Laffey v Laffey

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Laffey v Laffey 2017 NY Slip Op 33099(U) January 12, 2017 Supreme Court, Nassau County Docket Number: 609953/16 Judge: Stephen A. Bucaria Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NASSAU COUNTY CLERK 11/20/2017 05:10 PM NYSCEF DOC. NO. 31 INDEX NO. 609757/2017 RECEIVED NYSCEF: 11/20/2017 EXHIBIT B [*FILED: 2] NASSAU COUNTY CLERK 11/20/2017 05:10 PM NYSCEF DOC. NO. 31 ' INDEX NO. 609757/2017 RECEIVED NYSCEF: 11/20/2017 " SHORT FORM ORDER SUPREME COURT- STATE OF NEW YORK Present; HON. STEPHEN A. BUCARIA Justice TRIAL/IAS, PART 1 NASSAU COUNTY EMMETT LAFFEY, INDEX No. 609953/16 Plaintiff, MOTION DATE: 01/12/2017 Motion Sequence 00 I -againstPHILIP LAFFEY, MARK LAFFEY, U.S.! LAFFEY REAL ESTATE CORP., d/b/a Laffey Fine Homes, U.S. I. LAFFEY REAL ESTATE OF BELLEROSE, INC., d/b/a Laffey Fine Homes, LAFFEY FINE HOMES OF NEW YORK LLC, d/b/a Latley Fine Homes and d/b/a Laffey Real Estate, LAFFEY REAL ESTATE LLC, d/b/a Laffey Real Estate, LAFFEY ASSOCIATES, LLC, EREALTY TITLE AGENCY CORP., ETITLE LAND SERVICE, LLC, TCG GROUP LLC, d/b/a Kylemore Development Co., 55 NORTHERN BLVD., LLC, and 1 MAIN ST. HUNTINGTON, LLC., Defendant. The following papers read on this motion: Notice ofMotion ...................................... .X Affirmation in Support.. ............................ X A1lidavit in Opposition ............................. X Motion by plaintiff Emmett Laffey for the appointment of a receiver of defendants lJ.S. I Laffey Real Estate Corp.; U.S. 1 Laffey Real Estate of Bellerose, Inc.; Laffey Fine Homes of New York LLC; Laffey Real Estate LLC; Laffey Associates LLC; ERealty Title 1 [*FILED: 3] NASSAU COUNTY CLERK 11/20/2017 05:10 PM NYSCEF DOC. NO. 31 INDEX NO. 609757/2017 RECEIVED NYSCEF: 11/20/2017 Index No. 609953/16 LAFFEY v LAFFEY, ct al. Agency Corp; ETitle Land Services, LLC; TCG Group LLC; and 55 Northern Blvd., LLC is granted to the extent indicated below. This is an action for breach of fiduciary duty. PlaintiffEmmett Laffey and defendants Philip and Mark Laffey are brothers. Their father, Thomas Laffey, was a real estate broker who operated sevewl offices in Queens and Nassau. In 1.991, Thomas Laffey transferred a real estate brokerage company to each of his three sons. Emmett Laffey was given a real estate brokerage office in Williston Parle Philip was given a real estate brokerage in New Hyde Park, and Mark Laffey was given a real estate brokerage in East Norwich. The three offices competed against each other. In 1996, Thomas Laffey transferred his remaining office, which was located in Bellerose, to his sons in equal one-third shares. Over the years, the parties opened eleven additional jointly-owned real estate offices in Great Neck, Huntington, Jackson Heights, Little Neck, Manhasset, Northport, Port Washington, Syosset, Westbury, and two offices in Greenvale. The jointly-owned brokerages were owned by defendant U.S. I Laffey Real Estate Corp. In 2012, Philip and Mark Laffey, or companies which they controlled, commenced an action against Emmet Laffey in Supreme Court, Nassau County, alleging thatEmmet was improperly competing with one of the jointly owned companies (Index No 7703/12). The action was assigned to Justice Driscoll. By short form order dated January 28, 2013, Justice Driscoll granted Emmet Laff:ey's motion for the appointment of a temporary receiver to oversee the business and property of U.S. I Laffey Real Estate Corp; Laffey Associates, LLC; Erealty Title Agency Corp; and 55 Northern BLVD, LLC. James Donald Leonard, Esq. was appointed receiver with authority to manage ~md operate the entities and to make distributions to the members ~md shareholders. Receiver Leonard was directed to pay an equal salary and/or compensation to the principals, i.e. the Laffey brothers. The action was consolidated with two other related actions, Index No 13360/12 and Index No 15523/12. On August 24, 2015, Justice Driscoll issued his decision after trial. Justice Driscoll held that, despite the "irreconcilable coni1ict," of the brothers owing both competing and jointly-held