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= NA AU OUN Kk 04 Oo: Dv INDEX NO. 604539/2023
NYSCEF BOC. NO. 98 RECEIVED NYSCEF: 04/23/2024
EXHIBITN
INDEX NO. 604539/2023
NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024
SUPREME COURT-STATE OF NEW YORK
SHORT FORM ORDER
Present:
HON. TIMOTHY S. DRISCOLL
Justice Supreme Court
K.L. ORIGINALS CO., LTD.,
TRIAL/IAS PART: 4
Plaintiff,
NASSAU COUNTY
-against-
Index No: 604539-23
BCNY INTERNATIONAL, INC., SYNCLAIRE Motion Seq. No. 2
BRANDS, INC., FUTURE SHOE, INC., EVAN Submission Date:-2/23/24
CAGNER, GLENN UNGER, and MICHAEL
BRUCE CAGNER,
Defendants.
x
Papers Read on these Motions:
Affidavits and Affirmation in Support with Exhibit...
Memorandum of Law in Support.. ocsecensecseacsseasten:
Affidavit and Affirmation in Opposition with Exhibits.
Memorandum of Law in Opposition...
Reply Memorandum of Law..
Reply Affirmation with Exhibits.
Preséntly pending before the Court is defendants:BCNY International, Inc. (“BCNY”),
Synclaire Brands, Inc. (“Synclaire”), Future Shoe, Inc. (“Future Shoe”), Evan Cagier (“Evan”),
Glenn Unger (“Unger”), and Michael Bruce Cagnet’s (“Michael,” and collectively,
“Defendants”) motion to dismiss the Amended Complaint pursuant to CPLR § 3211(a)(1) and
(7). For the following reasons, Defendants” motion is granted in part and denied in part.
The parties are reminded of the conference.scheduled for April 24, 2024 at 11:00 a.m.
BACKGROUND
A. The Parties’ History
The Amended Complaint alleges-as follows:
BCNY was and is.a corporation organized undet the laws of the State of New York with
a principal place of business in Hicksville, New York. BCNY, Synclairé, and various related
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affiliates were engaged in the importing and wholesale distribution of shoes and accessories to
retail, discount, and department stores throughout the United States, Their affiliate, Future Shoe,
engaged in the internet sales of women’s and children’s shoes. BCNY, Synclaire, and Future
Shoe (collectively, the “Corporate Defendants”) have multiple related entities, which they use for
the sale of their products. Evan was the Chief Executive Officer, one of the principal
shareholders, and a member of the Board of Directors of the Corporate Defendants. Unger was
the Chief Financial Officer, shareholder, and a. member ofthe Board of Directors.of the
Corporate Defendants. Michael was a shareholder and the Chairman of the Board-of Directors'‘of
the Corporate Defendants.
Plaintiff K.L. Originals, Ltd. (“Plaintiff”) is.a corporation formed under the laws of the
People’s Republic of China that produces and manufactures shoes and other related: merchandise
(“Goods”). On or about March 10, 2019 and. March 10,2020, Plaintiff entered into.a series of
agreements with BCNY to supply and deliver the Goods'so BCNY could sell them to potential
customers (“Agreements”), Pursuant to the Agreements, the agreed upon and reasonable value
of the Goods was-$1,289,253.18. BCNY received the Goods, accepted them without objection,
and did not return any of the Goods to Plaintiff. Plaintiff has fully performed its obligations
under the Agreements.
BCNY remitted payment of $28,000 to Plaintiff for the Goods, however, there remains an
outstanding balance of $1,261,253.18. BCNY breached the Agreements by failing to timely pay
Plaintiff the agreed-upon and reasonable value of the. Goods in the-amount of $1,261,253.18.
Defendants are believed to‘have sold the. Goods to their customers either through the Corporate
Defendants or other related entities. The Corporate.Defendants’ customers made full and final
payment (the “Trust Funds’) to Defendants for the Goods, which amount is greater than the
amount due Plaintiff for the Goods. Defendants applied. the Trust Funds for-a purpose other than
the payment of claims to Plaintiff. BCNY is believed to have become insolvent as early as
December 31, 2018, but Defendants continued
to operate.the business by defrauding its vetidors
and creditors.
In.a Complaint filed in New York County Supreme Court, Rosenthal & Rosenthal, Inc.
(“Rosenthal”) alleged, inter alia; that Defendants submitted fraudulent financial statements to
Rosenthal to obtain certain loan proceeds; and Rosenthal discovered that BCNY and Synclaire
had béen insolvent since:at least December31, 2018. In a Complaint filed in the Eastern District
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of New York, Wells Fargo Bank (“Wells Fargo”) alleged, inter alia, that Defendants submitted
fraudulent financial statements to Wells Fargo in‘an attempt to obtain certain loan proceeds, and
the Wells Fargo Defendants discovered that BCNY and Synclaire had been insolvent since on or
about December 31, 2018. Based on the Rosenthal and Wells‘Fargo Complaints, Defendants
knew or should have known that BCNY was insolvent and did not have:the financial means to
pay its debt since on or about December 31, 2018. Plaintiff did not have the same access to
BCNY’s financial information that Rosenthal and Wells Fargo had, and otily discovered
BCNY’s insolvency from the Rosenthal Complaint and Wells Fargo Complaint.
BENY is believed to have become insolvent as early'as December 31, 2018, but
Defendants continued to operate the business by defrauding its vendors and creditors. Evan,
Unger, and Michael (collectively, the “Individual Defendants”) deliberately made material
misrepresentations to Plaintiff regarding BCNY’s ability to make payments to induce Plaintiff to
continue accepting orders and’ supplying the Goods, Plaintiff delivered invoices to BCNY for
the products that Defendants ordered. The invoices remained largely unpaid with an outstanding
balance of $1,261,253.18 as of March 10,2020. The‘Individual Defendants knew or should have
known that BCNY would not be able to make any: payments.toward the unpaid invoice balance
or the Goods that it.continued to order from Plaintiff. Prior to and/or during BCNY’s business
transactions with Plaintiff, the Individual Defendants caused Plaintiffto rely on false statements
relating to BCNY’s financial strength and security as part of the Individual Defendants’ scheme
to defraud the Corporate Defendants” vendors by converting their Goods,. using the proceeds for
their own personal benefit, and stripping the Corporate Defendants of assets, closing its doors,
and leaving it judgment proof and its vendors unpaid. Plaintiff relied upon thie false statements
and.shipped the Goods to BCNY and has been damaged by having not been paid for most of the
Goods.
Plaintiff asserts the following causes of action: 1) fraudulent inducement, 2) breach. of the
Agreements, 3) payment for goods.sold and delivered, 4) account stated, 5) unjust enrichment, 6)
breach of fiduciary duty, 7) breach of constructive trust; and 8) conversion.
I Tretiakov Affidavit
Arthur Tretiakov, agent of Plaintiff, affirms, in relevant part, that on May 8, 2020, when.
Plaintiff inquired when the unpaid balance would be paid, Unger replied: “Most of our customers
have not reopened due to.the Corona Virus. The-situation has not changed. When the customers
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reopen and they start accepting goods we should be.able to give you.a better idea of when
payments can start and how much you can expect.” Defendants never told Plaintiff about their
financial difficulties, which started years before the COVID-19 pandemic,
Tretiakov also affirms that the Individual Defendants used the Corporate Defendants as a
mere‘instrumentality, agent, alter-ego, and fagade in an attempt to erect a corporate veil. The
Individual Defendants caused the Corporate Defendants to disregard its corporate formalities.
