Berle v Buckley

[*1] Berle v Buckley 2008 NY Slip Op 50194(U) [18 Misc 3d 1124(A)] Decided on January 29, 2008 Supreme Court, Rensselaer County Platkin, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 29, 2008
Supreme Court, Rensselaer County

Beatrice Lila Berle, Individually and as a member of Berle Farm, LLC, Petitioner-, Plaintiff,

against

Abdon J. Buckley, Jr. and Berle Farm, LLC, Respondents-, Defendants.



223661



Whiteman, Osterman & Hanna LLP

Attorneys for Petitioner-Plaintiff

(Christopher E. Buckey, of counsel)

One Commerce Plaza

Albany, New York 12260

Carter, Conboy, Case, Blackmore, Maloney & Laird, P.C.

Attorneys for Respondents-Defendants

(Michael J. Catalfimo, of counsel)

20 Corporate Woods Boulevard

Albany, New York 12211

Richard M. Platkin, J.

By her Verified Petition and Complaint ("Petition-Complaint"), petitioner-plaintiff Beatrice L. Berle ("plaintiff" or "Berle") seeks an order granting her specific performance of a certain Buy-Sell Agreement, dated September 13, 2007, and compelling respondent-defendant Abdon J. Buckley, Jr. ("defendant" or "Buckley") to transfer his one-third membership interest in Berle Farm, LLC ("the LLC") to her in accordance with such agreement. In the alternative, plaintiff seeks an order dissolving the LLC pursuant to Limited Liability Company Law § 702.

Defendant opposes the Petition-Complaint and cross-petitions for an order of dissolution, the appointment of a liquidating receiver and an accounting. Defendant also moves for an order disqualifying plaintiff's counsel from this litigation.

BACKGROUND

Plaintiff Beatrice L. Berle and defendant Abdon J. Buckley, Jr. are the sole members of Berle Farm, LLC, which farms and produces organic goat cheese, straw and hay on approximately 500 acres in Hoosick, New York. Plaintiff has a two-thirds (2/3) membership interest and defendant a one-third (1/3) interest in the LLC. Plaintiff resides in a residence located on the property held by the LLC ("the Property").

According to the Petition-Complaint, plaintiff and defendant were involved in a romantic relationship beginning in 1994, with defendant cohabiting with plaintiff on the Property at certain times. Plaintiff and defendant have two children. Plaintiff alleges that throughout the parties' 13-year relationship, defendant has subjected her to a continuing campaign of physical, sexual, verbal and mental abuse.

As a result, on or about September 9, 2007, plaintiff filed two petitions in Rensselaer County Family Court: a Petition for Custody, seeking sole legal and physical custody of the two children, and a Family Offense Petition. Contemporaneous with such filings, plaintiff sought and obtained a Temporary Order of Protection, which required, inter alia, that defendant stay away from plaintiff and the Property. As a result of the Temporary Order of Protection, defendant is unable to carry out his responsibilities with respect to the LLC.

In order to sever her business ties with defendant, plaintiff alleges that she offered in writing to purchase defendant's one-third membership interest in the LLC. The writing (which plaintiff refers to as "the Offer") is a letter dated September 10, 2007 to plaintiff from her counsel. This letter sets forth "a brief description of how Abdon Buckley's interest in Berle Farms, L.L.C. can be purchased by Beatrice Berle and the procedures that would be followed to obtain judicial dissolution of [the LLC] if Mr. Buckley is unwilling to [agree]" (Petition-Complaint Ex. E).

As set forth in the Offer, plaintiff established the net value of the LLC at $806,000. This was based on fair market value of $825,000 for the Property, a fair market value of $175,710 for the LLC's assets and other equipment, and a deduction of $194,759, representing principal and accrued interest on a loan made by plaintiff to the LLC. Copies of the appraisal of the Property and the asset valuation were provided to defendant with the Offer. Thus, according to plaintiff, the Offer proposed that plaintiff would purchase defendant's one-third interest in the LLC for a lump sum payment of $268,666, subject to certain terms and conditions specified therein, including a requirement that defendant not enter into any farming operation or reside within twenty miles of the Property. [*2]

