Candlewood Holdings, Inc. v. Valle
| Decision Date | 16 December 2015 |
| Citation | 23 N.Y.S.3d 266,134 A.D.3d 872 |
| Parties | CANDLEWOOD HOLDINGS, INC., et al., appellants, v. Nicanor VALLE, Jr., et al., respondents. |
| Court | New York Supreme Court — Appellate Division |
Ackerman, Levine, Cullen, Brickman & Limmer, LLP, Great Neck, N.Y. (John M. Brickman and Andrew J. Luskin of counsel), for appellants.
Leonard R. Sperber, Garden City, N.Y. (Michelle S. Stein of counsel), for respondents Nicanor Valle, Jr., 676 Holding Corp., and Cutlass Enterprises, Inc.
RUTH C. BALKIN, J.P., L. PRISCILLA HALL, COLLEEN D. DUFFY, and HECTOR D. LaSALLE, JJ.
In an action, inter alia, for a judgment declaring that Candlewood Holdings, Inc., is the beneficial owner of 676 Holding Corp., and is entitled to the proceeds of a certain condemnation award, and for injunctive relief, the plaintiffs appeal from an order of the Supreme Court, Nassau County (Bucaria, J.), dated March 18, 2014, which granted the motion by Nicanor Valle, Jr., 676 Holding Corp., and Cutlass Enterprises Inc., for leave to renew and, upon renewal, in effect, vacated its prior order dated November 13, 2012, denying the motion by those defendants which was for summary judgment dismissing the complaint insofar as asserted against them, and thereupon, granted that motion to the extent of directing the dismissal of the second, third, fourth, and fifth causes of action insofar as asserted against them and, as to the first cause of action, directing the entry of a judgment, inter alia, declaring that Nicanor Valle, Jr., is the beneficial and legal owner of 676 Holding Corp., and is entitled to the proceeds of the condemnation award.
ORDERED that the order dated March 18, 2014, is affirmed, with costs.
Rosalie Moore is the owner of one-third of the stock of Candlewood Holdings, Inc. (hereinafter Candlewood). The other two-thirds of Candlewood's stock is owned by ANO, Inc., which is not a party to the present action. Prior to May 2000, Candlewood owned all of the stock of Cutlass Enterprises, Inc. (hereinafter Cutlass), which owned real property located at 676 Grand Concourse in the Bronx. In May 2000, Candlewood sold its interest in Cutlass to nonparty Jacko Car Wash Corp. (hereinafter Jacko), in return for a promissory note and a security interest in the Cutlass stock. In 2002, upon defaulting on the promissory note, Jacko agreed to assign all of its assets to Candlewood in lieu of foreclosure. Instead of accepting the return of the Cutlass stock, however, the shareholders of Candlewood formed 676 Holding Corp. (hereinafter 676 Holding) for the purpose of receiving any assignment of the Cutlass stock from Jacko. The shareholders of Candlewood decided that the stock of 676 Holding should be held by Nicanor Valle, Jr., who was not affiliated with Candlewood. Valle was thus made the record owner of the stock of 676 Holding, and all relevant tax returns were prepared consistent with this arrangement.
In 2007, the City of New York condemned the property located at 676 Grand Concourse in an eminent domain proceeding. As a result of that proceeding, Cutlass became entitled to an award from the City. The City made a partial payment of that award, which was retained by Valle, the record owner of the stock of 676 Holding. Thereafter, the plaintiffs commenced this action, inter alia, for a judgment declaring that Candlewood is the beneficial owner of 676 Holding and is entitled to the proceeds of the condemnation award, and for injunctive relief. The plaintiffs alleged that Valle agreed, in writing, to be the "nominee owner" of the shares of 676 Holding so as to allow Candlewood to obtain certain tax benefits, but that Valle gave no consideration for his shares and that Candlewood remained the "rightful beneficial owner."
Valle, 676 Holding, and Cutlass (hereinafter collectively the Valle defendants) moved for summary judgment dismissing the complaint insofar as asserted against them. They insisted that no such nominee agreement ever existed and that Valle was indeed intended to be the beneficial owner of 676 Holding. The Supreme Court denied that motion, concluding that the plaintiffs, despite not producing any written agreement, had raised triable issues of fact as to whether Valle was intended to be a nominee...
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