Until they were shut down and ceased doing business, the Corporate’ Defendants:shared common
office space, employees, officers, directors, owners, addresses, telephone numbers,:and fax
numbers, The Corporate Defendants and the Individual Defendants intermingled their assets and
liabilities. The Corporate Defendants and the Individual Defendants should be held jointly
responsible and liable for the debts of BCNY to avoid. injustice.
2. Defendants’ Affidavits
Unger affirms that he-was hired by BCNY in 2007 atid remained an employee of BCNY
until it suddenly and unexpectedly ceased operation in 2020 as a result of the COVID-19
pandemic. Unger was never.an owner, director, or shareholder of BCNY, Synclaire, or Future
Shoe.
Evan affirms that he was the President.and Chief Executive Officer of BCNY since
approximately 2016 and its sole shareholder since December 2019. BCNY was a holding
company of several related entities engaged
in the sale of accessories,-wholesale makeup, and
licensed shoes. Synclaire was a subsidiary of BCNY, focused on the wholesale distribution. of
licensed shoe brands. Future Shoe was a subsidiary of BCNY ‘focused on the sale.of shoes. over
the internet. Unger was only employed by BCNY throughout the course of the business
relationship with Plaintiff. Unger was.never an owner, director, or shareholder of BCNY,
Synclaire, or Future Shoe.
3. May 8. 2020 Emails
In opposition
to Defendants” motion, Plaintiff submits an email exchange with Unger.
See-Tretiakov Aff. at Exh. B. On May 8, 2020, Plaintiff sent an email stating:
Dear Glenn:
Pls [sic] ‘see the attached payment list
_ the dued [sic] amount is USD$1333841.51, has overdue for a long time, please help to
pay off.
Please kindly do help remit the [sic] this week.
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That same day, Unger responded:
Most of our customers have not reopened due-to the Corona Virus. The situation
has not changed.
When the customers reopen and they start accepting goods we should be able to
give-you a better idea of when payments can start and how much-you can expect.
B. The Parties’ Positions
Defendants argue that the claims against the Individual Defendants should be dismissed.
Plaintiff does not allege facts' demonstrating that any of the Individual Defendants engaged in
acts amounting to an abuse of the corporate form. Instead, Plaintiff only makes conclusory
assertions that parrot the law on piercing the corporate veil without any specific factual
allegations. In any event, Synclaire and Future Shoe are.entities wholly owned by BCNY tather
than alter-egos of one another or BCNY. Plaintiff fails to allege any malfeasance by Synclaire or
Future Shoe, let alone with the specificity required. Moreover, Unger was not:an owner,
director, or shareholder of any of the Corporate Defendants at any time, and the Amended
Complaint fails to satisfy the heavy pleading burden that Unger was an “equitable owner” of any
of the Corporate. Defendants.
Defendants contend that Plaintiff fails to state:a claim for breach of the Agreements
against the Individual Defendants, Synclaire, and.Future Shoe. At best, Plaintiff may state a
cause of action for breach of contract as against BCNY but not against any other Defendant.
Additionally, Plaintiff improperly seeks to transform its breach of contract claim against BCNY
into tort claims against the other Defendants. Plaintiff’s claim for fraudulent inducement is
alleged ina single claim against all Defendants even though any contract was only with BCNY.
Plaintiff 1) fails to state in detail the facts underlying the alleged fraudulent inducement, 2) fails
to allege a special relationship between the parties ‘such that rere nondiselosute of an alleged:
material fact would create a duty to disclose, and 3) lumps all Defendants together without
identifying the discrete, fraudulent acts allegedly committed by each Defendant. Moreover,
Plaintiff fails to identify any specific misrepresentation or omission. by any of the Defendants.
The only hint is unproven allegations made by third-parties in complaints that were dismissed
with prejudice.
Defendants. aver that the Amended Complaint fails to state a claim for payment for goods
sold and deliveréd in the absence of any binding agreement between Plaintiff and any other
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Defendant. The account stated claim also-fails. Plaintiff alleges. that it rendered accounts to
“Defendants,” however that allegation defies logic as it relates to all Defendants other than
BCNY. Notably, the Amended Complaint does not state when or to whom. any account
statements were allegedly rendered, nor does it reference any acceptance by any of the non-
BCNY Defendants. Plaintiff also fails to specifically allege how muich tite elapsed after the,
alleged delivery of the account statements. Plaintiff's claim for unjust enrichment is:a mere
restatement of the. breach of contract claim.
Defendant contends that the breach of fiduciary duty claim fails because the Amended
Complaint alleges, at best, a conventional arm’s length business relationship with BCNY. While
Plaintiff makes the conclusory allegation that Defendants had a duty to distribute and pay
Plaintiff from Trust Funds, no explanation is given as to how or why a “Trust Fund” would be
created from alleged payments made by customers to Defendants. Plaintiff also fails to state a
claim for constructive trust because a fiduciary or confidential relationship is not alleged with
particularity. Plaintiff does not allege any communication between Plaintiff and any of the
Defendants—let alone with the requisite level of spécificity—and fails.to identify any specific
promise by any of the Defendants or in what way the Plaintiff relied to its detriment.on such
nonexistent representations. Further, Plaintiff fails:to-state a claim for conversion, Again, no
trust was. created through the alleged transactions underlying the Amended Complaint, and
Plaintiff has neither alleged nor demonstrated that-it has legal.ownership or an. immediate
superior right of possession in the amount stated. Plaintiff has merely alleged aright to payment
for.goods it sold to BCNY, which does not give-rise to a claim for conversion.
Plaintiff argues that it has sufficiently pled.a claim. for fraudulent inducement.
Defendants made representations regarding their-ability to pay. for the Goods, which Plaintiff
relied on in entering into the Agreements. -Plaintiff cannot:definitively determine the insolvency
of the Corporate. Defendants or the level of knowledge of the Individual. Defendants because
Plaintiff does not have access to the Corporate Defendants’ financial statements, Nevertheless,
the allegations in both the Rosenthal Complaint and the Wells Fargo Complaint give credence to
the fact that the Corporate Defendants were insolvent when they enteréd into the Agreements.
Moreover, the Individual Defendants had knowledge of the insolvency based on the Rosenthal
and Wells Fargo allegations that the Individual Defendanits falsified their financial‘statements
and transferred assets and liabilities between the Corporate Defendants’ entities to overstate their
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assets.and downplay their liabilities in order to procure funding from both Rosenthal and Wells
Fargo. The allegations in the Complaint in Putian Elite Industry and Trading Co., Ltd, v. Evan
Cagner-& Glenn Unger, 21-cv-05913 (E.D.N.Y. Oct, 25, 2021), also gives credibility tothe
allegations in the Amended Complaint. Plaintiff should be allowed to’explore the financial
viability ‘of the Corporate Defendants at the time the Corporate Defendants entered itito the
Agreements.
Plaintiff.argues that it has sufficiently pled a basis ‘to pierce the corporate veil. ‘There are
key allegations in the Rosenthal, Wells Fargo, and Putian Complaints to show that the Individual
Defendants have.a history of committing fraud upon both financiers and manufacturers with
regard to the financial status and creditworthiness of the Corporate Deféndants in order to
procure financing or goods. To the extent Defendants argue that the Rosenthal, Wells Fargo, and
Putian matters were dismissed with prejudice, these. matters. were voluntarily dismissed.
