| Nuevo El Barrio Rehabilitaci�n de Vivienda y Econom�a, Inc. vMoreight Realty Corp. |
| 2011 NY Slip Op 06295 [87 AD3d 465] |
| August 18, 2011 |
| Appellate Division, First Department |
| Nuevo El Barrio RehabilitaciÓn de Vivienda yEconomía, Inc., Respondent, v Moreight Realty Corp. et al., Defendants, andDunwell Los Tres, Inc., Appellant. Nuevo El Barrio RehabilitaciÓn de Vivienda yEconomía, Inc., Respondent-Appellant, v Moreight Realty Corp. et al.,Appellants-Respondents, et al., Defendants. |
—[*1] Balber Pickard Maldonado & Van Der Tuin, P.C., New York (Roger Juan Maldonado andSteven N. Blivess of counsel), for respondent/respondent-appellant. Rosenberg, Calica & Birney LLP, Garden City (Ronald J. Rosenberg of counsel), forDunwell Los Tres, Inc., appellant.
Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered November20, 2009, which granted the motion of defendants Moreight Realty Corp. (Moreight) and LosTres Unidos Associates (Los Tres) for summary judgment dismissing the first cause of action inthe original complaint, denied the motion as to the second through seventh causes of action, anddenied plaintiff's cross motion for partial summary judgment on the first cause of action,unanimously modified, on the law, to the extent of dismissing the second through sixth causes ofaction, and the seventh cause of action insofar as it is premised on breaches of the landdisposition agreement and on breaches of contract that occurred prior to August 1, 2000, and[*2]otherwise affirmed, without costs. Order, same court andJustice, entered October 20, 2010, which denied the motion of defendant Dunwell Los Tres, Inc.(Dunwell) for summary judgment dismissing the amended complaint as against it, unanimouslyreversed, on the law, without costs, the motion granted, and, upon a search of the record,summary judgment granted dismissing the amended complaint against Los Tres as well. TheClerk is directed to enter judgment in favor of Dunwell dismissing the amended complaint asagainst it and in favor of Los Tres dismissing the original and the amended complaint as againstit.
The first cause of action in the original complaint alleged that a June 18, 1981 agreementbetween plaintiff, Moreight, and nonparty Harlem Urban Development Corp. (the June 18agreement) was void due to failure to comply with Not-For-Profit Corporation Law§§ 510 and 511. On appeal, plaintiff contends that the partnership agreements of LosTres and the conversion of plaintiff's general partnership interest in Los Tres into a limitedpartnership interest were also void for the same reason. This issue is academic because theamended complaint, which supersedes the original complaint, does not seek to void theagreements and conversion (see O'Ferralv City of New York, 8 AD3d 457, 459 [2004]). Furthermore, plaintiff may not void theJune 1981 agreement and partnership agreements while asserting rights under them (see 328 Owners Corp. v 330 W. 86 OaksCorp., 8 NY3d 372, 383 [2007] [a party "cannot retain what is beneficial in thetransaction, while disclaiming what is onerous" (internal quotation marks omitted)]).
The second through sixth causes of action in the original complaint and the first through thirdcauses of action in the amended complaint should have been dismissed. Plaintiff's right of firstrefusal, which is contained in the June 18 agreement and the amended and restated agreement oflimited partnership of Los Tres (amended partnership agreement), is triggered when Los Tres"determines to sell the Project" and "receives a bona fide offer to purchase the Project." SupremeCourt's determination on a prior motion that the right of first refusal is ambiguous does not bindus (see e.g. Martin v City of Cohoes, 37 NY2d 162, 165 [1975]). In any event, SupremeCourt did not find that the word "Project" was ambiguous but, rather, that other terms in the rightof first refusal were ambiguous. The term "Project" is clearly and unambiguously defined in boththe June 18 agreement and the amended partnership agreement. Thus, the motion court erred inconsidering extrinsic evidence such as the conduct of the parties (see e.g. South Rd. Assoc., LLC vInternational Bus. Machs. Corp., 4 NY3d 272, 278 [2005]).
