Opinion
46/B - 2014
04-21-2015
Application of Tamara Pewzner, as Co-Executor of the Estate of JACOB ELBERG, a/k/a YAAKOV ELBERG, Deceased, To Recover Property Withheld by RUBEN ELBERG, the Co-Executor of the Estate of JACOB ELBERG, a/k/a YAAKOV ELBERG and belonging to the Decedent.
For Petitioner: Howard Garfinkle, Esq., Lauterbach, Garfinkel, Damast & Hollander For Respondent: Peretz Bronstein, Esq., Bronstein, Gewirtz, Grossman, LLC; and Levi Huebner, Esq., Levis Huebner & Associates, P.C.
For Petitioner:
Howard Garfinkle, Esq., Lauterbach, Garfinkel, Damast & Hollander
For Respondent:
Peretz Bronstein, Esq., Bronstein, Gewirtz, Grossman, LLC; and Levi Huebner, Esq., Levis Huebner & Associates, P.C.
Diana A. Johnson, J.
In this proceeding to turnover assets allegedly belonging to the estate, respondent Ruben Elberg moves to dismiss the petition pursuant to CPLR §§3211(a)(1), (5) and (7).
The testator died on December 20, 2013. His will, dated August 23, 2012, was admitted to probate and letters testamentary issued to his daughter, petitioner Tamara Pewzner, and his son, respondent Ruben Elberg "Ruben") on January 16, 2014.
The petitioner brought this proceeding for the turnover of assets allegedly belonging to the estate, namely two limited liability corporations, Royal Real Estate Management LLC ("Royal RE Management") and Royal One Real Estate LLC ("Royal One RE") (collectively referred to as the "LLC's"), and three corporations owning taxi cab medallions: Merill Transit, Inc. ("Merill"), Spindle Trans. Corp ("Spindle") and Jarub Trans. Corp. ("Jarub") (collectively referred to as "medallion corporations"). The petitioner alleged that the testator was the sole owner of these assets and that Ruben claimed to have a 40% interest in the LLC's and to be the sole owner of Merill and Spindle and the 50% owner of Jarub.
Pending the hearing and determination of the proceeding, Ruben was restrained from transferring or conveying title or any interest in the LLC's, and from withdrawing any monies in his individual capacity from the medallion corporations, as well as accounts maintained by JEB Management LLC ("JEB") and Shefa Funding LLC., two corporations that managed the medallion corporations.
Ruben moved to dismiss the petition pursuant to CPLR §§3211(a)(1), (a)(5) and (a)(7). In the alternative, he asked the Court to modify the restraining order to authorize him to withdraw funds from JEB and to require petitioner to file an undertaking. Ruben's affidavit in support did not address dismissal pursuant to CPLR §3211(a)(5) and (7). Accordingly, they are denied. This leaves his claim that the proceeding should be dismissed because of a defense based upon documentary evidence.
A party seeking to dismiss a claim pursuant to CPLR §3211(a)(1) "has the burden of submitting documentary evidence that resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim." (Tooma v Grossbarth, 121 AD3d 1093, 1094-1095 [2d Dept 2014], quoting Mazur Bros. Realty, LLC v State of New York, 59 AD3d 401, 402 [2d Dept 2009]). A motion to dismiss based upon documentary evidence has been characterized as a "narrowly circumscribed and focused motion" (Fontanetta v John Doe I, 73 AD3d 78, 88 [2d Dept 2010]).
The party seeking dismissal on the ground of documentary evidence has the burden of showing that "the documentary evidence submitted utterly refutes plaintiff's factual allegations' (Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 [2002]; see Greenapple v Capital One, N.A., 93 AD3d 548, 550 [1st Dept 2012]), and conclusively establishes a defense to the asserted claims as a matter of law.'" (Lezzma v Cedano, 119 AD3d 479, 479 [2d Dept 2014] quoting Weil, Gotshal, Manges, LLP v Fashion Boutique of Short Hills, Inc. 10 AD3d 267, 270-271 [1st Dept 2004]; see also Goshen v Mutual Life Ins. Co. Of NY, 98 NY2d 314 [2002]; Leon v. Martinez, 84 NY2d 83 [1994]; Rodolico v Rubin & Licatesi, P.C., 114 AD3d 923 [2d Dept 2014]). The Court's responsibility on such a motion is to determine: (1) whether the documents are the type of documents that can be considered "documentary evidence" for purposes of CPLR §3211(a)(1); (2) whether the documents utterly refute the petitioner's claim; and (3) whether the documents are undeniable.
