This matter is before the court on 1) the motion filed by Plaintiff Stewart Title Insurance Company ("Stewart Title" or "Plaintiff") on December 17, 2010, and 2) the motion filed by Defendant Carmella Stuart ("Stuart") on January 20, 2011, both of which were submitted on April 8, 2011. For the reasons set forth below, the Court grants Plaintiff's motion and a) awards judgment in favor of Plaintiff against Defendant GPT/288 Inc., d/b/a Titleguard Agency, Titleguard Agency Land Services, Titleguard Land Services, Title Guard Land Services, and Titleguard Agency Land Services, Inc. in the amount of $691,497.41, plus out-of-pocket expenses and attorney's fees to be determined at an inquest, on Plaintiff's third, fifth and twelfth causes of action, and directs that the unliquidated portions of these causes of action, as well as all remaining causes of action against this Defendant, and the other Defendants, are severed and [*2]preserved; and b) holds Defendants GPT 288 Inc., 50 Grand Avenue Corporation and 25 Osborne Place Corp. in default of appearing and directs that the precise relief to which Plaintiff is entitled against these Defendants will be determined at the time of trial; and 2) denies Stuart's motion in its entirety.

BACKGROUND

A. Relief Sought

Plaintiff moves, pursuant to CPLR §§ 3125 and 3212, for an Order 1) directing entry of a money judgment in favor of Plaintiff against Defendant GPT/288 Inc., d/b/a Titleguard Agency, Titleguard Agency Land Services, Titleguard Land Services, Title Guard Land Services, and Titleguard Agency Land Services, Inc. in the amount of $716,399.37, on Plaintiff's third, fifth, seventh and twelfth causes of action, and severing and preserving the unliquidated portions of those causes of action, as well as all remaining causes of action against said Defendant, and all other Defendants; 2) holding Defendants GPT/288 Inc., 50 Grand Avenue Corporation, and 25 Osborne Place Corp. in default for its failure to appear, and setting this matter down for an inquest at the time of trial, or at such other time as the Court directs upon application by Plaintiff, in order to determine the precise relief to which Plaintiff is entitled against said Defendants; and 3) granting Plaintiff the costs and disbursements of this action.

Plaintiff's notice of motion also contains a request for an Order granting partial summary judgment to Plaintiff against Defendant Gerard P. Timoney ("Timoney") on Plaintiff's twelfth cause of action. That branch of Plaintiff's motion was resolved on the record and, therefore, will not be addressed in this decision.

Stuart moves, pursuant to CPLR § 3211, to dismiss the Complaint against her on the grounds that Plaintiff has failed to state a cause of action on which relief may be granted.

B. The Parties' History

The parties' history is set forth in detail in a prior decision of the Court datedNovember 1, 2010 ("Prior Decision") (Ex. 3 to Truitt Aff. in Supp.) in which the Court granted the injunctive relief sought in Plaintiff's prior Order to Show Cause ("Prior Motion"). As noted in the Prior Decision, the Verified Complaint ("Complaint") describes the parties as follows:1) Plaintiff is a title insurance underwriter, licensed by the New York State Department of Insurance to issue policies insuring the titles of real property owners and the mortgages of secured lenders; 2) Titleguard Agency Land Services ("Titleguard Land") was a New York corporation that was dissolved on or about January 27, 2010 and thereafter was an assumed business name of GPT 288 Inc. d/b/a Titleguard Agency ("GPT 288"); 3) GPT 288 is a New York corporation with offices ("Offices") in Rockville Centre, New York; 3) Titleguard Agency Land Services, Titleguard Land Services and Title Guard Land Services are assumed business names of GPT 288, and those entities and any other entity that conducted title abstract business from the Offices are collectively referred to as "Titleguard"); 4) Defendant Viking Title Agency Corp. ("Viking"), GPT Services Inc. d/b/a Titleguard Agency ("GPT Services"), GPT Capital Inc. ("GPT Capital"), Devin's Office Services Inc. ("Devin's"), 50 Grand Avenue Corporation ("50 Grand"), 25 Osborne Place Corp. ("25 Osborne") and Greenhouse Strategics LLC ("Greenhouse") are New York corporations; 5) Timoney was, at all relevant times, an officer and shareholder of Titleguard, Viking and each of the Transferee Companies; 7) Timoney, at all [*3]relevant times, was or held himself out to be the President of Titleguard; 8) Timoney, at all relevant times, was or held himself out to be the President of Viking; 9) Stuart, at all relevant times, was the bookkeeper and manager of Titleguard who was responsible for the financial and banking operations of Titleguard; and 10) Stuart and Timoney are referred to collectively as the "Individual Defendants."

