Opinion
Index No. 656160/2016
01-12-2024
PH-105 Realty Corp., 12 Whitwell Place, LLC, 181 Edgewater LLC, and Farhoud Jaber, Plaintiffs, v. Munzer Elayaan, PH-Fulton Corp., John and Jane Does 1-20, and XYZ Corporation/LLCS 1-20, Defendants.
The Aboushi Law Firm PLLC, New York, NY (Ayman A. Aboushi of counsel), for plaintiffs. McKool Smith, P.C., New York, NY (James H. Smith and Grant Johnson of counsel), for defendants. Wenig Saltiel LLP, New York, NY (Dan M. Blumenthal of counsel), for non-party 181 Edgewater St. LLC. Menicucci Villa Panzella & Calcagno, PLLC, Staten Island, NY (Jeremy Panzella of counsel), for non-parties Express Abstract Services Inc. and on its own behalf.
Unpublished Opinion
The Aboushi Law Firm PLLC, New York, NY (Ayman A. Aboushi of counsel), for plaintiffs.
McKool Smith, P.C., New York, NY (James H. Smith and Grant Johnson of counsel), for defendants.
Wenig Saltiel LLP, New York, NY (Dan M. Blumenthal of counsel), for non-party 181 Edgewater St. LLC.
Menicucci Villa Panzella & Calcagno, PLLC, Staten Island, NY (Jeremy Panzella of counsel), for non-parties Express Abstract Services Inc. and on its own behalf.
Hon. Gerald Lebovits, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 013) 452, 453, 454, 455, 461 were read on this motion to STRIKE JURY DEMAND.
The following e-filed documents, listed by NYSCEF document number (Motion 014) 456, 457, 458, 459, 460, 485, 486, 487, 488, 489, 490, 491, 492, 493, 494, 495, 496, 497, 498, 499, 500, 501, 502 were read on this motion to QUASH SUBPOENA.
The following e-filed documents, listed by NYSCEF document number (Motion 015) 462, 463, 464, 465, 466, 467, 468, 469, 470, 471, 472, 473, 474, 475, 476, 477, 478, 479, 480, 481, 482, 483, 503, 504, 505, 506, 507, 508, 509, 510, 511, 512, 513, 514, 515, 516, 517, 518, 519, 520, 521, 522, 523, 524, 525 were read on this motion for DISCOVERY.
Plaintiffs, PH-105 Realty Corp, 12 Whitwell Realty Corp., 181 Edgewater LLC, and Farhoud Jaber, brought this action in 2016, alleging that plaintiff Jaber is the owner of 75% of 181 Edgewater LLC and is its managing member. (NYSCEF No. 9 at ¶ 31.) Edgewater owns real property located at 181 Edgewater Street in Staten Island. (Id. at ¶ 32.) Plaintiffs have alleged that defendant Munzer Elayaan "unlawfully removed Jaber as managing member of the Edgewater" and "converted Jaber's 75% ownership of Edgewater, thereby depriving him of the right to manage Edgewater, and its asset, 181 Edgewater Street." (Id. at ¶¶ 33-34.) Plaintiffs have asserted causes of action for fraud, unjust enrichment, misrepresentation, declaratory judgment, conversion, and prima facie tort. (Id. at ¶¶ 6-10.)
In 2017, this court dismissed plaintiff's causes of action for fraud, misrepresentation, conversion and prima facie tort. (PH-105 Realty Corp. v Elayaan, 2017 NY Slip Op 30952 [U], *5 [Sup Ct, NY County 2017].) In September 2018, plaintiffs filed a note of issue and certificate of readiness for trial. (NYSCEF No. 288.)
Jaber then moved for summary judgment on plaintiffs' claim for declaratory judgment. (See PH-105 Realty Corp v Elayaan, 2019 NY Slip Op 31060 [U], *2 [Sup Ct, NY County 2019].) Elayaan and PH-Fulton cross-moved for summary judgment dismissing plaintiffs' claims for declaratory judgment and unjust enrichment. (Id.) This court denied plaintiff's motion for summary judgment and granted defendants' cross-motion. (Id. at *6.)
On appeal, the Appellate Division, First Department, reversed. (PH-105 Realty Corp v Elayyan, 183 A.D.3d 492, 492 [1st Dept 2020].) Plaintiff's two causes of action were reinstated. The First Department held that "defendants' acts in filing corporate tax returns for the years 2010 through 2014, signed by defendant Elayan, which contained factual statements that plaintiff Jaber had a 75% ownership interest in Edgewater during that time period,... preclude[d] defendants from taking a position contrary to that in this litigation." (Id.) It then remanded the case to this court because, it explained, "issues of fact remain as to who presently owns Edgewater and whether defendant [Elayaan] unlawfully stripped Jaber of his ownership rights." (Id. at 493.)
