Rayo v Vitale

[*1] Rayo v Vitale 2012 NY Slip Op 52428(U) Decided on December 21, 2012 Supreme Court, Kings County Schmidt, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 21, 2012
Supreme Court, Kings County

I. Peter Rayo, Mark Rayo, Robert Sgarlato, Herbert J. Slater, individually, and as joint venturers in 69 West 9th Street Investment, Plaintiffs,

against

Otto J. Vitale, Adam Horvit, Prameela K. Musunono and Rao A.K. Yhlamanchili, Defendants.



22891/11



Plaintiff Attorney: Slater, Sgarlato & Cappello, P.C., 1298 Victory Boulevard, Staten Island, New York 10301

Defendant Attorney: Greenberg Traurig, LLP, MetLife Building, 200 Park Avenue, New York, New York 10166

David Schmidt, J.

The following papers numbered 1 to 11 read on these motions:

Papers Numbered

Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed1-2, 3-4, 5-6

Opposing Affidavits (Affirmations)7, 8, 9

Reply Affidavits (Affirmations)10, 11

Affidavit (Affirmation)

Other Papers [*2]

Upon the foregoing papers, defendants Otto J. Vitale and Adam Horvit move for an order pursuant to CPLR 3211 (a)(1), (a)(5) and (a)(7) to dismiss plaintiffs' complaint. In a separate motion, defendants Vitale and Horvit move for an order extending their time to serve an answer to the complaint. Plaintiffs I. Peter Rayo, Mark Rayo, Robert Sgarlato, and Herbert J. Slater move, pursuant to CPLR 6201, for an order of attachment.

Background

On March 25, 1986, plaintiffs entered into a written partnership agreement with defendant Otto J. Vitale (among others) to purchase, manage, and sell nine cooperative residential apartments in a building located at 69 West 9th Street in Manhattan. Under the terms of the agreement, the parties thereto were required to contribute their proportionate share of expenses and receive their proportionate share of the profits when the apartments were sold. Further, Vitale, who was the owner of record for the apartments, was required to "keep accurate books and records of all income and expenses relative to the . . . investment" and to provide "quarter annually or more frequently if necessary an accounting . . . setting forth the status of the investment relative to income and expenses for the period covered by such accounting." According to the complaint filed in this action, plaintiffs own a combined 50% interest in the partnership and are entitled to 50% of the profits.

All nine apartments were sold between 1986 and 2008. In particular, three apartments (2-C, 11-A, and 4-C) were sold between 1986 and 1990, two apartments (4-G and 10-A) were sold in 1999, one apartment (10-K) was sold in 2002, two apartments (PHB and 5-F) were sold in 2007, and the last apartment (3-F) was sold in 2008.

In February, 2009, plaintiffs commenced an action against Otto Vitale, Adam Horvit (among others) in the United States District Court in the Eastern District of New York alleging a Federal RICO claim as well as claims sounding in conversion and seeking an accounting. In particular, the plaintiffs alleged that Otto Vitale sold units 10K, PHB, 5-F, 3-F, 4-G, and 10-A without the other partners' consent, wire transferred the funds from these sales to Florida, loaned the funds to Adam Horvit, and used the funds to invest in properties in Florida. In May 2009, the plaintiffs in the Federal action filed an amended complaint in which they added claims sounding in fraudulent accounting and breach of contract. In July 2009, the defendants in the Federal action moved to dismiss the amended complaint and plaintiffs cross-moved for leave to file a second amended complaint. Thereafter, the plaintiffs moved for an order of attachment. In a decision dated September 23, 2011, Senior United States District Judge Sterling Johnson Jr. denied plaintiffs' motion to file a second amended complaint and granted defendants' motion to dismiss. In so ruling, Judge Johnson determined that the Federal court lacked subject matter jurisdiction inasmuch as plaintiffs' allegations in both the amended and second amended complaint failed to state Federal RICO claims. Having dismissed the Federal RICO claims, Judge Johnson further declined to exercise supplemental jurisdiction over the remaining state law claims and dismissed those claims as well. [*3]

On or about October 11, 2011, plaintiffs filed the instant complaint against Otto Vitale, Adam Horvit, Prameela K. Musunono, and Rao A.K. Yhlamanchili. Among other things, the complaint alleges that:

