Kassab v. Kasab

195 A.D.3d 832

151 N.Y.S.3d 94

In the Matter of Nissim KASSAB, respondent-appellant,

v.Avraham KASAB, appellant-respondent, et al., respondents.

(Matter No. 1)

Avraham Kasab, appellant-respondent,

v.Nissim Kassab, respondent-appellant.

(Matter No. 2)

2017-09274, 2018-00160, 2018-01799

Index Nos. 711061/15, 711073/15

Supreme Court, Appellate Division, Second Department, New York.

Argued—April 1, 2021

June 16, 2021

Kasowitz Benson Torres LLP, New York, N.Y. (Jennifer S. Racine of counsel), for appellant-respondent.

Schlam Stone & Dolan LLP, New York, N.Y. (Richard H. Dolan, Jonathan Mazer, and Vitali S. Rosenfeld of counsel), for respondent-appellant.

MARK C. DILLON, J.P., ROBERT J. MILLER, FRANCESCA E. CONNOLLY, VALERIE BRATHWAITE NELSON, JJ.

DECISION & ORDER

In a hybrid proceeding pursuant to Business Corporation Law § 1104–a for the judicial dissolution of a corporation, and action, among other things, to recover damages for breach of contract, and a related action to recover on promissory notes, which were joined for trial, Avraham Kasab appeals from (1) an order of the Supreme Court, Queens County (Timothy J. Dufficy, J.), dated August 3, 2017, (2) an order of the same court dated October 27, 2017, and (3) an order of the same court dated January 5, 2018, and Nissim Kassab cross-appeals from the order dated August 3, 2017. The order dated August 3, 2017, insofar as appealed from, after a nonjury trial, granted the petition for dissolution of Corner 160 Associates, Inc., unless, within 90 days, Avraham Kasab purchased Nissim Kassab's interest in the corporation for a stated sum, and awarded Avraham Kasab only 4.35% and 0% prejudgment interest, respectively, on the promissory notes from their maturity dates. The order dated August 3, 2017, insofar as cross-appealed from, in effect, directed dismissal of Nissim Kassab's breach of contract cause of action, enforced the promissory notes, and awarded Avraham Kasab attorneys’ fees in the sum of $25,000 in connection with the action to recover on the promissory notes, with leave to request additional attorneys’ fees. The order dated October 27, 2017, insofar as appealed from, denied Avraham Kasab's motion pursuant to CPLR 4404 to modify the order dated August 3, 2017, so as to, among other things, award him additional interest on the promissory notes and modify the purchase terms for Nissim Kassab's interest in the corporation, and granted those branches of Nissim Kassab's cross motion pursuant to CPLR 4404 which were to modify the order dated August 3, 2017, so as to adjust the purchase price for his interest in the corporation to reflect certain shareholder loans, and to limit attorneys’ fees to the sums previously awarded. The order dated January 5, 2018, insofar as appealed from, upon dissolution, barred the parties from bidding at the receiver's auction of the real property of Corner 160 Associates, Inc.

Motion by Nissim Kassab to dismiss portions of the appeals from the orders dated August 3, 2017, and October 27, 2017, as academic. By decision and order on motion of this Court dated June 20, 2019, the motion was held in abeyance and referred to the panel of Justices hearing the appeals for determination upon the argument or submission thereof.

Upon the papers filed in support of the motion and the papers filed in opposition thereto, and upon the argument of the appeals, it is

ORDERED that Nissim Kassab's motion is denied; and it is further,

ORDERED that the appeal from the order dated January 5, 2018, is dismissed, as no appeal lies as of right from an order that does not decide a motion made on notice (see CPLR 5701[a][2] ), and we decline to grant leave to appeal; and it is further,

ORDERED that on the Court's own motion, the notice of appeal and the notice of cross appeal from the order dated August 3, 2017, are deemed to be applications for leave to appeal and cross-appeal, and leave to appeal and cross-appeal are granted (see CPLR 5701[c] ); and it is further,

ORDERED that the order dated August 3, 2017, is modified, on the law, (1) by deleting the provision thereof awarding Avraham Kasab the principal sum of $355,000, plus 4.35% prejudgment interest from December 31, 2016, and substituting therefor a provision awarding Avraham Kasab the principal sum of $355,000, plus 4.35% interest from August 27, 2012, to August 20, 2014, and 14% prejudgment interest thereafter, and (2) by deleting the provision thereof awarding Avraham Kasab the principal sum of $100,000, plus 0% prejudgment interest from March 25, 2016, and substituting therefor a provision awarding Avraham Kasab the principal sum of $100,000, plus 14% prejudgment interest from August 20, 2014; as so modified, the order dated August 3, 2017, is affirmed insofar as appealed and cross-appealed from; and it is further,

