Opinion
Index No. 655454/2021 MOTION SEQ. No. 004
12-16-2022
HIEBER READE STREET, LLC, CHRISTINA J. HIEBER, JENNIFER M. HIEBER, Plaintiff, v. FRED TAVERNA, NY INTERIOR CONSTRUCTION OF NY, INC., DOWNTOWN DEVELOPMENT OF NY LLC. JEANETTE TAVERNA Defendant.
Unpublished Opinion
DECISION + ORDER ON MOTION
HON. ANDREW BORROK JUDGE
The following e-filed documents, listed by NYSCEF document number (Motion 004) 85, 86, 87, 88, 89, 92, 93, 94, 96, 97, 98, 99 were read on this motion to/for REARGUMENT/RECONSIDERATION The defendants' motion for leave to reargue the Decision and Order of this Court, dated August 3, 2022 (the Prior Decision; NYSCEF Doc. No. 83) must be denied.
The plaintiffs brought this lawsuit by summons and complaint dated September 13, 2021 (NYSCEF Doc. No. 1) asserting causes of action for (i) a declaratory judgment that (x) the plaintiffs had the right to purchase the Taverna Defendants' membership interests in the Partnership, (y) such purchase was carried out by sending checks by certified mail, and (z) the Taverna Defendants' membership was assigned to the plaintiffs and they had no further interest in the Partnership (first cause of action), (ii) a declaratory judgment that the plaintiffs validly expelled the Taverna Members from the Partnership and terminated their interest (second cause of action), (iii) a declaratory judgment that Mr. Taverna's option to purchase an Unfinished Unit never vested, was never exercised, and was validly terminated (third cause of action), (iv) breach of contract against the Tavema Defendants for breach of the Operating Agreement (fourth cause of action), (v) breach of contract against NYIC for breach of the Construction Contract (fifth cause of action), (vi) breach of the covenant of good faith and fair dealing (sixth cause of action), (vii) conversion (seventh cause of action), (viii) breach of fiduciary duty (eighth cause of action), (ix) fraudulent inducement against Mr. Taverna (ninth cause of action), (x) fraudulent concealment (tenth cause of action), (xi) constructive trust (eleventh cause of action), and (xii) an accounting (twelfth cause of action).
The defendants moved to dismiss the lawsuit arguing, as relevant, that dismissal of the causes of action predicated on Mr. Taverna no longer being a member of the Partnership needed to be dismissed because under the express terms of the agreement, any attempt to oust him was invalid unless they paid him the amount set forth in his capital account (i.e., approximately $2 million), and it was undisputed that this was not done. This was discussed extensively at oral argument as the defendant's attorney correctly pointed out the plaintiffs own papers indicating the relevant memorandum capital account balance and that a $40 payment clearly did not comply with the mechanism set forth in the Operating Agreement for buy-out.
Indeed, based on this argument, the Court dismissed the first and second causes of action because the complaint and its attachments "firmly establish that the procedure set forth in Section 8.01 of the Operating Agreement for buying out Mr. Taverna's interests were not followed" (NYSCEF Doc. No. 83, at 5). As the Court held:
To wit, as relevant, in the August Letter, the plaintiffs indicate that the defendants had a capital account of $2 million and were approximately $900,000 deficient -i.e., they were supposed to have a capital account $2,942,856.60. When the plaintiffs exercised their option to buy the defendants out based on the $25,000
capital call in August 2020, which they did not make, the plaintiffs only paid the defendants $40 (NYSCEF Doc. No. 15). This simply does not comply with the mechanism set forth in Section 8.01 of the Operating Agreement for buying Mr. Taverna out(id.).
The Court further held that it does not matter whether the defendants breached the Operating Agreement or engaged in other conduct giving rise to claims, because
[A]lthough the plaintiffs may have exercised their option to buy him out, they have not complied with the provisions of the Operating Agreement to accomplish this and Mr. Taverna remains a member until he is paid in accordance with the terms of the Operating Agreement. The plaintiffs simply can not oust him without paying his memorandum account balance (i.e., $2 million) and then claim that he merely has a breach of contract claim. This is not the deal the parties struck(id., at 6).
Now, the defendants seek to reargue the Court's finding that Mr. Taverna remains a member of the Partnership, arguing that "such statement or finding overlooks the record on the motion to dismiss and would constitute a limitation on defendants' rights to seek full and proper relief and damages for plaintiffs' unlawful termination and conversion of their interests, in contravention of prevailing law" (NYSCEF Doc. No. 86, ¶ 8). They seek to clarify the Prior Decision "to eliminate the remark that the defendants 'remain' as members of the LLC, leaving it to the adjudication of the defendants' claims to determine the relief to which defendants may be entitled" (id.).
A motion for leave to reargue must be based on matters of fact or law allegedly overlooked or misapprehended by the Court in determining the prior motion but cannot include any matters of fact not offered on the prior motion (CPLR 2221 [d]). Judicial estoppel is the doctrine that prevents a party who assumed a certain position in a prior proceeding and secured a ruling in their favor from advancing a contrary position in another proceeding, simply because their interests have changed (Herman v 36 Gramercy Park Realty Associates, LLC, 165 A.D.3d 405, 406 [1st Dept 2018]).
The defendants argue that the Prior Decision should be clarified to eliminate the finding that Mr. Taverna remains a member of the Partnership until he is paid out under the Operating Agreement. This position is directly contrary to the position that the defendants correctly took on the motion to dismiss, as set forth above, and must therefore be denied.
For the avoidance of doubt, the Prior Decision does not address any post-decision conduct or the consequences thereof.
It is hereby ORDERED that the defendants' motion for leave to reargue is denied.