Plaintiff further alleges that on or about September 13, 2007, defendant agreed in writing to sell his one-third membership interest in the LLC to plaintiff for $267,566. This alleged agreement prepared by or behalf of defendant (which plaintiff refers to as the "Buy-Sell Agreement") reiterates much of the September 10, 2007 Offer letter, setting forth: the basis for the valuation of the LLC; plaintiff's offer to purchase defendant's one-third interest in the LLC for $268,666; and the timing of the payment (upon transfer of the membership interest). It also has several modifications to the terms set forth in the Offer: defendant's agreement to reduce the purchase price by $1,100 to reflect cash that he removed from the LLC's safe on September 11, 2007; and a proviso allowing defendant to farm and/or reside on specified family property in Greenwich, New York.

The Buy-Sell Agreement closes with the following language: "Mr. Buckley believes this agreement is a faithful representation of all matters formerly addressed, and affixes his signature below to affirm his acceptance of this agreement." The agreement was signed by defendant in the presence of a notary.

Prepended to the Buy-Sell Agreement is a communication from defendant to Mr. Gitlin with respect to the following subject: "Purchase of Abdon Buckley's Interest in Berle Farms, LLC", in which defendant states, in pertinent part:

In an attempt to meet the deadline specified by your office in your fax of September 12, 2007, I am preparing an agreement to sign and fax. This agreement I believe will meet your original specifications, with the inclusion of the additional information addressed in the faxes. The are indicated by [numbered] notes on page 3 of this agreement.

I appreciate your reiterated advice to acquire legal representation, and have been working towards that end, but have been unsuccessful within the stated time constraints.

The September 12, 2007 fax referred to by defendant is a letter from plaintiff's counsel to defendant, which references a telephone conversation earlier that day. In the letter, plaintiff's counsel: (1) confirms his understanding that defendant had been provided a copy of the September 10th Offer letter, as well as supporting documentation; (2) again advises defendant to retain counsel; (3) states that in their earlier telephone conversation, defendant had agreed to the terms of the Offer, except that he wanted the ability to farm and/or reside on family property in Cambridge, New York; (4) advises that defendant's proposal in that regard was acceptable if all other terms of the Offer were acceptable to defendant; and (5) informs defendant that the purchase price will need to be adjusted to reflect defendant's removal of "several thousand dollars of cash from the safe located at the Berle Farm property." The letter closes by requesting defendant to "signify his consent to the foregoing terms by signing this letter in the space below" and returning it before the close of business on September 13, 2007; otherwise, "we have been instructed to commence legal proceedings for the dissolution of Berle Farm, L.L.C."

On September 14, 2007, following receipt of the Buy-Sell Agreement, plaintiff's counsel wrote as follows to defendant:

I have received your memorandum of September 12 and your letter of yesterday and since it appears that, subject to confirming with Ms. Berle the amount of cash taken from the Berle Farm safe, there is general agreement regarding the terms of the purchase of your interest in Berle Farms, LLC, we are turning our attention to the drafting of a formal agreement which will contain the typical provisions regarding the purchase as well as the specific provisions that have been addressed [*3]in our communications. I expect that I will be able to send you the draft agreement for review next week. It would certainly be beneficial for you to retain counsel to review the contract . . . .

I am also making arrangements for the receipt of the purchase price in our Firm escrow account, so we should be able to close the transaction soon after we have any questions or comments you may have regarding the contract.In opposition to the Petition-Complaint, defendant contends plaintiff's claims of abuse were fabricated as part of an effort to force him out of the LLC.[FN1] While acknowledging drafting and sending the so-called Buy-Sell Agreement to plaintiff's counsel on September 13, 2007, defendant contends that he did not have sufficient time to consult with an attorney prior to plaintiff's deadline, and he did not understand how the threatened judicial dissolution of the LLC would affect his interest. According to defendant, he did not intend or contemplate that the Buy-Sell Agreement would constitute a final and complete contract; rather, it was his understanding and expectation that he was expressing his interest in the concept of plaintiff's proposal and his willingness to engage in continued negotiations relative to "her offer to buy [him] out."

