Fine Arts Development Labs, Inc. v. Shakespeare

Appellate Division of the Supreme Court of New York

Fine Arts Development Labs, Inc. v. Shakespeare

71 A.D.2d 591, 418 N.Y.S.2d 424, 1979 N.Y. App. Div. LEXIS 12783

CourtAppellate Division of the Supreme Court of the State of New York

DecidedJuly 10, 1979

StatusPublished

Cited by1 cases

This text of 71 A.D.2d 591 (Fine Arts Development Labs, Inc. v. Shakespeare) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Fine Arts Development Labs, Inc. v. Shakespeare, 71 A.D.2d 591, 418 N.Y.S.2d 424, 1979 N.Y. App. Div. LEXIS 12783 (N.Y. Ct. App. 1979).

Pincite

Opinion

—Judgment and order, Supreme Court, New York County, entered, respectively, January 16, 1979 and September 28, 1978, dismissing the complaint on motion pursuant to CPLR 3211 and 3016 (subd [b]), are unanimously reversed, on the law, and the motion to dismiss the complaint is denied, with costs to plaintiff-appellant. Special Term dismissed the complaint on the grounds that plaintiff was not a party to a certain shareholders’ agreement, and that, in any event, the complaint fails to plead circumstances in sufficient detail to satisfy CPLR 3016 (subd [b]). However, of the seven causes of action in the complaint, only the first and fifth causes of action are based on the shareholders’ agreement. The remaining causes of action allege derelictions by defendant in her duties and fiduciary obligation to plaintiff corporation as president and director of plaintiff corporation and are thus causes of action which, if sustained, may be maintained by the corporation without regard to rights under the shareholders’ agreement. While the first and fifth causes of action are based on fraud and failure of consideration under the shareholders’ agreement, it appears that the consideration which defendants received under that agreement flowed from plaintiff corporation, and if there has been fraud or failure of consideration, that consideration or the value [592]*592thereof would have to be returned or paid to plaintiff corporation. In the circumstances of this case, plaintiff corporation is obviously in privity with the stockholders with respect to the shareholders’ agreement and should be permitted to claim that defendants were not entitled to receive from plaintiff corporation the stock and proprietary lease or other benefit, although it would probably be desirable to join the other stockholders in this lawsuit. The allegations of the complaint appear to us to be sufficiently specific to comply with CPLR 3016 (subd [b]). Concur—Sullivan, J. P., Bloom, Lupiano, Silverman and Ross, JJ.

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—Judgment and order, Supreme Court, New York County, entered, respectively, January 16, 1979 and September 28, 1978, dismissing the complaint on motion pursuant to CPLR 3211 and 3016 (subd [b]), are unanimously reversed, on the law, and the motion to dismiss the complaint is denied, with costs to plaintiff-appellant. Special Term dismissed the complaint on the grounds that plaintiff was not a party to a certain shareholders’ agreement, and that, in any event, the complaint fails to plead circumstances in sufficient detail to satisfy CPLR 3016 (subd [b]). However, of the seven causes of action in the complaint, only the first and fifth causes of action are based on the shareholders’ agreement. The remaining causes of action allege derelictions by defendant in her duties and fiduciary obligation to plaintiff corporation as president and director of plaintiff corporation and are thus causes of action which, if sustained, may be maintained by the corporation without regard to rights under the shareholders’ agreement. While the first and fifth causes of action are based on fraud and failure of consideration under the shareholders’ agreement, it appears that the consideration which defendants received under that agreement flowed from plaintiff corporation, and if there has been fraud or failure of consideration, that consideration or the value [592]*592thereof would have to be returned or paid to plaintiff corporation. In the circumstances of this case, plaintiff corporation is obviously in privity with the stockholders with respect to the shareholders’ agreement and should be permitted to claim that defendants were not entitled to receive from plaintiff corporation the stock and proprietary lease or other benefit, although it would probably be desirable to join the other stockholders in this lawsuit. The allegations of the complaint appear to us to be sufficiently specific to comply with CPLR 3016 (subd [b]). Concur—Sullivan, J. P., Bloom, Lupiano, Silverman and Ross, JJ.

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Bluebook (online)

71 A.D.2d 591, 418 N.Y.S.2d 424, 1979 N.Y. App. Div. LEXIS 12783, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fine-arts-development-labs-inc-v-shakespeare-nyappdiv-1979.

Opinion

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