Matter of Kassab v. KasabMatter of Kassab v. Kasab
Kasowitz Benson Torres LLP, New York, NY (Jennifer S. Racine of counsel), for appellant-respondent.
Schlam Stone & Dolan LLP, New York, NY (Richard H. Dolan, Jonathan Mazer, and Vitali S. Rosenfeld of counsel), for respondent-appellant.
In a hybrid proceeding pursuant to
DECISION
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
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
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 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
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,
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
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.
“[T]he power of a court to declare the law only arises out of, and is limited to, determining the rights of persons which are
In reviewing a determination made after a nonjury trial, the power of this Court is as broad as that of the trial court, and this Court may render the judgment it finds warranted by the facts, “taking into account in a close case the fact that the trial judge had the advantage of seeing the witnesses” (Northern Westchester Prof. Park Assoc. v Bedford, 60 NY2d 492, 499 [internal quotation marks omitted]; see Garcia v Garcia, 187 AD3d 859, 862). “Where the trial court‘s findings of fact rest in large measure on considerations relating to the credibility of witnesses, deference is owed to the trial court‘s credibility determinations” (Reingold v Bowins, 180 AD3d 722, 723 [internal quotation marks omitted]).
Here, the Supreme Court‘s determinations that Avraham had engaged in oppressive actions and diversion of corporate assets sufficient to warrant dissolution of Corner, and that liquidation of the corporation was the only feasible means whereby Nissim may reasonably expect to obtain a fair return on his investment, were supported by the record and the court‘s credibility determinations, and will not be disturbed (see
Contrary to Nissim‘s contention, the Supreme Court properly determined that he failed to prove his cause of action alleging that Avraham breached the August 27, 2012 agreement by failing to pay him distributions, since the sums he received in the form of health insurance premiums exceeded 40% of the net income of the companies in the relevant years. Further, even if such a breach had occurred, the court properly enforced the promissory notes (see generally Fundamental Long Term Care Holdings, LLC v Cammeby‘s Funding LLC, 20 NY3d 438, 445).
However, we agree with Avraham that the Supreme Court erred in determining the proper interest to be awarded on the promissory notes. The notes provided for the accrual of interest at the contract rates of 4.35% and 0%, respectively, from the
Contrary to the Supreme Court‘s determination, counsel for Avraham did not waive the accelerated 14% interest rate at a deposition or at trial. Waiver “should not be lightly presumed and must be based on a clear manifestation of intent to relinquish a contractual protection” (Fundamental Portfolio Advisors, Inc. v Tocqueville Asset Mgmt., L.P., 7 NY3d 96, 104, quoting Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966, 968; see Matter of Professional Staff Congress-City Univ. of N.Y. v New York State Pub. Empl. Relations Bd., 7 NY3d 458, 465). Counsel‘s cited comments did not evince a clear intent to waive the increased interest associated with the August 20, 2014 accelerated maturity date of the notes. Nissim contends that, nevertheless, the court correctly enforced the notes according to their original terms because the acceleration was done in bad faith (see generally Dalton v Educ. Testing Serv., 87 NY2d 384, 389). However, the court made an alternative finding on the merits that Nissim had failed to prove that Avraham accelerated the loans and increased the interest rates in bad faith rather than due to a good faith doubt as to Nissim‘s creditworthiness and his ability to repay the notes. There is no basis upon which to disturb this finding, which was based primarily on the court‘s credibility determinations (see generally Reingold v Bowins, 180 AD3d at 723). Accordingly, the court should have awarded 14% interest on the promissory notes from the accelerated maturity date—August 20, 2014—through entry of judgment.
Pursuant to the terms of the notes, Avraham was entitled to recover reasonable attorneys’ fees incurred in connection with his enforcement of the notes (see People‘s United Bank v Patio Gardens III, LLC, 143 AD3d 689, 691). Therefore, in the order dated August 3, 2017, the Supreme Court properly awarded Avraham a sum of attorneys’ fees. However, we agree with Avraham that, in the order dated October 27, 2017, the court improvidently exercised its discretion in limiting him to the $25,000 in attorneys’ fees previously awarded, without permitting him a further opportunity to submit an affirmation of services. In the order dated August 3, 2017, the court granted Avraham leave to submit an affirmation of services requesting additional attorneys’ fees, without including any time limit for submission of the documentation. The parties thereafter
ENTER:
Aprilanne Agostino
Clerk of the Court