On September 14, 2016, the Second Department issued a decision in Katz v. Beil, 2016 NY Slip Op. 05977, denying defendants’ motion for summary judgment for failure to show a prima facie entitlement to judgment, explaining:
In determining the individual defendants’ motion for summary judgment, the Supreme Court concluded that judgment as a matter of law was appropriate since there was no evidence that the individual defendants breached their fiduciary duty to the plaintiffs. As an alternative ground for its determination, the court concluded that there was no evidence that the individual defendants had engaged in self-dealing or other misconduct and that all of the conduct alleged in the amended complaint was therefore protected by the business judgment rule. As an additional alternative ground for granting summary judgment, the court determined that the plaintiffs could not prove that they were damaged by the challenged conduct of the individual defendants.
The Supreme Court’s application of the summary judgment standard constituted legal error. In the context of this pretrial motion for summary judgment, the individual defendants, as the moving parties, had the initial burden of proof. Accordingly, while the ultimate burden of proof at trial will fall upon the plaintiffs, a defendant seeking summary judgment bears the initial burden of demonstrating its entitlement to judgment as a matter of law by submitting evidentiary proof in admissible form. On a summary judgment motion, a moving defendant does not meet its burden of affirmatively establishing its entitlement to summary judgment by merely pointing to gaps in the plaintiff’s case; rather, it must affirmatively demonstrate the merit of its defense. It is equally well established that the motion should not be granted where the facts are in dispute, where conflicting inferences may be drawn from the evidence, or where there are issues of credibility.
. . .
[C]ontrary to the Supreme Court’s conclusion, the individual defendants failed to establish, prima facie, their entitlement to judgment as a matter of law dismissing the amended complaint insofar as asserted against them. Since the individual defendants failed to sustain their prima facie burden, we need not consider the adequacy of the plaintiffs’ submissions in opposition to that motion.
(Internal quotations and citations omitted) (emphasis added).