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Oved v. Wiener

United States District Court, E.D. New York

December 21, 2017

ELAN OVED, Plaintiffs,
v.
DANIEL E. WEINER, Defendant.

          For Plaintiff: Law Offices of Elliot J. Blumenthal, PLLC By: Elliot J. Blumenthal, Esq.

          For Defendant: Jaspan Schlesinger LLP By: Steven R. Schlesinger, Esq. Shannon E. Boettjer, Esq. Natasha Shishov, Esq.

          MEMORANDUM & ORDER

          DENIS R. HURLEY, UNITED STATES DISTRICT JUDGE.

         Plaintiff, Elan Oved (“Plaintiff” or “Oved”) commenced this action on March 10, 2017 against defendant Daniel E. Weiner (“Defendant” or “Weiner”) basing jurisdiction on diversity of citizenship and asserting claims under state law for tortious interference with business relationship, tortious interference with prospective business relationship, breach of contract, unjust enrichment, and indemnification. Presently before the Court is Defendant's motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure.[1] For the reasons set forth below, the motion is granted in part and denied in part.

         BACKGROUND

         I. The Complaint

         The following allegations are taken from the complaint (“Comp.”) and presumed true for purposes of this motion.

         A. Allegations Relating to Plaintiff's Relationship with Defendant's Father

         Plaintiff and his family have been long time friends of Defendant's father, Louis Weiner (“Louis”). Louis is the founder of Lone Star Equities Inc. (“LSE”), a multi-faceted commercial real estate company with retail, office and industrial properties in more than 20 states. (Compl. ¶¶7-8.) Until 2011, Oved was an owner of Top Fortune Asia Limited (“Top Fortune”), a trading company that manufactured clothing sold to major retailers throughout the United States and the world. In or about September 2011 Louis tendered to Oved “portions of his business ventures, including a ten percent (10%) share in LSE and other ventures, in return for a forty (40%) percent stake in Top Fortune and other consideration.” (Id. ¶¶ 10, 17-18.) Under the agreement reached between Oved and Louis, the 40% interest in Top Fortune would be transferred to Louis' designee, the Weiner Family Foundation (the “Foundation”). In accordance with the agreement, Louis, on behalf of the Foundation, executed an Instrument of Transfer in September 2011 whereby 40% of Top Fortune was transferred to the foundation. Louis also executed and delivered LSE stock certificate no. 5 (the “Stock Certificate”) issuing 100 of the 1, 000 shares in LSE to Oved. The Stock Certificate was prepared by Louis' attorney and signed in her presence and that of Oved. (Id. ¶¶ 18-20.) The following month, Louis and Oven signed a document entitled “Delegation of Authority” which stated that Louis is a 90% shareholder of LSE and Oved is a 10% shareholder of LSE. Oved and Louis also agreed that “in return for Plaintiff's many years of past work for Louis Werner's business and his anticipated management and continued work for Louis Wiener's businesses and investments, Louis Weiner would take out a $5 million life insurance policy on himself with Oved as beneficiary.” Upon Louis's death, Oved “could either take the proceeds of the policy or transfer the proceeds to a trust maintained by [Defendant] in exchange for an additional 10% ownership stake in LSE.” (Id. ¶¶ 19-22.)

         Over the next five years Louis never disputed or denied Oved's interest in LSE and introduced Oved as a “10% owner in LSE and a partner in their joint businesses” to various business associates and to Louis's employees. At a staff meeting on June 29, 2015, Louis announced that he had “decided to turn over the leadership of all our companies to [] Oved” with “the change in top management . . . effective immediately.” (Compl. ¶¶ 23-24.)

         At the time the announcement, Defendant was not even shareholder of LSE and was not involved in the day to day operations of Louis' business affairs. Feeling threatened by his father's trust in Oved and afraid his future involvement in his father's business empire was at risk, Defendant “set out to sabotage the relationship” between his father and Oved. Defendant “orchestrated a series of zero consideration transfers of real estate interest to various entities he controlled as far back as December 1978.” (Compl. ¶¶ 25-29.) On August 24, 2015, Defendant hastily called a staff meeting and “undid everything his father had done at the June 29, 2015 staff meeting by stating that Louis Weiner was back in charge and that if Louis Weiner was unavailable [Defendant] himself was to be contacted regarding management decisions.” Although Louis was present at the August 24 meeting, “he was silent, stoic, and crestfallen, having been pushed to the side by his son, the Defendant, even though Defendant had no interest in LSE or any of the other entities which [Oved] had been managing for the past five years.” (Id. ¶¶ 30-31.) Defendant also planned and executed the surreptitious removal of LSE's files from the LSE office, including seven cabinets full of documents. He also caused the mail, including Oved's mail, to be forwarded to a new office location in Valley Stream, resulting in LSE breaching a lease agreement LSE had with a company controlled by Plaintiff. Defendant then secreted his father to a residence in Florida to insure that he (Defendant) would maintain full control over his father and his father's wealth and froze Plaintiff out of the operations and decision making of LSE and the other business. He caused his father “to file a lawsuit in Nassau County Supreme Court against Plaintiff alleging, inter alia, that Plaintiff forged the stock certificate showing his 10% stake in LSE.” (Id. ¶¶ 32-39.) [“T]he operations of LSE and the other entities have suffered in that Defendant has failed to properly manage the new York office and the LSE website. The vacancy rates in the properties have grown, [and] property managers have resigned and not been replace . . . .” (Id. ¶¶38.)

