Bernstein v. Freudman

• Decision Date: 21 January 1988
• Citation: 136 A.D.2d 490,523 N.Y.S.2d 811
• Parties: David W. BERNSTEIN, et al., Plaintiffs-Appellants, v. Victor FREUDMAN, et al., Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 811

523 N.Y.S.2d 811

136 A.D.2d 490

David W. BERNSTEIN, et al., Plaintiffs-Appellants, v. Victor FREUDMAN, et al., Defendants-Respondents.

Supreme Court, Appellate Division First Department.

Jan. 21, 1988.

A.H. Brodkin, New York City, for plaintiffs-appellants.

S. Kirschenbaum, New York City, for defendants-respondents.

Before KUPFERMAN, J.P., and SANDLER, CARRO, MILONAS and SMITH, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County (Louis Grossman, J.) entered October 8, 1986, which denied plaintiffs' cross-motion (1) for summary judgment on the first and second causes of action; (2) for production of documents in order to calculate damages on the second cause of action; (3) for an order dismissing the first and second counterclaims; and (4) for an order striking the affirmative defenses; and which denied plaintiffs' second cross-motion to compel answers to interrogatories; and which granted defendants' motion for partial summary judgment dismissing the first and second causes of action, unanimously reversed, on the law, the plaintiffs' cross-motions for summary judgment on the first and second causes of action, production of documents, dismissal of the first and second counterclaims, striking the affirmative defenses, and compelling answers to interrogatories granted and defendants' motion for dismissal of the first and second causes of action denied, with costs.

The present dispute grows out of a contract dated March 29, 1978. At that time, plaintiffs Joseph and J.D.K. Realty Inc. (JDK) were the owners of real property in Staten Island, New York City referred to in the contract as Group II Land. Plaintiff Bernstein was the sole stockholder of JDK. Defendants Freudman, Lee and Berger were the owners of real property in Staten Island, referred to in the contract as Group I Land and located near Group II Land.

The purpose of the 1978 contract between the plaintiffs and the defendants was to provide sewage facilities for each group and to engage in a joint venture to develop other real property. Pursuant to the agreement, a corporation was formed by the defendants to build a sewage treatment plant. The agreement called for plaintiffs to receive 75% of the total authorized shares of stock of the new corporation (Lenevar Associates, Ltd.) and for defendants to receive 25% of the total authorized shares. The agreement further called for plaintiffs to convey to the new corporation some of the Group II Land in order to build the sewage treatment plant which would service Group I Land, Group II's New Land and Joint Land. Defendants agreed to build the sewage treatment plant.

The 1978 contract also created a category of property known as Joint Land. Whenever any part of the Joint Land was sold, plaintiffs were entitled to the payment of a sum of money pursuant to a formula set forth in the contract. In Bernstein v. Freudman, 102 A.D.2d 805, 477 N.Y.S.2d 340 (1984), aff'd. 64 N.Y.2d 1044, 489 N.Y.S.2d 467, 478 N.E.2d 983 (1985), this Court upheld the right of the plaintiffs to receive compensation for the sale of Joint Land.

The present controversy arises, in part, from the sale of additional Joint Land known as "Spells" Land. Following the ruling of the Court of Appeals, supra, the defendants paid plaintiffs pursuant to the contract. Plaintiffs then sought to amend their complaint to seek payment for the "Spells" Land and to establish their right to a "participating interest" to the Joint Land. Their application to amend was granted and no appeal was taken from the decision permitting amendment.

The present amended complaint contains two causes of action which are at issue here. The first cause alleges that defendants have sold Joint Land known as Spells Land, and plaintiffs are entitled to a sum of money pursuant to a formula set forth in the 1978 agreement. The second cause...