Motion To Dismiss Claims For Advancement And Indemnification Denied

On March 11, 2025, Justice Margaret A. Chan denied defendants’ motion to dismiss claims for advancement and indemnification. White Oak Global Advisors, LLC v. Scopetta, Index No. 652992/2024. The Court explained:

Prime's arguments in support of its motion to dismiss the third-party complaint focuses on its claim that Scopetta is not a Prime member to amplify that the indemnification provision of the Operating Agreement excludes non-members of Prime (i.e. "Scopetta does not allege that he is or was ever a member of Prime.") (NYSCEF # 56 at 3). This claim is made despite White Oak's complaint that alleges Scopetta was the President and board member of Prime, and Scopetta's own allegations saying the same as White Oak. Further, Prime's arguments are largely spurious as they are unsupported. [] Except for allegations involving the Operating Agreement, the allegations are asserted only in its brief with no reference to any evidence (i.e. Scopetta allegedly turned over his asset to his wife, co-defendant Morgan Swing (id at 13)). In other words, it is only Prime's attorney making allegations and asserting "facts" for its motion to dismiss the third-party complaint against it.

In any event, Scopetta's allegation that he was President and board member of Prime at the crucial times including when he entered into the loan agreement and the Guaranty with White Oak, on behalf of Prime, and when the demand for payment was first made are sufficient to state a cause of action seeking advance and indemnification. Further, the only document Prime proffers to show the contrary do not definitively resolve the issue. Whether Scopetta was Prime's member or president on February 7 when White Oak allegedly effectively removed Scopetta from office or whether Scopetta can still benefit from§ 4.4.2 cannot be answered at this juncture.

Prime's subrogation argument to bar Scopetta from bringing this action for indemnification is unpersuasive. Scopetta's motion is for advancement and indemnification, not substitution, by Prime. The changed ownership of Prime's shares does not speak to the Operating Agreement, and Prime does not so indicate.

And while Prime infuses fraud in Scopetta's undertaking of a loan on Prime's behalf, this allegation would require more than arguments in a brief. Prime's remaining arguments on Scopetta's claims for a constructive trust and derivative claims also require some basis in fact and law.

[footnote omitted].

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning advancement or indemnification.