Bell v. WhiteBell v. White
Peters, J.P. Appeals (1) from an order of the Supreme Court (Tomlinson, J.), entеred May 28, 2009 in Albany County, which, among other things, denied plaintiffs motion to set aside an appraisal of his shares of defendant Norpco Restaurant, Inc., and (2) from an order of said court, entered February 2, 2010 in Albany County, which awarded defendants counsel fees.
The underlying facts of
Following plaintiffs unsuccessful appeals (id.), the parties’ respective appraisers, having failed to reach an agreement as to the fair market value of plaintiffs shares, agreed to the selection of Chris Mellen as the third appraiser. Mellen submitted an appraisal determining that the fair market value of the subject stock was $150,000. Thereafter, by orders to show cаuse, plaintiff moved to set aside Mellen’s appraisal and defendants sought a hearing for the determination of, among other things, an award of counsel fees based on plaintiffs prior contemptuous conduct. At a hearing on the motions, Supreme Court denied plaintiffs motion to set aside the appraisal and, with respect to defendants’ application, the parties agreed to submit affidavits and documentary evidence on the issue of which counsel fees defendants were entitled to recover, with plaintiff reserving his right to a hearing on the reasonableness of such fees. Supreme Court ultimately awardеd defendants counsel fees in the amount of $64,205.55. Plaintiff now appeals from both the order upholding the appraisal and the order awarding counsel fees.
Plaintiff argues that the appraisal should have been set aside since Mellen improperly appraised the shares according to their fair market value, rather than fair value, and erroneously applied a minority discount. It is well settled that a “stipulаtion of settlement is a contract subject to the principles of contract interpretation” (H.K.S. Hunt Club v Town of Claverack, 222 AD2d 769, 769 [1995], lv denied 89 NY2d 804 [1996]; see Corrigan v Breen, 241 AD2d 861, 863 [1997]). Where its terms are clear and unambiguous, “‘the parties’ intent is to be gleaned from the language of the agreement and whatever may be reasonably implied therefrom’ (Dudick v Gulyas, 4 AD3d 604, 606 [2004],
With respect to Mellen’s use of fair market value in appraising the shares, the stipulation plаinly states that, in the event that the parties’ respective appraisers are unable to agree on the “fair market value” of plaintiffs shares, they would agree upon a third appraiser to determine the “fair market value” of such shares. Indeed, Mellen explicitly stated in his report that, “[i]n accordance with the Stipulation, the applicable standard of value . . . is fair market value,” and then went on tо define the term pursuant to applicable regulations. Although plaintiff argues that it is “readily apparent” that the parties were contemplating a “fair value” standard since that standard is traditionally utilized in determining the value of shares of a closely-held corporation, “our sole function here is to interpret the stipulation of settlement and glean the intent of the parties from the plain language of the stipulation” (Mayefsky v Mayefsky, 184 AD2d at 955). As the stipulation unambiguously calls for a determination of the fair market value of plaintiffs shares, plaintiffs contrary interpretation of the parties’ intent must be rejected.
We next address plaintiffs assertion that the appraisal must be set aside because Mellen erroneously applied a minority discount in determining the value of the stock. Relying on Matter of Friedman v Beway Realty Corp. (87 NY2d 161 [1995]), plaintiff contends that the application of a minority discount in the context of a closely-held corporation is contrary to law. That decision, however, addressed the propriety of applying a minority discount in determining the “fair value” of the shares of dissenting minority shareholders in a close corporation in a proceeding pursuant to the
Plaintiff also argues that there was no factual basis for Mellen’s application of a lack of control discount to his shares because, pursuant to Norpco’s preincorporation agreement, all corporate decisions require unanimous approval of the shareholders.
Turning to plaintiffs challenge to Supreme Court’s award of counsel fees, it is well settled that “[c]ounsel fees that are documented and directly related to contemptuous conduct are generally recoverable unless proven excessive or reduced in a court’s reasoned decision” (Matter of Evans v Board of Assessment Review of Town of Catskill, 300 AD2d 768, 768-769 [2002];
see
We do, however, agree with plaintiffs assertion that Supreme Court erred in making its award of counsel fees without providing him the opportunity for a hearing to inquire into the reasonableness of those fees. During the hearing on defendants’ application, plaintiff argued that some of the claimed fees were not related to the contemptuous conduct аnd, therefore, were not recoverable. The parties stipulated that this issue would be decided by the court upon written submissions; however, plaintiff specifically reserved the right to request a hearing as to the reasonableness of the services for which counsel fees were sought. Accordingly, the parties and Supreme Court agreed that the court would first rule on the issue of which fees could be legally recоverable and, within 15 days of the court’s communication of its decision, plaintiff would have the right to request a hearing on the reasonableness of any of those fees. Despite this agreement, Supreme Court issuеd its order deciding both issues, thereby denying plaintiff his right to inquire into the reasonableness of the fees in violation of the parties’ stipulation. As such, the matter must be remitted and plaintiff provided an opportunity for a hеaring on this issue.
Spain, Malone Jr., Stein and Egan Jr., JJ., concur. Ordered
that the order