Rossi v. Twinbogo Co.

• Decision Date: 18 May 1993
• Citation: 193 A.D.2d 481,597 N.Y.S.2d 390
• Parties: James ROSSI, Jr., et al., Plaintiffs-Respondents, v. TWINBOGO COMPANY, et al., Defendants-Appellants, and Solomon P. Glushak, Defendant.
• Court: New York Supreme Court — Appellate Division

Page 390

597 N.Y.S.2d 390

193 A.D.2d 481

James ROSSI, Jr., et al., Plaintiffs-Respondents, v. TWINBOGO COMPANY, et al., Defendants-Appellants and Solomon P. Glushak, Defendant.

Supreme Court, Appellate Division First Department.

May 18, 1993.

Before SULLIVAN, J.P., and CARRO, WALLACH and KUPFERMAN, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County (Beatrice Shainswit, J.), entered March 22, 1991, to the extent that it granted plaintiffs summary judgment against defendant Twinbogo alone on their first and eighth causes of action, while severing and dismissing those causes of action as against the Bogoni defendants; granted plaintiffs summary judgment against defendant Bruce Paine on the seventh cause of action, while denying his motion for summary judgment thereon; and denied defendants' cross-motion for summary judgment to dismiss seven of the eleven causes of action on the basis of res judicata and collateral estoppel, while dismissing related affirmative defenses as well, unanimously modified, on the law, by reinstating the first and eighth causes of action as against the Bogoni defendants and granting plaintiffs summary judgment thereon, and otherwise affirmed, without costs. Order (same court and judge), entered July 17, 1992, which inter alia granted, on reargument, reinstatement of the sixth cause of action (dismissed on an earlier reargument motion) against the Paine defendants and granted plaintiffs summary judgment thereon, unanimously affirmed, without costs.

Defendants Bruce and Natalie Paine were the tenants of apartment 16-B, a rent-stabilized unit in an upper West Side building in Manhattan which was scheduled for cooperative conversion. The sponsor of the conversion was defendant Twinbogo Company, whose general partners were defendants Paul and Irene Bogoni. Plaintiffs Janet and James Rossi, Jr. were tenants of another apartment, # 10-A, in the same building. The Rossis planned to purchase their own apartment and the adjoining apartment 10-B. They were also interested in acquiring another apartment for Mr. Rossi's parents. Aware that the Paines spent little time in their apartment, the Rossis inquired about having the Paines purchase their own unit at the insider price ($225,750), and then flipping the sale to the Rossis. The cooperative offering plan initially prohibited assignment of a prospective purchaser's subscription. Nevertheless, in July 1988 the younger Rossi allegedly reached oral agreement with the Paines to purchase the latter's "insider rights" for $65,000. This oral pact was reduced to writing in October 1988, at about the same time that the landlord/sponsor approved the sublease of the Paines' apartment to the elder Rossis. The sponsor's attorney, defendant Glushak, then passed the word to the younger Rossis that the sponsor had given its approval to this arrangement. Indeed, in December 1988 the subscription plan was amended to permit limited assignment of a tenant's right to purchase at the insider price. In March 1989 the Paine/Rossi agreement on assignment and assumption of the subscription for apartment 16-B was supplemented in greater detail. This agreement was then rejected by the sponsor for a series of technical reasons which were invalid, and which, it would later be established, the sponsor knew to be so. The sponsor, through its attorney, thereafter brought pressure upon the Paines to abrogate their flip-sale agreement with the Rossis, and when the Paines resisted, the sponsor threatened to charge the Paines with default of tenancy and breach of conditions of their own occupancy, again for reasons that were invalid. The Rossis determined that the best way to force the sponsor to sell them the shares for apartment 16-B would be for Bruce Paine to sue them for specific performance, and the Rossis agreed to underwrite the legal expenses. This strategy bore fruit when Paine obtained a temporary restraining order against the sponsor's sale of the apartment's shares to any third party. On the basis of that order, Paine and Rossi obtained from the bank an extension of the mortgage commitment to finance the purchase of the cooperative shares allocated to apartment 16-B. The action for specific performance caused the sponsor to turn up the pressure, threatening not to renew Paine's lease. On June 27, 1989, Paine suddenly caved in to the pressure, stipulating with Twinbogo (without any consultation with Rossi) to discontinue the lawsuit with prejudice. In a final coup de grace to the rights of his silent beneficiary and underwriter of the lawsuit, Paine allowed the stipulation to state that "no person not a party has an interest in the subject matter of the...