Wynkoop v. 622A President St. Owners Corp.
| Decision Date | 26 October 2020 |
| Docket Number | Index No. 507156/13 |
| Citation | 2020 NY Slip Op 35295 (U) |
| Parties | Brett e. Wynkoop and Kathleen Keske, Plaintiffs, v. 622A President Street Owners Corp., Kyle Taylor, Hilary Taylor, and Rajeev Subramanyam, Defendants, |
| Court | New York Supreme Court |
Unpublished Opinion
DECISION AND ORDER
The following e-filed papers read herein:
NYSCEF Doc. Nos.
Notice of Motion/Cross Motion and Affidavits (Affirmations)
1764, 1766, 1792-1793
and Exhibits Annexed
1822, 1910-1912
Opposing Affidavits (Affirmations)
1946, 1951, 1956, 1970, 1999
Reply Affidavits (Affirmations)
Upon the foregoing papers, defendants Kyle Taylor, Hillary Taylor and Rajeev Subramanyam (collectively referred to as "the Individual Defendants") and plaintiffs on the counterclaim, Kyle Taylor and Rajeev Subramanyam, move for orders, pursuant to CPLR 3212, granting them summary judgment, dismissing plaintiffs' claims against them; and granting Taylor and Subramanyam summary judgment on their counterclaims for breach of fiduciary duty and conversion (motion sequence number 50).
Defendant 622A President Street Owners Corp. ("Co-op Corp") moves for an order: (1) pursuant to CPLR 3215 (a), granting the Co-op Corp a judgment by default on each of its counterclaims, directing a judgment awarding the Co-op Corp the equitable relief sought in its second and sixth counterclaims, and referring the matter for an inquest for an assessment, and determination of damages on the remaining counterclaims; and (2) in the alternative, pursuant to CPLR 3212, granting the Co-op Corp summary judgment, dismissing the complaint as against it; and granting the Co-op Corp summary judgment on its fourth and fifth counterclaims (motion sequence number 51).
Plaintiffs Brett Wynkoop and Kathleen Keske cross-move for orders: (1) pursuant to CPLR 3212, granting them summary judgment dismissing the counterclaims against them to the extent that they have not already been dismissed by the Appellate Division, Second Department; (2) pursuant to CPLR 3212 granting them summary judgment in their favor on all of their claims against the Individual Defendants; and (3) granting a default judgment pursuant to CPLR 3215, or, in the alternative, summary judgment in their favor pursuant to CPLR 3212, with respect to all of plaintiff's claims as against the Co-op Corp (motion sequence number 52).
The Individual Defendants' motion (motion sequence number 50) is granted to the extent that: (1) the amended complaint is dismissed in its entirety as against defendant Hilary Taylor (2) the fifth through six, eighth through nineteenth, and twenty-first through twenty-second causes of action of the amended complaint are dismissed in their entirety as against defendants Kyle Taylor and Rajeev Subramanyam; and (3) the seventh cause of action is dismissed as against Kyle Taylor in its entirety and is dismissed as against Subramanyam to the extent that is premised on legal theories other than unjust enrichment.[1] The Individual Defendants' motion is otherwise denied.
The Co-op Corp's motion (motion sequence number 51) is granted to the extent that plaintiffs' second, third, fourth, twenty-second and twenty-fourth causes of action and the portion of plaintiffs' declaratory judgment cause of action (first cause of action) requesting a reallocation of their shares in Co-op Corp relating to apartment 1 are dismissed. The Coop Corp's motion is otherwise denied.
Plaintiffs' cross-motion (motion sequence number 52) is granted only to the extent that plaintiffs are entitled to a declaration in their favor with respect to their use and occupancy of the cellar space, and they are directed to serve a proposed judgment relating to such declaration on defendants with notice of settlement within 60 days of service of this order with notice of entry. Plaintiffs' cross-motion is otherwise denied.
This action involves an acrimonious dispute amongst the shareholders and proprietary leaseholders of a small four-unit cooperative apartment building ("the Building") owned by the Co-op Corp. Plaintiffs jointly own 50 percent of the shares of the Co-op Corp; and are the proprietary leaseholders of apartments 1 and 2 in the Building. It is undisputed that plaintiffs purchased their shares in February 1995, that they live in apartment 1, which is located on the first floor of the Building, that they exclusively occupy the Building's cellar, and that they sublet apartment 2 from the time of their purchase of their shares for apartment 2 until at least 2015. Defendant Kyle Taylor purchased his 25 percent shareholder interest in the cop Corp and entered into his proprietary lease for apartment 3 in September 2010. Kyle Taylor lives in apartment 3 with his wife, defendant Hilary Taylor.[2] Defendant Rajeev Subramanyam, who holds a 25 percent shareholder interest in the Co-op Corp, purchased his shares and entered into his proprietary lease for apartment 4 in January 2006.