The Complaint describes this action as arising from the fraudulent and criminal activities of Defendants GPT 288, Viking and their controlling principal and manager, Timoney and Stuart respectively, between 2008 and 2010 ("Defalcation Period"). The Complaint alleges that 1) the Individual Defendants have admitted to converting at least $640,000 of trust funds entrusted to them at real estate closings ("Trust Funds"), in violation of their fiduciary and contractual obligations and to the detriment of Plaintiff and innocent property owners and mortgage holders; 2) on or before 2008, Viking, GPT 288, Timoney and Stuart ("Defalcating Defendants") misappropriated their customers' Trust Funds by expending them on debts and operational expenses of GPT 288, Viking and other companies and using the Trust Funds for personal expenses and other improper purposes; 3) as a result of their conversion of Trust Funds, the Defalcating Defendants failed to record deeds and mortgages issued at approximately 95 real estate closings ("Unrecorded Instruments"), thereby placing the validity and priority of titles and mortgages of property owners and lenders at risk; 4) this conduct exposed Plaintiff to potentially "catastrophic liability" (Compl. at ¶ 4) on claims under policies of title insurance that GPT 288 and Viking issued in Plaintiff's name at the real estate closings at issue; 5) the Individual Defendants exercised complete dominion and control over GPT 288 and Viking, and were solely responsible for their decisions and conduct; 6) the Individual Defendants have admitted to Plaintiff that the Trust Funds have been converted and were used for unauthorized purposes, and admitted their roles in that conversion; 7) the Court should pierce the corporate veils of GPT 288 and Viking and hold the Individual Defendants personally liable for Plaintiff's losses suffered as a result of the misconduct of those companies; and 8) the Defalcating Defendants' conduct warrants the imposition of punitive damages. The Complaint contains fifteen (15) causes of action including, but not limited to, requests for an accounting and injunctive relief, conversion of the Trust Funds and breach of fiduciary duty. The third, fifth, seventh and twelfth causes of action, to which Plaintiff makes specific reference in the instant motion, make allegations1) against Titleguard and the Individual Defendants for conversion of the Trust Funds (third cause of action), 2) against Titleguard for breach of contract (fifth cause of action), 3) against Titleguard and the Individual Defendants for breach of fiduciary duty (seventh cause of action), and 4) against Titleguard and Timoney for contractual indemnification, pursuant to the Underwriting Agreement (twelfth cause of action). Paragraph 23 of the Underwriting Agreement reflects Timoney and Titleguard's agreement, jointly and severally, to indemnify Plaintiff for damages, including attorney's fees, resulting from Titleguard's default under the Underwriting Agreement. The thirteenth, fourteenth and fifteenth causes of action allege violations of §§ 275, 276 and 276-a of the Debtor and Creditor Law by all Defendants.

In support of the Prior Motion, Plaintiff submitted an Affidavit of John A. Frates, a Vice President and New York State Counsel of Plaintiff ("Frates Affidavit"), which the Court outlined in detail in the Prior Decision and incorporates herein by reference. Plaintiff has submitted the Frates Affidavit in support of the instant motion. As noted in the Prior Decision, the Frates [*4]Affidavit contains details regarding 1) the execution by Plaintiff and Titleguard of the Underwriting Agreement at issue, 2) Plaintiff's termination of the Underwriting Agreement on or about June 7, 2010 upon the discovery of Defendants' improper conduct, 3) Plaintiff's discovery of Titleguard's failure to use the Trust Funds to record documents entrusted to it at no fewer than 96 title closings, 4) funds expended by Plaintiff to pay most of the fees and taxes required to record the Unrecorded Closing Documents, consisting of Plaintiff's replacement of $516,950.38 in Trust Funds regarding Titleguard files, as well as other funds that Plaintiff anticipates having to replace, expected to result in a total replacement cost of over $662,000, 5) related litigation

