6519-02 SUPREME COURT - STATE OF NEW YORK IAS TERM …decisions.courts.state.ny.us/10jd/nassau/decisions/index/index_new/... · 54fh Street New York, New York 10022 (for Ferrari Funding

Acker, Esq. dated May 16, 2003;Affirmation of Anthony M. Abraham, Esq. dated May 16, 2003;Affidavit of James Perrone sworn to on May 14, 2003;Affidavit of Cynthia Hardy sworn to on May 14, 2003;Notice of Cross-motion dated May 12, 2003;Affirmation of Eric Klein, Esq. dated May 18, 2003;Affidavit of James Perrone sworn to on May 14, 2003;Affidavit of Sara Altstaedter sworn to on November 26, 2002;

1

54th StreetNew York, New York 10022

ORDER

The following papers were read on Defendants ’ motion and cross-motion todismiss the amended complaint:

Notice of Motion dated May 16, 2003;Affirmation of Robert T.

54fh StreetNew York, New York 10022

(for Ferrari Funding Ltd.)Anthony M. Abraham, Esq.300 East

& Hardy)Eric Klein, Esq.300 East

- Suite 214Westbury, New York 11590

COUNSEL FOR DEFENDANT(for Perrone

& Associates900 Merchants Concourse

FERRARI FUNDING LTD.,Defendants.

X

COUNSEL FOR PLAINTIFFNeil H. Greenberg

-

JAMES PERRONE, CYNTHIA HARDY,and

- against

003,0041MOT DX

FAST TRACK FUNDING CORP.,Plaintiff,

g-26-03Motion Sequence No.:

COUNTY

PRESENT:HONORABLE LEONARD B. AUSTIN

Justice Motion R/D: 6-12-03Submission Date:

IAS TERM PART 19 NASSAU - STATE OF NEW YORK

6519-02SUPREME COURT

INDEXNO.1

Proceedinqs

Defendants previously moved pursuant to CPLR 3211 (a)(7) and (8) seeking an

order dismissing the complaint and for sanctions for commencing a frivolous action.

That motion was granted by decision and order of this Court dated March 19, 2003.

Pursuant to that Order, the matter was set down for a hearing on April 4, 2003 to

determine whether sanctions should be imposed against Plaintiff and/or its attorney

and, if so, the amount of such sanctions.

At the April 4, 2003 hearing, Plaintiff made an oral application for leave to serve

an amended complaint. The purpose of the proposed amended complaint was to

remedy the deficiencies in the original complaint which resulted in the complaint being

dismissed for failure to state a cause of action.

Plaintiff ’s application for leave to serve an amended complaint was granted. An

2

Acker, Esq. dated July 15, 2003.

Defendants move for an order pursuant to CPLR 3211 (a)(l) and (7) dismissing

the complaint.

BACKGROUN D

A. Prior

27,2003;Affidavit of Sara Altstaedter sworn to on July 14, 2003;Affidavit of Cynthia Hardy sworn to on July 13, 2003;Affidavit of James Perrone sworn to on July 13, 2003;Affidavit of Jeffrey Wain sworn to on June 27, 2003;Affirmation of Robert T.

.on May 14, 2003;Affirmation of Justin M. Reilly, Esq. dated June 26, 2003;Affidavit of Charles Seelinger sworn to on June

FAST TRACK FUNDING CORP. v. PERRONE, et a/.,Index No. 16519-02

Affidavit of Cynthia Hardy sworn to

al.,Index No. 16519-02

amended complaint was served in April, 2003. The sanctions application, as a result,

was withdrawn.

Defendants now move for dismiss the amended complaint pursuant to CPLR

3211 (a)(l) and (7).

B. Motion to Dismiss The Amended Complaint

Plaintiff Fast Track Funding Corp. ( “Fast Track ”) is a mortgage broker. James

Perrone ( “Perrone ”) is a former affiliate of Fast Track. Defendant Cynthia Harty, sued

herein as Hardy ( “Hardy”), is Perrone ’s wife. Defendant Ferrari Funding, Inc. ( “Ferrari”)

is also a mortgage broker.

Ferrari and Fast Track are competitors in the mortgage brokerage business

Each places mortgage loans with third party lenders. They are compensated for their

services by receiving a commission from the third party lenders with whom they place

the loans.

