Recitation in accordance with CPLR 2219 (a) of the papers considered on the motion of the defendants Dan Cevallos, John Cevallos, Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Advance Funding LLC, Majestic Funding LLC, HARRAJO LLC, and DCACOC LLC filed on Febuaury 21, 2020, under motion sequence number twenty, for an order: (1) pursuant to CPLR 3212 granting the defendants summary judgment in their favor and dismissing the complaint of plaintiff Julia Ashirova (hereinafter Ashirova); and (2) granting costs, disbursements, and attorney's fees.

On February 13, 2017, Ashirova commenced the instant action by filing a summons and verified complaint with the Kings County Clerk's office. By order issued on July 13, 2018, Ashirova was granted leave to amend the verified complaint. Ashirova's summons and amended verified complaint asserts causes of action for an accounting, conversion, and breach of fiduciary duty.

By answer dated December 5, 2018, Dan Cevallos joined issue. On January 14, 2019, defendants, Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Advance Funding LLC, DCACOC LLC and HARRAJO LLC each filed their separate answer to the amended verified complaint. On July 11, 2019 Majestic filed its answer to the amended verified complaint.

The amended verified complaint alleges the following salient facts. Beginning in or around 2001, Ashirova was an officer and fifty percent owner of Northeastern and John Cevallos was the owner of the remaining fifty percent. John Cevallos was also an officer of Northeastern and helped run its business. As Ashirova was a fifty percent owner, she received half of the profits generated each year by Northeastern and John Cevallos also received an annual distribution of profits that was equal to Ashirova's share. Northeastern is in the business of purchasing for a lump sum the rights to periodic payments awarded to lottery winner payees and to recipients of structured settlement income streams awarded in connection with the settlement of lawsuits or other legal claims. Once the income streams are purchased, Northeastern can keep the income stream or, sell the income stream for a lump sum to a third party, typically an insurance company. In purchasing the income stream from the payee, Northeastern could generate a profit by paying the payee a lump sum that is less than the current value of the revenue stream. Those profits were distributed on annually to Northeastern's owners based on percentage ownership in Northeastern. From the years 2001 to 2011, Ashirova received her share of profits from distributions made by Northeastern.

Ashirova had one hundred percent ownership interest in Empire and also assumed all responsibilities for the legal and financial operations of the company, for which she was paid a salary and benefits. John Cevallos also joined Empire in the role of officer. Dan Cevallos was active in the business and operations of Empire and Northeastern directly and through his brother, John Cevallos, whom he conspired with and controlled through his family relationship. As with Northeastern, Empire also generated substantial revenue and profits from this business. From these profits, distributions were paid by Empire to Ashirova annually for the years 2007 to 2011.

In 2011, Empire and Northeastern and its actual and purported officers and owners, including John and Dan Cevallos, purported to lock out Ashirova from the operations of both those companies. Among many actions, the defendants denied Ashirova any and all access to the books, records, and financial accounts of Empire and Northeastern. Further, after 2011, Empire and Northeastern and its actual and purported officers and owners, including defendants John and Dan Cevallos, stopped making any distributions of profits from Empire and Northeastern to Ashirova.

Defendants' former attorney, Yonatan Levoritz, in a case entitled, Law Office of Yonatan S. Levoritz, P.C. v Dan Cevallos, et al., index no. 655345/2017 (Sup. Ct. NY Cty.), submitted an affidavit which confirmed that defendants Dan and John Cevallos looted the assets of Empire and Northeastern and have either diverted those assets for personal use and/or transferred them to defendants Julie Casal, Athena Salvantis-Cevallos, Mercedes Cevallos, Advance, Majestic, Mercury, HARRAJO and DCACOC alter egos.

John Cevallos is a member of Northeastern, an officer of Empire and a purported owner of Empire. Dan Cevallos purports to be an owner and officer of Empire and Northeastern. Ashirova has the right under New York Limited Liability Company Law § 1102 to inspect the books and records of Northeastern and Empire, and defendants have a duty to provide an accounting of the financial status and operations of Northeastern and Empire to Ashirova. Ashirova made a demand of defendants to inspect the books and records of Northeastern and Empire. Defendants have denied Ashirova access to such books and records. Because of the refusal by defendants to disclose and afford Ashirova access to the books and records of Empire and Northeastern, Ashirova has been deprived of knowledge of the financial status of the business. Ashirova seeks an accounting as well as monetary damages.

By order dated May 17, 2019, the Court granted Ashirova's prior motion filed on January 22, 2019, under motion sequence number eight for a default judgment against John Cevallos.

By order dated July 12, 2019, the Court granted Ashirova's prior motion filed on March 18, 2019, under motion sequence nine for a default judgment against Empire Advance Funding LLC, Northeastern Capital Funding LLC, Majestic Funding LLC, and Mercury Capital Funding, LLC.