"Documentary evidence," for purposes of a motion to dismiss, is usually limited to the type of evidence that tends to be self-proving, such as a deed or contract (New York Tel. Co. v Mobil Oil Corp, 99 AD2d 185, 192 [1st Dept 1984]). "[J]udicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable', would qualify as documentary evidence' in the proper case." (Fontanetta v John Doe I, 73 AD3d 78, 84-85 [2d Dept 2010] quoting Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3211:10 at 21-22).
The document must utterly refute the plaintiff's allegations or conclusively establish a defense as a matter of law (Biro v Roth, 121 AD3d 733 [2d Dept 2014]). Thus, in Attias v Costiera (120 AD3d 1281 [2d Dept 2014]), a contract of sale and rider, although deemed documentary evidence, was not enough to dismiss a complaint because it did not "utterly refute" plaintiff's breach of contract claim or establish a defense as a matter of law.
Finally, the document must be "unambiguous, authentic, and undeniable" (Attias v Costiera, 120 AD3d 1281, 1282 [2d Dept 2014] quoting Granada Condominium III Assn. v Palamino, 78 AD3d 996, 996-997 [2d Dept 2010]; see also Cives Corp. v George A. Fuller, Co., Inc., 97 AD3d 713 [2d Dept 2012]). In Tooma v Grossbarth ( 121 AD3d 1093 [2d Dept 2014]), court orders that failed to refute claim of legal malpractice because they did not address the merits of the underlying action were held insufficient to dismiss the claim under 3211(a)(1).
The cases do not discuss what evidence may be used to dispute the validity or effect of a document offered to support a motion to dismiss based upon documentary evidence. However, there is no reason to limit rebuttal evidence to the same strict standards of documents offered to dismiss a claim. Evidence that would tend to dispute the validity or effect of the proffered document should be considered. While affidavits are not considered "documentary evidence" to support a motion to dismiss pursuant to CPLR §3211(a)(1) (see Tsimerman v Janoff, 40 AD3d 242 [1st Dept 2007]; Berger v Temple Beth-El of Great Neck, 303 AD2d 346 [2d Dept 2003]), affidavits that raise a question about the validity or import of a document should satisfy petitioner's burden to establish the existence of material issues of fact so as to defeat a motion to dismiss based upon documentary evidence.
The Medallion Corporations
Turning first to the medallion corporations, Ruben submitted a copy of a certificate issued by the NYC Taxi & Limousine Commission ("TLC") dated February 25, 2008, a copy of the TLC document entitled "Mini Fleet Closing", dated July 1, 1982, and a copy of the original Application for Taxicabs, filed with TLC on July 1, 1982, to establish that he is sole owner of Spindle.
Ruben submitted a copy of a certificate issued by the NYC Taxi & Limousine Commission ("TLC") dated February 25, 2008, a copy of a TLC document entitled "Mini Fleet Closing", dated June 21, 1984, and a copy of the original Application for Taxicabs, filed with TLC on June 21, 1984, to establish that he is sole owner of Merill.
Ruben submitted a copy of a certificate issued by the NYC Taxi & Limousine Commission ("TLC") dated February 25, 2008, a copy of a TLC document entitled "Mini Fleet Closing", dated January 18, 1983, and a copy of the original Application for Taxicabs, filed with TLC on January 18, 1983, to establish that he is a 50% owner of Jarub.
The letters, e-mails, and financing statements Ruben submitted in support of his motion do not constitute "documentary evidence" for purposes of a CPLR 3211(a)(1) motion to dismiss (Cives Corp. v George A. Fuller, Co., Inc., 97 AD3d 713 [2d Dept 2012]; Fontanetta v John Doe I, 73 AD3d 781[2d Dept 2010]). The TLC documents, however, create a prima facie case of Ruben's interest in the medallion corporations.
The burden then shifts to petitioner to show that there are questions of fact as to the ownership of the medallion corporations. Petitioner argues that these documents merely show that Ruben was the owner of record of the medallion corporations, and claims that Jacob was the beneficial owner. Petitioner alleges that Jacob provided the money to purchase the taxi cabs and allowed the corporations to be held in Ruben's name, upon Ruben's promise that he would convey the corporations back to Jacob whenever Jacob requested it.
Ruben denies that Jacob provided the funds to purchase the taxi cab medallions, claiming that he used profits from a diamond business he was engaged in.
