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Court Resolves Dispute Between Two Businesses


A Probate Lawyer said the records reflect that the instant case is one wherein estate of the parties are involved for settling the dispute between them. This involves two domestic businesses located in Richmond County, owned by two persons. As a result of disagreements in their business relationship, several lawsuits were filed regarding the Businesses. The first Lawsuit involved an entity Corporation. The initial complaint in the matter alleged that one of the owners obtained majority control of and tried to remove the partner from his responsibilities in the corporation. The complaint recently amended to add claims alleging other breaches of agreements and breaches of fiduciary duty by his partner. On May 25, 2010, a temporary restraining order was granted that, pending the hearing and determination of the motion at issue, directed that 1) the owner shall not cause nor allow the corporation to make any repayment of loans or interest on loans purportedly due to him or his entity, nor enter into a new loan from him or his Entity, nor incur any debt obligation or make any expenditure without advance notice to the partner and without his partner’s written consent; 2) he shall not cause or allow the 2009 federal and/or state tax returns of the corporation to be finalized or filed; and 3) they were to immediately provide to the partner all corporate ledgers, financial statements and loan documents for the years 2008-2010.

An Estate Lawyer said the second Lawsuit which involved another entity. The allegations in the second Lawsuit were that 1) the owner wrongfully diverted a payment in the sum of $100,000, due to his partner, to the corporation without his partner’s consent; and 2) he failed to distribute the other entity’s profits to his partner and other members. After conducting hearings on the matter, the judge entered judgment in favor of the Partner. The Judge issued Orders holding that the owner was in contempt for transferring certain funds in violation of court orders, ordering him to pay his partner certain monies and directing that he was to be incarcerated if he failed to make the required payment. The owner appealed the judgments but were denied.

The third Lawsuit filed involved a third entity. In this Lawsuit, the partner alleged that the owner refused to distribute the profits. The complainant’s counsel submits that these Lawsuits establish that 1) the owner has repeatedly and improperly transferred monies between entities, to fund certain real estate projects to which the Partner does not consent; and 2) owner has attempted to use his control over the finances of these entities to pressure his partner into consenting to these transferrals. The counsel also contends that the parties in the matter at bar disagree as to whether there exists an arrangement between them that permits these transferrals; the complainant denies that such an arrangement exists.

Defending party move for an Order, pursuant to CPLR sections 510(1) and 510(3), and Business Corporation Law (“BCL”) section 1112, 1) dismissing this action; or, alternatively, 2) transferring this matter to the Supreme Court of Richmond County, New York. The complainant opposed the motion.

Brooklyn Probate Lawyers said the Court ruled that, CPLR section 503(a) provides that, ‘Except where otherwise prescribed by law, the place of trial shall be in the county in which one of the parties resided when it was commenced; or, if none of the parties then resided in the state, in any county designated by the plaintiff. A party resident in more than one county shall be deemed a resident of each such county.’

Business Corporation Law section 1112 provides that, ‘An action or special proceeding under this article for dissolution shall be brought in the supreme court in the judicial district in which the office of the corporation is located at the time of the service on the corporation of a summons in such action or of the presentation to the court of the petition in such special proceeding.’

CPLR sections 510(1)-(3) provide that the Court, upon motion, may change the place of trial of an action where: 1. the county designated for that purpose is not a proper county; or 2. there is reason to believe that an impartial trial cannot be had in the proper county; or 3. the convenience of material witnesses and the ends of justice will be promoted by the change.

A Bronx Probate Lawyer said that preliminarily, the Court rejects Defending party’s argument that this action is, in effect, an application for dissolution of the Businesses. The Complaint does not seek that relief, and the Orders issued in the related Lawsuits do not discuss dissolution. Moreover, even assuming, that the Court were to conclude that the relief that complainant seeks includes dissolution, the Court is guided by the reasoning in Tashenberg v. Breslin, in which the Appellate Division affirmed the trial court’s denial of respondent’s motion for a change of venue. In affirming the trial court’s decision, the Appellate Division held: “If this were simply a special proceeding for a judicial dissolution, venue would lie in the judicial district in which the office of the corporation is located, that location being the one designated in the certificate of incorporation. Here, however, inasmuch as the petitioner essentially seeks various other types of relief on his own behalf as a stockholder, director and officer, his county of residence is proper for purposes of venue. Accordingly, since this matter involves a joinder of claims with conflicting venue provisions, the trial court exercised its discretion and designated petitioner’s county of residence as the place of trial.”

The Court concludes that it is not bound by the venue provisions of BCL section 1112 because complainant is not seeking dissolution of the Businesses. Even if the Court were to construe the Complaint as seeking that relief, the Complaint clearly seeks other non-dissolution relief, and the Court may properly apply the venue provisions of the CPLR rather than the BCL.

In light of the facts that 1) complainant resides in Nassau County; 2) his son, a potential witness, resides in Nassau County; 3) Defending party have been litigating the Lawsuits in Nassau County without objection; and 4) Defending party have failed to provide specific facts in support of their claim that factors, including the convenience of witnesses, support venue in Richmond County, the Court concludes that venue in Nassau County is appropriate, and that dismissal of this action is not warranted. Accordingly, the Court denies Defendants’ motion in its entirety. All matters not decided herein are hereby denied. This constitutes the decision and order of the Court.

Estate proceedings, estate administration, will contest and the likes are common cases faced by individuals. Sometimes, this kinds of proceedings can be complicated due to other issues relating to the estate and different applicable laws, and jurisdictional issues. If you are faced with such situations or one such as the instant case, secure the services of your legal team. Stephen Bilkis & Associates, with offices throughout New York, provides the services of its Richmond County Estate Lawyers, or its New York Estate Litigation Attorneys who are all well trained and experienced in their respective fields of practice. Always protect your rights in any proceeding before the courts, and never hesitate in consulting and securing the best legal assistance in defending your rights in a particular case.

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