Plaintiff in this case is Ellen Ronis, the widow and executrix of the estate of Michael Ronis, a chef and founder of restaurants which operate as "Carmine's" and "Virgil's." At the death of Michael Ronis, his interest in certain restaurants was to be redeemed. Loan debts were to be closed out. The estate did in fact receive payments relating to these obligations. Plaintiff, as executrix, brings this action alleging that the payments were inadequate. Defendants have answered, denying liability and asserting certain affirmative defenses and counterclaims.
Plaintiff moves for partial summary judgment. She seeks summary judgment on all phases of the case, except a set-off asserted by defendants relating to an alleged indebtedness of Michael Ronis in the amount of $105,000. Defendants oppose plaintiff's motion and cross-move for partial summary judgment on the $105,000 debt issue.
There is also a motion to intervene in the case by one Gary Croland.
The court denies the motion for partial summary judgment by both sides except that the court rules that the first three affirmative defenses are invalid. The motion by Gary Croland to intervene is granted.
The following facts are undisputed except where otherwise indicated.
Michael Ronis was a chef and founder of restaurants which operate as Carmine's and Virgil's. Defendants Broadway Feast, Little Fish, and Times Square are New York corporations that operate Carmine's and Virgil's in New York, New York. Atlantic City is a New Jersey limited liability company that operates Carmine's in Atlantic City, New Jersey.
On February 22, 2007, Michael Ronis and the shareholders of Broadway Feast, Little Fish, and Times Square entered into three virtually identical Shareholder Agreements (the "Corporate Agreements"). Section 3.03(a) of the Corporate Agreements gives the corporate defendants the right to redeem the shares of any deceased shareholder other than Cutler. Section 3.05(a) states that the purchase price for shares to be redeemed is to be "an amount equal to the amount calculated using the formula set forth in" Section 3.05(b).
Section 3.05(b) states that the purchase price will be the pro rata share of the valuation of each corporation calculated by a multiple of "the average of earnings before interest, taxes, depreciation, and amortization (‗EBITDA')" of each corporation for the previous three years. The EBITDA is to be adjusted downward "for management and administrative fees, not to exceed six (6%) percent of net sales, and adjusted upward for distributions."
Section 3.05(c) states that the value of the corporations and the EBITDA calculations are to be determined by "the certified public accountant regularly retained" by the corporations "on a basis consistent with past practices and accounting principles." In addition, this provision states that, absent "manifest error," the accountant's determination is to be "final, binding, and conclusive on the parties."
In addition, the Corporate Agreements contain a "no-waiver" provision in Section 7.02, which states that any "waiver by a party of a breach of any provisions of this Agreement shall not be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision."
Further, the Corporate Agreements discuss loans made by a deceased shareholder. Section 3.06(f) states that "any loans owed to the deceased" shareholders are to be repaid on the same terms as the purchase price for outstanding shares.
In July 2006, Michael Ronis entered into an Operating Agreement with Atlantic City (the "Atlantic City Agreement"). Section 6.4 of the Atlantic City Agreement provides that Atlantic City has the right to redeem the interest of a deceased member. The Atlantic City Agreement is different from the Corporate Agreements in that it provides for computation of the redemption price on the basis of a ...