Court Opinion

ID: 9959895
Source: CourtListenerOpinion
Date Created: 2024-04-12 20:11:21.019076+00
Date Added: 2024-06-11T08:18:59.045851
License: Public Domain

Khan v Garg
               2024 NY Slip Op 31223(U)
                      April 9, 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
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  York State Unified Court System's eCourts Service.
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                       publication.
                                                                                                                      INDEX NO. 652334/2013
  NYSCEF DOC. NO. 1795                                                                                          RECEIVED NYSCEF: 04/09/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. ANDREA MASLEY                                               PART                             48
                                                                                       Justice
            ----------------------------------------------------------------- ----------------X   INDEX NO.          652334/2013
             RAZA KHAN,
                                                                                                  MOTION DATE
                                                         Plaintiff,
                                                                                                  MOTION SEQ. NO. _ _ _02_9_ _
                                                 - V -

             VISHAL GARG, EDUCATION INVESTMENT FINANCE
             CORPORATION, 1/0 CAPITAL LLC, EMBARK HOLDCO I,                                         DECISION + ORDER ON
             LLC,                                                                                         MOTION

                                                         Defendants.
            ------------------------------------------------------------------- --------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 029) 1364, 1365, 1366,
            1367, 1368, 1369, 1441, 1454, 1596, 1641
                                                               VACATE/STRIKE - NOTE OF ISSUE/JURY
            were read on this motion to/for                      DEMAND/FROM TRIAL CALENDAR

                      Defendants Vishal Garg, Education Investment Finance Corporation (EIFC), 1/0

            Capital, LLC and Embark Holdco I, LLC (Embark) move pursuant to CPLR 4101 and

            4102 to strike the jury demand. (NYSCEF Doc. No. [NYSCEF] 1364, Notice of Motion.)

            The trial is scheduled to begin on May 6, 2024.

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

            party ... be ordered to buy out the other" (NYSCEF 335, Amended Complaint                                   ,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
             652334/2013 KHAN, RAZA vs. GARG, VISHAL                                                                  Page 1 of4
             Motion No. 029

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  NYSCEF DOC. NO. 1795                                                                  RECEIVED NYSCEF: 04/09/2024

            "wrongfully transferr[ing] funds [or using funds] belong to EIFC and EIFC-related

                         ,m 160-168); (VII) conversion against Garg for transferring EIFC funds to
            entities" (id.

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

            transferring 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 [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, VIII.

                    While the court agrees that plaintiff filed the Note of Issue late, and admittedly

            lost track of the filing deadline for summary judgment, the court rejects defendants'

            argument that plaintiff's jury demand is late. (NYSCEF 1641, Sept. 15, 2023 tr 14:7-17

            [mot. seq. nos. 029, 040].) In New York, the procedure is that the jury demand is to be

            filed with the Note of Issue. (CPLR 3402; CPLR 4102 [a]; NYSCEF 1355, Note of Issue

            filed May 3, 2023 at 1.) It need not be demanded in the complaint as defendants insist.

                    Plaintiff did not waive a jury trial with his equitable claims. Plaintiff's derivative

            claim may be tried by a jury. (Abrams v Rogers, 1992 WL 12664210, *1 [Sup Ct, NY

            County 1992] ["legal claims are not magically converted into equitable issues by their

            presentation to a court of equity in a derivative suit" (internal quotation marks and

            citation omitted)], affd 195 AD2d 349 [1st Dept 1993]; See also Fedoryszyn v Weiss, 62

            Misc 2d 889, 890 [Sup Ct, Nassau County 1970].) Breach of fiduciary duty is also

            triable by a jury. (Miller v Epstein, 293 AD2d 282, 282 [1st Dept 2002].) Since plaintiff

             652334/2013 KHAN, RAZA vs. GARG, VISHAL                                            Page 2 of 4
             Motion No. 029

                                                         2 of 4
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                                                                                               INDEX NO. 652334/2013
  NYSCEF DOC. NO. 1795                                                                  RECEIVED NYSCEF: 04/09/2024

            seeks damages for his unjust enrichment claim, it too is triable by a jury. (Id.; see PJI

            4.2 uury charges for unjust enrichment claim].) Finally, while plaintiff asserts equitable

            claims - accounting and corporate deadlock - they do not destroy the predominant

            monetary nature of this action. (Lipson v Dime Sav. Bank, FSB, 203 AD2d 161, 163

            [1st Dept 1994].) Plaintiff's requested relief: directing Garg "to effectuate the immediate

            restoration of Phoenix Real Estate Solutions Ltd.'s service contract with Activist Special

            Advisory Services, LLC, a subsidiary of EIFC" and to enjoin "Garg from taking any

            action to the detriment of EIFC in his capacity as a Board member of Embark and/or

            self-appointed manager of Embark Holdco I LLC, in violation of his fiduciary duties to

            EIFC, including but not limited to restructuring, selling and/or liquidating Embark and/or

            Embark Holdco I LLC" (NYSCEF 335, Amended Complaint at 31 [items B, D]), does not

            waive plaintiff' right to a jury since plaintiff may, and apparently has, waived such relief

            since EIFC is "moribund." (NYSCEF 1441, Plaintiff's MOL at 61.) The court finds that

            the "main thrust" of plaintiff's claims is for damages and damages will provide complete

            relief on all but Count I (corporate deadlock) which the court will decide. (Cf. Zainal v

           Am.-Europe-Asia Intern. Trade and Mgt. Consultants, Ltd., 254 AD2d 52, 53 [1st Dept

            1998]; see Cadwalader Wickersham & Taft v Spinale, 177 AD2d 315, 316 [1st Dept

            1991].) As to Count IX, "the accounting is merely a method to determine the amount of

            monetary damages." (Abrams v Rogers, 195 AD2d 349 [1st Dept 1993].) Therefore,

            the jury trial shall proceed on plaintiff's legal claims.

                      Plaintiff's request, not in the form of a cross motion, for an advisory verdict on the

            equitable claim is denied.

            1   NYSCEF pagination.
                652334/2013 KHAN, RAZA vs. GARG, VISHAL                                        Page 3 of 4
                Motion No. 029

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  NYSCEF DOC. NO. 1795                                                                         RECEIVED NYSCEF: 04/09/2024

                    Accordingly, it is

                    ORDERED that defendants' motion is denied.

                     4/9/2024
                      DATE                                                        ANDREA MASLEY, J.S.C.

                                     ~                                 ~
             CHECK ONE:                  CASE DISPOSED                     NON-FINAL DISPOSITION

                                         GRANTED         0    DENIED       GRANTED IN PART
                                                                                                    □
                                                                                                        OTHER

             APPLICATION:                SETTLE ORDER                      SUBMIT ORDER

                                                                                                    □
             CHECK IF APPROPRIATE:       INCLUDES TRANSFER/REASSIGN        FIDUCIARY APPOINTMENT        REFERENCE

             652334/2013 KHAN, RAZA vs. GARG, VISHAL                                                 Page4 of 4
             Motion No. 029

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