During parts of 2001 and 2002, Perrone was an affiliate of Fast Track. In that

capacity, Perrone would solicit business for Fast Track and would assist customers who

he solicited obtain mortgage loans. When the loans closed and Fast Track was paid its

commission by the third party lender, Perrone would be paid a portion of Fast Track ’s

commission as his compensation.

Perrone did not have a written employment agreement or any other agreement

3

FAST TRACK FUNDING CORP. v. PERRONE, et

FAST TRACK FUNDING CORP. v. PERRONE, et al.,Index No. 16519-02

containing a restrictive covenant or a covenant not to compete upon his terminating his

affiliation with Fast Track.

Perrone worked for Fast Track as an unlicensed individual under an Undertaking

of Accountability filed by Fast Track with the New York State Banking Department. An

“Undertaking of Accountability ” is a document filed by a mortgage brokerage firm

indicating that an unlicensed individual is soliciting business on behalf of a licensed

mortgage broker. It further indicates that the Banking Department may take regulatory

action against the licensed entity for any unlawful activity of the unlicensed individual. It

is signed by the principal of the licensed entity. The Undertaking of Accountability also

indicates that the unlicensed individual is acting as an affiliate (independent contractor)

and not an employee. Fast Track is not required to withhold taxes for its affiliate.

Defendants aver that Fast Track commenced this action to punish Perrone for

terminating his relationship with Fast Track. Perrone alleges that he terminated his

affiliation with Fast Track because of declining business and because Charles

Seelinger, Fast Track ’s principal, wanted to alter Perrone ’s commission arrangement

with Fast Track.

Upon terminating his relationship with Fast Track, Perrone went to work for

Ferrari performing essentially the same work for Ferrari that he performed at Fast Track.

Hardy was never employed by Fast Track and never had any business

relationship with Fast Track.

4

“...Fast Track would have entered

into a contractual agreement with these borrowers. ”

The second cause of action alleges that the Defendants were unjustly enriched

by the diversion of these prospective borrowers from Fast Track to Ferrari or other

mortgage brokers and seeks to recover amount allegedly received by Defendants as a

result of the diversion of this business.

The third cause of action seeks damages for Defendants ’ conversion of Fast

Track’s customer list and other proprietary information and loan opportunities.

The fourth cause of action seeks damages alleging that the Defendants

breached their fiduciary duty and duty of good faith and loyalty to Fast Track by

misappropriating Fast Track ’s customer list and other proprietary information and using

it to compete with Fast Track.

The fifth cause of action seeks money damages alleging that Perrone took

proprietary and confidential documents from Fast Track ’s computer system, modified

them and used them to solicit business for, and close loans with, Ferrari.

5


The amended complaint alleges six causes of action seeking monetary damages

and injunctive relief against the Defendants. The first cause of action alleges that the

Defendants tortiously or intentionally interfered with Fast Track ’s business by diverting

numerous prospective customers from Fast Track to Ferrari or other mortgage brokers.

The complaint alleges that had this not occurred that

N.Y.2d 409 (2001). The

6

[a][7])

When deciding a motion to dismiss made pursuant to CPLR 321 l(a)(7), the court

must accept as true all of the facts alleged in the complaint and any submissions made

in opposition to the motion, 511 West 232rd Street Owners Corn. v. Jennifer Realtv Co.,

supra; and Sokoloff v. Harriman Estates Development Corp., 96

ofAction (CPLR 3211

(2nd Dept., 2003).

2. Failure to State a Cause

A.D.2d 346 Beth-e1 of Great Neck, 303

(2nd Dept., 2003); and

Berqer v. Temple

A.D.2d 486 Asencv, Inc., 303 & J LLC v. Fillmore

N.Y.2d 144

(2002); 730 J

N.Y.2d 83 (1994). See

also, 511 West 232rd Street Owners Corp. v. Jennifer Realtv Co., 98


The sixth cause of action seeks to enjoin Defendants from using Fast Track ’s

confidential broker list and loan documents. Fast Track alleges that these documents

were copied from Fast Track ’s computer by Perrone prior to the time that he terminated

his relationship with Fast Track and that Perrone, Hardy and Ferrari use this confidential

and proprietary information to unfairly compete with Fast Track.

