Matter of Battat v Rejwan

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Matter of Battat v Rejwan 2023 NY Slip Op 33249(U) September 19, 2023 Supreme Court, Kings County Docket Number: Index No. 516774/2022 Judge: Leon Ruchelsman 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. INDEX NO. 516774/2022 FILED: KINGS COUNTY CLERK 09/19/2023 01:31 PM NYSCEF DOC. NO. 121 RECEIVED NYSCEF: 09/19/2023 SUPREME COURT OF THEi$TATE OF NEW YORK COUNTY OF KINGS! CIVlL TERM: COMMERCIAL 8 ---,--.---·--,--•--. ----.---~t-----·-.-.-·--------. ---x In the Matter of the Application of MENASHE BATTAT, Individually,:iand Derivatively qn Behalf of BABY TIME Jl'iITERNATIONAL, INC• I as the Holder of 50% jc;if all outstandihg shares of BABY TIME INTERNAttoNAL, INC. Petitioners; Decision and order For Dissolution of BABY TIME INTERNATIONAL, INC., a domestic corporation - against ..,. Index No. 516774/2022 SHAUL REJWAN, Inciividlially, and as the holder of SO% of all outstandin9 shares o.f BABY TIME Il\JTERNATTONAL, INC., .. Respondents, September 19, 2023 -----.-·-------.---.. ---. ; ; -. ----. -----·.-. --· .. .-.-·x: )?RESENT: HON. LEON RUCHELSMAN Motion Seq. #3 & #4 The respondent Shaul Rejwan has moved seeking to enforce a settlement agreement :entered into between the parties on January The peti tidmer Mena.she Bat tat has cross--:moved see'kihg 16; 2023. the appointment of a receiver. respectively. The motions are opposed Papers:w:ere subrnitted by the parties and after reviewing al.l the argyrnents this court now makes the foll·owirtg determination. Shaul Rejwan arid MenasheBattat were each half owner of an entity called Baby Time International Inc. the respondent sued . tbe :! In a related action petitioner alleging brea.ch of a fiduciary duty, ,.and aiding and :~betting such breach, misappropriation, un tvst enrichment~ m~ ~apptdpr ia t ion of trade s.e cret s and the aiding and a,betting and t.he breach of of such misappropJ;"iation, unfair competition thei f.$.ithless servant doctrine. ----------·······--··-·-·-··----··--····-···-····· [* 1] 1 of 6 The respondent INDEX NO. 516774/2022 FILED: KINGS COUNTY CLERK 09/19/2023 01:31 PM NYSCEF DOC. NO. 121 RECEIVED NYSCEF: 09/19/2023 alleged that petitlon;er was selling Baby Time products under a Ii different name and w?-is essentially competing with Baby Time. The petitioner commenced: !this action seeking a dissolution -of Baby ; : Time. On January 16I-! 2023 the partie::, ent€:'!red into a settlement ! : agreement which resoJ)ved both lawsuits. This motion has now been filed by the res:pondefnt seeking enforcement of that agreement, Specifically, the resjpondent argues that the peti tiorter has :! received approxlmatei!y $90, ODO for payments from receivables c1.nd has failed tb forward those funds to an escrow account established to deal viith all funds pursuant to tbe settlement agreement. The petit\ioners oppose the motion on two grounds. First, they allege tne respondent breached the settlement agreement so there is; no need for petitioner to honor any of its terms. Moreover, th~y asse:i:'t that the parties did not e'stablish a joint escrow agreement as outlined in the settlement agreement and until such time ~ne is established any funds in petitioner's possession will not J:;e deposited into an es·crow funds controlled .sqlely by respondent(s counsel. Conclusions of Law It is well settled that a stipulation or settlement agreed iri open court should not thereafter be disturbed.by the: court: (Itoko Suzuki v. Pet~rs, 12 AD3d 612, 784 NYS2d 393 [2d 2004]) • Indeed,. a cqurt should n.ot disturb a settleme_nt unless 2 [* 2] Dept., 2 of 6 INDEX NO. 516774/2022 FILED: KINGS COUNTY CLERK 09/19/2023 01:31 PM NYSCEF DOC. NO. 121 RECEIVED NYSCEF: 09/19/2023 some fraud or mistake, or some other significant reason presents Ii itself mandating cha~~ing the settlement terms (Maury v. Maury, 7 AD3d 585, 776 NYS2d ~j89 [2d Dept., 2004]). The petitioner ih this case has not prejsented any rea.9:on why the settlement should be cancelled. First, there ist no merit to any argument the respondent breached the agreemenit by establishing a new entity engaged in . ! selling baby product$!. There is nothing in the agreement prohibiting either patty frOm so engaging. Further, there is ho proof supporting any:allegations the respondent took any escrow funds at all once thEi. settlement agreement had been executed. Therefore, there is ~o basis to assert the respondent breached the settlement agree!I\ent. Next, Para,graph 1;3 of the s.ettlement agreement states that "any accounts receivables recovered, and upon final adjustment of the insurance claim,1the insurance proceeds shall be deposited into a joint escrow a;~count {!'Escrow Account") established by respective counsel f~.r Rejwari, Manny, .arid Baby Time, for ultimate division between the 1!parties subject to payment of Baby Time 1 s debts as determined by a neutral, third-party acco:untant ... " (see, .confidential Settlemr:,nt Agreement, 11[3 [NYSCEF Doc. No .. 