534 East 11th St. HDFC v Hendrick

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534 East 11th St. HDFC v Hendrick 2013 NY Slip Op 31987(U) August 23, 2013 Sup Ct, New York County Docket Number: 116064/08 Judge: Eileen A. Rakower Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. SCANNED ON 812712013 [* 1] SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY Index Number : 116064/2008 534 EAST 11TH STREET FIL .IC V3. - HENDRICK, PETER SEQUENCE NUMBER : 004 AUG 27 2013 DISMISS The following papers, numbered 1 to Notice of MotionlOrder to Show Cause INDEX NO. MOTION DATE MOTION SEQ. NO. COUNTY CLERK'S OFFICE Y ORK , were read on this motion t o / M e W -Affidavits - Exhibits z IW s ) . ' 3 IW s ) . IN W . A I Answering Affidavits - Exhibits Replying Affidavits Upon the foregoing papers, it is ordered that this motion is c--. --.. I _ ) _ _ %----- J.S.C. ..................................................................... 0 CASE DISPOSED CHECK AS APPROPRIATE: ...................... ~ ~ ~ IS: 0GRANTED ~ ~ DENIED ~ ~ ~ O O N 1. CHECK ONE: 2. 3. CHECK IF APPROPRIATE: ................................................ SETTLE ORDER 0DO NOT POST NON-FINAL DISPOSITION GRANTED IN PART 0OTHER 0SUBMIT ORDER 0F!DUCIARY APPQINTMENT 0REFERENCE [* 2] SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY PRESENT: Hon. EILEEN A. RAKOWER PART 15 Justice 1 16064/08 INDEX NO. MOTION DATE Defendants. The following papers, numbered 1 t o were read on this motion forlto Notice of Motion/ Order to Show Cause - Affidavits - Exhibits Answer - Affidavits - Exhibits Replying Affidavits ... 1 i I I I PAPERS NUMBERED 1,2, 3 4 Plaintiff is a cooperative corporation owning the premises located at 534 East 1IfhStreet in the County and State of New York. Defendant is a shareholder and proprietary lessee. The agreement plaintiff seeks to enforce in this action, in essence, involves the assignment of plaintiff's right to purchase the shares and proprietary lease associated with unit 6 in the premises t o defendant in exchange for defendant's promise to sell his shares and proprietary lease associated with unit 5 in the premises. Plaintiff previously moved to amend its verified complaint t o reflect changes in the cooperative's by laws, and such amendment was permitted. Defendant now moves to dismiss the Second Amended Complaint pursuant t o CPLR §3211 on the grounds that Plaintiff has unclean hands. The agreement states, in pertinent part: The parties hereto specifically covenant and agree that the within Assignment and Assumption has been entered into in consideration of the covenant and promise of Assignee [defendant] t h a t he will make best efforts t o sell t h e shares of [* 3] , 5 3 4 East 1 lthStreet HDFC and appurtenant Proprietary Lease both allocated t o Apartment #5 in the building known as 534 East 1Ith Street, New York, New York t o Dustin Shryock for the sale price of $ I 10,000 as soon as possible and, if such sale is not possible, to sell said Shares and Proprietary Lease allocated to Apartment #5 t o a Purchaser approved by Assignor as soon as possible. The complaint states that Defendant, assignee, in fact purchased the shares and proprietary lease associated with apartment 6. Defendant then entered into a contract of sale t o sell Dustin Shryock the shares and proprietary lease associated with apartment 5 for the sale amount of $ 1 10,000. Dustin Shyrock exercised his right to cancel the purchase contract for apartment 5 because he was unable t o obtain financing. Defendant next proposed a purchaser for apartment 5, Lia Gangitano. A t a Special Meeting of the Shareholders of the Plaintiff, Lia Gangitano was interviewed, but the majority of the Shareholders of Plaintiff did not approve the application of Lia Gangitano to become a Shareholder of Plaintiff. Pursuant to Plaintiff's ByLaws, the majority of the Shareholders of the Plaintiff then voted that Dustin Shyrock would be the person approved to become the Shareholder and Proprietary Tenant of Apartment #5 in the subject building. The complaint acknowledges that "Dustin Shyrock has informed Plaintiff that he no longer wishes t o purchase the Shares of Stock and appurtenant Proprietary Lease allocated to said Apartment #5." The complaint states that upon information and belief, "Defendant will refuse to propose any purchaser of said Shares of Stock to be approved, or not, by a vote of Plaintiff's Shareholders, thus preventing transfer of said Shares of Stock and Proprietary Lease t o an incoming Shareholder." The Plaintiff seeks specific performance of the contract, in that it seeks to have Defendant "propose a purchaser and, after approval by Plaintiff of such purchaser, transfer the Shares of Stock and appurtenant Proprietary Lease allocated t o Apartment #5 to such purchaser pursuant to PIaint iff 's By-Law s." 2 [* 4] Defendant moves t o dismiss based on Plaintiff's unclean hands. Defendant asserts facts, outside the four corners of the complaint, arguing that Plaintiff's refusal to accept his proposed purchaser coupled with Plaintiff's insistence that he renegotiate a sale to Dustin Shyrock for a reduced price, demonstrate a breach of the covenant of fair dealing. The covenant of good faith and fair dealing is breached when a party acts in a manner that deprives the other party of the right to receive benefits under the agreement. In order to establish a breach of the covenant of good faith and fair dealing, the party asserting the breach must allege facts that tend to show that the other party sought to prevent performance of the contract or t o withhold its benefits from the party asserting the breach. Whether or not a party t o a contract breached the implied covenant of good faith and fair dealing is often a factual question. On a motion t o dismiss pursuant to CPLR 0321l(a)(7), the pleading is t o be afforded a liberal construction and the plaintiff accorded the benefit of every possible inference. (See, Leon v. Martinez, 84 NY2d 83, 614 NYS2d 972,638 NE2d 51 1 [ I 9941). In determining whether dismissal is warranted for failure t o state a cause of action, the court must "accept the facts alleged as true ... and determine simply whether the facts alleged fit within any cognizable legal theory." (People ex re/. Spitzer v. Sturm, Ruger & Co., lnc., 309 AD2d 91[lst Dept. 20031) (internal citations omitted) (see CPLR §3211[a1[71). The court's function on a motion to dismiss pursuant t o CPLR 0321 1(a)(7) is t o determine whether the plaintiff's factual allegations fit within any cognizable theory, without regard to whether the allegations ultimately can be established. See, Union Stare Bank v. Weiss, 65 AD3d 584,884 NYS2d 136 [2ndDept 20091). The complaint states that the "shares of Stock and Proprietary Lease allocated t o Apartment #5 are unique and cannot be otherwise transferred except by enjoining Defendant as asserted herein." While Defendant may have defenses t o the action, the complaint, affording Plaintiff every possible inference, and looking only t o the four corners of the complaint, states a cause of action upon which relief may be granted. Wherefore, it is hereby ORDERED that the motion to dismiss is denied, and Defendant is to file 3 [* 5] , and serve an Answer to the Second Amended Complaint within 20 days of service of a copy of this Order with Notice of Entry.. This constitutes the Decision and Order of the Court. All other relief requested is denied. S Dated: August 23, 2013 Eileen A. Rapower, JSC 4 .

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