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FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021
STATE OF NEW YORK
SUPREME COURT COUNTY OF ONONDAGA
COSTELLO, COONEY & FEARON, PLLC, Index No. 003917/2021
Hon. Deborah H. Karalüñas, J.S.C.
Plaintiff,
-vs. AMENDED
VERIFIED COMPLAINT
MELINDA BURDICK BOWE,
Defendant.
The Plaintiff, Costello, Cooney & Fearon, PLLC, by and through the undersigned,
complaining of the Defendant Melinda Burdick Bowe, states, alleges and shows to the Court as
follows:
The Parties
1. At all times hereinafter mentioned, the Plaintiff, Costello, Cooney & Fearon, PLLC
("CC&F") was and is a professional limited liability company organized under the laws of the
State of New York, with a principal place of business at 211 West Jefferson Street, Syracuse, New
York.
2. Upon information and belief, Defendant is an attorney admitted to practice law in
the State of New York with a primary residence at 4 Oak Mountain Drive, Leicester, North
Carolina.
3. Upon further information and belief, prior to November 17, 2020, Defendant
resided at 102 Morgan Lane, Oneida, New York. Thereafter, Defendant relocated to North
Carolina.
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4. Upon further information and belief, Defendant has and continues to derive
substantial income from the practice of law within the State of New York.
Jurisdiction and Venue
5. This Court has jurisdiction and venue over this action based upon CC&F's place of
parties'
business and the transaction of business within the State of New York, which is the situs
of the contracts.
Facts Relevant to All Causes of Action
6. Effective March 17, 2017, Defendant entered into an Operating Agreement with
the other members of CC&F and became a member.
7. Pursuant to the terms of the Operating Agreement, members (or "partners") of
CC&F are compensated as a function of CC&F's profits according to the membership points
assigned to each partner biannually.
8. Each partner also maintains a "Capital Account". CC&F's day-to-day working
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capital is and has always been provided by withholding from distribution to the members certain
amounts as the Executive Committee determines as necessary for operating expenses.
9. Since each member's compensation varies by the terms of the Operating
Agreement, operating expenses and profits fluctuate throughout each particular fiscal year.
members'
10. CC&F's accountants do not maintain a constant running balance sheet of
capital accounts. Instead, as the accounting firm closes the books for each fiscal year, itdetermines
the balance of each member's capital account, based upon profits and allocation to each member
pursuant to the terms and provisions of the Operating Agreement. At the same time, the accounting
firm generates end-of-year tax documentation (e.g., K-1s) for each CC&F member.
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11. Inasmuch as capital accounts are used for CC&F's operating expenses, and as a
matter of course and practice over many decades, CC&F does not allow members to maintain a
negative balance on capital accounts.
12. Instead, when itis determined that a capital account has a negative balance, in the
months immediately after CC&F's fiscal year (CC&F's fiscal year follows the calendar year),
members are required to immediately make arrangements to repay their negative capital account
balance and bring his or her balance(s) to zero. Remainitig positive capital accounts for that year
are then paid out pursuant to the percentage an individual member's capital account compares to
the capital accounts of allmembers.
13. On or about November 16, 2020, Defendant sold her residence in New York State
and thereafter relocated to North Carolina.
14. The following week, on November 23, 2020, Defendant withdrew as a partner of
CC&F and entered into an Of Counsel Agreement with CC&F to work as an independent
contractor effective.December 1, 2020.
15. Under the Of Counsel Agreement, Defendant was to.be compensated at an hourly
rate of $100.00 per hour she billed individually on fees actually billed and received, plus twenty
percent (20%) of all fees generated by other CC&F timekeepers actually paid and received by
CC&F during the period of the Agreement for clients originated by Defendant. Such monies were
to be paid to Defendant upon a quarterly request by Defendant.
16. At Defendant's request, CC&F agreed to provide her with a bi-monthly advance
draw against her earned compensation under the Of Counsel Agreement.
17. At the end of each quarter, CC&F would determine actual compensation due to
Defendant, and then subtract out any advanced draw payments provided to Defendant. Defendant
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would only be entitled to a quarterly payment if fees which Defendant was entitled exceed the
amount of her advance draw payments.
18. Following Defendant's relocation to North Carolina, Defendant billed less than 350
hours from December 1, 2020 through April 1.5,2021. During the first half of April 2021, she
billed less than thirty-four (34) hours.
19. On or about December 14, 2020, CC&F made a distribution to members as an
advance of 2021 distributions. in conjunction with that distribution, Defendant, based upon the
members'
lack of accountant's determination of remair1ing balances of 2020 capital accounts, was
erroneously paid $18,750.00, since she would not be a member at any time during 2021 and no
basis existed outside of the Of Counsel Agreement for Defendant to share in any profits of CC&F.
20. On January 20, 2021, CC&F made another distribution to members as an advance
on 2021 distributions. In conjunction therewith, Defendant, based upon the lack of accountant's
members'
determination of remaining balances of 2020 capital accounts, erroneously received
another $14,320.00 and no basis existed outside of the Of Counsel Agreement for Defendant to
share in any profits of CC&F.
21. On March 9, 2021, Defendant, based upon the lack of accountant's determination
members'
of remaining balances of 2020 capital accounts, erroneously received another $7,160.00
as part of a further distribution to the members as an advance on 2021 distributions.
22. No basis existed outside of the Of Counsel Agreement for Defendant to share in
any profits of CC&F.