DISCUSSION

A. Standard on Motion Pursuant to CPLR 3211 (a)(l) and (7)

1. Documentary Evidence (3211 [a][l])

CPLR 3211 (a)(l) provides for the dismissal of an action based upon

documentary evidence. An action will be dismissed pursuant to CPLR 3211 (a)( 1) when

the documentary evidence submitted in support of the motion conclusively establishes a

defense to the action as a matter of law. Leon v. Martinez, 84

- Tortious Inference with Contract or TortiousInterference with Business Relationshin

From a reading of the complaint, it is unclear whether Plaintiff is alleging a claim

7

(2nd Dept., 1999).

B. First Cause of Action

A.D.2d 462 Mever v. Guinta 262

(2nd Dept.,

2003); and

A.D.2d 449

(2nd Dept., 1996). When the moving party

offers evidentiary material, the court must determine if the pleader has a cause of action

and not whether one has been plead. Morris v. Morris, 306

A.D.2d 764

(2nd Dept.,

2001); and Doria v. Masucci, 230

A.D.2d 595

(I” Dept., 2002).

While the allegations contained in the complaint are deemed true and afforded

every favorable inference, legal conclusions and facts contradicted on the record are

not entitled to such a presumption ’. In re Loukoumi, Inc., 285

A.D.2d 118 Chrvsler Corn., 292

(lst Dept., 1986). In so doing, the court must

determine from the facts whether the pleader has any legally cognizable cause of

action. Frank v. Daimler

A.D.2d 498

(2nd Dept., 1997);

and Goldman v. Goldman, 118

A.D.2d 159

N.Y.2d 633 (1976). See also,

Kenneth R. v. Roman Catholic Diocese of Brooklyn, 229

N.Y.2d 268 (1977); and Rovello v. Orofino Realtv Co., 40

(2nd Dept., 2000).

When deciding a motion made pursuant to CPLR 3211 (a)(7), the court must read

the challenged pleading to determine if the pleader has a cause of action and not

whether the cause of action has been properly plead. Guaaneheimer v. Ginzburg, 43

A.D.2d 193 & Queens, Inc., 273


court must also give the pleader the benefit of every inference which may be drawn

from the pleading. Leon v. Martinez, supra. See also, Dve v. Catholic Med. Ctr. Of

Brooklvn

alle_ge that any of the Defendants

intentionally induced anyone to breach their agreement with Fast Track. Nor is there

any evidence in the record that Perrone, Hardy or Ferrari or any other mortgage broker

obtained a loan for any of these persons other than one Sara Altstaedter. Thus, the

8

(2nd Dept., 2003).

The complaint does nothing more than list those deals which Perrone had

brought into Fast Track which were cancelled and allege that he diverted these loans

from Fast Track to Ferrari or other brokers.

Significantly, the complaint does not

A.D.2d 348

v. Health

Mqt. Systems, Inc., 303

N.Y.2d 90 (1993). See also, Bernberq


for tottious interference with contract or tortious interference with prospective business

advantage. In the general allegations relevant to all of the causes of action, the

amended complaint alleges a contractual relationship between the Fast Track and

certain customers. Despite these allegations, in the first cause of action, Fast Track

alleges that the Defendants actions prevented Fast Track from entering into contracts

with these prospective customers.

The first cause of action fails to state a cause of action for tortious interference

with contract. In order to plead a cause of action for tortious interference with a

contract, the Plaintiff must plead the existence of a contract between Plaintiff and a third

party, the Defendant ’s knowledge of the contract, the Defendant ’s intentional

inducement of the third party to breach the contract and damages resulting from the

breach. Kronos. Inc. v. AVX Corp., 81


- closed with Fast Track. The

documentary evidence establishes that Perrone was actually paid his commission by

Fast Track for placing this loan.

With regard to Sara Altstaedter, the submissions establish that Fast Track was

unable to obtain a loan for her. Ms. Altstaedter was a personal friend of Hardy. Hardy

referred Sara Altstaedter to her husband, Perrone, in 2001, when he was associated

with Fast Track. Perrone attempted to obtain a mortgage for Atlstaedter through Fast

Track from several sources but was unable to procure a mortgage for her due to credit

and income issues. Fast Track stopped trying to obtain a loan for Altstaedter in

September 2001. Nearly nine months later, in May 2002, Atlsteader was referred to

Ferrari by Hardy. Ferrari was able to obtain a loan for Atlsteader through one of its

sources.

