IN RE: the Application of Nathalie RATEAU (2009)

 Respondent, DAPA Communications, Inc. (DAPACom), appeals from a judgment entered pursuant to Business Corporation Law § 1118, contending that Supreme Court erred in determining the fair value of petitioners' shares in DAPACom, a closely held corporation.   Contrary to DAPACom's contentions, we conclude that the court properly valued DAPACom “ ‘as an operating business' ” (Matter of Pace Photographers [Rosen], 71 N.Y.2d 737, 748, 530 N.Y.S.2d 67, 525 N.E.2d 713;  see Matter of Friedman v. Beway Realty Corp., 87 N.Y.2d 161, 168, 638 N.Y.S.2d 399, 661 N.E.2d 972;  Matter of Seagroatt Floral Co. [Riccardi], 78 N.Y.2d 439, 445, 576 N.Y.S.2d 831, 583 N.E.2d 287), and that the court properly used the net asset valuation method (see e.g. Friedman, 87 N.Y.2d at 167, 638 N.Y.S.2d 399, 661 N.E.2d 972;  Matter of Endicott Johnson Corp. v. Bade, 37 N.Y.2d 585, 587-588, 376 N.Y.S.2d 103, 338 N.E.2d 614;  Hall v. King, 265 A.D.2d 244, 697 N.Y.S.2d 19).   We further conclude that the court's valuation of DAPACom falls “within the range of testimony presented” and should not be disturbed (Matter of Cortland MHP Assoc. [PetraliapBurnham], 267 A.D.2d 1013, 1013, 701 N.Y.S.2d 193 [internal quotation marks omitted];  see Matter of Ashford Mgt. Group, 261 A.D.2d 863, 689 N.Y.S.2d 792).

 We agree with DAPACom, however, that the court erred in failing to apply a discount for the lack of marketability of petitioners' shares in DAPACom (see Seagroatt Floral Co., 78 N.Y.2d at 445-446, 576 N.Y.S.2d 831, 583 N.E.2d 287;  Amodio v. Amodio, 70 N.Y.2d 5, 7, 516 N.Y.S.2d 923, 509 N.E.2d 936;  Hall, 265 A.D.2d 244, 697 N.Y.S.2d 19;  cf. Matter of Whalen v. Whalen's Moving & Stor. Co., 234 A.D.2d 552, 554, 651 N.Y.S.2d 579;  Matter of Quill v. Cathedral Corp., 215 A.D.2d 960, 963, 627 N.Y.S.2d 157, lv. dismissed 86 N.Y.2d 838, 634 N.Y.S.2d 446, 658 N.E.2d 224).   We therefore reverse the judgment and remit the matter to Supreme Court to determine the fair value of petitioners' shares following application of a discount for lack of marketability.

It is hereby ORDERED that the judgment so appealed from is unanimously reversed on the law without costs and the matter is remitted to Supreme Court, Cattaraugus County, for further proceedings.

MEMORANDUM: