Khan v Garg

2024 NY Slip Op 31418(U)

April 18, 2024

Supreme Court, New York County

Docket Number: Index No. 652334/2013

Judge: Andrea Masley

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
[FILED: NEW YORK COUNTY CLERK 04/18/2024 04:59 P~ 

NYSCEF DOC. NO. 1803 

SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 48 

-----------------------------------------------------------------------------------X 

RAZA KHAN, INDEX NO. 

Plaintiff, 

MOTION DATE 

- V -

INDEX NO. 652334/2013 

RECEIVED NYSCEF: 04/18/2024 

652334/2013 

VISHAL GARG, EDUCATION INVESTMENT FINANCE 

CORPORATION, 1/0 CAPITAL LLC, and EMBARK 

HOLDCO I, LLC, 

MOTION SEQ. NO. 030 035 039 

Defendants. 

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HON. ANDREA MASLEY: 

AMENDED DECISION+ 

ORDER ON MOTION 

The following e-filed documents, listed by NYSCEF document number (Motion 030) 1382, 1383, 1384, 

1396, 1397, 1457, 1461, 1484, 1485, 1486, 1487, 1488, 1489, 1490, 1491, 1492, 1493, 1494, 1495, 

1496, 1497, 1498, 1530, 1531, 1532, 1543, 1598, 1649 

were read on this motion to/for PRECLUDE 

The following e-filed documents, listed by NYSCEF document number (Motion 035) 1418, 1419, 1420, 

1421, 1422, 1423, 1424, 1434, 1436, 1438, 1472, 1476, 1524, 1542, 1600, 1651 

were read on this motion to/for PRECLUDE 

The following e-filed documents, listed by NYSCEF document number (Motion 039) 1500, 1501, 1502, 

1503, 1504, 1505, 1506, 1507, 1508, 1509, 1510, 1511, 1512, 1513, 1514, 1515, 1516, 1517, 1518, 

1519, 1520, 1521, 1523, 1528, 1535, 1554, 1555, 1556, 1557, 1558, 1559, 1560, 1561, 1562, 1563, 

1564, 1565, 1566, 1567, 1568, 1575, 1576, 1577, 1578, 1579, 1580, 1594, 1595, 1627 

were read on this motion to/for RENEW/REARGUE/RESETTLE/RECONSIDER 1 

Upon the foregoing documents, it is 

On July 2, 2013, plaintiff Raza Khan initiated this action, individually and 

derivatively, against his childhood friend defendant Vishal Garg, their company 

Education Investment Finance Corporation (EIFC) (of which each party owns 50%), 1/0 

1 The court amends its April 12, 2024 Decision and Order based on the discussion on 

the record on April 15, 2024. The parties' letters dated April 15, 2024 and April 16, 

2024 were not considered. 

652334/2013 KHAN, RAZA vs. GARG, VISHAL 

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Capital, LLC (Garg's company), 2 and Embark Holdco I, LLC (Embark) (EIFC owns 25% 

of Embark.) (NYSCEF Doc. No. [NYSCEF] 1, Complaint; NYSCEF 316, August 10, 

2016 Decision and Order at 1 [mot. seq. no. 010]; NYSCEF 1507, Organizational 

Chart.) Khan's derivative claims are on behalf of EIFC. (NYSCEF 1, Complaint.) 

The remaining claims are: (I) corporate deadlock as to EIFC requesting that "one 

party ... be ordered to buy out the other'' (NYSCEF 335, FAC ,m 151-154); (11) breach of 

fiduciary duty of loyalty and good faith against Garg for (i) converting EIFC's funds; (ii) 

falsifying EIFC's financial records; (iii) failing to file EIFC's tax returns since 2009; (vi) 

"failing to assign the asset purchases of the Senior Secured Term Note to EIFC"; (viii) 

"using EIFC's funds to benefit MRU Lending"; (ix) "improperly seizing EIFC equipment 

on June 24, 2013"; and (xii) "amending EIFC's tax returns with false financial 

information" (id. ,m 155-159); (111) conversion against Garg and Embark for "wrongfully 

transferr[ing] funds [or using funds] belong to EIFC and EIFC-related entities" (id. ,m 

160-168); (VII) conversion against Garg for transferring EIFC funds to another entity, 

MRU Lending (id. ,m 187-190); (VIII) unjust enrichment against Garg for transferring 

2 1/0 Capital, LLC is dismissed from this action. Plaintiff's first motion to amend the 

complaint to add 1/0 Capital LLC and Embark Holdco I, LLC was denied. (NYSCEF 

168, June 29, 2014, Decision and Order [mot. seq. no. 005].) However, on February 2, 

2017, on consent, plaintiff was permitted to amend the complaint to add 1/0 Capital LLC 

and Embark Holdco I LLC. (NYSCEF 335, First Amended Complaint [FAC]; NYSCEF 

339, Order.) Plaintiff's motion 027 to add as defendants 1/0 Holdco LLC and 1/0 Capital 

Ltd. was denied. (NYSCEF 1180, Proposed Second Amended Complaint; NYSCEF 

1346, January 16, 2023 Decision and Order at 13 [mot. seq. no. 027].) Plaintiff's motion 

to amend Count V for tortious interference against 1/0 Capital LLC by adding 1/0 Holdco 

LLC and 1/0 Capital Ltd. was denied. (Id.) Count V against 1/0 Capital LLC continued 

until April 13, 2023, when the court granted summary judgment dismissing Count V. 

(NYSCEF 1349, April 13, 2023 Decision and Order at 13 [mot. seq. no. 026]; see also 

NYSCEF 1598, August 15, 2023 tr 31 :8-9 ["As Your Honor may recall, 1/0 Capital, I 

believe, was dismissed from the case"].) 

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funds belonging to EIFC (id. ,m 191-195); and (IX) an accounting of EIFC's books and 

records. (Id. ,m 196-201; see also NYSCEF 360, May 30, 2018 Decision and Order at 

10-11 [decision on mot. seq. no. 012 to dismiss Amended Complaint dismissing Count 

IV against all defendants and Counts I, II, IV, V, VI, VII, VIII and IX against Embark]; 

NYSCEF 1349, April 13, 2023 Decision and Order at 13 [decision on mot. seq. no. 026 

for summary judgment dismissing Count II (iv), (v), (vii), (x), (xi), (xiv), and (xv), Count V 

and Count VI].) Plaintiff seeks damages for Counts II, Ill, VII, and VIII. (NYSCEF 335, 

FAC at 31-33.) Defendants have counterclaims for breach of fiduciary duty, corporate 

waste and mismanagement, and conversion. (NYSCEF 334, June 9, 2017 First 

Amended Answer and Counterclaims ,m 67-79.) The trial is scheduled to begin on May 

6, 2024. 3 

In motion 039, plaintiff Raza Khan moves for an order (1) pursuant to CPLR 

2221(e), "granting Plaintiff's motion for leave to renew his opposition to Defendants' 

Motion for Partial Summary Judgment dated December 31, 20204 ('Defendants' MSJ'); 

(2) pursuant to CPLR 5015(a), reversing Hon. Justice Jeffrey Oing's prior decision 

denying Plaintiff's Motion to Reject Settlements5 (NYSCEF 316, [Mot Seq 010, August 

3 After trial in the related case Embark Corp. v Kahn, Index. No. 652801/2013, the 

complaint and counterclaims were dismissed. (NYSCEF 684, July 14, 2022 Trial 

Decision at 20.) 4 In motion 026, defendants moved for summary judgment (1) dismissing plaintiff's 

fiduciary duty claims (Count II, Subcounts (iv), (v), (vii), (x), (xi), (xiv) and(xv), tortious 

interference claim (Count V), and claim for failure to execute corporate paperwork 

(Count IV); and (2) granting Garg's counterclaim for conversion (Count II). (NYSCEF 

1116, OSC.) 5 The following actions were settled: Education Investment Finance Corporation (EIFC) 

(on behalf of Activist Special Advisory Services, LLC [ASAS]) and Phoenix Real Estate 

Solutions Ltd. [PRES] in the arbitration captioned Activist Special Advisory Services, 

