In this action for breach of an employment contract and for other relief, the following pre-Note of Issue motions have been consolidated for disposition:

(1) Plaintiff Mark Kleinman (plaintiff) moves for an order: (a) granting him [*2]partial summary judgment against defendant Blue Ridge Foods, LLC (Foods) on his first, second, third, fifth, and sixth causes of action in the sum of $331,730.46, together with liquidated damages of $82,932.61, and his attorney's fees under Labor Law § 198, (b) directing defendants Foods and/or Blue Ridge Acquisitions, Inc. (Acquisitions) to deliver to him a 5% equity interest in Foods, (c) dismissing all of the counterclaims of defendants Foods, Acquisitions, and Marvin Sussman (collectively, defendants) against him, (d) striking the third affirmative defense as well as the second, third, and fourth counterclaim, in each case, as scandalous and prejudicial in accordance with CPLR 3024 (b), and (e) awarding him sanctions pursuant to 22 NYCRR 130-1.1 (motion sequence No. 7).

(2) Defendants move for an order, pursuant to CPLR 3211 (a) (7), or, in the alternative, pursuant to CPLR 3212, dismissing plaintiff's amended complaint as against defendant Sussman (motion sequence No. 6).

(3) Plaintiff moves for an order, pursuant to CPLR 3124, compelling defendants to respond to his Second Notice of Discovery and Inspection, dated December 22, 2010 (motion sequence No. 8).

Pursuant to an employment contract, dated as of October 16, 2009 (the employment contract), defendant Foods, a New York limited liability company, hired plaintiff as its Chief Executive Officer reporting to defendant Sussman, its sole owner and Chairman (or Executive Chairman) of its Board of Directors (EC, ¶ 3). The initial term was three years unless he was discharged earlier either for or without "cause," but, in each case, subject to a prior written notice to be delivered to plaintiff either personally or by registered or certified mail (EC, ¶¶ 2, 6 [a] [iv], 6 [a] [v], 11).

"Cause" was defined in ¶ 6 (c) to include:

"(iii) the intentional, willful or reckless breach by [plaintiff] of a fiduciary duty he owes to [Foods] . . ., provided [plaintiff] is given notice of such alleged breach and a reasonable grace period, not to exceed seven (7) business days, to cure such alleged breach (if curable), unless an emergency condition shall be deemed to exist . . ."

"(iv) a repeated failure by [plaintiff] to perform any substantial aspect of his employment duties after receipt of written notice specifying such failure and a reasonable grace period, not to exceed seven (7) business days, to cure such alleged failure (if curable), unless an emergency condition shall be deemed to exist . . ."

"(vi) [plaintiff's] gross negligence or willful misconduct in performing or failing to perform any of his duties[,] provided [plaintiff] is given notice of such alleged gross negligence or alleged willful misconduct and a reasonable grace period, not to exceed seven (7) business days, to cure the same (if curable), unless an emergency condition shall be deemed to exist, in each case, as determined by the Board of Directors of [Foods]." [*3]

"Notwithstanding the foregoing, for purposes of clauses (iii), (iv) and (iv) above, . . . an emergency condition shall be deemed to exist if the continuation of the breach is reasonably likely to adversely effect the business, operations, financial condition or reputation of [Foods] in which event the applicable cure period (if curable) shall be no greater than three (3) business days, as reasonably determined by the Board of Directors . . ." (emphasis added).

In accordance with the employment contract, plaintiff was entitled to receive: (1) salary, (2) a performance-based bonus, (3) benefits, and (4) in the event of his discharge without "cause," a generous severance payment equal to his 12 months' salary (EC, ¶¶ 4, 5, 6 [e] [i] [A]). Additionally, he was entitled to receive a 5% equity interest in Foods in accordance with a contemporaneously executed "Class B Member Instrument and Agreement" between Foods and plaintiff (the equity contract) (EC, ¶ 7). As is pertinent to this case, plaintiff's right to a 5% equity interest in Foods, pursuant to ¶ 3 (c) (i) (A) of the equity contract, would vest immediately upon the termination of his employment before December 31, 2010 other than for "cause."

(b)

Plaintiff's employment with Foods lasted for only four months. His employment commenced on October 19, 2010, but, with no prior notice to him, he was abruptly discharged by Foods on February 19, 2010.^[FN1] His discharge was communicated to him both verbally and in writing on that day. Initially, plaintiff was verbally discharged by Sussman in a brief face-to-face conversation in plaintiff's office. In addition and on the same day, he was given a confirmatory letter from the Foods Human Resources Manager, stating that effective February 19, 2010 his employment services with Foods were terminated.

