The following papers numbered 1 to 12 were read on the motion by petitioner in Action No. 1 for an order dissolving BROTHER'S STAFFING, INC; Directing respondent, M Fazlur Rahman and/or BROTHER'S STAFFING, INC., to furnish schedules of all information, known or ascertainable with due diligence, including a statement of corporate assets and liabilities; and for an order pursuant to CPLR 602(a) consolidating Action NO. 1 with Action No. 2 for joint trial; and the cross-motion of respondent for an order dismissing the petition of the grounds that petitioner is not a stockholder in the Corporation:

Papers

Numbered

Order to Show Cause-Petition-Affirmation-Exhibits.......1 - 5

Respondent's Cross-Motion-Affirmation...................6 - 8

Reply Affirmation.......................................9 - 12

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Plaintiff in Action No. 1, Dulal Behedo and defendant in Action No. 1, M Fazlur Rahman are alleged to each be 50% owners of Brother's Staffing Inc., a corporation whose business is dedicated to providing staffing and personnel to hotels for parties and events. Plaintiff asserts that defendant has been defrauding the plaintiff and that defendant has misappropriated and converted funds belonging to the corporation in an amount in excess of $40,000. As a result, plaintiff commenced an action against M Fazlur Rahman on October 16, 2012 in which he asserts causes of action for an accounting, injunctive relief, conversion, breach of fiduciary duty and fraud.

On December 13, 2012 the plaintiff commenced a second action pursuant to BCL §§ 1104(a)(3), 1104-a(a)(1) and 1104-a(a)(2) for the corporate dissolution of Brothers Staffing, Inc. In his verified petition dated November 28, 2012, petitioner alleges that there is internal dissension between the stockholders such that dissolution would be beneficial to the stockholders and alleging that respondent Rahman has been guilty of illegal, [*2]fraudulent and oppressive action towards the petitioner consisting of looting, wasting and diverting property and assets of the Corporation. Petitioner alleges that respondent has been denying petitioner access to the corporate office, that respondent arranged to have an individual approach and accost the petitioner and threaten him with physical violence, and that respondent improperly denied the petitioner control over the operation of the Corporation and denied petitioner his share of salary and profits of the Corporation.

Petitioner now seeks an order pursuant to CPLR 602 consolidating the dissolution petition with the plenary action for conversion, breach of fiduciary duty and fraud on the ground that the two actions involve common questions of law and fact and the same alleged acts by Rahman serve as the basis for both actions.

In opposition to the motion to consolidate, respondent submits a cross-motion in which he seeks to dismiss the proceeding on the ground that Dulal Behedo has no standing to commence the dissolution action as he is not a stockholder in the corporation. In support of the cross-motion respondent's counsel submits his own affirmation stating that respondent, Rahman, is the sole stockholder.

Upon review and consideration of the petitioner's motion for consolidation, this court finds that motion to consolidate is granted. "Where common questions of law or fact exist, a motion to consolidate should be granted absent a showing of prejudice to a substantial right by the party opposing the motion (see Kally v Mount Sinai Hosp., 44 AD3d 1010 [2d Dept. 2007]; Flaherty v RCP Assocs., 208 AD2d 496 [2d Dept. 1994]). "Consolidation is appropriate where it will avoid unnecessary duplication of trials, save unnecessary costs and expense, and prevent an injustice which would result from divergent decisions based on the same facts" (see Best Price Jewelers.Com, Inc. v Internet Data Storage & Systems, Inc., 51 AD3d 839 [2d Dept. 2008]).

Here, it is clear that the interests of justice and judicial economy will be served by consolidation of the two actions for joint trial as both actions arise from the allegation of fraud, misappropriation of corporate funds and breach of fiduciary duty, concern the same parties, involve common questions of law and fact and both actions are still in the early stages of discovery (see Nigro v Pickett, 39 AD3d 720[2d Dept. 2007]; Geneva Temps, Inc. v New World Communities, Inc., 24 AD3d 332 [1st Dept. 2005]; In re Dissolution of Tosca Brick Oven Bread, 243 AD2d 416 [1st [*3]Dept. 1997]). The respondent in Action No. 1 has failed to demonstrate that consolidation will prejudice a substantial right or that his time for discovery will be curtailed (see Scotto v Kodsi, 102 AD3d 947 [2d Dept. 2013]; Alizio v Perpignano, 78 AD3d 1087 [2d Dept. 2010]; Mas-Edwards v Ultimate Servs., Inc., 45 AD3d 540 [2d Dept.2007]).

Section 1104—a of the Business Corporation Law authorizes the "holders of 20% or more of the outstanding shares of a corporation to present a petition for dissolution based on any of several enumerated grounds, including oppressive acts by the directors or those in control of the corporation" (Matter of Seagroatt Floral Co., Inc., 78 NY2d 439 [1991]; Matter of Kemp & Beatley, Inc., 64 NY2d 63 [1984]; In re Parveen, 259 AD2d 389, 391 [1st Dept. 1999]). The Court of Appeals defines "oppressive acts" as conduct that substantially defeats the reasonable expectations held by minority shareholders in committing their capital to the particular enterprise (Matter of Kemp & Beatley, Inc., 64 NY2d 72—73, supra; Burack v I. Burack, Inc., 137 AD2d 523[2nd Dept.]; In re Maybaum, 6 Misc 3d 1019(A)[Sup Ct Nassau County 2005]).

Respondent's pre-answer cross-motion to dismiss the petition is denied. Respondent has failed to present any evidence or an affidavit from an individual with personal knowledge demonstrating that petitioner is not a holder of 20% or more of the outstanding shares and does not have the requisite ownership interest necessary to bring the dissolution proceeding under BCL § 1104-a. The only affirmation submitted on the cross-motion was an affirmation from counsel made on information and belief which has no probative value as counsel has no personal knowledge of the facts asserted (see Zuckerman v New York, 49 NY2d 557 [1980]).

Accordingly, for all of the above stated reasons it is hereby

ORDERED, that the motion to consolidate Action No. 1 and Action No. 2 for joint trial is granted and the two actions are hereby consolidated for joint trial, and it is further,

ORDERED, that petitioner's motion for an order granting the ultimate remedy of dissolution is denied without prejudice to renew following the completion of discovery, and it is further,

ORDERED, that the moving petitioner shall serve a copy of this order with notice of entry on all parties to the actions consolidated and on the Clerk of Queens County, and it is [*4]further,

ORDERED, that the respondent's cross-motion to dismiss the petition is denied and the respondent shall serve a verified answer to the petition within 15 days from service of copy of this order with notice of entry thereof, and it is further,

ORDERED, that discovery shall proceed in accordance with the preliminary conference order signed by Justice Siegal on December 18, 2012 and the compliance conference order signed by Justice Ritholtz on May 8, 2013, and it is further,

ORDERED, that upon completion of discovery the parties shall file separate notes of issue and certificates of readiness as to each action.

Dated: June 17, 2013

Long Island City, NY

___________________

ROBERT J. MCDONALD

J.S.C.

OCA e-submission: no Judge E-Mail