in Westchester County, New York in which Stewart alleges, inter alia, that Timoney caused Titleguard to co-mingle its money with funds belonging to his other companies and caused Titleguard's assets, receipts, and receivables to be diverted to both his personal accounts and other "sham entities" he formed, including Defendant GPT Services, 6) conversations between Frates and Timoney in June of 2010 during which Timoney admitted that the Trust Funds had been converted and described the manner in which the conversion was accomplished, which included the use of the company credit card for personal expenses, 7) conversations between Frates and Stuart during which Stuart confirmed Timoney's account of the conversion of the Trust Funds and described her own involvement which included her use of Trust Funds to pay Titleguard's payroll and other operating expenses beginning in late 2008, 8) Plaintiff's

post-termination inspection ("Inspection") at Titleguard's Office on June 8, 2010 which revealed documentation confirming that Timoney and Stuart have converted Trust Funds for their own personal use, and 9) the opinion of Plaintiff's Chief Technology Officer that information had been intentionally erased from Titleguard's computers, which Plaintiff took possession of at the Inspection.

Plaintiff has also submitted the Affirmation in Support of its counsel submitted in connection with the Prior Motion dated August 14, 2010 ("Prior Affirmation of Counsel"), in support of the instant motion. As noted in the Prior Decision, the Prior Affirmation of Counsel includes details regarding 1) Counsel's attendance at the Inspection and witnessing of Timoney's admissions as outlined in Frates' Affidavit, 2) Timoney's statements to Counsel that a) Timoney is the sole owner of 25 Osborne and 50 Grand which are holding companies ("Holding Companies") for two apartment buildings that Timoney owns located at 25 Osborne Place and 50 Grand Avenue, Rockville Centre, New York; b) Timoney resides in one of the 25 Osborne units and rents out the remaining units there, as well as units at 50 Grand; and c) Timoney is, and has always been, the sole owner of Titleguard, and 3) documentation demonstrating that Timoney has been using Trust Funds from Titleguard to make payments for his Holding Companies and to one of his former wives, of which Counsel provided copies.

In support of the instant motion, Counsel affirms that on August 19, 2010, Defendants GPT/288 Inc. (i.e., Titleguard), 50 Grand, and 25 Osborne (collectively "Defaulting Defendants") were each served with a copy of the Summons and Complaint as reflected by the Affidavits of Service provided (Ex. 4 to Truitt Aff. in Supp.). Counsel affirms that, based on his review of documents located at the Titleguard premises, "Titleguard did business at times under each of the assumed business names and d/b/a designations set forth in the caption, and most frequently [*5]referred to itself simply as Titleguard'" (Truitt Aff. in Supp. at n. 2).

Counsel affirms, further, that none of the Defaulting Defendants have appeared in this action, or have requested or received any extension of time to answer or otherwise appear. Moreover, none of the Defaulting Defendants have answered or moved with respect to the Complaint, and their time to do so has expired. Only the Individual Defendants have served answers in response to the Complaint, copies of which are provided (Ex. F to Truitt Aff. in Supp.).

In his Affidavit of Merits dated November 22, 2010, Richard J. King ("King"), a Vice President and Chief Claims Counsel for Plaintiff, affirms that he participated in and oversaw Plaintiff's investigation into the fraud committed by the Defendants. King was present during the Investigation and interview of Timoney described in the Complaint and Frates Affidavit, and affirms the truth and accuracy of the contents of those documents.

