U-Trend N.Y. Inv. L.P. v US Suite LLC

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U-Trend N.Y. Inv. L.P. v US Suite LLC 2018 NY Slip Op 32894(U) October 22, 2018 Supreme Court, New York County Docket Number: 652082/2014 Judge: Charles E. Ramos 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. [*IFILED: 1] FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY CLERK 10:01 10/26/2018 ANG NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 SUPREME RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 COURT OF COUNTY INDEX NO. 652082/2014 INDEX 652082/2014 NO. OF NEW THE STATE OF YORK NEW COMMERCIAL YORK: DIVISION ----------------------------------------X U-TREND YORK NEW INVESTMENT and Individually of Nominal Defendant US on and Suite Behalf Suite Hospitality S.A. International, subsidiary L.P., Derivatively wholly-owned its Corp., Plaintiff, -against- US AND SUITE AURA LLC, 440 WEST INVESTMENTS 41ST LTD., LLC, Defendants, and HOSPITALITY and US SUITE SUITE S.A. INTERNATIONAL, CORP., Nominal Defendants. Index No. 652082/2014 ----------------------------------------X U-TREND NEW Individually of Nominal YORK and on and Suite Behalf Suite Hospitality S.A. US L.P., Derivatively Defendant International, subsidiary INVESTMENT wholly-owned its Corp., Plaintiff and CounterDefendant, againstAURA INVESTMENTS MICHAEL KLEINER YAACOV LTD., and YOHAI Defendants ATRAKCHI, ABTAN, and CounterclaimPlaintiffs, and HOSPITALITY US SUITE SUITE INTERNATIONAL, S.A. CORP., Nominal Defendants. 31 of 31 of 29 and [*IFILED: 2] FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY CLERK 10:01 10/26/2018 ANG INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 AURA RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 INVESTMENTS MICHAEL YAACOV LTD., KLEINER and YOHAI ATRAKCHI, ABTAN, Defendants and CounterclaimPlaintiffs, -against- TOMER AND SHOHAT Index OREN 650498/2015 No. ELMALICH, Third Defendants, Party and HOSPITALITY and US SUITE SUITE S.A. INTERNATIONAL, CORP., Nominal Defendants. ---------------------------------------X Hon. C. E. J.S.C.: Ramos, Findings In U-Trend under purpose was to acquire New Street, 1; Investments PTX 2 at York joint Law is now a Virgin [DTX ("Aura"). for "Joint GY as partnership Islands (the venture known the Venture") Aff Shohat 15; 5-6, 10]. of and a what of ("U-Trend"), British the Ltd. 9 purpose The in formed L.P. of laws Compl Conclusions Mendelovich investing 12; 10, and Investments the of Aura with 99 York New formed Naftali 2009, Fact of the operate (the Venture Joint a property between U-Trend located at [Compl "Property"). 1]. 2 2 of of 4 31 29 99 18-20, 440 and West 27; Aura 41st PTX 1 at [*FILED: 3] CLERK NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY 10:01 AM FILED: 10/26/2018 INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF NYSCEF DOC. NO. 1970 DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 Tomer investor U-Trend in Tr. hearing a Shohat, friend and and the 2018 25, was Mendelovich, Venture. Joint Jan. 2117:5-10; of student 2018 1, [May (Shohat) Tr. hearing (Kleiner) an 860:19-23]. Although Venture the is for Defendant Suite LLC ("US 440 West owned in The St LLC part by Ben is b. HSI owns c. US Suite member 440 West member minority US Suite of US owns US Suite owns the of, US LLC US Suite and company, liability company was 440 and Aura, U-Trend, by follows: by U-Trend Suite Corp. a interest equally Corp. of, owned as 100% ("US Suky. indirectly owned HSI e. Zion liability limited a West"), subsidiaries a. d. ("440 is Property through managing the 41st Corp. Suite Defendant (iii) limited a ("HSI"), US are Nominal (i) S.A. Defendant Delaware that proceeding: corporation, a LLC"), this Joint the entities International, Delaware a Suite of Nominal (ii) of additional four are Suite company, Corp."), structure purposes the Hospitality Luxembourg West there complex, relevant most organizational full 70% and Aura. in, and is the LLC. 30% remaining Suite LLC. title holder 3 5 31 3 of of 29 of interest the in, Property. and is [*IFILED: 4] FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY CLERK 10:01 10/26/2018 ANG INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 In (together, 11 Aura effect, and 70%), 20, 23, US 25, Property, one superintendent a 5, 6, zone of a 17, (the proposed The "regulate "Founders Founders Agreement until the and related to Project was of 64,662 1, 39, 1 units, including on 24]. floors 9,875 3, sq. ft., Hudson special sq. 43, Yards inclusive ft., Von 49; 44, and/or Company 1.4 shall of [i.e., method the HSI . Founders all to this US Suite of . Aura] and of [HSI], ." operations agreement, including 4 of of 6 31 29 2]. shall "Aura and 4 period at [Id. management subject funding interim Agreement, LLC], [PTX to the . HSI. parties and during of execute pursuant [U-Trend the to the by an into respect created including such, entered management management the establishment and and Property [HSI], section responsible, of with between and actual Under the relationship activity [HSI's] D3 for Report of U-Trend and Agreement") of them at Aura 2009, purchase the between Report area 2010 5, tenants land area building [Compl 23]. December agreement 1]. T a Sub-area [Locatell Report On gross 95 stories, stabilized elevators, in Ancken Von 13 rent Property 30%. March on 9; has the owned Suky) Property at of 35% 14-19]. 