This matter comes before the Court on Defendants John King, Chung King Studios Inc., Chung King Studios, NYC, Inc., and Chung King House of Metal, Inc.'s ^[FN1] motion to dismiss pursuant to Sections 3211(a)(1), (a)(2), (a)(3) and (a)(7) of the New York Civil Practice Law and Rules ("CPLR"), seeking the entry of an order dismissing the complaint. Alternatively, Defendants move pursuant to CPLR 3024 and 3014, for a more definite statement.

Plaintiff Matthew T. Weiner ("Plaintiff"), suing on his own behalf and derivatively, on behalf of East Coast Sales and Rentals LLC ("ECSR"), opposes.

For the reasons that follow, Defendants' motion is granted in part and denied in part.

ECSR is a limited liability company ("LLC") formed under the laws of the state of Delaware. ECSR has only two members: Plaintiff and Defendant King. Plaintiff, a New York [*2]resident, is a 45% owner of ECSR, as well as its vice president and secretary. Defendant King operates a recording studio in Manhattan. He is a 55% owner of ECSR, as well as its president. Defendant King is also an officer, director, and owner of Defendant Companies. Defendant Companies are inactive corporations organized under the laws of the state of New York, which, during the period in question, had their principal places of business in New York.

In August 2007, Plaintiff and Defendant King decided to go into business together, renting equipment to customers in the music, film, and electronic industries. On August 10, 2007, a certificate of formation for ECSR was filed in the state of Delaware. Plaintiff and Defendant King entered into a letter agreement dated August 13, 2007 (the "Letter Agreement"), which Plaintiff alleges is the binding operating agreement with respect to ECSR. Notably, Defendants dispute this allegation, asserting that a separate operating agreement dated August 11, 2007 (the "Operating Agreement"), is actually the controlling agreement (Defendants' Memorandum in Support ("Defs.' Mem. Supp.") at 10-11; Defendants' Reply Memorandum ("Defs.' Reply Mem.") at 2.) This dispute is discussed further below.

The Letter Agreement provides, among other things, that Plaintiff would contribute $350,000, plus his skill, expertise, and contacts, in exchange for a 45% ownership interest in ECSR. Defendant King would contribute no money, but would contribute his skill, reputation, contacts, expertise, and good will, in exchange for a 55% ownership interest.

The Letter Agreement also imposes a range of obligations upon Plaintiff and Defendant King. Most notable are the obligations that neither owner compete with ECSR in any manner; that Plaintiff's $350,000 investment be used only to purchase equipment for ECSR and to support its operations; that Defendant King consult with Plaintiff before directing ECSR to incur significant expenses; and that transactions between ECSR and any related entities, such as Defendant Companies, be at arm's length and consistent with industry standards. Defendant King was also required to wind up the business of another company which he owned, ESR Electronics, Inc., which was a competitor with ECSR, but which is not a party to this action.

ECSR remained profitable until the end of 2009. At that time it still owned or had an interest in equipment with an appraised value of $223,300.

In March 2012, Plaintiff discovered "irregularities" regarding the way in which Defendant King had managed ECSR. (Amended Complaint ("Compl.") ¶ 30.) Specifically, in late 2010, Defendant King began disregarding Plaintiff's membership rights by asserting control over ECSR's business and operations. (Compl. ¶ 31.)

The amended complaint sets forth numerous allegations which are discussed in further detail below. Examples include that Defendant King failed to maintain accurate records of transactions and sold various pieces of ECSR's equipment without seeking Plaintiff's consent and without turning over any portion of the proceeds to ECSR or Plaintiff. Defendant King is also alleged to have transferred various pieces of equipment to Defendant Companies for no consideration and that Defendant Companies continue to possess and use that equipment without making any payments to ECSR.

As a result, Plaintiff commenced this action on July 18, 2013. In response to Defendants' motions for a more definite statement and to dismiss, Plaintiff filed an amended complaint on August 28, 2013. The amended complaint sets forth seven causes of action for replevin, conversion, breach of contract, breach of fiduciary duty, unjust enrichment, accounting, and [*3]constructive trust. The claims for breach of contract and accounting are asserted directly by Plaintiff, while the remainder are asserted derivatively on behalf of ECSR.