84]). The evidence e:stabli'shes !that al though the escrow account was .created. by counse.1 for the r~spondent, the peti tioriei' s counsel and indeed all parties td the two lawsuits con;i,ented to sµch an :! 3 [* 3]----------------··--""-----"" 3 of 6 FILED: KINGS COUNTY CLERK 09/19/2023 01:31 PM NYSCEF DOC. NO. 121 account. INDEX NO. 516774/2022 RECEIVED NYSCEF: 09/19/2023 Thus, whil~, the requirement the account be "joint;' Ii might require an act~~l joint account of all partiesi as noted, all parties conceded :to an account created by respondent's counsel. Thus, therejwas no breac:h of the settlement agreement due to the failure to maintain such joint account. This is further supported by !the fact respondent's counsel has made all bank statements availfble thereby preserving the transparency of the account. To be sure if'it 1is possible to open a joint escrow account then the parties should do so. There is a factual dispute whether a joint escrow- account is even possible. 2023 Ivi Pashcillari, . Chase sent an email a' :t.9 on July 10, business relationship manager at JP Morgan all counsel in this case explaining that the settlement agreement was not "sufficient" to open a joint escrow account (see, Email sent July 10, 2023 at 5:46 PM [NYSCEF Doc. No. 112]). On July 24, 2023 counsel for the petitioner sent an email that stated.that the petitioner visited a Chase branch in Brooklyn anci tha,t,such branch woul.d permit the opening of a joint escrow account by merely filling out forms. 1 The email concluded that ''in any event the person at Chase familiar with this is Louis Choy of: Chase and he operates at 6510 Avenue U, Brooklyn. NY. You ahdi/or your clie.nt .can stqp by the. branch or : : perhaps a. more conve~!ient branc:h a:.nd sign a W9 after conferring '.; with Mr. Choy. The jpint escrow agr.eE!ment can go. forward as :! envisi.oneci by the sebtlernent ~.greement 4 [* 4] 4 of 6 as written" (see, Email INDEX NO. 516774/2022 FILED: KINGS COUNTY CLERK 09/19/2023 01:31 PM NYSCEF DOC. NO. 121 RECEIVED NYSCEF: 09/19/2023 sent July 24, 2023 atl,2:57 PM [NYSCEF Doc. No. 103]). As noted, there is a disagreemet\_t whether a joint escrow account can even ! : be opened. The respo;rident cannot be faulted for failing to .act upon an email containi4ng assurances from a litigant about the '' unsubstantiated statements of a bank official. If a joint account can be openea; then the account must be opened j.ointly. Therefore, the motion is resolved as follows: the motion seeking to enforce the settl~Ifent agreement is granted. The petitioner must depo.sit all accounts receivahles in its possession and any other funcis that arei:he subject of the dissolution into the escrow account. if possible. The ,parties may endeavor to open a joint account If not possible the current escrow account remains '' valid and the responci$nt's counsel shall continue to provide account information upon request. Turning to the cross-motion seeking a receiver, it is Well settled that "a temporary receiver should only be appointed where there is a clear evidentiary showing Of the necessity for the conservation of the property at issue .and the need to protect a party's interests in :that property;, (see, Quick v. Quick, 69 AD3d ' ' B28, 893 NYS2d 583 [2d Dept., 2010]). Thus, a: temporary receiver is appropriate where Jhe party has presented "clear and convincing evidence qr irreparable loss or waste to the subject property arid that a t1=mporary receiver is needed to protect their i ! interests'' (Magee v. :Magee, 120 AD3d 637, 990 NYS2d 894 [2d 5 [* 5] 5 of 6 INDEX NO. 516774/2022 FILED: KINGS COUNTY CLERK 09/19/2023 01:31 PM NYSCEF DOC. NO. 121 RECEIVED NYSCEF: 09/19/2023 Dept., 2014]). Moteqyer, a receiver is charged with the and protect the property for the responsibility to "pr~serve ! : . j benefit of all persotj~ interested in the estate;; and the receiver's allegianc~ is ortl~ to the court (Bartk of Tbkyb Trust Company v. Urban Food Malls Ltd., 229 AD2d 14, 650 NYS2d 654 [1 st Dept., 1996]). In tnls case thexe are no substantiated allegations of any ne:¢'!d to preserve the property and there is no evidence of any loss!br waste to any of the escrow funds, The petition-er has leveled numerous allegations against the respondent. They are all c_onclusbry and without any evidence or substantiation. be vacated. Consequently, the settlement aqreerrient will not Furtherr the motion seeking a receiver is denied. So ordered. ENTER: DATED: September 19, .(2023 Brooklyn N. Y" • I Hon. Leon Ruchelsman JSC 6 [* 6] 6 of 6

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