23. At this point, Defendant herself questioned why she was receiving this payment,
but has subsequently and wrongfully claimed a right to retain the payment.
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24. Inasmuch as Defendant was no longer a member, she was not entitled to of the
any
aforesaid 2021 member advances. Thus, Defendant received $40,230.00 to which she
improperly
was not entitled.
25. Upon realizing that the aforesaid 2021 advance distributions had been mistakenly
made to Defendant, due demand was made by CC&F for the return, repayment or reimbursement,
on terms to be agreed upon amicably, of such monies received and retained
improperly by
Defendant.
26. Despite repeated due requests, Defendant lias wrongfully refused to return, repay
or reimburse CC&F for any portion of the improper distribution payments.
27. In addition to the foregoing, on or about March 17, 2021, upon closing CC&F's
books for 2020, CC&F's accountants determined Defendant had a negative capital account in the
amount of $2,640.12.
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28. Repeated due demandhas been made to Defendant to remit payment of the negative
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balance of her capital account, as a withdrawing member. Defendant has wrongfully refused to
remit any payment for her negative balance on her capital account.
29. Beginning on or about March 30, 2021, Defendant began to surreptitiously remove
confidential attorney-client commimications, attorney work-product, CC&F's proprietary
information and other confidential firm and client information from CC&F's computer system by
forwarding these items to a private Gmail e-mail account associated with Defendant.
30. Defendañt continued to periodically remove such client communications, e-mail
messages, internal confidential client documents, proprietary information and work-product from
CC&F's computer system over the ensuing weeks.
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31. On April 15, 2021. Defendant spent the majority of the afternoon removing client
communications, confidential client documents, CC&F proprietary information and work-product
from CC&F's computer system.
32. Defendant did not bill any hours on April 16, 2021 for work for CC&F clients.
33. Nevertheless, beginning at 8:00 a.m. on April 16, 2021, Defendant continued to
remove client communications, confidential client documents, CC&F's proprietary information
and work-product from CC&F's computer system.
34. Again on April 17, 2021, Defendant forwarded additional attorney-client
communications, confidential client documents, CC&F's proprietary information and attorney
work-product belonging to CC&.F to her private Gmail account.
35. By e-mail on April 18, 2021 at 10:01 a.m., Defendant unilaterally terminated her
Of Counsel Agreement and discontinued any relationship between herself and CC&F. Defendant
definitively stated no monies for payment of her negative 2020 capital account or erroneous
payments of the 2021 profit payments would be made.
36. Thereafter, Defendant continued to use her CC&F login information to access
CC&F's computer system and remove attorney-client communications and confidential client
information.
37. Defendant also continued to use her CC&F computer credentials to communicate
with CC&F clients, without disclosing she had terminated her relationship with CC&F.
38. All reases 1 le efforts by CC&F to avoid litigation have been rebuffed.
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AS AND FOR A FIRST CAUSE OF ACTION FOR UNJUST ENRICHMENT
Improperly Received 2021 Partnership Advances
39. CC&F repeats and realleges the allegations contained in paragraphs enumerated
"1" "38"
through as if more fully set forth and restated herein.
40. Defendant, based upon the lack of accountant's determination of remaining
members'
balances of 2020 capital accounts, erroneously received and retained advanced 2021
member distributions from CC&F on December 14, 2020, January 20, 2021, and March 9, 2021
in an amount totaling $40,230.00.
41. Defendant was not entitled to any of the aforesaid distributions of CC&F 2021
profits under the Operating Agreement, as she was no longer a member as of the end of 2020.
42. Defendant therefore erroneously received and wrongfully retained the unearned
amount of $40,230.00.
8 43. Defendant has been unjustly enriched in such amount, to the detriment of CC&F
and itscurrent members.
44. CC&F hereby demands judgment against Defendant in the amount of $40,230.00
based upon her unjust enrichment, together with costs and disbursements, interest and
statutory
attorneys'
reasonable fees.
AS AND FOR A SECOND CAUSE OF ACTION
FOR BREACH OF OPERATING AGREEMENT
Negative Capital Account
45. CC&F repeats and realleges the allegations contained in paragraphs enumerated
"1" "44"
through as if more fully set forth and restated herein.
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46. Following calculation of CC&F's 2020 year-end figures on or about March 15,
2021, itbecame clear Defendant, as a withdrawing member, had a negative capital account balance
of $2,640.12.
47. Pursuant to the Operating Agreement, upon determination that an existing or
withdrawing member has a negative capital account balance upon calculation of the year-end
profits, said member is required to bring such balance to zero as soon as practicable.
48. Such practice of not allowing a negative capital account is a practice which has
persisted within CC&F for decades.
49. As a member of CC&F from 2017 through 2020, Defendant was fully aware of said
members'
custom and practice and was afforded information other methods of
regarding
reimbursing CC&F to zero-out negative capital account balances during those years.
50. Despite due demand, Defendant has refused to remit any payment to CC&F, as a
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withdrawing member, to reimburse the debt of her 2020 negative capital account.
O
51. Defendant has therefore breached the 2020 CC&F Operating Agreement by
retaining $2,640.12, which Defendant is obligated to reimburse.
52. CC&F demands further judgment against Defendant in the amount of $2,640.12,
attorneys'
together with its costs and disbursements, statutory interest and reasonable fees.
