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| SUPREME COURT OF THE STATE OF ----------------------------------------------------------X SOPHIA HARRIS and MICHAEL YOONY, Plaintiffs, -against- ARRIS SPA & NAILS, INC., KEVIN
CHUN A/K/A MIN KWAN CHUN, CONE CHUN A/K/A JEONG SOOK
CHUN, MOMOSONO RESTAURANT, INC., and NORTH PARK SPA
& NAILS, INC.
Defendants. ----------------------------------------------------------X |
Index No. __________ Date
purchased and filed: SECOND SUPPLEMENTAL SUMMONS
Plaintiff designates venue in Plaintiff HARRIS resides at 425 Gate House Road |
TO ABOVE-NAMED DEFENDANTS:
You are hereby summoned to answer the Second Amended Complaint in this action and to serve a copy of your Answer, or if the Second Amended Complaint is not served with this Second Amended Summons, to serve a Notice of Appearance on Plaintiffs' attorneys within twenty (20) days after the service of this Second Amended Summons, exclusive of the day of service (or within 30 days after the service is complete if this summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the Second Amended Complaint.
October 18, 2001
Yours, etc.,
PETER M. AGULNICK, P.C.By:__________________________
Peter
M. Agulnick
Attorneys for Plaintiffs
SOPHIA HARRIS and MICHAEL
YOONY
305
Broadway
TO: JOHN DOE, ESQ.
Attorneys for Defendants
ARRIS SPA & NAILS, INC., and
KEVEN CHUN A/K/A MIN KWAN CHUN and
CONNIE CHUN A/K/A JEONG SOOK CHUN
434 Main Street
ARRIS,
NORTH PARK SPA & NAILS, INC., Defendant
ARRIS,
| SUPREME COURT OF THE STATE OF ----------------------------------------------------------X SOPHIA HARRIS and MICHAEL YOONY, Plaintiffs,-against- ARRIS SPA & NAILS, INC., KEVIN CHUN A/K/A MIN KWAN CHUN, CONNIE CHUN A/K/A JEONG SOOK CHUN, MOMOSONO RESTAURANT, INC. and NORTH PARK SPA & NAILS, INC., Defendants. ----------------------------------------------------------X
|
SECOND
AMENDED COMPLAINT |
Plaintiffs SOPHIA HARRIS and MICHAEL YOONY, through their attorneys, hereby amend their complaint, and allege the following, upon information and belief:
PARTIES
1. At
all times hereinafter mentioned, Plaintiff SOPHIA HARRIS
(hereinafter “SOPHIA”) was and is a resident of the State of
2. At
all times hereinafter mentioned, Plaintiff MICHAEL YOONY
(hereinafter “MICHAEL”) was and is a resident of the State of
3. At
all times hereinafter mentioned, Defendant ARRIS SPA &
NAILS, INC. (hereinafter "ARRIS SPA") was and is a corporation
organized under the laws of the State of
4. At
all times hereinafter mentioned, Defendant KEVIN CHUN A/K/A
KWAN CHUN, (hereinafter "KEVIN"), was and is a resident of the
State of
5. At
all times hereinafter mentioned, Defendant CONNIE CHUN A/K/A
JEONG SOOK CHUN (hereinafter
"CONNIE") was and is a resident of the State of
6. At
all times hereinafter mentioned, Defendant MOMOSONO
RESTAURANT, INC. (hereinafter "MOMOSONO RESTAURANT") was and
is a corporation organized under the laws of the State of
7. At all times hereinafter mentioned, Defendant NORTH PARK SPA & NAILS, INC. (hereinafter "NORTH PARK SPA") was and is a corporation organized under the laws of the State of New York and doing business in Westchester County.
FACTS
8. On or about October 21, 1998,
Defendant KEVIN entered into a written agreement to form a
closely held corporation known as "ARRIS Spa & Nails,
Inc." The corporation was
to be located at
9. A copy of the written contract, which is dated October 21, 1998, is annexed to this Second Amended Complaint and is hereby adopted by reference.