9

- - involving James Reidy Ill -


complaint fails to allege an essential element of a cause of action for tortious

interference with contract; to wit: that Defendants intentionally induced these third

parties to breach their contract with Fast Track. The first cause of action must be

dismissed.

The affidavit of Anthony Abraham, Ferrari ’s President and the documentary

evidence submitted therewith conclusively establish that Perrone, Hardy and/or Ferrari

did not obtain loans for any of these individuals other than Sara Altstaedter.

Perrone ’s affidavit and the exhibits annexed thereto further establish that at least

one of the loans


Fast Track attaches computer print-outs relating to nine mortgages that closed

with Ferrari while Perrone was employed by Fast Track. Perrone allegedly advised Fast

Track these loans were cancelled. Charles Seelinger, Fast Track ’s President, states

these loans were diverted by Perrone to his wife, Hardy, and closed through Ferrari.

This claim is specifically denied by Perrone, Hardy and Ferrari and, more importantly, is

rebutted by the documentary evidence submitted by Ferrari. While these loans may

have closed during the period of time that Perrone worked for Fast Track, there is

nothing in the record or any logical inference which the Court could draw from the

record which would result in the conclusion that these loans were diverted by Perrone to

his wife, Ferrari or any other mortgage broker. The records submitted by Ferrari

establish that it did not obtain loans for any of these individuals. Fast Track did not

submit proof that any of these individuals obtained their loans through the Defendants.

The allegation by Fast Track that these individuals obtained their loans through the

Defendants is nothing more than shear speculation.

The first cause of action also fails to state a cause of action for intentional

interference with prospective business advantage. The elements of such a cause of

action are that (1) the defendant knew of the proposed contract between the plaintiff

and a third party; (2) the defendant intentionally interfered with the proposed contract;

(3) the proposed contract would have been entered into except for the defendant ’s

interference; (4) the defendant ’s interference was done in a wrongful manner; and (5)

10


11

(4’h Dept.,

1999). There is no fiduciary relationship between Hardy and Fast Track or Ferrari and

Fast Track. Hardy was never an employee or affiliate of Fast Track. Ferrari and Fast

Track are competitors.

While there was a fiduciary employer-employee relationship between Perrone

and Fast Track, there are no allegations in the complaint or evidence in the record that

any of these customers would have entered into a contract with Fast Track but for the

A.D.2d 1018 Case-Hovt Coro., 262

(2nd

Dept., 1998). No such allegations have been made nor is there any evidence in the

record from which the Court could infer such actions on the part of the Defendants.

The term “wrongful means ” also includes interfering with a contractual or

prospective business relationship in breach of a fiduciary duty such as that owed by an

employee to an employer. Haves v.

A.D.2d 565

Kisco Lodae No. 1552 of the Benevolent and

Protective Order of Elks of the United States of America, Inc., 247

Manufacturina Corp., supra. See

also, BGW Development Corp. v. Mount

3:57, comments at p. 488.

To establish a claim for intentional interference with prospective business

advantage, the Defendant ’s conduct must be wrongful; meaning that the interference

was caused by physical violence, fraud or misrepresentation, civil suits or criminal

prosecution. Guard-Life Corp. v. S. Parker Hardware

N.Y.2d 183 (1980). See also, PJI

Manufacturins Corp.,

50

N.Y.2d 614 (1996); and Guard-Life Corp. v. S. Parker Hardware

FleetINorstar Financial Group. Inc., 87


the plaintiff suffered damage. NBT Bancorp v.

(2nd Dept.,

2000).

12

A.D.2d 673 Cot-o., 276

(lst Dept., 2002) and

Lakeville Pace Mechanical, Inc. v. Elmar Realtv

A.D.2d 295

Dabv,

supra. See also; Prestiqe Caterers v. Kaufman, 290

(lst Dept., 1991). Plaintiff must also establish that

the services were performed at the request or behest of the Defendant. Clark v.

A.D.2d 375

(3rd Dept., 2002); and Kaaan v. K-Tel

Entertainment, Inc., 172

A.D.2d 732

- Unjust Enrichment

The second cause of action alleges unjust enrichment. The gravamen of this

claim is that Perrone, Hardy and/or Ferrari received commissions from Fast Track

customers or prospective customers who were diverted by Perrone to Fast Track or

other mortgage brokers.