AS AND FOR A THIRD CAUSE OF ACTION FOR UNJUST ENRICHMENT
Negative Capital Account
53. CC&F repeats and realleges the allegations contained in paragraphs enumerated
"1" "52"
through as if more fully set forth and restated herein.
54. In the alternative, Defendant's failure or refusal to zero-out her negative capital
account constitutes unjust enrichment.
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55. As a matter of custom and practice, upon determination that an existing or
withdrawing member has a negative capital account balance upon calculation of the year-end
profits, said member is required to bring such balance to zero as soon as practicable.
56. Defendant's retention of monies exceeding her fair share of compensation,
including amounts which should have been contributed to her capital account, and Defendant's
further refusal to reimburse and zero-out her negative capital account constitutes unjust
enrichment.
57. Thus, in the alternative, CC&F demands judgment against Defendant for her unjust
enrichment in the amount of $2,640.12, together with itscosts and disbursements, statutory interest
attorneys'
and reasonable fees.
AS AND FOR A FOURTH CAUSE OF ACTIOlN FOR CONVERSION
2021 Partnership Advances
58. CC&F repeats and realleges the allegations contained in paragraphs enumerated
"1" "57"
through as if more fully set forth and restated herein.
59. In the alternative, on or about December 14, 2020, January 20, 2021 and March 9,
2021, Defendant mistakenly received membership distributions in advance of 2021 payments
totaling $40,230.12.
60. Pursuant to the terms of the Oper ating Agreement and Defendant's Of Counsel
Agreement, she was not legally entitled to such distributions.
61. Defendant has recognized she had no right to any 2021 distributions.
refused:
62. Despite due demand, Defendant has to return any portion of the monies
improperly distributed to her in December 2020, January 2021 or March 2021.
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63. Defendant has thus converted funds to CC&F and its members in the
belonging
amount of $40,230.12.
64. CC&F demands judgment against Defendant in the amount of $40,230.12, together
attorneys'
with its costs and disbursements, statutory interest and itsreasonable fees.
AS AND FOR A FIFTH CAUSE OF ACTION FOR CONVERSION
CC&F Operating Funds
65. CC&F repeats and realleges the allegations contained in paragraphs enumerated
"1" "64"
through as if more fully set forth and restated herein.
66. As set forth within the CC&F Operating Agreement, capital accounts are utilized
by CC&F for working capital and operating expenses.
67. Upon her withdrawal as a member of CC&F, Defendant carried a negative capital
account of $2,640.12 for 2020, as calculated in March 2021.
8 68. Defendant has not disputed she carried a negative capital account for 2020 upon
her withdrawal.
69. Nevertheless, despite due demand, Defendant has refused to reimburse CC&F for
its operating expenses and working capital expended on behalf of the firm and incurred during the
period when she was a member of CC&F.
70. Defendant is wrongfully in possession of $2,640.12 of funds properly belonging to
CC&F.
71. CC&F demands judgment against Defendant in the amount of $2,640.12, together
attorneys'
with itscosts and disbursements, statutory interest and its reasonable fees.
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AS AND FOR A SIXTH CAUSE OF ACTION
FOR BREACH OF FIDUCIARY DUTY
72. CC&F repeats and realleges the allegations contained in paragraphs enumerated
"1" "71"
through as if more fully set forth and restated herein.
73. As a former member of CC&F, Defendant owes a continuing fiduciary duty to
CC&F and its remaining members.
74. By failing or refusing to reimburse CC&F in the amount of her 2020 negative
capital account ($2,640.12), which sums were used by CC&F for its regular operating expenses
during Defendant's time as member, and by failing or refusing to return 2021 membership
advances erroneously paid to Defendant when she had no claim or entitlement to such distributions
of CC&F's 2021 profits, she has breached her fiduciary duty to CC&F and itsremaining members.
75. Defendant's withholding of her 2020 negative capital account funds and
erroneously retention of 2021 advanced distributions is a breach of Defendant's fiduciary duty to
CC&F and itsmembers.
76. As a result of Defendant's intentional and willful breaches of her fiduciary duty to
CC&F and itsmembers, CC&F has been damaged in the amount of $42,870.12.
77. CC&F demands judgment against Defendant in the amount of said sum, together
attorneys'
with its costs and disbursements, statutory interest and reasonable fees.
AS AND FOR A SEVENTH CAUSE OF ACTION
FOR BREACH OF DUTY OF LOYALTY
78. CC&F repeats and realleges the allegations contained in paragraphs enumerated
''1'' "77"
through as if more fully set forth and restated herein.
79. By virtue of her employment with CC&F, Defendant owed and continued to owe
CC&F both fiduciary duties and a duty of loyalty.
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80. Those duties included not to access, move, remove or otherwise interfere with
confidential communications, documents and items for purposes other than the advanceinelit of
CC&F's business and representation of itsclients.
81. By her wrongful acts, Defendant breached her fiduciary duties and duty of loyalty
to CC&F, for which CC&F is entitled to recover compensatory damages in such amount as the
proof at trialmay warrant.
82. Furthermore, CC&F is entitled to disgorgement of all monies paid to Defendant
from the moment of her first breach of the duty of loyalty.
83. By reason of the foregoing, CC&F demands judgment against Defendant ordering
Defendant to disgorge allprofits, draws, disbursements, compensation or other monies paid to her
during any term of her disloyalty, in an amount to be determined at trial.