ORDERED that the appeal from so much of the order dated October 27, 2017, as denied that branch of Avraham Kasab's motion pursuant to CPLR 4404 which was to modify the order dated August 3, 2017, so as to award him additional interest on the promissory notes is dismissed as academic; and it is further,

ORDERED that the order dated October 27, 2017, is modified, on the law and in the exercise of discretion, by deleting the provision thereof granting that branch of Nissim Kassab's cross motion pursuant to CPLR 4404 which was to modify the order dated August 3, 2017, so as to limit attorneys’ fees to the sums previously awarded, and substituting therefor a provision denying that branch of Nissim Kassab's cross motion on the condition that, within 20 days after service upon Avraham Kasab's attorney of a copy of this decision and order, Avraham Kasab shall file an affirmation of services seeking additional attorneys’ fees; in the event the condition is not complied with, then that branch of Nissim Kassab's cross motion which was to limit attorneys’ fees to the sums previously awarded is granted; as so modified, the order dated October 27, 2017, is affirmed insofar as reviewed; and it is further,

ORDERED that one bill of costs is awarded to Avraham Kasab.

These appeals and cross appeal involve related actions and proceedings between two brothers, Avraham Kasab (hereinafter Avraham) and Nissim Kassab (hereinafter Nissim), related to their interests in Corner 160 Associates, Inc. (hereinafter Corner), and Mall 92–30 Associates, LLC (hereinafter Mall). Avraham held a 75% interest, and Nissim held a 25% interest, in those entities. Together, the entities owned three adjacent, unimproved parcels of land in Queens, upon which the parties operated a parking lot and flea market business.

On August 27, 2012, the parties entered into an agreement that Nissim would receive 40% of the distributions of the net income of Corner and Mall: 25% on account of his interest plus 15% for management services. Contemporaneously with the agreement, Nissim executed two promissory notes in favor of Avraham: one in the principal sum of $355,000 to cover various loans, with 4.35% interest and a maturity date of December 31, 2016, and one in the principal sum of $100,000, representing Avraham's share of the sale of family property, with 0% interest and a maturity date of March 25, 2016. The pledge agreements associated with the notes permitted Avraham, in his sole discretion, to change the terms of payment.

In 2013, Nissim commenced a hybrid proceeding for judicial dissolution of Corner and Mall, and action, among other things, to recover damages for breach of the August 27, 2012 agreement. The Supreme Court directed dismissal of the cause of action seeking dissolution of Mall, and that determination was affirmed on appeal (see Matter of Kassab v. Kasab, 137 A.D.3d 1135, 1137, 29 N.Y.S.3d 39 ). Avraham commenced an action to recover on the promissory notes, which was joined for trial with the hybrid action/proceeding. Avraham thereafter modified the maturity dates of the notes to August 20, 2014, and increased the interest rate on each note to 14%.

Following a joint nonjury trial, in an order dated August 3, 2017, the Supreme Court found in favor of Nissim on the cause of action seeking dissolution of Corner unless, within 90 days from the entry of judgment, Avraham purchased Nissim's interest in the corporation for the principal sum of $3,170,173, together with 9% prejudgment interest from May 7, 2013. The court, in effect, directed dismissal of Nissim's cause of action alleging that Avraham breached the August 27, 2012 agreement by failing to pay him distributions. In the promissory notes action, the court enforced the notes according to their original terms, and directed judgment in favor of Avraham for the principal sums due, plus interest of 4.35% and 0%, respectively, from the original maturity dates, and reasonable attorneys’ fees of $25,000, with leave to request additional attorneys’ fees upon the submission of an affirmation of services.

Avraham thereafter moved, and Nissim cross-moved, pursuant to CPLR 4404 to modify the August 3, 2017 order in numerous respects. In an order dated October 27, 2017, the Supreme Court denied Avraham's motion and granted Nissim's cross motion to the extent of (1) amending the value of Nissim's shares in Corner to $3,338,403, to account for certain shareholder loans, and (2) limiting Avraham's recovery of attorneys’ fees in the promissory notes action to the sums previously awarded. Following expiration of the purchase option, in an order dated January 5, 2018, the court dissolved Corner and appointed a receiver to sell the properties and distribute the proceeds. The court included a provision barring the parties from bidding at the receiver's auction.

Avraham appeals, and Nissim cross-appeals, from stated portions of the orders. Nissim moves to dismiss those portions of Avraham's appeals which concern the dissolution of Corner, and the attendant purchase option, as academic, on the ground that Corner's properties were sold at public auction and the proceeds were distributed.

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