11 the 9 C6-3 property Mr. Aff 1988, two 9, basement. Ancken the and and a in owned (i.e. Shohat room, 8, each Report built District, of West [Locatell The 4, 440 purchased LLC $17,500,000. U-Trend 62; 26, Suite and to managing the board's be [*IFILED: 5] FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY CLERK 10:01 10/26/2018 ANG INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 decisions." [Id. and responsibility management fees subject to of as instructions the each shall party directors." a 20, [HSI]." 2 Aura has it the Mr. the b The U-Trend. U-Trend to directors held two. number Company's was signed Agreement to up board (Scharf & was not 5 of 7 31 5 of 29 Company "[t]he 5 out members, directors 3 and in and representatives [Id. terminated behalf on Tr. hearing HSI any shall directors." of the on the directors, Abtan) on seats ]. b(6) in Mendelovich Mr. by 2 to to Aura's appointed Amendment") up 2 Company's be Amendment, up that the deadlock include time the three the appoint any A ("the a to appoint 2018 held equal provides shall Appendix prevent to at A for amended shall right that 29, in board, an appoint Appendix at Pursuant to Aura Founders order of Amendment [Jan. Ultimately, "in in and [HSI's] Mendelovich was right and parties, representative a Agreement the costs the to of [Id. 1]. agreed is right Naftali at has majority The the appoint 2010, board which 1]. and shall [PTX Company's be Company's subsection of Founders January case of representative." first U-Trend between the ongoing of agreed the 1.1]. § management. The of 6 Manager [HSI's] as have [Id. Paragraph "[t]he be bear [HSI's] reimbursement full shall manage to authority for shall "Aura Moreover, the exchange in business, which 1.4]. § board when at of 953:4-9]. of directors, Mr. Atrakchi . [*FILED: 6] TY NEW YORK COUNTY CLERK 11/05/2018 10:49 AM( LEB2t 26 10 2018 10:01 INDEX NO. 652082/2014 INDEX NO. 652082/2014 NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 acquired later control Aura Clearly, to manage had the Property Agreement and its Agreement was valid, benefits the to Aura. the both under of the Aura times the availed and Founders itself Aura that authority Founders that Agreement Founders the the finds Agreement the of terms Court all at Founders of plain the This that and responsibility Amendment. obligations the of bound was manage to of the Joint Venture. The Agreement Founders and responsibility business to would and Aura LLC. The which included to 63 Corp., therefore of NY2d 557, A the 569 of duty and corporation." the of [Alpert care US Suite to HSI good and v Williams 28 citations (internal (1984) related managing a candor of the operations and owed bear ongoing including obligations management prudent would HSI's management agreement, Defendants "the manage to all the Aura that authority execute pursuant and/or St. the stated omitted)]. Appendix Aura that US Suite or any a(3)]. Properties U-Trend and of Aura specified factor US a Suite LLC, LLC an be was affiliated a managed by to it." be foreign company a board joint appointed representative by [PTX 1 at established company, 6 8 of 29 31 6 of provided additionally establish to "shall and Agreement Founders were that Corp.) directors to Appendix jointly or another by (i.e., of U-Trend A 95 with company Ltd. a(1), Livorno held [*FILED: 7] IFILED: NEW YORK YORK COUNTY CLERK 10 /2 6 /2018 NEW COUNTY CLERK 11/05/2018 10:49 AM 10 : 01 AM| INDEX NO. INDEX NO. 652082/2014 652082/2014 NYSCEF DOC. NO. NO. 1970 1965 NYSCEF DOC. Mr. by 70% RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 of US would anyone or Suky Suite hold of 30% act 9 or assets, principal of On February an operating LLC 24, agreement Tomer and Suite and Corp. LLC Member A 440 West] the Company's 1 repaid be 2009. 4, 440 LLC the as ]. a(9) and shall that so shall December Suite Founders at entered West (the 3 [PTX 1]. into "Operating to the to "acquire, at 32]. The 23; or Compl 1 dispose purpose of the US hold, improve, of is 219]. refinance, maintain, of behalf on Aura) Agreement the finance, repair, use 1 Agreement, own, of behalf on Suky Operating Aff Operating Mr. by director former Shohat license, the named Agreement Operating of (a [See signed was manage, Property." [PTX (i)]. 1.3(a) The [Id. otherwise and operate, § was lease, transfer, at US Saliah binding. Pursuant Suite for it for West) the activity, Corp. Agreement Operating West, valid Suite to [i.e., financial on 440 [Id.]. The US US A re-finance to formed 2010, Agreement"). of was Appendix Appendix at named hold l]. Livorno and would Corp. be at of accrued [Id. Suite a other interest to [Id. abilities any possible." US LLC. their the (later "Aura perform to and as 440 that best the Suite Suite US Livorno subsection of provided to soon US behalf. his and LLC, Paragraph Agreement on Property and 440 US West 7 79 of of 29 31 as Suite Minority Corp. as Member Managing of the 3 [*FILED: 8] NEW YORK |FILED: COUNTY YORK CLERK NEW COUNTY CLERK 11/05/2018 10:49 AM 10/26/2018 10:01 AM| INDEX NO. INDEX NO. 652082/2014 652082/2014 NYSCEF DOC. NO. 1970 1965 NYSCEF DOC. NO. RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 Property. [Id. Member Managing to §§ manage 6.1]. 2.1, US (i.e., Company's the limited in the Member shall: Managing of the Company; (ii) to the Company; and behalf of Section authority granted requiring the (i.e. decision . under of for US matters other all limited Section Suite on the 6.1(a) Corp. and by 440 Decision," "Major any granted powers Agreement Corp. consent . . " [Id. except obligation, § into 6.1(c) of West a including which those of the the Company refinance or ]; (ii) contract any operations day-to-day behalf on money "enter b. are providing for a customary for the business of Company ordinary Company" the [Id. § (iv)]; 6.1(c) "[t]ransfer c. the or Property any thereof" part (Id. § (viii)]; 6.1(c) d. financial Suite business and and law, ]. 