Suburban Graphics Supply Corp. v. Nagle

• Decision Date: 22 March 2004
• Docket Number: 2002-10751.
• Citation: 774 N.Y.S.2d 160,2004 NY Slip Op 02196,5 A.D.3d 663
• Parties: SUBURBAN GRAPHICS SUPPLY CORP., Appellant-Respondent, v. CORNELIUS G. NAGLE et al., Respondents-Appellants, and CORNELIUS F. NAGLE, Respondent.
• Court: New York Supreme Court — Appellate Division

5 A.D.3d 663

774 N.Y.S.2d 160

2004 NY Slip Op 02196

SUBURBAN GRAPHICS SUPPLY CORP., Appellant-Respondent, v. CORNELIUS G. NAGLE et al., Respondents-Appellants, and CORNELIUS F. NAGLE, Respondent.

2002-10751.

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

March 22, 2004.

In an action, inter alia, to recover damages for breach of fiduciary duty, unfair competition, and misappropriation of trade secrets, the plaintiff appeals, as limited by its brief, from so much of a judgment of the Supreme Court, Suffolk County (Seidell, J.), entered October 29, 2002, as, after an inquest on the issue of damages, dismissed the complaint insofar as asserted against the defendant Cornelius F. Nagle, vacated an injunction against the defendants, and limited its damages on its second cause of action to $150,000 for lost profits for its fiscal years ending March 31, 2002, March 31, 2003, and March 31, 2004, and the defendants Cornelius G. Nagle, Michael Nagle, and CMC Machine Corporation cross-appeal, as limited by their brief, from so much of the same judgment as is in favor of the plaintiff and against them.

Ordered that the judgment is modified, on the law, by deleting from the third decretal paragraph thereof the provision dismissing the second cause of action insofar as asserted against Cornelius F. Nagle, and adding to the first decretal paragraph thereof, after the words "the Defendants" the name "Cornelius F. Nagle"; as so modified, the judgment is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

By order entered January 15, 2002, the Supreme Court granted the plaintiff's motion to strike the answer of the defendants Cornelius G. Nagle, Michael Nagle, and CMC Machine Corporation, and the separate answer of the defendant Cornelius F. Nagle for willful failure to comply with discovery, and for an award of $43,000 against Michael Nagle and $16,000 against Cornelius G. Nagle, as was demanded in the first cause of action in the plaintiff's complaint. With respect to the plaintiff's second cause of action to recover damages for "illegal and unlawful misappropriation of trade secrets" and "unfair competition" against all the defendants, the order entered January 15, 2002, directed an inquest to determine "such money damages as . . . are determined to be due from defendants under the complaint in this action for unfair competition and misappropriation of trade secrets of the plaintiff corporation as are determined by this court at the aforesaid inquest." The defendants appealed from the order entered January 15, 2002 (App Div Docket No. 2002-01727), and their appeals were dismissed for lack of prosecution by decision and order on motion of this Court dated November 12, 2002. Cornelius G. Nagle, Michael Nagle, and CMC Machine Corporation moved for reargument, and by order dated March 27, 2002, reargument was granted, the Court adhered to its original determination, and those defendants appealed from that order (App Div Docket No. 2002-04128). The appeal from the order dated March 27, 2002, was dismissed for lack of prosecution by decision and order on motion of this Court dated April 3, 2003.

As a general rule, this Court does not consider any issues on a subsequent appeal that could have been raised on a prior appeal which was dismissed for lack of prosecution, although we have inherent jurisdiction to do so (see Bray v Cox, 38 NY2d 350 [1976]; Paniccia v Long Is. R.R. Co., 297 AD2d 366 [2002]). We decline to consider the propriety of the orders dated January 15, 2002, and March 27, 2002, upon the instant appeal, including the propriety of the awards granted with respect to the plaintiff's first cause of action.

The issues on this appeal and cross appeal are therefore limited to the plaintiff's second cause of action and the inquest thereon. In its second cause of action, the plaintiff alleged that the defendants engaged in the "illegal and unlawful misappropriation of Plaintiff's trade secrets" and unfair competition by actively soliciting the plaintiff's customers.

As a result of their default, the defendants admitted "all traversable allegations in the complaint, including the basic allegation of liability" (Rokina Opt. Co. v Camera King, 63 NY2d 728, 730 [1984]; see Hussein v Ratcher, 272 AD2d 446, 447 [2000]). Since the plaintiff was deprived of discovery, it "need only allege enough facts to enable a court to determine that a viable cause of action exists" (Woodson v Mendon Leasing Corp., 100 NY2d 62, 71 [2003]). At an inquest, the defendants should not be permitted to introduce evidence to defeat the plaintiff's cause of action (see Hussein v Ratcher, supra).

During the course of the inquest, the Supreme Court noted that the liability of Cornelius F. Nagle "has been established by the default." Nevertheless, the Supreme Court erroneously dismissed the second cause of action insofar as asserted against him. The question of whether Cornelius F. Nagle participated in the tortious conduct alleged in the second cause of action related to the issue of liability, not damages.

The measure of damages for "unfair competition...