Opinion
Index 704389/2021
04-08-2022
In the Matter of the Application of CARL F. MATTONE, holder of a 2 8.5 % Membership Interest, Petitioner, v. MICHAEL X. MATTONE, IRENE MATTONE, THERESA MATTONE, JOSEPH M. MATTONE, JR., For the Dissolution of Mattone Group Springnex LLC, Motion Seq. No. 1 & 2
Unpublished Opinion
Motion Date October 26, 2021
Present: HONORABLE Leonard Livote Justice
LEONARD LIVOTE, JUDGE
The following numbered papers read on this pre-answer motion by respondents, seeking to dismiss the petition pursuant to CPLR 3211 (a) (7) and a cross motion to stay the proceedings pending resolution of a special proceeding, mattone Group Springnex, LLC v CFM Development LLC, Index No. 719775/2020, and a separate motion by respondents seeking sanctions and attorneys s fees against petitioner and petitioners attorney.
(Table Omitted)
Upon the foregoing papers it is ordered that the motions and cross motion are determined as follows:
This is a proceeding by petitioner Carl F. Mattone, (CM), seeking corporate dissolution of a limited liability corporation, Mattone Group Springnex, LLC, (Springnex), and an accounting of the books and records of said corporation. Respondent movants seek dismissal of the petition and sanctions against the petitioner and petitioners s attorney. The petitioner cross moves for a stay in the proceeding pending resolution of a valuation proceeding resulting from a "freeze out" merger pursuant to LLCL S 1002.
On a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must accept the facts as alleged in the complaint as true, accord the petitioner the benefit of every possible favorable inference, and determine only if the facts alleged fit within any cognizable legal theory. (See Leon v Martinez, 84 N.Y.2d 83 [1994]; Travelsavers Enterprises, Inc., Analog Analytics, Inc., 149 A.D.3d 1003 [2d Dept 2017].) Affidavits submitted by the petitioner can be used freely to preserve in artfully pleaded but potentially meritorious claims. (See Rovello v Orofino Realty Co., Inc., 40 N.Y.2d 633 [1976]; Cherry v Duke, 1 34 A.D.3d 662 [2d Dept 2015].) When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether one has been artfully stated. (See Leon, 84 N.Y.2d 83.) If a material fact as claimed by the pleader is not a fact at all, and no significant dispute exists regarding it, dismissal is warranted. (See Guggenheimer v Gimburg, 43 N.Y.2d 268 [1977].)
In support of their motions, the respondents submitted, inter alia, their attorney's affirmation, the pleadings, a copy of the affidavit of Michael X Mattone, member of Springnex, and president of JMM SPE Corp., general manager of Springnex, a series of email communications between the parties' attorneys, a copy of the agreement of merger, a copy of the certificate of merger, a copy of the consent of members, a copy of the notice of merger and dissenters rights dated October 1, 2020, a copy of the notice of dissent dated October 21, 2020, a copy of the offer to purchase dated October 21, 2020, a copy of the court order in the special proceeding for valuation entered June 29, 2021, copies of certain tax documents for CFM Development LLC (CFM), a copy of the Sterling Bank commitment letter executed July 31, 2020, a copy of petitioners attorneys affirmation in support of the supplemental motion and motion for sanctions, a copy of an affidavit of Carl F. Mattone, petitioner, copies of affirmations of William Scherer, Esq., attorney for petitioner, dated October 28, 2020, November 4, 2020, November 20, 2020, and August 13, 2021. In opposition and in support of the cross motion to stay the dissolution proceeding pending the outcome of the valuation proceeding pursuant to LLCL 1002, a copy of Carl F. Mattone affidavit dated December 28, 2020, a copy of the affirmation of Sydney E. Unger dated December 28, 2020, a copy of CFM answer in valuation proceeding, and copies of the affidavits of William Scherer, Esq., October 19, 2021 and October 22, 2021
In seeking a judicial dissolution of a limited liability corporation (LLC), LLCL S 702 provides that the petitioner must demonstrate that it is no longer "reasonably practicable to carry on the business in conformity with the articles or organization or operating agreement." (See Kassab v Kasab, 195 A.D.3d 300 [2d Dept:2021]; Matter of 1545 Ocean Ave., LLC, 72 A.D.3d 121 [2d Dept. 2010].)
Based upon all the submissions to this court, it is clear that the underlying allegations . concerning an alleged delinquent mortgage loan on the corporations s asset as threatening the practicable viability of the corporation, has been rendered moot due to the refinancing of said loan. It is noted that the parties were before this sour ton a motion for a preliminary injunction brought by the within petitioner regarding whether the excess proceeds of the loan should be withheld or paid to the shareholders proportionately. In addition, it appears that any prior mortgage guarantee executed by the petitioner is no longer in effect. The allegations in the petition as to the inability of the corporation to be a going concern and that it is on the brink of financial ruin, are not factually correct. (See Guggenheimer, 43 N.Y.2d 268.)
The petitioners complaints regarding methods of management are insufficient to demonstrate grounds for dissolution. The grounds for dissolution pursuant to LLCL § 702 are far more restrictive than exist in the BCL, which does not apply herein. (See In re 1545 Ocean Ave., LLC 72 A.D.3d 121 [2d Dept 2010];) The operating agreement provides that non party JMM SPE Corp., (SPE) is the duly appointed general manager of the LLC. The operating agreement at S 5.1.2 states in its pertinent part that,
"The General Manager [SPE] shall have full, exclusive, and complete discretion, power and authority, subject in all cases to the other provisions of this Agreement and the requirements of applicable law, to manage, control, administer and operate the business and affairs of the Company for the purposes herein stated, and to make all decisions affecting such business and affairs, including, without limitation, for Company purposes.."
Accordingly, SPE, as the duly appointed general manager of the LLC, conducts its affairs as general manager, as it sees fit. How SPE does so, in this case by allegedly engaging the assistance of other members, but not including CM, is perhaps a vexing and distasteful issue for CM to be sure, however, it does not rise to:the level as a ground for dissolution of this limited liability corporation. (Kassab, 195 A.D.3d 830.)
In any event, as counsel for the petitioner has pointed out, the valuation proceeding pending before this court may provide the petitioner a ready legal alternative to obtain the same relief he aspires to achieve in this dissolution and accounting proceeding, namely, an accounting of the fair valuation of the company and fair remuneration for his shares.
Accordingly, respondents' motion is granted, the cross motion for a stay is denied as moot, the separate motion for sanctions is denied, and it is, ORDERED, that the petition is denied and the proceeding is dismissed.
This constitutes the Order of the Court.