Board of Managers of the Kingsley Condominium v. Villinvestment A.V.V. and Feldman

On August 18, 2003, in Board of Managers of the Kingsley Condominium v. Villinvestment A.V.V. and Feldman, Index No. 603944/02 (Sup. Ct., New York Co., August 18, 2003) (Tolub, J.), based on a motion filed by Kucker, Marino, Winiarsky, & Bittens, LLP (Kucker, Marino, Winiarsky, & Bittens) the court rendered a significant decision which limits a condominium board’s protection under the “business judgment” rule. The motion filed by Kucker, Marino, Winiarsky, & Bittens sought summary judgment on defendants’ behalf, enabling them to proceed with a proposed condominium unit sale. Among other things, the court held that the plaintiff’s treatment of a proposed offer as bona fide precluded plaintiff from subsequently asserting otherwise. An offer may not be bona fide for some purposes but not for other purposes. Court also held plaintiff was required in its motion papers to include any alleged evidence that proposed purchase price was not bona fide. Evidence presented by the plaintiff for the first time in reply papers on a cross-motion could not be considered for either defendants’ motion or plaintiffs’ cross-motion because defendants had no opportunity to respond to the evidence. The court also held that the Board received notice when its managing agent received notice. While the business judgment rule may protect a Condominium Board in the event of a challenge to its determination of whether or not to exercise a right of first refusal, a failure to act within the time limits set forth in the by-laws has nothing to do with business judgment. Equity will intervene in the event that the party who failed to act will suffer a forfeiture if not permitted to exercise its right of first refusal. However, cases in which such forfeiture is found generally involve parties that have invested considerable sums of money in renovating the subject premises, which they will lose if they cannot exercise the option that they had, whether it was to renew the lease or to purchase the property.]

325 Third Street LLC v. Maldonado

On September 3, 2003, in 325 Third Street LLC v. Maldonado, Index No. L&T 077865/03 (Civ. Ct. Kings Co., September 3, 2003) (Marton, J.H.C.), at the request of Kucker, Marino, Winiarsky, & Bittens, LLP, the court denied Respondent’s motion to vacate the previously executed “so ordered” stipulation of settlement and the resultant final judgment and held that a government subsidy approval was not a basis for relief, especially where the relief was less than the amount owed.

328 West 86th Assoc. v. Wakstein

On June 20, 2003, in 328 West 86th Assoc. v. Wakstein, Index No. L&T 081652/01 (Civ. Ct. New York Co., June 20, 2003) (Lebovits, J.H.C.), an important decision was rendered which recognizes that a party’s right to attend a deposition is not absolute. Based on Kucker, Marino, Winiarsky, & Bittens, LLP’s motion, a party was excluded from attending a deposition. The court held, because CPLR ยง3103(a) obligated the court to prevent one party from being disadvantaged by the other’s potentially collusive testimony, the court may exclude individual respondents from attending pretrial depositions of other Respondents when the Respondents’ interests were virtually identical and each Respondent was represented by the same attorney.]

9394 LLC, et al.

On May 2, 2003, in 9394 LLC, et al. v. Kehler, et al., Supreme Court, Westchester County, Index No. 09307/2002 (Nastasi, J.), the New York state court issued a significant decision concerning pretrial disclosure obligations, and rejected a defendants’ arguments that a “consultant” is immune from being deposed. Based on an application which Kucker, Marino, Winiarsky, & Bittens, LLP (Kucker, Marino, Winiarsky, & Bittens) made on behalf of plaintiffs, an order was rendered which directed defendants to comply with plaintiffs’ demands for disclosure, including document demands, and determined that plaintiffs were entitled to depose a non-party witness whom defendants characterized as a “consultant.” Plaintiffs’ underlying civil complaint alleged that defendants unlawfully constructed a large solid concrete block in a tidal wetlands area of the Long Island Sound immediately adjacent to plaintiffs’ residential property, which violated plaintiffs’ riparian rights and caused ecological damage to plaintiffs’ property. In ruling in favor of plaintiffs’ motion to compel disclosure concerning defendants’ so-called “consultant,” the Court agreed with Kucker, Marino, Winiarsky, & Bittens that the documents and reports which defendants claimed were prepared in anticipation of litigation by their purported consultant at maximum were only conditionally privileged, and the burden of proving that such material was prepared solely in anticipation of litigation rested on defendants as the party asserting the privilege and challenging discovery. The Court also agreed with Kucker, Marino, Winiarsky, & Bittens that defendants’ counsel’s affirmation, replete with conclusory assertions, was insufficient to establish the requested documents were immune from disclosure.

