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Schron v. Grunstein

Supreme Court of New York, New York County

April 9, 2013

Rubin SCHRON, CAM-ELM Company, LLC, SMV Property Holdings LLC, SWC Property Holdings LLC, SWC Special Holdings, LLC, SMV Special Holdings, LLC, Cammeby's Equity Holdings LLC, Cammeby's Funding LLC, Cammeby's Funding II LLC, Cammeby's Funding III LLC, Camfive Holdings, LLC, Cammeby's Management Co. LLC, and Cammeby's International, LTD., Plaintiffs,
v.
Leonard GRUNSTEIN, Murray Forman, Troutman Sanders LLP, Canyon Sudar Partners LLC, SVCARE Holdings, LLC, SavaSeniorCare LLC, Fundamental Long Term Care Holdings, LLC, THI of Baltimore, Inc., National Senior Care, Inc., Mariner Health Care, Inc., Metcap Securities, LLC, Metcap Holding, LLC, Metcap Advisory Services, LLC, Harry Grunstein, and Lawrence Levinson, Defendants. No. 650702/2010.

Editorial Note:

This decision has been referenced in a table in the New York Supplement.

Dechert LLP (Andrew J. Levander, Steven A. Engel, and David A. Kotler, of counsel) for Plaintiffs.

Zuckerman Spaeder LLP (Steven M. Cohen, James Sottile, Noah Solowiejczyk, and Benjamin Voce-Gardner, of counsel) for Defendants, Leonard Grunstein, Murray Forman, Canyon Sudar Partners LLC, SVCARE Holdings, LLC, and SAVA Senior Care LLC.

Arent Fox LLP (Allen G. Reiter and Nicholas P. Pavlidis, of counsel) for Defendants, Fundamental Long Term Care Holdings, LLC and THI of Baltimore, Inc.

Latham & Watkins LLP (Howard G. Baker, Roger Goldman, Daniel Meron, and Allen M. Gardner, of counsel) for Defendant, Mariner Health Care, Inc.

Arnall Golden Gregory LLP (Kevin B. Getzendanner, of counsel) for Defendant, SavaSeniorCare LLC.

Brodegaard & Associates LLC (Robert F. Brodegaard, of counsel) for Defendant, SavaSeniorCare LLC.

Davidoff Hutcher & Citron LLP (Martin H. Samson, of counsel) for Defendants, National Senior Care, Inc. and Harry Grunstein.

O. PETER SHERWOOD, J.

BACKGROUND

The background of this case is set forth in the Decision and Order, dated September 6, 2012 and will not be repeated here ( see 36 Misc.3d 1238 [A] [Sup Ct, N.Y. County 2012] aff'd ___ A.D.3d ___, 2013 N.Y.App.Div. LEXIS 2128). On this motion sequence number 036, plaintiffs move, pursuant to CPLR 3025(b), for leave to file a second amended complaint to assert nine additional causes of action on the basis of new facts alleged to have emerged in discovery or at trial. The additional claims relate to (i) defendants' alleged acquisition for themselves of Mariner real estate interests in breach of " reversionary rights" provided to plaintiffs in the 2004 Mariner Transaction, (ii) Grunstein and Forman's alleged misappropriation of SVCARE funds in breach of the Cam III loan agreement, and (iii) the defendants' alleged overbilling of plaintiffs by $4 million for services MetCap provided in connection with the Mariner Transaction.

Plaintiffs contend that during discovery, they discovered that the defendants acquired fee interests in leased real estate in violation of reversionary rights acquired primarily by plaintiff, SMV Property Holdings LLC (" SMV" ), in the 2004 Mariner Transaction. These reversionary rights purportedly gave SMV and/or its affiliates the right to purchase the underlying real estate of any leased skilled nursing facilities operated by Mariner or Sava at the time of the closing of the Mariner Transaction, if and when those properties are offered for sale by their third party owners. Plaintiffs assert that defendants secretly transferred a number of the facilities to and among themselves in violation of the reversionary rights.

These claims are the subject of discovery rulings of Justice Cozier and arguably are already within the broad allegations of breach of fiduciary duty asserted in the first amended complaint (" FAC" ). In this regard, plaintiffs contend that " [a]lthough [Discovery Order No. 12] properly recognizes that the Complaint plainly does include Plaintiffs' reversionary rights claims, [they] seek to amend their Complaint to remove any scintilla of doubt that the [defendants'] violations of Plaintiffs' reversionary rights are part of this lawsuit by asserting new allegations and claims. In addition, the amendments will add new causes of actions [sic] related to the reversionary rights claims, beyond those for breach of fiduciary duty." The proposed new causes of action related to reversionary rights are:

Sixteenth Cause of Action (Against Grunstein, Forman, MetCap Holding, New Mariner, Sava, and Fundamental) for Conversion
Seventeenth Cause of Action (Against Troutman Sanders) for Aiding & Abetting Conversion
Eighteenth Cause of Action (Against Grunstein, Forman, MetCap Holding, New Mariner, Sava, ...

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