King affirms that, as of November 22, 2010, Plaintiff has paid $691,497.41 to municipal and county offices, taxing authorities and other parties to replace funds converted by the Defendants. Had Plaintiff not made these payments ("Replacement Payments"), it risked "catastrophic liability" (King Aff. at ¶ 3) under title insurance policies it issued, which were placed at risk as a result of Defendants' conduct. King provides a spreadsheet (Ex. 6 to King Aff.) itemizing and detailing the payments made by Plaintiff as a result of Titleguard's conversion of Trust Funds. Plaintiff's damages of $691,497.41 are directly attributable to Titleguard's misappropriation of Trust Funds.

In addition, Plaintiff incurred damages in the sum of $24,901.96 resulting from Plaintiff's "loss adjustment expenses" (King Aff. at ¶ 6), a term that refers to Plaintiff's out-of-pocket costs incurred as a result of Titleguard's misconduct, other than moneys used to replace the stolen Trust Funds. Those expenses ("Expenses") consist of 1) $1,688.30 paid to vendors in connection with search and recording fees associated with the investigation and recording of the instruments that Titleguard failed to record, and 2) $23,213.66 in attorney's fees, and are listed on a document titled "Loss Adjustment Expenses" (Ex. 7 to King. Aff.). King also affirms that there may be additional claims by Plaintiff's insureds in the future, resulting in future damages to Plaintiff. For this reason, King submits, the Court should sever and preserve the "unliquidated portion" (King Aff. at ¶ 9) of Plaintiff's claims so that Plaintiff may apply for additional money judgments if additional damages are incurred.

King submits that, in light of the foregoing, the Court should grant Plaintiff a money judgment in the sum of $716,399.37, comprised of the $691,497.41 in Replacement Payments and $24,901.96 in Expenses, against Titleguard and Timoney, jointly and severally, with the unliquidated portions of Plaintiff's claims being severed and preserved. King argues, further, that the Court should schedule this matter for an inquest to determine the precise relief to which Plaintiff is entitled as against the Defaulting Defendants with respect to all causes of action pleaded in the Complaint.

In her Affidavit in Support of her motion to dismiss, Stuart affirms that, during the [*6]relevant time periods, she was merely an employee of Titleguard, and was never a corporate officer, accountant, bookkeeper or authorized against of any underwriter, including Plaintiff. She avers, further, that she never acted in any such capacity and never served in any official capacity of the corporations owned by Timoney. In addition, it was Timoney, the sole owner of Titleguard, who entered into the Underwriter Agreements with Plaintiff.

Plaintiff has asserted the following causes of action against Stuart: 1) third cause of action, against Titleguard and the Individual Defendants, for conversion of Trust Funds, 2) fourth cause of action, against Viking and the Individual Defendants, for conversion of Trust Funds,3) seventh cause of action, against Titleguard and the Individual Defendants, for breach of fiduciary duty, 4) eighth cause of action, against Viking and the Individual Defendants, for breach of fiduciary duty, 5) ninth cause of action, against the Individual Defendants, for aiding and abetting breach of fiduciary duty, 6) tenth cause of action, against Titleguard, Viking and the Individual Defendants, for common law negligence, and 7) eleventh cause of action, against Titleguard and the Individual Defendants, for fraud.

Plaintiff disputes Stuart's claim that she was merely an employee, describing that assertion as "self-serving, uncorroborated, and utterly inconsistent with overwhelming evidence to the contrary" (Truitt Aff. in Opp. at ¶ 3). Counsel notes that Stuart 1) held the corporate office of Secretary at Titleguard; 2) was authorized to conduct Titleguard's banking operations and issue checks on behalf of Titleguard; and 3) abused that authority by converting Trust Funds. In support, Plaintiff provides copies of five (5) signature cards ("Signature Cards") (Ex. 2 to Truitt Aff. in Opp.) relating to Titleguard and Viking bank accounts maintained with Signature Bank, which Plaintiff obtained through non-party discovery. Those Signature Cards reflect that 1) only Stuart and Timoney were authorized signators; 2) Stuart signed the Signature Cards as "Manager" or "Secretary" of Titleguard; and 3) on two (2) of the Signature Cards, Stuart also signed on behalf of Titleguard above the language "Must be signed by Secretary if Corporation or Association." Plaintiff affirms, further, that Stuart issued numerous checks on behalf of Titleguard, and refers to checks, submitted in connection with the Prior Motion, signed by Stuart and payable to "cash," totaling over $177,000. Plaintiff notes that these checks do not bear a title number in the subject line that might suggest that they were issued for a legitimate business.

