United States District Court, S.D. New York
Sagi GENGER and TPR Investment Associates, Inc., on behalf of AG PROPERTIES CO., Third-Party Plaintiffs,
Gilad SHARON, Third-Party Defendant.
[Copyrighted Material Omitted]
John Dellaportas, Esq., Evangelos Michailidis, Esq., Duane Morris, LLP, New York, NY, for Third-Party Plaintiffs.
William B. Wachtel, Esq., Julian D. Schreibman, Esq., Elliot Silverman, Esq., Wachtel Masyr & Missry LLP, New York, NY, for Third-Party Defendant.
OPINION AND ORDER
SHIRA A. SCHEINDLIN, District Judge.
Sagi Genger (" Genger" ) and TPR Investment Associates, Inc. (" TPR," together
" third-party plaintiffs" ) bring this action seeking enforcement of a promissory note and contribution and/or indemnification against third-party defendant Gilad Sharon, Sharon now moves for summary judgment seeking to dismiss the third-party plaintiffs' complaint in its entirety on the ground that the claims are precluded by the final judgment in a state court case involving the same parties. For the following reasons, the motion for summary judgment is denied.
This lawsuit arises out of a Canadian real estate venture (" AG Properties" ) between Gilad Sharon and Sagi Genger's father, Arie Genger. In 2001, AG Properties was incorporated in Nova Scotia. Arie Genger served as its sole director. Later in 2001, AG Holdings, another corporation under the sole directorship of Arie Genger, acquired all of the shares of stock in AG Properties. During 2001 and 2002, AG Properties acquired the entire beneficial interest in two pieces of real property located in Montreal, Canada (the " Durocher" and " Lincoln" properties). TPR, a Delaware corporation beneficially owned at the time by Sagi Genger and other members of the Genger family, provided AG Holdings the mezzanine debt financing necessary to acquire the property. The properties were placed in trust in 2002 (the " Lincoln" and " Durocher" Trusts).
Genger now alleges that Sharon held a fifty percent interest in AG Properties through Omniway, a Cypriot company. Genger alleges that Sharon purchased the stake with a $1.25 million promissory note (the " Omniway Note" ) secured by his shares in AG Properties. The Omniway Note was executed on February 6, 2002. The Note provided that the principal sum would be paid in three annual installments of $125,000 on July 24, 2008, July 24, 2009, and July 24, 2010, with the outstanding principal sum due on July 24, 2011. Additionally, interest of 6.5% per year was due annually beginning on July 24, 2003.
The Omniway Note contained an acceleration clause allowing AG Properties to recover the entire unpaid principal amount and all other amounts payable in an Event of Default:
Upon the occurrence of any Event of Default, the entire unpaid principal balance and all other amounts payable hereunder shall become immediately due and payable, in the case of an Event of Default specified (i) in clause (a) above, at the option of Payee; and (ii) in clauses (b) or (c) above, ipso facto upon occurrence of the Event of Default and without notice, demand, or any further or other action of the payee.
Clause (a) of the Omniway Note defines an Event of Default as: " Maker's failure to pay any of the principal of this Note when
due and payable or Maker's failure to pay any interest on this Note when due and payable and such failure to pay interest shall continue for thirty (30) days."  Neither Omniway nor Sharon have made any of the principal or interest payments due under the Omniway Note.
In 2003, Arie Genger and Sharon agreed to substitute Lerner Manor, an Israeli company, for Omniway as a fifty percent stockholder of AG Properties for $25,000 consideration. As a result, Sagi Genger alleges that he had no knowledge of the Omniway Note prior to this litigation. In 2004, at the direction of Arie Genger, Lerner Manor was retroactively substituted as a fifty percent ...