LLC v Phoenix Real Estate Solutions, Case No. 011400002627, pending before the 

American Arbitration Association; and (2) EIFC and Embark Corporation and Embark 

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10, 2016 Decision]);" (3) "denying Defendants' MSJ seeking dismissal of sub-counts 

(iv), (v), (vii), (x), (xiv), (x), (xiv) and (xv) of Plaintiff's breach of fiduciary duty claims 

alleged in his First Amended Complaint." (NYSCEF 1500, OSC, Mot Seq 039; 

NYSCEF 1349, April 13, 2023, Decision granting summary judgment and dismissing 

Count II (iv), (v), (vii), (x), (xi), (xiv) and (xv), tortious interference claim (Count V), and 

claim for failure to execute corporate paperwork (Count VI).) With this motion, plaintiff 

seeks to vacate prior decisions, including a 2016 decision by Justice Oing. The issue 

here is whether PRES, Garg's company owns the IP allegedly purloined from EIFC. 

In October 2014, EIFC and its subsidiary ASAS commenced an arbitration 

against PRES alleging misappropriation of EIFC's IP. (NYSCEF 316, August 10, 2016 

Decision at 5-6.) Garg founded PRES in 2011. (Id. at 4.) EIFC and PRES entered into 

a contract pursuant to which EIFC's subsidiary ASAS performed due diligence and 

other services for PRES for which PRES paid EIFC a monthly fee. (Id.) Plaintiff alleges 

that in June 2013, the contract was terminated and the next day, the ASAS services 

were provided by Phoenix Advisors and Managers, Ltd. (PAM), another Garg owned 

entity. (Id.) 

"In June 2014, EIFC commenced an action ... against Embark ... arising from 

Embark's alleged failure to pay EIFC for certain services and for invoices paid on 

Embark's behalf by EIFC." (Id. at 5.) 

In 2014, a subsidiary of Embark commenced an action against Embark for 

summary judgment in lieu of complaint for nonpayment of a note. (Id.) 

Holdco I, LLC, in the matters captioned EIFC v Embark Corp., Index No. 155818/2014, 

and Embark Holdco I, LLC v Embark Corp., et al., Index No. 652552/14. 

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On March 4, 2015, Justice Oing removed Khan and appointed Garg to lead EIFC 

and Embark. (NYSCEF 248, tr at 47-52.) 

On March 13, 2015, the Embark actions were settled. (NYSCEF 316, Decision 

at 6.) 

Justice Oing approved the Activist settlement on August 10, 2016. (NYSCEF 

316, Decision at 12.) 

"A motion for leave to renew ... shall be based upon new facts not offered on 

the prior motion that would change the prior determination ... and shall contain 

reasonable justification for the failure to present such facts on the prior motion" (CPLR 

2221 [e] [2], [3]). Plaintiff certainly has justification for not offering facts that did not exist 

at the time for the motions. However, plaintiff's motion is denied because the new facts 

presented do not change the prior determination. 

Plaintiff asserts that Garg, and others related to Garg, disclosed in a 2018 federal 

action (Trustee Action), 6 in which PRES seeks payment of unpaid invoices, that PRES 

owns the IP which Garg denied owning in this case. 

In this action on plaintiff's motion to reject the settlements, Garg defended the 

Activist settlement and denied that PRES owned the allegedly purloined IP. (NYSCEF 

1509, MOL at 3 ["Phoenix has pressed the position in the arbitration proceeding and in 

settlement discussions that regardless of the merits of the dispute it is the wrong party 

named and cannot be liable because the intellectual property that Raza Khan claims 

Phoenix misappropriated was neither controlled nor owned by Phoenix at any time, but 

6 The "Trustee Action" herein refers to the U.S. Bank National Association v Triaxx 

Asset Management LLC et. al., Case No. 1: 18-cv-04044 (BCM), filed in the United 

States District Court of the Southern District of New York. 

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instead was controlled and owned by a consultant for Phoenix."] As plaintiff's papers 

demonstrate, Garg has consistently maintained that the disputed IP does not belong to 

PRES. (NYSCEF 1509, EIFC's Memo of Law in Opposition to Khan's Motion to Reject 

Settlements on Mot Seq 010 at 11-12; NYSCEF 275, Khan's Memo of Law to Reject 

Settlements on Mot Seq 010 at 35; NYSCEF 1168, Defendants' MOL in Support of 

Partial Summary Judgment (Mot Seq 026) fn 8 at 29.) 