Thereafter, defense counsel in her letter, dated April 5, 2010, explained to plaintiff's counsel why plaintiff was discharged on February 19, 2010:

"Everyone I have spoken to vehemently denies that [plaintiff] was fired without cause' entitling him to the payments set forth in his employment contract. I have been told that [plaintiff] completely misrepresented his applicable experience and ability to perform as CEO of a company the size of [Foods] with the significant financial challenges it faced. [Plaintiff's] employment lasted sixteen weeks. Paragraph (6) (C) (vi) allows the firing with cause for gross negligence'; an emergency condition was deemed to exist by the Chairman [*4]of the Board of Directors, Marvin Sussman.

"I have obtained Mr. Sussman's notes reflecting meetings on almost a daily basis with [plaintiff] regarding the imminent financial crisis faced by [Foods]. [Plaintiff] was in completely over his head and was at no time able to perform the job for which he was hired" (emphasis added).^[FN2]

Approximately one month after plaintiff's discharge, defendant Sussman, by a "Transfer of Membership Interest," dated March 26, 2010 (the Transfer Document), conveyed all of his equity interest in Foods to defendant Acquisitions. This conveyance included the 5% equity interest to which plaintiff would have been entitled to under the equity contract if he had not been discharged for cause. This conveyance was made after plaintiff's counsel had made a written demand upon Sussman for the payment of monies owed to him under the employment contract as well as for his 5% equity interest.^[FN3] In the Transfer Document in ¶ 3 (C), Sussman had disclosed to Acquisitions in the category of litigation then pending against Foods that plaintiff notified it of a potential employment action.^[FN4]

Another relevant event for the purposes of these motions is that on February 12, 2010, or one week before his discharge, plaintiff signed, at Sussman's request, a letter waiving his right to compensation for the week of February 15-19, 2010 amounting to $5,679.30. According to plaintiff, when he signed that letter as a "voluntary accommodation,"^[FN5] he was unaware of Sussman's plan to discharge him one week later on February 19, 2010. Nevertheless, plaintiff candidly admits in his reply to counterclaims that Foods was operating [*5]at a loss during the four months of his employment, and that in January 2010 Foods also sustained a loss (Reply, ¶¶ 21-22).

(c)

In this action, plaintiff asserts that he was not fully compensated in accordance with his employment contract and his equity contract. More particularly, he asserts that, since his discharge was without "cause," he is owed salary, severance, bonus, and accrued benefits pursuant to the employment contract as well as a 5% equity interest in Foods in accordance with the equity contract. He advances six causes of action, as more fully set forth in his amended verified complaint, dated April 28, 2010: (1) a declaration that he was discharged without cause under the employment contract and for an injunction prohibiting defendants from communicating to any third party that he was discharged for cause or otherwise disparaging him or his performance to the business community or to the public in general; (2) a claim against Foods and Sussman for a breach of the employment contract in the total amount of $331,730.46,^[FN6] plus interest; (3) specific performance compelling defendants to deliver to him a 5% equity interest in Foods and to cancel the corresponding membership certificates representing what would have been his equity interest had Sussman not conveyed it to Acquisitions; (4) a claim solely against Sussman for rescission of his salary waiver as having been fraudulently induced and for payment of $5,679.30, plus interest; (5) a claim against Foods and Sussman for actual damages, interest, and attorney's fees under the Labor Law; and (6) a claim against Foods and Sussman for the statutory liquidated damages under Labor Law § 198.

Defendants interposed a joint verified answer, dated May 10, 2010, denying the material allegations in the amended complaint. Defendants asserted in one of their affirmative defenses that plaintiff was discharged for cause. Specifically, defendants alleged in their third affirmative defense that plaintiff was discharged because he had committed various felonies, breached a fiduciary duty to Foods, and was grossly negligent in the performance of his duties. Defendants further asserted numerous counterclaims. Plaintiff, in his verified reply to counterclaims, dated June 1, 2010, denied the majority of defendants' allegations.

Thereafter, the parties exchanged some documents and conducted depositions, but no note of issue and a certificate of readiness have been filed to date. The following motions ensued.

