Pixel Intern. Network Inc. v. State

• Decision Date: 20 June 1996
• Docket Number: No. 1,No. 2,1,2
• Parties: PIXEL INTERNATIONAL NETWORK INC., Respondent, v. STATE of New York, Appellant, and McGinn, Smith Capital Holdings Corporation, et al., Respondents, et al., Defendant. (Action) McGINN, SMITH CAPITAL HOLDINGS CORPORATION, Appellant, v. PIXEL INTERNATIONAL NETWORK INC. et al., Respondents. (Action)
• Court: New York Supreme Court — Appellate Division

Page 377

644 N.Y.S.2d 377

228 A.D.2d 899

PIXEL INTERNATIONAL NETWORK INC., Respondent, v. STATE of New York, Appellant, and McGinn, Smith Capital Holdings Corporation, et al.,

Respondents, et al., Defendant. (Action No. 1.)

McGINN, SMITH CAPITAL HOLDINGS CORPORATION, Appellant, v. PIXEL INTERNATIONAL NETWORK INC. et al., Respondents. (Action No. 2.)

Supreme Court, Appellate Division,

Third Department.

June 20, 1996.

Joan A. Kehoe, New York State Department of Agriculture & Markets (Michael McCormick, of counsel), Albany, for State of New York, appellant.

Featherstonhaugh, Conway, Wiley & Clyne, L.L.P. (Stephen J. Wiley, of counsel), Albany, for McGinn, Smith Capital Holdings Corporation, appellant.

Dirk J. Oudemool, Syracuse, for respondents.

Before MIKOLL, J.P., and MERCURE, CREW, YESAWICH and PETERS, JJ.

CREW, Justice.

Appeal from that part of an order of the Supreme Court (Spain, J.), entered January 27, 1995 in Albany County, which (1) in action No. 1 denied motions by defendant State of New York for summary judgment dismissing the complaint against it and the appointment of a temporary receiver, and (2) in action No. 2 denied a motion for partial summary judgment by plaintiff on its second cause of action and granted a cross motion by defendant Pixel International Network Inc. to amend its answer.

In August 1990, Pixel International Network Inc. and the Division of the State Fair, Department of Agriculture and Markets (hereinafter the Department) entered into an agreement, pursuant to the terms of which Pixel was to install and operate an electronic message center marquee and up to six illuminated billboards on the grounds of the New York State Fair, located in the Town of Geddes, Onondaga County. This agreement was approved by the Attorney-General and by the Comptroller.

Thereafter, in September 1991, Pixel sought and received approval from the Department to assign its right to construct and operate the six billboards to Vancom Enterprises Inc. Pixel and Vancom memorialized this assignment in two agreements, dated September 15, 1991 and May 14, 1992, respectively, neither of which were approved by the Attorney-General or the Comptroller. During this same time period, Pixel and the Department also agreed to certain clarifications of their prior agreement. Specifically, Pixel and the Department agreed that the marquee would be replaced by an "Electronic Media Communication Center" (hereinafter EMCC), which Pixel would own for a 10-year period and would then either sell to the Department for its fair market value or remove from the premises. This agreement, as set forth in a letter dated May 4, 1992, also was not approved by either the Attorney-General or the Comptroller. Additionally, in June 1992, Pixel entered into a joint venture agreement with McGinn, Smith Capital Holdings Corporation (hereinafter MSCH), wherein MSCH agreed to provide funding for the construction and installation of the EMCC in exchange for a share of the profits from the EMCC and the Vancom contract.

Although Pixel thereafter moved forward with the project, it ceased operating the EMCC in December 1992 due to problems that developed in the interim. As a result, MSCH informed Pixel in January 1993 that it was in violation of the joint venture agreement. Following Pixel's refusal to resume operation of the EMCC, the Department terminated its agreement with Pixel in May 1993, at which time the Department also informed Pixel that it had no legal basis to maintain the six remaining billboards on the premises.

Pixel thereafter commenced action No. 1 against the State, MSCH and Vancom seeking declaratory relief regarding, inter alia, the ownership of the EMCC and the six billboards. The State moved to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7) or, alternatively, for summary judgment pursuant to CPLR 3211(c). By order dated June 17, 1993, Supreme Court, inter alia, denied the State's motion to dismiss and its motion for summary judgment, the latter without prejudice to renew. It appears that no appeals were taken from this order.

In November 1993, MSCH commenced action No. 2 against Pixel and its president, defendant Dennis Kruegler, asserting various causes of action. Following joinder of issue, MSCH moved for partial summary judgment as to its second cause of action with respect to Pixel only, seeking a declaration that Pixel was in default of the joint venture agreement, and as to its sixth cause of action for conversion against both Pixel and Kruegler. Pixel responded by cross-moving for, inter alia, leave to amend its answer. Shortly thereafter, in January 1994, the State again moved for summary judgment in action No. 1 and, further, sought the appointment of a...