AS AND FOR AN EIGHTH CAUSE OF ACTION FOR CONVERSION
8 CC&F Work-Product and Proprietary Information
84. CC&F repeats and realleges the allegations contained in paragraphs enumerated
"1" "83"
through as if more fully set forth and restated herein.
85. Documents, contracts, agreements, briefs, memoranda, motions and other attorney
work-product, including drafts of the same, generated by CC&F attorneys and staff are the
exclusive property of CC&F.
86. The aforementioned items had and have significant value to CC&F and/or its
clients.
87. Defendant accessed and removed CC&F's proprietary information and attorney
work-product for personal reasons not associated with any work for CC&F or itsclients.
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88. Instead, during Defendant's employment with CC&F under the Of Counsel
Agreement, Defendant removed CC&F's confidential and information and
proprietary attorney
work-product for use in her own practice of law following her termination of the Of Counsel
Agreement.
89. Upon information and belief, Defendant intended to use that proprietary
information, documents, materials and attorney work-product to represent CC&F's clients or
former clients following termination of the Of Counsel Agreement.
90. CC&F demands judgment against Defendant in any amount to be determined at
trial for the value of the proprietary information, materials and work-product Defendant
wrongfully converted during the time of her employment under the Of Counsel Agreement, and
following her unilateral termination thereof.
AS AND FOR A NINTH CAUSE OF ACTION FOR CONVERSION
Attorney-Client Communications, Conñdential Client Materials
91. CC&F repeats and realleges the allegations contained in paragraphs enumerated
"1" "90"
through as if more fully set forth and restated herein.
92. Prior to and following Defendant's termination of the Of Counsel Agreement, she
accessed and removed attorney-client communications and significant confidential client
information and materials from CC&F's computer system.
. 93. The aforementioned items had and have significant value to CC&F and its clients.
94. Defendant accessed and lemoved the attorney-client communications and
confidential client information and materials for personal reasons not associated with any work for
CC&F or its clients.
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95. Instead, during Defendant's employment with CC&F under the Of Counsel
Agreement, Defendant removed these client communications and confidentiM materials for use in
her own practice of law following her termination of the Of Counsel Agreement.
96. Upon information and belief, Defendant intended to use the above-mentioned client
communications and confidential client materials to represent CC&F's clients or former clients
following termination of the Of Counsel Agreement.
97. CC&F demands judgment against Defendant in any amount to be determined at
trial for the value of the attorney-client communications and confidential and proprietary client
information and materials Defendant wrongfully converted during the time of her employment
under the Of Counsel Agreement, and following her unilateral termination thereof.
WHEREFORE, CC&F demands judgment against Defendant:
(a) In the amount of $40,230.00 for Defendant's unjust enrichment by receipt of 2021
advances to which she was not entitled;
(b) In the amount of $2,640.12 for Defendant's breach of the Operating Agreement
based upon her to reimburse CC&I2 for her negative capital account upon
failure
withdrawal as a member of CC&F;
(c) In the alternative, in the amount of $2,640.12 for Defendant's unjust enrichment
based upon her failure to reimburse CC&F for her negative capital account upon
withdrawal as a member of CC&F;
(d) In the alternative, in the amount of $40,230.00 for Defendant's conversion of 2021
advances wrongfully received and retained by Defendant;
(e) In the alternative, in the amount of $2,640.12 for Defendant's conversion of the
amount of her negative capital account, wrongfully retained by Defendant;
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(f) In the alternative, in the amount of $42,870.12 for Defendant's breach of her
fiduciary duties to CC&F and its members through receipt and retention of 2021
advances and the amount of her negative capital account;
(g) Disgorging all fees, draws, compensation and other monies paid to Defendant
during the term of her disloyalty to CC&F;
(h) In an amount to be determined at trial for Defendant's conversion of CC&F's
confidential and proprietary information, materials and attorney work-product;
(i) In an amount to be determined at trial for Defendant's conversion of CC&F's
privileged attorney-client communications and confidential client information and
materials; and
(j) As a result of the foregoing, the costs and disbursements of this action, statutory
attorneys'
interest and CC&F's reasonable fees and such other and further relief as
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the Court may deem just and proper.
DATED: November 11, 2021
COSTELLO, COONEY & FEARON, PLLC
PAUIfG. FERRARA
Attorneys for Plaintiff,
Costello, Cooney & Fearon, PLLC
Office and Post Office Address
211 West Jefferson Street
Syracuse, NY 13202
Telephone: (315) 422-1152
TO: WOODS OVIATT GILMAN LLP
Attorneys for Defendant,
Melinda Burdick Bowe
Office and Post Office Address
1900 Bausch & Lomb Place
Rochester, New York 14604
Telephone: (585) 987-2800
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STATE OF NEW YORK )
COUNTY OF ONONDAGA ) ss.:
JOHN R. LANGEY, being duly sworn, deposes and says that deponent is Chief Financial
Officer of Costello, Cooney & Fearon, PLLC, that deponent has read the foregoing Amended
Complaint and knows the contents thereof; that the same is true to the knowledge of the deponent,
except as to matters therein stated to be alleged upon information and belief, and that as to those
matters, deponent believes them to be true. This verification is made by deponent because
Costello, Cooney & Fearon, PLLC is a professional limited liability company. Deponent is Chief
Financial Officer of said company. The grounds of deponerit's belief as to all matters not stated
upon deponent's own knowledge are as follows: Investigations which deponent has caused to be
made concerning the subject matter of this Complaint and information acquired by deponent in the
course of deponent's duties as Chief Financial Officer of said company and from the books and
8 papers of said corporation.
