MADISON SULLIVAN PARTNERS LLC PMG LLC v. PMG LLC (2019)

Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered January 11, 2018, which granted defendants' motion to dismiss the complaint pursuant to CPLR 3211(a) and to award defendant PMG Sullivan Street LLC (PMG Sullivan) attorneys' fees, unanimously affirmed, without costs.

Plaintiff alleges essentially that it was damaged in connection with the development of a property jointly undertaken with defendant PMG Sullivan because PMG Sullivan and its affiliates permitted delays and cost overruns, and that defendants' actions constituted bad faith, intentional wrongdoing, and gross negligence.  It alleges further that a pre-suit demand on the nominal defendants would have been futile.  However, under Delaware law, which governs the instant demand futility analysis (see Asbestos Workers Phila. Pension Fund v. Bell, 137 A.D.3d 680, 681, 29 N.Y.S.3d 274 [1st Dept. 2016] ), the allegations in the complaint are insufficient to show demand futility because they lack the requisite particularized facts establishing that defendants faced a “substantial likelihood” of personal liability (Rales v. Blasband, 634 A.2d 927, 934–936 [Del. 1993] [internal quotation marks omitted];  see Asbestos Workers, 137 A.D.3d at 683–684, 29 N.Y.S.3d 274).

Moreover, on the merits, the failure to allege particularized facts is fatal to the cause of action for breach of fiduciary duty (see Giuliano v. Gawrylewski, 122 A.D.3d 477, 997 N.Y.S.2d 20 [1st Dept. 2014] ) and to the causes of action for aiding and abetting breach of fiduciary duty (see Deason v. Fujifilm Holdings Corp., 165 A.D.3d 501, 502, 86 N.Y.S.3d 28 [1st Dept. 2018] ).  Plaintiff makes no separate argument in its main brief on appeal that its claim for an accounting survives the dismissal of its other claims.  It is, therefore, deemed abandoned (Mehmet v. Add2net, Inc., 66 A.D.3d 437, 438, 886 N.Y.S.2d 397 [1st Dept. 2009] ).  The cause of action alleging breach of the construction management agreement is barred by the waiver of consequential damages in that agreement.

The motion court correctly granted defendants' application for attorneys' fees.  The relevant contractual provision plainly contemplates that in an action to enforce the operating agreement or amendment thereto, even where no damages are sought, the prevailing party—whether plaintiff or defendant—is entitled to its cost of collection.  In any event, insofar as the interpretation plaintiff now urges was not advanced before the motion court and on this record does not present a pure question of law, we do not reach the issue (see Beta Holdings, Inc. v. Goldsmith, 129 A.D.3d 521, 11 N.Y.S.3d 151 [1st Dept. 2015] ).