YU HAN YOUNG v. CHIU (2008)

In an action for specific performance of contracts to divide real property, and a related action, inter alia, to compel the transfer of certain property diverted in breach of a fiduciary duty, which were joined for trial, Cathy Chiu, a defendant in both actions, and Austin Realty Holding, LLC, a defendant in Action No. 2, appeal from a judgment of the Supreme Court, Queens County (Gavrin, J.), dated November 29, 2006, which, after a nonjury trial, is in favor of the plaintiff in both actions and against those defendants, among other things, directing specific performance of the contracts at issue in Action No. 1 and directing the transfer of 50% of the property at issue in Action No. 2 to the plaintiff.

ORDERED that the judgment is affirmed, with costs.

 “The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent” (Greenfield v. Philles Records, 98 N.Y.2d 562, 569, 750 N.Y.S.2d 565, 780 N.E.2d 166;  see Franklin Apt. Assoc., Inc. v. Westbrook Tenants Corp., 43 A.D.3d 860, 861, 841 N.Y.S.2d 673).  “When the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract giving practical interpretation to the language employed and the parties' reasonable expectations” (Costello v. Casale, 281 A.D.2d 581, 583, 723 N.Y.S.2d 44 [citations omitted];  see Correnti v. Allstate Props., LLC, 38 A.D.3d 588, 590, 832 N.Y.S.2d 594;  Harper v. Bard, 147 A.D.2d 614, 615, 538 N.Y.S.2d 23).   A party seeking reformation of a contract by reason of mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party's fraudulent misrepresentation (see M.S.B. Dev. Co., Inc. v. Lopes, 38 A.D.3d 723, 725, 832 N.Y.S.2d 95;  Matthews v. Castro, 35 A.D.3d 403, 404, 830 N.Y.S.2d 154;  Kadish Pharm. v. Blue Cross & Blue Shield of Greater N.Y., 114 A.D.2d 439, 494 N.Y.S.2d 354;  Janowitz Bros. Venture v. 25-30 120th St. Queens Corp., 75 A.D.2d 203, 215, 429 N.Y.S.2d 215).   Here, the appellants did not make such a showing.   Accordingly, the determination in Action No. 1 to grant the equitable remedy of specific performance, which lies within the discretion of the court, was appropriate (see Pyros v. Dengel, 35 A.D.3d 424, 425, 826 N.Y.S.2d 140;  Roland v. Benson, 30 A.D.3d 398, 399, 816 N.Y.S.2d 190;  McGinnis v. Cowhey, 24 A.D.3d 629, 808 N.Y.S.2d 397).

 Furthermore, directors and officers of corporations, in the performance of their duties, stand in a fiduciary relationship to their corporation (see Schachter v. Kulik, 96 A.D.2d 1038, 1039, 466 N.Y.S.2d 444).   As such, they owe the corporation their undivided loyalty and “may not assume and engage in the promotion of personal interests which are incompatible with the superior interests of their corporation” (Foley v. D'Agostino, 21 A.D.2d 60, 66, 248 N.Y.S.2d 121;  see Schachter v. Kulik, 96 A.D.2d at 1039, 466 N.Y.S.2d 444).   Specifically, an officer or director of a corporation may not, without consent, “divert and exploit for [his or her] own benefit any opportunity that should be deemed an asset of the corporation” (Commodities Research Unit [Holdings ] v. Chemical Week Assoc., 174 A.D.2d 476, 477, 571 N.Y.S.2d 253;  see Owen v. Hamilton, 44 A.D.3d 452, n. 3, 843 N.Y.S.2d 298;  Pangia & Co., CPA's P.C. v. Diker, 291 A.D.2d 539, 540, 741 N.Y.S.2d 242).   Here, the defendant Cathy Chiu diverted a corporate opportunity in breach of her fiduciary duty as an officer of YNC Ltd., and CNY Ltd., by secretly establishing a competing entity and acquiring the property at issue in Action No. 2, in which YNC Ltd., and CNY Ltd., had a “tangible expectancy” (Adirondack Capital Mgt., Inc. v. Ruberti, Girvin & Ferlazzo, P.C., 43 A.D.3d 1211, 1215, 842 N.Y.S.2d 603, lv. denied 9 N.Y.3d 817, 851 N.Y.S.2d 390, 881 N.E.2d 839;  see American Baptist Churches of Metro. N.Y. v. Galloway, 271 A.D.2d 92, 99, 710 N.Y.S.2d 12).   Accordingly, the court properly directed the transfer of 50% of the property at issue in Action No. 2 to the plaintiff, a 50% shareholder in both YNC Ltd., and CNY Ltd.