6.1(a) Operating company), "borrow loan mortgage the § applicable affairs in right otherwise as under authority act exclusive the Except the the 6.1(a), to: a. any the [Id. US . or otherwise of . manage (i) unanimous Suky's Mr. . Agreement this (iii) to "has . exercise 6.1(c) Corp.) Suite Company." the to business specifically Section Pursuant "select broker, advisor any leasing investment to act on real broker, banker or other behalf of the 8 10 31 8 ofof 29 estate third Company broker, party . . . " [Id. § [*FILED: 9] FILED: NEW YORK YORK COUNTY CLERK NEW COUNTY CLERK 11/05/2018 10:49 AM INDEX NO. INDEX NO. 652082/2014 652082/2014 NYSCEF DOC. NO. NO. 1970 1965 NYSCEF DOC. 6.1(c) ]; (xix) any § RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 e. "dissolve, action which 6.1(c) f. shall to any performed had consent. On winning bankruptcy [Id. act such if over to the or faith." bad West hire US Suite a was Corp. without terms (i.e. to ability mortgage, these of any Company authority 440 6.1]. § the or omission or Corp.'s the any omission or act Suite [Id. modifying to misconduct re-finance Property. nor employees Agreement, US an Affiliates, pursuant Operating agreements, from its any Member the contains otherwise, willful right the or except of veto prohibited West's Atrakchi a sell or broker, also new into )" . [the partners, for negligence, terms of any damages such Agreement, the Suky) or Members, by gross Agreement directors, in other this Under take (xvi)]. Operating Member liable, omitted from enter be or results . . Agreement this 6.1(c) officers, the by § the "no of granted Mr. of respective agents, or [Id. clause: their (or Company effect same terminate or modify 6.2(a) exculpation the up the substantially Agreement]" Section wind or or "amend, Operating of has ]; (xx) terminate 440 [Id.]. March bidder 29, 2012, acquire to closed on all (the proceeding the Atrakchi Mr. was assets Aura's of On "Bankruptcy"). purchase and 9 9 ofof 29 11 31 identified took control as in an May 23, of the Israeli 2012, Aura, Mr. [*fli'ILED: 10] NEW FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM YORK COUNTY CLERK 10/26/2018 10:01 AM) INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 including other (among such subsidiaries, agreements. in April On Atrakchi 22, had On the as an May 21, October 14, Mr. Property [PTX %¶ In January abatement No. of a of to and of in Mr. and the U-Trend, Suky's and U-Trend's Mr. of related Suky of Mr. On 10]. behalf on co-management authorizing signed [PTX with to Property. of Bar, Mr. Shohat U-Trend Aura). Mickey Mr. Aura, of agreement second Sup of the and safety measures Von Ancken Report the Ct the Suky's for 1 26]. v as of The Suite salary. a Occupancy, [Locatell use. action 10 of 12 31 10 of 29 was filed a N'gmt LLC, sought, City incurred Property such US The damages Certificate York New York 2015). and the of City New of penalties operation that behalf on continued City (t0f illegal announced was (excluding Shohat 2015, action, civil 35% ongoing 12]. 450084/2015 violation Property Aura), 7, things, indirect investment related U-Trend's (excluding 12 Aura's control Shohat, Suky into and Suky under representative million Mr. entered U-Trend, the Corp., it acquire to Mr. the 2012, after authorized Mr. of was assets bid 2012, with agreement Suite US shortly $10.2 co-management to 2012, U-Trend's and Aura's of LLC. won appointed oversee an Suite US HSI Aura's of Part interest was as obligations the things) as transient nuisance Index a of result hotel lacking Report discontinued other among the in fire suitable at 45-46; following [*FILED: 11] LEBet 10 NEW YORK COUNTY CLERK 11/05/2018 10:49 AM 26 2018 10:011 J ( INDEX NO. INDEX NO. 652082/2014 652082/2014 NYSCEF DOC. NO. 1970 1965 NYSCEF DOC. NO. RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 settlement. [Index In U-Trend 2016, and individually Corp. affiliated Suite to manage their LLC. control Aura caused The Trend 440 and West. Trend is the U-Trend alleges in the and contractual May 2012. Defendants Aura Mr. estopped by management responsibilities Bankruptcy proceeding extensive West was Property The Mr. in at The evidence was willing that fair value. to U- (1) alleged contractual discharged the in eventual the (3) U- against that: the were and market findings following bench fair alleges against due (2) Aura Israel, Atrakchi cross-claims claims U-Trend, of Mr. than variously its and with counterclaims allege asserting Shohat less asserted has Defendants from for failed accordance in and West Defendants additionally sold and 440 after asserted Aura and Aura The be have Shohat, Aura and care Suite "Aura against the US Abtan, the obligations to and individuals three Aura, U-Trend Property HSI damages due actions Yohai that with Property of Atrakchi, seeks 199]. # instant and with also misconduct the Yaackov U-Trend fiduciary took Aura (collectively, Defendants"). two behalf on against Aura: Kleiner US the derivatively with ECF 450084/2015, commenced damages seeking Michael No. 2012 sale of value. conclusions and are of result the an trial. presented to cooperate at failed trial with Aura 11 11 13 of of 29 31 to or U-Trend show that to 440 hire a new . [*FILED: 12] TY CLERK LE]NK NEW YORK COUNTY 11/05/2018 10:49 AM 10 26 10:01 2018 J ( INDEX NO. 652082/2014 INDEX NO. 652082/2014 NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 management evidence showed brokers from potential May HC (Shohat A funds" June 6, Aura to remove accounts and 1 were Tr. at 2372, Abtan Aff Aura's aware the Property 127]. to Mr. Aff of of [PTX the by failing the bank Property's information financial 178 Aura looting the shows disturbing West. when 1 DTX Suky duties its and control to 18-23; 5 440 (even obtain to failing lines and and Suky mismanaging obtain to failing it [Atrakchi "alarming breached Aura was or misappropriation that Suky The sell to counsel of Mr. by from Mr. by U-Trend. 