businesses, Emmet Laffey did not compete improperly by forming a competing business, Laffey Fine Homes International, and transfe1Ting 77 listings and a top-producing broker to one ofhis own companies. Although cause did not exist to remove Emmett Lat1ey as an officer or director of any company, the court held that Emmet was properly removed without cause as a member of Laffey Associates, LLC and an officer and/or director of ERealty Title Agency Corp. Justice Driscoll found that U.S. I Laffey Real Estate Corp. was dissolved by proclamation on June 30, 2004 but was "resurrected" as the corporate name of 2 [*FILED: 4] NASSAU COUNTY CLERK 11/20/2017 05:10 PM NYSCEF DOC. NO. 31 INDEX NO. 609757/2017 RECEIVED NYSCEF: 11/20/2017 Index No. 609953/16 LAFFEY v LAFFEY, et al. the parent Laffey company on September 11, 2012. Justice Driscoll denied any injunctive relief to Mark and Philip Laffey and denied damages relief to any of the parties. The receiver was discharged in November 2015. The present action was commenced on December 19, 2016. Emmett Laffey alleges that Philip and Mark Laffey formed their own company, defendru1t Laffey Fine Homes of New York, LLC, and transferred the cash, telephone numbers, website, office furnishings and equipment, computer systems, brokerage licenses, and real estate listings of U.S. 1 Laffey Real Estate Corp. to their new company. Emmett alleges that Laffey Fine Homes of New York has taken real estate commissions of over $17 million do!lru·s that belong to U.S. l Laffey Real Estate Corp. Emmett Laffey further alleges that Philip and Mark Laffey formed their own title company, defendant ETitle Land Services, LLC. Emmett alleges that defendants similarly transferred the assets of the jointly owned title company, defendant ERealty Title Agency Corp., to their new title company. Finally, Emmett Laffey alleges that defendants took over tl1e jointly owned management compru1y, defendant 55 Northern Blvd., LLC. 55 Northen1 Blvd. is the managing company for the jointly owned company, defendant TCG Group, LLC, which owns the property located at 55 Northern Blvd. in Greenvale. In his first cause of action, plaintiff Emmett Laiiey requests a declaratory judgment that Laffey Fine Homes of New Y orlc, LLC is the successor in interest to U.S. 1 Laffey Real Estate Corp. and that Emmett owns a one-third interest in Laffey Fine Homes of New York, LLC. In the second cause of action, plaintiff asserts a claim for breach of fiduciary duty based upon defendants' alleged transfer of the assets U.S. 1 Laffey Real Estate to Laffey Fine Homes ofNew York. In the third cause of action, plaintiff seeks an accounting with respect to all of the Laffey companies. In the fourth cause of action, plaintiff asserts a claim against Philip and Mark Laffey for breach of fiduciary duty with respect Laffey Associates, LLC. In the fifth cause of action, plaintiff seeks an accounting with respect to Laffey Associates, LLC since November 2015. In the sixth cause of action, plaintiff requests a declaratory judgment that ETitleLand Services, LLC is a successor in interest to Erealty Title Agency Corp. and that Emmett owns a one-third membership interest in ETitle Land Services. In the seventh cause of action, plaintiff asserts a claim for breach of fiduciary duty based upon defendants' alleged transfer of the assets ofERealty Title Agency Corp. to ETitle Land Services. In the eighth cause of action, plaintiff seeks an accounting with respect to ETitle Land Services and ERealty Title Agency Corp. 3 [*FILED: 5] NASSAU COUNTY CLERK 11/20/2017 05:10 PM NYSCEF DOC. NO. 31 INDEX NO. 609757/2017 RECEIVED NYSCEF: 11/20/2017 Index No. 609953/16 LAFFEY v LAFFEY, et al. In the ninth cause of action, plaintiff asserts a claim for breach of fiduciary duty bused upon defondants' alleged diversion ofrents payable to 55 Northern Blvd., LLC. In the tenth cause of action, plaintiff seeks an accounting with respect to 55 Northern Blvd., LLC. In the eleventh cause of action, plaintiffseeks a permanent injunction enjoining Philip and Mark Laffey from evicting or (:'.jecting him from the premises at 55 Northern