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.