DECISION By her Amended Verified Petition in this proceeding under SCPA 2103 and 2104 (the “amended petition”), Lian Jingyu, decedent’s mother and Administrator of his estate, seeks turnover from respondents Yuwen Zhang (“Alice”), who was decedent’s girlfriend and business partner, and Yucheng Zhang (“James”), Alice’s brother. According to the allegations of the amended petition, Respondents are wrongfully withholding a total of $447,095.93 from the estate and from two companies that decedent owned, in whole or in part, on the date of his death. Petitioner asks the court for an Order directing Respondents to turnover this amount.1 Decedent passed away on January 16, 2015, at the age of 24. At the time of his death, he was the sole member of JAZ Collection, LLC (“JAZ”), and owner of 50 percent of the shares in FoodGem, Inc. (“FoodGem”) (collectively, the “Companies”).2 The amended petition alleges that Alice (the other 50 percent shareholder in FoodGem) and James (an employee of FoodGem) were intimately involved in the day-to-day operations of the Companies and that each had unrestricted access to the Companies’ bank accounts. The amended petition further alleges that Respondents took advantage of such access by withdrawing hundreds of thousands of dollars from those accounts and diverting the funds to accounts controlled by them or their relatives, in China, and held for purposes unrelated to the Companies. Finally, the amended petition also alleges that Respondents managed to misappropriate funds from decedent’s personal bank account soon after his death. After Respondents were served with process in this proceeding, they defaulted, each of them failing to appear or controvert the petition’s allegations by either a responsive pleading or proof. As a result, under SCPA 509, the petition constitutes “due proof of the facts therein stated.” However, Petitioner is still required to make a prima facie showing of entitlement to the relief that she seeks (see Matter of Yankowitz, NYLJ, Aug. 15, 2005 at 36, col 2 [Sur Ct, Westchester County], and decisions cited therein), by proof beyond the four corners of the amended petition if the proof arising from Respondents’ default does not amount to such a case. Claim for turnover of funds allegedly misappropriated from the Companies At the outset, it is noted that Petitioner does not purport to have brought this proceeding in a representative capacity for either of the Companies. Rather, with respect to the funds that she alleges were diverted from the Companies, she seeks turnover to herself only in her capacity as fiduciary of decedent’s estate. With respect to the request of the Administrator for turnover of funds misappropriated from JAZ, precedent indicates that, although the company and the estate are separate entities, she nonetheless has authority to seek such relief in view of decedent’s sole ownership interest in the company (see Eastern Star Acupuncture, P.C. v. Allstate Ins. Co., 36 Misc 3d 41 [App Term, 2d Dept, 2d, 11th, & 13th Jud Dists 2012] [recognizing estate fiduciary's authority to substitute for her decedent's wholly owned corporation in prosecution of action to recover no-fault benefits]; see also Matter of Pulitzer, 139 Misc 575, 585 [Sur Ct, NY County 1931] ["[W]here the entire stock of the corporation was owned by the estate…the court, in its equitable powers, might disregard the corporate entity”]). It remains to be determined whether the Administrator has made a prima facie case for turnover by Respondents of the sum of $299,963.95 that she alleges was misappropriated by them from JAZ bank accounts. In addition to relevant proof against Respondents by dint of SCPA section 509, other proof of the Administrator’s case in this connection derives from portions of the transcript of Alice’s 2103 examination, including Alice’s express admission that she had transferred approximately $66,000 from a JAZ account into her personal bank account. Moreover, bank statements for JAZ’s account and records from Alice’s personal account substantiate the balance of the Administrator’s claim that Respondents misappropriated JAZ funds. Accordingly, Respondents are directed to turn over to the Administrator the sum of $299,963.95 in respect of funds diverted by them from JAZ. The Administrator’s request for turnover of funds allegedly diverted from FoodGem presents a significantly different circumstance from her turnover request as to funds allegedly diverted from JAZ. As already noted, decedent was not a majority, much less a sole, shareholder of FoodGem’s. The precedents in such case point to the conclusion that the Administrator cannot seek to recover on the estate’s behalf for an injury that was suffered by FoodGem and not by the estate itself (see Abrams v. Donati, 66 NY2d 951, 953 [1985], and cases cited therein] ["For a wrong against a corporation a shareholder has no individual cause of action, though he loses the value of his investment…."]). Accordingly, the amended petition for turnover of funds allegedly misappropriated by Respondents from FoodGem is denied, without prejudice to the Administrator’s commencing, in a proper forum and on the corporation’s behalf, an appropriate action against Respondents in respect of such funds. Decedent’s personal bank account Finally, the Administrator also seeks an Order directing Respondents to return the sum of $48,154 that was taken from decedent’s personal checking account only a few weeks after his death.3 In addition to relevant proof against Respondents based upon the amended petition’s uncontroverted allegations (SCPA 509), the record shows that decedent was the sole signatory on the account and that the withdrawals were not authorized by a fiduciary of decedent’s estate. Accordingly, the Administrator has made a prima facie case for turnover of the sum of $48,154 in respect of funds misappropriated from decedent’s personal bank account Submit Decree. Clerk to notify. Dated: October 8, 2021
