Ashkenazy v. Gindi

• Decision Date: 10 July 2022
• Docket Number: Index No. 656277/2020,Motion Seq. Nos. 001,002
• Citation: 2022 NY Slip Op 32261 (U)
• Parties: BEN ASHKENAZY, ASHKENAZY ACQUISITION CORPORATION, CROSS COUNTY MALL MANAGING MEMBER CORP., 1991 BROADWAY OWNER LLC, LULU GIGI REALTY LLC, 625 NMA AAC MEMBER LLC, DK CONNECTIONS LLC, HORACE PLAZA MANAGING MEMBER LLC, and ASHKENAZY CANADA GP CORP., Plaintiffs, v. RAYMOND GINDI, EDDIE GINDI, ISAAC GINDI, ASG EQUITIES LLC, CCC PARTNERS, 1991 BROADWAY BLUE LLC.WEBRO 2067 LLC, IRAYMOND 2067 LLC, STAR OF DAVID 2067 LLC, RANDALL CO. 2067 LLC, 625 BLUE MEMBER LLC, BEVCON BLUE FEE LLC, GV HORACE PARTNERS, 696 STE. CATHERINE BLUE PARTNERS, ISAAC RAYMOND ASSOCIATES LLC, G- CROSS BRONX PLAZA PARTNERS, 625 MADISON BLUE LLC. GCVS FLATBUSH PARTNERS, 145 GREENE BLUE LLC, BRAVERN BLUE LLC, G III 69TH ST. PARTNERS L.P., THE ASHKENAZY FAMILY N.Y. TRUST-DATED 11/16/05, 2013 ICONIC TRUST LLC, CROSS BRONX PLAZA MANAGING MEMBER CORP., BA 625 MAD MANAGING MEMBER CORP., BA BRAVERN MANAGER LLC, 69TH STREET HOLDINGS GP LLC, SAN FRAN ICONIC MEMBER LLC, and BEN AND DEBRA FAMILY 2015 LLC, Defendants.
• Court: New York Supreme Court

2022 NY Slip Op 32261(U)

BEN ASHKENAZY, ASHKENAZY ACQUISITION CORPORATION, CROSS COUNTY MALL MANAGING MEMBER CORP., 1991 BROADWAY OWNER LLC, LULU GIGI REALTY LLC, 625 NMA AAC MEMBER LLC, DK CONNECTIONS LLC, HORACE PLAZA MANAGING MEMBER LLC, and ASHKENAZY CANADA GP CORP., Plaintiffs,
v.
RAYMOND GINDI, EDDIE GINDI, ISAAC GINDI, ASG EQUITIES LLC, CCC PARTNERS, 1991 BROADWAY BLUE LLC.WEBRO 2067 LLC, IRAYMOND 2067 LLC, STAR OF DAVID 2067 LLC, RANDALL CO. 2067 LLC, 625 BLUE MEMBER LLC, BEVCON BLUE FEE LLC, GV HORACE PARTNERS, 696 STE. CATHERINE BLUE PARTNERS, ISAAC RAYMOND ASSOCIATES LLC, G- CROSS BRONX PLAZA PARTNERS, 625 MADISON BLUE LLC. GCVS FLATBUSH PARTNERS, 145 GREENE BLUE LLC, BRAVERN BLUE LLC, G III 69TH ST. PARTNERS L.P., THE ASHKENAZY FAMILY N.Y. TRUST-DATED 11/16/05, 2013 ICONIC TRUST LLC, CROSS BRONX PLAZA MANAGING MEMBER CORP., BA 625 MAD MANAGING MEMBER CORP., BA BRAVERN MANAGER LLC, 69TH STREET HOLDINGS GP LLC, SAN FRAN ICONIC MEMBER LLC, and BEN AND DEBRA FAMILY 2015 LLC, Defendants.