Moreover, BCNY is-a holding company in which Synclaire and Future Shoes are subsidiaries for
the ‘sale of the Goods. Thus, they are in privity because’ the monies to the Corporate Defendants’
customers would be paid to Synclaire, Future ‘Shoes, or their other related entities.
Plaintiff contends that its fraudulent inducement, claim.is not duplicative of its breach of
contract claim. Additionally; Plaintiff sufficiently pleads claims. for constructive trust, unjust
enrichment, conversion, and-breach of fiduciary duty. The:payments by the customers of the
Corporate Defendants were required to be held in trust by the Corporate Defendants for payment
to Plaintiff. This. payment arrangement is confirmed by Unger in a May 8, 2020 email, and this
is the fiduciary relationship between Plaintiff andthe Corporate Defendants. The unjust
enrichment claim is not duplicative of the breach of contract claim because Defendants have.
been unjustly enriched by their failure to hold the monies in trust for payment to Plaintiff.
Further, the Individual Defendants had a duty to hold the monies received by the Corporate
Defendants’ customers in trust for payment to Plaintiff. By failing to make payment to Plaintiff
for the monies received, the Individual Defendants breached their fiduciary duty to. their creditor,
Plaintiff.
On reply, Defendants argue that the fraudulent inducement claim is deficient. Plaintiff
does not identify who made these purported representations, when they were made, and what
was represented. Plaintiff does not offer any explanation for why it could not have. known about
the alleged insolvency, or how that warrants excusing Plaintiff's pleading failures. While Mr.
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Tretiakov asserts that Plaintiff entered into.a series of agreements with the Corporate Defendants,
even the most cursory review of the invoices reveal that only BCNY was identified as a
purported buyer. Not surprisingly, none of the other Corporate Defendants or Individual
Defendants are mentioned anywhere in the invoices. Accordingly, BCNY is the.only entity
Plaintiff did business with regarding the transactions in question as disclosed by the invoices.
While Plaintiff argues that it would be impossible to state the circumstances constituting the
alleged fraud in detail, Plaintiff offers nothing to establish that its causes of action are otherwise
valid, Instead, Plaintiff merely parrots the statutory elements
of the various theories of piercing
the corporate veil and relies, once again, on unproven and dismissed allegations contained in
other complaints,
Defendants contend that Plaintiff's breach of contract is identical to its fraudulent
inducement claim. The fraudulent inducement claim is solely based on the unsupported
allegation that the Corporate Defendants and the Individual Defendants misrepresented their
ability to perform their contractual duties and the exact same damages are alleged for all causes
of action. Further, given Plaintiff's admission that the only transactions at issue were, at best,
between it and BCNY, Plaintiff’s cause of action for.an account stated must be dismissed: against
all Defendants other than BCNY. As to unjust enrichment, Plaintiff simply restates its breach of
contract claim, which is insufficient to establish liability against Defendants.
‘Defendants aver that Plaintiff—in its opposition, rather:than its Amended Complaint—
purports to allege the-nature, extent, and possible existence of a fiduciary relationship. Plaintiff,
however, does nothing more than‘allege.a conventional business relationship. Plaintiff's reliance.
on Unger’s email as evidence that it delivered the goods in question to all of the Corporate
Defendants and that BCNY’s customers made full payment to all of the Corporate. Defendants is
a complete exaggeration and inaccurate reading of thé email. Plaintiff’s.attempt to-use its
incorrect description of Unger’s email asa basis for. transforming the possible future payments
by BENY’s customers to somehow create trust funds and/or establish-a constructive trust is
without any factual or legal support. In any event, the Amended Complaint still fails to properly
allege the existence of a constructive trust:in the absence of an allegation of an express or
implied promise by the Corporate Defendants or the Individual Defendants:and, most
importantly, a transfer made by Plaintiff in reliance on‘such promise. Plaintiff has merely
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alleged a right to payment for goods it allegedly sold to. BCNY, which does not give rise to.a
claim for conversion.
RULING OF THE COURT
Defendants’ motion to dismiss is granted in part and denied inpart. A motion to dismiss
pursuant to CPLR § 3211(a)(1) may only be granted where “the documentary evidence‘utterly
refutes the plaintiff's factual allegations, thereby conclusively establishing a defense as a matter.
of law.” Karpovich y. City of N.Y, 162 A.D.3d 996, 997 (2d Dept. 2018), quoting Mawere v.
Landau, 130 A.D.3d 986, 987 (2d Dept. 2015). Documentary evidence must be “unambiguous,
authentic, and undeniable.” Karpovich, 162 A.D.3d at 997, quoting Granada Condominium HI
Ass'n y. Palomino, 78 A.D.3d 996, 996-97 (2d Dept. 2010).
On a motion to dismiss pursuant to CPLR .§ 3211(a)(7), the court is required to “accept
the facts as alleged in the complaint as true, accord. the plaintiff the benefit of every possible
favorable inference, and determine only whether the: facts as.alleged fit within any cognizable
legal theory.” Connaughton'v. Chipotle Mexican Grill, Inc.,29 N.Y 3d 137, 141 (2017), quoting
Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994). Dismissal is warranted where the. non-movant
“fails to assert facts in support of an element of the claim, or if the factual allegations and.
inferences to be drawn from them do not allow for an enforceable right of
recovery.” Connaughton, 29 N.Y.3d at 142.
When the court-considers evidentiary material on a Section 3211(a)(7) motion to. dismiss
but does not convert the motion into a summary judgment‘motion, “the criterion. becomes
whether the plaintiff has a cause of action, not whether the plaintiff has stated-one, and unless'the
movant shows that a material fact as claimed by the plaintiff is not a fact at all.and no significant
dispute exists regarding the alleged fact, the complaint shall not'be dismissed.” Bodden v. Kean,
86 A.D.3d 524, 526 (2d Dept: 2011). While a plaintiff’ s-affidavit may be considered to address
pleading defects, the plaintiff is not required to submit.evidentiary support for a.properly pled
claim. Dismissal is warranted only where a party’s affidavit conclusively establishes that the
plaintiff has no cause of action. Jd.
Defendants’ motion to.dismiss the first claim for fraudulent inducement is granted. A
claim for fraudulent inducement requires a “knowing misrepresentation of material present fact,
which is intended to deceive-another party-and induce that party to act on it, resulting in
injury.” Tsinias Enterprises Ltd, v: Taza Grocery, Inc., 172 A.D.34 1271,,1272 (2d Dept. 2019)
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(internal quotations omitted). Where-a claim is grounded in misrepresentation or fraud, the
circumstances constituting the wrong must be stated in.detail. Jd. The Amended Complaint’s
vague allegation that Defendants knew or should have known that BCNY was insolvent and
made materially false representations lacks the specificity required for a fraud claim. See, e.g.,
Fariello v. Checkmate Holdings, LLC, 82 A.D.3d 437, 437 (2d Dept. 2011) (fraudulent
inducement claim was properly dismissed. where it was “bare-bones, without referencing, for
example, specific places and dates of the alleged misrepresentations”). The Tretiakov
Affidavit’s reference to Plaintiff's 2020 email exchange with Unger does not salvage this claim,
as Unger’s email was sent on May 8, 2020. This‘is.after the parties had already entered into the
Agreements on March 10, 2019 and March 10, 2020. See Tretiakov Aff, at Exh,.B.
Accordingly, Plaintiff cannot demonstrate that the May 8,.2020,email from Unger induced
Plaintiff to enter into the Agreements.
Defendants’ motion to dismiss the sixth claim for breach of fiduciary duty is granted.