It is well established that summary judgment may be granted only when it is clear that no triable issue of fact exists (Alvarez v Prospect Hospital, 68 NY2d 320 [1986]). The burden is upon the moving party to make a prima facie showing that he or she is entitled to summary judgment as a matter of law by presenting evidence in admissible form demonstrating the absence of material facts (Guiffirda v Citibank, 100 NY2d 72 [2003]).

A failure to make that showing requires the denial of the summary judgment motion, regardless of the adequacy of the opposing papers (Ayotte v Gervasio, 81 NY2d 1062 [1993]). If a prima facie showing has been made, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of material issues of fact (Alvarez, 68 NY2d at 324).

Pursuant to CPLR 3212 (b), a court will grant a motion for summary judgment upon a determination that the movant's papers justify holding, as a matter of law, that there is no defense to the cause of action or that the cause of action or defense has no merit. Furthermore, all of the evidence must be viewed in the light most favorable to the opponent of the motion (Marine Midland Bank v Dino & Artie's Automatic Transmission Co., 168 AD2d 610 [2nd Dept 1990]).

Defendants John Cevallos, Empire Advance Funding LLC, Northeastern Capital Funding LLC, Majestic Funding LLC, and Mercury Capital Funding, LLC are in default for failure to answer the amended verified complaint. A defaulting defendant admits all traversable allegations in the complaint, including the basic allegation of liability, but does not admit the plaintiff's conclusion as to damages (Deutsche Bank Nat'l Tr. Co. v Hall, 185 AD3d 1006 [2nd Dept 2020]; Rokina Opt. Co., Inc. v Camera King, Inc., 63 NY2d 728, 730 [1985]).

The default judgment against John Cevallos, Empire Advance Funding LLC, Northeastern Capital Funding LLC, Majestic Funding LLC, and Mercury Capital Funding, LLC has not been reversed, modified or vacated. Consequently, the motion for summary judgment dismissing the amended verified complaint as asserted against each of these defendants is denied.

Defendants Dan Cevallos, Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Advance Funding LLC, HARRAJO LLC, and DCACOC LLC are the remaining moving defendants who have answered the amended verified complaint (hereinafter the movants).

The movants make two arguments in support of their motion for summary judgment. First, they contend that the amended verified complaint lacks merit due to pleading deficiencies. Second, they contend that the instant action involves claims previously litigated in an action entitled Ashirova v Cevallos bearing index number 506927/2017 and that the claims asserted in the instant action were foreclosed by a stipulation of settlement made in that action.

The movants' motion is supported by an affirmation of their counsel, an affidavit of John Cevallos and by legal arguments directed to the alleged insufficiency of the causes of action plead in the amended verified complaint. The affirmation of the movants' counsel demonstrates no personal knowledge of the transactions or occurrences alleged in the amended verified complaint. On a motion for summary judgment, a bare affirmation of an attorney, who demonstrates no personal knowledge of the matter, is unavailing and without evidentiary value (Winter v Black, 95 AD3d 1208 [2nd Dept 2012]). The affidavit of John Cevallos contradicts allegations of fact in the amended verified complaint. However, it merely raises issues of fact and does not conclusively establish any fact in dispute.

The movants contend that all the causes of action in the amended verified complaint are premised on a misconception that Northern and Empire own assets. The argument is not supported by sworn allegations of fact by someone with personal knowledge or by any documentary evidence. It is therefore disregarded.

The movants specifically argue that the complaint pleads no allegations of fact which support an accounting. The right to an accounting is premised upon the existence of a confidential or fiduciary relationship and a breach of the duty imposed by that relationship respecting property in which the party seeking the accounting has an interest (Jacobs v Cartalemi, 156 AD3d 605, 608 [2nd Dept 2017]). This is the standard for the right to an accounting under common law. The plaintiff, however, as a member of several of the LLC defendants, has invoked her right to an accounting pursuant to section 1102 of the Limited Liability Company Law. Accepting the allegations of fact in the verified amended complaint as true and giving the plaintiff the benefit of every reasonable inference, the verified amended complaint sufficiently pleads a cause of action for an accounting under common law and under section 1102 of the Limited Liability Company Law. Furthermore, the movants have not presented any evidence in admissible form establishing their prima facie entitlement to dismissal of plaintiff's cause of action for an accounting. Accordingly, this branch of the movants' motion is denied regardless of the sufficiency of the plaintiff's opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).

The movants specifically contend that the second, third and fourth causes of action for conversion should be dismissed because the plaintiff fails to meet the requirements of a [*2]conversion cause of action. The movants argument is premised solely on an alleged pleading deficiency. In order to establish a cause of action to recover damages for conversion, the plaintiff must show legal ownership or an immediate superior right of possession to a specific identifiable thing and must show that the defendant exercised an unauthorized dominion over the thing in question to the exclusion of the plaintiff's rights (World Ambulette Transportation, Inc. v Kwan Haeng Lee, 161 AD3d 1028, 1030-1031 [2nd Dept 2018] citing, National Ctr. for Crisis Mgmt., Inc. v Lerner, 91 AD3d 920, 920 [2nd Dept 2012]).

