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Plaintiffs L. & E. Krim Family L.P.; Adam Krim as trustee of the Leonard H.
Krim Residuary Trust; and Ariel Company (“Plaintiffs”) by and through their attorneys,
Trachtenberg Rodes & Friedberg LLP, as and for their complaint against defendants
Leonard Hiller Family LP; Hiller Associates; Melvin D. Hiller and Jeffrey Hiller
individually and as trustees for the Bertha Hiller Trust; Jordan Hiller; Ryan Hiller; Jason
Hiller and Audrey Hiller individually and with Alan Eiges as trustees of the Alan Eiges
Trust; Jared Hiller; Lauren Greenberg; and Suzanne Feit (“Defendants”) and Bayshell
Realty Co., LLC; Shellray Realty Co., LLC; Eighty Eight Bleecker Co. LLC; Shell
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
-------------------------------------------------------------------------X In the Matter of the Judicial Dissolution of Bayshell Realty Co., LLC; Shellray Realty Co., LLC; Eighty Eight Bleecker Co. LLC; Shell Realty Co. LLC; Shellville Realty Co. LLC; 16-18 North Moore LLC; 230 West Houston Street LLC; L. & E. Krim Family L.P.; Adam Krim as trustee of the Leonard H. Krim Residuary Trust; and Ariel Company;
Plaintiffs, - against - Leonard Hiller Family LP; Hiller Associates; Melvin D. Hiller and Jeffrey Hiller individually and as trustees of the Bertha Hiller Trust; Jordan Hiller; Ryan Hiller; Jason Hiller and Audrey Hiller individually and with Alan Eiges as trustees of the Alan Eiges Trust; Jared Hiller; Lauren Greenberg; and Suzanne Feit;
Defendants,
- and -
Bayshell Realty Co., LLC; Shellray Realty Co., LLC; Eighty Eight Bleecker Co. LLC; Shell Realty Co. LLC; Shellville Realty Co. LLC; 16-18 North Moore LLC; and 230 West Houston Street LLC,
Nominal Defendants.
: : : : : : : : : : : : : : : : : : : : : : : : : : : : :
Index No. ____________ VERIFIED COMPLAINT
------------------------------------------------------------------------ X
FILED: NEW YORK COUNTY CLERK 01/18/2016 01:00 PM INDEX NO. 650208/2016
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 01/18/2016
2
Realty Co. LLC; Shellville Realty Co. LLC; 16-18 North Moore LLC; and 230 West
Houston Street LLC (the “Companies”) as nominal defendants, allege as follows:
NATURE OF THE DISPUTE
1. This action seeks the judicial dissolution of the Companies pursuant to §
702 of the New York Limited Liability Company Law (“LLCL”).1
2. Members of the Krim and Hiller families own all or virtually all of the
membership interests in the Companies.
3. Members of the Krim and Hiller families are the managing members of
the Companies.
4. The members of the Companies agreed that the management of the
Companies would be by one Krim and one Hiller member, each of whom would have an
equal vote on management issues.
5. The Krim and Hiller ownership of several of the Companies is 50/50.
6. The Krim and Hiller families have a wide array of fundamental and
irreconcilable disputes concerning the management and future of the Companies.
7. The Companies are managed and function as a group.
8. As a result of infighting, dysfunction and deadlock within the Companies,
the Companies are no longer operating as intended and it is no longer reasonably
practicable to carry on the business of the Companies. Accordingly, all of the Companies
should be judicially dissolved.
PARTIES
9. Plaintiff L. & E. Krim Family L.P. (“Krim Family LP”) is a Delaware
limited partnership with its principal place of business located at 675 Third Avenue, Suite
1 The Krim Family and Hiller Family also jointly own, directly and/or indirectly, a
corporation named 481 Realty Corp. The Krim Family is also seeking the dissolution of 481 Realty Corp. in a separate action.
3
1805 New York, New York. Krim Family LP is owned and/or controlled by various
members of the Krim family including, but not limited to, Gary Krim and Adam Krim
(the “Krim Family”).
10. Plaintiff Adam Krim is an individual who resides in New Rochelle, New
York and trustee of the Leonard H. Krim Residuary Trust (“Krim Residuary Trust”). The
Krim Residuary Trust is administered and/or controlled by various members of the Krim
Family.
11. Plaintiff Ariel Company (“Ariel Company”) is a New York partnership
with its principal place of business located at 675 Third Avenue, Suite 1805 New York,
New York.
12. Upon information and belief, Defendant Leonard Hiller Family LP
(“Hiller Family LP”) is a Delaware limited partnership with its principal place of
business located at 10 Box Street, Brooklyn, New York. Upon information and belief,
Hiller Family LP is owned and/or controlled by or subject to the beneficial interest of
various members of the Hiller family including, but not limited to, Jordan Hiller, Melvin
D. Hiller, Jeffrey Hiller, Jason Hiller, Ryan Hiller, Lauren Greenberg, Suzanne Feit and
Jared Hiller (the “Hiller Family”).