Plaintiff's motion is denied. First, Justice Oing's decision is not based on the 

ownership of the IP. (NYSCEF 316, August 10, 2016 Decision.) Likewise, this court's 

decision granting defendant's motion for summary judgment is not based on the 

ownership of the IP. (NYSCEF 1349, April 13, 2023 Decision.)7 

The court rejects plaintiff's "evidence" of PRES's ownership of the IP. The Legal 

and Analytical Consulting Services Agreement8 (Consulting Agreement) between PRES 

and Phoenix concerning work product, 9 is irrelevant to the ownership of the IP at issue 

1 The court dismissed Breach of Fiduciary Duty (iv) and (v) because plaintiff's assertion 

of theft of IP was insufficient. Plaintiff fails to identify the stolen IP. (NYSCEF 1349, 

April 13, 2023 Summary Judgment Decision at 9-10.) This decision is not based on 

anything Garg said or did. Rather, it is based on plaintiff's failure to prove his claim. 

8 Likewise, alone without more, the Consulting Agreement is inconclusive as to whether 

the IP addressed therein is the same as the IP allegedly purloined from EIFC. Rather, 

this record would suggest that Tang and Jonsson invested significant time in creating 

something new. 9 It states: "All inventions, discoveries, trade secrets, confidential information, proprietary 

information, software, databases, tangible and intangible works, and all rights therein, 

which directly or indirectly relates to the analytical services provided by [PAM] 

hereunder (collectively, "Work Product"), created, made conceived, authored, reduced 

to practice or developed by [PAM] personnel shall, in all cases, be owned jointly by 

[PAM] and [PRES]. In furtherance of the foregoing, [PRES] and [PAM] shall cooperate 

in any manner requested by the other in obtaining, protecting and asserting any and all 

rights in and to the Work Product." (NYSCEF 1511, ,i 7). PAM is Phoenix Advisors and 

Mangers Ltd., an entity related to Garg. Under the agreement, PRES engages PAM as 

a consultant to "provide to [PRES] and to its clients, as advised by [PRES] analytical 

services with respect to legal and data analysis of certain COO securities for general 

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in this case as between Jonsson and PRES. (NYSCEF 1511, July 1, 2013 Legal and 

Analytical Consulting Service Agreement ,T7.) Further, plaintiff's reliance on the Trial 

Declaration of Nicholas J. Calamari, General Counsel at 1/0 Capital LLC until December 

2020 and who provided services to PRES, is misplaced. His statement that "PRES, 

working with subcontractors including PAM, provided proprietary technology and 

analysis of certain of the residential mortgage-backed securities ('RMBS') held by the 

Triaxx CDOs," is equivocal as to who owns the proprietary technology and is not 

inconsistent with Garg's position that PRES does not own the IP. (NYSCEF 1518, 

Calamari Declaration ,T 10.) Indeed, the statement itself that PRES "provided 

proprietary technology" working with subcontractors, is consistent with statements made 

in this case. (Id.) Plaintiff's reliance on Calamari's statement as "evidence" is a clear 

distortion which undermines plaintiff's argument. Likewise, plaintiff's repeated insertion 

of the balded term "its own" "in its papers, without quotes since it is not a quote from 

defendants, does not make it so. (NYSCEF 1556, Plaintiff's MOL at 6, 11.) Finally, 

while Jonsson did not testify in the Trustee Action as to ownership of the IP, he 

submitted an affidavit in this action wherein he declares that he is creator and owner of 

the IP that Activist used pursuant to a license agreement. (NYSCEF 989, Jonsson April 

5, 2019 aff ,T,T 7, 15, 17.) Nothing plaintiff has submitted effectively contradicts 

Jonsson's statement. 

portfolio management, advisory and trading purposes as requested by [PRES]. The 

manner and means by which [PAM] chooses to perform the Services are in [PAM's] 

sole discretion and control. [PAM] shall perform the Services in accordance with 

applicable professional standards with all due care, skill and ability." (,T 2.) The 

agreement is not signed by Tang or Jonsson. 

