Rosania v Gluck

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Rosania v Gluck 2019 NY Slip Op 32087(U) July 8, 2019 Supreme Court, New York County Docket Number: 655331/2017 Judge: Saliann Scarpulla 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. [* 1] INDEX NO. 655331/2017 NYSCEF DOC. NO. 76 RECEIVED NYSCEF: 07/08/2019 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART IAS MOTION 39EFM -----------------------------------------------------------------------------------x ROBERT ROSANIA, INDEX NO. Plaintiff, MOTION DATE 655331/2017 09/11/2018 -vLAURENCE GLUCK, STELLAR SUTTON LLC,STELLAR BRUCKNER LLC,STELLAR 117 GARTH, LLC,STELLAR 750 TUCKAHOE, LLC,STELLAR 330 EAST 54, LLC,STELLAR WEST 110 LLC,STELLAR MORRISON LLC,STELLAR KVI LLC,STELLAR STRONG ISLAND MEMBER LLC,STELLAR WEST 28 LLC,STELLAR PWV LLC,STELLAR JANEL MEMBER LLC,STELLAR ARIES INVESTOR LLC,BOULEVARD STORY LLC,STELLAR COURT PLAZA LLC,STELLAR UNDERCLIFF LLC,STELLAR 2020 LLC,JOHN DOES MOTION SEQ. NO. 002 DECISION+ ORDER ON MOTION Defendant. -----------------------------------------------------------------------------------x HON. SALIANN SCARPULLA: The following e-filed documents, listed by NYSCEF document number (Motion 002) 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39,40,41,42,43,44,45,46,47,48,49,50, 51,52, 53,54,56, 57,58,59, 60, 61 DISMISS were read on this motion to/for Upon the foregoing documents, it is Defendant Laurence Gluck ("Gluck") moves, pursuant to CPLR 3211 (a)(l), (2), (4), (7) and ( 10), to dismiss Plaintiff Robert Rosania' s ("Rosania") amended verified complaint ("AVC") as asserted against him. Rosania filed the original verified complaint ("VC") on August 11, 2017 seeking the dissolution of 17 Delaware limited liability companies ("the LLCs") in which Rosania and Gluck hold financial interests (the LLCs with the three "John Doe" defendants are 655331/2017 ROSANIA, ROBERT vs. GLUCK, LAURENCE Motion No. 002 1 of 5 Page 1of5 [* 2] INDEX NO. 655331/2017 NYSCEF DOC. NO. 76 RECEIVED NYSCEF: 07/08/2019 hereby referred to as the "Nominal Defendants"). 1 Rosania claimed that dissolution of the Stellar LLCs pursuant to NY Limited Liability Company Law§§ 702 & 703 and 6 Del. C. §§ 18-802 & 18-803 was necessary because Gluck' s misconduct and "unfettered domination and control" over the Stellar LLCs has made their continued operation impracticable. Gluck moved to dismiss the VC based on Matter ofRaharney Capital, LLC v Capital Stack LLC, 138 AD3d 83 (1st Dept 2016). In Raharney, the First Department held that the courts of New York do not have subject matter jurisdiction to dissolve a foreign business entity. Id. at 85. In response, Rosania e-filed the AVC on December 22, 2017, asserting three causes of action. Although the AVC does not seek judicial dissolution per se, it seeks equitable relief associated with judicial dissolution. In the first cause of action, Rosania asserts that Gluck owes him fiduciary duties, which he has allegedly breached through fraudulent and abusive conduct in the management of the Nominal Defendants. To remedy this breach, Rosania seeks a court order forcing either the sale of the assets owned by the Nominal Defendants or a buy-out of Rosania and Gluck's respective interests in the Nominal Defendants. The second and third causes of action - the underlying bases for which are identical to the alleged conduct underlying the breach of fiduciary duty cause of action - seek a forced sale of the In the VC, at iJ 28, Rosania asserts that the John Doe Defendants are single-purpose limited liability companies through which Rosania and Gluck, "directly or indirectly,'' hold interests in three properties in the City of New York. Rosania also asserts that Gluck has refused his request to provide him copies of the John Doe Defendants' operating agreements, and so he has been unable to learn their true names. 