Berger v Pavlounis

[*1] Berger v Pavlounis 2011 NY Slip Op 50973(U) Decided on April 14, 2011 Supreme Court, New York County Bransten, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 14, 2011
Supreme Court, New York County

George B. Berger, as Administrator of the Estate of Meyer Berger, Deceased, Suing Individually and Derivatively on Behalf of Nominal, Defendant West 29 Street Parking, Inc., Plaintiff,

against

James P. Pavlounis, 587 PARKING, INC., SETH KAUFMAN, OLYMPIC PROPERTIES, LLC, JAMIE'S PARKING CORP. d/b/a JAMIE'S AUTOBODY, CHELSEA OUTDOOR & ANTIQUE COLLECTIBLES MARKET, INC., 100 WEST 26th STREET GARAGE CORP., ISP PROPERTIES LLC, OLYMPIC PARKING SYSTEMS, LLC, CAR PARK 29, LLC, CHELSEA PARKING LOT, INC., 724 PARKING CORP., 77-15 GARAGE CORP., 112 WEST 25th STREET PARKING, INC., and JOHN DOES NUMBERS 1 THROUGH 10 AND XYZ COMPANIES 1 THROUGH 10, Fictitious Names, True Names Unknown, Parties Intended Being Other Persons Liable for the Wrongful Transactions Complained of Herein, Defendants, -and- WEST 29th STREET PARKING, INC., Nominal Defendant.



103170/08

 

Counsel on the matter are Peter A Mahler, Esq. and Hillary A. Frommer, Esq., of Farrell Fritz, P.C. for Plaintiff and John A. Dalley, Esq. for Defendants.

Eileen Bransten, J.

In the instant motion (motion sequence number 006), George Berger, as administrator of the estate of Meyer Berger ("Plaintiff"), sues individually and derivatively on behalf of nominal defendant West 29th Street Parking, Inc. (the "Corporation"). The defendants relevant to this motion are James P. Pavlounis ("Pavlounis") and the following business entities allegedly owned and controlled by Pavlounis: 587 Parking, Inc., Olympic Properties, LLC, Jamie's Parking Corp., Chelsea Outdoor & Antique Collectibles Market, Inc., 100 West 26th Street Garage Corp., ISP Properties, LLC, Olympic Parking Systems, LLC, Car Park 29, LLC, Chelsea Parking Lot, Inc., 724 Parking Corp., 77-15 Garage Corp. and 112 West 25th Street Parking, Inc. (collectively, the "Pavlounis Defendants").

The motion seeks an order, pursuant to CPLR 3212, granting partial summary judgment on the eighth cause of action asserted in Plaintiff's amended complaint and awarding damages in the amount of $2,182,672.10, plus interest. For the reasons discussed herein, the motion is granted to the extent set forth herein.

Background

The following facts are supported by two volumes of documents and deposition transcripts annexed as exhibits to Plaintiff's Rule 19-a Statement filed in connection with this motion ("Plaintiff's Statement").[FN1] The Corporation was formed in 1953 for the purpose of owning and operating a parking lot at 124 West 29th Street, New York City (the "Parking Lot"). Plaintiff's Statement, ¶ 1. Meyer Berger, the father of George Berger, was one of the Corporation's original nine shareholders. Id., ¶ 2. When Meyer Berger died in 1991, he owned 23 and 21/33 shares of common stock, representing 23.63% of all of the Corporation's issued and outstanding shares. Id., ¶ 4. George Berger was duly appointed as the administrator of his father's estate. Id., ¶ 5. In 2000, Pavlounis, a shareholder of the Corporation and the owner of 587 Parking Inc. ("587 Parking"), which operated the Parking Lot under a lease from the Corporation, purchased all the shares of the Corporation, except for Berger's 23.63%. Id., ¶ 6. Since then, Pavlounis held himself out as the president and sole director of the Corporation, and operated the Corporation as if the Berger estate did not exist. Id., ¶¶ 7, 12.

