GEAR INC v. KIDFUSION LLC (2008)

Order, Supreme Court, New York County (Lancelot B. Hewitt, Special Referee), entered December 3, 2007, directing the Clerk to enter judgment in favor of plaintiff and against defendants in the amount of $75,801.76, with statutory interest from the date of the Special Referee's decision, unanimously modified, on the law, to increase the amount of the judgment by $802,116.47, with statutory interest on the latter amount from August 2, 2006, and otherwise affirmed, with costs in favor of plaintiff payable by defendants.   The Clerk is directed to enter judgment accordingly.

Plaintiff alleges that the individual defendants, who own a 100% interest in defendant Kidfusion LLC, fraudulently formed defendant Bradley Imports Apparel LLC to take over Kidfusion's assets and business for the purpose of defeating a judgment that plaintiff had obtained against Kidfusion.   Upon granting plaintiff's motion for a default judgment, the court referred “the issue of the assessment of Plaintiff's damages and attorneys' fees” to a Special Referee to determine.   The Special Referee, after noting his understanding that the attorneys' fees and litigation expenses that plaintiff had incurred in this action and was seeking to recover were one and the same as the “ ‘damages' ” it was also seeking to recover, assessed the reasonable value of plaintiff's attorneys' fees and directed entry of judgment in the amount thereof plus the amount of plaintiff's other litigation expenses.   This improperly deviated from the order of reference, which clearly indicated that damages and attorneys' fees were separate issues and that both were to be determined (cf. Dunleavy v. White, 236 A.D.2d 316, 317, 653 N.Y.S.2d 597 [1997] ).   Accordingly, we modify to award plaintiff, jointly and severally against defendants, an additional $802,116.47, the unpaid amount of plaintiff's judgment against Kidfusion, with interest thereon from August 2, 2006, the date the judgment was entered.