In order to recover on a claim of unjust enrichment, Plaintiff must establish that it

performed services on behalf of the Defendant resulting in the Defendant ’s unjust

enrichment. Clark v. Dabv, 300

(2nd Dept.,

1992). Therefore, the first cause of action fails to set forth a legally cognizable cause of

action under any theory must be dismissed.

C. Second Cause of Action

A.D.2d 501 & Edwards, Inc v. Samuels, 187


actions of Perrone. Furthermore, there are no factual allegations in the pleadings and

no evidence in the record that any of those customers or prospective customers of Fast

Track cancelled deals for which Fast Track would have earned a commission but for the

actions Perrone. See, Sutton


Alqo Distributors, Ltd., supra.

Even assuming that Defendants are in possession of a copy Fast Track ’s

customer list and broker and loan documents, Fast Track has not set forth a cognizable

claim for conversion since the possession of these documents does not interfere with

Fast Track ’s right of possession. Fast Track is still in possession of its customer list,

13

(qfh Dept., 1981). See also, AMF

Inc. v.

A.D.2d 237

(2nd Dept., 1975). Interference with Plaintiffs right of possession is the essence of an

action for conversion. Meese v. Miller, 79

A.D.2d 352Alqo Distributors, Ltd., 48 (2nd Dept., 1996); and AMF Inc. v. A.D.2d 369

(3rd Dept., 2000); and Galtieri v. Kramer,

232

A.D.2d 668 Albanv, 272

- Conversion

The third cause of action asserts that loans processed by Ferrari, customer lists

and confidential broker and loan documents were converted by Defendants.

To establish a claim for conversion, Plaintiff was prove that it has legal ownership

or a superior right to possession to a specific identifiable thing and that Defendant is

exercising control over this specific property in contravention of Plaintiff ’s possessor-y

rights. Hart v. Citv of


In this case, there are no allegations in the complaint nor is there evidentiary

material submitted in opposition to Defendants ’ motion that establish that Plaintiff

performed any services on behalf of or at the request or behest of the Defendants.

Therefore, the second cause of action is deficient and must be dismissed.

D. Third Cause of Action

(2nd Dept., 1987).

An Undertaking of Accountability is not signed by the affiliate. The Undertaking of

Accountability filed by Fast Track with the Banking Department indicating that Perrone

was its affiliate is not the equivalent of an employment agreement. Even if it is

14

A.D.2d 704

Fiduciarv Dutv

Perrone did not have a written employment agreement with Fast Track. In the

absence of a written agreement containing a restrictive covenant, a former employee is

not permitted to solicit customers of the former employer through fraudulent means, the

use of trade secrets or confidential information. Support Svstems Assoc., Inc. v.

Tavolacci, 135

- Misappropriation of Customer Lists/Breach of

(2nd Dept., 1975).

Customers or prospective customers are not tangible personal property which can be

converted.

Since Plaintiff has failed to allege that Defendants have exercised control over

specific items of personal property in contravention of Plaintiff ’s possessory rights,

second cause of action must be dismissed.

E. Fourth Cause of Action

A.D.2d 756,

(2nd Dept.,

2003); and Independence Discount Corp. v. Bressner, 47

A.D.2d 453 Phvsicians. PLLC, 305

FAST TRACK FUNDING CORP. v. PERRONE, et al.,Index No. 16519-02

broker documents and loan documents. Since Defendants acts have not interfered with

Fast Track ’s possession of these documents or information, the complaint fails to set

forth a valid claim for conversion as to these items. That is, Plaintiff must establish that

the Defendant possesses Plaintiff ’s tangible personal property or specific, identifiable

money. Fiorenti v. Central Emerqencv

(4th Dept., 1982).

15

A.D.2d 803

Pica, Inc., 89Eaqle Comtronics, Inc. v.

§ 757, comment b; and

Ashland Mat.. Inc. v. Janien, 82 N.Y. 2d 395 (1993). In determining whether

something is a trade secret, the court should consider the extent to which the

information is known outside the business, the extent to which the information is known

to employees or others in the business, the measures taken to safeguard the

information, the value of the information to the person possessing it and to its

competitors, the effort and expense incurred in developing the information and the ease

with which the information could be duplicated.

