United States District Court, S.D. New York
OPINION AND ORDER
G. SCHOFIELD, District Judge
14, 2014, Plaintiffs Thomas Au, Tung Au and Isabel Au brought
this action against Defendants Carryl Capital Management LLC
(“CCM”) and Rudolph Carryl (“Carryl”)
for breach of note, breach of contract, fraud, breach of
fiduciary duty, quantum meruit, unjust enrichment and
violations of the New York Civil Rights Law, the New York
Deceptive Trade Practices Act and the New York Labor Law.
Judgment was issued against CCM and the case was referred to
Magistrate Judge James C. Francis for an inquest on damages.
On November 4, 2015, Judge Francis's report and
recommendation for an award to Plaintiffs against CCM of $1,
545, 700 plus interest and $54, 600 in attorney's fees
was adopted in its entirety.
action against Carryl was stayed following the filing of his
bankruptcy petition in the United States Bankruptcy Court.
After the stay was lifted, default judgment was granted
against Carryl on July 20, 2016. The action was referred to
Judge Francis for an inquest on damages. On December 8, 2016,
Judge Francis issued his report and recommendation (the
“Report”) of a damages award to Plaintiffs
against Carryl of $1, 545, 700 plus interest and $67, 360 in
attorney's fees. No objection to the Report was filed.
For the following reasons, the Court adopts the Report in its
facts relevant to Carryl's liability and damages are set
out in greater detail in the Report and summarized here. This
action arises out of a scheme by which CCM, through its
chairman and chief executive officer, Carryl, fraudulently
induced Plaintiff Thomas Au and his parents, Plaintiffs Tung
and Isabel Au, to invest in a holding company and its
non-existent hedge fund.
made significant investments with CCM. By September 3, 2013,
Thomas Au had invested a net amount of $705, 000. At least
$240, 000 of Thomas Au's investment was intended to be a
short-term loan, but the money was not repaid. Despite
promising to indemnify Thomas Au for his tax liability for
early IRA withdrawals used to fund his CCM investments, CCM
paid $45, 000 out of a total tax liability of $303, 000. Tung
and Isabel Au invested a total of $180, 000, secured by a
note in the same amount plus 3.25% interest compounded
quarterly, all payable on January 31, 2013. No principal or
interest has been paid. Plaintiffs' contributions were
never invested in the hedge fund but instead were used for
Carryl's personal expenses.
Au performed work for CCM by evaluating and writing reports
on stocks. Although Thomas Au was promised a salary, he was
district court “may accept, reject, or modify, in whole
or in part, the findings or recommendations made by the
magistrate judge.” 28 U.S.C. § 636(b)(1)(C). The
district court “may adopt those portions of the report
to which no ‘specific, written objection' is made,
as long as the factual and legal bases supporting the
findings and conclusions set forth in those sections are not
clearly erroneous or contrary to law.” Adams v.
N.Y. State Dep't of Educ., 855 F.Supp.2d 205, 206
(S.D.N.Y. 2012) (citing Fed.R.Civ.P. 72(b); Thomas v.
Arn, 474 U.S. 140, 149 (1985)).
respect to Carryl's liability, the Report finds that, for
the same reasons discussed in the report and recommendation
concerning damages against CCM, the facts alleged in the
Complaint establish Carryl's liability on all but the New
York Deceptive Trade Practices Act cause of action. The
Report also finds that the Complaint sufficiently pleads
alter-ego liability, allowing Carryl to be held personally
liable for the liabilities of CCM. Plaintiffs offered the
same damages evidence as was offered at the inquest against
CCM. Thus, the Report recommends damages of $1, 545, 700 plus
attorneys' fees, in the previous inquest, thirteen hours
of attorney time were subtracted as attributable to the claim
against Carryl rather than CCM. Plaintiffs are entitled to
compensation for those hours now that the liability of the
individual defendant is established. Plaintiffs' counsel
also submitted a request for an additional 18.9 hours of work
in preparation for this inquest. The Report concludes that
Plaintiffs are entitled to an additional $12, 760 in
attorneys' fees for a total of $67, 360 in attorneys'
reviewed the Report, to which no objection was made, the
Court finds no clear factual or legal error and ...