Defendants now move for dismissal, arguing that the direct causes of action must be brought derivatively, that Plaintiff failed to satisfy a condition precedent set forth in the Operating Agreement (as opposed to the Letter Agreement) before bringing the derivative claims, and that certain of the claims otherwise fail to state a cause of action. As an alternative form of relief, Defendants move pursuant to CPLR 3024 and 3014 for a more definite statement, arguing that the amended complaint is so confusing that Defendants cannot frame a response.

"On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction. We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory." Leon v. Martinez, 84 NY2d 83, 87-88 (1994).

A motion to dismiss under CPLR 3211(a)(7), for failure to state a cause of action, must be denied if the factual allegations contained within "the pleadings' four corners . . . manifest any cause of action cognizable at law." 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144, 151-52 (2002). While factual allegations contained in a complaint should be accorded a favorable inference, bare legal conclusions and inherently incredible facts are not entitled to preferential consideration. Sud v. Sud, 211 AD2d 423, 424 (1st Dep't 1995).

Where the motion to dismiss is based on documentary evidence, CPLR 3211(a)(1), the claim will be dismissed "if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law." Leon, 84 NY2d at 88; see 150 Broadway NY Assocs., L.P. v. Bodner, 14 AD3d 1, 5 (1st Dep't 2004).

Dismissal is appropriate under CPLR 3211(a)(2) where "the court has not jurisdiction of the subject matter of the cause of action." CPLR 3211(a)(2). In a motion to dismiss under CPLR 3211(a)(3), the moving party seeks dismissal because "the party asserting the cause of action has not legal capacity to sue." CPLR 3211(a)(3). Defendants state that "[t]here is some dispute as to whether or not a motion to dismiss for lack of standing should be brought pursuant to CPLR 3211(a)(2) or (3)" and "in an abundance of caution . . . move pursuant to both provisions." (Defs.' Mem. Supp. at 4-5.) Notably, the portion of Defendants' motion brought under CPLR 3211(a)(2) and/or (a)(3) is solely with respect to Plaintiff's direct, rather than derivative, claims, arguing that Plaintiff lacks standing to sue directly.

II.The First and Second Causes of Action

The first cause of action is for replevin. The second cause of action is for conversion. Both causes of action are asserted derivatively on behalf of ECSR against all Defendants.

Section 801(a) of the New York Limited Liability Company Law ("LLCL") provides that "the laws of the jurisdiction under which a foreign limited liability company is formed govern its organization and internal affairs and the liability of its members and managers." LLCL 801(a). Plaintiff's claims arise out of the governance of ECSR, an LLC organized under the laws of Delaware, as well as the relations between its members, and are accordingly analyzed under [*4]Delaware law. See Hart v. General Motors Corp., 129 AD2d 179, 184 (1st Dep't 1987).

Delaware law defines "[a] conversion [as] the wrongful possession or disposition of another's property as if the property were one's own." Jarvis v. Elliott, 2010 WL 761089, at *4 (Del. Ch. Mar. 5, 2010). "In order to win recovery under this claim, [a plaintiff] must prove that at the time of the alleged conversion he had a property interest in the [converted property], he had a right to possession of the [converted property], and that there was a conversion." Jarvis, 2010 WL 761089, at *4.

Similar to conversion, though not identical, "[r]eplevin traditionally is a form of action for recovery of personal property that has been taken or withheld from the owner unlawfully, though it also has become a useful method to determine the title to goods and chattels." Jarvis, 2010 WL 761089, at *4.

The distinguishing feature between an action for conversion and one for replevin is the remedy sought. As one court observed, "[a]lthough the Plaintiff's civil action was filed as a replevin action, it appears as though it is actually a civil action for conversion since the Plaintiff is seeking money damages for items that he alleges were wrongfully taken from him and disposed of by the Defendants." Davis v. Dep't of Corr., 2004 WL 3312522, at *1 n.2 (Del. C.P. 2004).