The elements of a claim for breach of fiduciary duty are: “1) the existence of a fiduciary
relationship, 2) misconduct by the defendant, and 3).damages directly caused by the defendant’s
misconduct.” Rut». Young Adult Inst., Inc., 74 A.D.3d 776,777 (2d Dept, 2010). The Court is
not persuaded that Unger’s May 8, 2020 email confirnis that “payments by the customers to the
Corporate Defendants were required to be held in trust by the Corporate Defendants for payment
to Plaintiff.” See Pls. Memo-of Law at 14. Plaintiff alleges nothing more than a conventional
business relationship that does not, without: more, create a fiduciary relationship. See Saul v.
Cahan, 153 A.D.3d.947, 949 (2d Dept. 2017). For the same reasons, Defendants’ motion to
dismiss the seventh claim for breach of constructive trust is granted. See JPMorgan Chase Bank,
N.A. v. Roseman,.137 A.D.3d 1222, 1223 (2016) (“The elements of acause of action to impose a
constructive trust are (1) a confidential or fiduciary relationship, (2).a promise, (3) a transfer in
reliance upon the promise, and (4) unjust enrichment”).
Defendants’ motion to dismiss the eighth claim for conversion is granted. To'state a
‘claim for conversion, the plaintiff must -demonstrate “legal ownership or.an immediate superior
right of possession toa specific identifiable thing-and- must show that the defendant exercised an
unauthorized dominion over the thing in question . . . to the exclusion of the plaintiffs rights.”
Castaldiv. 39 Winfield Assoc., 30 A.D.3d 458 (2d Dept. 2006), quoting Batsidis v. Batsidis, 9
A.D.3d.342, 343 (2d Dept. 2004). Plaintiff's contention that it has a superior right of possession
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to the “Trust Funds” from Defendants’ customers amounts to a “mere right to payment” that
cannot form the basis'of a conversion claim. See Neurological Surgery, PC, v, Group Health
Inc., 204 N.Y.S.3d 565 (2d Dept. 2024) (“The mere right to payment cannot be'the basis-for.a
cause of action alleging conversion since the essence of a conversion cause of action is the
unauthorized dominion over the thing in question”) (internal quotations omitted).
Defendants’ motion to dismiss the second claim for breach of contract is denied. A
breach of contract claim requires allegations of “the existence of a contract, the plaintiff's
performance pursuant to the contract, the defendant’s breach of the contract, and resulting
damages.” Thompson Bros. Pile Corp. v. Rosenblum, 121 A.D.3d 672, 673 (2d Dept. 2014).
The Amended Complaint states’a claim for breach of contract against BCNY based on the
allegations that Plaintiff entered into a series of Agreements to supply and deliver the goods,
Plaintiff provided the Goods, and BCNY failed to fully remit payment for the Goods.
As to the remaining defendants regarding the breach of contract cause of action,
Defendants correctly argue that Plaintiff fails to state direct claims against the remaining
Defendants for breach of contract because there are no alleged'agreements between Plaintiff and
the Individual Defendants, Synclaire, and/or Future Shoe, Nevertheless, at this nascent stage in
the proceedings, Plaintiff alleges a basis to pierce the corporate veil to reach the Individual
Defendants, Synclaire, and Future Shoe on its breach of contract claim against BCNY. “To
sutvive a motion to dismiss the complaint, a party seeking to pierce the corporate. veil must
allege facts that, if proved, establish that the party against whom the doctrine is asserted 1)
exercised complete domination over the corporation with respect to the-transaction at issue, and.
2) through such domination, abused the privilege of doing businegs.in the corporate form fo
perpetratea wrong or injustice against the plaintiff such that a court in equity will intervene.”
Olivieri Const. Corp. v. WN Weaver Street, LLC, 144 A.D:3d.765, 766-67 (2d Dept. 2016).
Factors to be considered include the failure to adhere to corporate formalities, inadequate
capitalization, commingling of assets, and the personal use of corporate funds, /d Further, “the
corporate veil will be pierced to achieve equity, even absent fraud, when-a corporation has been
so dominated by an individual or another corporation and its separate entity so ignored that it
primarily transacts the dominator’s business instead of its own and can be called the other’s alter
ego.” Jd. (internal quotations omitted).
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Here, the Amended Complaint, as supplemented by the Tretiakov Affidavit, alleges, inter
alia, that 1) the Individual Defendants caused the Corporate Defendants to disregard its corporate
formalities; 2) until they ceased doing business, the Corporate Defendants shared common office
space, employees, officers, directors, addresses, telephone numbers, and fax numbers, 3) the
Corporate Defendants and the Individual Defendants intermingled their assets and liabilities, and
4) the Corporate Defendants all act as and are one economic entity and used the legal fiction of
separate entities to defraud creditors. See Tretiakov Aff. {] 33-39. Moreover, the Amended.
Complaint alleges that these abuses of the corporate form were used to commit the harms that
Plaintiff alleges it suffered. These allegations suffice at the pleading stage to assert alter-ego
liability against Synclaire, Future Shoe, and the Individual Defendants with respect to Plaintiff's
claims against BCNY. Defendants’ affidavits affirming that Unger was an employee of BCNY
raise issues of fact not properly addressed at this juncture.
Defendants’ motion to dismiss the fifth claim for unjust enrichment is.granted. The
Agreements govern the parties’ dispute and this claim is accordingly duplicative of the breach of
contract claim. See First Class Concrete Corp. v. Rosenblum, 167 A.D.3d 989,990 (2d Dept.
2018) (unjust enrichment claims are equitable in nature and, thus, are only appropriate where.a
valid and enforceable contract does not cover the dispute at issue).
Defendants’ motion to dismiss the third claim for payment for goods sold and delivered is
denied. “In order to recover on a claim for goods sold and delivered, in an action for price, a
plaintiff must show that: 1) it had a contract with the buyer, 2) the buyer failed to pay the
purchase price, and 3) the buyer accepted the goods.” See 93.N.Y. Jur. 2d Sales § 302, The
Amended Complaint states a claim for goods sold-and delivered against BCNY based on the
alleged Agreements and délivery of the Goods. This claim is, in turn, viable against the
remaining Defendants on an alter-ego and/or piercing the corporate veil theory.
Defendants’ motion to dismiss the fourth claim for account stated is denied. “An account
stated is.an agreement between parties to an account based upon prior transactions between them
with respect to the correctness of the account items.and balance due.” Accent Collections, Inc. v.
‘Cappelli Enters., Inc., 94 A.D.3d 1026, 1026 (2d Dept. 2012), quoting Laridau v. Weissman, 78
A.D.3d 661, 662 (2d Dept. 2010). Plaintiff-alleges that it delivered invoices to Defendants with
respect to the Goods-and the-invoices were received without objection. See Tretiakov Aff, 22.
12
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Accordingly, Plaintiff states an account stated claim against BCNY. This claim is, in turn, viable
against the remaining Defendants on an alter-ego and/or piercing the corporate veil theory.
CONCLUSION
LMNCEYS
Defendants’ motion to dismiss is granted in part and denied in part. Defendants’ motion
is granted as to the first claim for fraudulent inducement, fifth claim for unjust enrichment, sixth
claim for breach of fiduciary duty, seventh claim for breach of constructive trust, and eighth
claim for conversion, and otherwise denied.
The parties are reminded of the conference scheduled for April 24, 2024 at 11:00 a.m.
All matters not decided herein are hereby denied.
‘This constitutes the decision and order of the Court.
ENTER
DATED: Mineola. NY.
March aye2024
HON, TIMOT! DRI OLL
IS.