Plaintiff also obtained documentation, through discovery, revealing that Stuart actively participated in the misappropriation of the Trust Funds. As outlined in the Prior Affirmation of Counsel, Stuart issued numerous payments to Timoney's ex-wife from Titleguard's clearing account. Finally, Stuart made numerous admissions regarding her involvement, which are detailed in the submissions relating to the Prior Motion, on which Plaintiff also relies in support of the instant motion.

C. The Parties' Positions

Plaintiff submits that it has demonstrated its right to judgment against GPT/288 Inc., d/b/a Titleguard Agency, Titleguard Agency Land Services, Titleguard Land Services, Title Guard Land Services, and Titleguard Agency Land Services, Inc. in the amount of $716,399.37 on Plaintiff's third, fifth, seventh and twelfth causes of action, for conversion, breach of contract, breach of fiduciary duty and contractual indemnification, respectively.

Plaintiff contends, further, that it has established that Plaintiff's damages may continue to accrue as Plaintiff discovers more converted Trust Funds and, for that reason, asks that the [*7]unliquidated portions of Plaintiff's third, fifth, seventh and twelfth causes of action against Titleguard should be severed and preserved.

In addition, the Frates Affidavit establishes that Defaulting Defendants 50 Grand and 25 Osborne received money traceable to the Trust Funds that Titleguard converted, at a time that Titleguard was using its customers' Trust Funds to sustain its business operations. Plaintiff provides additional copies of the checks, submitted in connection with the Prior Motion, paid to 50 Grand and 25 Osborne (Ex. 8 to Truitt Aff. in Supp.). Thus, Plaintiff submits, it is entitled to a default judgment on the issue of liability for its causes of action against 50 Grand and 25 Osborne for violation of the Debtor and Creditor Law.

Finally, Plaintiff argues that this matter should be set down for an inquest, at or before the time of trial, to determine the precise relief to which Plaintiff is entitled against each of the Defaulting Defendants, including the severed and unliquidated portions of Plaintiff's third, fifth, seventh and twelfth causes of action against Titleguard.

Stuart submits that the Court should dismiss this action against her in light of her claims that she was merely an employee of Titleguard and never acted in any official capacity of the corporations owned by Timoney. Plaintiff opposes Stuart's motion, submitting that Plaintiff has pled viable causes of action against Stuart in light of documentation reflecting her official position in Titleguard, including the Signature Cards, and her misappropriation of funds as reflected by the checks provided and Stuart's own admissions.

RULING OF THE COURT

A. Default Judgment

CPLR § 3215(a) permits a party to seek a default judgment against a Defendant who fails to make an appearance. The moving party must present proof of service of the summons and the complaint, affidavits setting forth the facts constituting the claim, the default, and the amount due. CPLR § 3215 (f); Allstate Ins. Co. v. Austin, 48 AD3d 720 (2d Dept. 2008). The moving party must also make a prima facie showing of a cause of action against the defaulting party. Joosten v. Gale, 129 AD2d 531 (1st Dept. 1987).

B. Standards of Dismissal

A motion interposed pursuant to CPLR § 3211 (a)(7), which seeks to dismiss a complaint for failure to state a cause of action, must be denied if the factual allegations contained in the complaint constitute a cause of action cognizable at law. Guggenheimer v. Ginzburg, 43 NY2d 268 (1977); 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144 (2002). When entertaining such an application, the Court must liberally construe the pleading. In so doing, the Court must accept the facts alleged as true and accord to the plaintiff every favorable inference which may be drawn therefrom. Leon v. Martinez, 84 NY2d 83 (1994). On such a motion, however, the Court will not presume as true bare legal conclusions and factual claims which are flatly contradicted by the evidence. Palazzolo v. Herrick, Feinstein, 298 AD2d 372 (2d Dept. 2002).