Here, Plaintiff seeks money damages for both the replevin and conversion causes of action. Plaintiff alleges similar facts in support of both causes of action. Specifically, Plaintiff claims that Defendant King has wrongfully retained control of ECSR's equipment and that certain pieces of such equipment are now in the possession of Defendant Companies. With respect to the conversion claim, Plaintiff includes an additional allegation that income generated from the rental of the equipment was misappropriated by Defendant King. The sole remedy sought in both claims is money damages of no less than $350,000. (Compl. ¶¶ 61, 66-67.)

Plaintiff has sufficiently alleged a cause of action for conversion under Delaware law—that ECSR had a property interest in, and right to possession of, the equipment; that Defendant King wrongfully took possession of the equipment; that at least some of the equipment is currently in use and possession of the Defendant Companies; and that rental income from the use of such equipment, to which ECSR was entitled, was misappropriated by Defendant King. However, the replevin claim fails as a matter of law because Plaintiff seeks money damages only, as opposed to turnover of property, making it duplicative of the conversion claim.

Defendants' remaining argument, that the conversion claim should be dismissed as duplicative of the breach of contract claim, is unavailing. While the misappropriation of equipment is alleged in connection with the breach of contract claim, there are additional allegations regarding the improper allocation of profits and losses and the interference with Plaintiff's management authority. Moreover, the breach of contract claim is direct, while the conversion claim is derivative in nature. (Compl. ¶¶ 73, 83.) For these reasons, the conversion claim is not duplicative of the breach of contract claim.

Accordingly, the first cause of action for replevin is dismissed for failure to state a cause of action and as duplicative of the conversion claim. Defendants' motion to dismiss is denied with respect to the second cause of action for conversion.

III.The Third Cause of Action [*5]

The third cause of action is for breach of contract. It is asserted directly (as opposed to derivatively) by Plaintiff against Defendant King only. Notwithstanding Defendants' assertion that "the Amended Complaint is confusing," (Defendants' Opposition Memorandum ("Defs.' Opp. Mem.") at 7), it is beyond peradventure that only two of the seven causes of action in the amended complaint are being asserted as direct claims: the third cause of action for breach of contract and the sixth cause of action for an accounting. (Compl. ¶¶ 83, 110.)

Defendants argue that dismissal of the third cause of action for breach of contract is warranted because that claim should actually have been brought derivatively. Notably, Defendants do not otherwise argue that Plaintiff has failed to plead the elements of breach of contract, such that the Court need only consider whether this claim must be brought derivatively.

Under Delaware law, "to determine whether a claim is direct or derivative, . . . . a court should consider (1) who suffered the alleged harm (the corporation or the suing stockholders, individually); and (2) who would receive the benefit of any recovery or other remedy (the corporation or the stockholders, individually).'" Yudell v. Gilbert, 99 AD3d 108, 114 (1st Dep't 2012) (quoting Tooley v. Donaldson, Lufkin, & Jenrette, Inc., 845 A.2d 1031, 1033 (Del. 2004)). In Yudell, the First Department adopted the Delaware test in Tooley for determining whether, under New York law, a claim is direct or derivative. Yudell, 99 AD3d at 110.

Defendants contend that the allegations related to that claim "affect solely the operations of ECSR" or the wrongful use of ECSR's equipment. (Defs.' Opp. Mem. at 7-8.) Thus, argue Defendants, any recovery could only go to ECSR, not to Plaintiff. Plaintiff opposes, arguing that the alleged breach concerns the allocation of profits to which Plaintiff Weiner was entitled under the Letter Agreement, such that any recovery would inure to his benefit, not ECSR's.

The Letter Agreement provides that profits and losses are to be allocated in accordance with ECSR's members' respective interests. (Compl. ¶ 82; Plaintiff's Exhibit A ("Pl.'s Ex. A") at 2.) The Letter Agreement further provides that salaries and distributions are only paid from such profits, subject to both parties' consent. (Pl.'s Ex. A at 2.)

Plaintiff's allegations regarding the wrongful allocation of ECSR's profits and losses between Plaintiff and Defendant King in violation of the Letter Agreement, concern an alleged harm to, and potential recovery for, Plaintiff, not ECSR. See Carlson v. Hallinan, 925 A.2d 506, 526, 548 (Del. Ch. 2006) (finding that a breach of an agreement not to pay directors and officers a salary was a direct claim where the breach cause money to be unavailable for pro rata distribution to shareholders); see also Najjar Group, LLC v. West 56th Hotel LLC, 110 AD3d 638, 638 (1st Dep't 2013) (finding that a plaintiff's claim regarding the pro rata distribution of surplus revenue pursuant to an LLC agreement was "personal to [that plaintiff], not corporate").