13. Upon information and belief, Defendant Hiller Associates is a partnership
with its principal place of business located at 10 Box Street, Brooklyn, New York.
14. Upon information and belief, Defendant Melvin D. Hiller is an individual
who resides in Nassau County and a trustee of the Bertha Hiller Trust.
15. Upon information and belief, Defendant Jeffrey Hiller is an individual
who resides in Nassau County and a trustee of the Bertha Hiller Trust.
4
16. Upon information and belief, the Bertha Hiller Trust is administered and
controlled by various members of the Hiller Family.
17. Upon information and belief, Defendant Jordan Hiller is an individual
who resides in Nassau County.
18. Upon information and belief, Defendant Jared Hiller is an individual who
resides in Kings County.
19. Upon information and belief, Defendant Ryan Hiller is an individual who
resides in New York County.
20. Upon information and belief, Defendant Jason Hiller is an individual who
resides in New York County and a trustee of the Alan Eiges Trust.
21. Upon information and belief, Defendant Audrey Hiller is an individual
who resides in Nassau County and a trustee of the Alan Eiges Trust.
22. Upon information and belief, Defendant Alan Eiges is an individual who
resides in Bergen County, New Jersey and a trustee of the Alan Eiges Trust.
23. Upon information and belief, the Alan Eiges Trust is administered and
controlled by various members of the Hiller Family.
24. Upon information and belief, Defendant Lauren Greenberg is an
individual who resides in Israel.
25. Upon information and belief, Defendant Suzanne Feit is an individual
who resides in Nassau County.
Bayshell Realty Co., LLC
26. Nominal Defendant Bayshell Realty Co., LLC (“Bayshell Realty”) is a
New York limited liability company which has its principal place of business at 675
Third Avenue, Suite 1805, New York, New York 10017.
5
27. Bayshell Realty owns and manages the unsold shares of cooperative
corporations which own apartment buildings located at at 209-10 and 210-50 41st
Avenue, Bayside, New York (the “Bayshell Realty Property”).
28. Plaintiff Krim Family LP is a member of Bayshell Realty and owns a
50% interest therein.
29. Defendant Hiller Family LP is a member of Bayshell Realty and owns a
50% interest therein.
Shellray Realty Co., LLC
30. Nominal Defendant Shellray Realty Co., LLC (“Shellray Realty”) is a
New York limited liability company which has its principal place of business at 675
Third Avenue, Suite 1805, New York, New York 10017.
31. Shellray Realty owns and manages the unsold shares of a cooperative
corporation which owns an apartment building located at 26 East 38th Street, New York,
New York (the “Shellray Realty Property”).
32. Krim Residuary Trust is a member of Shellray Realty and owns a 50%
interest therein.
33. Defendant Hiller Family LP is a member of Shellray Realty and owns a
50% interest therein.
Eighty Eight Bleecker Co., LLC
34. Nominal Defendant Eighty Eight Bleecker Co., LLC (“Eighty Eight
Bleecker”) is a New York limited liability company which has its principal place of
business at 675 Third Avenue, Suite 1805, New York, New York 10017.
35. Eighty Eight Bleecker owns and manages the unsold shares of a
cooperative corporation which owns an apartment building located at 88 Bleecker Street,
6
New York, New York (the “Eighty Eight Bleecker Property”) and a certain master lease
for the retail units, garage and laundry room at the Eighty Eight Bleecker Property.
36. Plaintiff Ariel Company is a member of Eighty Eight Bleecker and owns
a 50% interest therein. Ariel Company is owned and/or controlled by various members
of the Krim Family.
37. Defendant Hiller Associates is a member of Eighty Eight Bleecker and
owns a 50% interest therein. Hiller Associates is owned and/or controlled by various
members of the Hiller Family.
Shell Realty Co., LLC
38. Nominal Defendant Shell Realty Co., LLC (“Shell Realty”) is a New
York limited liability company which has its principal place of business at 675 Third
Avenue, Suite 1805, New York, New York 10017.
39. Shell Realty owns and manages a property located at 222 East 75th Street,
New York, New York (the “Shell Realty Property”).
40. Plaintiff Krim Family LP is a member of Shell Realty and owns a 50%
interest therein.
41. Defendant Hiller Family LP is a member of Shell Realty and owns a 50%
interest therein.
Shellville Realty Co. LLC
42. Nominal Defendant Shellville Realty Co., LLC (“Shellville Realty”) is a
New York limited liability company which has its principal place of business at 675
Third Avenue, Suite 1805, New York, New York 10017.
43. Shellville Realty owns and manages a property located at 202-206
Thompson Street, New York, New York (the “Shellville Realty Property”).