In 2000, Pavlounis caused the Corporation to borrow $640,000 from European American Bank ("EAB") to finance his buyout of all the Corporation's shareholders, except Berger. Id., ¶ 15. In 2004, he caused the Corporation to take out a $1.5 million mortgage loan with M & T Real Estate Trust ("M & T") to refinance the EAB loan. Pavlounis allegedly diverted $400,000 of the loan proceeds for his personal benefits and for the benefits of several Pavlounis Defendants. Id., ¶¶ 17-27. In 2005, he caused the Corporation to borrow $100,000 from Susan Kaufman, mother of attorney-defendant Seth Kaufman, allegedly knowing that the Corporation did not need the money and intending to use the proceeds for his own benefits. Id., ¶ 34.

In January 2006, Pavlounis caused the Corporation to sell its sole asset, the Parking [*2]Lot, for $9,525,000. Pavlounis allegedly falsely stated in the conveyance deed that the sale was approved by the Corporation's shareholders, when no shareholders' meeting or vote was held to approve the sale. Id., ¶¶ 38-40. Thereafter, Pavlounis bought four properties in the name of Corporation as tax-deferred "1031 exchanges": the Bronx Property ("car wash"), the Yonkers Property ("townhouse"), the Chelsea Condominium ("condominium unit") and the Upper Manhattan Property ("apartment building"). Id., ¶ 43. After the 1031 exchanges, the Corporation received about $3.04 million in net proceeds from the Parking Lot sale. Id., ¶ 44.

Pavlounis sold the Parking Lot, using part of the proceeds to pay the settlement that involved litigation against his own family members (the "Family Litigation"). Id., ¶ 46. In the Family Litigation, where Berger was a nominal defendant, Pavlounis sought a declaration of his ownership interest in 587 Parking and the Corporation, which his mother and sisters also claimed were part of his father's (Steve Pavlounis's) estate. Id., ¶ 47. Under the settlement reached in the Family Litigation, Pavlounis agreed to pay his mother $1.1 million. Pavlounis paid his mother $400,000 within four days after the Parking Lot sale, allegedly using that sale's proceeds. Id., ¶¶ 49-50. He also allegedly used the proceeds from the sale of the Parking Lot to pay the Family Litigation attorneys, as well as to pay off the M & T loan and the Kaufman loan, which were never used for any corporate purpose. Id., ¶¶ 51-52. Soon after the Parking Lot sale, Pavlounis withdrew money from the proceeds for his benefit and the benefit of the Pavlounis Defendants. Id., ¶¶ 53-61. By December 2006, he depleted the Corporation's accounts, which held more than $3 million 11 months earlier from the Parking Lot sale. Id., ¶ 62.

In August 2007, Pavlounis caused the Corporation to obtain a mortgage loan for the Chelsea Condominium. In obtaining the loan, Pavlounis falsely stated that 587 Parking was the Corporation's sole shareholder and used part of the loan proceeds to pay for the expenses of several Pavlounis Defendants and his own Family Litigation attorneys. Id., ¶¶ 70-78. He also squandered the Chelsea Condominium by, inter alia, not collecting rent from his own attorney ("Kaufman") who leased the premises, not paying rent to the Corporation for his own use of the premises and/or the use by one Pavlounis Defendant. Moreover, Pavlounis allegedly diverted the proceeds from the sale of the condominium building's development rights (about $130,000) for his own benefit and the benefit of the Pavlounis Defendants. Id., ¶¶ 81-87. In September 2009, Pavlounis stopped paying the loan on the condominium unit, which resulted in a foreclosure proceeding against the Corporation. Id., ¶ 88. He also stopped paying the mortgage on the Upper Manhattan Property, even though he collected rents from the tenants. A foreclosure proceeding pertaining to that property was then also brought against the Corporation. A subsequent auction of the property in May 2010 resulted in a significant loss to the Corporation. Id., ¶¶ 90-96.

With respect to the Bronx Property and the Yonkers Property, which were leased to tenants, Pavlounis diverted and deposited the rental income from these properties into his personal bank account or the account of a Pavlounis Defendant. The Corporation did not [*3]receive rental income from such properties. Id., ¶¶ 97-107.

After this action was commenced against Pavlounis and the Pavlounis Defendants in 2008, Pavlounis repeatedly failed to comply with various orders of the court, which resulted in the appointment of a temporary receiver for the Corporation in February 2010. By order dated May 17, 2010, the court granted Plaintiff's petition to dissolve the Corporation, and appointed the receiver as permanent receiver for the Corporation. Id., ¶¶ 108-110.