Separately, Plaintiff alleges that in violation the Letter Agreement and in disregard of Plaintiff's membership rights therein, Defendant King was unilaterally managing and exercising control over ECSR's business operations. (Compl. ¶¶ 31, 77-79.) The Letter Agreement provides in pertinent part that "[b]oth of us [Plaintiff and Defendant King] will manage ECSR's business." (Pl.'s Ex. A at 2.)

Here, the alleged breach is of a contractual right given to ECSR's members, Plaintiff and Defendant King, as opposed to a right given to ECSR itself. "Claims based upon contractual rights of the shareholder which exist separately from any right of the corporation are direct claims." Ruffalo v. Transtech Serv. Partners Inc., 2010 WL 3307487, at *9 (Del. Ch. Aug. 23, [*6]2010); see also Gjuraj v Uplift El. Corp., 110 AD3d 540, 540 (1st Dep't 2013) (applying Yudell and finding that a breach of fiduciary duty claim was direct, not derivative, "since defendants' freezing [plaintiff] out of the corporation and failing to pay him his share of the profits harmed him individually, and he would receive the benefit of any recovery").

For these reasons, the Court finds that the third cause of action is correctly pled as a direct claim. Accordingly, Defendants' motion to dismiss is denied with respect to the third cause of action.

IV.The Fourth Cause of Action

The fourth cause of action is for breach of fiduciary duty. It is asserted derivatively on behalf of ECSR against Defendant King only.

Defendants do not argue that Plaintiff has failed to sufficiently allege facts supporting this claim, but, rather, that the claim is duplicative of the third cause of action for breach of contract. However, the amended complaint sets forth a range of allegations that when accepted as true and accorded the benefit of every possible favorable inference, support a claim for breach of fiduciary duty which is not duplicative of the claim for breach of contract.

Under Delaware law, "in the absence of a contrary provision in the LLC agreement, LLC managers and members owe traditional fiduciary duties of loyalty and care to each other and to the company.'" Feeley v. NHAOCG, LLC, 62 A.3d 649, 660 n.1 (Del. Ch. 2012) (quoting Kelly v. Blum, 2010 WL 629850, at *10 (Del. Ch. Feb. 24, 2010)). No such provision appears to exist in the Letter Agreement, nor has it been argued that one does. See Feeley, 62 A.3d at 664 (quoting Bay Ctr. Apts. Owner, LLC v. Emery Bay PKI, LLC, Bay Ctr., 2009 WL 1124451, at *9 (Del. Ch. Apr. 20, 2009)) (explaining that "[d]rafters of an LLC agreement must make their intent to eliminate fiduciary duties plain and unambiguous'").

The traditional fiduciary duty of loyalty "mandates that the best interest of the corporation and its shareholders takes precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the stockholders generally." Cede & Co. v. Technicolor, 634 A.2d 345, 361 (Del. 1993). This standard is also applicable in the context of LLCs. See Stewart v. BF Bolthouse Holdco, LLC, 2013 WL 5210220, at *10 (Del. Ch. Aug. 30, 2013). "[T]he duty of loyalty [also] encompasses . . . actions taken in bad faith." Stewart, 2013 WL 5210220, at *11 (citing Stone v. Ritter, 911 A.2d 362, 370 (Del. 2006)). Specifically, the inquiry is whether the fiduciary acted " in the good faith belief that her actions are in the corporation's best interest.'" Stone, 911 A.2d at 370 (quoting Guttman v. Huang, 823 A.2d 492, 506 n.34 (Del. Ch. 2003)).

"Under Delaware law, a director is liable for a breach of the fiduciary duty of care when their actions are grossly negligent." Stewart, 2013 WL 5210220, at *10 (citing In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 53 (Del. 2006)). "[G]ross negligence is conduct that constitutes reckless indifference or actions that are without the bounds of reason.'" Stewart, 2013 WL 5210220, at *10 (quoting McPadden v. Sidhu, 964 A.2d 1262, 1274 (Del. Ch. 2008)). "The focus of a duty of care analysis is not the substance of the decision the directors made but rather the process they undertook in making it." Stewart, 2013 WL 5210220, at *10.

