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Freedom Baking Company v. Homemade Kosher Products LLC

Sup Ct, New York County

July 15, 2013

FREEDOM BAKING COMPANY, Plaintiffs,
v.
HOMEMADE KOSHER PRODUCTS LLC and SHMUEL ZITRONENBAUM, Defendants. HANDMADE KOSHER PRODUCTS LLC and SHMUEL ZITRONENBAUM, Defendants/Cross-claimants
v.
HANDMADE PRODUCTS, INC., HANDMADE PRODUCTS II CORP., KAREN ARABACHYAN, MARINA AYRIYAN, KHACHATUR ARABACHIAN, JOSEPH ASVYANSKY, KAREN GEVORKYAN a/k/a JOHN GEVORKIAN, Cross-claim Defendants. Docket Number No. 106132/2009

Unpublished Opinion

Charles E. Ramos, J

Defendant/Cross-claim plaintiff Shmuel Zitronenbaum moves for an order of default judgment as against Freedom Baking Company, Mediterranean Best Foods Inc., and Karen Gevorkian a/k/a John Kumro.

Background

This action arises out of an asset purchase agreement (Agreement) that defendant Shmuel Zitronenbaum executed on behalf of a New York entity to be subsequently formed, to purchase a bakery located in New York and owned by Handmade Products II, Corp. (Seller), on April 10, 2008. The New York entity that Zitronenbaum formed which eventually purchased the bakery is the defendant Handmade Kosher Products LLC {Handmade Kosher). Zitronenbaum is the sole member and manager of Handmade Kosher.

On the date of closing, Zitronenbaum tendered to the Seller $36, 500 and an official bank check for $300, 000. Handmade Kosher and Zitronenbaum, jointly and severally, executed a note (the Note) for the balance of the purchase price, to be paid over the next thirty-six months.

Concurrently, at closing the Seller assigned its rights under the Note to the plaintiff, Freedom Baking Company (Freedom Baking, or plaintiff), which constituted partial payment of debts purportedly owed by the Seller to plaintiff.

Freedom Baking, as assignee of the Note and a purported holder in due course, commenced this action after Handmade Kosher defaulted under the Agreement by failing to make installment payments. The remaining principal due and owing under the Note is $24, 624.19.

In the answer, Zitronenbaum interposed affirmative defenses, counterclaims, and cross-claims against the Seller, Handmade Products, Inc. (Handmade I), Karen Arabchyan, Marina Ayriyan, Khachatur Arabachian, Joseph Asvyansky, Karen Gevorkyan a/k/a John Gevorkian, and the plaintiff, Freedom Baking.

Zitronenbaum alleges that the Seller made numerous misrepresentations pertaining to the assets in order to induce defendants to enter into the Agreement. In addition, Zitronenbaum alleges that Freedom Baking, the assignee of the Note, had actual knowledge of the factual misrepresentations contained within the due diligence materials, and acted in concert with the Seller to induce Zitronenbaum to execute the Agreement and the Note. The driving force behind this fraudulent scheme was one man with three alleged identities: Karen Gevorkyan a/k/a John Gevorkian a/k/a John Kumro (Gevorkian), who is both the principal and/or owner of Handmade Products II and Freedom Baking.

Zitronenbaum alleges numerous instances of breach of the Agreement, including that both the Seller and Freedom Baking improperly solicited Kosher Products' customers, interfered with its distributor relationship, and trademark infringement, amongst other wrongful conduct. Zitronenbaum seeks to have the Note rescinded and the Agreement declared void, in addition to compensatory damages. He represents that Handmade Kosher has since gone out of business.

Procedural Background

In February 2010, the third party defendants moved to dismiss the claims against Joseph Asvyansky, and to compel arbitration of the counterclaims and cross-claims pursuant to a written agreement to arbitrate contained in the Agreement.

The Court granted the motion on default (NYSCEF No. 18), and in May 2010 entered an order dismissing all claims against Asvyansky, directing defendants to commence an arbitration to adjudicate the claims against Handmade I, the Seller, and Gevorkian within 90 days from the date of entry of the order, or the claims would be dismissed with prejudice (NYSCEF No. 21). Marina Ayriyan, Khachatur Arabachian and Karen Arabachian did not appear or answer.

On February 16, 2011, upon submission of an affirmation of counsel for the third party defendants, the Court entered an order dismissing the claims against the third party defendants for failure to commence an arbitration proceeding within 90 days of ...


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