Raycom Program Ventures, Inc. v Reliable Fast Cash, LLC 2018 NY Slip Op 32945(U) November 20, 2018 Supreme Court, Kings County Docket Number:

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1 Raycom Pogam Ventues, nc. v Reliable Fast Cash, LLC 2018 NY Slip Op 32945(U) Novembe 20, 2018 Supeme Cout, Kings County Docket Numbe: /18 Judge: Leon Ruchelsman Cases posted with a "30000" identifie, i.e., 2013 NY Slip Op 30001(U), ae epublished fom vaious New Yok State and local govenment souces, including the New Yok State Unified Cout System's ecouts Sevice. This opinion is uncoected and not selected fo official publication.

2 [*[FLED: 1] KNGS COUNTY CLERK 11z26z201a 02:34 PM] NDEX NO /2018 NYSCEJ;,: DOC.,NO SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KNGS : CVL TERM: COMMERCAL ~ x RAYCOM PROGRAM VENTURES, NC., Plaintiff, Decision and ode ndex No /18 against RECEVED NYSCEF: 11/26/2018 ~s ~~ j RELABLE FAST CASH, LLC, MARY C. MCDONNELL, and BELLUM ENTERTANMENT, LLC, d/b/a BELLUM ENTERTANMENT, Defendants, BR HOLDNG COMPANY LLC, FX T AND FNSH LLC, and FLP MY FOOD LLC, Novembe 20, x PRESENT: HON. LEON RUCHELSMAN The defendant has moved pusuant to CPLR 3211 seeking to eague a decision and ode dated July 30, The plaintiff has opposed the motion. Papes wee submitted by the paties and aguments held. Afte eviewing all the aguments this cout now makes the following detemination. The facts wee adequately pesented in the pio ode and need not be ecited again _. ). Conclusions of Law A motion to eague which is not based upon new poof o evidence may be ganted upon the showing that the cout... ; ~. -./ ovelooked o misappehended the facts o law o fo some othe eason mistakenly aived at its ealie decision.- <,, -- :-.-.. ~ 1;. :'., ~: 1 of 8

3 [*[FLED: 2] KNGS COUNTY CLERK 11/26/ :34 P~ NDEX NO /2018 NYSCEf DOC.,NO. 62 RECEVED NYSCEF: 11/26/2018 (Delcete Cop. v. Kling, 67 AD2d 1099, 415 NYS2d 148 [4th Dept., 1979]). Thus, the paty must demonstate that the judge must have ovelooked some point of law o fact and consequently made a decision in eo. ts pupose is L ~~ (... designed to affod an oppotunity to establish that the cout ovelooked o misappehended elevant facts o misapplied a contolling pinciple of law. The motion cannot be made afte the time fo appealing the pio ode has expied (Millson v. f l: Anot Reality Cop., 266 AD2d 918, 697 NYS2d 435 [4th Dept., 1999]). Thus, whee a paty fails to demonstate that the Cout misappehended any of the elevant facts o misapplied any contolling pinciple of law, a motion to eague must be.. i~ i denied Matte of Mattie M. v. Administation fo Childen's Sevices, 48 AD3d 392, 851 NYS2d 236 [2d Dept., 2008], McNamaa v. Rockland County Patolmen's Benevolent Association, nc., 302 AD2d 435, 754 NYS2d 900 [2d Dept., 2003]). The defendant agues the cout ovelooked the second half of Califonia Copoations Code 800 (b) (2) which govens '., futility of notice and which equies that the plaintiff "has eithe infomed the copoation o the boad in witing of the ultimate facts of each cause of action against each defendant ~ ~ o deliveed to the copoation o the boad a tue copy of 2.. ' > : ~,.',.:. 2 of 8

