The opinion of the court was delivered by: SAND
HONORABLE LEONARD B. SAND, U.S.D.J.
Plaintiffs, the estate of Amos Ginor ("Ginor") and Langhorne Plaza Associates (the "Partnership"), assert claims against various defendants arising from the sale of two shopping centers by the Partnership. Now before the Court are motions for summary judgment pursuant to Rule 56 by defendants Rosenman & Colin ("Rosenman"), Dennis Landsberg ("Landsberg"), and Glimcher Holdings Limited Partnership ("Glimcher Holdings") and Glimcher Realty Trust (the "REIT") (collectively "Glimcher"). Also before the Court is a motion by Glimcher for sanctions pursuant to Rule 11. For the reasons set forth below, defendants' motions for summary judgment are granted in their entirety. Glimcher's Rule 11 motion is denied.
The history of this transaction is summarized as follows.
1. The Formation of the Partnership
The Partnership was formed in mid-1983 by defendant Concord Assets Group, Inc. ("Concord"), a corporation controlled by defendants Robert Mandor and Leonard Mandor. Id. PP 2, 7. From the inception of the Partnership, Amos Ginor (who died in early January, 1994), and subsequently his estate, was the sole limited partner, owning a 99% interest in the Partnership. Id. P 2. The 1% general partner interest was owned by Landsberg from 1983 through 1991, and subsequently by defendant Washington General Corporation ("Washington").
Id. PP 3-4. Washington is a subsidiary of Concord; Robert Mandor was at all relevant times Washington's president. Id. PP 4-5.
2. The Partnership's Acquisition of the Properties
The Partnership acquired the Properties in 1983. Id. PP 18-19. The Properties were originally owned by one Kenneth Zeisler ("Zeisler"), subject to a mortgage on one of the Properties held by Seamen's Bank (the "Seamen's mortgage") and a mortgage on the other Property held by Prudential Insurance Company (the "Prudential mortgage"). Id. P 17.
Defendant Langhorne Plaza, Inc. ("Plaza Inc."), also a Concord subsidiary, acquired the Properties from Zeisler in August, 1983 for approximately $ 7.1 million, with Plaza Inc. paying partly in cash, partly by assuming the Seamen's and Prudential Mortgages, and partly by granting Zeisler a long-term note secured by a purchase money mortgage (the "Zeisler mortgage"). Id. P 18. Plaza Inc. then sold the Properties to the Partnership for approximately $ 7.5 million.
Id. P 19. The Partnership paid for the Properties partly in cash, partly by a short-term note, and partly by a long-term note secured by a purchase money wrap mortgage (the "wrap mortgage"). Id.
3. The Rabin Class Action
In 1989, a class action was commenced before this Court on behalf of all investors in various Concord-created limited partnerships, including the Partnership, alleging fraud against Landsberg, Concord, Plaza Inc., Robert and Leonard Mandor, and other related entities. See Rabin v. Concord Assets Group, Inc., 1995 U.S. Dist. LEXIS 16166, No. 89 Civ. 6130 (LBS), 1995 WL 645441 (S.D.N.Y. Nov. 2, 1995). A settlement agreement (the "Rabin settlement") was reached, which this Court approved in November, 1991. Id. at *1.
The Rabin settlement contained two provisions that are of particular relevance to the instant motions. First, the settlement provided that Landsberg would be removed as general partner of the Partnership, to be replaced by Washington. Am. Compl. P 31a. Second, the general partner was given the authority to sell the property of the Partnership without the consent of the limited partner. Id. P 31e.
4. Ginor's Attempts to Remove Washington
Plaintiffs allege that Amos Ginor entered into negotiations with Concord in mid-1992 in an attempt to acquire Washington's 1% general partner interest. Id. P 32. Plaintiffs allege that an oral agreement was reached in the Spring of 1993, pursuant to which Ginor would receive the 1% general partner interest, along with satisfaction of the wrap mortgage, in exchange for the sum of $ 600,000. Id. P 36. The existence of this oral agreement is disputed.
Plaintiffs allege that formal documentation memorializing this agreement was promised by Concord but never delivered. Id. PP 37-38. Ginor thereafter decided to exercise the right, which he possessed under the partnership agreement, to remove Washington as general partner. Id. P 43. Several attempts were then made by Ginor and his representatives to contact Concord, Washington, Landsberg and Robert Mandor from November, 1993 through January, 1994, by both mail and telephone. Id. PP 44-49. In particular, on January 3, 1994, a letter was sent purporting to terminate Washington as general partner, effective 30 days after mailing of the letter. Id. P 45. Plaintiffs allege that these communications were not answered until after the sale of the Properties had closed. Id. PP 44-49.
5. The Sale of the Properties to Glimcher
Washington, acting as general partner of the Partnership, contracted to sell the Properties to Glimcher Holdings in November, 1993, for $ 5,654,781. Id. P 51. The sale closed on January 26, 1994. Id. P 52. The sale of the Properties was part of a larger block sale, in which 46 properties owned by various Concord-created limited partnerships were sold to Glimcher Holdings. Id. P 56. Rosenman represented Washington and all the Concord-created limited partnerships in connection with the sale. Id. P 58.
Pursuant to the sale, the Seamen's, Prudential, and Zeisler mortgages were prepaid, and Plaza Inc. received approximately $ 1.3 million in satisfaction of the wrap mortgage. Id. P 52. Ginor received only $ 70,310. Id. P 53.
Plaintiffs allege that notice of the impending sale was not given to Ginor or his representatives prior to closing. Id. P 66. Plaintiffs claim that the sale was detrimental to the interests of Ginor and the Partnership for various reasons, including: the alleged use of a "global sale price" for all 46 properties, which allegedly caused the two Partnership Properties to be sold below their market value; the creation of $ 198,000 in penalties to the Partnership for prepayment of the Seamen's, Prudential, and Zeisler mortgages; the alleged creation of a substantial tax liability on the estate of Ginor through the elimination of a substantial loss which would have accrued to the benefit of the estate had the Properties not been sold; the elimination of the Partnership's alleged ability to ...