interference with a business relationship ( see Leon v. Martinez, 84 N.Y.2d at 87, 614 N.Y.S.2d 972, 638 N.E.2d 511).

In sum, we conclude that the Supreme Court should not have directed dismissal of the third-party complaint for failure to state a cause of action to recover damages for breach of a duty of loyalty or for tortious interference with a business relationship.

We further conclude, contrary to Tichy's contention, that CPLR 1007 does not provide a proper basis for dismissal of the third-party complaint, but rather, under the circumstances of this case, the Supreme Court should have exercised its discretion to sever the third-party action from the main action.

CPLR 1007 provides that “a defendant may proceed against a person not a party who is or may be liable to that defendant for all or part of the plaintiff's claim against that defendant.” The Court of Appeals has recognized that “[t]he language of CPLR 1007 serves only to identify the persons against whom a third-party claim may be brought” ( George Cohen Agency v. Donald S. Perlman Agency, 51 N.Y.2d 358, 365, 434 N.Y.S.2d 189, 414 N.E.2d 689). “It places no limit upon the amount which may be recovered or upon the legal theories which may be asserted as a basis for the claim” ( id.;see JP Morgan Chase Bank, N.A. v. Strands Hair Studio, LLC, 84 A.D.3d 1173, 1174, 923 N.Y.S.2d 670).

Although the impleader language of CPLR 1007 has been liberally construed and “should not be read as allowing recovery solely for claims sounding in strict indemnity” ( George Cohen Agency v. Donald S. Perlman Agency, 51 N.Y.2d at 365, 434 N.Y.S.2d 189, 414 N.E.2d 689), the “third-party claim must be sufficiently...