Plaintiff moves for partial summary judgment solely against defendant Foods on his causes of action for declaratory judgment (first); breach of employment contract (second); specific performance of equity contract to compel the issuance to him of a 5% equity interest [*6]in Foods (third); actual damages, interest, attorney's fees, and costs under Section 198 and other provisions of Labor Law article 6 (fifth); and the statutory liquidated damages under Section 198 (sixth).^[FN7] Initially, plaintiff contends that his discharge was without cause, in that: (1) defendant Sussman never expressed any reason for his discharge during their February 19, 2010 meeting; (2) the Human Resources Manager's contemporaneous termination letter made no reference to his discharge being for cause; and (3) defense counsel's April 5, 2010 letter, while purporting to articulate some basis for his earlier discharge, did not comply with the notice and delivery provisions of the employment contract; namely, such letter was not delivered to plaintiff either personally or by registered or certified mail. In the alternative, plaintiff contends that even if defense counsel's April 5th letter were considered to be an adequate notice of termination, it failed to meet the "for cause" requirement of the employment contract, since no "emergency condition" justifying his immediate discharge had been declared by the Foods Board of Directors.

The court finds that plaintiff has made a prima facie showing that his discharge did not meet the "for cause" requirement set forth in the employment contract. The record indicates that Sussman expressed no basis for plaintiff's discharge when he verbally terminated plaintiff on February 19, 2010 (Sussman Tr at 256-257, 291).^[FN8] Moreover, Sussman confirmed at his pretrial deposition that the form termination letter, which, at his direction, the Human Resources Manager conformed to plaintiff's case and issued to plaintiff, likewise expressed no basis for plaintiff's discharge.^[FN9] Finally and crucially, the "for cause" [*7]discharge provision (EC, ¶ 6 [C] [vi]), which defense counsel referenced in her April 5th letter, could not have been invoked unless plaintiff had been given a prior grace period of up to seven days within which to cure his breach, except for an "emergency condition," if one had been previously declared by the Board of Directors, in which case the cure period would been reduced to up to three days. Yet, Sussman (at page 297 of his pretrial deposition) denied knowing anything about declaring an emergency condition, and thus, for this provision to have been properly invoked, plaintiff should have been provided a prior grace period of up to at least three days in which to cure an alleged breach. Thus, defense counsel's attempted retroactive validation of plaintiff's discharge is without force and effect, in that Foods failed to comply with the contractual notice provision which was a condition precedent to a valid discharge for cause (see Ta—Chotani v Doubleclick, Inc., 276 AD2d 313 [1st Dept 2000]).^[FN10] Accordingly, plaintiff has demonstrated entitlement to partial summary judgment on the issue of liability to the extent his claims are grounded upon the breach of his employment contract (see Hanson v Capital Dist. Sports, Inc., 218 AD2d 909, 910 [3d Dept 1995]). Moreover, based on the court's conclusion that Foods failed to satisfy any of the "for cause" discharge provisions of the employment contract, it is irrelevant whether Foods did, in fact, have the requisite cause to discharge plaintiff (see Kalus v Prime Care Physicians, P.C., 20 AD3d 452, 454 [2d Dept 2005]).

Defendants, in effect, concede that Foods had failed to meet any of the "for cause" discharge provisions which dictated the procedure to be followed before plaintiff's employment could be terminated. Instead, defendants contend that plaintiff may not recover the compensation he seeks because the employment contract is void or voidable, having been induced by plaintiff's fraudulent misrepresentations to Sussman. The elements of fraud in the inducement require proof of "a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the [party to whom the representation was made], and resulting injury" (Centro Empresarial Cempresa S.A. v America Movil, S.A.B. de C.V., 2011 WL 2183293, 2011 NY Slip Op 04720 [Ct App 2011] [internal quotation marks omitted]). Each of these elements must be satisfied by clear and convincing evidence (see State v Industrial Site Services, Inc., 52 AD3d 1153, 1157 [3d Dept 2008]), and summary judgment is [*8]warranted if any one of its elements is not so established (see Frank Crystal & Co., Inc. v Dillmann, 84 AD3d 704 [1st Dept 2011]).

Defendants maintain that plaintiff misrepresented to Sussman two material facts in connection with his proposed employment by Foods: first, he falsely claimed he was National's General Manager when, in fact, he was merely its marketing executive; and, second, he falsely claimed to have the diverse experience he had acquired during his four-year tenure at National (2000-2004) when, in fact, his experience at that company was limited to marketing. In this regard, defendants point out that as the Foods CEO, plaintiff lacked the necessary experience to run its non-marketing groups, such as plant management, quality assurance, R & D, special projects, sales, business development, customer service and sales support, Kosher supervision, and finance.

