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Capital TCP, LLC v A-G Holdings, LLC
2012 NY Slip Op 31611(U)
June 8, 2012
Sup Ct, New York County
Docket Number: 603288/09
Judge: Shlomo S. Hagler
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SCANNED ON 611912012 '
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SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY
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Number : 603288/2009
CAPITAL TCP, LLC
A-G HOLDINGS, LLC
MOTION SEQ. NO.
SEQUENCE NUMBER : 002
MOTION CAL. NO.
AMEND SUPPLEMENT PLEADINGS
/his motion tolfor
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Anrwerlng Affidavlts - Exhlblts
Replying Aff idavits
0 Yes d No
Upon tho foregoing papen, It I ordered that this motion
ET FORTH C THE-----N
WRITTEN DECISION & ORDER
0 FINAL DISPOSITION
Check if appropriate:
DO NOT POST
SUBMIT ORDER/ JUDG.
SETTLE ORDER/ JUDG.
Indax No. 603288/09
-again8tA-G HOLDINGS, LLC, VIVID MANAGEMENT, LLC,
ISHERRO, LLC, TODAH REALTY U C , SAID
SOLEIMANI, WATCHHILL CONSULTANTS, LLC,
and MARK WOLPE,
Hon. Shlomo S . Haglrr, J.S.C.:
LOUNTY CLERKS OFFICE
Plaintiffs Capital TCP, LLC and Tennessee' Investment Group
Realt'y LLC ("plaintiffs,
"Capital TCP" or "Tennessee Investment
Group") move, pursuant to CPLR 5 3 0 2 5 ( b ) , f o r leave to file and
serve an amended complaint as annexed thereto as Exhibit "4"
(Motion Sequence # 0 0 2 ) .
In a separate motion
Plaintiffs submitted papers in support of their motion to
amend under Motion Sequence # 0 0 2 . Defendant Watchhill submitted
what, at the time, appeared to be a cross-motion for summary
judgment dismissing the complaint and/or amended complaint, b u t
the cross-motion was not appearing as such in the court's case
management system. Watchhill's counsel subsequently infbrmed the
court that he paid a separate motion fee f o r the summary judgment
motion, which was apparently assigned Motion Sequence number 003.
To date, case management indicates two open motions in this
action, Motion Sequence #002, plaintiffs' motion to amend, and
Motion Sequence # 0 0 3 , Watchhill's motion f o r summary judgment
dismissing the cornplaint/amended complaint.
“Watchhill”) moves, pursuant to CPLR 5 3212, for summary judgment
dismissing the complaint and/or the amended complaint.
motions are consolidated herein for disposition.
Plaintiffs are two limited liability companies
established under the laws of Tennessee, whose sole business was
the ownership and management of two apartment buildings located in
Tennessee (“Buildings”). Defendants are all members of one or b o t h
of the plaintiffs LLCs. Pursuant to the Operating Agreements dated
April, 2004, (“Operating Agreements“) between the parties herein,
defendants A-G Holdings, LLC (“A-G Holdings”) and Vivid Management,
LLC (“Vivid”) are the managing members of both plaintiffs.
In 2006, plaintiffs agreed to sell the Buildings to two
companies controlled by nonparty Eli Weinstein
“Weinstein“) for a total purchase price of $43.2 million, payable
in full at closing.
George Fakiris (“Fakiris“), owner of A-G
Holdings, acted on behalf of plaintiffs in this transaction.
On December 7, 2006, the day of the closing, plaintiffs
learned that the Purchaser did not have sufficient funds to pay the
entire balance of the purchase price, falling $5,621,792.00 short.
In o r d e r to close at the agreed purchase price, plaintiffs accepted.
a promissory note (”Note”) for the shortfall payable by Weinstein.
However, Weinstein failed to make all payments on the Note as
As a result of Weinstein's failure to pay, Fakiris commenced
of plaintiffs against the
Tennessee ("Tennessee Action").
Fakiris alleges that he did So
with the knowledge and consent of the defendants.