In addition, petitioner submitted various documents, including corporate K-1's executed by the medallion corporations, Jacob's personal income tax returns, and the affidavits of the accountant for the medallion corporations and the attorney who acted as broker and insurance agent for the medallion corporations, in support of her claim that Jacob was the sole owner of the medallion corporations.
Finally, Ruben admitted that the income of the medallion corporations was administered by JEB. Petitioner asserts, and Ruben does not deny, that JEB was solely owned by Jacob. W-2 statements show that Ruben received wages from JEB. These documents establish that there is a question of fact as to Ruben's ownership of the medallion corporations.
Based on the above, Ruben has failed to establish by documentary evidence that he is the sole owner of Merill and Spindle, and the 50% owner of Jarub, as a matter of law.
The LLC's
Turning next to the LLC's, Ruben submitted a copy of the operating agreement of Royal RE Management dated June 13, 2001 and a written consent of members dated June 14, 2001, and copies of the operating agreements of Royal One RE, the first dated March 2, 2005, and the second dated January 1, 2008, a written consent of members dated March 3, 2005, a franchise agreement dated April 30, 2009, and e-mails, letters and financing documents that he claims establishes his 40% ownership in the LLC's as a matter of law. As in the case of the medallion corporations, the letters, e-mails, franchise and financing statements do not constitute "documentary evidence" for purposes of a CPLR 3211(a)(1) motion to dismiss (Fontanetta v John Doe I, 73 AD3d 781[2d Dept 2010]; Cives Corp. v George A. Fuller, Co., Inc., 97 AD3d 713 [2d Dept 2012]). For the same reason, the corporate resolutions dated February 12, 2014 are not considered "documentary evidence" for purposes of a motion to dismiss pursuant to CPLR §3211(a)(1) (Rabos v R & R Bagels & Bakery, Inc., 100 AD3d 849 [2d Dept 2012]).
This leaves the operating agreements. Limited liability corporations are a statutory creation, first authorized by enactment of the Limited Liability Corporation Law by the legislature in 1994 (L 1994, ch 576). A limited liability company is a hybrid business entity, combining the tax aspects of a partnership with the limited liability of a corporation. One of the basic principles underlying the limited liability corporation law is that its members are permitted broad flexibility in structuring the limited liability company pursuant to an operating agreement.
An LLC is formed at the time of filing of its articles of organization with the Department of State. The filing of articles of organization is conclusive evidence of the formation of an LLC (Limited Liability Corporation Law §203[d]). Ruben's affidavit does not indicate that the LLC's operating agreements were filed with the Department of State. This is not necessarily a fatal defect to the motion to dismiss (see Boslow Family Ltd. Partnership v Glickenhaus & Co., 7 NY3d 664 [2006]). In the instant case, the operating agreements may be considered as documentary evidence whether or not filed with the Secretary of State, since testator's execution of the documents is not contested (see e.g. Cherfas v Wolf, 17 Misc 3d 1102[A], 2007 NY Slip Op 51802[U], *4-5 [Sup Ct, Kings County 2007]). These documents create a prima facie case for Ruben's 40% interest in the LLC's.
It thus becomes the petitioner's burden to establish that the documents do not establish ownership as a matter of law. Petitioner denies that Jacob intended to give Ruben a 40% interest in the LLC's. Among the documents submitted by petitioner to refute the documentary evidence are tax returns for the LLC's, mortgage loan documents executed in 2006 and the affidavits of the two accountants for the LLC's, all stating that Jacob was the sole owner of the LLC's. As in the case of the medallion corporations, this is sufficient to raise a question of fact about the ownership of the LLC's. Based on the above, Ruben has failed to establish that the documents establish his 40% membership in the LLC's as a matter of law.
As for that part of Ruben's motion seeking distributions from JEB Management LLC, petitioner denied that this is Ruben's sole source of income and Ruben failed to provide any documentation supporting this claim. Accordingly, Ruben's request for interim distributions from JEB Management LLC is denied, without prejudice.
Finally, inasmuch as the temporary restraining order maintains the status quo between the parties and Ruben has failed to show any particular damage to him as a result of the restraining order, the Court sees no reason to burden the estate with the expense of an undertaking.
Based on the above, Ruben's motion to dismiss the proceeding is denied. The temporary restraining order is modified, however, by the Court, sua sponte, to allow Ruben Elberg to pay estate administrative expenses in fulfilment of his duties as co-executor of the estate.
This constitutes the decision and order of the Court.
/S/
HON. DIANA A. JOHNSON
S u r r o g a t e
Dated: April 21, 2015