(3rd Dept., 1985). See also, Restatement of Torts A.D.2d 991

(2nd Cir., 1990); and Delta Filter Corp. v. Morin, 108F.2d 171

Diqital

Transactions, Inc., 920

Mot. Services, Inc. v.

(2nd Dept., 1991).

Trade secrets can be a formula, pattern, device or compilation of information

which is used in one ’s business which gives one the competitive advantage over

competitors who do not know or use it. lnteqrated Cash

A.D.2d 739

(2nd Dept., 2000). That

duty is not breached unless the employee makes improper use of the employer ’s time,

facilities or proprietary secrets. See, Wallack Freiaht Lines, Inc. v. Next Dav Express,

Inc., Id.; and Schneider Leasinq Plus, Inc. v. Stallone, 172

A.D.2d 462 Day Express, Inc., 273


considered to be so, it does not contain a restrictive covenant or covenant not to

compete. Plaintiff is thus left only to pursue a breach of fiduciary duty claim, if possible.

An employee owes a duty of good faith and loyalty to an employer. Wallack

Freiqht Lines, Inc. v. Next

N.Y.2d 87 (1999).

Fast Track has twice had the opportunity to submit proof in evidentiary form that

would support its claim that the loan documents or broker ’s information is confidential

and has failed to do so. Information required to be in loan documents and the

16

Maas v. Cornell University, 94

Newbern/, 3 N.Y. 2d 554

(1958).

In this case, neither the factual allegations in the complaint nor the affidavit of

Charles Seelinger provide the court with sufficient evidence so that it could infer that

any of the broker information or loan documents allegedly taken by Perrone were

confidential. Plaintiff ’s allegation in the complaint and his affidavit are, at best, bald

conclusions unsupported by any facts. Plaintiff could, under a request for

confidentiality, provide this Court with a copy the customer list to establish how and why

it is confidential or proprietary. It did not. As such, these allegations are not entitled to

the presumption of truth. See,

& Home Service, Inc. v. & Country House

(2nd Dept.,

1983); and Town

A.D.2d 398

(2nd Dept.

1998); Greenwich Mills Co., Inc. v. Barrie House Coffee Co., 91

(2nd Dept., 2000).

Conversely, where the names of the customers are not known in the trade or can be

obtained only through extraordinary effort, customer lists may be considered trade

secrets. See, e.g., Laro Maintenance Corp. v. Culkin, 255 A.D. 2d 560

A.D.2d 343 N.Y.2d 387 (1972); and Atmospherics Ltd. v. Hansen, 269


Trade secret protection will not attach to a customer list where the name and

addresses of the customers are readily ascertainable. Leo Slifin, Inc. v. Cream, 29

(2nd Dept., 2002); and

Atmospherics, Ltd. v. Hansen, supra.

Clearly, the names of those clients who Perrone solicited on behalf of Fast Track

is not confidential. This is general information obtained by Perrone in connection with

his affiliation with Fast Track.

17

A.D.2d 336

(3”’ Dept., 2003). Solicitation of

business from a former employer ’s customers is not improper unless the customer list is

considered a trade secret. Marietta Corp. v. Fairhurst, Id., Eastern Business Svstems,

Inc. v. Specialty Business Solutions, LLC., 292

A.d.2d 734

(2”d Dept., 1985).

See also, Marietta Corn. v. Fairhurst, 301

A.D.2d 783

5240, et. seq. All mortgage brokers and lenders

are required by to furnish these documents and this information to prospective lenders

in the form prescribed by statute and/or regulations. These forms are public record and

are neither proprietary nor confidential The sources used by mortgage brokers to obtain

loan for clients are lending institutions. This information is clearly not secret. Mortgage

brokers make applications for loans on behalf of their clients to mortgage lenders such

as banks and mortgage bankers.

General knowledge of how a business operates obtained through one ’s

employment and the particular needs and habits of customers is not confidential.

Cataloaue Service of Westchester. Inc. v. Henry, 107

52601, et. seq. (Real Estate Settlement Procedures Act)

and Real Property Law Article 8, and


disclosure relating to mortgage loans is largely governed by New York State and

Federal Law. See, 12 U.S.C.

(2nd

Dept., 1998). Mere possession of this information is not sufficient to constitute a breach

of Perrone ’s fiduciary duty. In order to constitute a breach of his fiduciary duty, this

18

A.D.2d 497 Klymenko; 248 & Co. of New York, Inc. v.


