KASSOVER v. Richard Sabella, Defendant–Respondent. (2017)

Judgment, Supreme Court, New York County (Saliann Scarpulla, J.), entered March 11, 2014, dismissing the complaint as against defendants Richard Sabella and GCC Realty Co., LLC (successor in interest to named defendants PVP–GCC Holdingco II, LLC and The Garden City Company, Inc.), unanimously affirmed, without costs.  Appeal from order, same court (Barbara R. Kapnick, J.), entered September 25, 2013, which granted defendants' motion for summary judgment, and denied plaintiffs' motion to amend the complaint, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

Plaintiffs claim that defendants violated Business Corporation Law § 501(c) by giving them less consideration for their shares in connection with the merger of Prism Venture Partners and Garden City Company than other shareholders received.

Defendants established prima facie that plaintiffs were not entitled to the same compensation as other shareholders, because they declined to sign the letter agreement or assignment agreement that other shareholders signed in exchange for their compensation.

In opposition, plaintiffs failed to raise an issue of fact.  They argue that the letter agreement presented to them required them to make an assignment that the other shareholders were not required to make to acquire the same benefit.  However, the other shareholders signed separate assignment agreements, pursuant to which they agreed to relinquish “any and all rights and claims ․ under the Shareholder Agreement ․ with respect to all GCC stock owned.”  Plaintiffs failed to show that, on their face, those assignment agreements were different from or narrower in scope than the assignment instrument referred to in the letter agreement presented to them, or that different consequences followed, simply because other shareholders' assignments were memorialized in documents separate from their letter agreements.

Plaintiffs argue further that the letter agreements had a discriminatory effect on them because they alone had claims to assign.  However, the record does not support this argument either.  Other shareholders were required, pursuant to their separate assignment agreements, to assign not only “claims” under the shareholder agreements but also rights, title, and interest.  Moreover, Business Corporation Law § 501(c) provides, in pertinent part, that “each share shall be equal to every other share of the same class”;  plaintiffs failed to demonstrate that the statute requires that the effect of a particular transaction upon each shareholder be equal.  Nor did plaintiffs show that the letter agreement and assignment presented to them would have adversely affected their “claims.”

The evidence submitted by plaintiffs fails to rebut the case otherwise established by the record, that plaintiffs, who vigorously opposed the merger, simply did not like its terms, and, in plaintiff Philip Kassover's own words, made a “business decision” to reject it.  Having exercised their right to make that choice, plaintiffs will not now be heard to claim unfair treatment as a result (see generally Cherry Green Prop. Corp. v Wolf, 281 A.D.2d 367, 722 N.Y.S.2d 537 [1st Dept. 2001] ).

We note in addition that plaintiffs failed to raise an issue ‘of fact whether defendant Sabella acted other than on behalf of the entities of which he was a managing member.  Moreover, they failed to show that a violation of Business Corporation Law § 501(c) could properly support a claim sounding in tort (compare Fletcher v. Dakota, Inc., 99 A.D.3d 43, 948 N.Y.S.2d 263 [1st Dept. 2012] [violation of human rights law];  Matter of State of New York v. Daro Chartours, 72 A.D.2d 872, 422 N.Y.S.2d 146 [3d Dept. 1979] [fraudulent sale of vacation trips];  La Lumia v. Schwartz, 23 A.D.2d 668, 257 N.Y.S.2d 348 [2d Dept. 1985] [invasion of privacy] ).

The “new evidence” offered on plaintiffs' motion to amend the complaint is equivocal and fails to support their speculative argument.

We have considered plaintiffs' remaining arguments and find them unavailing.