4 [*[FLED: 3] KNGS COUNTY CLERK 11/26/ :34 PM]!"".' " -.'..' "!!'. NDEX NO /2018 NYSCEf DOC., NO. 62 ". _'!1:.1! ) ~-: "' -: RECEVED NYSCEF: 11/26/2018 the complaint which plaintiff poposes to file" (id). Raycom assets that thee is no evidence such notice was povided and t that consequently the statute has not been fulfilled and demand futility has not been pesented. ' ~ l 1: While the statute appeas to equie an additional notice to the boad o a copy of the complaint, Califonia couts intepeting this statute have not imposed this additional notification. Thus, in Apple nc., v. Supeio Cout, 18 Cal.App 5th 222, 227 Cal.Rpt.3d 8 [Cout of Appeal 6ili Distict, Califonia 2017] the cout noted that "a ~ + deivative plaintiff unde Califonia law aleady must make a demand on the company's boad to take legal action o show that it would have been futile to do so at the time the case is initiated ( 800 (b) (2)). f the suit is popely initiated and the deivative claims ae validly in issue, the pesuit demand equiement has been met" failing to mention any such. i additional notification equiement. The case of Klein v. Cook, 2015 WL [N.D.C. San Jose Division 2015) is instuctive. n that case the cout noted, citing ealie State authoity, that "in Califonia, the demand equiement unde Copoations Code 800 (b) (2) 'is simila to the fedeal ule and equies that the plaintiff in a shaeholde deivative suit allege in the complaint with paticulaity. : l 3 3 of 8... _... '

5 [*[FLED: 4] KNGS COUNTY CLERK 11/26/ :34 P~ NYSCEf DOC.. NO. 62 f NDEX NO /2018 RECEVED NYSCEF: 11/26/2018 plaintiff's effots to secue fom the boad such action as plaintiff desies, o the easons fo not making such effot, )~ (,", and allege futhe that plaintiff has eithe infomed the copoation o the boad in witing of the ultimate facts of ~.:~.,,!. each cause of action against each defendant o deliveed to the copoation o the boad a tue copy of the complaint which plaintiff poposes to file'" (id). ndeed, Fedeal Rule 23.1 (b) (3) (A) (B) states that egading deivative actions the complaint must "state with paticulaity any effot by the plaintiff to obtain the desied action fom the diectos o ~ "' -::...:~compaable authoity and, if necessay, fom the shaeholdes o membes; and the easons fo not obtaining the action o not making the effot 1 ' (id). Again, the Fedeal Rule, upon which the Califonia ule is pattened, has no such additional t notice equiement. Theefoe, the absence of such a notification cannot be deemed a failue to comply with the!... :.«) ~ statute. Consequently, the motion to eague that potion of the pio decision is denied. t, Next, defendant seeks to eague the potion of the,. decision that held thee was no meit to the assetion ;,; ~, McDonnell waived the ights of the emaining paties. On Octobe 11, 2017 McDonnell did sign a declaation which stated that ", on behalf of all defendants waive the ight to attach f~".. '}, "' "' 1;1 '. "".;; ~: of 8 ~

6 [*[FLED: 5] KNGS COUNTY CLERK 11/26/ :34 P~ NYSCEf DOC.. NO. 62 NDEX NO /2018 RECEVED NYSCEF: 11/26/2018 the validity of the New Yok Judgement" (see, Declaation of May Caole McDonnell, ]7). Thus, defendant agues that McDonnell's waive as manage and agent of BR Holding Company and the nominal defendants this action is now baed since it has been waived. Howeve, the complaint alleged that "manages of BR Holding cannot confess judgement on behalf of the company without the consent of all membes of BR Holding... plaintiff, which is a 50% membe of BR Holding, neve consented to Defendant McDonnell signing the Second Confession of Judgement on behalf of BR Holding" (see, Veified Complaint, ]36). Upon eagument the defendant agues the cout "seemed to conflate the issue of authoity to execute the confession of judgement befoe judgement was enteed and the authoity to waive a challenge to a judgement some time afte the judgement had been enteed" (Memoandum of.,.: "' Law in Suppot of Motion to Reague, page 6). Howeve, the complaint suely pesents facts, which must be accepted as tue, that McDonnell had no authoity to ente. into confessions of judgement without consent of all membes. Thus, it natually flows that likewise, McDonnell had no ' authoity to waive challenges to confessions of judgement she had no authoity to execute in the fist place. t would be absud to ague that although McDonnell had no authoity to 5..., 5 of 8