Fast Track has failed to establish that its customer list or that any of the

information contained on that list is a trade secret. Plaintiff claims that the customer list

contained the name and address of the customer, interest rate information, information

regarding the points paid and other comments about the loan transaction. However,

there is nothing in the list which would be confidential or proprietary. There is nothing in

the record from which this Court could infer that this list is used to solicit new business

or that it contains repeat customers. The rate of interest and the points charged is

determined by the lending institution. Fast Tracks position that this material is

confidential and essential to its business is belied by the statement in the affidavit of its

president, Charles Seelinger, which states, “If James Perrone has a copy of this

[customer] list, it would be fatal to my business. ”Despite the fact that Perrone has

allegedly had this customer list for over a year, Fast Track has remained in business.

From this the Court must infer that either the Defendants do not have the information or,

if they do, that Fast Track can continue to do business even though this information is in

the hands of a competitor.

Finally, Plaintiff has failed to establish that Perrone, Hardy or Ferrari have

divulged or used this information after Perrone terminated his affiliation with Fast Track.

See, Arthur J. Gallasher


- Misappropriation of Confidential Information

This cause of action is similar to the fourth cause of action in that it alleges that

19

(2nd Dept. 1974).

This cause of action must also be dismissed against Ferrari and Hardy since

neither had a fiduciary relationship with Fast Track. Ferrari is a competitor. Hardy was

never an employee or affiliate of Fast Track. Since this action alleges a breach of

fiduciary duty and since Hardy and Ferrari did not have a fiduciary duty to Fast Track,

the cause of action fails to set forth a cause of action against these Defendants

F. Fifth Cause of Action

(2nd Dept., 1988). There is no proof that

this occurred.

Fast Track ’s assertion that this information was stored on a computer which

could only by accessed by Mr. Seelinger does not make this information confidential or

proprietary. Perrone, who is an individual without any specific computer skills, could

access and copy this information. There is no indication in the record that a special

password was needed to access this information Therefore, there was little effort made

to safeguard the information.

There is also no evidence or allegations in the record that Fast Track expended

any time or expense in compiling this information. See, Atmospherics. Inc. v. Hansen,

supra; and Hecht Foods, Inc. v. Sherman, 43 A.D. 2d 850

A.D.2d 22

(2nd Dept., 1995);

and Walter Karl, Inc. v. Wood, 137

A.D.2d 737 Companv, Inc. v. Cavanaah, 215


information must be used by Perrone and/or his new employer to unfairly compete with

Fast Track. See, NCN

- lniunctive Relief

The sixth cause of action seeks injunction relief enjoining the Defendants from

using the misappropriated broker and loan documents and lists and customer list.

A former employee may be enjoined from using confidential or proprietary

information misappropriated from a former employer. See, NCN Co. Inc. v. Cavanaqh,

supra. Despite this, the sixth cause of action must be dismissed for the same reasons

that the fourth and fifth causes of action are being dismissed; to wit: the information

which Plaintiff seeks to enjoin Defendants from using is neither proprietary or

confidential. Since the information is neither proprietary or confidential, it may be used

by the Defendants to compete with the Plaintiff.

Therefore, it is,

20


Perrone misappropriated Fast Track ’s confidential broker and loan list and documents

and used them to close loans and misappropriated Fast Track ’s customer list and use

used it solicit business.

As indicated above, neither the information contained in the brokers and loan list

and documents nor the customer list is confidential or proprietary. Since the information

for which Fast Track seeks to recover damages is neither confidential or proprietary, the

cause of action fails to set for a claim upon which relief can be granted and must be

dismissed.

G. Sixth Cause of Action


xxx

21

AUSTIN, J.S.C.t!EoN~Rmj B. 12,2004 Hon.

\January

7

Dated: Mineola, NY qRa_-.

cross-

motion of the Defendants James Perrone and Cynthia Hardy for an order dismissing

this action is granted and the action is hereby dismissed.

This constitutes the decision and Order of th rt.


ORDERED, that the motion of Defendant Ferrari Funding, Ltd., and the

Documents

6519-02 SUPREME COURT - STATE OF NEW YORK IAS TERM …decisions.courts.state.ny.us/10jd/nassau/decisions/index/index_new/... · 54fh Street New York, New York 10022 (for Ferrari Funding