Index No. 656277/2020, Motion Seq. Nos. 001, 002

Supreme Court, New York County

July 10, 2022

Unpublished Opinion

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DECISION + ORDER ON MOTION

HON. ANDREA MASLEY, JUDGE:

The following e-filed documents, listed by NYSCEF document number (Motion 001) 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41,42, 43, 44, 45, 46, 56, 63, 64, 65, 66, 72, 131, 135 were read on this motion to/for SUMMARY JUDGMENT AFTER JOINDER

The following e-filed documents, listed by NYSCEF document number (Motion 002) 58, 59, 60, 61,62, 75, 76, 77, 78, 79, 80, 81,82, 83, 84, 85, 86, 87, 88, 89, 90, 91,92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 122, 132, 133, 136 were read on this motion to/for DISMISS Upon the foregoing documents, it is Motion sequence numbers 001 and 002 are consolidated for disposition.

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This action arises from a business dispute between real estate investors, plaintiffs Ben Ashkenazy, and the entities he controls, and defendants Raymond Gindi, Eddie Gindi, Isaac Gindi (collectively, the Gindis) and the entities they control. Based on defendants' refusal to fund capital calls issued for the parties' jointly owned commercial properties, plaintiffs assert in the sixteen-count complaint causes of action for breach of the implied covenant of good faith and fair dealing (first, fifth, sixth, and seventh causes of action), breach of contract (second, third and fourth causes of action), and declaratory judgment (eighth, ninth, tenth, eleventh, twelfth, thirteenth, and fourteenth causes of action.) Additionally, plaintiffs assert causes of action for defamation and defamation per se (fifteenth and sixteenth causes of action, respectively) based on the Gindis's alleged statements to others accusing Ashkenazy of mismanagement and theft.

In their answer, the Gindis assert various affirmative defenses, including failure to state a claim (first affirmative defense.) They are also joined by additional entities owned and/or controlled by the Gindis in asserting forty counterclaims.^[1] These include a counterclaim alleging that plaintiffs' defamation claims are a strategic lawsuit against public participation ("SLAPP") in violation of New York's recently amended anti-SLAPP law. (Civil Rights Law §§ 70-a, 76-a.) The remainder of the counterclaims are for breach of contract, declaratory judgment, breach of fiduciary duty and aiding and abetting breach of fiduciary duty and are based on various allegations of misconduct by plaintiffs in connection with the parties' joint real estate investments.

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In motion sequence number 001, defendants now move for summary judgment dismissing the causes of action for of breach of the implied covenant of good faith and fair dealing, breach of contract and declaratory judgment (first through fourteenth causes of action.)

In motion sequence number 002, plaintiffs move, pursuant to CPLR 3211 (a) (1) and (7), to dismiss counterclaims one, four through eight, eleven through seventeen, nineteen, twenty-two, twenty-four through twenty-nine and thirty-two through forty.

I. Background

Ashkenazy is a well-known real estate investor, who owns and operates plaintiff Ashkenazy Acquisition Corporation ("AAC".) (NYSCEF Doc No. [NYSCEF] 1, compl., ¶ 37; NYSCEF 7, answer with counterclaims [answer], ¶ 41.) The Gindis, along with other members of their family, own and operate defendant ASG Equities LLC ("ASG"), which owns and operates a portfolio of real estate and private equity investments. (NYSCEF 1, compl., ¶ 38; NYSCEF 7, answer, ¶ 42.) For approximately a decade, Ashkenazy and the Gindis, through their various entities, invested in numerous commercial properties together. In connection with these properties, AAC, through one of its affiliates, would act as the managing member and ASG, though one of its affiliates, would act as a passive investor. (NYSCEF 1, compl., ¶ 39; NYSCEF 7, answer, ¶¶ 5, 8, 43.)

According to the complaint, seven of these properties (the "Capital Call Properties") experienced "significant financial distress as a result of the COVID-19 pandemic." (NYSCEF 1, compl., ¶ 40.) In April and June 2020, plaintiffs sent capital call letters (the "Capital Call Letters") to defendants in connection with these properties.