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Plaintiff also relies on PRES's Proposed Findings of Fact and Conclusions of 

Law (PFFCL) in the Trustee Action as evidence of defendants' "admission" that PRES 

owns the IP: 

"In March 2011, PRES began to analyze the hundreds of thousands of loans 

underlying the CDOs' RMBS collateral to identify evidence of wrongdoing by 

originators, servicers, and trustees. (Tang ,m 30-33, 38, 42-45; Jonsson ,m 18-

20, 23, 26-31; Tr. 723:8-14.) PRES initially performed this analysis manually, on 

a loan-by-loan basis. (Tang ,m 38, 42; Jonsson ,m 24, 26.) To do the work at 

scale, Tang and Jonsson built a unique database of loan level data for the Triaxx 

CDOs' RMBS collateral. (Tang ,m 34-37, Jonsson ,m 19-22.) Such a database 

did not exist anywhere in the market. (Tang ,i 34, Jonsson ,i 20.) PRES also 

built from scratch advanced proprietary algorithms to analyze the data. (Tang ,i,i 

37-41, 46; Jonsson ,i,i 23- 26, 32; Tr. 846:8-847:14.) The database and 

algorithms were time-consuming and costly to build. (Tang ,i,i 36, 41; Jonsson ,i 

22; Tr. 847:3-14.) Tang estimated PRES's cost to build the database and 

algorithms was $10 to $20 million. (Tang ,i 41; Tr. 848:2-22.)" 

(NYSCEF 1510, PRES's PFFCL ,I17.) PRES submitted the PFFCL to Judge Moses in 

the Trustee action in support of its request for payment of its invoices. However, 

Ownership of IP was not the issue at the hearing in the Trustee Action. Plaintiff's 

snippet is insufficient evidence of ownership. First, the court cannot confirm many of 

the unquoted statements in ,i17. Plaintiff provided a transcript to the court from the 

Trustee Action which ends at page 825 (NYSCEF 1506), but the quotes in ,i17 are from 

pages 846-848. Plaintiff failed to provide the Tang Declaration so the court cannot read 

Tang's actual statements. 

The court reviewed the Declaration of Sigurgeir Jonsson which is quoted in ,i17 

and finds that plaintiff's snippet10 omits context important to this proceeding but not 

10 The court appreciates that plaintiff place great weight on the fact that defendants 

submitted this snippet in the Trustee Action, but that does not stop plaintiff from 

connecting it to the record and supporting that which it is relying on. The snippet itself is 

not enough. 

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important to the Trustee Action. For example, paragraphs 11-18 of Jonsson's 

Declaration explain how Tang and Jonsson came to be working to find and analyze 

defective loans in RMBS trusts. (NYSCEF 1514, Jonsson Declaration.) Jonsson 

explains their search leading to the statement that "Tang and Jonsson built a unique 

database" using the DataQuick database and adding other property and borrower 

information and details the circumstances under which they worked to do so. (Id. ,m 19-

22.) Likewise, the statements "PRES paid to acquire access to DataQuick's database" 

(Id. ,I22), while "Dr Tang and [Jonsson] developed the algorithm ourselves" do not 

preclude the possibility that Tan and Jonsson provided that work for the benefit of PAM 

which was engaged by PRES. (Id. ,I24.) It is clear from the declaration that Jonsson 

was working for ARAM Global which was engaged by PRES. (,I,I13-14; see also 

NYSCEF 1506 tr 718:2-723:7.) Likewise, the court cannot infer Jonsson's relationship 

with PAM from Calamari's testimony that Jonsson was "at" PAM and Jonsson sent 

invoices to the trustee. (NYSCEF 1506, tr 11-13.) Meanwhile, plaintiff insists that Tang 

and Jonsson worked for EIFC. (NYSCEF 275, Khan's Memo of Law on Mot Seq 010 at 

35.) Finally, the statement "PRES also built from scratch advanced proprietary 

algorithms to analyze the data. (Tang ,i,i 37-41, 46; Jonsson ,i,i 23- 26, 32; Tr. 846:8-