With respect to the duty of loyalty, Plaintiff alleges that Defendant King, acting on behalf of ECSR, entered into transactions with certain of Defendant Companies, in which ECSR [*7]received no payment. Plaintiff separately contends that Defendant King acted in bad faith. Defendant King is alleged to have transferred, without consideration, certain of ECSR's equipment to Defendant Companies. Defendant King is also alleged to have diverted ECSR's profits to his own benefit and to have directed Defendant Companies to withhold money to which ECSR was entitled.

With respect to the duty of care, Plaintiff alleges that there are "several irregularities" with respect to the way that Defendant King was managing ECSR's business. (Compl. ¶ 30.) Examples include Defendant King's alleged "conceal[ment] [of] vital information from [Plaintiff] concerning the operations of the business including the current location of ECSR's equipment." (Compl. ¶ 32.) Defendant King also allegedly orchestrated the sale of ECSR's equipment without "seeking or obtaining [Plaintiff's] consent." (Compl. ¶ 35.) Defendant King is further alleged to have "intentionally failed to keep accurate records of ECSR's inventory of equipment as well as other financial information related to ECSR's operations," and the records that do exist, over which Defendant King maintained "exclusive control," are devoid of any reference to the sale of ECSR's equipment. (Compl. ¶¶ 37, 43.)

These allegations go beyond those alleged in support of the breach of contract claim, which, as discussed above, focused largely on Defendant King's alleged misallocation of profits. In addition, the breach of fiduciary claim is asserted derivatively, while the breach of contract claim is direct. Any recovery under the former claim would go to ECSR, while recovery under the latter would go to Plaintiff.

For these reasons, Defendants' motion to dismiss the fourth cause of action for breach of as duplicative of the third is denied.

V.The Fifth Cause of Action

The fifth cause of action is for unjust enrichment. It is asserted derivatively on behalf of ECSR against Defendant Companies.

Defendants argue that dismissal of this claim is warranted because it is duplicative of the second cause of action for conversion. Delaware law defines an unjust enrichment as " the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience.'" Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010) (quoting Fleer Corp. v. Topps Chewing Gum, Inc., 539 A.2d 1060, 1062 (Del. 1988)). The elements of a cause of action for unjust enrichment are "(1) an enrichment, (2) an impoverishment, (3) a relation between the enrichment and the impoverishment, (4) the absence of justification, and (5) the absence of a remedy provided by law." Nemec, 991 A.2d at 1130.

Identical facts are alleged in support of the claims for conversion and unjust enrichment. Summarily, Plaintiff alleges that Defendant Companies were unjustly enriched as a result of possessing and using ECSR's equipment without making any payment to ECSR. Under Delaware law, dismissal of an equitable claim may be appropriate where it is "duplicative of a legal claim that could provide an adequate remedy." Dubroff v. Wren Holdings, LLC, 2011 WL 5137175, at *11 n.58 (Del. Ch. Oct. 28, 2011).

Also, with respect to the unjust enrichment claim, there is no allegation that Plaintiff lacks an adequate remedy at law. While under certain circumstances, Delaware law permits a [*8]cause of action for unjust enrichment to be brought at law instead of at equity, see Stevanov v. O'Connor, 2009 WL 1059640, at *13 n.74 (Del. Ch. Apr. 21, 2009) (noting that "[d]epending on the circumstances, unjust enrichment can be thought of as either a legal or an equitable claim"), permitting Plaintiff to do so in this case would make the unjust enrichment claim indistinguishable from the conversion claim.