Ashirova has alleged that the movants have improperly diverted funds and assets due and owing to her. Conversion occurs when funds designated for a particular purpose are used for an unauthorized purpose (World Ambulette Transportation, Inc., 161 AD3d at 1030—31 citing, Petrone v Davidoff Hutcher & Citron, LLP, 150 AD3d 776, 777 [2nd Dept 2017]). Accepting the allegations of fact in the verified amended complaint as true and giving the plaintiff the benefit of every reasonable inference, the second, third and fourth causes of action in the verified amended complaint sufficiently plead causes of action for conversion. Furthermore, the movants have not presented any evidence in admissible form establishing their prima facie entitlement to dismissal of plaintiff's causes of action for conversion. Accordingly, this branch of the movants' motion is also denied regardless of the sufficiency of the plaintiff's opposition papers (see Winegrad, 64 NY2d at 853).

The movants contend that Ashirova's claims were all the subject of a release she executed on September 26, 2012 to settle an action brought by Dan Cevallos against Ashirova in Kings County Supreme Court under index number 19308/2011 (hereinafter the settled action). The settlement agreement was executed in 2012 and released Dan Cevallos and Ashirova from any and all claims that they had against each other prior to September 26, 2012. The movants contend that the claims in the amended verified complaint accrued prior to September 26, 2012 and are foreclosed by the stipulation. The movants' contention, however, is not supported by an affidavit of anyone with personal knowledge of the release or of the transactions and occurrences alleged in the complaint.

Assuming the argument has merit, the defense of release may only be applied to Dan Cevalos, because the other movants were not parties to the settled action. However, Dan Cevelos has not eliminated all material issues of fact regarding the applicability of the release to the claims asserted against him in the instant action. Accordingly, this branch of the movants motion is also denied regardless of the sufficiency of the plaintiff's opposition papers (see Winegrad., 64 NY2d at 853).

The movants also seek dismissal of the fifth, sixth and seventh causes of action alleging breach of fiduciary duty on the basis that the pleadings are too vague and fail to meet the heightened pleading standard mandated by CPLR 3016 (b). The elements of a cause of action to recover damages for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant's misconduct (Chipetine v Neu, 182 AD3d 571 [2nd Dept 2020]).

Here, as in the other branches of their motion, the movants' arguments are based on the alleged insufficiency of the pleadings and not on the merits. Accepting the allegations of fact in the verified amended complaint as true and giving the plaintiff the benefit of every reasonable inference, the fifth, sixth and seventh causes of action for breach of fiduciary duty are sufficiently plead. Furthermore, the movants have not presented any evidence in admissible form establishing their prima facie entitlement to dismissal of plaintiff's causes of action for [*3]breach of fiduciary duty. Accordingly, this branch of the movants motion is denied regardless of the sufficiency of the plaintiff's opposition papers (see Winegrad, 64 NY2d at 853).

CPLR 8106 provides that costs upon a motion may be awarded to any party, in the discretion of the court, and absolutely or to abide the event of the action. CPLR 8101 provides that the party in whose favor a judgment is entered is entitled to costs in the action, unless otherwise provided by statute or unless the court determines that to so allow costs would not be equitable, under all of the circumstances. The party to whom costs are awarded is entitled to recover reasonable and necessary expenses as are taxable according to course and practice of the court, by express provision of law or by order of the court (CPLR 8301 [a]).

The movants have not obtained a judgment in their favor on any branch of the instant motion and are, therefore, not entitled to costs pursuant to either CPLR 8101 or 8106; or disbursements pursuant CPLR 8301.

Under the general rule, attorney's fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule (Pickett v 992 Gates Ave. Corp., 114 AD3d 740 [2nd Dept 2014] citing Hooper Assoc. v AGS Computers, 74 NY2d 487, 491 [1989]). Here, the movants have offered no factual or legal basis for an award of attorney's fees.

The motion by Dan Cevallos, John Cevallos, Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Advance Funding LLC, Majestic Funding LLC, HARRAJO LLC, and DCACOC LLC for an order pursuant to CPLR 3212 granting them summary judgment in their favor and dismissing the complaint is denied.

The motion by Dan Cevallos, John Cevallos, Julie Casal, Athena Salavantis-Cevallos, Mercedes Cevallos Living Trust, Advance Funding LLC, Majestic Funding LLC, HARRAJO LLC, and DCACOC LLC for an order granting the defendants costs, disbursements, and attorney's fees is denied.

The foregoing constitutes the decision and order of this Court.