116; from Property. buyers and "mismanagement, Suky by about Property. to According with provide HSI to and quarterly Mr. Founders respect to U-Trend with Kleiner information Defendants obtained operations and HSI. audited annual by about Suky the financial 12 12 of 14 of 29 31 was responsible the venture, Agreement required statements financial accountants. HSI's Mr. that of Founders The reviewed admitted Aura Agreement, management reports financial Aura the all executing including the letter contends Mr. Aura 2014) misconduct U-Trend Property), with 2012 other knew for 16, Defendants Defendants the July the refused and Property, by sell prospective hearing regarding and 1]. the to blocked Suky (Atrakchi) Aff the Mr. proposed 2018 3, or re-finance, accessing information" 1 that bidders 99; that to company, refused Property. information to The provide Aura time first was in June [*KLED: 13] FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY 10:01 CLERK 10/26/2018 AM| INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 more than a Property. When Aura incomplete and 2013, trusted Around Suite the the finance the A no mitigate Kleiner did it by the Property 80]. caused not Yet, became it have.reserves Both March around had despite to Mr. 2013, be knowing soon for as [the for possible." [PTX Aura admitted and Aura [Abtan sold. financial Mortgage them in in sufficient the "re- to duty defaults took or defaults. to Abtan had In responsibility, both clear Aura LLC, accrued interest those by Abtan Mr. Suite other avoid to The Aura's as York New mortgage. this time any US any repaid US Property, 2014. Property's Despite at matured. that, ]. (9) and that Property be not million. $10 1, of and be shall (a) of perform to the from included principal the damage testimonies acquired August on the or steps the Mr. when 1 meaningful LLC was it could "Mortgage") Agreement mortgage] Appendix information amount the with [Property], Property's the information, the shareholder deal that (the terms its Founders so activity, in controlling to Suite mortgage by obligation addition, US ("NYCB") matured As financial this testified that a Bank Mortgage 1 time obtained Community with upon. the LLC the Abtan involved becoming received Mr. relied or after year more 13 of 15 31 13 of 29 June to Mr. Kleiner than direct 2013 the repay also that the Mortgage stated concluded Defendants Aff their 1 118; Kleiner a year that that Aff some 1 plan [*IFILED: 14] FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY CLERK 10:01 10/26/2018 ANG INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 was RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 to necessary 2014, the Aura steps to refinance The evidence the need to 440 West's the Property had a of raised in On or letter take Jaffa and in January a 2, to Property the with filing stating address the Separately, action to address Aura the the the 14 14 of of 16 31 29 of that Property safety the valid a 16 ¶¶ issues received letter"), Property, to relating 102]. made a public Securities Authority would the in 43 control take U-Trend [PTX any 2013, [PTX "Jaffa Aura Aura 22, Defendants [PTX issues. the issues told also that address safety raised issues stating letter"). at that March Aura Aura Israel aware without (the letter, were operating the ingress. Jaffa 2014, 103]. life took fire to 2013, they (including 2013 anything and egress, to repair, violations health response to Associates & serious sprinklers, announcement [PTX 30, critical In the December parties On was August in off. the "March do letter. multiple including dated to 2013 Jack from of Property (the failed about describing fire the March the it violations occupancy Aura ]. (f) that that letter need significant evidence violations. demand serious maturity that the a Mortgage pay showed sent of or address and 4 (a), trial in no Mortgage at was certificate looming offered the attorney number the Defendants promptly violations), a address ¶ 4; letter. Jaffa that of Aura Shohat would Aff ¶ . [*FILED: 15] : 0 CPY NEW YORK COUNTY CLERK 11/05/2018 10:49 AM CLEFUC 10 26 2018 1 INDEX NO. 652082/2014 INDEX NO. 652082/2014 NYSCEF DOC. NO. NYSCEF DOC. NO. 1970 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 65]. Aura steps to offered do the at Notice provided 31, market stock in thereafter in Default Notice evidence an at Mr. made not an Mr. the payment default e-mail request for Kleiner testified but Mortgage default and did to Mortgage. ongoing notice. not steps inform Aura did to Aura that not of copy the no the Property's the the Property bookkeeper the of share received Property the the e-mails respond. payments Aura its the default. 2014, later, pay informed presented 2014, that the Aura a the 14, days to and Aura April Nine [Id.]