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FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 STATE OF NEW YORK SUPREME COURT COUNTY OF ONONDAGA COSTELLO, COONEY & FEARON, PLLC, Index No. 003917/2021 Hon. Deborah H. Karalüñas, J.S.C. Plaintiff, -vs. AMENDED VERIFIED COMPLAINT MELINDA BURDICK BOWE, Defendant. The Plaintiff, Costello, Cooney & Fearon, PLLC, by and through the undersigned, complaining of the Defendant Melinda Burdick Bowe, states, alleges and shows to the Court as follows: The Parties 1. At all times hereinafter mentioned, the Plaintiff, Costello, Cooney & Fearon, PLLC ("CC&F") was and is a professional limited liability company organized under the laws of the State of New York, with a principal place of business at 211 West Jefferson Street, Syracuse, New York. 2. Upon information and belief, Defendant is an attorney admitted to practice law in the State of New York with a primary residence at 4 Oak Mountain Drive, Leicester, North Carolina. 3. Upon further information and belief, prior to November 17, 2020, Defendant resided at 102 Morgan Lane, Oneida, New York. Thereafter, Defendant relocated to North Carolina. 1 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 4. Upon further information and belief, Defendant has and continues to derive substantial income from the practice of law within the State of New York. Jurisdiction and Venue 5. This Court has jurisdiction and venue over this action based upon CC&F's place of parties' business and the transaction of business within the State of New York, which is the situs of the contracts. Facts Relevant to All Causes of Action 6. Effective March 17, 2017, Defendant entered into an Operating Agreement with the other members of CC&F and became a member. 7. Pursuant to the terms of the Operating Agreement, members (or "partners") of CC&F are compensated as a function of CC&F's profits according to the membership points assigned to each partner biannually. 8. Each partner also maintains a "Capital Account". CC&F's day-to-day working 8 capital is and has always been provided by withholding from distribution to the members certain amounts as the Executive Committee determines as necessary for operating expenses. 9. Since each member's compensation varies by the terms of the Operating Agreement, operating expenses and profits fluctuate throughout each particular fiscal year. members' 10. CC&F's accountants do not maintain a constant running balance sheet of capital accounts. Instead, as the accounting firm closes the books for each fiscal year, itdetermines the balance of each member's capital account, based upon profits and allocation to each member pursuant to the terms and provisions of the Operating Agreement. At the same time, the accounting firm generates end-of-year tax documentation (e.g., K-1s) for each CC&F member. -2- 2 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 11. Inasmuch as capital accounts are used for CC&F's operating expenses, and as a matter of course and practice over many decades, CC&F does not allow members to maintain a negative balance on capital accounts. 12. Instead, when itis determined that a capital account has a negative balance, in the months immediately after CC&F's fiscal year (CC&F's fiscal year follows the calendar year), members are required to immediately make arrangements to repay their negative capital account balance and bring his or her balance(s) to zero. Remainitig positive capital accounts for that year are then paid out pursuant to the percentage an individual member's capital account compares to the capital accounts of allmembers. 13. On or about November 16, 2020, Defendant sold her residence in New York State and thereafter relocated to North Carolina. 14. The following week, on November 23, 2020, Defendant withdrew as a partner of CC&F and entered into an Of Counsel Agreement with CC&F to work as an independent contractor effective.December 1, 2020. 15. Under the Of Counsel Agreement, Defendant was to.be compensated at an hourly rate of $100.00 per hour she billed individually on fees actually billed and received, plus twenty percent (20%) of all fees generated by other CC&F timekeepers actually paid and received by CC&F during the period of the Agreement for clients originated by Defendant. Such monies were to be paid to Defendant upon a quarterly request by Defendant. 16. At Defendant's request, CC&F agreed to provide her with a bi-monthly advance draw against her earned compensation under the Of Counsel Agreement. 17. At the end of each quarter, CC&F would determine actual compensation due to Defendant, and then subtract out any advanced draw payments provided to Defendant. Defendant -3- 3 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 would only be entitled to a quarterly payment if fees which Defendant was entitled exceed the amount of her advance draw payments. 18. Following Defendant's relocation to North Carolina, Defendant billed less than 350 hours from December 1, 2020 through April 1.5,2021. During the first half of April 2021, she billed less than thirty-four (34) hours. 19. On or about December 14, 2020, CC&F made a distribution to members as an advance of 2021 distributions. in conjunction with that distribution, Defendant, based upon the members' lack of accountant's determination of remair1ing balances of 2020 capital accounts, was erroneously paid $18,750.00, since she would not be a member at any time during 2021 and no basis existed outside of the Of Counsel Agreement for Defendant to share in any profits of CC&F. 20. On January 20, 2021, CC&F made another distribution to members as an advance on 2021 distributions. In conjunction therewith, Defendant, based upon the lack of accountant's members' determination of remaining balances of 2020 capital accounts, erroneously received another $14,320.00 and no basis existed outside of the Of Counsel Agreement for Defendant to share in any profits of CC&F. 21. On March 9, 2021, Defendant, based upon the lack of accountant's determination members' of remaining balances of 2020 capital accounts, erroneously received another $7,160.00 as part of a further distribution to the members as an advance on 2021 distributions. 