ENTERED
Apr 01 2024
NASSAU COUNTY
COUNTY CLERK'S OFFICE
13
sued 13-0f-13
.
Preview
= NA AU OUN Kk 04 Oo: Dv INDEX NO. 604539/2023 NYSCEF BOC. NO. 98 RECEIVED NYSCEF: 04/23/2024 EXHIBITN INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 SUPREME COURT-STATE OF NEW YORK SHORT FORM ORDER Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court K.L. ORIGINALS CO., LTD., TRIAL/IAS PART: 4 Plaintiff, NASSAU COUNTY -against- Index No: 604539-23 BCNY INTERNATIONAL, INC., SYNCLAIRE Motion Seq. No. 2 BRANDS, INC., FUTURE SHOE, INC., EVAN Submission Date:-2/23/24 CAGNER, GLENN UNGER, and MICHAEL BRUCE CAGNER, Defendants. x Papers Read on these Motions: Affidavits and Affirmation in Support with Exhibit... Memorandum of Law in Support.. ocsecensecseacsseasten: Affidavit and Affirmation in Opposition with Exhibits. Memorandum of Law in Opposition... Reply Memorandum of Law.. Reply Affirmation with Exhibits. Preséntly pending before the Court is defendants:BCNY International, Inc. (“BCNY”), Synclaire Brands, Inc. (“Synclaire”), Future Shoe, Inc. (“Future Shoe”), Evan Cagier (“Evan”), Glenn Unger (“Unger”), and Michael Bruce Cagnet’s (“Michael,” and collectively, “Defendants”) motion to dismiss the Amended Complaint pursuant to CPLR § 3211(a)(1) and (7). For the following reasons, Defendants” motion is granted in part and denied in part. The parties are reminded of the conference.scheduled for April 24, 2024 at 11:00 a.m. BACKGROUND A. The Parties’ History The Amended Complaint alleges-as follows: BCNY was and is.a corporation organized undet the laws of the State of New York with a principal place of business in Hicksville, New York. BCNY, Synclairé, and various related 4t -ef-t3 INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 affiliates were engaged in the importing and wholesale distribution of shoes and accessories to retail, discount, and department stores throughout the United States, Their affiliate, Future Shoe, engaged in the internet sales of women’s and children’s shoes. BCNY, Synclaire, and Future Shoe (collectively, the “Corporate Defendants”) have multiple related entities, which they use for the sale of their products. Evan was the Chief Executive Officer, one of the principal shareholders, and a member of the Board of Directors of the Corporate Defendants. Unger was the Chief Financial Officer, shareholder, and a. member ofthe Board of Directors.of the Corporate Defendants. Michael was a shareholder and the Chairman of the Board-of Directors'‘of the Corporate Defendants. Plaintiff K.L. Originals, Ltd. (“Plaintiff”) is.a corporation formed under the laws of the People’s Republic of China that produces and manufactures shoes and other related: merchandise (“Goods”). On or about March 10, 2019 and. March 10,2020, Plaintiff entered into.a series of agreements with BCNY to supply and deliver the Goods'so BCNY could sell them to potential customers (“Agreements”), Pursuant to the Agreements, the agreed upon and reasonable value of the Goods was-$1,289,253.18. BCNY received the Goods, accepted them without objection, and did not return any of the Goods to Plaintiff. Plaintiff has fully performed its obligations under the Agreements. BCNY remitted payment of $28,000 to Plaintiff for the Goods, however, there remains an outstanding balance of $1,261,253.18. BCNY breached the Agreements by failing to timely pay Plaintiff the agreed-upon and reasonable value of the. Goods in the-amount of $1,261,253.18. Defendants are believed to‘have sold the. Goods to their customers either through the Corporate Defendants or other related entities. The Corporate.Defendants’ customers made full and final payment (the “Trust Funds’) to Defendants for the Goods, which amount is greater than the amount due Plaintiff for the Goods. Defendants applied. the Trust Funds for-a purpose other than the payment of claims to Plaintiff. BCNY is believed to have become insolvent as early as December 31, 2018, but Defendants continued to operate.the business by defrauding its vetidors and creditors. In.a Complaint filed in New York County Supreme Court, Rosenthal & Rosenthal, Inc. (“Rosenthal”) alleged, inter alia; that Defendants submitted fraudulent financial statements to Rosenthal to obtain certain loan proceeds; and Rosenthal discovered that BCNY and Synclaire had béen insolvent since:at least December31, 2018. In a Complaint filed in the Eastern District 2 2 of 13 onntenn INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 of New York, Wells Fargo Bank (“Wells Fargo”) alleged, inter alia, that Defendants submitted fraudulent financial statements to Wells Fargo in‘an attempt to obtain certain loan proceeds, and the Wells Fargo Defendants discovered that BCNY and Synclaire had been insolvent since on or about December 31, 2018. Based on the Rosenthal and Wells‘Fargo Complaints, Defendants knew or should have known that BCNY was insolvent and did not have:the financial means to pay its debt since on or about December 31, 2018. Plaintiff did not have the same access to BCNY’s financial information that Rosenthal and Wells Fargo had, and otily discovered BCNY’s insolvency from the Rosenthal Complaint and Wells Fargo Complaint. BENY is believed to have become insolvent as early'as December 31, 2018, but Defendants continued to operate the business by defrauding its vendors and creditors. Evan, Unger, and Michael (collectively, the “Individual Defendants”) deliberately made material misrepresentations to Plaintiff regarding BCNY’s ability to make payments to induce Plaintiff to continue accepting orders and’ supplying the Goods, Plaintiff delivered invoices to BCNY for the products that Defendants ordered. The invoices remained largely unpaid with an outstanding balance of $1,261,253.18 as of March 10,2020. The‘Individual Defendants knew or should have known that BCNY would not be able to make any: payments.toward the unpaid invoice balance or the Goods that it.continued to order from Plaintiff. Prior to and/or during BCNY’s business transactions with Plaintiff, the Individual Defendants caused Plaintiffto rely on false statements relating to BCNY’s financial strength and security as part of the Individual Defendants’ scheme to defraud the Corporate Defendants” vendors by converting their Goods,. using the proceeds for their own personal benefit, and stripping the Corporate Defendants of assets, closing its doors, and leaving it judgment proof and its vendors unpaid. Plaintiff relied upon thie false statements and.shipped the Goods to BCNY and has been damaged by having not been paid for most of the Goods. Plaintiff asserts the following causes of action: 1) fraudulent inducement, 2) breach. of the Agreements, 3) payment for goods.sold and delivered, 4) account stated, 5) unjust enrichment, 6) breach of fiduciary duty, 7) breach of constructive trust; and 8) conversion. I Tretiakov Affidavit Arthur Tretiakov, agent of Plaintiff, affirms, in relevant part, that on May 8, 2020, when. Plaintiff inquired when the unpaid balance would be paid, Unger replied: “Most of our customers have not reopened due to.the Corona Virus. The-situation has not changed. When the customers 3 ae 3-ef-£3 INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 reopen and they start accepting goods we should be.able to give you.a better idea of when payments can start and how much you can expect.” Defendants never told Plaintiff about their financial difficulties, which started years before the COVID-19 pandemic, Tretiakov also affirms that the Individual Defendants used the Corporate Defendants as a mere‘instrumentality, agent, alter-ego, and fagade in an attempt to erect a corporate veil. The Individual Defendants caused the Corporate Defendants to disregard its corporate formalities. Until they were shut down and ceased doing business, the Corporate’ Defendants:shared common office space, employees, officers, directors, owners, addresses, telephone numbers,:and fax numbers, The Corporate Defendants and the Individual Defendants intermingled their assets and liabilities. The Corporate Defendants and the Individual Defendants should be held jointly responsible and liable for the debts of BCNY to avoid. injustice. 