. address April stating Default default. addressed Aura violations cure. enclosed until on The to to Again, On 26]. the that that, cured. default default, address it been announcement Mortgage that had and days public take Mortgage. bookkeeper, After a its e-mail Mortgage. from an a letter testified sent made [Id.]. showing the pay 2014 U-Trend. paid thirty would it 1, to Kleiner bookkeeper could April with would it of [PTX took that operation illegal the Aura that trial always about that stated default Aura Israel notice a Notice"). LLC 2014, investors Aura's Suite violations the "Default US March On had (the showing delivered from resulting trial critical NYCB 2014, Property at the that 20, Mortgage the or so, March On evidence no were did U-Trend nothing of 15 17 of 29 31 15 of it. not made, to cure NYCB the issued payment [*FILED: 16] NEW YORK F1LED: YORK COUNTY CLERK NEW COUNTY CLERK 11/05/2018 10:49 AM 10/26/2018 102-0_1 22d INDEX NO. 652082/2014 INDEX NO. 652082/2014 NYSCEF DOC. NYSCEF DOC. NO. 1970 NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 Aura The efforts showing A 2014 Shohat of meeting of indicated that to Abtan negotiate for a the Aura the investment. Mr. not hire [Tr. to Mr. did Property's value not sole a Mr. as Defendants of sale directors exclusive and Property. the that would if HSI wished the HSI to U- overrode also and "try to to vote 3.2.1]. minutes meeting they 3 31, Defendants Aura The to authority [PTX the vote. testified 420:3-10]. summoned Aura seeking July save the reflect sell the its 1.7]. 1 broker on capacity the U-Trend's market" open Kleiner a 2 their There, but stating [Id. Defendants [Tr. to 3 place Defendants in of 2014. July took Aura assess Aura the directors of to mind. the objected, and sell) favor the (when trial at or Property, U-Trend, in of Defendants in Property 2013 asked sale a March meeting. buyer as directors with the The in evidence any market to of Defendants Mr. objection board were no had authorize Trend's HSI the they Aura need member HSI, but the present meeting"). another directors The the board ("HSI to between determined and Property made value Defendants not did they Property's the 9, Defendants that value the Abtan similarly conduct before an voting property board of directors prior to the admitted appraisal to set 1172:2-4]. 16 18 of 29 31 16 of to a that meeting. Aura the determine minimum did the price for sale. [*FILED: 17] LERK NEW YORK COUNTY CLERK 11/05/2018 10:49 AM 10/26/2018 10:01 AM INDEX NO. INDEX NO. 652082/2014 652082/2014 NYSCEF DOC. NO. NYSCEF DOC. NO. 1970 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 Aura Nonetheless, to Property Mr. prior Assa, Tr. 341:16; signed 1057-60]. with Assa that The Aura Defendants the deal with million. between the Mr. At the [Index No. U-Trend GCS was it, were that put $27 pay with and represented Property Comfort to willing accessing GCS George only it to would auction, [Tr. of million In 1]. consolidated the asked of context Aura [PTX ("GCS"), the New York for the to 34, willing access 17 17 of 19 of 29 31 to pay to the Property. from U-Trend. more if in 45, 44, real Property its join without Property information limited with 33]. 118:15-22]. for be PTX Property. Sons & marketed resolution the two these well-known a the U-Trend # Depo for not 1172:10-13; of the locate was signing repeatedly for to the ECF U-Trend able Mr. showing value Property first [Kleiner was buyer, the trial market meeting, 652082/2014, refused. the board process LLC to Property at fair Assa. HSI the sales Aura estate Mr. action, competitive 161]. and commenced newly-commenced a meeting to of time contemporaneously cases. that sell to Suky conceded board HSI Suite US the evidence no reflected Assa Abtan 176]. 33, offered Mr. of of Solly Mr. meeting, sale the sell 340:23- Depo resolution a [PTX Abtan Mr. the to properties, [Abtan after day deal other meeting. approving $26 a in consent Suky), for Property. with One written Mr. partner his board HSI unanimous a (along the negotiated fully and Suky to had the for • [*FILED: 18] NEW YORK CLERK 11/05/2018 10:49 AM FGC COUNTY C:CRENTY CLEFut 1 : 10 26 2018 INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 due diligence. the Property. million Aura there in as was required. This Property $27 than U-Trend well, In offered could million support of direct the Atrakchi, submitted testimony is On 133; of 25], 417; 422; Supreme the this Court contradicted even his found of While of documentary own Court written 440 the higher price a Court primarily Mr. Abtan and finds that their Kleiner, frustrated was Mr. Kleiner Likud he Party gave a in Israel evasive prior testimony. 18 of 20 31 18 of 29 direct 125:23-126:14; 124; is As an and lawyer [Tr. answers sworn Mr. by provide to [Tr. veracity. evidence, direct market to refusal Mr. the that of credible. lack Court not Defendants This this 882]. the that, that Mr. affidavit. not general and answers of inconsistency, evasion, did show not did behalf finds Aura the testimonies cross-examination, Kleiner's to in Assa Suky failure claims, by failed obtained. be their largely also million. Mr. on $27 the Property Mr. establish not trial offers Court did at by Defendants' Aura the $27 the addition, purchase to to for offered In value. consenting notwithstanding buyers price the market fair cooperate potential that and marketplace, West, more presented purchase would located had offer his evidence the were U-Trend raised Assa Mr. only after Assa Mr. buyer, reflect that Immediately Nonetheless, that