In the amended complaint, Plaintiff asserts eight causes of action, including breach of fiduciary duty, unjust enrichment, gross negligence, constructive trust and accounting. The eighth cause of action, asserted against all defendants except Kaufman, alleges that the defendants committed wrongful conduct, including fraud and breach of fiduciary duty, as described in the Plaintiff's Statement. Plaintiff asserts that, had the defendants fulfilled their fiduciary responsibilities, he would have received his rightful share of the proceeds from the Parking Lot sale in an amount not less than $2.25 million, which is his pro-rata share (23.63%) of the $9.525 million sale proceeds.

As noted above, in the instant motion, Plaintiff seeks summary judgment on the eighth cause of action and an award of money damages. The motion is opposed by the defendants.

Discussion

In setting forth the standards for granting or denying a motion for summary judgment, pursuant to CPLR 3212, the Court of Appeals, in Alvarez v Prospect Hospital, 68 NY2d 320, 324 (1986), stated:

As we have stated frequently, the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. Once this showing has been made, however, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action [internal citations omitted].

The courts uniformly scrutinize motions for summary judgment, as well as the facts and circumstances of each case, to determine whether relief may be granted. Andre v Pomeroy, 35 NY2d 361, 364 (1974) (because entry of a summary judgment "deprives the litigant of his day in court it is considered a drastic remedy which should only be employed when there is no doubt as to the absence of triable issues"); Martin v Briggs, 235 AD2d 192, 196 (1st Dept 1997) (in considering a motion for summary judgment, "evidence should be analyzed in the light most favorable to the party opposing the motion"). Conclusory allegations unsupported by competent evidence, however, are insufficient to defeat a summary judgment motion. Alvarez, 68 NY2d at 324-25. On the other hand, summary judgment is generally granted in favor of the movant if there are no material and triable [*4]issues of fact. Francis v Basic Metal, Inc., 144 AD2d 634 (2d Dept 1988).

Defendants Failed To File The Requisite Rule 19-a Statement

As noted, in support of Plaintiff's partial summary judgment motion, Plaintiff's Statement was submitted in compliance with Rule 19-a of the Rules of the Commercial Division of the Supreme Court. 22 NYCRR 202.70. Pavlounis and the Pavlounis Defendants (collectively, the "Defendants") did not file their requisite Rule 19-a statement, and failed to advance a justifiable explanation for such failure. The Appellate Division of the First Department has held that a party's failure to file a responsive statement could be deemed an admission of the assertions made in the other party's properly filed Rule 19-a statement. Moonstone Judge, LLC v Shainwald, 38 AD3d 215, 216 (1st Dept 2007).

Also, Defendants' opposition brief is not supported by an affidavit from an individual with personal knowledge of the facts. Instead, Defendants rely upon an affirmation of their attorney, which consists primarily of assertions not entirely relevant to the subject matter at issue (i.e., breach of fiduciary duty) or, as discussed fully below, are otherwise unsupported by citations to admissible evidence. Upon these reasons, this court must deem the factual assertions in the Plaintiff's Statement admitted for purposes of the instant motion for summary judgment. Callisto Pharm., Inc. v Picker, 74 AD3d 545, 546 (1st Dept 2010) (affidavit "bereft of citations" to evidentiary support was ruled "inadequate" to contravene statement of undisputed facts).

Defendants Breached Statutory and Common-Law Duties

Governing Sale of Significant Corporate Assets

In support of Plaintiff's claim for breach of fiduciary duty, Plaintiff asserts that Defendants have failed to comply with the statutory and common-law fiduciary duties. With respect to the statutory duties, section 909 (a) of the Business Corporation Law ("BCL") provides, in relevant part, that the sale of all or substantially all the assets of a corporation, if not made in the regular course of the business, shall be authorized only where: (1) the board of the corporation authorizes the proposed sale and directs its submission to a vote by shareholders; (2) notice of the meeting is given to each shareholder; and (3) the holders of two-thirds of the shares approve the sale. BCL § 909 (a). A violation of Section 909 (a) may give rise to, inter alia, a claim for monetary damages by an aggrieved shareholder, particularly where the directors and officers of a corporation have engaged in conduct violative of their fiduciary obligations. Collins v Telcoa Intl. Corp., 283 AD2d 128, 132-33 (2d Dept 2001).

