In a May 18, 2011 decision by Justice Bucaria, the court considered various motions brought by shareholders a nurse staffing company in a derivative action who claimed that the defendants breached fiduciary duties and misappropriated trade secrets by starting a competing business and diverting the corporation’s business. The court found that the corporation’s shareholders were deadlocked and dissolution would be beneficial to the shareholders, but denied the motion brought by order to show cause for dissolution pursuant to BCL § 1104(a) because the plaintiffs did not comply with the publication requirement of BCL § 1106(c). The court also denied the plaintiffs’ motion to impose a constructive trust on all of the defendants’ assets upon determining that where a shareholder of a close corporation breaches his fiduciary duties, the other shareholders are injured only to the extent they are entitled to share in the profits earned by the corporation. The court denied the plaintiffs’ motion for the appointment of a temporary receiver, an extreme remedy which results in the taking and withholding of personal property before there has been an adjudication on the merits, because the previously imposed temporary restraining order preventing the defendants from disposing of the corporation’s records or transferring assets except in the ordinary course would provide adequate relief. Finally, the court denied the plaintiffs’ motion for an order restraining defendants from utilizing the corporation’s list of nurses as trade secrets on the grounds that the plaintiffs failed to establish that the nurse list was entitled to trade secret protection.

Babaew v Shteyman, Sup Ct, Nassau County, May 18, 2011, Bucaria, J, Index No. 003691/11