insisted head the 72:21- that statements example, and on cross- [*[FILED: 19] FILED: NEW COUNTY CLERK 11/05/2018 10:49 AM NEW YORK YORK COUNTY CLERK 10-01 10/26/2018 AM INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED 10/26/2018 NYSCEF: 2013 the that Mortgage. denied [Tr. 104-05]. swore insufficient in But that in to pay funds under oath insufficient had Property Kleiner Mr. Kleiner Mr. examination, June his direct to June affidavit, were "there mortgage." the in the pay testimony knew he knew he funds 2013 off that [Kleiner Aff T 84]. Abtan Mr. evidence. documentary that he did for rights HSI Suite the Special 33, Corp. in between signed attempt controlled agreement 2012 to that [DTX 2017. lawyer testimony Aura's justify the and (a offered similarly 2012 gave [PTX U-Trend Suite LLC among other 68, that lacked "veto 19 of 21 31 19 of 29 in Suky behalf of In to for US he DTX credibility. right" July JF]. 2372:3-4]) the the period an to of 301; [Tr. referred LLC Suite documents 300, throughout Atrakchi on the executed Notice the for of were US Mr. Kleiner Mr. a with 31, like Mr. Property, all of signed DE], his rights Corp. consent US inaction in But Suite US also of signature signature only proceeds Abtan possessed Indeed, or the Members the the and cross-examination 953-54]. unanimous Mr. August Atrakchi Mr. HSI by split 176]. Aura 329:9-330:8]. the of Meeting Suite Depo and had statements sworn on [Tr. he signed Property [PTX 2014. from Corp. including Abtan, anybody swore documents prior testified Suite [Abtan Corp. Mr. sell US Abtan Mr. material by or that his Abtan Mr. know not deposition, US contradicted also an it alleged sale. [Tr. [*[FILED: 20] NEW YORK YORK COUNTY CLE_RK FILED: NEW COUNTY CLERK 11/05/2018 10:49 AM 10/26/2018 10:01 Ald INDEX NO. 652082/2014 INDEX NO. 652082/2014 NYSCEF DOC. NO. 1965 NYSCEF DOC. NO. 1970 2400]. RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 Atrakchi Mr. page agreement. been never [Tr. and offered at because every that to Aura the during Atrakchi Mr. director of HSI. knowledge of Tr. case stated the 1490]. affidavit detailed same. direct had By written documentary to of be the U-Trend testimony of and directly, was testimony Mr. offered [PTX filed No. in 652082/2014, 29-page a to purporting of have Atrakchi's Mr. the direct 2347-60]. as who Shohat, personal no affidavits Index IR; Much to activities. trial, [Tr. gave "little Atrakchi facts. Claudio lawyer, prior before stricken. contrast, examination direct Mr. uninvolved an Aura's DTX 2360; testimony knowledge testimony [Tr. was Atrakchi's Mr. testified meeting. had to" relating exist U-Trend's former Atrakchi Mr. Surprisingly, of Aura's to unlikely over he of exhibits of Atrakchi, board that 2398]. 190:22-191:9]. 214; Mr. had history is Property conceded facts agreement five- or agreement hundreds the HSI four a four-year the of 2014 9, that the in the July [Tr. confirmed time as right" including sell also Dessberg, # to "veto this Defendant, 3-2 This part Moreover, voted objection any not was trial. they at document this 2401]. referred litigation this ECF described its answered pertinent well-supported 20 22 of of 31 20 29 witness questions answers. by, evidence. primary and consistent the on Mr. cross Shohat's with, the [*[FILED: 21] YORK NEW YORK COUNTY CLE-RK FILED: NEW COUNTY CLERK 11/05/2018 10:49 AM 10/26/2018 10:01 INDEX NO. 652082/2014 INDEX NO. 652082/2014 NYSCEF DOC. NO. 1965 NYSCEF DOC. NO. 1970 At RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 Aura trial, Aura received letters 2012 claiming that tried Aura responsibilities. impact Aura responsibility. continued and 1013-16]. to served to responsible if act this Indeed, it did on March not of noted has notice on Aura behalf fulfill summer letters of management rejected US Suite Corp. U-Trend that U-Trend's [Tr. U-Trend's that its management the Aura no had Aura's to Abtan, on Court Aura put Mr. the inaction. those these impediment own management its cancel showed to in of to no According letters default evidence posed and in its for counsel threatening The on merely was and U-Trend U-Trend's from responsibilities, blame to letters would hold Aura [Tr. duties. 1342:10-16]. Moreover, letter to U-Trend [Aura] is a [PTX 106 1 Aura's contention stated management 4; Tr. was to given which in way." any right, and Aura, manage the DTX 4]. the Bankruptcy 21 21 23 of of 31 29 under Mr. and Abtan the expressly and authority ongoing the after 2012, Agreement the in proceeding July Founders of to 87:26-88:4; a In the hands Bankruptcy obligations unwarranted. the were responsibility a to diminished or Aura the management cited "[i]n that [PTX is Aura Bankruptcy, that Aura's Agreement Founders wrote agreements "continuing terminated not trustees 1090:10-1091:19]. discharged Israel ." are Tr. 2012, that stating party, 4; 28, business . testified discharged that only . . [*[FILED: 22] NEW-YO-RK COUNTY CLERK FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM 10 / 2 6 /2 018 10 : 01 INDEX NO. INDEX NO. 652082/2014 652082/2014 NYSCEF DOC. NO. 1970 1965 NYSCEF DOC. NO. RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 obligations. financial conceded time that of In assumed like the control Defendants had when a violations Aura Mortgage had matured Mr. Atrakchi could knew that part of meaningful action at the Aura a would from NYCB. in management its address aware of that Mortgage The numerous Property to [PTX with deal Mortgage. [PTX 7, the but responsibilities, the the