2. Defendants’ Affidavits Unger affirms that he-was hired by BCNY in 2007 atid remained an employee of BCNY until it suddenly and unexpectedly ceased operation in 2020 as a result of the COVID-19 pandemic. Unger was never.an owner, director, or shareholder of BCNY, Synclaire, or Future Shoe. Evan affirms that he was the President.and Chief Executive Officer of BCNY since approximately 2016 and its sole shareholder since December 2019. BCNY was a holding company of several related entities engaged in the sale of accessories,-wholesale makeup, and licensed shoes. Synclaire was a subsidiary of BCNY, focused on the wholesale distribution. of licensed shoe brands. Future Shoe was a subsidiary of BCNY ‘focused on the sale.of shoes. over the internet. Unger was only employed by BCNY throughout the course of the business relationship with Plaintiff. Unger was.never an owner, director, or shareholder of BCNY, Synclaire, or Future Shoe. 3. May 8. 2020 Emails In opposition to Defendants” motion, Plaintiff submits an email exchange with Unger. See-Tretiakov Aff. at Exh. B. On May 8, 2020, Plaintiff sent an email stating: Dear Glenn: Pls [sic] ‘see the attached payment list _ the dued [sic] amount is USD$1333841.51, has overdue for a long time, please help to pay off. Please kindly do help remit the [sic] this week. 4 of 13 (FILED: NASSAU COUNTY CLERK 04/83/2024 09:33 PM INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 That same day, Unger responded: Most of our customers have not reopened due-to the Corona Virus. The situation has not changed. When the customers reopen and they start accepting goods we should be able to give-you a better idea of when payments can start and how much-you can expect. B. The Parties’ Positions Defendants argue that the claims against the Individual Defendants should be dismissed. Plaintiff does not allege facts' demonstrating that any of the Individual Defendants engaged in acts amounting to an abuse of the corporate form. Instead, Plaintiff only makes conclusory assertions that parrot the law on piercing the corporate veil without any specific factual allegations. In any event, Synclaire and Future Shoe are.entities wholly owned by BCNY tather than alter-egos of one another or BCNY. Plaintiff fails to allege any malfeasance by Synclaire or Future Shoe, let alone with the specificity required. Moreover, Unger was not:an owner, director, or shareholder of any of the Corporate Defendants at any time, and the Amended Complaint fails to satisfy the heavy pleading burden that Unger was an “equitable owner” of any of the Corporate. Defendants. Defendants contend that Plaintiff fails to state:a claim for breach of the Agreements against the Individual Defendants, Synclaire, and.Future Shoe. At best, Plaintiff may state a cause of action for breach of contract as against BCNY but not against any other Defendant. Additionally, Plaintiff improperly seeks to transform its breach of contract claim against BCNY into tort claims against the other Defendants. Plaintiff’s claim for fraudulent inducement is alleged ina single claim against all Defendants even though any contract was only with BCNY. Plaintiff 1) fails to state in detail the facts underlying the alleged fraudulent inducement, 2) fails to allege a special relationship between the parties ‘such that rere nondiselosute of an alleged: material fact would create a duty to disclose, and 3) lumps all Defendants together without identifying the discrete, fraudulent acts allegedly committed by each Defendant. Moreover, Plaintiff fails to identify any specific misrepresentation or omission. by any of the Defendants. The only hint is unproven allegations made by third-parties in complaints that were dismissed with prejudice. Defendants. aver that the Amended Complaint fails to state a claim for payment for goods sold and deliveréd in the absence of any binding agreement between Plaintiff and any other 5 S-of-t3 INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 Defendant. The account stated claim also-fails. Plaintiff alleges. that it rendered accounts to “Defendants,” however that allegation defies logic as it relates to all Defendants other than BCNY. Notably, the Amended Complaint does not state when or to whom. any account statements were allegedly rendered, nor does it reference any acceptance by any of the non- BCNY Defendants. Plaintiff also fails to specifically allege how muich tite elapsed after the, alleged delivery of the account statements. Plaintiff's claim for unjust enrichment is:a mere restatement of the. breach of contract claim. Defendant contends that the breach of fiduciary duty claim fails because the Amended Complaint alleges, at best, a conventional arm’s length business relationship with BCNY. While Plaintiff makes the conclusory allegation that Defendants had a duty to distribute and pay Plaintiff from Trust Funds, no explanation is given as to how or why a “Trust Fund” would be created from alleged payments made by customers to Defendants. Plaintiff also fails to state a claim for constructive trust because a fiduciary or confidential relationship is not alleged with particularity. Plaintiff does not allege any communication between Plaintiff and any of the Defendants—let alone with the requisite level of spécificity—and fails.to identify any specific promise by any of the Defendants or in what way the Plaintiff relied to its detriment.on such nonexistent representations. Further, Plaintiff fails:to-state a claim for conversion, Again, no trust was. created through the alleged transactions underlying the Amended Complaint, and Plaintiff has neither alleged nor demonstrated that-it has legal.ownership or an. immediate superior right of possession in the amount stated. Plaintiff has merely alleged aright to payment for.goods it sold to BCNY, which does not give-rise to a claim for conversion. Plaintiff argues that it has sufficiently pled.a claim. for fraudulent inducement. Defendants made representations regarding their-ability to pay. for the Goods, which Plaintiff relied on in entering into the Agreements. -Plaintiff cannot:definitively determine the insolvency of the Corporate. Defendants or the level of knowledge of the Individual. Defendants because Plaintiff does not have access to the Corporate Defendants’ financial statements, Nevertheless, the allegations in both the Rosenthal Complaint and the Wells Fargo Complaint give credence to the fact that the Corporate Defendants were insolvent when they enteréd into the Agreements. Moreover, the Individual Defendants had knowledge of the insolvency based on the Rosenthal and Wells Fargo allegations that the Individual Defendanits falsified their financial‘statements and transferred assets and liabilities between the Corporate Defendants’ entities to overstate their 6 — €-ef 13 INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 assets.and downplay their liabilities in order to procure funding from both Rosenthal and Wells Fargo. The allegations in the Complaint in Putian Elite Industry and Trading Co., Ltd, v. Evan Cagner-& Glenn Unger, 21-cv-05913 (E.D.N.Y. Oct, 25, 2021), also gives credibility tothe allegations in the Amended Complaint. Plaintiff should be allowed to’explore the financial viability ‘of the Corporate Defendants at the time the Corporate Defendants entered itito the Agreements. Plaintiff.argues that it has sufficiently pled a basis ‘to pierce the corporate veil. ‘There are key allegations in the Rosenthal, Wells Fargo, and Putian Complaints to show that the Individual Defendants have.a history of committing fraud upon both financiers and manufacturers with regard to the financial status and creditworthiness of the Corporate Deféndants in order to procure financing or goods. To the extent Defendants argue that the Rosenthal, Wells Fargo, and Putian matters were dismissed with prejudice, these. matters. were voluntarily dismissed. Moreover, BCNY is-a holding company in which Synclaire and Future Shoes are subsidiaries for the ‘sale of the Goods. Thus, they are in privity because’ the monies to the Corporate Defendants’ customers would be paid to