Sherrill v. Grayco Builders, Inc.

• Decision Date: 06 March 1984
• Parties: Richard SHERRILL, Plaintiff-Appellant-Cross-Respondent, v. GRAYCO BUILDERS, INC. et al., Defendants-Cross-Appellants, Housing Preservation and Development Department of The City of New York, Defendant-Respondent. Richard SHERRILL, Plaintiff-Appellant, v. GRAYCO BUILDERS, INC. et al., Defendants-Respondents, and Louis E. Yavner, Defendant-Co-Appellant, and Housing Preservation and Development Department of The City of New York, Defendant-Respondent, v. RICHARD SHERRILL ASSOCIATES, Third-Party Defendant-Co-Appellant, and Susan Jon Gray, et al., Third-Party Defendants. Richard SHERRILL, Plaintiff-Respondent, v. RIVERSIDE PARK COMMUNITY (STAGE 1), INC., et al., Defendants-Appellants, and Louis E. Yavner et al., Defendants-Respondents, and Walter C. Goldstein, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 187

473 N.Y.S.2d 187

99 A.D.2d 965

Richard SHERRILL, Plaintiff-Appellant-Cross-Respondent, v. GRAYCO BUILDERS, INC. et al., Defendants-Cross-Appellants,

Housing Preservation and Development Department of The City

of New York, Defendant-Respondent.

Richard SHERRILL, Plaintiff-Appellant, v. GRAYCO BUILDERS, INC. et al., Defendants-Respondents, and Louis E. Yavner, Defendant-Co-Appellant,

and

Housing Preservation and Development Department of The City

of New York, Defendant-Respondent, v. RICHARD SHERRILL ASSOCIATES, Third-Party Defendant-Co-Appellant, and Susan Jon Gray, et al., Third-Party Defendants.

Richard SHERRILL, Plaintiff-Respondent, v. RIVERSIDE PARK COMMUNITY (STAGE 1), INC., et al.,

Defendants-Appellants,

and

Louis E. Yavner et al., Defendants-Respondents,

and

Walter C. Goldstein, et al., Defendants.

Supreme Court, Appellate Division First Department.

March 6, 1984.

M.I. Berkowitz, New York City, for Richard Sherrill and Richard Sherrill Associates.

S.V. Slotnik, New York City, for Grayco Builders, Inc., et al., and Riverside Park Community.

D.L. Berkey, New York City, for Housing Preservation and Development Dept. and Louis E. Yavner.

Before KUPFERMAN, J.P., and SANDLER, CARRO, BLOOM and LYNCH, JJ.

MEMORANDUM DECISION.

Appeal from an order entered October 1, 1982 in Supreme Court, New York County, unanimously dismissed as moot in light of the subsequent lawsuit involving all the parties, without costs.

Appeals from two orders entered July 20, 1983 in Supreme Court, New York County, which, respectively, denied plaintiff's motion to renew and reargue, and denied plaintiff's motion to vacate the order entered July 1, 1983 in the same court, deemed a motion to reargue, dismissed as nonappealable.

Order entered July 1, 1983 in Supreme Court, New York County, which, inter alia, denied plaintiff's motion to stay certain arbitrations, unanimously modified on the law and the facts and in the exercise of discretion to the extent of permanently staying all arbitration, vacating the stay of judicial proceedings granted in that order, and granting defendant Yavner's motion to consolidate the action with two other actions indexed in Supreme Court as Nos. 10987 and 10988/1980, and the order is otherwise affirmed without costs.

Order entered April 4, 1983 in Supreme Court, New York County, is unanimously affirmed, without costs. Further, on its own motion this court orders all actions involved in the above appeals consolidated into one action, with leave to all parties to serve, within 30 days of this order, amended pleadings reflecting such consolidation of all the issues and actions.

Richard Sherrill, Louis Yavner and Daniel Gray have worked together for almost twenty years. Individually or through corporate entities created by them, the three have developed a number of housing projects in New York City. In December of 1972 the three ¹ created and entered into a partnership agreement with Riverside Park Community (stage 1), Inc. [hereinafter RCP], a corporation they organized under Article II of the Private Housing Finance Law. That partnership contract is at the center of all the disputes from whence these appeals flow, with the main issue being whether Sherrill effectively resigned as a general, managing partner of RPC through a series of agreements made in 1975 and 1976. Briefly, Sherrill maintains that his attempted resignation was ineffective and a nullity because he could not secure the consent of the fifteen limited partners and the City of New York Housing Preservation and Development Department (HPD). ² Gray insists that Sherrill "retired" from RPC, and thus, did not need the consent of anyone. ³

Yavner, though he originally gave his consent to Sherrill's withdrawal from RPC, agrees with Sherrill that it was an ineffective resignation for the lack of necessary consents.

In 1978 Sherrill commenced an action on this basis against Gray and Grayco Builders, Inc. for rescission of one of the 1976 agreements, and return of certain moneys he allegedly paid out in furtherance thereof. These defendants answered with general denial, and then pursued discovery. In May of 1981 Gray and Grayco filed a separate suit against Sherrill, Yavner and Robert Sherrill Associates (RSA) seeking an accounting, an injunction against Sherrill attempting to act as managing partner for RPC and a money judgment. Then in November of 1961, Gray and Grayco moved to join Yavner as a defendant in Sherrill's action, and later that month Gray demanded arbitration of Sherrill and Yavner, again seeking an accounting and a declaration that Sherrill had "retired" under section 12 of the RPC agreement. (Grayco served a similar demand for arbitration relative to one of the 1976 project agreements).

In December 1981 Grayco's motion to join Yavner in Sherrill's action was granted and Gray consented to dismissal of its lawsuit for failure to serve a complaint. Then, in January of 1982 Gray and Grayco served an amended answer to Sherrill's complaint, now asserting counter-claims against Sherrill and cross-claims against Yavner.

Finally, in October 1982, after entry of the first order appealed from (denying Sherrill's application to join the limited partners of RPC), Sherrill instituted his second action, this time naming all signatories to the 1972 agreement (both limited and general partners), as well as HPD. In this mirror action to his first, Sherrill seeks a declaratory judgment that he is managing, general partner of RPC, and his attempted resignation was a nullity. ⁴

By instituting the second action Sherrill has effectively abandoned his previous one, thereby mooting the appeal from the October 1, 1982 order; accordingly, we dismiss that appeal.

All of these disputes belong in one consolidated action where a unity of discovery and procedure can effect an efficient resolution of the confusion over Sherrill's status in RPC and all of the issues which have been born of that confusion. Arbitration should not and may not be resorted to; the Parties have all chosen the courtroom, either directly or through actions which constitute waiver. All parties should, however, be given an opportunity to themselves consolidate their respective pleadings into comprehensive and conclusive statements of the alleged wrongs. We note that consolidation into one lawsuit is consonant with the fact that a majority of the limited parties have secured counsel and, through counsel, participated in the broader Sherrill action.

The appeal in connection with that case focuses on the correctness of Justice Schwartz's decision not to honor Gray's demand for arbitration. In a decision dated March 31, 1983 Justice Schwartz reasoned that the opposition of HPD to arbitration was sufficient, inasmuch as HPD "i...