Gladstone v. Lynn Dinettes, Inc.

Appellate Division of the Supreme Court of New York

Gladstone v. Lynn Dinettes, Inc.

140 A.D.2d 487, 528 N.Y.S.2d 599, 1988 N.Y. App. Div. LEXIS 5394

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

DecidedMay 16, 1988

StatusPublished

This text of 140 A.D.2d 487 (Gladstone v. Lynn Dinettes, Inc.) 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

Gladstone v. Lynn Dinettes, Inc., 140 A.D.2d 487, 528 N.Y.S.2d 599, 1988 N.Y. App. Div. LEXIS 5394 (N.Y. Ct. App. 1988).

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Opinion

[488]*488We agree with the trial court’s determination that the defendant Hyman Lynn did not breach his fiduciary duty as a 50% shareholder and director of Hodor Industries Corp. (hereinafter Hodor) when he established Lynn Dinettes, Inc. Although both companies are engaged in the furniture business, Hodor’s stores are located in the New York City metropolitan area, while the stores of Lynn Dinettes, Inc. are located in Florida. Prior to establishing the new business, the defendant Lynn discussed the matter with Hodor’s attorney and with the plaintiff and Harold Green, the other two shareholders of Hodor. Thereafter, the three individuals, as the sole shareholders of Hodor, each signed an agreement dated February 12, 1974, expressly confirming that the defendant’s proposed Florida business did not constitute a corporate opportunity of Hodor and that Hodor had no interest therein. For the greater amount of time, Hyman Lynn devoted his energies and talents to Hodor, traveling to Florida on alternate weekends. While the operations of the two companies were in many respects similar, it is clear that Hodor did not suffer any damage as a result thereof.

Moreover, the defendant Hyman Lynn made a timely application for indemnification of attorneys’ fees, and, as he raised meritorious issues during this litigation, a hearing should have been scheduled on the issue at the conclusion of the trial (see, Business Corporation Law § 724).

We have considered the plaintiff’s remaining contentions and find them to be without merit. Brown, J. P., Weinstein, Spatt and Balletta, JJ., concur.

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[488]*488We agree with the trial court’s determination that the defendant Hyman Lynn did not breach his fiduciary duty as a 50% shareholder and director of Hodor Industries Corp. (hereinafter Hodor) when he established Lynn Dinettes, Inc. Although both companies are engaged in the furniture business, Hodor’s stores are located in the New York City metropolitan area, while the stores of Lynn Dinettes, Inc. are located in Florida. Prior to establishing the new business, the defendant Lynn discussed the matter with Hodor’s attorney and with the plaintiff and Harold Green, the other two shareholders of Hodor. Thereafter, the three individuals, as the sole shareholders of Hodor, each signed an agreement dated February 12, 1974, expressly confirming that the defendant’s proposed Florida business did not constitute a corporate opportunity of Hodor and that Hodor had no interest therein. For the greater amount of time, Hyman Lynn devoted his energies and talents to Hodor, traveling to Florida on alternate weekends. While the operations of the two companies were in many respects similar, it is clear that Hodor did not suffer any damage as a result thereof.

Moreover, the defendant Hyman Lynn made a timely application for indemnification of attorneys’ fees, and, as he raised meritorious issues during this litigation, a hearing should have been scheduled on the issue at the conclusion of the trial (see, Business Corporation Law § 724).

We have considered the plaintiff’s remaining contentions and find them to be without merit. Brown, J. P., Weinstein, Spatt and Balletta, JJ., concur.

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Bluebook (online)

140 A.D.2d 487, 528 N.Y.S.2d 599, 1988 N.Y. App. Div. LEXIS 5394, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gladstone-v-lynn-dinettes-inc-nyappdiv-1988.

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