IN RE: Application of Marion SAKOW

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Supreme Court, Appellate Division, First Department, New York.

IN RE: Application of Marion SAKOW, Petitioner-Appellant, For the Judicial Dissolution of 633 Seafood Restaurant Inc., etc., 633 Seafood Restaurant Inc., etc., et al., Respondents-Respondents.

Decided: August 15, 2002

NARDELLI, J.P., BUCKLEY, ELLERIN, LERNER, and RUBIN, JJ. Morton S. Robson, for Petitioner-Appellant. Alan M. Lebensfeld, Brandon T. Davis, for Respondents-Respondents.

Order, Supreme Court, New York County (Barry Cozier, J.), entered February 25, 1999, which denied the petition, converted the proceeding to one brought pursuant to Business Corporation Law 1104-a, and directed a hearing to appraise petitioner's shares for a forced buy-out pursuant to Business Corporation Law 1118, unanimously modified, on the law, to delete the ordering paragraphs which deem the petition as one for a forced buy-out, direct a note of issue be filed and a valuation hearing be conducted, and otherwise affirmed, without costs.   Order, same court (Richard Lowe III, J.), entered October 31, 2001, which, inter alia, enforced the February 25, 1999 order upon its resettlement by respondents with regard to the appraisal hearing, and approved the application of respondents to sell the two restaurants owned by the corporate respondents, unanimously reversed, on the law, without costs, and the order vacated.

 This is an action seeking dissolution of a corporation pursuant to Business Corporation Law § 1104.   Petitioner alleged that she owned 50% of the stock, as required to demonstrate standing.   The IAS court properly found, however, that one share of the stock claimed by petitioner had been sold, leaving petitioner short of the 50% stock ownership required, depriving her of standing to bring this action and requiring dismissal.   Petitioner's conclusory claim that the share transfer was a sham did not raise issues of fact warranting a hearing (see, Goodman v. Lovett, 200 A.D.2d 670, 607 N.Y.S.2d 52, lv. dismissed 84 N.Y.2d 850, 617 N.Y.S.2d 139, 641 N.E.2d 160).   Having dismissed the petition, the IAS court sua sponte converted the proceeding to one brought under Business Corporation Law § 1104-a.   The right of appraisal provided by Business Corporation Law § 1118 applies only where dissolution is sought under the oppression statute, Business Corporation Law § 1104-a (Matter of Cristo Brothers, Inc., 64 N.Y.2d 975, 489 N.Y.S.2d 35, 478 N.E.2d 176;  Matter of Duffy, 97 A.D.2d 694, 468 N.Y.S.2d 116;  Matter of Levitt, 109 A.D.2d 502, 507, 492 N.Y.S.2d 736).   Petitioner sought statutory dissolution under a section which does not afford respondents a buy-out remedy.   In her reply, petitioner specifically objected to consideration of her petition as one seeking relief under Business Corporation Law § 1104-a and denied she was subject to a buy-out.   The IAS court did not have the power to convert petitioner's action into a claim requesting relief she had not sought (see, Fedele v. Seybert, 250 A.D.2d 519, 673 N.Y.S.2d 421;  Matter of Parveen, 259 A.D.2d 389, 687 N.Y.S.2d 90).   Since there was no appraisal remedy as the petition was properly dismissed, the enforcement proceedings were a nullity.