NMR TAILING LLC v. Iftikar Ahmed, Defendant–Appellant. (2023)

Judgment, Supreme Court, New York County (Barry R. Ostrager, J.), entered July 22, 2021, against defendant Iftikar Ahmed (Ahmed) in the sum of $10,428,273.97, unanimously affirmed, with costs.  Appeal from orders, same court and Justice, entered May 25, 2021 and entered June 23, 2021, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

Plaintiff made a sufficient showing that service upon Ahmed pursuant to CPLR 308(1) through (4) was impracticable, and that email service was reasonably calculated under the circumstances to apprise defendant of the action (see Safadjou v. Mohammadi, 105 A.D.3d 1423, 1425, 964 N.Y.S.2d 801 [4th Dept. 2013]).  Accordingly, Supreme Court providently exercised its discretion in allowing service of the complaint via electronic mail (CPLR 308[5]) and service was properly effectuated over defendant Ahmed.  Further, the court properly denied Ahmed's motion to vacate the default judgment pursuant to CPLR 5015(a).

The record also supports the judgment entered after an inquest on damages, which will not be disturbed.  Damages resulting from fraudulent inducement are meant to indemnify a plaintiff “for the actual pecuniary loss sustained as the direct result of the wrong” (Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 421, 646 N.Y.S.2d 76, 668 N.E.2d 1370 [1996][internal quotation marks omitted]).  “[D]amages are calculated to compensate plaintiffs for what they lost because of the fraud, not for what they might have gained in the absence of fraud” (Connaughton v. Chipotle Mexican Grill, Inc., 135 A.D.3d 535, 538, 23 N.Y.S.3d 216 [1st Dept. 2016] citing Lama Holding Co., 88 N.Y.2d at 421, 646 N.Y.S.2d 76, 668 N.E.2d 1370).  Such damages are limited to an amount necessary to restore the plaintiff to the position it occupied before the commission of the fraud (see Hotaling v. Leach & Co., 247 N.Y. 84, 159 N.E. 870 [1928]; Alpert v. Shea Gould Climenko & Casey, 160 A.D.2d 67, 71–72, 559 N.Y.S.2d 312 [1st Dept. 1990]).

Here, plaintiff NMR E–Tailing LLC (NMR) asserts that but for Ahmed's false representations, it would have never agreed to participate in the Series B offering for Choxi.com, Ahmed coerced it into making the Series B investment, all while intending to convert the majority of the funds, and that it lost its entire investment when Ahmed's fraud was unearthed, causing the company to file for bankruptcy.  These allegations are deemed admitted by virtue of the default (see Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 70, 760 N.Y.S.2d 727, 790 N.E.2d 1156 [2003]).NMR's entire investment, and the loss thereof, was a result of the established fraudulent scheme (see Whittemore v. Yeo, 117 A.D.3d 544, 545, 986 N.Y.S.2d 69 [1st Dept. 2014]).  Finally, Ahmed's default precludes his argument that NMR's loss was a derivative injury, as that argument pertains to liability, not to the measure of damages.

We have considered the remaining contentions and find them unavailing.