22. No basis existed outside of the Of Counsel Agreement for Defendant to share in any profits of CC&F. 23. At this point, Defendant herself questioned why she was receiving this payment, but has subsequently and wrongfully claimed a right to retain the payment. -4- 4 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 24. Inasmuch as Defendant was no longer a member, she was not entitled to of the any aforesaid 2021 member advances. Thus, Defendant received $40,230.00 to which she improperly was not entitled. 25. Upon realizing that the aforesaid 2021 advance distributions had been mistakenly made to Defendant, due demand was made by CC&F for the return, repayment or reimbursement, on terms to be agreed upon amicably, of such monies received and retained improperly by Defendant. 26. Despite repeated due requests, Defendant lias wrongfully refused to return, repay or reimburse CC&F for any portion of the improper distribution payments. 27. In addition to the foregoing, on or about March 17, 2021, upon closing CC&F's books for 2020, CC&F's accountants determined Defendant had a negative capital account in the amount of $2,640.12. 8 28. Repeated due demandhas been made to Defendant to remit payment of the negative 8 balance of her capital account, as a withdrawing member. Defendant has wrongfully refused to remit any payment for her negative balance on her capital account. 29. Beginning on or about March 30, 2021, Defendant began to surreptitiously remove confidential attorney-client commimications, attorney work-product, CC&F's proprietary information and other confidential firm and client information from CC&F's computer system by forwarding these items to a private Gmail e-mail account associated with Defendant. 30. Defendañt continued to periodically remove such client communications, e-mail messages, internal confidential client documents, proprietary information and work-product from CC&F's computer system over the ensuing weeks. -5- 5 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 31. On April 15, 2021. Defendant spent the majority of the afternoon removing client communications, confidential client documents, CC&F proprietary information and work-product from CC&F's computer system. 32. Defendant did not bill any hours on April 16, 2021 for work for CC&F clients. 33. Nevertheless, beginning at 8:00 a.m. on April 16, 2021, Defendant continued to remove client communications, confidential client documents, CC&F's proprietary information and work-product from CC&F's computer system. 34. Again on April 17, 2021, Defendant forwarded additional attorney-client communications, confidential client documents, CC&F's proprietary information and attorney work-product belonging to CC&.F to her private Gmail account. 35. By e-mail on April 18, 2021 at 10:01 a.m., Defendant unilaterally terminated her Of Counsel Agreement and discontinued any relationship between herself and CC&F. Defendant definitively stated no monies for payment of her negative 2020 capital account or erroneous payments of the 2021 profit payments would be made. 36. Thereafter, Defendant continued to use her CC&F login information to access CC&F's computer system and remove attorney-client communications and confidential client information. 37. Defendant also continued to use her CC&F computer credentials to communicate with CC&F clients, without disclosing she had terminated her relationship with CC&F. 38. All reases 1 le efforts by CC&F to avoid litigation have been rebuffed. -6- 6 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 AS AND FOR A FIRST CAUSE OF ACTION FOR UNJUST ENRICHMENT Improperly Received 2021 Partnership Advances 39. CC&F repeats and realleges the allegations contained in paragraphs enumerated "1" "38" through as if more fully set forth and restated herein. 40. Defendant, based upon the lack of accountant's determination of remaining members' balances of 2020 capital accounts, erroneously received and retained advanced 2021 member distributions from CC&F on December 14, 2020, January 20, 2021, and March 9, 2021 in an amount totaling $40,230.00. 41. Defendant was not entitled to any of the aforesaid distributions of CC&F 2021 profits under the Operating Agreement, as she was no longer a member as of the end of 2020. 42. Defendant therefore erroneously received and wrongfully retained the unearned amount of $40,230.00. 8 43. Defendant has been unjustly enriched in such amount, to the detriment of CC&F and itscurrent members. 44. CC&F hereby demands judgment against Defendant in the amount of $40,230.00 based upon her unjust enrichment, together with costs and disbursements, interest and statutory attorneys' reasonable fees. AS AND FOR A SECOND CAUSE OF ACTION FOR BREACH OF OPERATING AGREEMENT Negative Capital Account 45. CC&F repeats and realleges the allegations contained in paragraphs enumerated "1" "44" through as if more fully set forth and restated herein. -7- 7 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 46. Following calculation of CC&F's 2020 year-end figures on or about March 15, 2021, itbecame clear Defendant, as a withdrawing member, had a negative capital account balance of $2,640.12. 47. Pursuant to the Operating Agreement, upon determination that an existing or withdrawing member has a negative capital account balance upon calculation of the year-end profits, said member is required to bring such balance to zero as soon as practicable. 48. Such practice of not allowing a negative capital account is a practice which has persisted within CC&F for decades. 49. As a member of CC&F from 2017 through 2020, Defendant was fully aware of said members' custom and practice and was afforded information other methods of regarding reimbursing CC&F to zero-out negative capital account balances during those years. 50. Despite due demand, Defendant has refused to remit any payment to CC&F, as a 8 withdrawing member, to reimburse the debt of her 2020 negative capital account. O 51. Defendant has therefore breached the 2020 CC&F Operating Agreement by retaining $2,640.12, which Defendant is obligated to reimburse. 