| Matter of El-Roh Realty Corp. |
| 2008 NY Slip Op 07728 [55 AD3d 1431] |
| October 10, 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-Respondent; Joan Roth et al., Respondents-Appellants, andEl-Roh Realty Corp., Respondent. |
—[*1] Woods Oviatt Gilman LLP, Rochester (William G. Bauer of counsel), forrespondents-respondents-appellants.
Appeal and cross appeal from an order of the Supreme Court, Onondaga County (Donald A.Greenwood, J.), entered November 1, 2007 in a proceeding pursuant to Business CorporationLaw article 11. The order, among other things, dismissed the petition seeking the dissolution ofrespondent El-Roh Realty Corp.
It is hereby ordered that said appeal from the order insofar as it concerns the first cause ofaction is unanimously dismissed, the cross appeal is dismissed and the order is modified on thelaw by reinstating the second cause of action and by granting the motion and staying proceedingson that cause of action pending determination of the counterclaim in the 2006 dissolutionproceeding and as modified the order is affirmed without costs.
Memorandum: In this proceeding seeking dissolution of respondent El-Roh Realty Corp.(El-Roh), petitioner appeals and Joan Roth and Lois Roth, as executrix of the estate of LewisRoth (collectively, respondents), cross-appeal from an order that, inter alia, dismissed the petition(2007 petition). Petitioner previously filed a petition in 2006 (2006 petition) seeking dissolutionof El-Roh "on the grounds that director deadlock and internal dissension among the shareholderswas preventing El-Roh from conducting business," and respondents moved for partial summaryjudgment on their counterclaim seeking specific performance of that part of the shareholders'[*2]agreement (agreement) of El-Roh requiring petitioner to offerto sell her shares to El-Roh and the remaining shareholders (Matter of El-Roh RealtyCorp., 48 AD3d 1190, 1191 [2008]). Supreme Court issued two orders deciding the motions.By its order in appeal No. 1, the court dismissed the 2006 petition. By its order in appeal No. 2,the court granted the motion of respondents for partial summary judgment on their counterclaimfor specific performance of that part of the agreement providing that, if any shareholderattempted to transfer his or her shares in any manner, that shareholder "shall automatically bedeemed to have offered for sale all of the shares of Capital Stock then owned by" thatshareholder.
While the appeals from those orders were pending before this Court, petitioner filed the 2007petition. We thereafter reversed the order in appeal No. 1 that dismissed the 2006 petition, andwe affirmed the order in appeal No. 2 that granted respondents' motion and "direct[ed] El-Roh toengage its independent certified public accountants to determine the purchase price of the shares"(id. at 1192). We determined with respect to the order in appeal No. 1 that dismissal ofthe petition was premature at that juncture but noted that the petition may ultimately be dismissedin the event that El-Roh or the remaining shareholders elect to purchase petitioner's sharespursuant to the agreement.
The first cause of action in the 2007 petition sought dissolution of El-Roh upon the identicalgrounds alleged in the 2006 petition, but the second cause of action raised the additional groundthat the shareholders of El-Roh have failed to hold an annual meeting for more than two yearsand that such failure was preventing the corporation from properly conducting business. Prior tothis Court's determination of the appeals with respect to the 2006 petition, Supreme Courtgranted the relief sought by respondents in their answer to the 2007 petition by dismissing thefirst cause of action based on the doctrine of res judicata and dismissing the second cause ofaction on the ground that the mere failure to hold a shareholders meeting did not warrantdissolution (see Business Corporation Law § 1104 [a] [1], [3]; [c]).
We note at the outset that we agree with respondents that the appeal from that part of theorder dismissing the first cause of action in the 2007 petition is moot. The 2006 petition has beenreinstated in accordance with our decision with respect to the order in appeal No. 1, and thusthere is currently a petition pending in Supreme Court that will allow petitioner, if her shares arenot purchased by El-Roh or respondents, to pursue the relief sought in the first cause of action.Consequently, we dismiss the appeal insofar as it concerns the first cause of action (seegenerally Matter of Anonymous v New York City Health & Hosps. Corp., 70 NY2d 972, 974[1988], rearg denied 71 NY2d 994 [1988]; Matter of Hearst Corp. v Clyne, 50NY2d 707, 713-714 [1980]).
We agree with petitioner, however, that the court erred in dismissing the second cause ofaction in the 2007 petition. By their first affirmative defense, respondents sought dismissal of thepetition on the ground that it "fails to state a cause of action or claim upon which relief should begranted." Accepting the allegations in the petition as true and according petitioner everyfavorable inference (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]), we conclude thatthe second cause of action sufficiently states a cause of action for dissolution pursuant toBusiness Corporation Law § 1104 (c), inasmuch as it alleges that El-Roh failed to holdannual meetings for more than two years, thereby preventing the election of directors andimpeding the corporation's ability to conduct business (see generally Matter of Giordano vStark, 229 AD2d 493, 494-495 [1996]). We therefore modify the order by reinstating thesecond cause of action. In view of our determination, we further modify the order by grantingrespondents' motion seeking to stay proceedings on the second cause of action pendingdetermination of the counterclaim in the 2006 dissolution proceeding (see El-Roh, 48AD3d at 1192). In the event that petitioner's shares are sold pursuant to the counterclaim, thenthe second cause of action herein will become moot and subject to dismissal along with the 2006petition.[*3]
Finally, we dismiss the cross appeal of respondentsinasmuch as they are not aggrieved by the order on appeal that, inter alia, dismisses the 2007petition (see CPLR 5511). Respondents merely object to a specified sentence in thecourt's decision and order, and "[t]he fact that the court's decision and order contains language orreasoning that [respondents] deem[ ] adverse to [their] interests does not furnish a basis forstanding to take an appeal" (Pramco III, LLC v Partners Trust Bank, 52 AD3d 1224, 1225[2008] [internal quotation marks omitted]). Present—Martoche, J.P., Smith, Lunn, Pineand Gorski, JJ.