| Kun v Fulop |
| 2010 NY Slip Op 02101 [71 AD3d 832] |
| March 16, 2010 |
| Appellate Division, Second Department |
| Michelle E. Kun, Appellant, v Jacqueline I. Fulop et al.,Respondents. |
—[*1] Kevin E. Rockitter, P.C., Woodbury, N.Y., for respondents.
In an action for a judgment declaring that the plaintiff is a 50% shareholder of the defendantBucked Tooth Realty Corp., the plaintiff appeals, as limited by her brief, from so much of ajudgment of the Supreme Court, Nassau County (Austin, J.), entered December 12, 2008, as,upon a decision of the same court dated October 7, 2008, made after a nonjury trial, declared thatthe plaintiff was not a shareholder of the defendant Bucked Tooth Realty Corp., and that thedefendant Jacqueline I. Fulop was the sole shareholder.
Ordered that the judgment is affirmed insofar as appealed from, with costs.
The plaintiff, Michelle Kun, is a pediatric dentist, and the defendant Jacqueline I. Fulop is anorthodontist. In 2002 Fulop found an office space in Woodbury, New York, which ultimatelybecame a dental office. Fulop's attorney, Joseph Slater, incorporated Bucked Tooth Realty Corp.(hereinafter Bucked Tooth), in January 2003. Slater also negotiated the lease, which wasexecuted in March 2003. The office space was leased by Bucked Tooth, and the lease was signedby Fulop, as president of Bucked Tooth. Fulop was the sole shareholder of Bucked Tooth, andthe sole asset of Bucked Tooth was the leasehold interest in the dental office.
Kun testified at trial that she went to see the office space with Fulop, and told her that shewanted to share the space. She also testified that she told Fulop that she wanted to be a 50%shareholder of Bucked Tooth; however, Fulop testified that she never agreed to that. When thedental office opened in July 2003 the parties began to share the space. At trial, Fulop testifiedthat she always considered Kun to be a subtenant in the office. Kun and Fulop (hereinaftertogether the parties) shared rent and office expenses equally, both entered into an equipment loanfor the purchase of dental equipment, and Kun paid half of Slater's legal fees for negotiating thelease and incorporating Bucked Tooth. This arrangement continued amicably for a time.However the parties' relationship began to deteriorate, and Kun subsequently brought this actionfor a judgment declaring that she is a 50% shareholder of Bucked Tooth.
"In reviewing a trial court's findings of fact following a nonjury trial, this Court's authority[*2]is as broad as that of the trial court and includes the power torender the judgment it finds warranted by the facts, taking into account in a close case the factthat the trial judge had the advantage of seeing the witnesses" (O'Brien v Dalessandro, 43 AD3d1123, 1123 [2007] [internal quotation marks omitted]). Deference is owed to the trial court'scredibility determinations (see Fowler vJamaica Bus, 62 AD3d 943 [2009]; Praimnath v Torres, 59 AD3d 419 [2009]).
"The mere fact that the corporation did not issue any stock certificates [to an individual] doesnot preclude a finding that [the individual] has the rights of a shareholder" (French vFrench, 288 AD2d 256, 256 [2001]; see Matter of Benincasa v Garrubbo, 141 AD2d636, 638 [1988]). "In the absence of a share certificate . . . a court must determinefrom other available evidence whether a putative shareholder in fact and law enjoys that status"(Matter of Pappas v Corfian Enters. Ltd., 22 Misc 3d 1113[A], 2009 NY Slip Op 50109,*3 [2009]). In that regard, "[t]he relationship between a corporation and its stockholders iscontractual . . . to constitute one a stockholder a subscription or contract wherebythe right to hold stock or upon some condition to demand stock and to exercise the rights of astockholder is required" (id. [internal quotation marks omitted]). Pursuant to BusinessCorporation Law § 504 (a), consideration for the issuance of shares can include money orother property, or "labor or services actually received by or performed for the corporation or forits benefit or in its formation or reorganization."
To support her claim that she is a 50% shareholder of Bucked Tooth, Kun argues that,pursuant to Business Corporation Law § 504, her payment of half the legal fees for settingup Bucked Tooth, and half the rent and office expenses thereafter, constituted good and valuableconsideration for 50% of the shares of Bucked Tooth. However, the Supreme Court properlyfound that there was no evidence adduced at trial demonstrating any understanding or meeting ofthe minds between Kun and Fulop sufficient to invoke the protection of Business CorporationLaw § 504. The Supreme Court credited Fulop's testimony that she had never agreed toshare Bucked Tooth with Kun, and that Kun never mentioned to her that she wanted to be a 50%shareholder of Bucked Tooth. Slater also testified that Kun never told him that she wanted to bea 50% shareholder of Bucked Tooth. Additionally, the evidence showed that Kun never askedfor or received any forms to report a shareholder's distributed share of income from BuckedTooth, corporate tax forms, or any other indicia of shareholder status. Further, although Kuntestified at trial that she became aware that she was not a shareholder of Bucked Tooth as earlyas 2004, she continued in the relationship without demanding any rights of a shareholder untilOctober 2006, when she had her attorney write a letter to Fulop demanding documentary proofof shareholder status. Thereafter, when Slater informed her that she had no shareholder rights inBucked Tooth, she waited until March 2007 to commence the instant action. Therefore, theSupreme Court properly rejected Kun's assertion that she was a 50% shareholder of BuckedTooth (see Hunt v Hunt, 222 AD2d 759, 760-761 [1995]; see also Matter of Heisler vGingras, 90 NY2d 682, 687 [1997]; cf. Matter of Estate of Purnell v LHRadiologists, 90 NY2d 524, 530 [1997]; Matter of Capizola v Vantage Intl., 2 AD3d 843, 844-845 [2003]).
Kun's remaining contention is without merit. Skelos, J.P., Covello, Balkin and Sgroi, JJ.,concur.