847:14)" is equivocal as to whether PRES's employees built it or it used independent 

contractors or collaborated with others. Likewise, Tang's testimony is equivocal: "Q: In 

your declaration you stated from 2011 to 2018, you performed work on behalf of 

[PRES]? A: Yes." Without Tang's Declaration, it is unclear for whom Tang actually 

worked, if at all, and in what capacity; he could have worked as an independent 

contractor. Further, from Jonsson's Declaration and the portion of the transcript 

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provided, it appears that PRES, ARAM, Tang and Jonsson were working 

collaboratively, but the ownership of the work product between them is not addressed 

as it was not the issue in the Trustee Action. (NYSCEF 1514, Jonsson Declaration 

,i,i11-14, 18.) 

Plaintiff has not satisfied his burden to show that PRES owned the IP. It is not 

the court's burden to search the record to connect the dots where plaintiff has failed to 

do so. Motion 039 is denied. 

In motion 030, defendants move for an order precluding plaintiff from raising 

evidence, argument or theories at trial related to the following: 

1. The facts and issues that were alleged and settled in Activist Special 

Advisory Services, LLC v. Phoenix Real Estate Solutions (the "PRESL 

Arbitration"), Case No. 011400002627, American Arbitration Proceeding. 

2. Documents obtained and used in the PRESL Arbitration. 

3. Documents obtained and used in Embark Holdco I, LLC v. Embark Corp., 

et al., Index No. 652552/2014. 

4. Any arguments that the settlements reached in the above actions were 

contrary to the interests of EIFC and Khan. 

5. Any argument that Garg subverted the PRESL Arbitration by failing to 

produce documents. 

6. Any evidence relating to employment agreements executed by Mingsung 

Tang and Ziggy Jonsson. 

7. Any argument that Garg hired Tang and Jonsson to work for Defendant 

1/0 Capital and steal or destroy intellectual property belonging to EIFC. 

8. Any argument that Garg and 1/0 Capital intentionally induced PRES to 

terminate its contract with ASAS and to divert the contract to 1/0 Capital. 

9. Any argument that Better Mortgage or Garg utilized EIFC intellectual 

property and/or data at Better Mortgage. 

10. Any argument that Better Mortgage was funded with money that belonged 

to, or was owed to, Kahn or EIFC. 

11.Any argument that Garg and 1/0 Capital tortiously interfered with Khan or 

EIFC's prospective business relations with Better or Better's predecessor, 

Avex. 

12.Any argument that Garg (i) misappropriated EIFC proprietary information, 

clients, relationships or business opportunities or (ii) set up competing 

businesses by stealing EIFC's core business and misappropriating its 

proprietary information, business opportunities or clients. 

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13.Any argument that Garg converted distributions that Phoenix Holdco 

allegedly owed to Khan. 

14.Any testimony at trial from Peter Vinella regarding misappropriation of 

EIFC intellectual property; and 

15. Certain damages theories asserted by J. Duross O'Bryan, CPA. 

(NYSCEF 1382, OSC [mot. seq. no. 030].) 

Defendants' motion is denied as to number 2 above. Plaintiff may use any 

documents produced by defendants. Plaintiff need not produce documents back to 

defendants. However, any documents in plaintiff's possession, but not in 

defendants' possession, and not produced to defendants may not be used at trial. 

Defendants' motion is denied as to number 3 above because Garg's alleged 

failure to assign the Senior Secured Term Note to EIFC was carved out of paragraph 

7 of the Embark settlement. (NYSCEF 1495, Confidential Settlement Agreement & 

Release ,i 7.) 

Defendants' motion is granted as to numbers 4, 11 and 13 above which are 

not addressed by plaintiff in his opposition. 

Defendants' motion is granted as to number 5 above because whether Garg 

subverted the arbitration, or not, is not relevant to whether Khan's initiation of the 

arbitration was frivolous. 