It is undisputed that Pavlounis, the only director and majority shareholder of the Corporation, failed to give notice to Plaintiff or seek his vote regarding the sale of the Parking Lot, which was then the Corporation's sole asset. Indeed, as noted above, in the deed conveying the Parking Lot, Pavlounis misleadingly represented that the conveyance was "authorized by the affirmative vote of shareholders holding more than two-thirds (2/3) of Grantor's outstanding shares" (Mahler Affirmation, Ex. 28), but no notice of a shareholders' [*5]meeting or vote was ever given or undertaken. This is a violation of the statutory duties imposed under BCL § 909 (a) regarding the sale of corporate assets.

Moreover, New York law is clear that, in a close corporation (such as the Corporation), a majority shareholder (such as Pavlounis) owes fiduciary duties to other shareholders (such as Plaintiff) when undertaking corporate actions (such as sale of the Parking Lot). Even if the majority shareholder has the apparent unlimited right under a shareholder agreement to act in a certain manner, the contractual right "may not be exercised solely for personal gain in such a way as to deprive the other party of the fruits of the contract." Richbell Info. Servs., Inc. v Jupiter Partners, L.P., 309 AD2d 288, 302 (1st Dept 2003); Fellner v Morimoto, 52 AD3d 352, 353-54 (1st Dept 2008) ("where a wrongdoer has breached an obligation to a shareholder which is independent of any duty owing to the corporation, the shareholder has an individual cause of action") (quotation marks in original, citations omitted).

It is undisputed that the sale of the Parking Lot for over $9.5 million was undertaken without providing Plaintiff a chance to share in the sale proceeds, and the amended complaint as well as the Plaintiff's Statement adequately allege that Defendants diverted the proceeds for their own benefits. This constitutes a breach of the statutory and common-law fiduciary duties. Plaintiff has therefore posited a prima facie case for summary judgment on liability for his eighth cause of action.

Defendants' Arguments in Opposition Are Without Merit

Importantly, Defendants do not specifically deny that they breached the fiduciary obligations owed to Plaintiff. Instead, in their opposition to the instant motion, they argue: (1) any of Plaintiff's claims for breaches of fiduciary duties prior to June 2005 are timed-barred; (2) Plaintiff's claims sounding in fraud are untimely; (3) there are issues of fact as to whether Plaintiff was partly responsible for the loss of the Upper Manhattan Property; and (4) there are issues of fact as to whether certain payments made by Defendants had benefitted the Corporation, which would reduce any damages to be granted in favor of Plaintiff. Defendants' Opposition Brief, at 3-7.

Defendants' argument that claims for breaches of fiduciary duties prior to June 2005 are time-barred is moot or irrelevant. Plaintiff's eighth cause of action is the only one for which Plaintiff currently seeks summary judgment. Plaintiff's claim primarily alleges that Defendants breached their fiduciary duties by selling the Parking Lot in January 2006 and thereafter depriving Plaintiff of his share of the proceeds from that sale. Amended Complaint, ¶¶ 110-116.

While Plaintiff's eighth cause of action may be construed to include claims for breaches of fiduciary duties that predated the Parking Lot sale or the June 2005 time bar, Plaintiff concedes or acknowledges that he is now limiting this claim to those acts that arose in connection with the sale, and "does not seek any damages for those specific acts of waste, looting, and diversion [that occurred before June 2005]." Plaintiff's Reply, at 6-7. Further, the law is clear that a breach of fiduciary duty claim that seeks money damages, as Plaintiff [*6]does here, is"an action to recover damages for an injury to property," and has a limitations period of three years. CPLR § 214 (4); Kaufman v Cohen, 307 AD2d 113, 118 (1st Dept 2003). Because the Parking Lot sale took place in January 2006, and this action was commenced in February 2008, the breach of fiduciary duty claim is timely. Therefore, it is unnecessary to discuss herein those alleged breaches of fiduciary duties that occurred prior to June 2005.

Defendants next argue that the two year statute of limitations under CPLR § 213 (8) applies to the claims sounding in fraud,[FN2] and that there are issues of fact as to when Plaintiff knew or should have known that "the sale of the subject parking lot in January 2006 was eminent [sic]." Defendants' Opposition Brief, at 4-5. Specifically, Defendants point to Plaintiff's deposition testimony, which indicated that Plaintiff had directed his then attorney (Marvin Greenwald) to demand the Corporation's books and records, and had further directed Greenwald to bring suit against Pavlounis (but did not do so because of the commencement of the Pavlounis' Family Litigation in 2004). Defendants thus argue that "there is not a legal excuse for plaintiff's failure of due diligence ... [and] there is nothing in the record to suggest that plaintiff could not have litigated his fraud claims against Pavlounis in the context of [the Family Litigation]." Id. at 5.