Consistent with the September 14th letter, plaintiff's counsel subsequently prepared and sent to defendant a proposed final agreement, captioned "Membership Interest Purchase Agreement". Defendant retained an attorney to review this document and "discovered then that there were numerous terms in the proposed agreement which [he] did not agree with and which, according to [his] attorney, did not appear to be in [his] best interest." Accordingly, defendant alleges that he directed his attorney to attempt to negotiate a mutually satisfactory agreement on his behalf. Such efforts were not successful.

Plaintiff commenced this action by Order to Show Cause on December 7, 2007. Defendant filed a combined answer and "cross-petition" on December 28, 2007. This Decision, Order & Judgment follows.

SPECIFIC PERFORMANCE

The Court begins with plaintiff's first cause of action, seeking specific performance of the alleged Buy-Sell Agreement. Defendant contends that no contract was formed by the exchange of written and verbal communication between plaintiff's counsel and defendant, and that such communications were not intended to create, and did not create, a binding contract.

The principles of New York law governing contract formation are well settled:

In accordance with long-established principles, the existence of a binding contract is not dependent on the subjective intent of [the parties]. In determining whether the parties entered into a contractual agreement and what were its terms, it is necessary to look, rather, to the objective manifestations of the intent of the parties as gathered by their expressed words and deeds. In so doing so, disproportionate emphasis is not to be put on any single act, phrase or other expression, but, instead, on the totality of all of these, given the attendant circumstances, the situation of the parties, and the objectives they were striving to attain.

(Brown Bros. Elec. Contrs. v Beam Construction, 41 NY2d 397, 399-400 [1977]). [*4]

"When such factors demonstrate at best an agreement to agree,' leaving open for future negotiations essential terms of the parties' relationship, no enforceable contract is created" (Enercomp, Inc. v. McCorhill Pub., Inc., 873 F2d 536, 546 [2d Cir 1989]). But where it is clear that the parties intended to bind themselves to future performance, the fact that some terms may be left open does not necessarily render the agreement unenforceable (id.).

Applying these principles, the Court concludes that defendant entered into a binding agreement to sell his one-third membership interest in the LLC to plaintiff for $267,566, subject to the other terms and conditions specified in the Buy-Sell Agreement. Taken together, the letters of plaintiff's counsel dated September 10, 2007 and September 12, 2007 constitute an offer by plaintiff to purchase defendant's one-third membership in the LLC for $268,666, subject to a reduction in such amount for the "several thousand dollars of cash" taken by defendant from the Berle Farm's safe and an exact description of the family property in Cambridge, New York upon which defendant sought to farm and/or reside. Indeed, defendant does not dispute that plaintiff made an offer to buy him out of the LLC (Buckley Affidavit § 16).

The issue then becomes whether defendant's transmittal of the Buy-Sell Agreement to plaintiff's counsel constituted an acceptance of the offer. The Court concludes that it does. The Buy-Sell Agreement, signed by defendant in the presence of a notary, recites the essential terms of the transaction, including the amount to be paid to defendant for his one-third membership interest and the timing of such payment. It also addresses the two minor issues left outstanding following transmittal of the September 12 letter: (1) the precise amount by which the purchase price must be reduced to reflect defendant's removal of cash from the LLC's safe; and (2) the exact location of the family property upon which defendant seeks to farm and/or reside. Indeed, the Buy-Sell Agreement prepared by defendant contains an express acknowledgment that it represents a written memorialization of the parties' meeting of the minds: defendant acknowledges that such "agreement is a faithful representation of all matters formerly addressed, and affixes his signature below to affirm his acceptance of this agreement."