10. In particular, the contract provides that Plaintiff SOPHIA would contribute $25,000 and own 25% of the corporate stock; Plaintiff MICHAEL would contribute $25,000 and own 25% of the corporate stock; and Defendant KEVIN would contribute $50,000 and own 50% of the stock.
11. Defendant KEVIN made unequivocal representations that he would use Plaintiffs' initial capital contributions for the ARRIS SPA corporation and that Plaintiffs would, in turn, be given a percentage of the corporate shares as discussed above.
12. Defendant KEVIN’s representations to the Plaintiffs were knowing lies, which were made for the purpose of illegally and immorally stealing Plaintiffs' money.
13. Plaintiffs did not know Defendant KEVIN was lying or have any reason to know he was lying or intending to exploit them and commit a fraud upon them.
14. Unknown to the Plaintiffs, on October 19, 1998, Defendants KEVIN and CONNIE, entered into a lease agreement, without Plaintiffs' knowledge or consent, with Garson Brothers ARRIS, LLC, the owners of 575 Main Street, ARRIS, New York, as tenants instead of "ARRIS Spa & Nails, Inc.," as the parties had contractually agreed to.
15. In addition, Defendant KEVIN had also formed with his wife, Defendant CONNIE, a corporation under the name "ARRIS Spa & Nails, Inc." He did not issue shares to Plaintiffs, as Defendant KEVIN was contractually obligated to do.
16. The formation of the ARRIS SPA corporation, without Plaintiffs as shareholders, was without the consent or knowledge of the Plaintiffs. Moreover, it was a contrary of the parties' contractual agreement. It was also done in an attempt to defraud and exploit the Plaintiffs.
17. On or about October 30,
1998, SOPHIA, MICHAEL, and KEVIN decided to increase ARRIS’s
initial capital investment from $60,000 to $100,000.
18. Accordingly,
the parties modified their prior written agreement by
signing a new contract, dated October 30, 1998.
19. The
October 30, 1998 contract had the identical terms of the
prior October 21, 1998 contract except it increased the
initial capital investment from $60,000 to $100,000. Under
the new agreement, each shareholder was to own the same
percentages of shares as was agreed previously, but his or
her initial capital investment was to increase
proportionally so that ARRIS would have $100,000
capitalization.
20. SOPHIA and MICHAEL gave additional money
to KEVIN to satisfy the increase in the initial capital
investment proportional to the percentage of shares they
were supposed to own.
21. A
copy of the written contract, which is dated October 30, 1998,
is annexed to this Second Amended Complaint and is hereby
adopted by reference.
22. On or about December 13, 1998, KEVIN sold 10% of ARRIS shares, which he owned, to SOPHIA for $10,000.
23. KEVIN and SOPHIA effectuated this transfer of shares by signing a “Stock Transfer” Agreement, dated December 13, 1998.
24. In return for signing the stock transfer agreement, SOPHIA paid KEVIN $10,000.
25. Notwithstanding, KEVIN never issued shares to SOPHIA or MICHAEL.
26. A
copy of the Stock Transfer Agreement, which is dated October
30, 1998, is annexed to this Second Amended Complaint and is
hereby adopted by reference.
27. Under the terms of the written contracts (October 21, 1998, October 30, 1998, and December 13, 1998 agreements), the percentage of share ownership should have been as follows:
|
Shareholder |
Capital Contribution |
% Equity Ownership |
|
SOPHIA |
$35,000 |
35% |
|
MICHAEL |
$25,000 |
25% |
|
KEVIN |
$40,000 |
40% |
________________________________________________________________________
|
TOTAL: |
$
100,000 |
100% |
28. At all relevant times, Defendant KEVIN had kept secret from the Plaintiffs—in an attempt to perpetuate the fraud—that he had formed the corporation and made himself and his wife, CONNIE, the only shareholders, and excluded the Plaintiffs.