Mortgage. the required be Aura of default Aura The control was agreements ongoing discharged. mortgage it to not acquired cause that clear quite and which to were they 2014, that as made million $10 August in 16]. that pursuant Agreement knew matured obligations bid Aura of Founders Property no counsel Aura's Indeed, Bankruptcy. addition, the 1020:2-5]. were there the [Tr. took no Tr. 209; 1266:12-20). Aura The Defendants counterclaims U-Trend against and Mr. and Property Shohat Mr. Mr. asserted Atrakchi] U-Trend and Mr. Shohat liable for the mismanagement Suky's Aura's looting. that sought of counterclaims hold to the are dismissed. hereby This support finds Court its Shohat actually in way U-Trend manage managed precluded Aura that that claims to responsibility any [except the the Aura presented has or Mr. Property, Property, from fulfilling 22 22 24 of of 29 31 no Shohat had U-Trend its to any U-Trend that that evidence or or responsibilities Mr. Mr. Shohat [*FILED: 23] NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY CLERK 10:01 F.LLED: 10/26/2018 AM INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 to RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 manage the Aura to damages or the counterclaims of dismissed with U-Trend Mr. caused Shohat Aura's of all any claims U-Trend against Clerk The $4 seeking Sale or and Mr. directed is Shohat enter to Suite US mismanagement of Claims Looting of contract, of $3,700,904.38. the premised are and (3) Direct and Aura failed to satisfaction of the adequately address substantial debt million, and aiding arrange leaving the Mortgage lender U-Trend on of the Property, unable 23 of 25 31 23 of 29 and The breach duty, seek and damages alleging Aura, or refinance, and diminished even West 440 waste the to failed the causing defaults, that duty. Claims"). against repayment, interest. Aura, looting, the Claims"), fiduciary fiduciary the of "Sale liability, claims for Mortgage the to abetting derivative the sale 35% of "Looting breach on (the against for Mr. a forcing breach (the Property Aura, trial: U-Trend's claims damages alleging against to the derivative and LLC on at value damages premised are damages for market fair direct of Abtan Mr. below million Direct claims and price a for claims derivative and Claims (2) three Kleiner, at Property $1.9 asserted kind asserted Mr. Atrakchi, that that finds prejudice. Direct (1) and or accordingly. judgment The Court any U-Trend that Property. the Accordingly, are or Property, recover to accrual by recovery the of full [*[ FILED: 24] NEW YORK COUNTY CLERK 11/05/2018 10:49 AM FILED NEW YORK COUNTY CLERK 10:01 : 10/26/2018 AM INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 amount of Claims are of RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 its loans (the premised on Claims"). "Mortgage breach the of Mortgage The fiduciary breach and duty contract. With why respect such The are unwarranted. parties are in Venture. evidence The for contract and through October Under Mr. v York substantial a AD2d an to knowledge of assistance" the of Joint the Aura the bears breach of but liability, only 440 Aura provided U-Trend and ]. "[T]he constitutes owes [Id.]. act. to 2003) defendant the wrongdoing, West; Dept abettor and aider for liable fails (1st 126 if be fiduciary plaintiff." West's to on of can the 113, only the 440 both fiduciary alleged assistance directly looted that theories when 307 of members the looting abetting law, Cohen, inaction Suky established trial assistance" [Kaufman Mr. explained already 2012. 3, New to Suky's and that duties at aiding "substantial duty his have we Claims, agreement breached responsibility mere Sale the damages and Property to a had fiduciary actual "substantial suffered damages as a result. Aura being the a of fiduciary fiduciary duty is liable duty of for by and to 24 24 of of 26 31 29 Joint the aiding failing U-Trend to directly shareholder controlling Aura Accordingly, breach owed remove by virtue Venture. abetting Mr. Mr. Suky, Suky's failing of [*FILED: 25] CLERK NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY 10:01 AM FILED: 10/26/2018 INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF NYSCEF DOC. NO. 1970 DOC. NO. 1965 to RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 control take and Suky, the failing to argues that Suky's 2012 lead to in three accounts from away Mr. information financial reliable delay for 11 4-6, Due to U-Trend's damages that Aura. Aura admitted trying [Garibaldi delay proved Aura asked for an Suky. Mr. action taking trial October awarded is Gemini never While that ruling 2012 3, not are against the Mr. looting attributable to 1343:15-18]. U-Trend 2012, to its after arose [Tr. to request reiterates Court the the 43]. 1 against steps the among Aff had Tr. DQ; take negotiations U-Trend taking to agreement Shohat the discuss [DTX going Mr. October early Suky. was 39-41; 2012, 2, in for 10]. 