Gatzonis v Valiotis

Gatzonis v Valiotis 2009 NY Slip Op 07961 [67 AD3d 443] November 5, 2009 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected through Wednesday, January 6, 2010

Evangelos Gatzonis, Individually and Derivatively on Behalf of Top Cove Associates, Inc., Appellant,
v
Efstathios Valiotis, Respondent, et al., Defendant.

—[*1] Steiner & Kostyn LLP, White Plains (Kevin F. Kostyn of counsel), for appellant.

Law Offices of Santo Golino, New York (Santo Golino of counsel), for respondent.

Order, Supreme Court, New York County (Eileen Bransten, J.), entered April 22, 2009, which denied plaintiff's motion for a preliminary injunction, unanimously affirmed, without costs.

The court properly denied plaintiff's motion as he failed to show a likelihood of success on his claim that the loan agreement with defendant was unenforceable. The agreement provided that, in the event of a default, the parties would value plaintiff's minority stake in their closely held company pursuant to a formula. Defendant would pay plaintiff the difference between this valuation and the amount owed on the loan, and defendant would then own the shares. Contrary to plaintiff's contention, this was not a liquidated damages clause, but a means of valuing the consideration plaintiff offered for repayment (cf. Bui v Industrial Enters. of Am., Inc., 41 AD3d 238 [2007]; Quaker Oats Co. v Reilly, 274 AD2d 565 [2000]).

Furthermore, the agreement was neither procedurally nor substantively unconscionable (see Gillman v Chase Manhattan Bank, 73 NY2d 1, 10-11 [1988]). The record demonstrates that plaintiff, a sophisticated businessman, was not forced into the loan, as his desire for the funds was not some emergent need, but rather so that he could, inter alia, pursue investment opportunities (see Gillman v Chase Manhattan Bank, 73 NY2d at 11 [1988]). Moreover, although plaintiff showed he might suffer a 35% discount for his minority share in the closely held corporation, whose sole asset was a parcel of commercial real estate, such discount was not unreasonable under the circumstances (see Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 424-426 [1977]).

We have considered plaintiff's remaining contentions, including that the court should have held an evidentiary hearing, and find them unavailing. Concur—Sweeny, J.P., Buckley, Catterson, Acosta and Freedman, JJ.