- Defendants colectively own a 50% interest in the investment. - The agreement between the parties created a fiduciary duty upon Vitale to the investors.- Between 1986 and 1990, Vitale sold apartment units 2-C, 11-A, and 4-C for $289,000.00 and failed to provide plaintiffs with an accounting for these sales.- On February 16, 1990, Vitale informed the investors that they owned the remaining six apartments free and clear except for negative maintenance of approximately $6,000.00 per year.- Between March 1999 and December 1999, Vitale sold apartment units 4-G and 10-A for $384,250.00 without plaintiffs' knowledge. In January 2000, Vital notified plaintiffs of the sale and reported a net gain of $272,267.00. However, Vitale actually received a net gain of $362,000.00 for the sale of these units. Vitale failed to provide an accounting for these sales.- In 2002, Vitale sold apartment unit 10-K for $315,000.00 without plaintiffs' knowledge or consent. Thereafter, Vitale informed plaintiff that he received a net gain of $249,734.00 for this sale when in actuality, he received a net gain of approximately $285,000.00. Vitale failed to provide an accounting for this sale.- In 2007, Vitale sold apartment units PHB and 5-F for $2,290,000.00 without plaintiffs' knowledge or consent. Vitale claimed a net gain of only $2,071,148.00 for these sales. No accounting of the distribution was given.- On March 18, 2008, Vitale distributed $448,818 to plaintiffs reporting their taxable income as $969,996.00. No accounting of the distribution was given.- After the sale of the apartments in 2007, Vitale made loans to Adam Horvit in excess of $2,000,000.00.- In 2008, Vitale charged the venture/partnership $1,110,364.50 for loans, fees and interest from 1986 to 2008 referred to as the "Otto Reimbursement" bill. Vitale has not provided an accounting for the Otto Reimbursement bill.- In 2007, Vitale charged the venture/partnership $94,944.00 and has failed to provide an accounting for the charge.- On September 3, 2008, Vitale sold apartment unit 3-F for $475,000.00. Vitale has not made any distribution to the investors for the proceeds of apartment 3-F.- In total, Vitale has admitted to receiving $3,753,250.00 in sales as nominee for the investors and has distributed only $683,818.00 to plaintiffs allegedly representing their 50% share in the partnership.

Based upon these allegations, the complaint seeks a judgment dissolving the partnership and ordering an accounting of all of the partnership transactions and of all property and money received by Vitale from sales and paid by plaintiffs. In addition the complaint seeks a [*4]judgment against Vitale for any sum which upon the final accounting may be found to be due plaintiffs.

Defendants Vitale and Horvit (defendants) now move to dismiss the complaint. In addition, plaintiffs move for an order of attachment.

Motion to Dismiss

In moving to dismiss the complaint, defendants contend that, to the extent that plaintiffs' complaint seeks an accounting and alleges breach of contract and fiduciary duty based upon the failure to provide an accounting, such claim must be dismissed. In this regard, defendants aver that documentary evidence conclusively demonstrates that defendants have already provided plaintiffs with an accounting detailing the operating expenses, losses and gains for each year of the partnership from its inception to 2008, including amounts due Mr. Vitale for funding the partnership's shortfalls and as compensation for managing the partnership's operations. In particular, defendants note that through discovery in the prior Federal action, Vitale and the partnership's accountant provided plaintiffs with thousands of pages of bank statements, cancelled checks, deposit slips, tax returns, contracts of sale, closing statements, ledgers, balance sheets, invoices, and correspondence relating to the partnership. In addition, defendants point to the Otto Reimbursement bill which was provided to plaintiffs in 2008 and sets forth an accounting itemizing the operating expenses, losses and gains for each year of the partnership. According to defendants, the Otto Reimbursement bill, in conjunction the underlying financial documents provided in the Federal action conclusively demonstrate that defendants have provided an accounting. Indeed, defendants maintain that the plaintiffs' own complaint demonstrates that an accounting has been provided inasmuch as the complaint alleges specific financial details relating to apartment sales. Under the circumstances, defendants aver that plaintiffs' claims seeking an accounting and alleging breach of contract and breach of fiduciary duty based upon the alleged failure to provide an accounting must be dismissed pursuant to CPLR 3211 (a)(1). Finally, defendants argue that the real issue in this case is plaintiffs' disagreement with the accounting and financial data already provided inasmuch as they ignore the fact that Vitale financed the operating losses of the partnership and is entitled reimbursement and is further entitled to compensation as the sole manager of the partnership. Thus, defendants maintain that plaintiffs should sue for money damages rather than seek another accounting.

