### Ji Jiang Zheng v Daotong LLC 2024 NY Slip Op 30512(U) February 15, 2024 Supreme Court, Kings County Docket Number: Index No. 531388/2023 Judge: LeonRuchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op30001(U), are republished from various New York State and local governmentsources, including the New

York State Unified Court System's eCourtsService. This opinion is uncorrected and not selected for official publication.

### FILED: KINGS COUNTY CLERK 02/16/2024 10:37 AM INDEX NO. 531388/2023 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 02/16/2024

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### SUPREME COURT OF THE STATE 

### OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL 8 

### -· ... -·-·----··-·--.-------·-·----------------x· JI JIANG ZHENG, individually and as a member of Daotong LLC, Plaintiff,

- against

- DAOTONG LLC, 201 LIBERTY LLC, SHUNHE MANAGEMENT 

### LLC, XIANG YU CAO, ABC COMPANY #1-20, JOHN DOE #1-20,Defendants,

-·-- - ---- --- .--.----·---·-·--·-----·--·--- - - - ----x PRESENT: HON. LEON RUCHELSMAN Decision and order Index No. 531388/2023

. . . .. . . . . . .
February 

### 15, 2024 Motion Seq. #1
The defendants have movedpursuant tb CPLR§3211 seeking to dismiss various portions of the complaint for the failure to allege any causes of action.. The plaintiff opposes themotion. Papers were submitted by the parties and arguments were held. After reviewing all the cl.rguments this courtnow makes the following determination. According to the verified complaintthe plaintiff is a 34%
owner of defendant Daotong LLC and is managed by defendant Xiang 

### Yu Cao. Daotorig LLC is a fifty percent owner bf defendant 201 Lihert:.y LLC. The verified complaint alleges that on October 20, 2016, 201 Liberty LLC purchased property located at 201 46t.h Street in Kings County. On October 14, 2021, 201 Liberty LLC sold the property to defendant Shunhe Maha.gementLLC for tw.entythree million dollars. The verified compla,int .alleges that none of the. proceeds of .the sale

# or of ar1y income earned by 201 Liberty LLC was. ever transferred to Daotong LLC or to the. plaintiff. The complaint asserts 

### a derivative arid directca.use



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### FILED: KINGS COUNTY CLERK 02/16/2024 10:37 AM INDEX NO. 531388/2023 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 02/16/2024

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### of action for thebreach of fiduciary duty 

### by Cao, a derivative
cause of action

### forbreach of co11tract byCao, aiding and a9etting a breachof a fiduciary duty by Shunhe LLC and an individual cai1se ofaction for an accounting of both Daotohg LLC and 

### 201 LibertyLLC. The defendants havemoved seeking to dismissportions of the complaint on the grounds the complaint impermissibly mixes directand eierivative claims and in any event fails to allege causes of action. As noted the plaintiff opposes the motion. Conclusions of Law It is well settled that upon a motion to dismiss the court must determine, accepting the allegations of tlle complaint as true, whether the party can succeedupon any reasonable view of those facts (Perez v. Y &M

### TransportationCorporation, 

### 219,AD3d 1449, 196 

### NYS3d 145 

### [2d Dept., 2023]) . 

### Further, all the allegations in the complaint are deemed true and allreasonable inferences may

### be drawn in favor 

### o:E the plaintiff {Archival Inc., V. 177 

### Realty Corp., 220 AD3d 9091 198 NYS2d 567 [2d Dept., 

### 2023]). Whether 

### the complaint will later survive a, 

### motion for summary judgment, or whether the plaintiff will ultimatelybe. able to 

### prove its claims, 

### of course, plays no part in the 

### detetmiriation of~ ~te-disco~ery CPLR 

### §3211 motion to dismiss (see, 

### Lam v. Weiss; 2.19 AD3d 713.,. 195 NYS3d 

### 488 [2d Dept., 

### 20,23]j•
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### FILED: KINGS COUNTY CLERK 02/16/2024 10:37 AM INDEX NO. 531388/2023 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 02/16/2024

3 of 5 In order to assert any derivative claims the person must

### be a sha:r.:ehblder of the co:tporatioh (Marx v. Akers, 

### 88 NY2d 

### 189; 644 NYS2d 121 [19.96]). Of course, a shareholder cannot assert derivative claim.s when the indiviciual merely maintains individual claims not shared

