Roytlender v. D. Malek Realty, LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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MAYA ROYTLENDER,

Plaintiff,

OPINION

AND ORDER

-against-

21-CV-00052 (JMW)

D. MALEK REALTY, LLC et. al.,

Defendants.

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A P P E A R A N C E S:

Paul L. Dashefsky, Esq.

317 Middle Country Road

Smithtown, NY 11787

Attorney for Plaintiff and Counter Defendant Maya Roytlender

Jonathan D. Farrell, Esq.

Daniel Frank Carrascal, Esq.

Mark A. Radi, Esq.

Meltzer Lippe Goldstein & Breitstone LLP

190 Willis Avenue

Mineola, NY 11501

Attorneys for Defendants and Counterclaims D. Malek Realty, LLC, Malek Management

Corporation, StaffPro, Inc., David Malek, and Michael Malek

WICKS, Magistrate Judge:

Plaintiff and Counter Defendant Maya Roytlender initially sued Defendants and Counter

Plaintiffs, Defendants D. Malek Realty, LLC (“D. Malek Realty”); Malek Management

Corporation (“Malek Management”); StaffPro, Inc. (“StaffPro”); David Malek; and Michael

Malek (collectively, “Defendants”) for various violations of the Fair Labor Standards Act,

FLSA, 29 U.S.C. 201, et seq. and the New York Labor Law. However, Defendants subsequently

filed their own counter claims, alleging Plaintiff engaged in fraud and breached her fiduciary

duty and additionally asserted the faithless servant doctrine. The Court granted Defendants’

motion for summary judgment, dismissing Plaintiff’s claims, and awarding judgment on liability

and damages of $1,139,664.03 on Defendants’ counterclaims. (ECF No. 132.) It further

directed the parties to file letter briefs addressing Defendants’ entitlement to and the amount of

pre-judgment interest. (Id.)

The parties have filed their respective letter briefs and now before the Court is

Defendants’ request for prejudgment interest (ECF No. 133) which is opposed by Plaintiff (ECF

No. 134). Thus, the only issue before the Court is the amount of mandatory pre-judgment

interest to which Defendants are entitled from Plaintiff. For the reasons set forth herein,

Defendants’ motion is GRANTED in part.

THE PARTIES’ CONTENTIONS

Defendants argue that they are entitled to prejudgment interest on the $1,139.664.03 in

fraud damages. As to the date of the interest to be awarded, Defendants state that the earliest

ascertainable date for the fraud cause of action against Plaintiff was January 27, 2017, which was

when Plaintiff issued a check in employee Aaron Lazar’s name for $559.61 that was

subsequently deposited in her own account. (ECF No. 133 at 2.) The damages however accrued

thereafter up until her termination in October 2020 and the median date of accrual of these

damages is October 28, 2020. (Id.) Therefore, Defendants request prejudgment interest at 9% in

the amount of $384,983.70 calculated from October 28, 2020 through the date judgment was

entered—July 29, 2024. (Id.)

Plaintiff does not dispute the median date suggested by Defendants. However, Plaintiff

opposes the total amount, stating that the Travelers Insurance amount of $750,000 paid out

should be deducted from the calculation of prejudgment interest to be awarded to Defendants.

(ECF No. 134.) Defendants however respond that the Travelers insurance monies must be repaid

to Travelers. (ECF No. 135.) Nevertheless, Travelers awarded this money to Defendants

because Plaintiff was found liable for stealing all those monies and should be directed to pay

those monies stolen plus the mandatory interest on it. (Id.)

DISCUSSION

A. Legal Standard

Defendants are entitled to pre-judgment interest on damages. See Brown v. Stinson, 821

F. Supp. 910, 916 (S.D.N.Y. 1993) (finding that pre-judgment interest was mandatory in the

fraud case even if it was not requested by the movant). “Under New York law, awarding

prejudgment interest on damages awarded for fraud is mandatory.” Bolivar v. Fit Int’l Group

Corp., 12cv781 (PGG) (DF), 2017 U.S. Dist. LEXIS 39887, at *62 (S.D.N.Y. Mar. 16, 2017)

(quoting In re Crazy Eddie Sec. Litig., 948 F. Supp. 1154, 1166 (E.D.N.Y. 1996)). Since the

claims arise under state law, in New York Plaintiff is entitled to pre-judgment interest on the

damages from the time of the misconduct, at a rate of nine percent per annum. See N.Y.

C.P.L.R. §§ 5001, 5004.

B. Application

Defendants were paid $750,000 in insurance monies as a result of their submission of

proof of Plaintiff’s fraud. (ECF No. 123-73.) Specifically, Defendants received monies for

Plaintiff’s issuing fake checks and payroll to both Dubno and Leontyev. (Id.) However, at Oral

Argument, Defendants conceded that if damages were awarded, the Travelers’ payments would

reduce the total monies to be awarded to them. (See Oral Argument Tr. at 17) (Defs.’ Counsel:

“With respect to the Travelers Insurance payment, I’m fairly certain that they are going – if they

get a judgment, defendants are required to pay that money back, so that’s an issue that is

completely irrelevant here.” Court: “Okay. It becomes an offset.” Defs’ Counsel: “Yeah.”)

Given that the Court has already established Defendants’ entitlement to prejudgment

interest, the issue between the parties is whether the Travelers Insurance payment should be

reduced from the prejudgment interest to be paid to Defendants. Neither party provides support

for the addition or reduction of the $750,000 Travelers Insurance payment into the pre-judgment

interest calculation. However, because the insurance payment will effectively be returned to

Travelers upon being reduced from the total damages awarded to Defendants, the prejudgment

interest should exclude the $750,000 insurance payment from the $1,139.664.03 damages award.

Though courts have not opined on the issue in the fraud context, some courts in this Circuit have

ruled similarly: In re September 11 Litig., 649 F. Supp. 2d 171, 172 (S.D.N.Y. 2009) (“New

York State law reduces the recovery of a tort claimant by the amount of collateral source

payments that he has received. For example, if a tort claimant was insured for the risk upon

which he sues, his insurance recovery is deducted from any judgment that he recovers from the

tortfeasor.”); World Trade Center Props. LLC v. American Airlines, Inc. (In re September 11

Litig.), 802 F,3d 314, 344 (2d Cir. 2015) (“[T]he district court should perform the insurance

setoff before calculating the prejudgment interest.”) (emphasis in original); see also Wynstream

Holdings Ltd. v. Liberty Mut. Ins. Co., 23-CV-719-JLS(LGF), 2024 U.S. Dist. LEXIS 103963, at

*18-19 (W.D.N.Y. June 11, 2024) (finding that plaintiffs could recover interest on their claims if

plaintiffs could establish that they reserved their right to the interest when the insurance

payments were made).

Accordingly, Defendants are entitled to the prejudgment interest with an accrual date of

October 28, 2020 through July 29, 2024 and shall exclude the $750,000 Travelers Insurance

payment. The interest should be calculated as follows:

Interest 9%

Median Date October 28, 2020

Days between median date and judgment on 1,370 days

July 29, 2024

Interest per day ($389,664.03 X 0.09/365) $96.08

Interest Owed ($96.08 X 1,370 days) $131,631.71

CONCLUSION

For the reasons stated above, Defendants’ motion for prejudgment interest is granted in

part. (ECF No. 133.) Plaintiff shall pay Defendants $131,631.71 in prejudgment interest.

Dated: Central Islip, New York

September 4, 2024

S O O R D E R E D:

James M. Wicks

/S/

JAMES M. WICKS

United States Magistrate Judge