The opinion of the court was delivered by: Catterson, J.
Schron v Troutman Saunders LLP
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.
SUPREME COURT, APPELLATE DIVISIONFirst Judicial Department
Peter Tom,J.P. James M. Catterson Rolando T. Acosta Helen E. Freedman, JJ.
Leonard Grunstein, Murray Forman, Canyon Sudar Partners LLC, and SVCare Holdings, LLC, appeal from the order of the Supreme Court, New York County (James A. Yates, J.), entered January 25, 2011, which, granted Cammeby's Equity Holdings LLC's motions to exclude parol evidence of whether a loan was a condition precedent to the validity of its option to purchase the bulk of SVCare Holdings LLC (in Schron v Grunstein, Index No. 650702/10), and to dismiss the cause of action for a declaration that the option is void (in Mich II Holdings LLC v Schron, Index No. 600736/10), from the order, same court (O. Peter Sherwood, J.), entered September 15, 2011, which upon reargument, adhered to the original determination, and from the order, same court and Justice, entered October 11, 2011, which, clarified that the reargument order entered in Mich II Holdings LLC v Schron also applied to Schron v Grunstein.
In this action, the defendants are seeking to avoid the plain language of an option to purchase a national nursing-home company by incorporating into it a separate loan agreement through the use of parol evidence. Two motion courts correctly rejected this tortured argument and we therefore affirm.
Plaintiff Rubin Schron is a real estate investor who operates through various entities using the names Cammeby's and Cam-Elm (all managed by Schron and majority-owned by his immediate family). Defendant-appellant Leonard Grunstein (hereinafter referred to as "Grunstein"), a partner at Troutman Sanders LLP (formerly at Jenkens Gilchrist Parker Chapin LLP), was formerly Schron's attorney. Defendant-appellant Murray Forman (hereinafter referred to as "Forman"), an investment banker, was formerly Schron's investment banker.
In December 2004, at Grunstein's and Forman's urging, Schron and his companies (sometimes hereinafter referred to collectively as "Schron") financed a $1.3 billion acquisition of the assets of Mariner Health Services, Inc., a public company operating numerous nursing homes. Schron paid $14 million to a small investment bank predominantly owned by Forman and Grunstein, who had structured the deal. Grunstein and his law firm (then Jenkens & Gilchrist) drafted the 2004 transactional documents and the 2006 amended refinancing documents.
Schron provided $1.1 billion in cash, lines of credit and mortgages, and effectively guaranteed the remaining loans from a third-party lender. It is undisputed that neither Grunstein or Forman contributed any funds to the transaction.
A Schron entity, SMV Property Holdings LLC (hereinafter referred to as "SMV") acquired Mariner's real estate. Grunstein persuaded Schron to lease the nursing home facilities to Grunstein's brother; SVCare (managed by Grunstein and Forman) and its operating subsidiary, Sava, were formed for that purpose. Less than two months after the closing, Grunstein's brother transferred SVCare to Canyon Sudar Partners, LLC, which was wholly-owned by Grunstein and Forman, for the nominal sum of $10.
In connection with the Mariner transaction, a Schron entity, Cammeby's Funding III, LLC, agreed to make a $100 million loan to SVCare; the loan agreement was amended in 2006. The 2004 loan agreement ...