         B. Allegations Relating to Contract between Plaintiff and Defendant

         In or about the end of 2008, Defendant told Plaintiff he needed to show rental income of approximately $2, 000.00 for his primary residence in Lawrence and requested that Plaintiff pay him $2, 000.00 a month as “rent” and that that money would be reimbursed to Plaintiff. “For the next several years” Oved paid Defendant $2, 000.00 per month for rent for Defendant's home in Lawrence, New York, yet never occupied it. In August 2011, Defendant paid Plaintiff $90, 464.00, representing approximately 45 months of rental payments. Oved stopped making payments after he learned in late July 2013 that the payments he had been making “were an attempt by Defendant to illegally engage in tax evasion from the State of New York, by using Plaintiff's payments to prove his claim that he was not in fact a New York State resident.” Plaintiff has demanded both reimbursement of the $48, 000.00 still owed to him as well as indemnification should any civil liability be imposed upon Mr. Oved for his unwitting assistance in Defendant's tax evasion scheme. (Comp. ¶¶ 40-46.)

         C. Causes of Action Asserted

         Plaintiff has asserted a claim for tortious interference with business relationship in that with full knowledge of the contractual relationship between Oved and Louis, Defendant sabotaged that relationship by removing files, “wrest[ed] control” of the business from Plaintiff and caused Louis to breach his contractual relationship with Oved. (Compl. ¶¶ 47-52.) He also asserts a claim for tortious interference with prospective business relationship as Defendant interfered with the business relationship between Oved and Louis “with the sole purpose of harming [Plaintiff's] ongoing relationship with [Louis], for fear that Louis[‘s] []trust in Oved and his business relationship with Oved, although beneficial to Louis [], could ultimately harm Defendant's opportunity to seize control of his father's substantial assets and wealth.” (Id. ¶¶ 55-58.)

         Based on the allegations regarding the payment of “rent” by Plaintiff to Defendant, Plaintiff has asserted a claim for breach of contract, unjust enrichment, and indemnification.

         II. The State Court Action

         It is alleged in the complaint that Defendant caused Louis to commence an action against Plaintiff in Nassau County, Supreme Court. See Weiner v. Oved, Index No, 606466/2015 (Sup. Ct. Nassau County) (the “State Court Action”). Preliminarily, the Court notes that it may consider the pleadings in the state court action “not for the truth of the matters asserted in [this] other litigation, but rather to establish the fact of such litigation and related filings.” Kramer v. Time Warner, Inc., 937 F.2d 767, 774 (2d Cir. 1991); see Staehr v. Hartford Fin. Servs. Group, 547 F.3d 406, 424-25 (2d Cir. 2008) (holding it was proper for district court to take judicial notice of, inter alia, state court complaints.)

         According to the amended complaint in the State Court Action, Oved insinuated himself into the personal and business affairs of Louis, who turned 91 in January 2016, in order to provide himself with access to Louis and LSE's records and financial resources. He then transferred, borrowed, and stole in excess of six million dollars from Louis. Oved used that access to fabricate a story that he (and his wife) possess an ownership interest in LSE's stock when they do not. (See Ex. D to Weiner Aff.)

         Oved's answer in the State Court Action includes a number of counterclaims. The first counterclaim seeks a declaratory judgment that 10% of LSE was transferred to Oved in September 2011 and that since the date of transfer, he has and continues to be a 10% shareholder of LSE. The second counterclaim seeks specific performance of the agreement between Oved and Louis whereby Oved transferred 40% of Top Fortune to Louis in exchange for 10% of LSE. The third counterclaim asserts that Louis breached the foregoing agreement. The fourth counterclaim alleges breach of fiduciary duty in that no distribution from LSE have been made to Oved while such distributions have been made to Louis or his designees. Other counterclaims include claims for an accounting, conversion, and imposition of a constructive trust. (See Ex. 3 to Schlesinger Declar.)

         DISCUSSION

         I. Legal Standards

         A. Rule 12(b)(1) Motion

         A case may properly be dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) “when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). “In contrast to the standard for a motion to dismiss for failure to state a claim under Rule 12(b)(6), a ‘plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.' ” MacPherson v. State St. Bank & Trust Co., 452 F.Supp.2d 133, 136 (E.D.N.Y. 2006) (quoting Reserve Solutions Inc. v. Vernaglia, 438 F.Supp.2d 280, 286 (S.D.N.Y. 2006)), aff'd, 273 F. App'x 61 (2d Cir. 2008); accord Tomaino v. United States, 2010 WL 1005896, at *1 (E.D.N.Y. Mar. 16, 2010). “In resolving a motion to dismiss for lack of subject matter jurisdiction, the Court may consider affidavits and other materials ...


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