29. To date, Defendants refuse to issue the shares of stock to which Plaintiffs are legally entitled.
30. In addition, Defendants have stopped sharing profits with Plaintiffs in accordance with their contract, and now claim that Plaintiffs own no interest in ARRIS SPA.
31. Defendant KEVIN and CONNIE were married at the time of the three written contracts were consummated and when were negotiated.
32. Defendant CONNIE was aware of the binding agreement between the Plaintiffs and Defendant KEVIN.
33. In fact, Defendant CONNIE actually heard all or part of the negotiations between her husband, Defendant KEVIN, and the Plaintiffs, which led to contract formation.
34. Moreover, CONNIE actually saw all or parts of the written contracts that her husband, KEVIN, entered into with SOPHIA and MICHAEL at or shortly after they were entered into.
35. Defendant CONNIE made false representations to Plaintiffs regarding her planned role in ARRIS SPA in that she would be an employee and not a shareholder.
36. Both KEVIN and CONNIE assumed the positions of corporate officers of ARRIS SPA.
37. Defendant KEVIN and CONNIE improperly used money they obtained from Plaintiffs, which was supposed to be used for ARRIS SPA, and, instead, in an attempt to shield the money from Plaintiffs, paid for expenses of MOMOSONO RESTAURANT.
38. Defendant
KEVIN and CONNIE improperly used ARRIS SPA corporate money to
pay for debts of
39. Defendant KEVIN and CONNIE opened NORTH PARK SPA in the same town and on the same street as ARRIS SPA, which was direct competition and detrimental to ARRIS SPA causing a loss of business to ARRIS SPA.
40. In addition, KEVIN and CONNIE stole and commingled ARRIS SPA corporate money for their own personal use, including, in one known instance, paying for a family member’s dental bills out of ARRIS SPA corporate funds.
(FRAUD)
41. Plaintiffs repeat and realleges each allegation set forth previously in this complaint.
42. Defendants KEVIN and CONNIE made false representations to Plaintiffs.
43. Defendants KEVIN and CONNIE made these false representations with knowledge and belief (scienter) that the representations were false and for the purpose of exploiting Plaintiffs.
44. Defendants KEVIN and CONNIE intended to induce Plaintiffs to enter into a contract and pay money for the purpose of exploitation for their own financial benefit and, in essence, to steal Plaintiffs' money.
45. Plaintiffs justifiability relied upon the representations made by Defendant KEVIN and CONNIE, respectively.
46. Defendants KEVIN and CONNIE's acts were illegal, despicable, reckless, malicious, deliberate, and immoral.
47. As the result of Defendants KEVIN and CONNIE 's acts, Plaintiffs have incurred damages.
48. Accordingly, Defendants KEVIN and CONNIE are liable for fraud.
49. Defendants KEVIN and CONNIE are also liable for punitive damages.
50. Defendants KEVIN and CONNIE used the money they fraudulently obtained from Plaintiffs forforming the corporation ARRIS SPA.
51. Defendants KEVIN and CONNIE continue to use the funds that they fraudulently obtained from Plaintiffs for ARRIS SPA. This includes, but is not limited to, storing Plaintiffs' funds in bank accounts in ARRIS SPA's corporate name.
52. The corporation ARRIS SPA is being used for the purpose of illegally shielding funds that Defendants KEVIN and CONNIE have fraudulently stolen from the Plaintiffs.
53. Consequently, Defendant ARRIS SPA is liable for fraud vicariously through Defendants KEVIN and CONNIE under a theory of “‘reverse’ piercing of the corporate veil."
54. Defendant ARRIS SPA is also liable for punitive damages.
55. Defendants KEVIN and CONNIE used the money they fraudulently obtained from Plaintiffs for forming the corporation MOMOSONO RESTAURANT.
56. Defendants KEVIN and CONNIE continue to use the funds that they fraudulently obtained from Plaintiffs for MOMOSONO RESTAURANT. This includes, but is not limited to, storing Plaintiffs' funds in bank accounts in MOMOSONO RESTAURANT 's corporate name and paying its debts.