52. CC&F demands further judgment against Defendant in the amount of $2,640.12, attorneys' together with its costs and disbursements, statutory interest and reasonable fees. AS AND FOR A THIRD CAUSE OF ACTION FOR UNJUST ENRICHMENT Negative Capital Account 53. CC&F repeats and realleges the allegations contained in paragraphs enumerated "1" "52" through as if more fully set forth and restated herein. 54. In the alternative, Defendant's failure or refusal to zero-out her negative capital account constitutes unjust enrichment. -8- 8 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 55. As a matter of custom and practice, upon determination that an existing or withdrawing member has a negative capital account balance upon calculation of the year-end profits, said member is required to bring such balance to zero as soon as practicable. 56. Defendant's retention of monies exceeding her fair share of compensation, including amounts which should have been contributed to her capital account, and Defendant's further refusal to reimburse and zero-out her negative capital account constitutes unjust enrichment. 57. Thus, in the alternative, CC&F demands judgment against Defendant for her unjust enrichment in the amount of $2,640.12, together with itscosts and disbursements, statutory interest attorneys' and reasonable fees. AS AND FOR A FOURTH CAUSE OF ACTIOlN FOR CONVERSION 2021 Partnership Advances 58. CC&F repeats and realleges the allegations contained in paragraphs enumerated "1" "57" through as if more fully set forth and restated herein. 59. In the alternative, on or about December 14, 2020, January 20, 2021 and March 9, 2021, Defendant mistakenly received membership distributions in advance of 2021 payments totaling $40,230.12. 60. Pursuant to the terms of the Oper ating Agreement and Defendant's Of Counsel Agreement, she was not legally entitled to such distributions. 61. Defendant has recognized she had no right to any 2021 distributions. refused: 62. Despite due demand, Defendant has to return any portion of the monies improperly distributed to her in December 2020, January 2021 or March 2021. 9 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 63. Defendant has thus converted funds to CC&F and its members in the belonging amount of $40,230.12. 64. CC&F demands judgment against Defendant in the amount of $40,230.12, together attorneys' with its costs and disbursements, statutory interest and itsreasonable fees. AS AND FOR A FIFTH CAUSE OF ACTION FOR CONVERSION CC&F Operating Funds 65. CC&F repeats and realleges the allegations contained in paragraphs enumerated "1" "64" through as if more fully set forth and restated herein. 66. As set forth within the CC&F Operating Agreement, capital accounts are utilized by CC&F for working capital and operating expenses. 67. Upon her withdrawal as a member of CC&F, Defendant carried a negative capital account of $2,640.12 for 2020, as calculated in March 2021. 8 68. Defendant has not disputed she carried a negative capital account for 2020 upon her withdrawal. 69. Nevertheless, despite due demand, Defendant has refused to reimburse CC&F for its operating expenses and working capital expended on behalf of the firm and incurred during the period when she was a member of CC&F. 70. Defendant is wrongfully in possession of $2,640.12 of funds properly belonging to CC&F. 71. CC&F demands judgment against Defendant in the amount of $2,640.12, together attorneys' with itscosts and disbursements, statutory interest and its reasonable fees. -10- 10 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 AS AND FOR A SIXTH CAUSE OF ACTION FOR BREACH OF FIDUCIARY DUTY 72. CC&F repeats and realleges the allegations contained in paragraphs enumerated "1" "71" through as if more fully set forth and restated herein. 73. As a former member of CC&F, Defendant owes a continuing fiduciary duty to CC&F and its remaining members. 74. By failing or refusing to reimburse CC&F in the amount of her 2020 negative capital account ($2,640.12), which sums were used by CC&F for its regular operating expenses during Defendant's time as member, and by failing or refusing to return 2021 membership advances erroneously paid to Defendant when she had no claim or entitlement to such distributions of CC&F's 2021 profits, she has breached her fiduciary duty to CC&F and itsremaining members. 75. Defendant's withholding of her 2020 negative capital account funds and erroneously retention of 2021 advanced distributions is a breach of Defendant's fiduciary duty to CC&F and itsmembers. 76. As a result of Defendant's intentional and willful breaches of her fiduciary duty to CC&F and itsmembers, CC&F has been damaged in the amount of $42,870.12. 77. CC&F demands judgment against Defendant in the amount of said sum, together attorneys' with its costs and disbursements, statutory interest and reasonable fees. AS AND FOR A SEVENTH CAUSE OF ACTION FOR BREACH OF DUTY OF LOYALTY 78. CC&F repeats and realleges the allegations contained in paragraphs enumerated ''1'' "77" through as if more fully set forth and restated herein. 79. By virtue of her employment with CC&F, Defendant owed and continued to owe CC&F both fiduciary duties and a duty of loyalty. -11- 11 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 80. Those duties included not to access, move, remove or otherwise interfere with confidential communications, documents and items for purposes other than the advanceinelit of CC&F's business and representation of itsclients. 81. By her wrongful acts, Defendant breached her fiduciary duties and duty of loyalty to CC&F, for which CC&F is entitled to recover compensatory damages in such amount as the proof at trialmay warrant. 82. Furthermore, CC&F is entitled to disgorgement of all monies paid to Defendant from the moment of her first breach of the duty of loyalty. 83. By reason of the foregoing, CC&F demands judgment against Defendant ordering Defendant to disgorge allprofits, draws, disbursements, compensation or other monies paid to her during any term of her disloyalty, in an amount to be determined at trial. AS AND FOR AN EIGHTH CAUSE OF ACTION FOR CONVERSION 8 CC&F Work-Product and Proprietary Information 84. CC&F repeats and realleges the allegations contained in paragraphs enumerated "1" "83" through as if more fully set forth and restated herein. 