T h e Purchaser
subsequently filed counterclaims against the plaintiffs, Fakiris,
and defendant Said Solemiani ("Solemiani") for fraud.
On July 9, 2010, the Tennessee court granted plaintiffs'
motion for summary judgment against the Purchaser f o r the balance
of the purchase price and the Note, and dismissed the Purchaser's
connection with the Tennessee Action, plaintiffs incurred more than
$525,000 in fees and expenses, of which more than $400,000 was
allegedly paid on behalf of plaintiffs, by Fakiris, personally, and
Fakiris anticipates that more fees and expenses in
connection with this Tennessee Action will be incurred.
In addition to the Tennessee Action, in 2009, an action was
commenced against the plaintiffs by Royal York Realty, LLC ("Royal
in the. New York Supreme Court, Kings County, Index N o .
("Kings County Action") . 2
In the Kings County Action,
Royal York sought .more than $1.2 million in brokerage commissions
in connection with the sale of the Buildings.
On May 15, 2012, a decision was rendered by the Hon. Martin
Solomon, J . S . C . , in the Kings County Action which dismissed both
Royal York's action and the counter-claims asserted by Capital
TCP and Tennessee Investment Group.
through Fakiris, retained a law firm to defend plaintiffs.
Plaintiffs have allegedly incurred more than $10,000 in fees and
expenses in connection with the Kings County Action, none of which
has allegedly been paid.
According to Fakiris, plaintiffs have no
money to pay for these legal fees a n d expenses.
defendants to pay their proportionate share of past l e g a l fees and
expenses, as well as anticipated future legal fees and expenses,
arising from the Tennessee Action and Kings County Action.
Plaintiffa‘ Motion for Loaye t;o Amend
Plaintiffs seek leave to amend the complaint to add causes of
action for breach of contract, based on specific provisions of the
Operating Agreements, and for declaratory judgment, declaring that
each defendant member must p a y its proportionate share of the fees
and expenses incurred in the Tennessee Action and Kings County
The proposed amended complaint also elaborates on the
original unjust enrichment claim, as well as the factual background
of the case.
There is no dispute that the Operating Agreements are governed
by Tennessee law, and “it is the well-settled ’policy of the courts
of this State to enforce contractual provisions for choice of law”’
(Boss v American Express F i n . Advisors, Inc., 15 AD3d 306, 307 [ l s t
Dept 20051, a f f d 6 NY3d 242 , quoting Koob v IDS F i n . S e r v s . ,
Inc., 213 A D 2 d 26, 33 [lst Dept 19951). However, “under common-law
rules matters of procedure are governed by the law of the forum”
(Matter of Frankel v C i t i c o r p I n s . S e r v s . , Inc., 8 0 A D 3 d 2 8 0 , 285
[Zd Dept 20101 [internal quotes and citations omitted]). Thus, the
issue of whether plaintiffs should be granted leave to amend is one
of procedure and governed by N e w York law.
It is well settled law that “leave to amend pleadings is to be
(Briarpatch Ltd., L.P. v Briarpatch F i l m Corp.,
60 A D 3 d 585 [lst
Dept 20091). Nevertheless, an examination of the underlying merit
of the proposed amendment is required, and “leave will be denied
where the proposed pleading fails to state a claim or is p a l p a b l y
insufficient as a matter of law” (Thompson v Cooper, 24 AD3d 2 0 3 ,
205 [Ist Dept 20051).
asserting their new causes of action f o r breach of contract and for
a declaratory judgment.
However, granting plaintiffs’ motion to
amend would be futile since the allegations set forth in the
proposed amended complaint are not sufficient to state a claim for
breach of contract and f o r a declaratory judgment,.declaring that
defendants must pay their share of plaintiffs‘ legal fees, as
provided in the Operating Agreements, as will be discussed below in
Watchhill‘s motion for summary judgment.
Watchhill’s Motion for
On a motion for summary judgment, the movant must m a k e a prima
facie showing of entitlement to judgment as a matter of