As a threshold matter, the court notes that plaintiff's alleged misrepresentation of his title to Sussman is immaterial, since Sussman conceded (at pages 305-306 of his deposition) that plaintiff's exact title at National was not critical to him. Rather, Sussman maintained (at page 306 of his deposition) that the crucial fact which plaintiff misrepresented was his overall lack of business experience to qualify for the CEO position; in particular, that he "never r[a]n the business" at National. The record, however, does not support this contention. According to plaintiff's direct supervisor at National, Martin Silver (at pages 24-25, 31, 46 of his deposition), plaintiff advanced, during his four-year employment at National, from his initial position as the chief of its marketing group to that of the chief of the five of National's six business groups, and that, if he had not left National when its offices relocated from Long Island to Chicago, he would also have become the chief of its sixth business group. Thus, the material misrepresentation element of the fraudulent inducement defense — that plaintiff lacked the requisite experience to function as the Foods CEO — is not borne out by the record in this case.^[FN11]

More importantly, defendants have failed to raise a triable issue of fact as to the justifiable reliance element of their fraud-in-the-inducement theory. The crucial factor in this context is Sussman's inadequate verification of plaintiff's experience when, after discussing plaintiff's qualifications with plaintiff's superiors at National, he "should have seen red flags [*9]flying and heard alarm bells ringing."^[FN12] In particular, Sussman conceded (at pages 99-100 of his deposition) that plaintiff's direct supervisor at National, Martin Silver, had advised him that plaintiff did not "run the show" at National. If this was not a signal leading to further inquiries concerning plaintiff's experience, Sussman should have been sufficiently alerted to look into the legitimacy of plaintiff's competency as a future CEO when Silver dwelled at length on plaintiff's marketing skills, but became confusing or "nebulous" about plaintiff's expertise in other areas (see Sussman Tr at 100, testifying, "The thing that kept coming back, was marketing, he was good in marketing."). Furthermore, plaintiff's other reference at National, Steve Silk, also alerted Sussman to the fact that plaintiff did not "run the whole show" at National. In fact, after talking to both Martin Silver and Steve Silk, Sussman was not sufficiently satisfied with their comments about plaintiff that he was immediately prepared to offer him the position of the CEO (Sussman Tr at 107). At that point, Sussman should have conducted further investigation by contacting plaintiff's other employers, such as Groupe Danone (Dannon Yogurt) where plaintiff had worked for ten years, and Kraft/General Foods where plaintiff had worked for five years. He could have also contacted an executive recruiter (James Mead) which had recommended plaintiff to him (Sussman Tr at 60-61). Or he could have investigated plaintiff's employment through 10-K filings and background checks. If that was not enough, Sussman could have re-explored plaintiff's qualifications when Martin Silver started working for Sussman as a consulting Vice-President of Sales in September 2009, or approximately one month before plaintiff started working for Foods (Kleinman Tr at 102, 105). In sum, Sussman, a sophisticated business man, investor, and law school graduate, had the means available at his disposal to verify the caliber of plaintiff's experience (see UST Private Equity Investors Fund, Inc. v Salomon Smith Barney, 288 AD2d 87, 88 [1st Dept 2001]). Instead, Sussman hired plaintiff without any further investigation merely based on plaintiff's verbal assurances to him that plaintiff "ran a business" at National (Sussman Tr at 311-312). In doing so, Sussman unjustifiably and exclusively relied on plaintiff's verbal representations and turned blind eye to the obvious complications he was then facing; first, that Martin Silver and Steve Silk both had alerted him to the fact that plaintiff did not "run the show" or "the whole show" at National, and, second, that his company's continuous financial losses and its urgent operational problems demanded a seasoned, hands-on CEO (see National Medical Health Card Sys., Inc. v Fallarino, 21 Misc 3d 304, 312-313 [Sup Ct, Nassau County 2008] [the employer which hired an executive by checking a reference at only one of his former employers failed to exercise due diligence in hiring and, accordingly, could not rescind his employment agreement on the basis that his resume contained numerous misrepresentations and omissions]).

Based on the foregoing, plaintiff is entitled to a declaratory judgment on his first cause of action that his discharge by Foods on February 19, 2010 was without "cause." For the [*10]same reasons, plaintiff is entitled to partial summary judgment on liability on his second cause of action for breach of his employment contract. Since plaintiff has prevailed on liability on his underlying wage claim, he is also granted partial summary judgment on liability on his fifth and sixth causes of action under Labor Law § 198 and other provisions of Labor Law article 6 (see Winsch v Esposito Bldg. Specialty, Inc., 48 AD3d 558, 559 [2d Dept 2008]).