The sale of stock of Moreight—Los Tres's general partner—does not constitutea sale of the project (see e.g. 5303 Realty Corp. v O & Y Equity Corp., 64 NY2d 313,323 [1984]) and therefore did not trigger plaintiff's right of first refusal (see Torrey Delivery vChautauqua Truck Sales & Serv., 47 AD2d 279 [1975]). Plaintiff may not rely on a landdisposition agreement (LDA), to which it is not a party and of which it is not a third-partybeneficiary (see Mendel v Henry PhippsPlaza W., Inc., 6 NY3d 783, 786-787 [2006]), to contradict the clear and unambiguousterms of the June 18 agreement and amended partnership agreement.
The seventh cause of action in the original complaint and the fourth cause of action in theamended complaint are asserted against Moreight only; these causes of action allege breaches ofthe June 18 agreement, Los Tres's partnership agreements, the LDA, and the covenant of goodfaith and fair dealing. Plaintiff may not raise any breaches that occurred more than six yearsbefore it commenced this action (see CPLR 213 [2]), and it lacks standing to assertclaims under the LDA because it is neither a party thereto nor a third-party beneficiary thereof(see Mendel v Henry Phipps Plaza W.,Inc., 16 AD3d 112, 113 [2005], affd 6 NY3d 783 [2006]). Although [*3]Moreight failed to make these arguments below, a purely legalargument may be considered for the first time on appeal (see e.g. Chateau D'If Corp. v City ofNew York, 219 AD2d 205, 209 [1996], lv denied 88 NY2d 811 [1996]).
Moreight's argument that plaintiff had no right to be consulted is unavailing; section 8 of theJune 18 agreement states, "Moreight shall keep [plaintiff] advised with respect to managementpolicies and decisions and shall seek [plaintiff]'s advice with respect thereto. Moreight willarrange to have meetings with representatives of [plaintiff] at least quarterly." The issue ofwhether plaintiff waived its rights under section 8 is not suited to summary disposition (seeAlsens Am. Portland Cement Works v Degnon Contr. Co., 222 NY 34, 37 [1917]).
The allegations in the amended complaint that Dunwell breached the June 18 agreement andamended partnership agreement should be stricken. Dunwell is not a signatory to eitheragreement. Thus, "no cause of action for breach of contract can be asserted against" it (Balk v 125 W. 92nd St. Corp., 24AD3d 193, 193 [2005]).
While it is true that Dunwell was Moreight's sole shareholder from November 23, 2004 toSeptember 9, 2005, there is no reason to pierce Moreight's corporate veil; the record contains noevidence that Dunwell "exercised complete domination of [Moreight] in respect to thetransaction attacked" (Matter of Morris v New York State Dept. of Taxation & Fin., 82NY2d 135, 141 [1993]) or that Dunwell "through [its] domination, abused the privilege of doingbusiness in the corporate form to perpetrate a wrong or injustice against [plaintiff] such that acourt in equity will intervene" (id. at 142). "An inference of abuse does not arise. . . where a corporation was formed for legal purposes or is engaged in legitimatebusiness" (TNS Holdings v MKI Sec. Corp., 92 NY2d 335, 339-340 [1998]). Moreightwas formed for legal purposes and was engaged in a legitimate business.
Contrary to plaintiff's contention, it is not necessary to hold a trial before deciding whetherthe corporate veil should be pierced (seee.g. East Hampton Union Free School Dist. v Sandpebble Bldrs., Inc., 16 NY3d 775,776 [2011] [affirming dismissal of alter ego claim]).
In light of the above disposition, we need not reach the parties' remaining arguments.Concur—Andrias, J.P., Friedman, Catterson, Renwick and DeGrasse, JJ. [Prior CaseHistory: 26 Misc 3d 1225(A), 2009 NY Slip Op 52748(U).]