Breach of Contract; Breach of Fiduciary Duty; Declaratory Judgment; Permanent Injunction
By: Amanda Tersigni | Senior Staff Writer
This case stems from a complex matter involving multiple parties and two interrelated actions. Plaintiffs, Siras Partners LLC (including Saif Sumaida and Ashwin Verma, collectively “Siras”) formed a joint venture with Defendants, Activity Kuafu Hudson Yards LLC (including Defendants Shang Dai, Zengliang Shan, and Qiling Yuan), titled Reedrock Kuafu Development Company, LLC, whereby they would collectively develop upon a parcel of land in Manhattan at 462-470 Eleventh Avenue (“462-470”). The members of the joint venture created Bifrost Land LLC to hold title to the property. Bifrost subsequently obtained a loan to acquire the 462-470 property, part of which would be drawn at the time of the closing. The loan contained an option to extend the maturity date for two consecutive six-month periods. Plaintiffs later alleged that Kuafu and its principals sought to deceive them in ways to jeopardize the loan for the property and undermine the entire project. Thus, Plaintiffs commenced such action (“the Siras Action”) alleging nine causes of action. Concurrently, 462-470 commenced a related foreclosure action to foreclose on the loan obtained for such property.
The Foreclosure Action
462-470 alleges that Bifrost defaulted on the loan because it failed to pay the remaining balance on the loan by the original date of the loan’s maturity. Pursuant to the loan agreement, Bifrost was required to complete the demolition of the property before the maturity date. Plaintiffs object to this action because it contends that the foreclosure action need be stayed until the Siras Action is resolved. This is because Plaintiffs asserted a claim pursuant to CPLR 2201 against 462-470 in their own action, and if not stayed, Plaintiffs would suffer irreparable harm. However, the court ultimately denied Plaintiffs’ motion to stay the foreclosure action.
The Siras Action
Plaintiffs assert a claim for civil conspiracy against 462-470, Shang Dai, Daniel Dwyer, and Dai & Associates (D&A) arguing that 462-570 (who is an affiliate of Defendant) conspired with Defendant and its principals when unlawfully purchasing the loan on the property and essentially breached its fiduciary duties to Reedrock. To assert civil conspiracy, Plaintiffs must sufficiently establish the following: (1) an agreement between two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties’ intentional participation in the furtherance of a plan or purpose; and (4) resulting damage or injury. Defendant and D&A counter that the conspiracy claims are insufficient because Plaintiffs failed to assert a breach of fiduciary duty claim against Defendant of 462-470, and irrespective, such a claim would be in violation of their operating agreement that “Members, shall have no fiduciary duties towards each other, provided, however, nothing in this sentence shall limit the fiduciary duties any Members may have in its capacity as Manager.” However, the Court found that this provision does not prohibit all fiduciary claims. Regardless, Plaintiffs’ conspiracy claim is still insufficiently pled because there is no claim being asserted against Defendant for breach of fiduciary duty nor is there a conspiracy claim asserted against Defendant. Rather, Plaintiffs solely makes accusations against 462-470, attempting to connect 462-470 with Defendant through an “unpleaded underlying tort allegedly committed by [Defendant].” Therefore, the Court found that such cause of action is insufficiently pled and is meritless and thus, Plaintiffs’ motion must be denied.
Siras Partners LLC v. Activity Kuafu Hudson Yards LLC, Index No. 650868/2015, 3/29/2017 (Oing, J.)