ST MARKS ASSETS INC v. SOHAYEGH (2018)

Order, Supreme Court, New York County (Lynn R. Kotler, J.), entered June 18, 2018, which denied plaintiff's motion for summary judgment seeking a declaration that two contracts of sale between the parties are void and dismissal of defendant's counterclaim for specific performance, unanimously affirmed, with costs.

Plaintiff seeks to rescind two contracts, executed by its president, for the sale of two Manhattan properties to defendant.  Summary judgment was precluded by triable issues as to whether Business Corporation Law § 909(a) applies to the circumstances here, due to conflicting evidence as to whether the sale of real property is outside the scope of defendant's regular course of business, and whether the sale of the properties at issue here would dispose of substantially all of plaintiff's assets.  Further, while there is no dispute that the sale was not formally approved by shareholder vote, there is evidence that all shareholders informally approved of the properties' sale, and that plaintiff's directors regularly dispensed with corporate formalities, such as shareholder meetings.  “If corporate formalities are customarily dispensed with and the affairs of a close corporation are carried on through informal conferences, decisions reached by all the directors and shareholders at informal conferences bind the corporation” (Leslie, Semple & Garrison v. Gavit & Co., 81 A.D.2d 950, 951, 439 N.Y.S.2d 707 [3d Dept. 1981] ).

Plaintiff's argument that defendant's factual averments that the sales were approved by all shareholders are fabrications requires a credibility determination, which is not appropriate on summary judgment (DeSario v. SL Green Mgt. LLC, 105 A.D.3d 421, 963 N.Y.S.2d 24 [1st Dept. 2013] ).