Bodner v Grunstein

Bodner v Grunstein 2015 NY Slip Op 02849 Decided on April 2, 2015 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on April 2, 2015
Mazzarelli, J.P., Sweeny, DeGrasse, Feinman, Gische, JJ.
653442/11 -131 14700A 14700

[*1]14701 & Allen Bodner, etc., Plaintiff-Appellant,

v

Harry Grunstein, Defendant-Respondent, Leonard Grunstein, et al., Defendants-Respondents, John Does, #1-10, et al., Defendants, DMV Funding LLC, et al., Nominal Defendants.

Nathan M. Ferst, New York, for appellant.

Davidoff Hutcher & Citron LLP, New York (Michael Wexelbaum of counsel), for Harry Grunstein, respondent.

Zuckerman Spaeder LLP, New York (James Sottile of counsel), for Leonard Grunstein and Murray Forman, respondents.

Arent Fox LLP, New York (Allen G. Reiter and Jennifer Bougher of counsel), for Fundamental Long Term Care Holdings LLC, Thi of Baltimore, Inc. and the Thi-named Entities (other than Thi of Texas at Samaritan Hospice, LLC and Thi of Michigan at Detroit, LLC), respondents.

Order, Supreme Court, New York County (Lawrence K. Marks, J.), entered April 25, 2013, which, to the extent appealed from as limited by the briefs, granted defendants' motion to dismiss the derivative causes of action, unanimously reversed, on the law, with costs, and the motion denied. Appeal from order, same court and Justice, entered December 17, 2013, to the extent it denied plaintiff's motion to renew, unanimously dismissed, without costs, as academic. Appeal by Harry Grunstein from order entered April 25, 2013, unanimously withdrawn, without costs, pursuant to the stipulation of the parties dated January 28, 2015.

Plaintiff set forth sufficiently particularized facts to raise a reasonable doubt that defendant Harry Grunstein, the only individual upon whom demand to bring suit could be made, was disinterested and independent, and thereby to establish that a demand would have been futile (see Aronson v Lewis, 473 A2d 805, 814 [Del 1984], overruled on other grounds Brehm v Eisner, 746 A2d 244 [Del 2000]). The potential for this individual's liability was more than a "mere threat" (see Rales v Blasband, 634 A2d 927, 936 [Del 1993]; In re China Agritech, Inc. Shareholder Derivative Litig., 2013 WL 2181514, *16, 2013 Del Ch LEXIS 132, *43-44 [Del Ch 2013]). His codefendant brother, although not an officer, director or member of the nominal defendant entities, was the prime mover in the underlying transactions complained of, and, indeed, claimed to control the entities notwithstanding that Harry Grunstein held the management

positions in them (see In re China Agritech, 2013 WL 2181514 at *20, 2013 Del Ch LEXIS 132 [*2]at *60 [family relationships raise reasonable doubt as to director's lack of independence]; Mizel v Connelly, 1999 WL 550369, 1999 Del Ch LEXIS 157 [Del Ch 1999] [same]; Harbour Fin. Partners v Huizenga, 751 A2d 879, 889 [Del Ch 1999] [same]). Moreover, Harry Grunstein had operated as a willing extension of his brother in related transactions that resulted in litigation (see Schron v Grunstein, 105 AD3d 430 [1st Dept 2013]).

Contrary to defendants' contention, this action is not barred by the dismissal without prejudice of a prior action.

Defendants' request for costs is denied.

M-131 - Bodner v Grunstein, et al.

Motion to take judicial notice

granted to the extent of supplementing

the record with the amended order,

Supreme Court, New York County

(Melvin L. Schweitzer, J.), entered

on or about August 24, 2011, and

otherwise denied.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: APRIL 2, 2015

CLERK