### by all the shareholders. Further, the same lawsuit may contain both derivative anddirect claims. In Serino 

### v. Lipper; 123.AD3d 34, 994 NYS2d 64 [Pt Dept., 2014] the court explained that to distinguish a derivative claim .from an individual claim the court must engage intwo inquiries. First, whether any harm was sufferedby the corporation or an individual stockholder and whether the corporation 

### orthe individual stockholder would receive the benefit ofany re.covery. As the court stated "if there is any harm caused to the individual, as: opposed to 

### the qorporation; then the individual rtiay proceed with
a direct action
...On the other hand, even where an individual harm is claimed, if it is .confused with or embedded in the harm to the corporationr it cannot separately stahd" (id). Thus, where the alleged injury affects all shareholders notjust the plaintiff then the action is derivative andhot direct (Vaughan v. Standard Gen~ral 

### L.P., 154 AD3d 

### 581, 63 ~YS3d 44 

### [1~ Dept., 2017]}. Consequently; wh.ile a complaint may contain both derivative 

### claims and 

### individual claims 

### such claims 

### cannot be intermingled within 

### the same cause

## of action (~,

### Hettinga v. Nahouni.., 

### 193 AD.3d 449, 14i NYS3d 

### 693 [Pt 

### Dept., 2021L Greenberg v..Falco



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### FILED: KINGS COUNTY CLERK 02/16/2024 10:37 AM INDEX NO. 531388/2023 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 02/16/2024

4 of 5 Construction Corp. , 29 Misc3d 1202(A), 958 NYS2d 307 [Supreme Court Kings County, 2010])
. In this case the first cause of action alleging a breach of
a fiduciary duty sta:tes that ''Cao breached his fiduciary duty to the Plaintiff and the other members of Daotong when Cao failed to distribute income deriveci by Liberty pre-sale from the operations of the Subject Prbpertyll (see, Verified Complaint, 9I42 [NYSCEF Doc. No. 2]). The Verified Complaint impermissibly ±nixes derivative claims and individual claims in the same cau.se of action. Therefore, the motion seeking 

### to dismiss the first caJJ.se of action is granted without prejudice and the plaintiff shall have an opportunity to properly re-plead the claims of a breach of a fiduciary duty, Further, without a valid underlying breach of fiduciary

. . claim there can be no claim of aiding and abetting such breach of any fiduciary duty (see, Eccles v. Shamrock capital Advisors LLC, 209 ADJd 486, 176 NYS3d 35 [1st Dept,, 2022]). Therefore, the motion seeking.to dismiss. the third cause 0£ action is granted without prejudice. Concerning the motion seeking- to dismiss the accounting claim filed against 201 LibertyLLC, itis well settled that ''the right to an accounting is premis·ed 

### ll.pbn the existence of 

### a confidential or fi.dμciary relation;5hip and a brea.ch of the duty imposed 

### by that relationship respecting property in which the
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### FILED: KINGS COUNTY CLERK 02/16/2024 10:37 AM INDEX NO. 531388/2023 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 02/16/2024

5 of 5 party seeking the accounting has an interest'' (see, Palazzo v. Palazzo, 121 AD2d 261, 503 NYSZd 381 [2d Dept., 1986]), The plaintiff, in his individual capacity does not maintain any fiduciary relationship with 201 Liberty LLC. "The fiduciary relationship necessapy to obtain an accounting is created

### by the plaintiff entrusting to the defenda.nt some money or property with respectto 

### which defendant 

### is bound t.o reveal his dealings" (Stevens 

### v. St. Joseph's Hospital, 52 AD2d 722, 381 NYS2d 927 [4th Dept., 197Ei]). The plaintiff;s mere minority ownership interest inDaotong LLC which in turn has an owne.rship interest in 201 Liberty LLC does not establish any fiduciary relationship between the individual plaintiff and 201 LibertyLLC. This is particularly true where the individual plaintiff isnot a shareholder 

### of 201 Liberty LLC (see, Castellotti 

### v. Free, 138 AD3d 198, 27 NYS3d507 [Pt Dept., 2016], Royal Warwick S.A. v. Hotel Representativ:e Inc., 106 AD3d 451, 965 NYS2d 409 [pt Dept
.., 2013]). Thus, the plaintiff's mere owners.hip in a company owned by 201 Liberty LLG doe.5 not e5tablish any fiduciary relationship. Therefore, the motion seeking 

### to dismiss that portion of the accounting cause of action is grahted. So ordered.



### DATED: 

### February Brooklyn 

### ENTER~~ 15, 202.4

# ~ N.Y; Hem. Leon Ruchelsman 

## J.st
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