104 Suky, Suky to meeting 19 discussions, December By Mr. management Aff such have responsible Aura U-Trend potential a held asked against time, [Kleiner fruitless. [PTX the be had action At did not U-Trend taking parties. emergency should it negotiating U-Trend was obtain because looting 1434:21-1436:18]. and bank Property's the Property. Aura of of the that recover Report 4] paid amount GCI 25 of 27 31 25 of 29 constitutes 25, payments, Mr. and Mr. by June those 15]. improper of payments On make to Suky were The to 2012. [PTX GCI to them. at Mr. authorization. payments to in ("GCI") instructed withdrew to Inc. Capricorn, expressly that attributable damages that Abtan Aura $289,785.56 looting by Mr. [*FILED: 26] CLERK NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY 10:01 AN FILED: 10/26/2018 INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 that Suky and RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 is Suite LLC. Because Aura Suky's 2012 looting, Direct Realty, US from US Suite With to March default conceded in a incorporated the default amount were $1,998,711.31. not Mortgage Property's Aura argues that it Aff Aura of 3 the Index 174; April 2015 1, responsible 26 of 28 31 26 of 29 payoff reflected to 4/1/2015: # acted 1286]. Default address to way. not Aura's support 1177:11-1178:23]. Tr. ECF (and reason which 3/20/2014 had timely is Abtan to final 652082/2014, accrued a 229; the from No. in PTX began and previously Mr. by affidavit, 20.00% have accrued make expense. testimony in Abtan's [Index would by to Property's the has [Abtan included at submitted 154; only default into Aura damages 1264 # Mr. to $1,998,711.31." interest the and totaling failure of 26]. direct that LLC recoverable unnecessary fell Abtan's Midtown Aura's accrue affidavit Mr. report, repayment Mortgage of West, Aura. or to all NYC be Claims, [PTX was Interest not West, to 440 Aura, for should 4], Mortgage the ECF attached "Default at to Garibaldi's Mr. in 440 Mr. 652082/2014, letter relating Property sworn into exact damages interest. damages) This the refinancing 2014, accruing Mortgage responsible the the caused claimed deemed and regard for In not Report LLC provisions Mortgage severally reflected LLC [Garibaldi $324,531 No. is attributed and jointly for the default the [*FILED: 27] NEW YORK COUNTY CLERK 11/05/2018 10:49 AM CLERK OUNTY 10/26/2018 10 : 01 AN| INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 accrued interest be merit. knew in 2013 repay Aura was before or the Mortgage. also aware had [Tr. refinanced would been have to The and the was at of The loan Aura at Aura Defendants agreed Property's the the value the Property of the would a loan - of Property. have trial agreed which The allowed that value 27 27 of of 29 31 29 Property lend conceded was untapped repay U-Trend balance to expert substantial to by the willing million it. re-financing Mortgage NYCB Aura's Aura been fulfill of $20 nearly to the was have its called the been interest witnesses lender a value - 1568:24-1570:7] attempting have penalty abdicated that Assuming not the than that Property could and expert and million, needed Property (as temporarily would simply rather The million. Mortgage the address the matured, experts $30 well Property Property default possible. least the perform fact, $9.3 only down to act, financing in shut averted. responsibility was, the to 123]. 9 violations. 1264:4-13]. before the on Aura funds Aff Abtan 84; nothing Mortgage the 3 that sufficient have not defense this showed trial not Aff did urged) then triggered. Aura simply repeatedly renovations, would could Property But at violations the Property Aura U-Trend presented [Kleiner of the inevitable. was Property Yet numerous If 65% the that maturity. the default a evidence The because Mortgage the and re-financed, lacks to on the was to up [Tr. achievable equity Mortgage on in and [*[FILED: 28] NEW FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM YORK COUNTY CLERK 10:01 10/26/2018 AN| INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 finance RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 the Aura renovation. made no effort to this into tap equity. Aura also available sale cannot because backed was [PTX sophisticated 4]. 2, million in By to expert conceded Aura's been have [Tr. available evidence to obtain that contract The instance U-Trend's The market a same 11 $9.3 2014. for Mortgage the between rate that 7% 12%. and was re-financing Aff [Falik available was [Id. needed only in 7.5%. the to $31,775,000. opined and 6% the $3,775,000 refinancing refinancing breach and 57]. 9 Aura had paid loans fiduciary to collected The tried satisfy until the in for Aura for to failing the amount HSI shall breach accrued due $1,998,711.31. wit, behalf on to duty Mortgage the default, damages be of against assessed are with deal Mortgage the ]. LLC expert damages appropriately to at The it. Accordingly, of at between rates clear is that U-Trend's at issues Mortgage the repay available 1572:16-18]. and of Suite US 2015. million, 1(a) financing comparison, of $28 additional an principal financing 9 Summary advanced total for Property, would Claim lender of violations was financing April in financing existing 232, that sold was Property non-recourse the Property. 1(a), the by notwithstanding dispute reasonably the of remaining U-Trend loans 28 of 30 31 28 of 29 unpaid have been in balance fully the first on paid. [*IFILED 29] FILED: NEW YORK COUNTY CLERK 11/05/2018 10:49 AM NEW YORK COUNTY CLERK 10:01 : 10/26/2018 ANG INDEX NO. 652082/2014 INDEX 652082/2014 NO. NYSCEF DOC. NO. 1970 NYSCEF DOC. NO. 1965 Any RECEIVED NYSCEF: 11/05/2018 RECEIVED NYSCEF: 10/26/2018 collected amounts balance U-Trend's of distribution the account loans to directly of have any been U-Trend other to after repaid fully due claims its shall interest equity Property. All claims Settle Dated: on October not judgment 22, assessed above are dismissed. hereby accordingly. 2018 J. 2 9 of 31 31 29 of 29 S. C. the be a in

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