In further support of their motion to dismiss, defendants argue that plaintiffs' breach of contract and breach of fiduciary duty allegations fail to state a claim and must be dismissed pursuant to CPLR 3211 (a)(1). Specifically, defendants contend that, inasmuch as these claims are based upon alleged concealment of the true amounts of profits received on the apartment sales, said claims must be plead with specificity under CPLR 3016 (b). According to defendants, the conclusory claims in the complaint are inadequate in this regard. Defendants also argue that the individual partner-plaintiffs lack standing to assert claims of breach of contract and breach of fiduciary duty since these claims belong to the partnership and do not implicate any injury to the individual partners distinct from the harm [*5]to the partnership. Finally, defendants argue that plaintiffs claims for an accounting, breach of contract, and breach of fiduciary duty must be dismissed under CPLR 3211 (a)(5) inasmuch as they are largely time-barred. In particular, defendants note that, under CPLR 205 (a), plaintiffs' claims are deemed to be interposed no earlier than the filing of complaint in the Federal action (i.e., February 27, 2009). Therefore, defendants maintain that the claims for an accounting and breach of contract (which have a six-year statute of limitations) arising prior to February 27, 2003 are time-barred, and any claim for breach of fiduciary duty (which has a three-year statute of limitations) arising prior to February 27, 2006 are time-barred. Defendants further maintain that these claims accrued upon the sale of the individual apartment units and six of the units were sold prior to February 27, 2003.

In opposition to defendants' motion to dismiss, plaintiffs argue that defendants have failed to produce documentary evidence which conclusively demonstrates that plaintiffs have been provided with an accounting. In particular, plaintiffs argue that the Otto Reimbursement bill and the documents supplied by defendants in the Federal action are incomplete and fail to comprise an adequate accounting for the partnership. In support of this argument, plaintiffs submit an expert affidavit by James D. Bonamassa, a Certified Public Accountant who has reviewed the bank records, contracts, closing statements, and other financial documents supplied in the Federal action. Among other things, Bonamassa avers that, within a reasonable degree of accounting certainty: - Defendants have not presented a complete transparent and separate set of books and records for the Partnership which should include original entries into cash receipts and cash disbursements together with original documentation which support such entries.- Defendants have only provided limited copies of cash disbursements and no effort has been made to reconcile disbursements with the tax returns prepared.- The tax returns are incorrect, did not report an apartment sale, and do not contain the necessary balance sheet items including assets, liabilities, and capital. Accordingly, the tax returns provided by defendants do not constitute a full set of books and records.- The real estate closing statements provided by defendants were not prepared by an attorney and are unsupported by bank deposits, contracts, cancelled checks, or invoices.- Defendants have not provided an accounting to the partnership, and the sums claimed in the Otto Reimbursement bill are unsubstantiated by the records submitted.

In further opposition to defendants' motion, plaintiffs seek to "incorporate by reference" the amended complaint and the proposed second amended complaint in the Federal action so as to allege causes of action for breach of contract, breach of fiduciary duty, conversion and fraud. According to plaintiffs, the allegations in the Federal complaint are adequate to state a claim under all of these causes of action. Similarly, plaintiffs contend that the fraud allegations are pled with the specificity required under CPLR 3016 (b). [*6]

Plaintiffs also argue that, contrary to defendants' assertions, their claims are not time-barred. In particular, with respect to their accounting cause of action, plaintiffs' contend that, inasmuch as the Otto Reimbursement bill sent to plaintiffs in April, 2008 alleged claims and charges dating back to 1986, then plaintiffs are entitled to an accounting dating back to this time period. In addition, plaintiffs maintain that under applicable case law, the six-year statute of limitations on their accounting claim does not begin to run until the fiduciary (i.e., Vitale) has repudiated his obligation or the fiduciary's account has been judicially settled, neither of which has occurred here. With respect to their fraud claims, plaintiffs note that their claims accrued within six years of the alleged fraud or two years from the date that they discovered, or could have discovered the alleged fraud. Here, plaintiffs argue that the statute of limitations has not expired inasmuch there is no evidence that plaintiffs were on notice of the alleged fraud, or could have with reasonable diligence, discovered the alleged fraud more than two years prior to the commencement of the Federal action. Finally, plaintiffs claim that their causes of action for breach of contract, conversion, fraud, and breach of fiduciary duty are not time-barred inasmuch as they are all intertwined with and directly relate to their demand for an accounting.

