| Matter of El-Roh Realty Corp. |
| 2008 NY Slip Op 00921 [48 AD3d 1190] |
| February 1, 2008 |
| Appellate Division, Fourth Department |
| In the Matter of the Dissolution of El-Roh Realty Corp. Philippe R.Schwimmer, Individually and as Holder of Fifty Percent of the Outstanding Voting Shares ofEl-Roh Realty Corp., Appellant; Joan Roth et al., Respondents, et al., Respondent. RobertBaldwin, Esq., as Trustee of the Seymour Roth Living Trust, Intervenor-Respondent. (AppealNo. 1.) |
—[*1] Woods Oviatt Gilman LLP, Rochester (William G. Bauer of counsel), forrespondents-respondents.
Appeal from an order of the Supreme Court, Onondaga County (Donald A. Greenwood, J.),entered January 3, 2007 in a proceeding pursuant to Business Corporation Law article 11. Theorder, among other things, dismissed the petition.
It is hereby ordered that the order so appealed from is unanimously reversed on the lawwithout costs, the petition is reinstated, the motion is granted and the proceeding is stayedpending determination of the counterclaim.
Memorandum: Respondent El-Roh Realty Corp. (El-Roh) is a closely held corporation inwhich petitioner and respondent Joan Roth each own 50% of the voting stock. The loyalties ofthe members of El-Roh's Board of Directors are similarly divided, with petitioner and herhusband on one side and Joan Roth and respondent Lois Roth, as executrix of the estate of LewisRoth (collectively, respondents), on the other. Petitioner commenced this proceeding pursuant toBusiness Corporation Law § 1104 (a) (1) and (3), seeking dissolution of El-Roh on thegrounds that director deadlock and internal dissension among the shareholders was preventingEl-Roh from conducting business. In appeal No. 1, petitioner appeals from an order that, interalia, dismissed the petition and denied respondents' motion for a stay of the proceeding as mootand, [*2]in appeal No. 2, petitioner appeals from an order thatdenied her motion for leave to reargue and granted the motion of respondents for partialsummary judgment on their counterclaim. We note at the outset that petitioner's appeal from theorder in appeal No. 2 must be dismissed insofar as petitioner contends that Supreme Court erredin denying her motion for leave to reargue (see Empire Ins. Co. v Food City, 167 AD2d983, 984 [1990]).
Contrary to the contention of petitioner in both appeals, the court properly concludedthat the commencement of this proceeding triggered a provision in the shareholders' agreement(agreement) of El-Roh that required petitioner to offer to sell her shares to the corporation, usingthe valuation method set forth in the agreement. The agreement prohibited the transfer of anyshares, "including, without limitation, transfers that are voluntary, involuntary, by operation oflaw or with or without valuable consideration" and further provided that, if any shareholderattempted to transfer shares in violation of that provision, that shareholder "shall automatically bedeemed to have offered for sale . . . all of the shares of Capital Stock then owned bysuch [s]hareholder" to El-Roh and the other shareholders at a purchase price "calculated by theindependent certified public accountants then engaged by [El-Roh]." Thus, the commencement ofthis dissolution proceeding by petitioner triggered that unambiguous provision (see Matter ofDoniger v Rye Psychiatric Hosp. Ctr., 122 AD2d 873, 877 [1986], lv denied 68NY2d 611 [1986]; see also Matter of BBS Norwalk One, 239 BR 440, 443 n 4[1999]).In examining the terms of the agreement as a whole and giving a practical interpretationto the language employed, the court properly concluded that respondents' " 'construction of theagreement is the only construction which can fairly be placed thereon' " (Abramo v HealthNow N.Y., Inc., 23AD3d 986, 987 [2005], lv denied 6 NY3d 714 [2006]), and thus properly refused toconsider the extrinsic evidence offered by petitioner (see Borrelli v Chamberlain, 21 AD3d 1382, 1383-1384 [2005],lv denied 6 NY3d 708 [2006]). Contrary to petitioner's further contention, such aconstruction does not violate public policy (see generally Matter of Pace Photographers[Rosen], 71 NY2d 737, 747 [1988]). We reject petitioner's contention that respondentswaived their right to invoke the agreement in response to a dissolution proceeding (seegenerally Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966, 968 [1988]).Consequently, we agree with respondents that the court properly concluded thatpetitioner, by commencing this action, triggered the provisions that deemed petitioner to haveoffered her shares for sale to the remaining shareholders and to El-Roh. We thus conclude withrespect to the order in appeal No. 2 that the court properly granted the motion of respondents forpartial summary judgment on their counterclaim seeking specific performance of that part of theagreement requiring petitioner to offer to sell her shares to El-Roh and the remainingshareholders. We reject petitioner's contention that the court erred in directing El-Roh to engageits independent certified public accountants to determine the purchase price of the shares.Respondents met their burden on their motion with respect to their counterclaim by submittingthe agreement, which unambiguously provides for such a valuation, and petitioner failed to raisean issue of fact concerning the accounting firm's ability to conduct such a valuation (seegenerally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). We therefore affirmthe order in appeal No. 2.Nevertheless, we conclude under the unique circumstances of this case that the courtprematurely dismissed the petition by the order in appeal No. 1. In the event that El-Roh or theremaining shareholders elect to purchase petitioner's shares pursuant to the agreement, thepetition may be dismissed. In the event that El-Roh or the remaining shareholders do notpurchase those shares, however, petitioner will be deprived of the ability to dispose of her sharesand will have no remedy. We therefore reverse the order in appeal No. 1, reinstate the petition,grant respondents' motion and stay the proceeding pending determination of the counterclaim.Present—Gorski, J.P., Martoche, Smith, Centra and Green, JJ. [See 14 Misc 3d1212(A), 2007 NY Slip Op 50005(U).]