- May 16, 2017
Markham Schatz Kaye & Fox LLP, New York, NY (Luisa M.
Kaye of counsel), for appellants.
Herrick, Feinstein LLP, New York, NY (Scott E. Mollen and
Ross L. Hirsch of counsel), for respondents.
C. BALKIN, J.P. SANDRA L. SGROI JEFFREY A. COHEN COLLEEN D.
DECISION & ORDER
action for a judgment declaring the rights of the parties
under a shareholders' agreement, the plaintiffs appeal,
as limited by their brief, from so much of an order of the
Supreme Court, Kings County (Schmidt, J.), dated February 10,
2015, as granted the motion of the defendants Rochelle Pazer,
Dina Bassen, and Lisa Pazer for an order setting the
valuation date for the defendant Rochelle Pazer's shares
of the defendant Astoria Holding Corp. as contemporaneous
with the parties' exchange of appraisals of those shares.
that the order is affirmed insofar as appealed from, with
defendant Astoria Holding Corp. (hereinafter Astoria) owned a
shopping center in Brooklyn. Pursuant to the
shareholders' agreement for Astoria, the plaintiffs
Howard Mintz and Susan Mintz-Bello (hereinafter together the
Mintzes) owned just under 48% of Astoria's shares and the
defendant Rochelle Pazer owned just over 52% of its shares.
When a deadlock, as defined by the shareholders'
agreement, arose between the Mintzes and Pazer, the Mintzes,
in accordance with the terms of the shareholders'
agreement, served a "right of first offer" to
purchase Pazer's shares, which the Supreme Court held, in
an order dated December 30, 2013, entitled them to buy her
interest out pursuant to the appraisal process set forth in
the shareholders' agreement. That appraisal process
involved the Mintzes and Pazer each hiring an appraiser to
determine the purchase price of Pazer's interest in
Astoria, which was to be equal to the appraised fair market
value of all assets of Astoria less all of Astoria's
liabilities, multiplied by a fraction, the numerator of which
was the number of shares to be sold, and the denominator of
which was the total number of shares issued. The
shareholders' agreement provided that if their appraisals
varied by 10% or less, they were to use the average of the
two, and if they varied by more than 10%, they were to agree
upon another appraiser, who would select between the two
appraisals for a final and binding determination of the
value, which was then payable in cash within 30 days.
shareholders' agreement provided that, in determining the
purchase price, the appraisers were to determine the
"full pro rata share of net liquidation asset
value" represented by Pazer's shares, "as if
all Corporation assets were sold on the open market, after
reasonable and diligent marketing and net of all reasonable
and customary selling costs and expenses, " and
"the net asset value of all Corporation assets after
payment of all Corporation liabilities fully distributed to
all Shareholders pro rata." Unless provided otherwise,
time was of the essence as to all of the provisions of the
Mintzes refused to agree to a date to exchange appraisals,
citing possible environmental contamination at the shopping
center, which they claimed to need more information about
before the purchase price of Pazer's interest could be
accurately appraised. Thereafter, in an order dated November
7, 2014, the Supreme Court directed the parties to exchange
appraisals within 10 days of notice of entry of that order.
The Mintzes and Pazer also disputed the date as of which
Pazer's interest should be valued, with the Mintzes
arguing that it should be valued as of October 31, 2012,
based on an exchange of emails between the parties'
counsel prior to the commencement of this action, and Pazer
arguing that her interest should be valued contemporaneously
with the exchange of the appraisals. The Mintzes appeal from
an order dated February 10, 2015, in which the court granted
the motion of Pazer and her daughters, the defendants Dina
Bassen and Lisa Pazer, to set the valuation date of the
subject shares as contemporaneous with the exchange of the
searching for the probable intent of [contracting] parties,
lest form swallow substance, our goal must be to accord the
words of the contract their 'fair and reasonable
meaning' (Heller v Pope, 250 NY 132, 135). Put
another way, 'the aim is a practical interpretation of
the expressions of the parties to the end that there be a
"realization of [their] reasonable
expectations"' (see Brown Bros. Elec. Contrs. v
Beam Constr. Co., 41 N.Y.2d 397, 400, quoting 1 Corbin,
Contracts, § 1; see, also, 4 Williston,
Contracts [3d ed], § 600, pp 284-285). Concordantly . .
. not merely literal language, but whatever may be reasonably
implied therefrom must be taken into account (10 NY Jur,
Contracts, § 191, p 96; Matter of People [Bond &
Mtge. Guar. Co.], 267 NY 419, 425). . . . [U]nless there
are reservations to the contrary, embraced in the
interpretative result should be '"any promises which
a reasonable person in the position of the promisee would be
justified in understanding were included"' (Rowe
v Great Atlantic & Pacific Tea Co., 46 N.Y.2d 62,
69, quoting from 5 Williston, Contracts [rev ed, 1937],
§ 1293, the substance of which is now in 4 Williston,
Contracts [3d ed], § 610B)" (Sutton v East Riv.
Sav. Bank, 55 N.Y.2d 550, 555). "'A written
contract "will be read as a whole, and every part will
be interpreted with reference to the whole; and if possible
it will be so interpreted as to give effect to its general
purpose."... The meaning of a writing may be distorted
where undue force is given to single words or phrases'
(Empire Props. Corp. v Manufacturers Trust Co., 288
NY 242, 248  quoting 3 Williston, Contracts §
618)" (Matter of Westmoreland Coal Co. v
Entech, Inc., 100 N.Y.2d 352, 358).
the shareholders' agreement did not set a valuation date
to be used for the subject shares in the event of a
deadlock-induced buyout. Accordingly, it was left for the
parties to agree on a valuation date in the event of such a
buyout. In an exchange of emails in November 2012, the
parties chose October 31, 2012, as the valuation date. The
Supreme Court correctly concluded, upon viewing these emails
in context, that the Mintzes and Pazer chose that date in the
expectation and belief that the appraisals would be exchanged
contemporaneously, and without delay. Nevertheless there was,
subsequently, unanticipated delay in the exchange. Moreover,
the parties' intent, as evidenced by the
shareholders' agreement, was that the appraisals reflect
the fair market value of the shares at the time of the sale.
Thus, the court correctly held that the parties' emails
did not evince a binding agreement to value the shares as of
October 31, 2012, but that, viewing the shareholders'
agreement, the emails, and all the circumstances together,
the parties intended to set a valuation date that was
contemporaneous with the actual exchange of appraisals.
& ORDER ON MOTION
by the respondents Rochelle Pazer, Dina Bassen, and Lisa
Pazer to dismiss an appeal from an order of the Supreme
Court, Kings County, dated February 10, 2015, on the ground
that the appeal has been rendered academic. By decision and
order on motion of this Court dated March 24, 2016, the
motion was held in abeyance and referred to the ...