EXECUTIVE FASHIONS INC v. International Fashions, Inc., Cross Claim Defendant-Respondent. (1999)

Judgment, Supreme Court, New York County (Irad Ingraham, J.), entered November 19, 1997, which, after a nonjury trial, dismissed defendant's counterclaim for breach of fiduciary duty, unanimously affirmed, with costs.

On appellate review of a nonjury trial, “the decision of the fact-finding court should not be disturbed ․ unless it is obvious that the court's conclusions could not be reached under any fair interpretation of the evidence, especially when findings of fact rest in large measure upon considerations relating to credibility” (Claridge Gardens, Inc. v. Menotti, 160 A.D.2d 544, 544-545, 554 N.Y.S.2d 193;  accord, Langenbacher Co., Inc. v. Tolksdorf, 199 A.D.2d 64, 605 N.Y.S.2d 34;  Richstone v. Q-Med, Inc., 186 A.D.2d 354, 588 N.Y.S.2d 772).   In this case, the trial evidence enabled the court to conclude fairly that all three directors of the subject corporation, Executive Fashions (EFI), had consented, in accordance with the parties' memorandum agreement, to the payment of salaries to EFI's “key men” who, in fact, were actually working in the business.

 In addition, even if EFI's competitor, defendant International Fashions, was formed by EFI's directors in violation of their fiduciary duty of loyalty to EFI (see, e.g., Foley v. D'Agostino, 21 A.D.2d 60, 66-69, 248 N.Y.S.2d 121), we see no basis to disturb the trial court's finding that the competing venture generated no profits or other benefits upon which an otherwise justified constructive trust could have been impressed.   It is undisputed, moreover, that defendant has recouped the entire balance of his investment in EFI, and more, and there is no basis, in any event, for an award of damages to him as an individual shareholder (see, Glenn v. Hoteltron Sys., Inc., 74 N.Y.2d 386, 547 N.Y.S.2d 816, 547 N.E.2d 71;  and compare, Grato v. Grato, 272 N.J.Super. 140, 639 A.2d 390, cert. denied 138 N.J. 264, 649 A.2d 1285).

MEMORANDUM DECISION.