On the present record, however, the court is unable to determine the amount of compensation to which plaintiff is entitled under the employment contract (second cause of action), his actual damages, interest, attorney's fees, and costs under Section 198 and other provisions of Labor Law article 6 (fifth cause of action), and the statutory liquidated damages under Labor Law § 198 (sixth cause of action). For instance, plaintiff has offered no proof that he is entitled to an additional payment in the sum of $20,192.00, representing his 2010 bonus, pro-rated through February 19, 2010 (Amended Complaint, ¶ 20). In addition, the version of Section 198 to which plaintiff cites is incorrect. The applicable version of Section 198 is the one that was in effect on February 19, 2010 when he was discharged, rather than the version that was in effect on October 16, 2009 when the employment contract was signed.^[FN13] Section 198 was amended in the intervening four-month period. The pertinent version required (in subsection 1-a) that the statutory liquidated damages must be imposed as a matter of course "unless the employer proves a good faith basis to believe that its underpayment of wages was in compliance with the law."^[FN14] Furthermore, plaintiff bases his calculation of the statutory liquidated damages on the incorrect assumption that the term "wages," as used in Section 198, includes his $300,000 severance. Although "wages" is defined in Section 190 (1) as "the earnings of an employee for labor or services rendered" and also "includes benefits or wage supplements" as defined in Section 198-c, the latter [*11]section does not apply to an executive, such as plaintiff, who was earning more than $900 per week (see Fraiberg v 4Kids Entertainment, Inc., 75 AD3d 580, 583 [2d Dept 2010]).^[FN15] Lastly, plaintiff's performance-based bonus (EC, ¶ 4) is discretionary incentive compensation and is not "wages" under Section 190 (1) (see Magness v Human Resource Services, Inc., 161 AD2d 418, 419 [1st Dept 1990]). Accordingly, the amount of compensation to which plaintiff may be entitled under the employment contract (second cause of action), his actual damages, interest, attorney's fees, and costs under Section 198 and other provisions of Labor Law article 6 (fifth cause of action), and the statutory liquidated damages under Labor Law § 198 (sixth cause of action) will be determined at an inquest.

With respect to the remaining portion of plaintiff's first cause of action for an injunction prohibiting defendants from communicating to any third party that he was terminated for cause or otherwise disparaging him or his performance to the business community or to the public in general, such relief is denied as not sufficiently documented. In fact, plaintiff does not address this aspect of his cause of action in his moving papers.

Next, the branch of plaintiff's motion for summary judgment on his third cause of action for specific performance to compel a transfer of his 5% interest in Foods is denied without prejudice.^[FN16] Plaintiff's claim to a 5% interest in Foods is grouped, in a conclusory fashion, with his other requested relief.^[FN17] Moreover, plaintiff has failed to address the key [*12]issue of whether the equity interest, the delivery of which plaintiff seeks to compel, is of such nature as to warrant this court, on proper findings, to order its delivery, rather than to hold that a recovery of its value would provide an adequate remedy (see Marwede v Commercial Hotel, 273 App Div 984 [2d Dept 1948]). It appears that the proper measure of damages with respect to plaintiff's 5% interest in Foods would be the value of that interest at the time of plaintiff's termination. If, as defendants assert Foods, as a whole, had no value at that time, plaintiff's claim with respect to a 5% interest therein would be zero. The court expects both parties to brief these issues in any subsequent motion addressed to the merits of plaintiff's claim to a 5% equity interest in Foods or a monetary equivalent thereof.

Plaintiff's request for dismissal of all of defendants' counterclaims is granted without opposition (see Kuehne & Nagel, Inc. v Baiden, 36 NY2d 539, 544 [1975]; Springer v Keith Clark Pub. Co., 191 AD2d 922, 924 [3d Dept 1993], lv dismissed 82 NY2d 706 [1993]).

Plaintiff's request to strike the third affirmative defense, as well as the second, third, and fourth counterclaims, in each case, as scandalous and prejudicial under CPLR 3024 (b) is denied as untimely, since his request was not served within twenty days after service of the challenged pleading as provided for in CPLR 3024 (c), and he has demonstrated no "good cause" in accordance with CPLR 2004 excusing his untimeliness.

Plaintiff's request for an award of sanctions pursuant to 22 NYCRR 130-1.1 is denied in the exercise of the court's discretion. Defendants' arguments are not so lacking in merit as to justify an award under 22 NYCRR 130—1.1 (see Katz v Shomron, 71 AD3d 770 [2d Dept 2010]).

Defendants move for an order, pursuant to CPLR 3211 (a) (7), or, in the alternative, for an order, pursuant to CPLR 3212, dismissing plaintiff's amended complaint as against defendant Sussman. Plaintiff has controverted defendants' evidence and submitted additional evidence of his own.