57. The corporation MOMOSONO RESTAURANT is being used for the purpose of illegally shielding funds that Defendants KEVIN and CONNIE have fraudulently stolen from the Plaintiffs.
58. Consequently, Defendant MOMOSONO RESTAURANT is liable for fraud vicariously through Defendants KEVIN and CONNIE under a theory of “‘reverse’ piercing of the corporate veil."
59. Defendant MOMOSONO RESTAURANT is also liable for punitive damages.
60. Defendants KEVIN and CONNIE used the money they fraudulently obtained from Plaintiffs for forming the corporation NORTH PARK SPA.
61. Defendants KEVIN and CONNIE continue to use the funds that they fraudulently obtained from Plaintiffs for NORTH PARK SPA. This includes, but is not limited to, storing Plaintiffs' funds in bank accounts in NORTH PARK SPA's corporate name and paying its debts.
62. The corporation NORTH PARK SPA is being used purpose of illegally shielding funds that Defendants KEVIN and CONNIE have fraudulently stolen from the Plaintiffs.
63. Consequently, Defendant NORTH PARK SPA is liable for fraud vicariously through Defendants KEVIN and CONNIE under a theory of “‘reverse’ piercing of the corporate veil."
64. Defendant NORTH PARK SPA is also liable for punitive damages.
65. Plaintiffs gave Defendant KEVIN large sums of money for a business that the three had agreed to form.
66. Defendant KEVIN, with the help of Defendant CONNIE, used the money for a purpose not agreed upon.
67. Plaintiffs demanded the return of their money from Defendants KEVIN and CONNIE.
68. Defendant KEVIN and CONNIE improperly refused to return the money.
69. Defendants KEVIN and CONNIE are therefore liable for the tort of conversion.
70. Defendants KEVIN and CONNIE acted illegally, maliciously, and recklessly with the purpose of intentionally exploiting Plaintiffs.
71. Defendants KEVIN and CONNIE are therefore liable for punitive damages for converting Plaintiffs funds.
72. Defendant KEVIN and CONNIE used the money for ARRIS SPA.
73. Defendant KEVIN and CONNIE deposited the money into the bank account of ARRIS SPA for the purpose of illegally and fraudulently shielding it from Plaintiffs.
74. Consequently, Defendant ARRIS SPA is vicariously liable for conversion through Defendants KEVIN and CONNIE under a theory of "reverse piercing of the corporate veil."
75. Defendant ARRIS SPA is also liable for punitive damages.
76. Defendant KEVIN and CONNIE deposited the money into the bank account of MOMOSONO RESTAURANT for the purpose of illegally and fraudulently shielding it from Plaintiffs, and has paid the debts of MOMOSONO RESTAURANT with this money.
77. Consequently, Defendant MOMOSONO RESTAURANT is vicariously liable for conversion through Defendants KEVIN and CONNIE under a theory of "reverse piercing of the corporate veil."
78. Defendant MOMOSONO RESTAURANT is also liable for punitive damages.
79. Defendant KEVIN and CONNIE deposited the money into the bank account of NORTH PARK SPA for the purpose of illegally and fraudulently shielding it from Plaintiffs, and has paid the debts of NORTH PARK SPA with this money.
80. Consequently, Defendant NORTH PARK SPA is vicariously liable for conversion through Defendants KEVIN and CONNIE under a theory of "reverse piercing of the corporate veil."
81. Defendant
NORTH PARK SPA is also liable for punitive damages.
82. Plaintiffs repeat and realleges each allegation set forth previously in this complaint.
83. A binding contract existed between the Plaintiffs and Defendant KEVIN on or before the first week of October, 1998.
84. Defendant CONNIE knew of the existence of this contract.
85. Defendant CONNIE intentionally and, with malice towards Plaintiffs, induced her husband, Defendant KEVIN, to breach his contractual obligations.
86. As a result of the breach, Plaintiffs have incurred damages, which include, but are not limited to, pecuniary loss and the loss of opportunities to make substantial profits from the contract.
