The opinion of the court was delivered by: John Gleeson, United States District Judge
This is the third time I have been presented with dispositive motions
in this case. In my previous memoranda and orders, DiMaria
Goor, No. 09-CV-1011(JG)(RML), 2010 WL 3923227 (E.D.N.Y. Sept. 30, 2010)
(ECF No. 73), and DiMaria v. Goor, No. 09-CV-1011(JG)(RML), 2011 WL
3235754 (E.D.N.Y. July 28, 2011) (ECF No. 90), I significantly
winnowed down the claims and the parties in the case. Only one claim
now remains against moving defendant Martin Goor ("Goor"):*fn2
Plaintiff Jean DiMaria ("DiMaria) seeks to enforce Goor's
performance of a Stockholders Agreement between Goor and DiMaria's
deceased husband under which each was obligated to buy out the other's
interest if the other died. Goor has filed a motion for summary
judgment in which he does not dispute liability under this contract,
but seeks a determination that the price he must pay for the stock is
zero. For the reasons explained below, I deny Goor's motion.
The full facts of this case are set forth in my previous opinions, and familiarity with them is assumed. I recite in this memorandum and order only those facts necessary to dispose of the present motion.
A. Martin Goor, Gary DiMaria and CFT, Inc.
Goor and Gary DiMaria ("Mr. DiMaria") each owned 50% of Contract Furniture
Transport, Inc. ("CFT, Inc." or the "corporation"), a corporation that they used to carry on the business of delivering and installing furniture, mostly in New Jersey. Mr. DiMaria and Goor were also joint owners of a number of other corporate entities related to the same business, collectively referred to as the "CFT Entities."*fn3
B. The Stockholders Agreement On or about December 31, 1992, Mr. DiMaria and Goor entered into a "Stockholders Agreement," in their capacities as 50% shareholders in CFT, Inc.*fn4 Stockholders Agreement at 1, Goor Cert., Ex. A (ECF No. 92-4). The Agreement's stated purpose was to ensure "the continuity of the Corporation's business" by providing procedures for the sale and purchase of stock in CFT, Inc., both during Mr. DiMaria's and Goor's lifetimes and upon their deaths. Id. The procedures for sale upon death of a stockholder were provided "to guard against the possibility that, upon the Stockholders' deaths, their estates might be required to sell such stock ownership in the Corporation to persons not familiar with the business." Id.
Article 4 of the Stockholders Agreement concerns the death of a stockholder. Id. at 8. It provides that, upon the death of either stockholder, the corporation has the option to purchase all of the decedent's stock from his estate. If, however, CFT, Inc. does not elect to exercise its purchase option, "the Surviving Shareholder shall then be obligated to purchase all of the Decedent's stock and the legal representatives of the Decedent's estate shall be obligated to sell to the Surviving Stockholder, at the Death Purchase Price." Id. at 9.
Article 6 addresses the determination of the Death Purchase Price. It provides that the price per share shall be determined by dividing the number of outstanding shares into the corporation's "Value," which is defined as "the total value of" CFT, Inc. Id. at 19-20. This Value is determined in one of two ways. If Goor and Mr. Dimaria had agreed on the corporation's value in a Certificate of Agreed Value within the last two years, then the corporation's Value shall be "the last dated amount set forth on the Certificate of Agreed Value."
If, instead, Goor and Dimaria had failed to agree on a valuation of the corporation for more than two years, then the Value "shall . . . be determined by using the amount set forth on the most recent Certificate of Agreed Value, plus (or minus) an amount which reflects the increase (or decrease) in the net worth of the corporation from the date of the most recent Certificate of Agreed Value to the end of the month immediately preceding the . . . Decedent's death . . . , as determined by the certified public accountant regularly employed by the Corporation, applying generally accepted accounting principles." Id. at 19-20. At the time of their execution of the Stockholders Agreement, Mr. DiMaria and Goor "determined the Value of the Corporation" to be $2 million, which they set forth in a Certificate of Agreed Value dated December 31, 1992. Id. at 20, Ex. B. DiMaria and Goor never again agreed on the corporation's value in a Certificate of Agreed Value after that date.
C. Mr. DiMaria's Death and Its Aftermath Mr. DiMaria died on July 16, 2006. Upon his death, Jean DiMaria inherited his ownership interests in the CFT Entities, including CFT, Inc. DiMaria then invoked the Stockholders Agreement and demanded that Goor buy her out of CFT, Inc. for $1 million (half of the last-agreed value of $2 million). Goor refused ...