## Facts

- Several related, closely held family corporations operated a chain of New York City supermarkets using the “D’Agostino” name in their corporate names and business.
- Plaintiffs, as executors of a deceased shareholder’s estate, held 50% of the stock in the family corporations.
- Defendants included the other 50% shareholder and certain directors, officers, and employees of the corporations.
- Plaintiffs alleged defendants wrongfully organized and threatened to operate an independent competing supermarket using the “D’Agostino” name.
- Plaintiffs asserted three claims: (1) a derivative claim for breach of fiduciary duty seeking injunctive relief and an accounting; (2) a derivative claim for unfair competition based on use of the “D’Agostino” name; and (3) a claim framed on a joint-venture theory.
- The trial court dismissed the entire complaint for failure to state a cause of action under CPLR 3211(a)(7).
- Plaintiffs appealed.

## Issues

1. Whether the first and second causes of action stated derivative claims with sufficient particularity under CPLR 3013 to survive a CPLR 3211(a)(7) motion, where corporate insiders allegedly formed a competing business and used the family name.
2. Whether the third cause of action alleged sufficient facts to state a claim based on the existence of a joint venture.

## Decision

- The Appellate Division modified the order.
- The court reinstated the first cause of action, holding it adequately pled a derivative breach-of-fiduciary-duty claim against officers/directors based on organizing and threatening to operate a competing supermarket using the family name.
- The court reinstated the second cause of action, holding it adequately pled a derivative unfair-competition claim based on use of the “D’Agostino” name in competition with the corporations.
- The court affirmed dismissal of the third cause of action, holding the joint-venture theory was not supported by sufficient factual allegations.

## Legal Principles

- Under CPLR 3013, a pleading is sufficient if its statements are sufficiently particular to give the court and parties notice of the transactions or occurrences to be proved and the material elements of each claim; the focus is notice rather than technical form.
- On a CPLR 3211(a)(7) motion, the complaint is assessed for whether it provides notice of the claim’s essential transactions and elements, not whether it pleads detailed evidence.
- Corporate officers and directors owe fiduciary duties of loyalty and good faith to the corporation; allegations that they organized and threatened to operate a competing enterprise to the corporation’s detriment can state a derivative fiduciary-duty claim.
- Allegations that insiders used a corporate-associated name to compete in a manner likely to harm corporate goodwill can state a derivative unfair-competition claim at the pleading stage.
- A joint-venture claim requires factual allegations supporting core elements such as agreement, joint control, and sharing of profits and losses; conclusory labeling is insufficient.

## Conclusion

The court applied CPLR 3013’s notice standard to hold that the complaint adequately stated derivative claims for fiduciary breach and unfair competition arising from insiders’ alleged plan to compete using the corporate-associated family name, but it dismissed the separate joint-venture theory for lack of supporting factual allegations.


Foley v. D’Agostino, 21 A.D.2d 60, 248 N.Y.S.2d 121 (N.Y. App. Div. 1st Dep’t 1964)