Blvd. In the twelfth cause of action, plaintiff seeks a declaratory judgment that Emmett owns a onethird interest in 1 Main St. Huntington, LLC, which owns the property located at I East Main Street in Huntington. In the thirteenth cause of action, plaintiff asserts a claim for diversion of corporate opportunity with regard to the purchase of the prope1iy at I East Main Street. Plaintiff alleges that the purchase of the properly was a corporate opportunity properly belonging to U.S. I Laffey Real Estate Corp. The court notes that plaintiff does not seek judicial dissolution of any of the jointlyowned companies, including U.S. 1 Laffey Real Estate Corp, Laffey Associates, LLC, TCG Group LLC, ERealty Title Agency Corp., or 55 Northern Blvd., LLC. By order to show cause dated December 20,2016, plaintiff moves for the appointment of a receiver with respect to both jointly-owned companies, 1 Laffey Real Estate Corp., Laffey Associates, LLC, TCG Group LLC, ERealty Title Agency Corp., and 55 Northern Blvd., LLC, as well as defendants' companies,Laffcy Fine Homes ofNew YorkLLC,Laffey Real Estate LLC, and ETitle Land Services, LLC. Plaintiff also seeks a preliminary injunction enjoining Philip and Mark Laffey from evicting him or forcing him out of the Laffey offices located at 55 Northen Blvd in Greenvale during the pendency of this action. A party moving for the appointment of a temporary receiver must submit clear and convincing evidence of irreparable loss or waste to the subject property and that a temporary receiver is needed to protect their interest (Bd. of Managers v Nob Hill Condominium, I 00 AD3d 673 [2d Dept. 2012]). 'Ibe appointment of a receiver is a drastic remedy; the court should exercise extreme caution in the appointment ofreceivers, which should never be made until a proper case has been clearly established (Matter of Armicnti & Brooks, 309 AD2d 659 [1 ''Dept. 2003]). The use of corporate fonds without authorization does not establish a risk of potential loss and may be addressed in the final accounting between the shareholders (Matter of Harrison Realty Corp., 295 AD2d 220 [1" Dept. 2002]). The parties have demonstrated that they are incapable of conducting the Laffey real estate brokerage business as equal one-third shareholders. Thus, as to the jointly-held companies, there is a danger of irreparable loss or waste of the business, if a receiver is not 4 [*FILED: 6] NASSAU COUNTY CLERK 11/20/2017 05:10 PM NYSCEF DOC. NO. 31 INDEX NO. 609757/2017 RECEIVED NYSCEF: 11/20/2017 ' LAFFEY v .LAFFEY, ct al. Index No. 609953/16 appointed. The court determines that the receivership must encompass Philip and Mark Laffey's new companies because of defendants' commingling of the assets ofthe jointly-held companies with their companies and in order to protect the viability and good will of the jointly-held companies. Accordingly, plaintiff Emmett Laffey' s motion for the appointment of a temporary receiver is granted as to the jointly-owned companies, 1 Laffey Real Estate Corp., Laffey Associates, LLC, TCG Group LLC, ERealty Title Agency Corp., and 55 Northern Blvd., LLC, as well as defendants' companies, Laffey Fine Homes of New York LLC, Laffey Real Estate LLC, and ETitle Land Services, LLC. John Spellman, Esq., fiduciary# 169893, 229 7' 11 Street, Suite 100, Garden City, New York (516-592-6801) will be appointed receiver pursuant to a separate order, upon posting a bond of$ 5 million. The receiver will be granted authority to manage and operate the aforesaid companies and to make distributions to the members and shareholders. The receiver will be directed to pay an equal salary and/or compensation to the principals, i.e. the Laffey brothers. Plaintiff Emmett Laffey has established that he has been improperly excluded from the Laffey offices by defendants. Accordingly,plaintiff' s motion for a preliminary i11iunction enjoining Philip and Mark Laffey from evicting him or forcing him out of the Laffey offices located at 55 Northen Blvd. in Greenvale during the pendency of this action is granted. So ordered. 5

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