In reply to plaintiffs' opposition papers, defendants reiterate their argument that plaintiffs have already been provided with a full accounting. In the alternative, defendants contend that plaintiffs' accounting claim is largely time-barred inasmuch as the applicable six-year statute of limitations began to run when the duty to pay arises. According to defendants, the duty to pay defendants their 50% share of the profits arose upon each sale of the subject apartment units and six of the nine units were sold more than six years prior to the commencement of the Federal action.

Defendants also argue that there is no basis for plaintiffs to assert new fraud and conversion claims in their opposition papers inasmuch as such claims are not pled or alleged in the complaint. In any event, defendants aver that these claims, along with their substantive claims for breach of contract and breach of fiduciary duty are largely time-barred. Defendants further maintain that even if the court finds that the accounting claim is not time-barred, plaintiffs could not recover on the bulk of their substantive claims. In particular, defendants contend that according to plaintiffs' own allegations, most of the breach of contract claims accrued more than six years prior to the commencement of the Federal action. Similarly, defendants aver that the bulk of plaintiffs' conversion and breach of fiduciary duty claims accrued more than three years prior to the Federal action. Finally, defendants argue that plaintiffs' allegations in the Federal action demonstrate that plaintiffs' had actual knowledge of the facts that could give rise to their fraud claim more than six years before filing suit. Thus, defendants argue that this claims are barred by the applicable statute of limitations.

As an initial matter, the court notes that plaintiffs' complaint asserts a single cause of action seeking dissolution of the partnership and an accounting. Although the complaint contains allegations that Vitale breached the 1986 partnership agreement and his fiduciary [*7]duty, it does not assert these claims as distinct causes of action. In any event, such claims would be premature until an accounting has been completed (Wiesenthal v Weisenthal, 40 AD3d 1078, 1080 [2007]). Further, the complaint does not assert any causes of action sounding in fraud or conversion. As such, in determining the instant motion to dismiss, the court will confine itself to the actual complaint filed in this case and not the allegations, causes of action, and proposed causes of action set forth in the defunct Federal action. Contrary to plaintiffs' argument, there is no authority for the proposition that plaintiffs may side-step the pleading requirements of the CPLR and, in effect, amend their complaint by referencing in opposition papers the claims in a dismissed action that was before a different court. In this regard, the case of Daramboukas v Samlidis (84 AD3d 719 [2011]), which is cited by plaintiffs in support of their argument, is inapplicable. Daramboukas merely allows a defendant moving for summary judgment to rely upon and incorporate by reference the pleadings and exhibits annexed to a co-defendant's separate summary judgment motion that has already been filed with, and is pending before, the court. To the extent that plaintiffs seek to assert fraud and/or conversion claims against defendants, they should avail themselves of the mechanisms set forth in CPLR 3025.

Turning to the motion to dismiss plaintiffs' accounting claim for failure to state a claim, "[o]n a motion to dismiss a claim pursuant to CPLR 3211 (a)(7) for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Cucco v Chabau Café Corp., 99 AD3d 965 [2012]). In order to state a claim for an accounting, a plaintiff must allege "the existence of a confidential or fiduciary relationship and a breach of the duty imposed by that relationship respecting property in which the party seeking the accounting has an interest" (Weinstein v Natalie Weinstein Design Assoc., 86 AD3d 641, 643 [2011]). Here, the complaint alleges that the parties entered into a confidential and fiduciary relationship whereby plaintiffs possessed a 50% interest in partnership. The complaint further alleges that Vitale was nominated as director of the operation of the partnership due to his expertise in real estate investments, and as such, was entrusted with money to purchase the apartment units in his name. Accordingly, the complaint adequately states a claim for an accounting against Vitale.

With respect to defendants' motion to dismiss plaintiffs' accounting claim based upon documentary evidence, "a CPLR 3211 (a)(1) motion may be granted only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Sands Point Partners Private Client Group v Fidelity Nat. Tit. Ins. Co., 99 AD3d 982 [2012]). Here, although defendants have provided plaintiffs with thousands of pages of financial documents related to the partnership, it is apparent that there is substantial disagreement between the parties as to whether these documents are sufficient to comprise a full and complete accounting. In this regard, defendants have submitted an expert affidavit which indicates that there are substantial deficiencies in the documentation provided thus far. Under the circumstances, it cannot be said that the documents provided by defendants conclusively establishes that plaintiffs have already been provided with a full and complete accounting.