Synclaire, Future ‘Shoes, or their other related entities. Plaintiff contends that its fraudulent inducement, claim.is not duplicative of its breach of contract claim. Additionally; Plaintiff sufficiently pleads claims. for constructive trust, unjust enrichment, conversion, and-breach of fiduciary duty. The:payments by the customers of the Corporate Defendants were required to be held in trust by the Corporate Defendants for payment to Plaintiff. This. payment arrangement is confirmed by Unger in a May 8, 2020 email, and this is the fiduciary relationship between Plaintiff andthe Corporate Defendants. The unjust enrichment claim is not duplicative of the breach of contract claim because Defendants have. been unjustly enriched by their failure to hold the monies in trust for payment to Plaintiff. Further, the Individual Defendants had a duty to hold the monies received by the Corporate Defendants’ customers in trust for payment to Plaintiff. By failing to make payment to Plaintiff for the monies received, the Individual Defendants breached their fiduciary duty to. their creditor, Plaintiff. On reply, Defendants argue that the fraudulent inducement claim is deficient. Plaintiff does not identify who made these purported representations, when they were made, and what was represented. Plaintiff does not offer any explanation for why it could not have. known about the alleged insolvency, or how that warrants excusing Plaintiff's pleading failures. While Mr. 7 -— tof ts INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 Tretiakov asserts that Plaintiff entered into.a series of agreements with the Corporate Defendants, even the most cursory review of the invoices reveal that only BCNY was identified as a purported buyer. Not surprisingly, none of the other Corporate Defendants or Individual Defendants are mentioned anywhere in the invoices. Accordingly, BCNY is the.only entity Plaintiff did business with regarding the transactions in question as disclosed by the invoices. While Plaintiff argues that it would be impossible to state the circumstances constituting the alleged fraud in detail, Plaintiff offers nothing to establish that its causes of action are otherwise valid, Instead, Plaintiff merely parrots the statutory elements of the various theories of piercing the corporate veil and relies, once again, on unproven and dismissed allegations contained in other complaints, Defendants contend that Plaintiff's breach of contract is identical to its fraudulent inducement claim. The fraudulent inducement claim is solely based on the unsupported allegation that the Corporate Defendants and the Individual Defendants misrepresented their ability to perform their contractual duties and the exact same damages are alleged for all causes of action. Further, given Plaintiff's admission that the only transactions at issue were, at best, between it and BCNY, Plaintiff’s cause of action for.an account stated must be dismissed: against all Defendants other than BCNY. As to unjust enrichment, Plaintiff simply restates its breach of contract claim, which is insufficient to establish liability against Defendants. ‘Defendants aver that Plaintiff—in its opposition, rather:than its Amended Complaint— purports to allege the-nature, extent, and possible existence of a fiduciary relationship. Plaintiff, however, does nothing more than‘allege.a conventional business relationship. Plaintiff's reliance. on Unger’s email as evidence that it delivered the goods in question to all of the Corporate Defendants and that BCNY’s customers made full payment to all of the Corporate. Defendants is a complete exaggeration and inaccurate reading of thé email. Plaintiff’s.attempt to-use its incorrect description of Unger’s email asa basis for. transforming the possible future payments by BENY’s customers to somehow create trust funds and/or establish-a constructive trust is without any factual or legal support. In any event, the Amended Complaint still fails to properly allege the existence of a constructive trust:in the absence of an allegation of an express or implied promise by the Corporate Defendants or the Individual Defendants:and, most importantly, a transfer made by Plaintiff in reliance on‘such promise. Plaintiff has merely 8 of 13 (FILED: NASSAU COUNTY CLERK 04/83/2024 09:33 PM INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 alleged a right to payment for goods it allegedly sold to. BCNY, which does not give rise to.a claim for conversion. RULING OF THE COURT Defendants’ motion to dismiss is granted in part and denied inpart. A motion to dismiss pursuant to CPLR § 3211(a)(1) may only be granted where “the documentary evidence‘utterly refutes the plaintiff's factual allegations, thereby conclusively establishing a defense as a matter. of law.” Karpovich y. City of N.Y, 162 A.D.3d 996, 997 (2d Dept. 2018), quoting Mawere v. Landau, 130 A.D.3d 986, 987 (2d Dept. 2015). Documentary evidence must be “unambiguous, authentic, and undeniable.” Karpovich, 162 A.D.3d at 997, quoting Granada Condominium HI Ass'n y. Palomino, 78 A.D.3d 996, 996-97 (2d Dept. 2010). On a motion to dismiss pursuant to CPLR .§ 3211(a)(7), the court is required to “accept the facts as alleged in the complaint as true, accord. the plaintiff the benefit of every possible favorable inference, and determine only whether the: facts as.alleged fit within any cognizable legal theory.” Connaughton'v. Chipotle Mexican Grill, Inc.,29 N.Y 3d 137, 141 (2017), quoting Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994). Dismissal is warranted where the. non-movant “fails to assert facts in support of an element of the claim, or if the factual allegations and. inferences to be drawn from them do not allow for an enforceable right of recovery.” Connaughton, 29 N.Y.3d at 142. When the court-considers evidentiary material on a Section 3211(a)(7) motion to. dismiss but does not convert the motion into a summary judgment‘motion, “the criterion. becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated-one, and unless'the movant shows that a material fact as claimed by the plaintiff is not a fact at all.and no significant dispute exists regarding the alleged fact, the complaint shall not'be dismissed.” Bodden v. Kean, 86 A.D.3d 524, 526 (2d Dept: 2011). While a plaintiff’ s-affidavit may be considered to address pleading defects, the plaintiff is not required to submit.evidentiary support for a.properly pled claim. Dismissal is warranted only where a party’s affidavit conclusively establishes that the plaintiff has no cause of action. Jd. Defendants’ motion to.dismiss the first claim for fraudulent inducement is granted. A claim for fraudulent inducement requires a “knowing misrepresentation of material present fact, which is intended to deceive-another party-and induce that party to act on it, resulting in injury.” Tsinias Enterprises Ltd, v: Taza Grocery, Inc., 172 A.D.34 1271,,1272 (2d Dept. 2019) 9 cae g-of 43 (FILED: NASSAU COUNTY CLERK 04/83/2024 09:33 PM INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 (internal quotations omitted). Where-a claim is grounded in misrepresentation or fraud, the circumstances constituting the wrong must be stated in.detail. Jd. The Amended Complaint’s vague allegation that Defendants knew or should have known that BCNY was insolvent and made materially false representations lacks the specificity required for a fraud claim. See, e.g., Fariello v. Checkmate Holdings, LLC, 82 A.D.3d 437, 437 (2d Dept. 2011) (fraudulent inducement claim was properly dismissed. where it was “bare-bones, without referencing, for example, specific places and dates of the alleged misrepresentations”). The Tretiakov Affidavit’s reference to Plaintiff's 2020 email exchange with Unger does not salvage this claim, as Unger’s email was sent on May 8, 2020. This‘is.after the parties had already entered into the Agreements on March 10, 2019 and March 10, 2020. See Tretiakov Aff, at Exh,.B. Accordingly, Plaintiff cannot demonstrate that the May 8,.2020,email from Unger induced Plaintiff to enter into the Agreements. Defendants’ motion to dismiss the sixth claim for breach of fiduciary duty is granted. The