C. Piercing the Corporate Veil

Generally, a corporation exists independently of its owners, who are not personally liable [*8]for the corporation's obligations. Moreover, individuals may incorporate for the express purpose of limiting their liability. East Hampton v. Sandpebble, 66 AD3d 122, 126 (2d Dept. 2009), citing Bartle v. Home Owners Coop., 309 NY 103, 106 (1955) and Seuter v. Lieberman, 229 AD2d 386, 387 (2d Dept. 1996). The concept of piercing the corporate veil is an exception to this general rule, permitting, under certain circumstances, the imposition of personal liability on owners for the obligations of their corporations. East Hampton, 66 AD3d at 126, citing Matter of Morris v. N.Y.S. Dept. Of Taxation, 82 NY2d 135, 140-41 (1993).

A plaintiff seeking to pierce the corporate veil must demonstrate that a court should intervene because the owners of the corporation exercised complete domination over it in the transaction at issue. Plaintiff must further demonstrate that, in exercising this complete domination, the owners of the corporation abused the privilege of doing business in the corporate form, thereby perpetrating a wrong that caused injury to plaintiff. East Hampton, 66 AD3d at 126, citing, inter alia, Love v. Rebecca Dev., Inc. 56 AD3d 733 (2d Dept. 2008). In determining whether the owner has "abused the privilege of doing business in the corporate form," the Court should consider factors including 1) a failure to adhere to corporate formalities, 2) inadequate capitalization, 3) commingling of assets and 4) use of corporate funds for personal use. East Hampton, 66 AD3d at 127, quoting Millennium Constr., LLC v. Loupolover, 44 AD3d 1016, 1016-1017 (2d Dept. 2007).

D. Relevant Causes of Action

The essential elements of a cause of action sounding in fraud are 1) a misrepresentation or a material omission of fact which was false and known to be false by defendant, 2) made for the purpose of inducing the other party to reply upon it, 3) justifiable reliance of the other party on the misrepresentation or material omission, and 4) injury. Colasacco v. Robert E. Lawrence Real Estate, 68 AD3d 706 (2d Dept. 2009), quoting Orlando v. Kukielka, 40 AD3d 829, 831 (2d Dept., 2007).

To establish a claim for conversion, a plaintiff must show that he had an immediate superior right of possession to the property and the exercise by defendants of unauthorized dominion over the property in question to the exclusion of plaintiff's rights. Bankers Trust Co. v. Cerrato, Sweeney, Cohn, Stahl & Vaccaro, 187 AD2d 384, 385 (1st Dept. 1992).

To establish a cause of action for breach of contract, one must demonstrate: 1) the existence of a contract between the plaintiff and defendant, 2) consideration, 3) performance by the plaintiff, 4) breach by the defendant, and 5) damages resulting from the breach. Furia v. Furia, 116 AD2d 694 (2d Dept. 1986).

The elements of a claim for breach of fiduciary duty are: 1) existence of a fiduciary relationship, 2) misconduct, and 3) damages directly caused by the wrongdoer's misconduct. Fitzpatrick House III, LLC v. Neighborhood Youth & Family Services, 55 AD3d 664 (2d Dept. 2008); Kurtzman v. Bergstol, 40 AD3d 588, 590 (2d Dept. 2007). A cause of action for aiding and abetting breach of fiduciary duty requires a prima facie showing of 1) a fiduciary duty owed to plaintiff by another, 2) a breach of that duty, and 3) defendant's substantial assistance in effecting the breach, and 4) resulting damages. Keystone Int'l v. Suzuki, 57 AD3d 205, 208 (1st Dept 2008). [*9]

The thirteenth, fourteenth and fifteenth causes of action allege violations of §§ 275, 276 and 276-a of the Debtor and Creditor Law by all Defendants. Those statutes provide as follows:

§ 275. Conveyances by a person about to incur debts Every conveyance made and every obligation incurred without fair consideration when the person making the conveyance or entering into the obligation intends or believes that he will incur debts beyond his ability to pay as they mature, is fraudulent as to both present and future creditors.

§ 276. Conveyance made with intent to defraud Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors.