In the Matter of the Application of Lipper Holdings, LLC

On April 9, 2003, in a New York state court proceeding, In the Matter of the Application of Lipper Holdings, LLC, Supreme Court, New York County, Index No. 603653/2002, a notable interim order was rendered in which the state court approved the use of a methodology for distributing plan assets which historically revalued each investor’s capital account month by month. The petitioner had initiated the action seeking an order approving a proposed distribution of assets in connection with the winding up of certain limited partnerships. Justice Karla Moskowitz, of the Commercial Part of the Supreme Court which hears complex civil actions, ruled in favor of Kucker, Marino, Winiarsky, & Bittens, LLP’s client and other investors. By Her Honor’s interim order, the Court approved the suggested asset distribution methodology because it was consistent with proper accounting principles and limited partnership plan documents. The Court rejected the arguments of certain investors who attempted to limit their own loss by forcing the entire revaluation of plan assets (a $400 million adjustment) to be applied in one month only, the final month in which winding up was initiated. Over petitioner’s objection, the court ruled that any negative balances in an investor’s capital accounts must be attributed to the general partner. Based on allegations that he had engaged in misconduct, the general partner was replaced as liquidating trustee.

Calka v. Chuu

On March 18, 2003, in Calka v. Chuu, 2003 U.S. Dist. Lexis 4090 (S.D.N.Y. 2003), the federal court issued an important decision under federal bankruptcy law. The court held that an adversary proceeding brought by a debtor tenant to recover funds paid to an apartment owner should be dismissed for lack of jurisdiction, as it did not involve a core bankruptcy matter, and a recovery, if any, would not benefit debtor’s bankruptcy estate.

R Glad House Holdings, LLC v. Lipper Holdings, LLC

On February 20, 2003, in R Glad House Holdings, LLC v. Lipper Holdings, LLC, 03 CV 1144 (RO) (S.D.N.Y.), an important federal securities class action was filed against Lipper Holdings, LLC, Kenneth Lipper, Abraham Biderman and Edward Strafaci, in the United States District Court for the Southern District of New York, by plaintiffs’ counsel Kucker, Marino, Winiarsky, & Bittens, LLP (Kucker, Marino, Winiarsky, & Bittens), and New Jersey co-counsel, Cohn Lifland Pearlman Herrmann & Knopf LLP. In the civil complaint, plaintiffs allege that defendants substantially overvalued the fund assets, by approximately 40%, collected excessive performance based management fees, distributed deceptive written materials, and artificially inflated the value of fund assets in representing and reporting the performance, profits and value of the assets to investors from 1995 through 2001, which were violations of Section 12(2) of the Securities Act of 1933, Section 20(a) of the Securities Exchange Act of 1934, Section 10(b) of the Securities Exchange Act of 1934, SEC Rule 10b-5 and state securities laws.

Spanierman Gallery Profit Sharing Plan v. Merritt

On January 20, 2003, in Spanierman Gallery Profit Sharing Plan v. Merritt, 2003 U.S. Dist. Lexis 1444 (S.D.N.Y.), a critical ruling on the issues of jurisdiction, comity and issue preclusion was made. Based on Kucker, Marino, Winiarsky, & Bittens, LLP’s petition, the federal district court refused to bar a plaintiff art gallery from continuing to prosecute its legal claims despite a judgment in favor of the federal defendant against another party which was rendered in a state court action in which the plaintiff art gallery was not a participant. Kucker, Marino, Winiarsky, & Bittens defeated the defendant’s attempts to impose issue preclusion on the plaintiff.

9394 LLC et al. v. Farris, et al.

On March 14, 2003, in 9394 LLC et al. v. Farris, et al., 304 A.D.2d 804 (2nd Dep’t 2003), the Appellate Division of the New York Supreme Court protected the plaintiffs’ critical rights to obtain the notice required by CPLR 3211(c) before a motion to dismiss may be converted to a summary judgment motion. The civil complaint which Kucker, Marino, Winiarsky, & Bittens, LLP (Kucker, Marino, Winiarsky, & Bittens) filed on plaintiffs’ behalf alleged more than a million dollars in damages caused by defendants’ unlawful utilization of residential premises for business uses. In error the trial court (Lefkowitz, J.) dismissed plaintiffs’ damages claims. Kucker, Marino, Winiarsky, & Bittens successfully appealed and obtained reversal by the Appellate Division, Second Department. The appellate court agreed with Kucker, Marino, Winiarsky, & Bittens that the trial court had improvidently converted defendants’ motion to dismiss into a motion for summary judgment without providing the notice required by CPLR 3211(c). The Appellate Division further held that, based on the facts as alleged, the complaint was legally sufficient to withstand a motion to dismiss for alleged failure to state a cause of action, and accordingly the complaint was reinstated. Plaintiffs could proceed with their damages claims and certain requests for injunctive relief.