A motion to dismiss pursuant to CPLR 3211 may be converted to a summary judgment motion by the court after giving the parties adequate notice in accordance with CPLR 3211 (c). The notice requirement may be obviated in cases where it can be found that the parties "deliberately chart a summary judgment course" (Backer v Bouza Falco Co., 28 AD3d 503, 504 [2d Dept 2006], lv denied 7 NY3d 707 [2006]). The court finds that, through the submission of extensive extrinsic evidence, as well as the alternative designation of defendants' motion as one for summary judgment, the parties have deliberately charted a summary judgment course. The court, therefore, considers defendants' motion as one solely for summary judgment and will apply the standards of review applicable to summary judgments.^[FN18] [*13]

In support of their motion, defendants contend that: (1) Sussman, as an individual, did not have a business relationship with plaintiff; (2) plaintiff would only be able to assert a claim against Sussman as the sole shareholder (or member) of Foods under the veil-piercing/alter ego theory; and (3) there is no factual basis for the application of the veil-piercing/alter ego theory in this case. Generally, a corporation (or, in this case, a limited liability company) exists independently of its owners (members), who are not personally liable for the corporate obligations (see Billy v Consolidated Mach. Tool Corp., 51 NY2d 152, 163 [1980], rearg denied 52 NY2d 829 [1980]).^[FN19] The veil-piercing/alter ego theory is an exception to this general rule, permitting, under certain circumstances, the imposition of personal liability on owners for the obligations of their corporations (see East Hampton v Sandpebble, 66 AD3d 122, 126 [2d Dept 2009], affd 16 NY3d 775 [2011]). Factors to be considered in determining whether the owner has abused the privilege of doing business in the corporate form include whether there was a failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and personal use of corporate funds (see East Hampton, 66 AD3d at 127).

In support of his veil-piercing/alter ego theory, plaintiff alleges that: (1) Sussman was the sole member of Foods, (2) Sussman exercised dominion over the Foods assets as if they were his own, and (3) Sussman disregarded the corporate existence of Foods by: (a) failing to observe corporate formalities, including refusing to establish a Board of Directors, (b) failing to maintain adequate capitalization, (c) conveying his entire equity interest in Foods to a third party with full knowledge of its contractual obligations to plaintiff, and (d) conducting the business affairs of Foods to benefit his own personal interests and/or to render Foods insolvent and otherwise unable/unwilling to satisfy its obligations to plaintiff (Amended Complaint, ¶¶ 36-38). Plaintiff further alleges that, as a result of such domination and control, Foods has refused to satisfy its contractual obligations to plaintiff and thus will be unable to satisfy any resulting judgment (Id., ¶ 39).

Plaintiff's argument is partially correct, but only partially. As plaintiff correctly notes, [*14]the deposition testimony confirms that: (1) Sussman was the sole member/owner of Foods; (2) he failed to appoint a Board of Directors (Kleinman Tr at 95-96, 139); (3) Foods was inadequately capitalized, in that it depended solely on Sussman for its funding needs and was losing $500,000 per month on average (Kleinman Tr at 142, 146, 154); and (4) he conveyed his entire equity interest in Foods to Acquisitions with full knowledge of its contractual obligations to plaintiff. Yet, plaintiff's evidence fails to establish the principal elements of a veil-piercing theory; namely, commingling of corporate assets with the owner's own assets or application of corporate assets for the owner's personal use. Consequently, plaintiff has provided no evidence that Foods was operated as Sussman's "alter ego," and plaintiff's amended complaint, which is devoid of supporting proof, merely recites conclusory allegations as to Sussman (see Trofien Steel & Constr. Inc. v Rybak, 26 Misc 3d 1223[A], 2010 WL 549236, *3-4, 2010 NY Slip Op 50235[U] [Sup Ct, Kings County 2010]).

Indeed, the uncontroverted evidence undermines, rather than supports, plaintiff's veil-piercing theory, in that: (1) Foods had never been profitable under Sussman's ownership even before plaintiff was hired in October 2009; (2) Sussman conducted the first round of layoffs in the early part of 2010 in an attempt to reduce expenses; and (3) Sussman ultimately discharged plaintiff and other executives on February 19, 2010 because he was unable to continue the Foods business without funding it beyond the $9.2 million which he had already invested (Kleinman Tr at 110, 142, 164; Jungsberger Tr at 35, 40; Sussman Tr at 216-217). Significantly, plaintiff never required Sussman to invest a minimum amount of capital in Foods, and, at no point, was Sussman responsible to plaintiff for funding it (Kleinman Tr at 155). Thus, insofar as plaintiff was concerned, Sussman could walk away from this business at any time, and this is what he did after discharging plaintiff and other executives.