Defendants' motion is granted as to numbers 9 and 14 above concerning 

Garg's alleged use of EIFC's intellectual property and Vinella's opinion on Garg's 

alleged misappropriation of EIFC's intellectual property because the court dismissed 

those claims. Specifically, plaintiff now asserts here that defendants improperly 

seized EIFC's equipment on June 24, 2013 where EIFC's intellectual property 

resided which was used by Garg at Better Mortgage. However, the fiduciary duty 

claim subcount (xv) for "misappropriat[ion of] EIFC's intellectual and other property 

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and assets" was alleged in the arbitration and settled, and thus, dismissed. 

(NYSCEF 1349, April 2023 Decision and Order at 8/13.) Further, having failed to 

establish facts on summary judgment that Garg used the intellectual property, data, 

and proprietary information to pitch investors for Better Mortgage, plaintiff cannot 

assert it at trial. The court dismissed plaintiff's misappropriation claim as 

speculative, based on Vinella's opinion which had no factual basis. (Id. at 10/13.)11 

Defendants' motion is denied as to number 10 above because whether Garg 

funded Better Mortgage with EIFC funds or used funds owed to Kahn to fund Better 

Mortgage is relevant to the breach of fiduciary duty claim (i) for converting funds to 

make asset purchases. 

Defendants' motion is denied as to number 15 above because O'Bryan's 

damages testimony regarding COO analytics and lost prospective customers is 

relevant to plaintiff's breach of fiduciary duty claims for (i) converting EIFC's funds, 

(ii) falsifying EIFC's financial records, and (iii) failing to file EIFC's tax returns since 

2009. Plaintiff intends to present evidence at trial that "these particular breaches of 

Garg's fiduciary duties, individually and collectively, led to the attrition of EIFC's 

employees and customers base, and ultimately the complete destruction of EIFC's 

enterprise value." (NYSCEF 1532, MOL at 16; NYSCEF 1489, O'Bryan Report ,i 

39.) 

Defendants' motion is denied as to number 15 above because O'Bryan will 

testify to damages arising from the alleged breach of fiduciary duty by (i) converting 

11 NYSCEF pagination. 

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RECEIVED NYSCEF: 04/18/2024 

EIFC's funds and (ix) improperly seizing EIFC's equipment and Garg's alleged 

conversion of EIFC's funds to make asset purchases. 

Defendants cannot preclude evidence necessary for plaintiff to defend against 

defendants' counterclaims which are: 

Count I, Breach of Fiduciary duty: for "(i) removing Garg's access to EIFC's 

operations and finances prior to commencing this litigation; (ii) knowingly causing 

false and misleading tax returns to be filed on behalf of EIFC; (iii) knowingly 

directing the filing of frivolous litigation on behalf of EIFC and expending EIFC 

funds and resources to pursue these claims as a result of a personal vendetta 

against Garg; (iv) refusing, unreasonably, to sign corporate documents prepared 

by EIFC's counsel, which caused the filing of EIFC tax returns and the transfer of 

certain assets to EIFC to be delayed; (v) refusing to return money to EIFC that he 

borrowed for personal investments; and (vi) failing to satisfy outstanding 

payments due to vendors that provided critical services to EIFC." (NYSCEF 334, 

First Amended Counterclaims ,i 69.) 

Count II, Conversion: "Khan improperly exercised unauthorized dominion over 

monies belonging to EIFC and improperly prohibited Garg, who at all relevant 

times remained a 50% shareholder, from having any access to the same or 

records regarding the same. Khan did this by, inter alia, using EIFC funds to 

fund multiple lawsuits against and investigations into wrongdoing by Garg in an 

effort to harm his estranged friend and business-partner. (Id. ,i 72.) 

Count Ill, Corporate Waste and Mismanagement: "Khan is a director of EIFC and 

is required to act in EIFC's best interest. Khan violated that obligation by 

depleting EIFC of the majority of cash it held in its company bank account and 

failing to pay vendor costs. Khan also violated that obligation when he 

unilaterally authorized excessive spending of EIFC's funds, including a payment 

of at least $400,000 to Paul Hastings to conduct an 'investigation' in furtherance 

of his personal vendetta against Garg. The payment to Paul Hastings was the 

single largest expenditure made from EIFC funds in 2013 and represented more 

than 25% of EIFC's 2012 operating profit. Khan did not seek approval or input 

from Garg or EIFC's counsel prior to spending those funds. He further violated 

that obligation when he retained two different law firms and knowingly caused 

them to file litigations purportedly on behalf of EIFC, who was left funding the 

actions. One of these was summarily dismissed and another was stayed by the 

Plaintiff two weeks after the claim was brought. Khan did not seek approval from 

Garg prior to making these expenditures because his real aim was to attack Garg 

personally by suing entities that Garg either owned or was affiliated with while 

hiding behind EIFC." (Id. ,I 76.) 