elements of a claim for breach of fiduciary duty are: “1) the existence of a fiduciary relationship, 2) misconduct by the defendant, and 3).damages directly caused by the defendant’s misconduct.” Rut». Young Adult Inst., Inc., 74 A.D.3d 776,777 (2d Dept, 2010). The Court is not persuaded that Unger’s May 8, 2020 email confirnis that “payments by the customers to the Corporate Defendants were required to be held in trust by the Corporate Defendants for payment to Plaintiff.” See Pls. Memo-of Law at 14. Plaintiff alleges nothing more than a conventional business relationship that does not, without: more, create a fiduciary relationship. See Saul v. Cahan, 153 A.D.3d.947, 949 (2d Dept. 2017). For the same reasons, Defendants’ motion to dismiss the seventh claim for breach of constructive trust is granted. See JPMorgan Chase Bank, N.A. v. Roseman,.137 A.D.3d 1222, 1223 (2016) (“The elements of acause of action to impose a constructive trust are (1) a confidential or fiduciary relationship, (2).a promise, (3) a transfer in reliance upon the promise, and (4) unjust enrichment”). Defendants’ motion to dismiss the eighth claim for conversion is granted. To'state a ‘claim for conversion, the plaintiff must -demonstrate “legal ownership or.an immediate superior right of possession toa specific identifiable thing-and- must show that the defendant exercised an unauthorized dominion over the thing in question . . . to the exclusion of the plaintiffs rights.” Castaldiv. 39 Winfield Assoc., 30 A.D.3d 458 (2d Dept. 2006), quoting Batsidis v. Batsidis, 9 A.D.3d.342, 343 (2d Dept. 2004). Plaintiff's contention that it has a superior right of possession 10 10 of 13 (FILED: NASSAU COUNTY CLERK 04/83/2024 09:33 PM INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 to the “Trust Funds” from Defendants’ customers amounts to a “mere right to payment” that cannot form the basis'of a conversion claim. See Neurological Surgery, PC, v, Group Health Inc., 204 N.Y.S.3d 565 (2d Dept. 2024) (“The mere right to payment cannot be'the basis-for.a cause of action alleging conversion since the essence of a conversion cause of action is the unauthorized dominion over the thing in question”) (internal quotations omitted). Defendants’ motion to dismiss the second claim for breach of contract is denied. A breach of contract claim requires allegations of “the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant’s breach of the contract, and resulting damages.” Thompson Bros. Pile Corp. v. Rosenblum, 121 A.D.3d 672, 673 (2d Dept. 2014). The Amended Complaint states’a claim for breach of contract against BCNY based on the allegations that Plaintiff entered into a series of Agreements to supply and deliver the goods, Plaintiff provided the Goods, and BCNY failed to fully remit payment for the Goods. As to the remaining defendants regarding the breach of contract cause of action, Defendants correctly argue that Plaintiff fails to state direct claims against the remaining Defendants for breach of contract because there are no alleged'agreements between Plaintiff and the Individual Defendants, Synclaire, and/or Future Shoe, Nevertheless, at this nascent stage in the proceedings, Plaintiff alleges a basis to pierce the corporate veil to reach the Individual Defendants, Synclaire, and Future Shoe on its breach of contract claim against BCNY. “To sutvive a motion to dismiss the complaint, a party seeking to pierce the corporate. veil must allege facts that, if proved, establish that the party against whom the doctrine is asserted 1) exercised complete domination over the corporation with respect to the-transaction at issue, and. 2) through such domination, abused the privilege of doing businegs.in the corporate form fo perpetratea wrong or injustice against the plaintiff such that a court in equity will intervene.” Olivieri Const. Corp. v. WN Weaver Street, LLC, 144 A.D:3d.765, 766-67 (2d Dept. 2016). Factors to be considered include the failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and the personal use of corporate funds, /d Further, “the corporate veil will be pierced to achieve equity, even absent fraud, when-a corporation has been so dominated by an individual or another corporation and its separate entity so ignored that it primarily transacts the dominator’s business instead of its own and can be called the other’s alter ego.” Jd. (internal quotations omitted). 11 wo tt -0f-43 (FILED: NASSAU COUNTY CLERK 04/83/2024 09:33 PM INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 Here, the Amended Complaint, as supplemented by the Tretiakov Affidavit, alleges, inter alia, that 1) the Individual Defendants caused the Corporate Defendants to disregard its corporate formalities; 2) until they ceased doing business, the Corporate Defendants shared common office space, employees, officers, directors, addresses, telephone numbers, and fax numbers, 3) the Corporate Defendants and the Individual Defendants intermingled their assets and liabilities, and 4) the Corporate Defendants all act as and are one economic entity and used the legal fiction of separate entities to defraud creditors. See Tretiakov Aff. {] 33-39. Moreover, the Amended. Complaint alleges that these abuses of the corporate form were used to commit the harms that Plaintiff alleges it suffered. These allegations suffice at the pleading stage to assert alter-ego liability against Synclaire, Future Shoe, and the Individual Defendants with respect to Plaintiff's claims against BCNY. Defendants’ affidavits affirming that Unger was an employee of BCNY raise issues of fact not properly addressed at this juncture. Defendants’ motion to dismiss the fifth claim for unjust enrichment is.granted. The Agreements govern the parties’ dispute and this claim is accordingly duplicative of the breach of contract claim. See First Class Concrete Corp. v. Rosenblum, 167 A.D.3d 989,990 (2d Dept. 2018) (unjust enrichment claims are equitable in nature and, thus, are only appropriate where.a valid and enforceable contract does not cover the dispute at issue). Defendants’ motion to dismiss the third claim for payment for goods sold and delivered is denied. “In order to recover on a claim for goods sold and delivered, in an action for price, a plaintiff must show that: 1) it had a contract with the buyer, 2) the buyer failed to pay the purchase price, and 3) the buyer accepted the goods.” See 93.N.Y. Jur. 2d Sales § 302, The Amended Complaint states a claim for goods sold-and delivered against BCNY based on the alleged Agreements and délivery of the Goods. This claim is, in turn, viable against the remaining Defendants on an alter-ego and/or piercing the corporate veil theory. Defendants’ motion to dismiss the fourth claim for account stated is denied. “An account stated is.an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items.and balance due.” Accent Collections, Inc. v. ‘Cappelli Enters., Inc., 94 A.D.3d 1026, 1026 (2d Dept. 2012), quoting Laridau v. Weissman, 78 A.D.3d 661, 662 (2d Dept. 2010). Plaintiff-alleges that it delivered invoices to Defendants with respect to the Goods-and the-invoices were received without objection. See Tretiakov Aff, 22. 12 12 of -13 (FILED: NASSAU COUNTY CLERK 04/83/2024 09:33 PM INDEX NO. 604539/2023 NYSCEF DOC. NO. 88 RECEIVED NYSCEF: 03/28/2024 Accordingly, Plaintiff states an account stated claim against BCNY. This claim is, in turn, viable against the remaining Defendants on an alter-ego and/or piercing the corporate veil theory. CONCLUSION LMNCEYS Defendants’ motion to dismiss is granted in part and denied in part. Defendants’ motion is granted as to the first claim for fraudulent inducement, fifth claim for unjust enrichment, sixth claim for breach of fiduciary duty, seventh claim for breach of constructive trust, and eighth claim for conversion, and otherwise denied. The parties are reminded of the conference scheduled for April 24, 2024 at 11:00 a.m. All matters not decided herein are hereby denied. ‘This constitutes the decision and order of the Court. ENTER DATED: Mineola. NY. March aye2024 HON, TIMOT! DRI OLL IS. ENTERED Apr 01 2024 NASSAU COUNTY COUNTY CLERK'S OFFICE 13 sued 13-0f-13 .