Appeal from order, Supreme Court, Bronx County (Dianne T. Renwick, J.), entered on or about April 17, 2008, which determined the market value of two properties and directed closings thereon, dismissed, without costs.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Tom, J.P., Nardelli, Sweeny, McGuire, DeGrasse, JJ.
In 1971 plaintiff Juan Reyes, M.D., defendant Rafael Sequeira, M.D., and a nonparty physician formed a closely held corporation, SAR. The following year SAR purchased a parcel of land in the Bronx. Plaintiff and defendant then bought out the nonparty's one-third interest in SAR, giving plaintiff and defendant each a 50% interest in it. In 1976 plaintiff and defendant formed another closely held corporation, 91 Graham Avenue Realty Corporation, which purchased a parcel of land in Brooklyn. In 1977 the New York State Department of State dissolved SAR because it had failed to pay franchise taxes; 91 Graham was dissolved in 1980 for the same reason.
In September 2003 plaintiff commenced this action against defendant and the two dissolved corporations asserting causes of action to recover damages for fraud, breach of fiduciary duty and under Business Corporation Law § 720. Plaintiff also seeks an accounting from defendant regarding the corporations' assets and access to the corporations' records. The gravamen of the action is that defendant attempted to sell both the Bronx and Brooklyn parcels without plaintiff's knowledge or consent; defendant transferred 91 Graham's checking and savings accounts to a different bank and removed plaintiff's name as an authorized signatory on transactions involving those accounts; defendant refused to provide plaintiff with the corporations' records; and defendant formed a new corporate entity in 2003, SAR 2003, without consulting plaintiff. Defendant answered the action and asserted counterclaims seeking (1) damages for breach of fiduciary duty and under Business Corporation Law §§ 722, 723 and 724, (2) declarations that defendant owned two thirds of the shares of SAR because plaintiff agreed to transfer one sixth of his interest in that corporation to defendant if he managed the Bronx parcel, and that a contract of sale defendant executed on behalf of SAR regarding the Bronx parcel was valid, and (3) judicial supervision of the winding up of the affairs of SAR pursuant to Business Corporation Law § 1008.
In March 2004 defendant commenced a proceeding pursuant to article 10 of the Business Corporation Law in Supreme Court, Kings County, to wind up the affairs of 91 Graham. Defendant sought permission to sell the Brooklyn parcel and a declaration that he owns two thirds of the shares of 91 Graham and is entitled to two thirds of the net proceeds of the sale of the parcel. Defendant also sought damages against plaintiff for breach of fiduciary duty and under Business Corporation Law § 720. This proceeding was later consolidated with the Bronx action by an order of Supreme Court, Bronx County.
On January 29, 2007, plaintiff and defendant entered into a stipulation of settlement on the record before Supreme Court. Pursuant to the stipulation "2. The parties agree that two court order[ed] appraisals are to be conducted to determine the present fair market value of each property[,] the Bronx property and the Brooklyn property.
"The parties further agree that the value of the combined properties for purposes of settling this matter shall be determined by the Court based upon an average of the two appraisals performed on each of the properties. . . . "4. Upon the Court's determination of the settlement value of both p[roperties], the parties agree that the defendant shall be entitled to 55% net of the appraised value of both properties. The plaintiff shall be entitled to 45% of the appraised value of both properties. . . . "9. The parties agree that a more formal written stipulation of settlement incorporating the settlement entered into this Court today shall be made within 10 days of the return of the report[s] of the two appraisers. The objective being settling all other collateral issues that are the subject of this matter before the Court. . . . "It is further understood and agreed by and between the above captioned parties and the respective counsels that the formal stipulation referred to above shall in no way modify or alter or amend the stipulation which is presently being dictated on the record for the Court on this date" (emphasis added). The stipulation of settlement also contained provisions requiring plaintiff to assume all of the outstanding liabilities concerning the parcels. The parties apparently intended that plaintiff would pay defendant 55% of the net appraised value of both parcels and, in consideration for that payment and plaintiff's assumption of responsibility for the outstanding liabilities concerning the parcels, defendant would assign his interest in the parcels to plaintiff, giving plaintiff sole ownership of both parcels. However, no provision requiring defendant to assign his interest in the parcels to plaintiff was included in the stipulation of settlement.
Supreme Court requested appraisals for both parcels from Skyline Appraisals Inc. and East Coast Appraisals, and the appraisals were performed. While neither party objected to the appraisals performed by Skyline, defendant sent a letter to Supreme Court objecting to the appraisal performed by East Coast. Defendant was concerned that the East Coast appraisal was inaccurate and greatly undervalued the parcels. Defendant requested a conference between the parties and the court to "resolve" issues relating to the East Coast appraisal; no motion was made by either party for any relief.
On August 7, 2007, Supreme Court held a conference with the parties to discuss the appraisals. After the matter was discussed off the record, the court went on the record, stating:
"We came together sometime ago and the parties stipulated to an agreement to resolve this matter, and pursuant to the stipulation, the Court would find two appraisers who would do appraisals of both the Bronx and Brooklyn properties.
"The appraisals have been done, but at least one of the parties is unhappy with the result of the appraisal done by . . . East Coast Appraisals, and the Court will give the benefit of the doubt based on the arguments made, and I'll select another appraiser from Brooklyn to again appraise the property in both boroughs.
"I'm going to call the administrative judge in Brooklyn and get the names of two Brooklyn judges who handle cases where appraisals might be used and ask for each of them to give me the names of an appraiser, and I'll randomly select one of the appraisers to do another appraisal.
"The parties will be responsible for paying, again, for the cost of the appraisers. I want the parties to know, both parties, but in particular, defendants, and I say this because the plaintiff [is] willing to accept the average as is. The agreement in the stipulation is to accept an average of the appraisals.
"So I want to point out to defendants . . . that if after I seek another appraiser, if the amount of the appraisal comes out at or near what the East Coast appraiser came up with, then you'll be bound by that appraisal, everybody will be bound, but I can't continue to go over and over and over getting appraiser after appraiser after appraiser.
"I'll get one appraiser again and it will be the last time, and whatever the amount comes up with [sic], all ...