Lavoott Bluestone, New York, NY, for appellants.
Lopresto & Barbieri, P.C., Astoria, NY (Guy Barbieri of
counsel), for respondent.
REINALDO E. RIVERA, J.P. JEFFREY A. COHEN ROBERT J. MILLER
VALERIE BRATHWAITE NELSON, JJ.
DECISION & ORDER
by the defendants from an order of the Supreme Court, Nassau
County (Stephen A. Bucaria, J.), entered September 21, 2012.
The order denied the motion of Michele Tulino to be
indemnified for attorney's fees incurred in connection
with this action.
that the appeal by the defendant Tulino Realty, Inc., is
dismissed, as that party is not aggrieved by the order
appealed from (see CPLR 5511; Mixon v TBV,
Inc., 76 A.D.3d 144); and it is further, ORDERED that
the order is affirmed on the appeal by the defendant
Nicoletta Tulino, as executor of the estate of Michele
Tulino; and it is further, ORDERED that one bill of costs is
awarded to the plaintiff.
plaintiff, Antonio Tulino, and Michele Tulino (hereinafter
the decedent) were brothers, each owning 50% of the stock of
Tulino Realty, Inc. (hereinafter the Corporation), whose sole
asset is a commercial building. In 2008, the plaintiff
entered into an agreement to sell his interest in the
Corporation to Vincenzo Acquista, the commercial
building's tenant. The agreement was contingent upon the
plaintiff's delivery of a corporate resolution signed by
all shareholders of the Corporation consenting to the sale.
After the decedent refused to give his consent, the
plaintiff, individually and on behalf of the Corporation,
commenced this action seeking, inter alia, to compel the
decedent, as president of the Corporation, to issue a stock
certificate to him reflecting his 50% interest in the
Corporation, and asserting a cause of action alleging breach
of fiduciary duty. The decedent, individually and on behalf
of the Corporation, asserted counterclaims against the
plaintiff alleging, among other things, breach of fiduciary
duty, unjust enrichment, and conversion.
February 2012, the plaintiff stipulated to voluntarily
discontinue his causes of action, without prejudice. The
action, however, continued as to the defendants'
counterclaims. Thereafter, the decedent moved, pursuant to
Business Corporation Law § 724, to be indemnified for
the attorney's fees he incurred in connection with this
action. By order entered September 21, 2012, the Supreme
Court denied his motion. After filing a notice of appeal from
that order, the decedent died, and this Court granted the
application of Nicoletta Tulino, as executor of the
decedent's estate (hereinafter the executor), to be
substituted for the decedent as a defendant, and to amend the
7 of the Business Corporation Law sets forth the statutory
framework for a corporation to provide indemnification for,
or advancement of, expenses incurred in litigation to
officers and directors (see Business Corporation Law
§ 721 et seq.). Where a corporation does not
provide for indemnification, indemnification may be obtained
by court order (see Business Corporation Law §
724[a], [c]). Pursuant to Business Corporation Law §
724(a), a court may award indemnification to the extent
authorized by Business Corporation Law §§ 722 and
723(a). Business Corporation Law § 722 allows
indemnification of a director or officer in certain actions
where the director or officer "acted, in good faith, for
a purpose which he [or she] reasonably believed to be in...
the best interests of the corporation" (Business
Corporation Law § 722[a], [c]; see Biondi v Beekman
Hill House Apt. Corp., 94 N.Y.2d 659, 666; Zuckerman
v Goldstein, 71 A.D.3d 576, 577). However, Business
Corporation Law § 722(c) states that "no
indemnification under this paragraph shall be made in respect
of... a pending action which is settled or otherwise disposed
of." Business Corporation Law § 723(a) mandates
indemnification to "[a] person who has been successful,
on the merits or otherwise, in the defense of a civil...
action... described in section 722."
to the executor's contentions, the Supreme Court properly
applied Business Corporation Law § 724(a). In this
regard, the court determined that the stipulation pursuant to
which the plaintiff's causes of action were discontinued,
without prejudice, did not demonstrate that the decedent was
successful on the merits (see Business Corporation
Law § 723[a]). Additionally, Business Corporation Law
§ 722(c) precludes indemnification in instances where,
as here, the matter was "settled or otherwise disposed
of." As a result, the decedent did not demonstrate his
entitlement to indemnification, and the court properly denied
his motion (see Business Corporation Law
§§ 722[c]; 723[a]; Mercado v COES FX,
Inc., 12 Misc.3d 766, 767-768 [Sup Ct, Nassau County]).
executor's contention that indemnification should have
been awarded based upon Business Corporation Law §
724(c) is improperly raised for the first time on appeal and
has not been considered by this Court (see Point Holding,
LLC v Crittenden, 119 A.D.3d 918, 920; Sheng Sheng
Constr., Inc. v Har's Constr., Inc., 116 A.D.3d
J.P., COHEN, MILLER and BRATHWAITE NELSON, JJ., concur.
DECISION & ORDER ON MOTION
Tulino, etc., respondent, v Nicoletta Tulino, as executor of
the estate of ...