Equally important, the record contains no evidence that Sussman's ownership and resulting domination of Foods led to "inequity, fraud or malfeasance" with regards to plaintiff (see TNS Holdings, Inc. v MKI Sec. Corp., 92 NY2d 335, 339 [1998]). The only so-called inequity that plaintiff has demonstrated is that, at this time, Foods might not have any assets to satisfy its contractual obligations to him. Yet, the corporate form may not be disregarded merely because the assets of the corporation are insufficient to assure plaintiff the recovery he seeks (see Walkovszky v Carlton, 18 NY2d 414, 419 [1966]). That Foods ultimately may be judgment proof is the risk that plaintiff assumed when he contracted with Foods only and obtained no personal guaranty from Sussman. The terms of the employment contract do not bind Sussman personally, nor do they bind any acquirer of equity in Foods from Sussman (EC, ¶ 12). Nothing in the record indicates that plaintiff, who was represented by counsel in his negotiations with Sussman, thought that he was contracting with Sussman personally, and plaintiff so acknowledged (at pages 13-14 of his pretrial deposition) when he testified that he "was going to work for an organization to grow a business" and that he was working for Sussman as the sole owner of Foods, rather than individually (see Rebh v Lake George Ventures, Inc., 223 AD2d 986, 987 [3d Dept 1996]). In sum, defendants have demonstrated, prima facie, that Foods' obligations to plaintiff under the employment contract [*15]should not be imputed to Sussman and, in opposition, plaintiff has failed to sustain his burden in this regard (see Smith v Delta Intl. Machinery Corp., 69 AD3d 840, 842 [2d Dept 2010]).

Separately from his employment contract claim, plaintiff alleges that Sussman harbored an undisclosed intention to discharge plaintiff when one week prior, he fraudulently induced plaintiff to waive one week's salary. As noted above, however, the fraud-in-the-inducement claim requires justifiable reliance. Plaintiff could not have justifiably relied on Sussman keeping him continuously employed by virtue of his one-time salary waiver.^[FN20] His salary waiver did not modify the terms of the employment contract, since the memorandum reflecting it was not signed by both parties as required in ¶ 15 of the employment contract. Thus, all of the terms of his employment contract remained in effect, including Sussman's power to terminate him at any time either for or without cause. And, last but not least, the salary waiver letter does not indicate that plaintiff executed it under protest or with reservation of rights.

Finally, plaintiff's claims against Sussman under Section 198 and other provisions of Labor Law article 6 must be dismissed as a matter of law. There is no legal basis for asserting civil claims against a corporate officer (or an LLC member) for the corporation's (or the LLC's) alleged violations of Section 198 and other provisions of Labor Law article 6 (see Andux v Woodbury Auto Park, Inc., 30 AD3d 362 [2d Dept 2006]). Thus, plaintiff's fifth and sixth causes of action are dismissed as against Sussman.

Although in their motion for summary judgment defendants have not specifically addressed plaintiff's fraudulent inducement claim and the Labor Law claims against Sussman (fourth, fifth, and sixth causes of action), they did seek "any and all further relief that the Court deems just and proper." The presence of a general relief clause enables the court to grant relief that is not too dramatically unlike that which is actually sought, as long as the relief is supported by proof in the papers, and the court is satisfied that no party is prejudiced (see Tirado v Miller, 75 AD3d 153, 158 [2d Dept 2010]). Accordingly, the branch of defendants' motion which is for summary judgment dismissing the amended complaint as against defendant Marvin Sussman is granted, and the amended complaint is dismissed in its entirety as to this defendant (see Selinger v GF Health Products, Inc., 23 Misc 3d 1113[A], 2009 WL 1058587, *5, 2009 NY Slip Op 50726[U] [Sup Ct, NY County 2009]).^[FN21]

Plaintiff moves for an order, pursuant to CPLR 3124, compelling defendants to respond to plaintiff's Second Notice of Discovery and Inspection. Although defendants responded to it, plaintiff contends that, in their response, they have refused to produce relevant documents, claimed that a number of documents are unavailable, and placed the burden on plaintiff to bear the cost of retrieving such documents. Plaintiff requests a full and complete response to items Nos. 1, 2, 3, 6, 7, 10, 15, 17, 18, and 19 as set forth in his Second Notice of Discovery and Inspection.