85. Documents, contracts, agreements, briefs, memoranda, motions and other attorney work-product, including drafts of the same, generated by CC&F attorneys and staff are the exclusive property of CC&F. 86. The aforementioned items had and have significant value to CC&F and/or its clients. 87. Defendant accessed and removed CC&F's proprietary information and attorney work-product for personal reasons not associated with any work for CC&F or itsclients. -12- 12 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 88. Instead, during Defendant's employment with CC&F under the Of Counsel Agreement, Defendant removed CC&F's confidential and information and proprietary attorney work-product for use in her own practice of law following her termination of the Of Counsel Agreement. 89. Upon information and belief, Defendant intended to use that proprietary information, documents, materials and attorney work-product to represent CC&F's clients or former clients following termination of the Of Counsel Agreement. 90. CC&F demands judgment against Defendant in any amount to be determined at trial for the value of the proprietary information, materials and work-product Defendant wrongfully converted during the time of her employment under the Of Counsel Agreement, and following her unilateral termination thereof. AS AND FOR A NINTH CAUSE OF ACTION FOR CONVERSION Attorney-Client Communications, Conñdential Client Materials 91. CC&F repeats and realleges the allegations contained in paragraphs enumerated "1" "90" through as if more fully set forth and restated herein. 92. Prior to and following Defendant's termination of the Of Counsel Agreement, she accessed and removed attorney-client communications and significant confidential client information and materials from CC&F's computer system. . 93. The aforementioned items had and have significant value to CC&F and its clients. 94. Defendant accessed and lemoved the attorney-client communications and confidential client information and materials for personal reasons not associated with any work for CC&F or its clients. -13- 13 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 95. Instead, during Defendant's employment with CC&F under the Of Counsel Agreement, Defendant removed these client communications and confidentiM materials for use in her own practice of law following her termination of the Of Counsel Agreement. 96. Upon information and belief, Defendant intended to use the above-mentioned client communications and confidential client materials to represent CC&F's clients or former clients following termination of the Of Counsel Agreement. 97. CC&F demands judgment against Defendant in any amount to be determined at trial for the value of the attorney-client communications and confidential and proprietary client information and materials Defendant wrongfully converted during the time of her employment under the Of Counsel Agreement, and following her unilateral termination thereof. WHEREFORE, CC&F demands judgment against Defendant: (a) In the amount of $40,230.00 for Defendant's unjust enrichment by receipt of 2021 advances to which she was not entitled; (b) In the amount of $2,640.12 for Defendant's breach of the Operating Agreement based upon her to reimburse CC&I2 for her negative capital account upon failure withdrawal as a member of CC&F; (c) In the alternative, in the amount of $2,640.12 for Defendant's unjust enrichment based upon her failure to reimburse CC&F for her negative capital account upon withdrawal as a member of CC&F; (d) In the alternative, in the amount of $40,230.00 for Defendant's conversion of 2021 advances wrongfully received and retained by Defendant; (e) In the alternative, in the amount of $2,640.12 for Defendant's conversion of the amount of her negative capital account, wrongfully retained by Defendant; -14- 14 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 (f) In the alternative, in the amount of $42,870.12 for Defendant's breach of her fiduciary duties to CC&F and its members through receipt and retention of 2021 advances and the amount of her negative capital account; (g) Disgorging all fees, draws, compensation and other monies paid to Defendant during the term of her disloyalty to CC&F; (h) In an amount to be determined at trial for Defendant's conversion of CC&F's confidential and proprietary information, materials and attorney work-product; (i) In an amount to be determined at trial for Defendant's conversion of CC&F's privileged attorney-client communications and confidential client information and materials; and (j) As a result of the foregoing, the costs and disbursements of this action, statutory attorneys' interest and CC&F's reasonable fees and such other and further relief as 8 the Court may deem just and proper. DATED: November 11, 2021 COSTELLO, COONEY & FEARON, PLLC PAUIfG. FERRARA Attorneys for Plaintiff, Costello, Cooney & Fearon, PLLC Office and Post Office Address 211 West Jefferson Street Syracuse, NY 13202 Telephone: (315) 422-1152 TO: WOODS OVIATT GILMAN LLP Attorneys for Defendant, Melinda Burdick Bowe Office and Post Office Address 1900 Bausch & Lomb Place Rochester, New York 14604 Telephone: (585) 987-2800 -15- 15 of 16 FILED: ONONDAGA COUNTY CLERK 11/11/2021 01:35 PM INDEX NO. 003917/2021 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 11/11/2021 STATE OF NEW YORK ) COUNTY OF ONONDAGA ) ss.: JOHN R. LANGEY, being duly sworn, deposes and says that deponent is Chief Financial Officer of Costello, Cooney & Fearon, PLLC, that deponent has read the foregoing Amended Complaint and knows the contents thereof; that the same is true to the knowledge of the deponent, except as to matters therein stated to be alleged upon information and belief, and that as to those matters, deponent believes them to be true. This verification is made by deponent because Costello, Cooney & Fearon, PLLC is a professional limited liability company. Deponent is Chief Financial Officer of said company. The grounds of deponerit's belief as to all matters not stated upon deponent's own knowledge are as follows: Investigations which deponent has caused to be made concerning the subject matter of this Complaint and information acquired by deponent in the course of deponent's duties as Chief Financial Officer of said company and from the books and 8 papers of said corporation.