LaBARBERA v. Vincent M. D'Amico, Respondent (Matter No. 2). (1997)

In a consolidated action, inter alia, to recover damages for breach of contract and a proceeding for the judicial dissolution of a professional service corporation, the plaintiff/petitioner appeals from an order of the Supreme Court, Westchester County (Rosato, J.), entered June 26, 1996, which, as amended by a so-ordered stipulation of the parties dated January 23, 1997, granted the defendants' motion for summary judgment dismissing the consolidated action and proceeding.

ORDERED that the order as amended is reversed, on the law, with costs, and the motion for summary judgment is denied as to both defendants.

In his petition the plaintiff/petitioner, Frank R. LaBarbera, sufficiently pleaded a cause of action for dissolution under Business Corporation Law § 1104-a(a)(1) and (2) (see, Matter of Greenhouse [HGK Asset Management], 228 A.D.2d 246, 644 N.Y.S.2d 26), the allegations of which, if borne out, would entitle him to relief.   Therefore, it was error to dismiss the petition where LaBarbera alleged that he was made a 50% shareholder in the subject professional service corporation and the certificate of incorporation reflected that he was “to be [one of] the original stockholders, directors and officers of the corporation”.

In light of the above and in the face of the individual respondent's denial that LaBarbera held any interest in the corporation, the court should have ordered a hearing to determine whether the petitioner was a shareholder and held the requisite amount of shares (20% or more) to bring a proceeding pursuant to Business Law Corporation § 1104-a (see, Matter of Kournianos [H.M.G., Inc.], 175 A.D.2d 129, 129-130, 571 N.Y.S.2d 823).   The dismissal of the proceeding was inappropriate in the presence of a genuine issue of fact regarding the threshold matter of standing (see, CPLR 3212[b] ) and a hearing must be held thereon.

Upon our review of the complaint, we find that it too was improperly dismissed.   The causes of actions asserted against the defendants/respondents are not barred by General Obligations Law § 5-701(a)(1) (see, Morris Cohon & Co. v. Russell, 23 N.Y.2d 569, 574, 297 N.Y.S.2d 947, 245 N.E.2d 712;  Hubbell Elec. v. State of New York, 153 Misc.2d 810, 812-813, 583 N.Y.S.2d 112;  General Obligations Law § 5-701[b][3][c] ).

MEMORANDUM BY THE COURT.