Turning to defendants' argument that plaintiffs' accounting claim is time-barred, "[o]n a motion to dismiss a complaint pursuant to CPLR 3211 (a)(5) on statute of limitations grounds, the moving defendant must establish, prima facie, that the time in which to commence the action has [*8]expired" (Vilsack v Meyer, 96 AD3d 827, 828 [2012]). Further, where, as here, the defendant is alleged to be a fiduciary, the statute of limitations on an accounting claim does not begin to run until the fiduciary has openly repudiated his or her obligation or the relationship has otherwise been terminated (Knobel v Shaw, 90 AD3d 493, 496 [2011]; Missan v Schoenfeld, 95 AD2d 198, 209 [1983]; see also Partnership Law § 74). Here, defendants have failed to demonstrate that Vitale openly repudiated his obligations or that the partnership was terminated more than six years prior to the commencement of the Federal action. Accordingly, defendants' motion to dismiss the accounting cause of action is denied.

As a final matter, the complaint fails to state any cognizable claim against defendant Adam Horvit. In particular, Mr. Horvit was not a party to the 1986 partnership agreement nor is it alleged that he owed plaintiffs any duty as a fiduciary. Accordingly, the complaint must be dismissed against Mr. Horvit without prejudice to asserting future claims against him in amended or supplemental pleadings.

Plaintiffs' Motion for an Order of Attachment

Plaintiffs move for an order of attachment pursuant to CPLR 6201 et seq. in the amount of $1,321,602.00.[FN1] In support of its motion, plaintiffs initially note that the discovery exchanged in the Federal action indicates that the nine apartment units were sold for an unverified gross amount of $3,753,250, and that the unverified net for these sales was $3,357,143.00. However, despite the fact that they were 50% partners, plaintiffs have received a total distribution of only $679,816.00 inclusive of their contributed investment amount. In contrast, in 2008 alone, Vitale and Horvit have received over $1,800,000.00 in distributions, the majority of which was withdrawn from partnership capital accounts under the guise of the Otto Reimbursement bill. According to plaintiffs, this Reimbursement bill does not conform with the partnerships' financial records and tax returns, fraudulently double bills the partnership, bills the partnership for expenses which were not authorized, and is a "fabrication and fraud created to conceal and steal over 1.1 million dollars" from the partnership.

Plaintiffs allege additional acts of conversion and fraudulent conduct on Vitale's part including: charging the partnership's capital accounts $150,000.00 in 2009 and 2010 for his legal fees in the Federal action, missing funds in the partnership's capital accounts, and improper and unauthorized loans to Vitale and Horvit. Further, plaintiffs allege that Vitale transferred over 18% of the restricted shares in the partnership to Horvit in November 2003 without notifying the other partners as required in the 1986 partnership agreement. According to plaintiffs, the sale price for these shares ($60,000.00) was well below market value given the fact that the three remaining apartments owned by the partnership at that time ultimately sold for $2,765,000.00.

According to plaintiffs, these allegations are based upon incontrovertible facts which demonstrate that Vitale has continually withheld vital and fiduciary information in an effort to conceal, convert, and embezzle profits due to plaintiffs, and has further continually and repeatedly acted to defraud the plaintiffs. Under the circumstances, plaintiffs reason that they are entitled to an order of attachment under CPLR 6212 (a) and 6201 (3). Plaintiffs further contend that they are [*9]entitled to an order of attachment under CPLR 6201 (1) inasmuch as they are entitled to a money judgment against Vitale, who is a nondomiciliary residing in Florida.

