Singe v. Bates Troy, Inc.

• Decision Date: 30 June 2022
• Docket Number: 533629
• Citation: 206 A.D.3d 1528,172 N.Y.S.3d 147
• Parties: Thomas SINGE, Appellant, v. BATES TROY, INC., et al., Respondents.
• Court: New York Supreme Court — Appellate Division

206 A.D.3d 1528
172 N.Y.S.3d 147

Thomas SINGE, Appellant,
v.
BATES TROY, INC., et al., Respondents.

533629

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

Calendar Date: May 25, 2022
Decided and Entered: June 30, 2022

172 N.Y.S.3d 148

Law Office of Ronald R. Benjamin, Binghamton (Ronald R. Benjamin of counsel), for appellant.

Coughlin & Gerhart, LLP, Binghamton (Alan J. Pope of counsel), for respondents.

Before: Egan Jr., J.P., Clark, Aarons, Fisher and McShan, JJ.

MEMORANDUM AND ORDER

McShan, J.

206 A.D.3d 1528

Appeals (1) from an order of the Supreme Court (Cerio Jr., J.), entered May 3, 2021 in Broome County, which granted defendants’ motion to dismiss the complaint, and (2) from the judgment entered thereon.

Plaintiff was the general manager of defendant Bates Troy,

206 A.D.3d 1529

Inc. from 2004 until

172 N.Y.S.3d 149

2018, when his employment was terminated by defendant Brian Kradjian, the president and majority shareholder of Bates Troy, purportedly for cause. Over the course of his employment, plaintiff received 222.22 restricted shares of Bates Troy, which equated to a 10% interest. Pursuant to the stock purchase agreement and the award of restricted stock agreement between plaintiff and Bates Troy, for-cause termination or voluntary resignation required plaintiff to sell his shares back to Bates Troy for $1, and any other end to plaintiff's employment required him to sell back his shares to Bates Troy or Kradjian, upon their request, at fair market value. Notwithstanding the terms of those agreements, plaintiff's termination letter directed him to simply return the share certificates without mentioning payment. Plaintiff did not comply with those instructions, prompting Kradjian, as the only other shareholder, to conduct a shareholder meeting in August 2018, approve the cancellation of plaintiff's shares and execute a resolution memorializing the cancellation.

In April 2019, Bates Troy brought an action against plaintiff, his son and his separate business, Premier Linen Services, alleging that plaintiff breached his fiduciary duty to Bates Troy, defrauded its customers, embezzled from it and diverted its assets to Premier. Meanwhile, plaintiff brought a separate action against defendants and Kradjian's wife for breach of contract, slander and libel, seeking compensatory and exemplary damages. In that action, plaintiff accused Kradjian of attempting to force his resignation by reducing his job responsibilities, thereby compelling him to give up his Bates Troy shares. According to plaintiff, when that strategy failed, Kradjian falsely accused him of wrongdoing in order to fire him for cause. The parties’ dueling actions were eventually consolidated into one (hereinafter the first action).

Nearly two years after litigation began in the first action, plaintiff commenced the instant action in March 2021 seeking an accounting, lost profits, other damages, counsel fees and either judicial dissolution of Bates Troy or a $1 million buyout of his shares. The complaint restated many of the allegations underlying the first action and added, among other things, that Kradjian's father — Kradjian's immediate predecessor as Bates Troy president — had for years used Bates Troy's assets to fund his gambling addiction and engaged in sundry unlawful acts, which Kradjian knew about and ratified.

Defendants moved to dismiss the complaint based on documentary evidence, lack of standing, another action pending

206 A.D.3d 1530

between the parties and failure to state a cause of action (see CPLR 3211[a][1], [3], [4], [7] ). Plaintiff subsequently filed a proposed amended complaint in April 2021, adding a shareholder derivative suit and separate causes of action for breach of fiduciary duty, breach of contract and unjust enrichment. Over plaintiff's opposition, Supreme Court rejected the proposed amended complaint and granted defendants’ motion, finding that defendants’ evidence demonstrated that plaintiff's shares had been forfeited or canceled, and, as a result, he lacked standing. Plaintiff appeals, and we reverse.

As an initial matter, plaintiff argues that Supreme Court erred in rejecting his proposed amended complaint, and we agree. Plaintiff was not required to seek leave of the court for an amendment because, by our count, plaintiff electronically filed his amended complaint within 20 days of commencing this action (see CPLR 3025[a] ). Thus, Supreme Court improperly treated plaintiff's filing of the amended complaint as a request for leave to file

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