87. Plaintiff CONNIE is therefore liable for the tort of tortuous interference with a contract.
88. Plaintiff CONNIE is also liable for punitive damages.
(BREACH
OF CONTRACT)
89. Plaintiffs SOPHIA and MICHAEL entered into a binding agreement with Defendant KEVIN.
90. The agreement was supported by valuable consideration.
91. Defendant KEVIN intentionally breached this agreement.
92. As a result of the breach, Plaintiffs have damages, which include, but are not limited to, pecuniary loss and the loss of opportunities to make substantial profits from the contract.
93. Accordingly, Defendant KEVIN is liable for breach of contract.
(UNJUST
ENRICHMENT)
94. Plaintiffs made payments to Defendants or had their payments diverted to Defendants, which thereby enriched them.
95. The enrichment was at Plaintiffs’ expense.
96. There is no adequate remedy at law.
97. The circumstances are such that equity and good conscience require Defendants to make restitution.
SIXTH
CAUSE OF ACTION
AGAINST
KEVIN
(DECLARATORY JUDGMENT)
98. An actual and justiciable controversy presently exists between Plaintiffs and Defendants regarding Plaintiffs’ ownership of shares of ARRIS SPA.
99. This Court should adjudge that, under the terms of the October 21, 1998 Agreement, October 30, 1998 Agreement, and December 13, 1998 Stock Transfer Agreement, SOPHIA HARRIS owns 35% of ARRIS SPA’s total shares and MICHAEL YOONY owns 25% of ARRIS SPA’s total shares.
SEVENTH
CAUSE OF ACTION
AGAINST
KEVIN CHUN AND CONNIE CHUN ON BEHALF OF ARRIS SPA &
NAILS, INC. AND ITS SHAREHOLDERS
(BREACH OF FIDUCIARY DUTY/THEFT OF CORPORATE
OPPORTUNITY/CONVERSION OF CORPORATE ASSETS/WASTE)
100. Defendants KEVIN and CONNIE assumed the positions of ARRIS SPA’s corporate officers.
101. Defendants KEVIN and CONNIE stole ARRIS SPA’s corporate funds for their own personal businesses and to pay for their own personal expenses.
102. Defendant KEVIN and CONNIE formed a competing nail salon, NORTH PARK SPA, for which CONNIE and/or KEVIN is(/are) the sole owner(s), in the same town and on the same street as ARRIS SPA.
103. The competing nail salon has caused and/or will cause loss of business to ARRIS SPA, resulting in loss of profits and damages to its shareholders.
104. Defendants KEVIN and CONNIE have breached their fiduciary duties as corporate officers, committed conversion of corporate assets, have stolen corporate opportunities, and committed waste of corporate assets.
105. Without a preliminary and permanent injunction enjoining Defendants from their unlawful acts, ARRIS SPA, its shareholders, and Plaintiffs will incur an irreparable injury for which there is no adequate remedy at law.
106. Defendants KEVIN and CONNIE are therefore liable, pursuant to Bus. Corp. Law s 626 and 720, to ARRIS SPA and its shareholders for breach of fiduciary duty, theft of corporate opportunity, and conversion of corporate assets.
