Jose Cruz Molina, et al., Plaintiffs, v. Union Radio Dispatch, Inc., Defendant–Respondent–Appellant. (2018)

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Judgment, Supreme Court, New York County (Ira Gammerman, J.H.O.), entered March 2, 2017, dismissing the claim of plaintiff Daniel Jaquez, restoring to the plaintiffs other than Jaquez all right, title and interest to their shares as stockholders in defendant, and awarding the plaintiffs other than Jaquez damages, unanimously modified, on the law and the facts, to vacate $7,920 of the award to plaintiff Jose Cruz Molina, $28,800 of the award to plaintiff Ramon Beras, and $31,200 of the award to plaintiff Nelson Benitez, and the matter remanded for a new trial on those portions of the damages claimed by each of Cruz Molina, Beras and Benitez, based on the base fees he paid to other companies during the period of his ouster from defendant, consistent with this decision, and otherwise affirmed, without costs.  Appeals from order, same court and J.H.O., entered January 10, 2017, which determined, after a trial, that defendant terminated plaintiffs' shareholder rights and denied them dividends in violation of its bylaws, and order, same court and J.H.O., entered December 30, 2016, which dismissed plaintiff Jaquez's claims as time-barred and determined that plaintiffs Tatis, Ortiz and Santos were passive shareholders, and order, same court and J.H.O., entered January 10, 2017, which determined that plaintiffs Cruz Molina, Beras and Benitez were entitled to damages for weekly radio dispatch fees based on 48 weeks of work each year, unanimously dismissed, without costs, as subsumed in the appeals from the judgment.

Plaintiff Jaquez's claims, which are based on defendant's breach of its bylaws, were correctly dismissed as untimely under

the six-year statute of limitations for contract actions (see Pomerance v. McGrath, 124 AD3d 481 [1st Dept 2015], lv dismissed 25 NY3d 1038 [2015];  CPLR 213[2] ).  Jaquez was expelled from the corporation in May 2005.  This action was commenced in or about October 2011, about five months after the statute of limitations had run.

The court correctly determined that plaintiffs Ortiz, Tatis and Santos are passive shareholders within the meaning of the corporate bylaws (see Beardslee v. Inflection Energy, LLC, 25 NY3d 150, 157 [2015] ).  The bylaws unambiguously provide that a shareholder who has worked for the company for three years may stop working and maintain his or her shareholder rights, but that, after three years of inactivity, the shareholder will stop receiving dividends as an active shareholder.  Ortiz, Tatis and Santos presented no evidence that they remained active shareholders.

Defendant was not denied a fair trial as to liability.  The court correctly ruled as a matter of law that, under the bylaws, plaintiffs' shareholder rights were improperly terminated, on the undisputed ground that plaintiffs did not receive a disciplinary hearing upon 72 hours' advance notice.  The factual basis that defendant sought to establish at trial for ejecting plaintiffs from the corporation was legally insufficient to alter the court's conclusion.

We vacate the indicated portions of the damages awards to plaintiffs Cruz Molina, Beras and Benitez because the court's determination that these plaintiffs were entitled to damages based on each one's having worked as a radio-dispatch taxicab driver for 48 weeks per year is not supported by admissible evidence presented at trial, and because the court unfairly precluded defendant from presenting evidence that these plaintiffs worked for less than 48 weeks per year during the relevant periods.  The matter is remanded for a new trial on the indicated portions of these plaintiffs' damages, at which admissible evidence shall be received concerning the number of weeks per year each plaintiff worked as a radio-dispatch taxicab driver during the period of his ouster from defendant, and his damages for base fees paid to other companies during the period of his ouster recalculated based on the resulting findings.

We have considered the parties' remaining arguments for affirmative relief and find them unavailing.

The Decision and Order of this Court entered herein on May 24, 2018 (161 AD3d 626 [1st Dept 2018] ) is hereby recalled and vacated (see M–3109 decided simultaneously herewith).

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CLERK