In December 2021, non-party 181 Edgewater St. bought a 75% interest in Edgewater. In March 2022, Edgewater vested a 75% interest in the property in Edgewater St. and a 25% interest in the property to itself. (NYSCEF No. 478.)
In August 2022, plaintiffs moved for a TRO requiring defendants and Edgewater St. to transfer the property back to Edgewater and to refrain from selling the property. (NYSCEF No. 417.) This court granted the TRO in part and denied it in part, "due to the lack of any evident exigency, and because the relief sought [was] premised on an ownership claim that plaintiffs [had] by no means yet established." (Id.) This court thought it prudent, however, to "briefly restrain further alienation or encumbrance of the 181 Edgewater property, in the interests of preserving the status quo." (Id.) This court ultimately denied the underlying preliminary injunction. (See PH-105 Realty Corp v Elayaan, 2023 NY Slip Op 50478 [U], *5 [Sup Ct, NY County 2023].)
In motion sequence 013, defendants Elayaan and PH-Fulton Corp. move to strike plaintiffs' demand for a jury trial. The motion is granted.
In motion sequence 014, non-party Edgewater St. LLC moves to quash plaintiffs' subpoena as untimely for failure to move for leave to conduct post-note-of-issue discovery. (NYSCEF No. 457 at 2.) Conversely, plaintiffs, in motion sequence 015, move to compel compliance with subpoenas from July 2023 and request additional discovery. Edgewater's motion is granted. Plaintiffs' motion is denied.
DISCUSSION
I. Motion Sequence 013
Plaintiffs filed a note of issue and certificate of readiness for a jury trial in September 2018. (NYSCEF No. 288.) Defendants move to strike plaintiffs' jury demand. The motion is denied.
Defendants argue that because plaintiffs' remaining claims-declaratory judgment and unjust enrichment-are equitable in nature, plaintiffs are not entitled to a jury trial. (NYSCEF No. 453 at 1.) Plaintiff counters that it is not the relief sought that entitles it to a jury trial, but the pleadings in the complaint. (NYSCEF No. 455 at 5.) The court agrees with plaintiffs.
Where "money damages alone afford a full and complete remedy, the action sounds in law and may be tried by a jury." (Cadwalader Wickersham & Taft v Spinale, 177 A.D.2d 315, 316 [1st Dept 1991].) The "joinder of claims for legal and equitable relief," however, "amounts to a waiver of the right to demand a jury trial." (Kaplan v Long Island Univ., 116 A.D.2d 508, 509 [1st Dept 1986].) In determining entitlement to a jury trial, "[t]he critical consideration is whether the facts stated show that the action is equitable or legal in nature." (Id.)
Here, plaintiffs' central claims are that (1) "Elayaan unlawfully removed Jaber as the managing member of Edgewater" and (2) "Elayaan converted Jaber's 75% ownership of Edgewater, thereby depriving him of the right to manage Edgewater, and its asset 181 Edgewater Street." (NYSCEF No. 9 at ¶¶ 33-34.)
With respect to plaintiffs' cause of action for declaratory judgment, the question is "which of the traditional common-law actions would most likely have been used to present the instant claim[s] had the declaratory judgment action not been created." (Strachman v Palestinian Auth., 73 A.D.3d 124, 127, [1st Dept 2010].) Here, the most analogous cause of action absent a declaratory judgment sounds in replevin, to recover the limited liability membership interests claimed by plaintiff. (See Herman v 36 Gramercy Park Realty Assoc., LLC, 131 A.D.3d 422, 423 [holding that limited liability membership interests are subject to replevin].) And replevin "has traditionally been considered a remedy at law." (James Benjamin, Inc. v Trump CPS, L.L.C., 289 A.D.2d 113, 113 [1st Dept 2001].) The court concludes, therefore, that plaintiffs' declaratory-judgment claim that this claim sounds in law, rather than equity, such that that plaintiffs have not waived their right to a jury trial. (See Arrow Communication Labs. v Pico Prods., 219 A.D.2d 859, 860 [4th Dept 1995] [discussing how to determine whether a declaratory-judgment claim is legal or equitable].)