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The letters were largely identical and explained that due to the pandemic's impact on tenants (i.e., "tenant closures, stated inability to pay rent, relief requests") and due to the uncertainty as to what, if any, "accommodations lender [would] agree to," plaintiffs were anticipating "severely constrained revenue over the next 3-6 months." (NYSCEF 39-45, Capital Call Letters.) The letters also warned that failure to fund the capital calls exposed the parties to "unimaginable risks, liabilities and threat to [their] ownership in the property," including possible "loan defaults, loan foreclosure, lapse of insurance coverages, tax liens and Landlord default under leases." (Id.) The letters stressed that "failing to fund th[e] capital call[s]. . . [would] result in severe consequences and cause significant damage to the partners." (Id.)

Defendants failed to fund the capital calls. (NYSCEF 1, compl., ¶¶ 7, 59 NYSCEF 7, answer, ¶ 11.) Plaintiffs allege that this was done to force a "buy-out at a premium." (NYSCEF 1, compl., ¶ 1.) In addition, defendants allegedly "launched a series of harassing and unfounded demands on [p]laintiffs for voluminous amounts of documents and information." (Id., ¶ 8.) Plaintiffs allege that they "have provided [d]efendants with access to all the financial information to which they are [contractually] entitled" and that "the substance of the documents and information [defendants] purport to Seek had long ago been provided to them." (Id.)

Lastly, plaintiffs allege that, in May 2020, defendants "launched a public campaign of defamation and harassment" against plaintiffs (id., ¶ 9), accusing plaintiffs of stealing millions of dollars in connection with the Capital Call Properties. (See id., ¶¶ 9, 62.) In the complaint, plaintiffs point to the following incidents in support of this claim:

"(a) Defendant Eddie Gindi accused Mr. Ashkenazy and [p]laintiffs of 'stealing' to Eddie Gindi's son-in-law, Zourie

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Dweck, as well as to Alex Adjmi, the president of A&H Acquisition Corporation and another well-known real estate investor;

"(b) Defendant Isaac Gindi accused Mr. Ashkenazy and [p]laintiffs of 'stealing' to a business associate Eli Gindi (no relation to the Gindis herein) at a fundraiser, and also to Isaac Gindi's son, Sonny Gindi, who then shared the false statements with community members; and

"(c) Defendant Raymond Gindi accused Mr. Ashkenazy and [p]laintiffs of 'stealing' to his business associate Eli Gindi (no relation to the Gindis herein), to Raymond Gindi's brother-inlaw, Jojo Chehebar, and to Joseph Cayre, yet another well-known real estate investor."

(Id.,¶63.)

For their part, defendants claim that, in 2018, they, for the first, time requested information regarding their investments. According to ASG's Chief Financial Officer, Michael O'Shea, "Ashkenazy agreed to provide equity schedules setting out the parties' equity contributions, ownership percentage, and distributions received for each of their investments," but he delayed doing so until 2019. (NYSCEF 76, O'Shea aff, ¶¶ 3, 6, 7.) Allegedly, upon receiving these schedules, defendants realized that "Ashkenazy had assigned himself greater ownership in the properties than the parties had agreed and/or failed to contribute amounts consistent with his stated ownership interest" and "that Ashkenazy had taken more than his pro rata share of distributions in some instances and had used funds from the joint companies to pay off his personal loans." (Id., ¶ 7.) Defendants claim that they had no prior notice of these issues, because they had never been provided this information before. (Id.) Based on these discoveries, defendants allege that they made repeated requests for additional information, but that-with the exception of the federal tax returns for the years 2016 through 2018, which Ashkenazy

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produced in June 2020-Ashkenazy did not provide further information. (See id., ¶¶ 811; See also answer, ¶¶ 51-57.) In addition, defendants deny that they made defamatory statements about plaintiffs. They claim that Ashkenazy was the one that spread rumors about the parties' dealings. (See answer, ¶¶ 58-60.)

Plaintiffs commenced this action on November 13, 2020. Defendants filed their answer with counterclaims on December 18, 2020.

Details regarding the parties' business arrangements and their specific allegations of wrongdoing against each other are set forth below.

Capital Call Properties

1. Cross County Mall

In December 2007, plaintiff Cross County Mall Managing Member Corp. ("CCMMM"), an affiliate of AAC, defendant CCC Partners, an affiliate of ASG, and...