§ 276-a. Attorneys' fees in action or special proceeding to set aside a conveyance made with intent to defraud In an action or special proceeding brought by a creditor, receiver, trustee in bankruptcy, or assignee for the benefit of creditors to set aside a conveyance by a debtor, where such conveyance is found to have been made by the debtor and received by the transferee with actual intent, as distinguished from intent presumed in law, to hinder, delay or defraud either present or future creditors, in which action or special proceeding the creditor, receiver, trustee in bankruptcy, or assignee for the benefit of creditors shall recover judgment, the justice or surrogate presiding at the trial shall fix the reasonable attorney's fees of the creditor, receiver, trustee in bankruptcy, or assignee for the benefit of creditors in such action or special proceeding, and the creditor, receiver, trustee in bankruptcy, or assignee for the benefit of creditors shall have judgment therefor against the debtor and the transferee who are defendants in addition to the other relief granted by the judgment. The fee so fixed shall be without prejudice to any agreement, express or implied, between the creditor, receiver, trustee in bankruptcy, or assignee for the benefit of creditors and his attorney with respect to the compensation of such attorney.

E. Counsel Fees

Attorneys' fees may be awarded pursuant to the terms of a contract only to an extent that is reasonable and warranted for services actually rendered. Kamco Supply Corp. v. Annex Contracting Inc., 261 AD2d 363 (2d Dept. 1999). Provisions or stipulations in contracts for payment of attorneys' fees in the event it is necessary to resort to aid of counsel for enforcement or collection are valid and enforceable. Roe v. Smith, 278 NY 364 (1938); National Bank of Westchester v. Pisani, 58 AD2d 597 (2d Dept. 1977).

The amount of attorneys' fees awarded pursuant to a contractual provision is within the court's sound discretion, based upon such factors as time and labor required. SO/Bluestar, LLC [*10]v. Canarsie Hotel Corp., 33 AD3d 986 (2d Dept. 2006); Matter of Ury, 108 AD2d 816 (2d Dept. 1985). Legal fees are awarded on a quantum meruit basis and cannot be determined summarily. See Simoni v. Time-Line, Ltd., 272 AD2d 537 (2d Dept. 2000); Borg v. Belair Ridge Development Corp., 270 AD2d 377 (2d Dept. 2000). When the court is not provided with sufficient information to make an informed assessment of the value of the legal services, a hearing must be held. Bankers Fed. Sav. Bank v. Off W. Broadway Developers, 224 AD2d 376 (1st Dept. 1996).

F. Application of these Principles to the Instant Action

The Court denies Stuart's motion to dismiss based on the Court's conclusion that the causes of action against her are viable in light of 1) her position in and involvement in the daily business operations of Titleguard, 2) her issuance of numerous checks on Titleguard's accounts for apparently improper purposes, and 3) her admissions to her involvement in the scheme to convert the Trust Funds.

The Court grants Plaintiff's motion for judgment in favor of Plaintiff against Defendant GPT/288 Inc., d/b/a Titleguard Agency, Titleguard Agency Land Services, Titleguard Land Services, Title Guard Land Services, and Titleguard Agency Land Services, Inc. in the amount of $691,497.41, plus out-of-pocket expenses and attorney's fees as determined at in inquest, on Plaintiff's third, fifth and twelfth causes of action based on the Court's conclusion that, as outlined above and discussed in the Prior Decision, Plaintiff has demonstrated Defendant's breach of the Underwriting Agreement by its conversion of the Trust Funds, and Plaintiff's right to contractual indemnification pursuant to the Underwriting Agreement. The Court refers the determination of out-of pocket expenses and attorney's fees to an inquest based on the Court's conclusion that it has an insufficient record on which to base that award. The Court refers the determination of out-of-pocket expenses and attorney's fees to Special Referee Frank N. Schellace who will hear and determine all issues relating to the determination of out-of-pocket expenses and attorney's fees on June 27, 2011 at 10:00 a.m. The Court directs counsel for Plaintiff to serve on Defendant GPT/288 Inc., d/b/a Titleguard Agency, Titleguard Agency Land Services, Titleguard Land Services, Title Guard Land Services, and Titleguard Agency Land Services, Inc., by certified mail, return receipt requested, a copy of this Order with Notice of Entry, a Notice of Inquest or a Note of Issue and to pay the appropriate filing fees on or before June 17, 2011. The County Clerk, Nassau County is directed to enter a judgment in favor of the Plaintiff and against the Defendant in accordance with the decision of the Special Referee.