Defendants' reliance upon Sebastian Holdings, Inc. v. Deutsche Bank AG, 78 AD3d 446 (1st Dep't 2010), is misplaced. There, the First Department considered only whether the conversion and unjust enrichment claims were duplicative of a separate breach of contract claim, not whether they were duplicative of each other. Sebastian Holdings, Inc., 78 AD3d at 448. Notably, following the filing of an amended complaint in that case, the First Department affirmed the dismissal of the conversion and unjust enrichment claims as duplicative of certain newly asserted breach of contract claims. Sebastian Holdings, Inc. v. Deutsche Bank, AG., 108 AD3d 433, 433 (1st Dep't 2013); see also Financial Structures Ltd. v. UBS AG, 77 AD3d 417, 419 (1st Dep't 2010) (concluding that it was error not to dismiss a fraud claim as duplicative of a breach of contract claim where the former was "based on the same facts that underlie the contract cause of action, is not collateral to the contract, and does not seek damages that would not be recoverable under a contract measure of damages"); Hershenbaum v. Angerman, 1 AD3d 218, 219 (1st Dep't 2003) (finding that "other causes of action were properly dismissed as duplicative of the deficient fraud claim").

For these reasons, the fifth cause of action for unjust enrichment is dismissed.

VI.The Sixth Cause of Action

The sixth cause of action is for an accounting. It is asserted directly by Plaintiff against Defendant King only.

Under Delaware law, "[a] claim for an accounting in the Court of Chancery generally reflects a request for a particular type of remedy, rather than an equitable claim in and of itself." Stevanov, 2009 WL 1059640, at *15. It is "an equitable remedy that consists of the adjustment of accounts between parties and a rendering of a judgment for the amount ascertained to be due to either as a result." Addy v. Piedmonte, 2009 WL 707641, at *23 n.126 (Del. Ch. Mar. 18, 2009).

"Delaware law provides a right to accounting only in the following circumstances: (1) where there are mutual accounts between the parties; (2) where the accounts are all on one side but there are circumstances of great complication; and, (3) where a fiduciary relationship exists between the parties and a duty rests upon defendant to render an account.'" Kaufman v. Guest Capital, L.L.C., 386 F. Supp. 2d 256, 274 (S.D.NY 2005) (quoting Pan Am. Trade & Inv. Corp. v. Commercial Metals Co., 33 Del. Ch. 425, 94 A.2d 700, 701 (Del. Ch. 1953)). Despite the use of the word "and" between the second and third circumstances, each circumstance, on its own, may entitle a plaintiff to an accounting. See Kaufman, 386 F. Supp. 2d at 274-75; Lamplugh v. Sheridan, 2000 WL 128970, at *8 (Del. Ch. Jan. 19, 2000).

The amended complaint sets forth no allegations that there are accounts between both Plaintiff and Defendant King or that there are accounts on one or the other side, in addition to circumstances of great complication. Accordingly, the Court considers the third circumstance, that is, whether "a fiduciary relationship exists between the parties and a duty rests upon [*9]defendant to render an account." Kaufman, 386 F. Supp. 2d at 274.

Under Delaware law, "fiduciaries have a duty to account to their beneficiaries for their disposition of all assets that they manage in a fiduciary capacity. That duty carries with it the burden of proving that the disposition was proper." Technicorp Int'l II v. Johnston, 2000 WL 713750, at *2 (Del. Ch. May 31, 2000). Indeed, "[c]orporate officers and directors, like all fiduciaries, have the burden of showing that they dealt properly with corporate funds and other assets entrusted to their care." Technicorp Int'l II, 2000 WL 713750, at *16.

As discussed above, treating all allegations in the amended complaint as true, Plaintiff has sufficiently alleged the existence of a fiduciary relationship between Defendant King, as fiduciary, and Plaintiff. See Feeley v. NHAOCG, LLC, 62 A.3d 649, 663 (Del. Ch. 2012); see also Zimmerman v. Crothall, 62 A.3d 676, 702 n.145 (Del. Ch. 2013) (noting that "managers and managing members of an LLC do owe fiduciary duties as a default matter").

In addition, Plaintiff alleges that Defendant King took control of ECSR's business and operations; that Defendant King concealed information about the business and ECSR's equipment from Plaintiff; that Defendant King took possession of ECSR's equipment to the exclusion of Plaintiff and ECSR; and that Defendant King has failed to keep accurate records regarding ECSR's equipment and operations.