652334/2013 KHAN, RAZA vs. GARG, VISHAL 

Motion No. 030 035 039 

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As long as defendants proceed with their claims that Kahn's litigations were frivolous, 

the jury must hear evidence about the litigations to determine whether they were 

frivolous or not. Accordingly, defendants' motion is denied as to numbers 1, 2, 3, 6, 7, 

8, 10, 12, and 15 and granted as to 4, 5, 9, 11, 13, and 14. 

In motion sequence 035, plaintiff moves to exclude some of the opinion 

testimony of defendants' expert Greig Taylor. Plaintiff's challenge is limited to Taylor's 

September 11, 2020 report related to the cost of EIFC's litigations against Garg and his 

entities. Plaintiff's motion does not address Taylor's opinions on the amount Khan owes 

EIFC for capital contributions or the impact on EIFC's taxes resulting from the 

challenged litigations, nor Taylor's October 23, 2020 rebuttal report critiquing plaintiff 

expert's damages analysis. Plaintiff's motion is denied because Taylor does not need a 

law degree to evaluate legal costs and whether they are objectively within the scope of 

the stated purpose of the representation, as reflected in the retainer agreement and 

other documents. Contrary to plaintiff's objection, Taylor's testimony is relevant and the 

jury may find it helpful; it is up to the jury to decide whether to give it any weight or not. 

Taylor's firm specializes in "the identification, quantification and valuation of damages, 

lost profits, business enterprise value and wasted costs in matters involving breach of 

contract and contract terminations." (NYSCCEF 1424 Taylor Report ,I 6.) However, 

Taylor is not qualified to opine on whether the litigation benefitted EIFC or not. 

Likewise, Taylor cannot opine on Khan's motive. (See Cohen v Am. Biltrite Inc., 62 

Misc 3d 861, 683 [Sup Ct, NY County 2018] [expert "may not testify regarding either 

entity's reasoning or motivations, of which he has no personal knowledge"].) 

Accordingly, it is 

652334/2013 KHAN, RAZA vs. GARG, VISHAL 

Motion No. 030 035 039 

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ORDERED that motion sequence 030 is granted, in part, to the extent that the 

arguments related to the following are precluded from being raised at trial: 

4. Any arguments that the settlements reached in the above actions were 

contrary to the interests of EIFC and Khan. 

5. Any argument that Garg subverted the PRESL Arbitration by failing to produce 

documents. 

9. Any argument that Better Mortgage or Garg utilized EIFC intellectual property 

and/or data at Better Mortgage. 

11. Any argument that Garg and 1 /0 Capital tortiously interfered with Khan or 

EIFC's prospective business relations with Better or Better's predecessor, Avex. 

13. Any argument that Garg converted distributions that Phoenix Holdco allegedly 

owed to Khan. 

14.Any testimony at trial from Peter Vinella regarding misappropriation of EIFC 

intellectual property; and it is further 

ORDERED that the balance of motion sequence 030 is denied; and it is further 

ORDERED that motion sequence 035 is denied; and it is further 

ORDERED that motion 039 is denied. 

4/18/2024 

DATE 

CHECK ONE: 

APPLICATION: 

CHECK IF APPROPRIATE: 

~ CASE DISPOSED 

GRANTED □ DENIED 

SETTLE ORDER 

INCLUDES TRANSFER/REASSIGN 

652334/2013 KHAN, RAZA vs. GARG, VISHAL 

Motion No. 030 035 039 

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ANDREA MASLEY, J.S.C. 

NON-FINAL DISPOSITION 

GRANTED IN PART 

SUBMIT ORDER 

FIDUCIARY APPOINTMENT 

□ OTHER 

□ REFERENCE 

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