ATLANTIS MANAGEMENT GROUP II LLC v. NABE (2019)

Order, Supreme Court, New York County (Saliann Scarpulla, J.), entered October 1, 2018, which, to the extent appealed from, granted plaintiff Atlantis Management Group II LLC (Atlantis)'s motion for partial summary judgment on its cause of action for an accounting, unanimously affirmed, with costs.

Supreme Court correctly found that Atlantis may seek an equitable accounting at common law (see Gottlieb v. Northriver Trading Co. LLC, 58 A.D.3d 550, 551, 872 N.Y.S.2d 46 [1st Dept. 2009]). As the managing members of the LLCs, the individual defendants owed plaintiff—a nonmanaging member—a fiduciary duty (see Pokoik v. Pokoik, 115 A.D.3d 428, 429, 982 N.Y.S.2d 67 [1st Dept. 2014]). “To be entitled to an equitable accounting, a claimant must demonstrate that he or she has no adequate remedy at law” (Unitel Telecard Distrib. Corp. v. Nunez, 90 A.D.3d 568, 569, 936 N.Y.S.2d 17 [1st Dept. 2011]). In view of the fiduciary relationship between Atlantis and the individual defendants, and the allegations that defendants denied demands for an accounting and access to their books and records, an accounting is appropriate in this case (see Mohinani v. Charney, 156 A.D.3d 443, 444, 67 N.Y.S.3d 10 [1st Dept. 2017]; Adam v. Cutner & Rathkopf, 238 A.D.2d 234, 242, 656 N.Y.S.2d 753 [1st Dept. 1997]). Costs and attorneys' fees were also correctly awarded pursuant to section 6.4.5 of the operating agreements.

Although the right to an accounting is distinct from a claim for an equitable accounting (see DPB Family LLC v. Eutychia Group LLC, 2018 N.Y. Slip Op. 32655(U),*4, 2018 WL 5043897 [Sup. Ct., N.Y. County 2018]), Supreme Court correctly found that it was because defendants repeatedly refused to respond to demands for access to books and records that an equitable accounting was warranted (see Morgulas v. Yudell Realty, 161 A.D.2d 211, 213–214, 554 N.Y.S.2d 597 [1st Dept. 1990] [finding that defendant's denial to plaintiffs of access to its books in violation of its obligations as a fiduciary was sufficient to warrant an accounting] ). The fact that Atlantis allegedly voluntarily gave up its right to receive financial information about the defendant LLCs does not preclude this equitable remedy.