Opinion
May 25, 1999
Appeal from the judgment, Supreme Court, New York County (Herman Cahn, J.).
In early 1985, plaintiffs and defendants Stanley Tollman, Monty Hundley, Sanford Freedman and Harvey Martin formed a limited partnership, California Days, Ltd. (Cal Days), for the purpose of acquiring and operating eight motels and developing other sites in California and Nevada. In furtherance of that purpose, the partnership entered into a purchase agreement with Days Inns of America, Inc. Defendants, however, subsequently formed another limited partnership, California Hotel Properties Limited Partnership (Cal Hotel), to which it transferred Cal Days's purchase rights without consideration and to the exclusion of plaintiffs. The purchase of the motels, originally to be made by Cal Days, was then ultimately consummated through Cal Hotel. Although plaintiffs were wronged by the transfer of Cal Days's assets, they did not establish any damages with a reasonable degree of certainty ( see, Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261-262). Far from generating profits, the properties, operated at a staggering loss, were ultimately foreclosed upon by lenders, and even subsequent to foreclosure left an outstanding indebtedness of millions of dollars. Defendants' financial statements, which plaintiffs characterize as appraisals of the properties' value (at an amount greater than the purchase price), actually reflect mere projections of capitalized income over a period of 10 to 11 years, which were highly speculative and in the end completely erroneous. Since plaintiffs are not entitled to damages, the issue of prejudgment interest is academic.
The motion court's expansion of Matter of Birnbaum v. Birnbaum ( 157 A.D.2d 177, 191), which permitted the award of attorneys' fees for a testamentary trustee's breach of fiduciary duty to cases, involving a breach of fiduciary duty in a non-testamentary context, is unsupported by the law, unwarranted, and, even if there had been a sustainable recovery by the individual limited partner plaintiffs herein, inconsistent with the limiting language of Partnership Law § 121-1002 Partnership(e).
The motion court, however, properly limited plaintiffs' potential liability for transfer taxes upon property held by Orlandinn, Ltd., another limited partnership in which the parties participated, to their 7.17% partnership interest, rather than the full amount of the transfer taxes, since plaintiffs were not required to consent to a means of syndication by which the transfer tax could have been avoided and, moreover, could reasonably have withheld consent to a syndication from which they had been wrongfully excluded.
Concur — Ellerin, P. J., Sullivan, Rosenberger and Lerner, JJ.