7
44. Krim Residuary Trust is a member of Shellville Realty and owns a 10%
interest therein.
45. Defendant Hiller Family LP is a member of Shellville Realty and owns a
90% interest therein.
16-18 North Moore LLC
46. Nominal Defendant 16-18 North Moore LLC (“16-18 North Moore”) is a
New York limited liability company which has its principal place of business at 675
Third Avenue, Suite 1805, New York, New York 10017.
47. 16-18 North Moore owns and manages a property located at 16-18 North
Moore Street, New York, New York (the “16-18 North Moore Property”).
48. Krim Residuary Trust is a member of 16-18 North Moore and owns a
7.25% interest therein.
49. Plaintiff Krim Family LP is a member of 16-18 North Moore and owns a
7.25% interest therein.
50. Defendant Jordan Hiller is a member of 16-18 North Moore and owns a
1.45% interest therein.
51. Bertha Hiller Trust is a member of 16-18 North Moore LLC and owns a
28.98% interest therein.
52. Defendant Jason Hiller is a member of 16-18 North Moore and owns a
14.49% interest therein.
53. Defendant Ryan Hiller is a member of 16-18 North Moore and owns a
14.49% interest therein.
54. Defendant Audrey Hiller is a member of 16-18 North Moore and owns a
5.80% interest therein.
8
55. Defendant Jeffrey Hiller is a member of 16-18 North Moore and owns a
14.49% interest therein.
56. Alan Eiges Trust is a member of 16-18 North Moore and owns a 5.80%
interest therein.
230 West Houston Street LLC
57. Nominal Defendant 230 West Houston Street LLC (“230 West Houston”)
is a New York limited liability company which has its principal place of business at 675
Third Avenue, Suite 1805, New York, New York 10017.
58. 230 West Houston owns and manages a property located at 230 West
Houston Street, New York, New York (the “230 West Houston Property”).
59. The Krim Residuary Trust is a member of 230 West Houston and owns a
20% interest therein.
60. Defendant Jordan Hiller is a member of 230 West Houston Street LLC
and owns a 4.00% interest therein.
61. Defendant Jared Hiller is a member of 230 West Houston and owns a
4.00% interest therein.
62. Defendant Lauren Greenberg is a member of 230 West Houston and owns
a 4.00% interest therein.
63. Defendant Suzanne Feit is a member of 230 West Houston and owns a
4.00% interest therein.
64. Defendant Jason Hiller is a member of 230 West Houston and owns a
10% interest therein.
65. Defendant Ryan Hiller is a member of 230 West Houston and owns a
10% interest therein.
9
66. Defendant Audrey Hiller is a member of 230 West Houston and owns a
10% interest therein.
67. Defendant Jeffrey Hiller is a member of 230 West Houston and owns a
20% interest therein.
68. The Alan Eiges Trust is a member of 230 West Houston and owns a 10%
interest therein.
69. Defendant Melvin D. Hiller is a member of 230 West Houston and owns
a 4.00% interest therein.
The Properties
70. The Bayshell Realty Property, Shellray Realty Property, Eighty Eight
Bleecker Property, Shell Realty Property, Shellville Realty Property, 16-18 North Moore
Property and 230 West Houston Property are hereinafter referred to collectively as the
“Properties”.
JURISDICTION AND VENUE
71. This Court has personal jurisdiction over the Defendants pursuant to
CPLR §§ 301 and 302 because the Defendants reside in New York and/or have done
business or transacted business in New York in connection with the matters alleged in
this complaint.
72. Venue is properly laid in this Court pursuant to LLCL § 702 because the
Companies’ offices are located in New York County.
10
FACTS
A. Leonard Krim and Leonard Hiller Establish Real Estate Investment Ventures
73. From the 1970s through 1995, Leonard Krim and Leonard Hiller jointly
invested in a variety of real estate ventures in and about the New York City metropolitan
area.
74. Leonard Krim and Leonard Hiller formed the predecessors of each of the
Companies (other than 16-18 North Moore and 230 West Houston) as New York
partnerships.
75. The Companies and their predecessors were formed for the specific
purpose of owning, operating and eventually selling the Properties for a profit.
76. Prior to his real estate investment ventures with Leonard Hiller, Leonard
Krim had substantial experience and expertise in New York property ownership,
operation and management.
77. Due to Leonard Krim’s prior experience, it was agreed between Leonard
Hiller and Leonard Krim that Leonard Krim, a practicing attorney, would manage and
operate the Properties.
78. The Companies’ Properties were managed by Leonard Krim from the
1970s to 2005.
79. The relationship between Leonard Krim and Leonard Hiller was marked
by trust and confidence at every stage.
80. Indeed, Leonard Hiller engaged Leonard Krim to manage a property in
which neither Leonard Krim nor the Krim Family had an ownership interest.