7 [*[FLED: 6] KNGS COUNTY CLERK 11/26/ :34 P~ NYSCEf DOC. NO. 62 /. -~=-..,,.,.;,~:. ~ execute the judgements (o at least thee ae questions about such authoity) once they wee executed and she then NDEX NO /2018 RECEVED NYSCEF: 11/26/2018 unilateally waived any challenges, then such challenges ae :f" indeed waived. The defendant does aise the cuious fact that between the execution of the confession of judgement and the execution of the waive, appoximately a month late, no action was taken to emove McDonnell as a manage. Howeve, such inaction does not conclusively establish the waive was accepted by BR Holding and the nominal defendants. Rathe, that is a matte that can be exploed duing discovey and might pove useful at a late stage of the litigation. "!.,. Howeve, at this junctue, thee is no basis to eague the detemination the fist cause of action states a valid claim. Consequently, the motion seeking eagument in this egad is denied. The defendant futhe agues the cout ovelooked the legal tuism that the plaintiff is equied to demonstate the defendant had actual knowledge that McDonnell lacked the J. authoity to bind the nominal defendants (see, Copoations Code 313, Copoations Code l(b) (2), Snukal v. Flightways Manufactuing nc., 3 P3d 286, 23 Cal.4th 754 [Supeme Cout of Califonia 2000]). Fo example, Copoations Code l(b) (2) states that "evey manage.. i;;' -:~:6 (...::,..!,. \ 6 of 8

8 [*[FLED: 7] KNGS COUNTY CLERK 11/26/ :34 P~ NDEX NO /2018 NYSCEf DOC. NO. 62 RECEVED NYSCEF: 11/26/2018 is an agent of the limited liability company fo the pupose of its business o affais, and the act of any manage, including, but not limited to, the execution in the name of the limited liability company of any instument fo appaently caying on in the usual way the business o affais of the limited liability company of which the peson is a manage, binds the limited liability company, unless the manage so acting has, in fact, no authoity to act fo the limited liability company in the paticula matte and the peson with whom the manage is dealing has actual knowledge of the fact that the manage has no such authoity" (id). Howeve, thee is no authoity pesented the plaintiff ~ " must, at the pleading stage, establish these legal.. ":'-'.);4}~~" / conclusions. The defendant assets that "Plaintiff's fist cause of action fails and must be dismissed because it does not, and cannot, allege that RFC had actual knowledge that l McDonnell lacked authoity to bind the nominal Defendants and Plaintiff" (supa, page 8). That is a conclusion that has not been tested though discovey. The issue of appaent authoity and knowledge of such authoity o lack theeof should suvive the pleading stage. Consequently, the motion seeking eagument on this issue is denied without pejudice.., ' f Upon the conclusion of all discovey any pat may make any. \ '.. -. i ' of 8

9 [*[FLED: 8] KNGS COUNTY CLERK 11/26/ :34 P~ NYSCEf.DOC~ NO. 62 NDEX NO /2018 RECEVED NYSCEF: 11/26/2018 motion. The motion seeking to dismiss the faud claim is denied. c. As noted in the pio ode such allegation was pled with ~ '... paticulaity and the defendant has failed to pesent any agument equiing econsideation. Likewise, the motions seeking to eague dismissing the cause of action pusuant to [ CPLR 3218 and the fifth cause of action ae denied. The defendant has-not pesented any aguments, not aleady pesented, why the cout should alte its pio detemination. Theefoe, based on the foegoing, all the motions seeking eagument ae denied. ~ So odeed. ENTER: ';' -..i DATED: Novembe 20, 2018 Booklyn NY Hon. Leon JSC ---~~ :~o.-,.;;... -,_ -... ~_ c::> -CD :z: 0 < N ' :i:- ::a: _. t.> w ' - ~.,;-.,:.,. :z: G> (./) -t('") _o e ' iz a~ ("") n Al :,;:... -; 8 8 of 8