The cover note from defendant to plaintiff's counsel further supports the Court's conclusion. Therein, defendant states that "[t]his agreement I believe will meet your original specifications, with the inclusion of the additional information addressed in the faxes." Further, defendant acknowledges that he prepared and executed the Buy-Sell Agreement in an effort to meet the deadline set forth in the September 12, 2007 letter: that plaintiff would commence litigation to dissolve the LLC unless defendant provided his written "consent" and "agreement" to plaintiff's buy-out offer by the close of business the following day. Thus, it is apparent from the attendant circumstances that defendant prepared and transmitted the Buy-Sell Agreement to accept plaintiff's buy-out proposal prior to the deadline for the purpose of avoiding litigation. In contrast, defendant's claim that the Buy-Sell Agreement represented nothing more than an expression of interest in the concept of plaintiff's buy-out proposal and a willingness to negotiate further runs counter to his contemporaneously stated objective in preparing and executing the agreement.[FN2]

Further, contrary to defendant's contention, nothing in the letter of September 14, 2007 [*5]from plaintiff's counsel to defendant is inconsistent with the conclusion that the parties had entered into a binding and enforceable agreement. The fact that the parties' written agreement on the essential terms of the buy-out transaction were subject to the preparation of a definitive "formal agreement" that would include "typical provisions" regarding the purchase of an LLC membership interest (in addition to the specific terms negotiated by defendant and plaintiff's counsel) did not "leave the transaction incomplete and without binding force in the absence of a positive agreement that it should not be binding until so reduced to writing and formally executed" (Municipal Consultants & Publs., Inc. v. Town of Ramapo, 47 NY2d 144, 149 [1979]).

Nor does the Court attach significance to the fact that plaintiff's counsel needed to confirm with his client the amount of money that defendant had taken from the safe pursuant to parties' agreement to effectuate a corresponding reduction in the purchase price. Even if such amount had not be determined and agreed upon at the time of the execution of the Buy-Sell Agreement, a contract is sufficiently definite for enforcement where, as here, it invites recourse to an objective extrinsic event (Joseph Martin, Jr., Delicatessen, Inc. v. Schumacher, 52 NY2d 105, 110 [1981]).[FN3]

Based on the foregoing, the Court concludes that plaintiff has established that a binding contract was formed by the exchange of written communication between plaintiff's counsel and defendant. Defendant agreed to sell his one-third (1/3) membership interest in the LLC to plaintiff for a lump sum payment of $267,566 subject to certain negotiated terms and conditions. It is undisputed that plaintiff is ready, willing and able to perform under the contract and that defendant has failed and/or refused to perform. Accordingly, the Court concludes that defendant is in breach of the contract and, given the nature of the buy-sell transaction, plaintiff lacks an adequate remedy at law. Under these circumstances, the Court determines that plaintiff's application for specific performance should be granted.

CONCLUSION

In view of the foregoing, the Court need not reach the cross-applications for dissolution of the LLC. Further, the Court's disposition of the breach of contract claim renders academic defendant's motion for a temporary receiver and disqualification of plaintiff's counsel.

Accordingly, it is

ORDERED and ADJUDGED that plaintiff is entitled to specific performance of the Buy-Sell Agreement; and it is further

ORDERED that defendant's motions for the appointment of a temporary receiver and disqualification of plaintiff's counsel are denied as academic; and it is further

ORDERED, ADJUDGED and DECREED that defendant Buckley shall transfer his one-third (1/3) membership interest in the Berle Farm, LLC to plaintiff for a lump sum payment of $267,566, subject to negotiated terms and conditions of the Buy-Sell Agreement, within thirty days of service of this Decision, Order & Judgment with notice of entry, at a closing to be held at the offices of plaintiff's counsel (or such other location that plaintiff shall designate). [*6]

This constitutes the Decision, Order & Judgment of the Court. All papers, including this Decision, Order & Judgment are returned to plaintiff's counsel. The signing of this Decision, Order & Judgment shall not constitute entry or filing under CPLR Rule 2220. Counsel is not relieved from the applicable provisions of that Rule respecting filing, entry and Notice of Entry.

Dated: Albany, New York

January 29, 2008

Richard M. Platkin

A.J.S.C. Footnotes

Footnote 1: In reply, plaintiff submits an affidavit of a third party who avers that she personally witnessed the bruising on plaintiff's body resulting from defendant's abuse. She further avers that defendant acknowledged to her that he had "beaten" the plaintiff on at least one occasion.

Footnote 2: Of course, as noted supra, the inquiry as to whether a contract has been formed is an objective one that does not depend on defendant's subjective beliefs.

Footnote 3: The Court notes that the proposed formal agreement prepared by plaintiff's counsel did accept defendant's figure of $1,100 for this purpose.