WHEREFORE, Plaintiffs SOPHIA
HARRIS and MICHAEL YOONY demand
judgment as follows:
(a) On the first cause of
action (fraud), judgment against
Defendants KEVIN CHUN, CONNIE CHUN,
ARRIS SPA & NAILS, INC., MOMOSONO RESTAURANT, INC., and
NORTH PARK SPA & NAILS, INC. for the following relief: (1) a
permanent injunction as described below; (2) specific
performance of contract; (3) alternatively
to specific performance, a money judgment in the amount of $10
million in actual, compensatory, and expectation damages and
$10 million in punitive damages;
(b) on the second cause of
action (conversion), judgment against
Defendants KEVIN CHUN, CONNIE CHUN,
ARRIS SPA & NAILS, INC., MOMOSONO RESTAURANT, INC., and
NORTH PARK SPA & NAILS, INC. for the following
relief: (1) a
permanent injunction as described below; (2) specific
performance of contract; (3) alternative
to specific performance, a money judgment in the amount of $10
million in actual, compensatory, and expectation damages and
$10 million in punitive damages;
(c) on the third cause of
action (tortious interference with a contract), judgment against
Defendant CONNIE CHUN for the following relief: (1) a
permanent injunction as described below; (2) a
money judgment in the amount of $10 million in actual,
compensatory, and expectation damages and $10 million in
punitive damages;
(d) on the fourth cause of
action (breach of contract), judgment against
Defendants KEVIN CHUN for the following relief: (1) specific
performance of contract; (2) alternative
to specific performance, money damages in the amount of $10
million in actual, compensatory, and expectation damages;
(e) on the fifth cause of
action (unjust enrichment), judgment against
Defendants KEVIN CHUN, CONNIE CHUN,
ARRIS SPA & NAILS, INC., for the following relief: (1) specific
performance of contract; (2) alternative
to specific performance, money damages in an amount to be
determined at trial but not less than $500,000.
(f) on the sixth cause of
action (declaratory judgment), pursuant
to CPLR 3001, adjudging that, under the
terms of the October 21, 1998 Agreement, October 30, 1998
Agreement, and December 13, 1998 Stock Transfer Agreement,
SOPHIA HARRIS owns 35% of ARRIS SPA & NAILS, INC.’s total
shares and MICHAEL YOONY owns 25% of ARRIS SPAN & NAILS,
INC.’s total shares;
(g) on the seventh cause of
action (breach of fiduciary duty/theft of corporate
opportunity/conversion of corporate assets), judgment on behalf of
ARRIS SPA & NAILS, INC. against Defendants
KEVIN CHUN, CONNIE CHUN, pursuant
to Bus. Corp. Law § 626, granting all relief available under
Bus. Corp. Law § 720 including, but not limited to, a an
accounting and a preliminary and permanent injunction: (1) enjoining
KEVIN CHUN and CONNIE CHUN from diverting and commingling
ARRIS SPA & NAILS, INC. assets; (2) enjoining
KEVIN CHUN and CONNIE CHUN from operating or owning a nail
salon within a reasonable geographic area that will compete
with ARRIS SPA & NAILS, INC., including, but not limited
to, NORTH
PARK SPA & NAILS, INC.; and (3) enjoining
KEVIN CHUN and CONNIE CHUN from using ARRIS SPA & NAILS,
INC.’s money or assets for NORTH PARK SPA &
NAILS, INC., MOMOSONO RESTAURANT, INC.,
or Venus Nails; and
(h) a permanent injunction
against Defendants KEVIN CHUN and CONNIE CHUN enjoining
them , (1) from
removing or destroying any property of ARRIS SPA & NAILS,
INC., which has its premises located at the premises located
at 575 Main Street, ARRIS, New York 10504, including, but not
limited to, papers, documents, notes, books, records,
checkbooks, bank statements, invoices, desks and other
furnishings or inventory (nail polish, nail polish remover and
various other supplies, etc.); (2) from
using any money or assets of ARRIS SPA & NAILS, INC. for
personal reasons against the interest of ARRIS SPA &
NAILS, INC., including, but not limited to, making payments to
or on behalf of MOMOSONO RESTAURANT,
INC., NORTH PARK SPA &
NAILS, INC.; and (3) from
operating, owning, or working in any nail salon, including,
but not limited to NORTH PARK SPA &
NAILS INC., within a geographical area that would
reasonably believed to be competing with ARRIS SPA &
NAILS, INC.; and
(i) other
relief, together with the above relief, that this
Court issue a judgment against all Defendants for costs, fees,
attorneys’ fees, and interest and such other legal or
equitable relief that is appropriate.
October 18, 2001
Yours, etc.,
PETER M. AGULNICK, P.C.By:__________________________
Peter
M. Agulnick
Attorneys for Plaintiffs
SOPHIA HARRIS and MICHAEL
YOONY
305
Broadway