Defendants' argument is unpersuasive. The unopposed record indicates that Defendants denied Plaintiff access to the books and records of the Corporation. Plaintiff's Statement, ¶¶ 12-14; Defendants' Amended Answer, ¶ 3. Had Defendant not denied access, Plaintiff may have been able to discover the fraud. Berger Affidavit, ¶¶ 8, 35. It is also uncontested that Defendants' fraud was not discovered until early 2008, in the course of Plaintiff's filing of this action and the petition to dissolve the Corporation, after its sole asset was sold without Plaintiff's consent and knowledge. Dalley Affirmation Ex. H, Greenwald Affidavit, ¶¶ 4-8; Berger Affidavit, ¶¶ 16, 22. Thus, Defendants' conclusory allegation that Plaintiff failed to exercise due diligence to discover the fraud is unsupported by the evidence. Moreover, "the case law in New York clearly holds that a cause of action for breach of fiduciary duty based on allegations of actual fraud is subject to a six-year limitations period." Kaufman v Cohen, 307 AD2d at 119 (citations omitted). Plaintiff's fraud-based breach of fiduciary duty claim, encompassed in his eighth cause of action, is therefore also timely, because CPLR § 213 (8) states that such claim can be brought within the greater of six years from its accrual or two years after its discovery. As noted above, Plaintiff does not now seek damages for this claim in the instant motion, and the court is not required to determine the merits of such claim now.

Defendants next argue that Plaintiff might be partly responsible for the loss of the [*7]Upper Manhattan Property to foreclosure, due to Plaintiff's refusal to agree to sell the Bronx Property whereby its proceeds could be used to reinstate the mortgage loan for the Upper Manhattan Property. This argument is also unpersuasive. Notably, Defendants' counsel represented that the arrearage as to the Upper Manhattan Property was $199,000, and that amount had to be paid to reinstate the mortgage and halt the foreclosure. Mahler Reply Affirmation, Ex. 2 (transcript of hearing held on 11/17/09), at 5. Under the draft sales contract for the Bronx Property, even though the purported purchaser, the tenant on the property, agreed to buy the property for $800,0000, the tenant was to pay less than $100,000 cash at closing after prorations and adjustments, and execute a mortgage note of $700,000 Id., Ex. 1 (draft sales contract). Thus, the proposed sale of the Bronx Property would generate less than $100,000 at closing, an insufficient amount to bring current the Upper Manhattan Property's defaulted loan. Whether or not Plaintiff had agreed to the proposed sale, the sale would not have stopped the Upper Manhattan Property foreclosure that was caused by Defendants.

Further, Defendants' argument is irrelevant to the issue of breach of the fiduciary duty. The amended complaint asserts that Defendants used part of the proceeds from the Parking Lot sale to purchase "1031 exchange" properties without Plaintiff's knowledge and consent, and that Defendants stopped paying the mortgage loans on the properties, which resulted in foreclosures against such properties, all to the detriment of Plaintiff. Even if, in arguendo, Defendants were to prevail on their argument, it would only serve as a mitigating factor in determining damages that would be awarded Plaintiff flowing from the breach of the fiduciary duty claim. However, the evidence is not here in Defendants' favor.

Defendants next argue that they made contributions to the Corporation that were not acknowledged by Plaintiff, and, as such, there are issues of fact as to the amount of a damages award that Plaintiff is entitled to receive. Similar to the above argument raised by Defendants, this argument does not address the issue at bar, the alleged breach of the fiduciary duty. In addition, this argument is unsupported by evidence and is insufficient to defeat the motion for summary judgment on the eighth cause of action. At best, it only pertains to the issue of damages, discussed below.

