Grossberg v. Van Bakergem, Index No. 651376/15, 1/15/16, (Ramos, J.)

Contract; breach; Fiduciary Duty; breach; Declaratory Judgment; Specific Performance; CPLR 2221(d)(2); CPLR 2221(e)(2); CPLR 2221(e)(3); CPLR 5016

By: Yan Borodanski | Senior Staff Member

Plaintiff Erik Weller Grossberg (“Plaintiff”), Defendant Derek van Bakergem (“Defendant”), and Counterclaim Defendant Wyatt Carder (“Counterclaim Defendant”) each own one-third of Pampelonne LLC (“Pampelonne”). Pamplalonne’s operating agreement guaranteed the parties the right to sell their individual interest in Pampalonne through a Buy-Sell Offer (“Offer”). Plaintiff submitted an Offer to sell his interest in Pampelonne to Defendant and Counterclaim Defendant for ten-thousand dollars. Later, Defendant accepted the Offer and notified Plaintiff. Pursuant to Pamplalonne’s operating agreement, Defendant had 90 days to complete the buyout and return any loans Plaintiff extended to Pampelonne when the company was founded. If Defendant did not adhere to this requirement, Plaintiff was entitled to receive the right to purchase Defendant’s interest in Pampalonne for a price equal to the purchase price provided in the Offer. However, Defendant did not meet the 90-day deadline and subsequently refused to sell Plaintiff his interest in Pampelonne.

Plaintiff commenced a civil proceeding against Defendant alleging that: (1) it was entitled to a declaratory judgment nullifying Defendant’s original election to accept the Offer, (2) Defendant failed to timely respond to the Offer, initiating Plaintiff’s entitlement to purchase Defendant’s interest in Pampalonne, (3) Plaintiff is now entitled to purchase Defendant’s interest in Pampelonne, and (4) it was entitled to specific performance requiring Defendant to sell his interest in Pampelonne to Plaintiff. The Court granted Plaintiff’s motion for summary judgment, holding that Plaintiff was entitled to purchase Defendant’s interest in Pampelonne. Defendant moved, by order to show cause, for clarification, and to reargue and renew the judgment that was granted in favor of Plaintiff. Upon granting reargument and renewal, Defendant sought an order granting him summary judgment on his claim for declaratory relief and allowing his counterclaims to proceed, along with a stay of the judgment and disposing of any interest in Pampelonne pending the outcome of his instant motion for reargument and renewal. In opposition, Plaintiff argued that Defendant improperly sought relief under CPLR 2221 instead of CPLR 5015 because the Court’s order was reduced to a judgment, and only CPLR 5015 applies to judgments that have been entered.

The Court granted Defendant’s motion to reargue under CPLR 2221(d)(2) to the extent of clarifying its decision and order granting Plaintiff’s motion for summary judgment and the dismissal of Defendant’s counterclaims, in part. First, the Court stated Defendant’s motion was proper because the judgment was not “entered” pursuant to CPLR 5016, which requires that the judgment be signed and filed with the court clerk. Second, the Court clarified that because Defendant did not complete the buyout of the Offer within the required time pursuant to Pampelonne’s operating agreement, Plaintiff was entitled to purchase Defendant’s interest in Pampelonne for the Offer price of $10,000. Third, the Court denied Defendant’s motion to reargue the Court’s dismissal of his counterclaims. To succeed on a motion to reargue , Defendant must identify any fact or law “overlooked or misapprehended by the court” pursuant to CPLR 2221(d)(2). Here, Defendant did not put forth such evidence. Fourth, the Court denied Defendant’s motion for leave to renew based upon “new facts” purportedly demonstrating that Defendant had sufficient funds to close on the purchase of Plaintiff’s membership interest in Pampelonne. To succeed on a motion for leave to renew based upon new facts, Defendant must offer “justification for the failure to present such facts on the prior motion.” Here, nothing contained in these affidavits would change the Court’s prior determination pursuant to CPLR 2221 (e) (2) and (3).

Grossberg v. Van Bakergem, Index No. 651376/15, 1/15/16, (Ramos, J.).

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