| Cole v Macklowe |
| 2012 NY Slip Op 07058 [99 AD3d 595] |
| October 23, 2012 |
| Appellate Division, First Department |
| Warren Cole, Appellant, v Harry Macklowe et al.,Respondents. |
—[*1] Akin Gump Strauss Hauer & Feld LLP, New York (Sean E. O'Donnell of counsel), forrespondents.
Order, Supreme Court, New York County (Jane S. Solomon, J.), entered November 17,2011, which granted defendants' motion to dismiss the complaint, unanimously reversed, on thelaw, without costs, and the motion denied. Appeal from order, same court (Cynthia Kern, J.),entered March 2, 2012, which, to the extent appealable, denied plaintiff's motion for renewal,unanimously dismissed, without costs, as academic.
Like parties to any contract, partners may fix their partnership rights and duties by agreement(Bailey v Fish & Neave, 8 NY3d523, 528 [2007]). Accordingly, when the agreement between partners is clear, complete andunambiguous, it should be enforced according to its terms (id. at 528).
Here, section 11.1 of the limited partnership agreement between the plaintiff and defendantMAK West 55th Street Associates (MAK West) states that upon termination of plaintiff'semployment "he shall sell to [defendant Harry Macklowe] . . . and [Macklowe]. . . shall purchase . . . [plaintiff's] interest in the partnership pursuantto section 11.2." Section 11.2 states that "[plaintiff's] interest shall be purchased . . .[for] the amount that he would receive if the partnership sold all of its property for amounts equalto the amounts that [Macklowe] determines it would have received for such property in arm'slength sales on the date of the [t]ermination." According to section 11.3 of the agreement, closingof the transaction was to occur no later than 90 days after plaintiff's termination.
The agreement thus provides that within 90 days of the termination of plaintiff'semployment, it was the intent of the parties that plaintiff, via a sales transaction, would bedivested of his partnership interest in MAK West. This intent, however, by the very terms of theagreement, could only be effectuated by following the mechanism prescribed, a sales transaction.The parties agree that plaintiff never sold, and Macklowe never bought, plaintiff's partnershipinterest upon plaintiff's termination. However, they disagree as to result of such failures.
Contrary to the defendants' assertion, plaintiff's failure to sell his interest did not divest himof his partnership interest. Not only is the agreement void of any language mandating this result,but such interpretation of the agreement runs afoul of the well settled principle that a contractshould not be interpreted to produce an absurd result, one that is commercially [*2]unreasonable, or one that is contrary to the intent of the parties (Matter of Lipper Holdings v TridentHoldings, 1 AD3d 170, 171 [1st Dept 2003]). In the absence of express languagedivesting plaintiff of his partnership interest for his failure to sell his interest, such a result issimply contrary to basic contract law. Moreover, the interpretation of the agreement urged bydefendants—allowing them to acquire plaintiff's partnership interest absent theconsideration expressed in the agreement—represents a windfall to the defendants that isabsurd, not commercially reasonable and contrary to the express terms of the agreement and thusthe intent of the parties. Accordingly, plaintiff continues to hold his partnership interest.Therefore, the motion court erred in dismissing the complaint.
While it is certainly true that "[c]ontract damages are ordinarily intended to give the injuredparty the benefit of the bargain by awarding a sum of money that will, to the extent possible, putthat party in as good a position as it would have been in had the contract been performed"(Goodstein Constr. Corp. v City of New York, 80 NY2d 366, 373 [1992]), wenevertheless reject defendants' contention that the foregoing principle of law serves to limitplaintiff's recovery to the value of his partnership interest on the date of his termination. Wereplaintiff suing for defendants' failure to buy his partnership interest, then, as defendants posit, hisrecovery would be capped at the value of his partnership interest on the date of his terminationrather than the present value of his interest. However, plaintiff does not sue for such a breach,suing instead for defendants' breach of the agreement insofar as they failed to provide him, apartner, with his share of the distribution made by them in 2008 when they sold the propertyconstituting the partnership's sole asset. Concur—Mazzarelli, J.P., Catterson, Moskowitz,Manzanet-Daniels and Román, JJ. [Prior Case History: 33 Misc 3d 1235(A), 2011 NYSlip Op 52249(U).]