The Court declines to award Plaintiff judgment, at this time, on the seventh cause of action alleging breach of fiduciary duty. While there is clearly a fiduciary duty between Titleguard and the individuals who provided the Trust Funds, the Court cannot conclude, based on the record before it, that there exists a fiduciary duty between Stewart and Titleguard. The Court grants Plaintiff's application to sever and preserve the unliquidated portions of these causes of action, as well as all remaining causes of action against Titleguard and the other Defendants. [*11]

Plaintiff has also demonstrated its right to relief against Defendants 50 Grand Avenue Corporation, and 25 Osborne Place Corp. Plaintiff has presented proof of service of the summons and the complaint, affidavits setting forth the facts constituting the claim and their default. Plaintiff has established a prima facie showing against those Defendants by demonstrating GPT/288, Inc.'s involvement in the conversion of the Trust Funds, and that Defendants 50 Grand and 25 Osborne received money traceable to the Trust Funds that Titleguard converted, at a time that Titleguard was using its customers' Trust Funds to sustain its business operations. The Court outlined that evidence in the Prior Decision, noting as follows:

Counsel for Plaintiff ("Counsel") provides an Affirmation in Support datedAugust 14, 2010 in which he affirms that he attended the Inspection and witnessed Timoney's admissions as outlined in Frates' Affidavit. In addition, Timoneyadvised Counsel that Timoney is the sole owner of 25 Osborne and 50 Grand whichare holding companies ("Holding Companies") for two apartment buildings that Timoney owns located at 25 Osborne Place and 50 Grand Avenue, Rockville Centre,New York. Timoney stated that he resides in one of the 25 Osborne units and rentsout the remaining units there, as well as units at 50 Grand. Timoney also confirmedthat he is, and has always been, the sole owner of Titleguard.

Counsel for Plaintiff affirms that he has learned that Timoney has been using Trust Funds from Titleguard to make payments for his Holding Companies and to one ofhis former wives. Counsel provides documentation in support of this assertion, including 1) copies of numerous Titleguard checks payable to "cash," (Ex. 11 toTruitt Aff.) totaling $177,160.75, which Stuart signed and cashed, which contain notitle numbers or other notation that would suggest the checks were used for aTitleguard business purpose, 2) copies of 13 checks totaling $4,245.35 (Ex. 13 toTruitt Aff.) drawn against Titleguard accounts during the Defalcation Period, payableto 25 Osborne, 3) copies of 12 checks totaling $6,308 (Ex. 14 to Truitt Aff.), issued from Titleguard accounts during the Defalaction Period, payable to 50 Grand, and4) 48 checks totaling $16,544.79 (Ex. 15 to Truitt Aff.), issued during the Defalcation Period from various Titleguard accounts, payable to Oceanside. These checks contain numbers on the memo line that correspond to Timoney's Member and AccountNumbers with Oceanside.

Prior Decision at p. 9.

In light of the foregoing, the Court grants Plaintiff motion, finds that Defendants GPT/288 Inc., 50 Grand Avenue Corporation, and 25 Osborne Place Corp. are in default, and directs that the precise relief to which Plaintiff is entitled against Defendants 50 Grand Avenue Corporation and 25 Osborne Place Corp, and the precise additional relief to which Plaintiff is entitled against Defendant GPT/288 Inc., will be determined at trial.

All matters not decided herein are hereby denied.This constitutes the decision and order of the Court.

The Court reminds counsel for the parties of their required appearance before the Court [*12]on June 22, 2011 at 9:30 a.m.

ENTER

DATED: Mineola, NY

May 24, 2011

__________________________

Hon. Timothy S. Driscoll

J.S.C.