Damages Against Defendants

In the amended complaint, Plaintiff seeks damages for his eighth cause of action against all Defendants, except defendant Seth Kaufman, in an amount of not less than $2.25 million. Plaintiff states that because he holds a 23.63% interest in the Corporation, he is entitled to receive 23.63% of the proceeds from the sale of the Parking Lot, after deducting the closing costs. Exhibit 38 to the Mahler Affirmation shows that the closing costs were $288,131.25. The net proceeds from the sale were therefore $9,236,868.75, and Plaintiff's requested 23.63% equates to $2,182,672. Plaintiff's Brief, at 19. Plaintiff asserts that this amount (plus prejudgment interest) should be awarded to compensate him for his 23.63% interest, because the award is "an appropriate remedy" that is "comparable to a compelled buy-out of a minority shareholder's interest ... who has suffered oppression at the hands of [*8]a disloyal majority shareholder," especially "under these unique circumstances where the Court has ordered judicial dissolution of the Corporation." Id. In support of this assertion, Plaintiff relies on Matter of Wiedy's Furniture Clearance Ctr., Co., 108 AD2d 81 (3d Dept 1985).

The facts in Wiedy's Furniture differ from this case. In Wiedy's Furniture, the petitioner held one-third of the shares of the corporation. In lieu of dissolving the corporation, which would have given petitioner one-third of the liquidation value of the corporate assets, the court directed the respondents (i.e., the majority shareholders) "to compensate petitioner for the value of his interest ... as determined by an independent appraiser," so as to assure that "petitioner receives full credit for his ownership interest" in the corporation in which he had contributed efforts towards its profitability.[FN3] The court noted that the respondents would then be free to "voluntarily dissolve the corporation after compensating petitioner, should they so choose." Matter of Wiedy's Furniture Clearance Ctr., Co., 108 AD2d at 85.[FN4]

Unlike Wiedy's Furniture, the Corporation is being dissolved and its remaining assets (the 1031 exchange properties) are being liquidated by the receiver. The proceeds of the liquidation will then be distributed, pending final resolution of the many issues raised in the amended complaint. Granting Plaintiff's requested money judgment at this time, on account of those acts asserted in the eighth cause of action that occurred after the Parking Lot sale, is equivalent to a "compelled buy-out" of his interest in the Corporation. However, it is arguable whether Plaintiff is entitled to another money judgment for those acts asserted in the same eighth cause of action that pre-dated the sale (as to which he does not now seek damages). Under Wiedy's Furniture, it appears that fixing a "buy-out" value may have the effect of precluding any additional value to be awarded Plaintiff. Yet, based on Plaintiff's pleadings, he has not waived any right to seek such award in the future. Plaintiff's reliance on Wiedy's Furniture is thus misplaced, as the facts and rationale for the holding in that case are clearly distinguishable.

That branch of Plaintiff's motion which seeks a money judgment awarding Plaintiff an amount of $2,182,672, plus interest, will not be granted at the present time. Instead, a money judgment will be granted in favor of Plaintiff after all issues raised in the eighth cause of action and/or the amended complaint are resolved.

Accordingly, it is

ORDERED that the branch of plaintiff's motion (motion sequence number 006) seeking partial summary judgment on liability on plaintiff's eighth cause of action, which relates to defendants' breach of the fiduciary duty with respect to acts committed in connection with the corporation's parking lot sale, is granted as to liability; and it is further

ORDERED that the branch of plaintiff's motion (motion sequence number 006) seeking a [*9]money judgment on the eighth cause of action, which relates to defendants' breach of the fiduciary duty with respect to acts committed in connection with the corporation's parking lot sale, is held abeyance pending resolution of all issues raised in the eighth cause of action and/or the amended complaint.

Dated: New York, New York

April 14, 2011

ENTER

/s/__________________________

Hon. Eileen Bransten, J.S.C. Footnotes

Footnote 1: Defendants have not filed their required Rule 19-a Statement; see discussion on p. 7, infra.

Footnote 2: CPLR § 213 (8) states, in relevant part, that an action based on fraud must be commenced within "the greater of six years from the date the cause of action accrued or two years from the time that plaintiff ... discovered the fraud, or could with reasonable diligence have discovered it" (emphasis added).

Footnote 3: The appraisal value appears to be a going-concern value, as opposed to a liquidation value, for the company. Frequently, if not almost always, the former value is higher.

Footnote 4: The other case cited by Defendants, Burack v I. Burack, Inc., 137 AD2d 523 (2d Dept 1988), also does not help Defendants because it involved facts very similar to Wiedy Furniture.