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Levine v. Sarig

Court Lacks Subject Matter Jurisdiction to Adjudicate Derivative Claims

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DECISION AND ORDER  Defendants move to dismiss: (i) the first, second, fifth, sixth, and seventh causes of action for failure to state claims (CPLR 3211 [a] [7]); and (ii) the third and fourth causes of action for lack of subject matter jurisdiction of this court (CPLR 3211 [a] [2]) to adjudicate derivative claims. Plaintiff opposes the motion and cross-moves for summary judgment on its complaint and dismissing defendants’ counterclaim (CPLR 3212).BACKGROUNDPlaintiff Amanda Levine and defendant Tom Sarig created a limited liability company called Esther Branded Entertainment Group (“EBEG”) by Operating Agreement dated January 1, 2013, which designates Sarig as Managing Member and which vests each of them with a fifty percent interest in the company. The amended complaint dated June 20, 2017 (the “Complaint”), as supplemented by affidavits from Levine and her father, Norman Levine, alleges that Levine procured a loan check from her father “for the benefit of plaintiff EBEG,” and payable to EBEG, in an amount of $10,000.00. It is further alleged that Sarig — the president of defendant Esther Creative Group, LLC (“ECG”), of which Levine is not a member — misappropriated that check by depositing it, not into EBEG’s bank account; but rather, into ECG’s bank account. The complaint alleges that such misappropriation caused Levine damage quantified by the amount of that $10,000.00 check (the first cause of action). The same allegation forms the basis for the second cause of action for conversion.The third cause of action alleges that Sarig wrongfully liquidated EBEG’s bank account, containing $9,632.63, without transferring half that sum — $4,816.31 — to Levine, characterizing that as a misappropriation, as well. The same allegation forms the basis for the fourth cause of action for conversion.The fifth cause of action references a service agreement entered into among Levine individually and EBEG, titled “Member Exclusive Services Agreement,” dated April 11, 2013 (see, Complaint

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