Plaintiffs initially asserted a conversion claim to recover the allegedly misappropriated limited-liability membership interests. (See NYSCEF No. 9 at 10.) This court granted defendants' motion to dismiss that claim because conversion only lies with respect to "identifiable tangible personal property," rather than "real property and interests in business opportunities." (PH-105 Realty Corp. v Elayaan, 2017 NY Slip Op 30952[U], at *2 [Sup Ct, NY County 2017] [quoting C & B Enters. USA, LLC v Koegel, 136 A.D.3d 957, 958 [2d Dept 2016].) Regardless, conversion, like replevin, sounds in law rather than equity. (See Chauvin v Keniry, 216 A.D.2d 753, 753 [3d Dept 1995].)
Defendants argue in the alternative that even if plaintiffs' declaratory-judgment claim is legal in nature, plaintiffs have still waived their right to a jury trial by also asserting an unjust-enrichment cause of action. (See NYSCEF No. 453 at 8.) But the nature of the claimed unjust enrichment at issue here is defendants' alleged misappropriation of the membership interests. This cause of action is thus, in effect, a claim for conversion (or replevin) brought under another guise. As a result, plaintiffs' having couched the cause of action as one for unjust enrichment does not, without more, preclude them from obtaining a jury trial. (See Darmsteadter v Tandberg of America, 104 A.D.2d 355, 356 [2d Dept 1984] [holding that a claim alleging that "the defendants unjustly enriched themselves by converting the value of plaintiffs' contractual rights... [was] in effect, one for money had and received which, while based upon equitable principles, is deemed an action at law"].)
Defendants' motion to strike plaintiffs' jury demand is denied.
II. Motion Sequences 014 and 015
In motion sequence 014, non-party 181 Edgewater St. LLC moves under CPLR 2304 to quash defendant's judicial subpoena duces tecum as improper and untimely. (NYSCEF No. 456; NYSCEF No. 457 at 1.) In motion sequence 015, plaintiff moves to (1) compel Express Abstract, Edgewater St., and Menicucci Villa to comply fully with its subpoenas, (2) compel defendant Elayaan to produce all documentation requested in plaintiffs' supplemental discovery demands, and (3) compel Express Abstract, Edgewater St., Menicucci Villa to produce documents and information on Edgewater St., the property, the vesting of the property, and ownership of the property dating from January 2021. (NYSCEF No. 503.) The subpoenaed parties oppose the motion. They argue that the subpoenas were issued after the note of issue and certificate of readiness for trial were filed and that the subpoenas' content make them invalid. The motions are decided together. Edgewater's motion to quash is granted. Plaintiffs' motion to compel compliance with discovery is denied.
Plaintiff also requests a privilege log. (NYSCEF No. 463 at 1.)
Under 22 NYCRR 202.21 (d), "[w]here unusual or unanticipated circumstances develop subsequent to the filing of a note of issue" requiring additional pretrial discovery "to prevent substantial prejudice, the court, upon motion supported by affidavit, may grant permission to conduct such necessary proceedings." (Prevost v One City Block LLC, 155 A.D.3d 531, 537 [1st Dept 2017] ["In seeking post-note-of-issue discovery, [the proponent] must demonstrate unusual or unanticipated circumstances as well as substantial prejudice."] [internal quotation marks omitted].)
Plaintiffs' subpoenas to Express Abstract, Edgewater St., and Menicucci Villa, and their supplemental discovery requests to Elayaan are dated July 2023-years after plaintiffs filed their note of issue in 2018. (NYSCEF Nos. 458, 481, 509, 511.) Plaintiffs contend essentially that Edgewater St.'s purchase of the 75% interest in Edgewater in 2021 and the vesting of the property into Edgewater's interests in 2022 are unusual and unanticipated circumstances that would warrant additional post-note-of-issue discovery. (NYSCEF No. 463 at ¶¶ 26-27, 31.) Plaintiffs further assert that they discovered the sale and transfer only recently, and that Edgewater St. did not exist before the note of issue was filed. (NYSCEF No. 463 at ¶¶ 51-53.)
Edgewater St. contends that plaintiffs provide only conclusory statements concerning unusual or unanticipated circumstances. (NYSCEF No. 504 at ¶ 30.) Elayaan argues that no such circumstances exist. Elayaan asserts that Jaber "failed to prosecute his claims for years, including after the First Department's reversal of the summary judgment order," and that Elayaan's efforts to invest in real property and "maximize the value of [the] investment" are not extraordinary. (NYSCEF No. 524 at 7-8.)
