Wilfredo Rosado, individually and derivatively as a shareholder on behalf of Castillo Rosado, Inc., et al., Plaintiffs-Appellants,
Edmundo Castillo Inc. et al., Defendants-Respondents, B & D Financial Strategies, Inc., et al., Defendants.
Caraballo & Mandell, LLC, New York (Dolly Caraballo of
counsel), for appellants.
W. Hayes, P.C., New York (Edward W. Hayes of counsel), for
Sweeny, J.P., Renwick, Mazzarelli, Manzanet-Daniels, JJ.
Supreme Court, New York County (Geoffrey D. Wright, J.),
entered December 15, 2014, to the extent appealed from,
dismissing the complaint against Edmundo Castillo (Mr.
Castillo) and Edmundo Castillo Inc. (Castillo Inc.),
unanimously affirmed, without costs. Order, same court and
Justice, entered September 12, 2014, which, to the extent
appealed from, denied plaintiff Wilfredo Rosado's motion
for contempt against all defendants, dismissed the part of
plaintiff's claims that is based on the market value of
Castillo Rosado, Inc. (CRI), and sub silentio denied
plaintiff's request for sanctions against defendant
Denise Cassano, unanimously affirmed, without costs.
court providently exercised its discretion in refusing to
draw an adverse inference against defendants for failing to
produce certain documents (see Mathis v New York Health
Club, 288 A.D.2d 56, 57 [1st Dept 2001], lv
denied 98 N.Y.2d 610');">98 N.Y.2d 610 ). To the extent plaintiff
seeks to raise spoliation and CPLR 3126 on his current
appeal, these issues have twice been decided against him
(see Rosado v Edmundo Castillo Inc., 54 A.D.3d 278');">54 A.D.3d 278
[1st Dept 2008]).
Castillo and Castillo Inc.'s argument that
plaintiff's claims are derivative, and he may not recover
individually, is precluded by our most recent decision in
this case (see Rosado v Edmundo Castillo, Inc., 89
A.D.3d 544 [1st Dept 2011]).
court providently exercised its discretion in declining to
accept plaintiff's expert's valuation of CRI and its
trademark (see Matter of Endicott Johnson Corp. v
Bade, 37 N.Y.2d 585, 588 ). The valuation was in
part based on CRI's sales, but the expert counted as
"sales" all the deposits into CRI's bank
account, without determining whether some of them were
actually loans. Moreover, even plaintiff's expert
concluded that plaintiff's "total ownership
value" was "$2, 155, 747.65 minus his share of
corporate long-term debt" (emphasis added) (see
Trotter v Lisman, 209 NY 174, 180  ["(T)he
assets of a corporation constitute a trust fund for the
payment of its debts(, ) and... its creditors have an
equitable lien upon the same, superior to the right of the
court correctly dismissed plaintiff's contract claim
against Mr. Castillo (see Dorfman v American Student
Assistance, 104 A.D.3d 474');">104 A.D.3d 474 [1st Dept 2013]). Its
conclusion that "[a]s to any agreement between
[plaintiff] and [Mr.] Castillo, [plaintiff] effectively
withdrew and abandoned the joint project, and thus before any
activity alleged against [Mr.] Castillo, [plaintiff] had
fractured the relationship" was reached under a fair
interpretation of the evidence (see Thoreson v Penthouse
Intl., 80 N.Y.2d 490, 495 ).
contends that the court should have awarded him $1, 461, 000
($769, 000 plus interest from January 2005) and punitive
damages on his conversion claim. It should be noted that the
court awarded him $759, 823.40 ($406, 973.58 plus interest
from May 13, 2005, plus costs and disbursements) as against
Cassano, defendant B & D Financial Strategies Inc., and
defendant Beverly Whitaker d/b/a The Money Tree. Plaintiff is
not entitled to additional relief. First, he does not argue
that Castillo Inc. exerted any dominion over CRI's funds.
Second, his claim that Mr. Castillo and Cassano converted
$769, 000 to their own use is not supported by the record,
which shows that many of the payments made by Whitaker d/b/a
Money Tree were for CRI's legitimate expenses, such as
payments to companies that shipped its products.
Mr. Castillo may have breached his fiduciary duty to CRI by
establishing Castillo Inc. (see Alexander & Alexander
of N.Y. v Fritzen, 147 A.D.2d 241, 246 [1st Dept 1989]),
plaintiff did not prove that this caused him $2, 155, 747.65
in losses (see Gibbs v Breed, Abbott & Morgan,
271 A.D.2d 180, 189 [1st Dept 2000]).
court providently exercised its discretion in denying
plaintiff's contempt motion. Cassano's failure to
produce Money Tree's books and records on one day's
notice falls into the category of "honest mistake"
(Matter of Sentry Armored Courier Corp. v New York City
Off-Track Betting Corp., 75 A.D.2d 344, 345 [1st Dept
1980] [internal quotation marks omitted]). Moreover,
plaintiff failed to show "actual loss or injury"
from the delay in obtaining CRI's and Money Tree's
books and records (Matter of Beiny, 164 A.D.2d 233,
236 [1st Dept 1990]). While it is true that he was harmed to
the extent defendants improperly transferred CRI's
assets, the court awarded him $759, 823.40 as against
Cassano, B & D, and Whitaker d/b/a Money Tree for these
trial court providently exercised its discretion in sub
silentio denying plaintiff's renewed motion for sanctions
against Cassano. Given that the motion court (Charles E.
Ramos, J.), denied plaintiff's original request for
sanctions against Cassano and his motion to renew (see
Rosado, 54 A.D.3d 278');">54 A.D.3d 278), and this Court affirmed both
rulings (see id.), to grant sanctions at this stage
would allow plaintiff to circumvent our affirmance of the
denial of his renewal motion. The key piece of evidence