Those allegations, coupled with Defendant King's alleged misallocation of profits and losses, as well as those related to Defendant King's practice of transferring money between himself and Defendant Companies to avoid creditors, are sufficient at this stage to support Plaintiff's claim for an accounting and to allow Plaintiff to bring that claim directly, as opposed to derivatively. See Carlson v. Hallinan, 925 A.2d 506, 537 (Del. Ch. 2006) (concluding that where defendants failed to allocate and keep track of expenses among various entities, an accounting was "necessary to determine the extent of the misallocation of expenses and the damages resulting therefrom"); Debbs v. Berman, 12 Del. J. Corp. L. 685, 688 (Del. Ch. Aug. 1, 1986) (finding that plaintiffs were entitled to an accounting where "defendants had direct supervision and control of [the] books, records, funds and operations and owed fiduciary duties to plaintiffs . . . . [and] failed to maintain accurate books and records").

Unlike the unjust enrichment claim, the Court finds that it would be premature at this juncture to dismiss the accounting claim as duplicative of the claim for breach of contract. Indeed, as a form of remedy, as opposed to a separate cause of action, the request for an accounting cannot be considered duplicative of the breach of contract claim. As one court explained, "[s]o long as the underlying cause of action is well pled, requested relief styled as a claim [for an accounting] will not be stricken from the complaint." MCG Capital Corp. v. Maginn, 2010 WL 1782271, at *25 (Del. Ch. May 5, 2010).

Based on the foregoing, Defendants' motion to dismiss is denied with respect to the sixth cause of action for an accounting.

VII.The Seventh Cause of Action

The seventh cause of action is for constructive trust. Plaintiff asserts this cause of action derivatively on behalf of ECSR, seeking the imposition of a constructive trust "over the Defendant Companies' assets, including [their] recording equipment, in order to prevent the Defendant Companies' unjust enrichment." (Compl. ¶ 123.) [*10]

Under Delaware law, "[a] constructive trust is proper when a defendant's fraudulent, unfair or unconscionable conduct causes him to be unjustly enriched at the expense of another to whom he owed some duty." Jackson Nat'l Life Ins. Co. v. Kennedy, 741 A.2d 377, 393-94 (Del. Ch. 1999) (internal quotations omitted). Stated more broadly, "[a] constructive trust is one imposed by a court of equity as a remedy to correct the unlawful vesting, or assertion of, legal title." East Lake Methodist Episcopal Church, Inc. v. Trustees of the Peninsula-Delaware Annual Conf. of the United Methodist Church, Inc., 731 A.2d 798, 809 n.4 (Del. 1999).

Here, Plaintiff has not alleged that Defendant Companies owed a duty to ECSR. Moreover, Plaintiff has not alleged that legal title (as opposed to mere possession) in the equipment or proceeds from the sale thereof has vested in, or is asserted by, Defendant Companies.

For these reasons, the amended complaint fails to state a cause of action with respect to the seventh cause of action for constructive trust. Accordingly, the seventh cause of action is dismissed.

VIII.The Operating Agreement's Condition Precedent to Bringing Derivative Claims

Defendants separately argue that the causes of action asserted derivatively must be dismissed because Plaintiff failed to satisfy a condition precedent before bringing this action. Specifically, Defendants argue that the Operating Agreement, as opposed to the Letter Agreement, is ECSR's governing operating agreement and that Section 5(b)(xiv) of the Operating Agreement requires the unanimous consent of ECSR's members, Plaintiff and Defendant King, before an action may be brought by ECSR.

Notably, the Operating Agreement is dated August 11, 2007, while the Letter Agreement is dated August 13, 2007. However, the Letter Agreement is signed by both parties, while the Operating Agreement is initialed and signed only by Plaintiff.

As discussed above, "[o]n a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction. We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory." Leon v. Martinez, 84 NY2d 83, 87-88 (1994).Furthermore, "[u]nder CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law." Leon, 84 NY2d at 88 (emphasis added).

In this case, Defendants' documentary evidence, that is, the Operating Agreement, does not conclusively establish a defense to the derivative claims. Notwithstanding the presence of Plaintiff's signature and initials on the Operating Agreement, there are questions of fact as to the circumstances surrounding the drafting of the two agreements, as well as by which of the two agreements parties intended to be bound. Related is the question raised by Defendants of consideration, or the absence thereof; Defendants' reply memorandum is insufficient to resolve that issue.