In their opposition to plaintiff's motion, defense counsel asserts that while certain requested documents may exist, they are not accessible and/or available to defendants. According to defense counsel, these documents, if they exist, may be stored in electronic format on defendants' computer server which was damaged by a power surge in October 2010. Defense counsel states that defendants will permit plaintiff full access to the server to examine and inspect it, at plaintiff's cost, if plaintiff decides to reactivate it. If plaintiff is successful in reactivating the server, then defendants will permit him to search it for other possibly responsive documents, subject to all rights and objections of defendants, including privilege, relevancy, propriety, etc.

The court finds defendants' objection to be without merit. It is well established that when the records cannot be located, an affidavit must be served on the requesting party and filed with the court (see Lewis v City of New York, 17 Misc 3d 559, 569-570 [Sup Ct, Bronx County 2007]). The affidavit must be made by the custodian of records or by such other person duly designated by law to be a substitute custodian or person charged with the obligation to preserve, maintain, store and search for said records. At a minimum, this affidavit must include: (1) official custodian/qualifications of affiant, (2) diligent search efforts, (3) reason for absence, (4) the chain of custody, (5) last known possessor, and (6) storage locations. Defense counsel's affirmation here is plainly inadequate. Accordingly, plaintiff's motion is granted, and defendants Foods and Acquisitions are directed, within thirty days after service of a copy of this decision, order and judgment upon their counsel with notice of entry, to furnish to plaintiff's counsel full and complete responses to each of items Nos. 1, 2, 3, 6, 7, 10, 15, 17, 18, and 19 as set forth in plaintiff's Second Notice of Discovery and Inspection.^[FN22]

Based upon the foregoing, the court rules as follows:

(1)The court declares that defendant Foods terminated plaintiff on February 19, 2010 without "cause," as that term is defined in his employment contract.

(2)Plaintiff is granted partial summary judgment on liability with respect to his second cause of action for breach of his employment contract with Foods.

(3)Plaintiff is denied summary judgment without prejudice on his third cause of action for an order directing issuance to him of a 5% equity interest in Foods.

(4)Plaintiff is granted partial summary judgment on liability on his fifth cause of action for actual damages, interest, attorney's fees, and costs under Section 198 and other provisions of Labor Law article 6.

(5)Plaintiff is granted partial summary judgment on liability on his sixth cause of action for the statutory liquidated damages under Labor Law § 198.

(6)The branch of plaintiff's motion for dismissal of all of defendants' counterclaims against him is granted without opposition.

(7)The branch of plaintiff's motion for an order striking the third affirmative defense, second counterclaim, third counterclaim, and fourth counterclaim, in each case, as scandalous and prejudicial under CPLR 3024 (b) is denied.

(8)The remaining branch of plaintiff's motion for an award of sanctions pursuant to 22 NYCRR 130-1.1 is denied.

(9)Defendants' motion for an order, pursuant to CPLR 3211 (a) (7), or, in the alternative, for an order, pursuant to CPLR 3212, dismissing plaintiff's amended complaint as against defendant Sussman is converted to one for summary judgment, pursuant to CPLR 3211 (c), and, upon conversion, defendants are granted summary judgment dismissing plaintiff's amended complaint as against defendant Sussman only. The action is severed and continued against the remaining defendants Foods and Acquisitions. The caption is amended to read as follows: -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X

Mark Kleinman,

Plaintiff,

- against -Index No. 9603/2010

Blue Ridge Foods, LLC and

Blue Ridge Acquisitions, Inc.,

Defendants. -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X

(10)Plaintiff's motion for an order, pursuant to CPLR 3124, compelling defendants to respond to his Second Notice of Discovery and Inspection, dated December 22, 2010, is [*18]granted. Defendants Foods and Acquisitions are directed, within thirty days after service of a copy of this decision, order and judgment upon their counsel with notice of entry, to furnish to plaintiff's counsel full and complete responses to each of items Nos. 1, 2, 3, 6, 7, 10, 15, 17, 18, and 19 as set forth in plaintiff's Second Notice of Discovery and Inspection.

Plaintiff's counsel, Brian M. Levy, Esq., is directed, within fourteen days after entry of this decision, order and judgment, to serve upon defendants' counsel a copy of same with notice of entry pursuant to CPLR 2103 (b) and 5513 (a), and to file proof of service thereof with the clerk's office.

The parties shall appear at Commercial Part 5 for a further compliance conference on August 19, 2011 at 9:30 A.M., in Room 774.

This constitutes the decision, order, and judgment of the court.

E N T E R,

J. S. C.