1 655331/2017 ROSANIA, ROBERT vs. GLUCK, LAURENCE Motion No. 002 2 of 5 Page 2 of 5 [* 3] INDEX NO. 655331/2017 NYSCEF DOC. NO. 76 RECEIVED NYSCEF: 07/08/2019 Nominal Defendants' assets and a forced buy-out of Rosania and Gluck's respective interests in the Nominal Defendants, respectively. The remedies sought here - ( 1) the forced sale of the Nominal Defendants' assets and the distribution of proceeds and (2) the forced purchase and sale of one party's interests in the Nominal Defendants to the other party - are identical to the relief Rosania previously sought in the VC through judicial dissolution. See VC iii! 132-33 and iii! 13739. The AVC is clearly an ill-disguised attempt to make an end-run around the rule expressed in Raharney. See September 5, 2018 hearing transcript at 8:4-13 and 9: 13-17. The Nominal Defendants are each single purpose entities, set up for the sole purpose of owning each Stellar investment property. Id. at 8:4-13. Granting Rosania an order to sell the assets of each LLC and to distribute the proceeds would be tantamount to ordering the dissolution of each LLC. Id. at 9: 13-17. I cannot grant such relief because, as explained in Raharney, "judicial dissolution of a foreign [business entity] ... can only be granted by the state that created it." 138 AD3d at 88. See generally Kassab v Kasab, 137 AD3d 1138, 1141 (2d Dept 2016) (plaintiff "failed to allege any basis ... to compel the sale of property owned by those entities in the absence of the dissolution of those entities"). Although the forced buy-out relief Rosania seeks does not appear to present the same problem because it would not require dissolution of the LLCs, this remedy is not available here. See Kassab v Kassab, 2015 WL 11090346, * 2 (Sup Ct, Queens County 2015) (LLC member had no right to buyout where claim for dissolution dismissed and 655331/2017 ROSANIA, ROBERT vs. GLUCK, LAURENCE Motion No. 002 3 of 5 Page 3 of 5 [* 4] INDEX NO. 655331/2017 NYSCEF DOC. NO. 76 RECEIVED NYSCEF: 07/08/2019 LLC's operating agreement did not contain buyout provision); see also Belardi-Ostroy, Ltd. v American List Counsel, Inc., 2016 NY Slip Op 30727 [U], 10 n.8 (Sup Ct, NY County 2016) ("the remedy of 'equitable buyout' is unavailable when [plaintiff] fails to state a claim for dissolution"), citing, inter alia, Mizrahi v Cohen, I 04 AD3d 917, 920 (2d Dept 2013) ("in certain circumstances, a buyout may be an appropriate equitable remedy upon the dissolution of an LLC' (emphasis added)). Accordingly, Rosania's second and third causes of action are dismissed. The breach of fiduciary cause of action, which seeks identical relief as the aforementioned causes of action, is also dismissed. While the allegations in the AVC may support relief in the form of damages, Rosania fails to seek this relief in the AVC. Accordingly, Rosania shall have leave to rep lead the breach of fiduciary cause of action to assert proper relief, i.e., damages, for the reasons set forth on the record on September 5, 2018. Tr. 10:17-24. In accordance with the foregoing, it is hereby ORDERED that the defendant's motion to dismiss is granted and the complaint is dismissed; and it is further ORDERED that plaintiff is granted leave to serve and file an amended complaint so as to rep lead the first cause of action for breach of fiduciary duty within twenty days of the date of this decision and order; and it is further 655331/2017 ROSANIA, ROBERT vs. GLUCK, LAURENCE Motion No. 002 4 of 5 Page 4 of 5 [* 5] INDEX NO. 655331/2017 NYSCEF DOC. NO. 76 RECEIVED NYSCEF: 07/08/2019 ORDERED that, in the event that plaintiff fails to serve and file an amended complaint in conformity herewith within such time, leave to replead shall be deemed denied, and the Clerk of the Court, upon service (60 Centre Street, Room 141B) of a copy of this order with notice of entry and an affirmation/affidavit by defendant's counsel attesting to such non-compliance, is directed to enter judgment dismissing the action, with prejudice; and it is further ORDERED that such service upon the Clerk of the Court shall be made in accordance with the procedures set forth in the Protocol on Courthouse and County Clerk Procedures for Electronically Filed Cases (accessible at the "E-Filing" page on the court's website at the address www.nycourts.gov/supctmanh)]. This constitutes the decision and order of the Court. 7/8/19 DATE CHECK ONE: CASE DISPOSED GRANTED D DENIED APPLICATION: SETTLE ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN 655331/2017 ROSANIA, ROBERT vs. GLUCK, LAURENCE Motion No. 002 5 of 5 ~ NON-FINAL DISPOSITION GRANTED IN PART SUBMIT ORDER FIDUCIARY APPOINTMENT D D OTHER REFERENCE Page 5 of 5

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