Also, the question of whether of the Letter Agreement is an amendment, based on the purportedly limited scope of the merger clause, is unanswerable at this juncture. The reference to "subject matter" in the Letter Agreement's merger clause is easily construed as referring to the creation and governance of ECSR, such that the Letter Agreement would supersede, as opposed [*11]to supplement, the Operating Agreement in its entirety. (Pl.'s Ex. A at 3.)

Another issue not raised by the parties is the language of Section 5(b)(xiv) of the Operating Agreement, which requires the members' unanimous vote to commence a legal action "brought by the Company." (Defendants' Exhibit B ("Defs.' Ex. B") at 6.) Under Section 18-106(a) and (b) of the Delaware Limited Liability Company Act ("DLLCA"), an LLC may carry on any lawful activity and may exercise all powers and privileges given to it by law. DLLCA 18-106(a)-(b). This grant of authority has been interpreted to mean that "an LLC can sue for injuries it incurred." Fenrick Waterman's, LLC v. Littleton, 2014 WL 708431, at *2 n.8 (Del. Feb. 19, 2014). However, under DLLCA 18-1001, a member of an LLC may sue "in the right of" an LLC. DLLCA 18-1001. That is, a "member of LLC may bring [a] derivative action." Elf Atochem N. Am., Inc. v. Jaffari, 727 A.2d 286, 294 n.40 (Del. 1999). Arguably, a suit "by" ECSR is distinct from a suit brought "in its right." Thus, even assuming that the Operating Agreement was the controlling agreement, there is still a question of whether Section 5(b)(xiv) would preclude Plaintiff from bringing a suit derivatively on ECSR's behalf.

Plaintiff correctly points out that Defendants have not argued that Plaintiff failed to satisfy the demand requirement, and, accordingly, the Court need not reach that issue.

For these reasons, the portion of Defendants' motion seeking dismissal of the derivative causes of action for failure to satisfy a condition precedent is denied.

IX.Defendants' Request for a More Definite Statement

As an alternative form of relief, Defendants seek the entry of an order compelling that Plaintiff replead in the form of a more definite statement.

CPLR 3024(a) provides that "[i]f a pleading is so vague or ambiguous that a party cannot reasonably be required to frame a response he may move for a more definite statement." CPLR 3024(a). CPLR 3014 provides in pertinent part that "[e]very pleading shall consist of plain and concise statements in consecutively numbered paragraphs. Each paragraph shall contain, as far as practicable, a single allegation." CPLR 3014.

Defendants argue that the amended complaint is so confusing that Defendants cannot properly form a response. In addition, Defendants assert that "[m]any of the paragraphs in the complaint violate the one allegation per paragraph rule of the CPLR, which also make it impossible for Defendant to properly respond to the complaint." (Defs.' Mem. Supp. at 17.)

Defendants' arguments are unavailing. Defendants have not identified the paragraph or paragraphs which purportedly violate CPLR 3014. Moreover, Defendants' earlier argument that it is impossible to discern whether the causes of action are set forth directly or derivatively is simply without merit. As noted above, the amended complaint makes clear that the third and sixth causes of action are asserted directly by Plaintiff, while the remainder are asserted derivatively on behalf of ECSR.

Because Defendants have not otherwise established a basis for the alternative relief sought, this prong of the motion is denied.

ACCORDINGLY, it is hereby

ORDERED, that the first, fifth, and seventh causes of action are dismissed, and the [*12]motion is denied in all other respects; and it is further

ORDERED, that Defendants John King, Chung King Studios Inc., Chung King Studios, NYC, Inc., and Chung King House of Metal, Inc., are directed to serve an answer to the amended complaint within 20 days after service of a copy of this decision and order with notice of entry; and it is further

ORDERED, that the parties shall appear for a compliance conference in Room 442, 60 Centre Street, on Tuesday, April 29, 2014, at 10 a.m.

This constitutes the decision and order of the Court.

Dated: New York, New York

March 27 , 2014

ENTER:

/s Eileen Bransten

Hon. Eileen Bransten, J.S.C.