Here, the alleged sale and vesting of interests occurred after the note of issue was filed. (Cf. Schroeder v IESI NY Corp., 24 A.D.3d 180, 181 [1st Dept 2015] [holding that circumstances were not unusual or unanticipated when they occurred "before the filing of the note of issue, not after"].) And plaintiff claims it did not know about the sale and transfer. (Cf. Prevost, 155 A.D.3d at 537 [affirming denial of additional post-note-of-issue independent medical examinations when defendant "had ample notice of plaintiff's ongoing [injury] far in advance of the note of issue"]; Miller v Metropolitan 810 7th Ave., 50 A.D.3d 474, 474-475 [1st Dept 2008] [denying post-note-of-issue deposition of witness about whom movant was aware prior to the filing of the note of issue].)
Edgewater St. contends that plaintiff was aware or should have been aware that Edgewater existed. (NYSCEF No. 41.) But Edgewater St. was created in 2020. The note of issue, filed in 2018, predates its existence.
The question remains, though, whether plaintiff has shown that this court's denial of its motion will result in prejudice. Plaintiffs contend that they require discovery on the sale of the 75% interest in Edgewater and the vesting of the property in the members' interests to avoid prejudicing the prosecution of their claims and adversely affecting their rights and remedies. (NYSCEF Nos. 463 at ¶ 32, 525 at ¶ 12.)
Elayaan responds that "the sale of Edgewater in 2021 does not impact the substantive basis of [Jaber's] claims, nor would it foreclose [Jaber] from the relief he seeks." (NYSCEF No. 524 at 8.) Express Abstract and Menicucci Villa argue, in the same vein, that "the focus of the subpoenas seems to be a transaction involving a non-party, 181 Edgewater St, LLC in 2021, which appears to have no bearing on the Plaintiff's claims in this action." (NYSCEF No. 505 at ¶ 14.) The court agrees.
Plaintiffs' claims concern whether "Elayaan unlawfully removed Jaber as the managing member of Edgewater" and "Elayaan converted Jaber's 75% ownership of Edgewater, thereby depriving him of the right to manage Edgewater, and its asset 181 Edgewater Street." (NYSCEF No. 9 at ¶¶ 33-34.) The subsequent sale of the 75% of interests in Edgewater and the vesting of the property in Edgewater's members do not pertain to those issues; rather, those transactions will become relevant only if the final determination in this action is that Jaber was improperly removed from Edgewater and denied his property rights. Plaintiffs do not articulate whether, or how, discovery pertaining to the 2021 sale and 2022 vesting would impact the court's resolution of Jaber's claims relating to his alleged removal from, and ownership interest in, Edgewater. (See Stephen-Leedom Carpet Co. v Arkwright-Boston Mfrs. Mut. Ins. Co., 101 A.D.2d 574, 577 [1st Dept 1984] ["[T]he discovery sought... must be relevant to the issue or issues in controversy."] [internal quotation marks and citation omitted].)
The court is also skeptical about the extent of prejudice plaintiffs would suffer without further discovery, given plaintiffs served these subpoenas in 2023, and the sale and vesting were in 2021 and 2022 respectively. Further, as Elayaan notes, this court already denied plaintiffs' request for an injunction requiring Elayaan to return the property to Edgewater because Jaber could not establish irreparable harm without a determination of his membership interest in Edgewater-an issue for trial. (See PH-105 Realty Corp, 2023 NY Slip Op 50478 [U], at *4; NYSCEF No. 524 at 8 n 25.)
The court does not reach the subpoenaed parties' arguments that plaintiffs' subpoenas requested irrelevant, privileged, overbroad, or nonspecific information or were otherwise improperly sought. (See NYSCEF No. 457 at 8-9 [Edgewater's memorandum]; 505 [Express Abstract and MVC's memorandum]; NYSCEF No. 524 at 10-11 [Elayaan's memorandum]). Nor does the court reach the arguments concerning possible defects in the text of the subpoena (see NYSCEF No. 457 at 10-11), or any failure to pay attendance and travel fees. (See NYSCEF No. 504 at 5).
Accordingly, it is
ORDERED that defendants' motion to strike plaintiff's request for a jury trial (mot seq 013) is denied, and it is further
ORDERED that Edgewater St.'s motion to quash plaintiff's subpoena (mot seq 014) is granted; and it is further
ORDERED that plaintiffs' motion to compel Edgewater St., Express Abstract, Edgewater St., Menicucci Villa, and Elayaan to comply with its subpoenas and produce additional discovery (mot seq 015) is denied.