It is essentially undisputed that, from the time that plaintiffs purchased their interest in the Co-op Corp, the shareholders managed the Co-op Corp without following the corporate formalities required by the Co-op Corp's by-laws and by the Business Corporation Law. Upon becoming a shareholder, Wynkoop assumed the roles of treasurer and building manager and Keske assumed the roles of vice-president and secretary (Amended Complaint 23-25; 1/13/14 Wynkoop Aff. ¶ 9). Without the holding of any annual meetings or the election of board members or officers, plaintiffs continued in these roles even after Subramanyam and Taylor purchased their respective shares. Disputes eventually arose between plaintiffs and the Individual Defendants with respect to, among other things, the governance of the Co-op Corp, the right to access to the basement areas, and the maintenance of the Building, including a repair of a water leak in a skylight on the building's roof and water damage associated with the leak.
Unable to resolve their differences with plaintiffs, Taylor and Subramanyam, in March 2012, commenced an action (Taylor v Wynkoop, Index No. 6548/12) ("Prior Action"), styled as a shareholder derivative action, against the plaintiffs in this action, as well as plaintiffs' subtenant, James Borland; and the Co-op Corp as a nominal defendant. In the amended complaint in the Prior Action, Taylor and Subramanyam sought, inter alia, an order directing the holding of a shareholder meeting to elect a board of directors, the termination of Wynkoop and Keske's shares in 622A Owners and their ejectment from the Building, the ejectment of Wynkoop and Keske from the cellar, and alleged a cause of action based on a breach of fiduciary duty.
The court (Rivera, J.), in an order dated November 7, 2013, dismissed the Prior Action without prejudice, finding that Taylor and Subramanyam had failed to adequately plead demand futility as is required to excuse a demand upon the board of directors as is required by Business Corporation Law § 626 (c) to commence a shareholder derivative cause of action. In this same November 7, 2013 order; however, the court denied Wynkoop, Keske and Borland's cross-motion for summary judgment with respect to the breach of contract and breach of fiduciary duty causes of action based on, inter alia, assertions that Wynkoop and Keske, improperly acted as corporate officers, and misappropriated corporate funds. This November 7, 2013 order was thereafter affirmed (Taylor v Wynkoop, 132 A.D.3d 843, 845 [2d Dept 2015]).
Shortly after the dismissal of the Prior Action, plaintiffs commenced this action, alleging multiple causes of action against the Co-op Corp and the individual defendants. In the amended complaint, plaintiffs, allege, among other things, that the Individual Defendants entered their cellar unit without permission; used the Prior Action to improperly attempt to oust plaintiffs from the cellar, and obtain control over the Co-op Corp despite the fact that defendants possessed the addendum to the proprietary lease, which documented plaintiffs' entitlement to the cellar. [3] Plaintiffs also claim that the Individual Defendants falsely asserted in the Prior Action that they used corporate funds for personal purposes such as legal expenses; that the Individual Defendants influenced building inspectors to issue violations against the Building based on the presence of Wynkoop's bicycle in the common hallway; and that through Taylor and Subramanyam's withholding of maintenance charges, and their refusal to conduct board business, they prevented necessary building maintenance, including the re-grouting of the building, which led to water damage in plaintiffs' apartment.
Plaintiffs further assert that, at some point in 2011, Taylor and Subramanyam used economic duress in the form of threats to withhold building maintenance payments in order to obtain an agreement from plaintiffs to pay half the costs of repairs to the roof and skylight; despite the fact that the obligation to maintain the roof falls solely on Subramanyam under the addendum to the proprietary lease. In view of these factual allegations, plaintiffs pleaded numerous causes of action against the Individual Defendants based on breach of fiduciary duty, different forms of fraud, contract rescission,[4] private nuisance, conspiracy, prima facie tort, attorney fraud by Kyle Taylor under Judiciary Law § 487, abuse of process, defamation, trespass, tortious interference with contract, and slander of title.
With respect to the Co-op Corp, plaintiffs seek a declaratory judgment against the Co-op Corp declaring, among other things, that the addendum/rider to the proprietary lease titled "Section Seven A to the Proprietary Lease" is valid, that this rider entitles plaintiffs to...
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