In opposition to plaintiffs' motion for an order of attachment, defendants argue that plaintiffs have not and cannot satisfy the requirements of CPLR 6212 (a). In particular, defendants argue that plaintiffs have not shown probable success on the merits of their underlying claims. In this regard, as previously set forth in the motion to dismiss, defendants claim that plaintiffs' claims are largely time-barred and otherwise without merit. Moreover, defendants argue that plaintiffs' claims do not exceed the potential judgments defendants will recover on their counterclaims. In particular, defendants note that they have asserted counterclaims in which they seek to recover damages for harm they sustained as the result of the alleged meritless Federal law suit which exceed plaintiffs' claims. Further, defendants aver that plaintiffs have failed to satisfy either CPLR 6201 (1) or (3). Specifically, defendant Vitale maintains that, although his primary residence is in Florida, he also resides in and works in Richmond County. Finally, defendants contend there is no evidence of any fraud or missing monies in this case. Rather, the matter boils down to a "garden variety" business dispute wherein Mr. Vitale, as managing partner of the partnership, was reimbursed for certain monies invested together with interest along with management fees and defendants contend that he was not entitled to this reimbursement.

CPLR 6212 (a) provides that:

"On a motion for an order of attachment . . . the plaintiff shall show, by affidavit and such other written evidence as may be submitted, that there is a cause of action, that it is probable that the plaintiff will succeed on the merits, that one or more grounds for attachment provided in section 6201 exist and that the amount demanded from the defendant exceeds all counterclaims known to the plaintiff."

With respect to the prerequisite requirements set forth in CPLR 6201, subdivision (1) of the statute provides that an order of attachment may be granted when "the defendant, with intent to . . . frustrate the enforcement of a judgment that might be rendered in plaintiff's favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts." CPLR 6201 (1) provides that an order of attachment may be granted when "the defendant is a nondomiciliary residing without the state." In determining a motion for an order of attachment, it is noted that "attachment is considered a harsh remedy and CPLR 6201 is strictly construed in favor of those against whom it may be employed" (Grafstein v Schwartz, 100 AD3d 699 [2012]).

Here, plaintiffs have failed to show a probability of success on the merits as required under CPLR 6212 (a) (id.). Indeed, many of the claims set forth in plaintiffs' motion papers have yet to be pled. Further, assuming for the sake of argument that plaintiffs' evidence is sufficient to demonstrate the likelihood of success on the merits of one or more of their claims, they have failed to make the additional required showing under CPLR 6201 subdivision one or three.

In particular, "[i]f the defendant is either a domiciliary or resident of New York, CPLR 6201 (1) is not available as a ground for attachment. Thus, a nondomiciliary may contest his amenability to attachment by arguing that he maintains some sort of residence within New York" (Vincent C. Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C6201:1). Here, although defendant Vitale's primary residence is in Florida, he has submitted an affidavit in which he avers that he also maintains a residence and works in a real estate office in Staten Island. [*10]Moreover, plaintiffs do not contest Vitale's claimed ties to Richmond County. Accordingly, plaintiffs are not entitled to an order of attachment under CPLR 6201 (1).

Plaintiffs have also failed to sufficiently demonstrate that they are entitled to an order of attachment under CPLR 6201 (3). "In order to prevail under CPLR 6201 (3), the plaintiff must demonstrate that the defendant has concealed or is about to conceal property in one or more of several enumerated ways, and has acted or will act with the intent to defraud creditors or to frustrate the enforcement of a judgment that might be rendered in favor of the plaintiff" (Corsi v Vronman, 37 AD3d 397 [2007] [internal quotation marks and citations omitted]). "Furthermore, the mere removal, assignment or other disposition of property is not grounds for attachment" (Computer Strategies v Commodore Bus. Machs., 105 AD2d 167, 173 [1984]). At this stage of the proceedings, plaintiffs have failed to even allege fraud and plaintiff has failed to demonstrate that Vitale has engaged in conduct which would satisfy the requirements of CPLR 6201 (3). Under the circumstances, plaintiffs' motion for an order of attachment is denied.

Motion to Extend Defendants' Time to Answer

Defendants' motion to extend their time to answer the complaint is granted. Defendant Vitale is to serve an answer within ten days after service of notice of entry of this order (see CPLR 3211 [f]).

Summary

In summary, defendants' motion to dismiss the complaint is granted only to the extent that the complaint is dismissed as against defendant Horvit without prejudice. Plaintiffs' motion for an order of attachment is denied. Defendants' motion to extend the time in which to serve an answer is granted.

This constitutes the decision and order of the court.

E N T E R,

J. S. C.

Footnotes

Footnote 1:This amount includes $914,602.00 which remains in the partnership's capital accounts and $407,000.00 attributable to the lost bargain and loss of opportunity arising out of the sale of restricted shares to Adam Horvit.