11
B. The 1995 Operating Agreements
81. During or about 1995, Bayshell Realty, Shellray Realty, Eighty Eight
Bleecker, Shell Realty and Shellville Realty were converted from partnerships into New
York limited liability companies pursuant to LLCL § 1006.
82. In connection with this conversion, the owners of the Companies entered
into limited liability company conversion agreements (the “1995 Conversion
Agreements”).
83. Section 7.1 of each of the 1995 Conversion Agreements states that “[t]he
day-to-day affairs of the Company shall be handled by the Managing Members.”
84. The original managing members of each of the Companies governed by
the 1995 Conversion Agreements consisted of Leonard Krim and Leonard Hiller or one
entity owned and/or controlled by the Krim Family and one entity owned and/or
controlled by the Hiller Family.
85. The current managing members of each of the Companies governed by
the 1995 Conversion Agreements consist of one entity owned and/or controlled by the
Krim Family and one entity owned and/or controlled by the Hiller Family.
86. Specifically, the current managing members of the following Companies
are as follows: (a) Bayshell Realty - Krim Family LP and Hiller Family LP; (b) Shellray
Realty - Krim Residuary Trust and Hiller Family LP; (c) Eighty Eight Bleecker - Ariel
Company and Hiller Associates; and (d) Shell Realty - Krim Family LP and Hiller
Family LP.
87. Upon information and belief, the current managing members of 230 West
Houston are Krim Residuary Trust and Jeffrey Hiller.
12
88. Section 7.2 of the 1995 Conversion Agreements states that the unanimous
approval of the members of each Company is required for (i) the purchasing and
developing of new properties; (ii) the amendment of the agreement; and (iii) the
admission of new members.
89. Section 7.3 of the 1995 Conversion Agreements states that other than as
set forth in paragraphs 7.1 and 7.2 thereof, all other actions of the Companies “require the
vote and approval of the Members owning a majority interest of the Company.”
C. Gary Krim Takes Over Management of the Properties
90. Leonard Krim died in 2006.
91. From 1992 through August 2005, Leonard Krim’s son Gary Krim, a
member of the New York bar, worked with Leonard Krim both as a lawyer and in the
management of the Properties owned during those years. Thereafter, Gary Krim took
over his father’s law practice.
92. Shortly after August 2005, Leonard Hiller, the rest of the Hiller Family
and the Krim Family consented to Gary Krim continuing his role in the management of
the Properties.
93. Gary Krim thereupon became the property manager of all of the
Properties owned by the Companies, including the 16-18 North Moore Property and the
230 West Houston Property which were purchased after the death of Leonard Krim.
94. For several years thereafter, Gary Krim continued the management of the
Properties with the full approval and support of Leonard Hiller and the rest of the Hiller
Family.
95. Gary Krim has remained the property manager of the Properties since that
time.
13
96. Beginning during or about November 2007, at the request of the Hiller
Family, Gary Krim employed and mentored Defendant Jordan Hiller in connection with
the management of the Properties.
97. Jordan Hiller worked for Gary Krim from November 2007 to June 30,
2015, at which time he resigned.
D. The 2009 Operating Agreements
98. During or about 2009, the owners of Shellville Realty and 16-18 North
Moore entered into new operating agreements governing their respective entities (the
“2009 Operating Agreements”).
99. Section 7.1 of the 2009 Operating Agreements states that “[t]he day-to-
day affairs of the Company shall be handled by the Managers.”
100. The managing members of Shellville Realty and 16-18 North Moore
consist of one member of the Krim Family and one member of the Hiller family.
101. Specifically, the current Managers of Shellville Realty and 16-18 North
Moore are Jordan Hiller and Gary Krim.
102. Section 7.2 of the 2009 Operating Agreements states that “[t]he sale of
any real property owned by the Company shall require the vote and approval of the
holders of a majority of the Membership interests in the Company.”
103. The 2009 Operating Agreements state that the unanimous approval of the
members of each Company is required for (i) the purchasing and developing of new
properties; (ii) the amendment of certain Sections of the Agreement, including Sections
7.1 and 7.2; and (iii) the admission of the new members.
14
104. Section 7.3 of the 2009 Operating Agreements states that other than as set
forth in Sections 7.1 and 7.2 thereof all other actions of the Companies “shall require the
vote and approval of the Members owning a majority interest of the Company.”
E. The Krim and Hiller Working and Personal Relationships Deteriorate
105. After the death of Leonard Hiller, the business and personal relationships
between the Krim and Hiller Families deteriorated.
106. By mid-2012 the relationship between the Krim and Hiller Families had
become so acrimonious that it was beginning to affect the management of the Properties.
107. During the period since mid-2012 the Hiller Family has engaged in
various acts which have undermined the management of the Properties by Gary Krim,
impeded the effective functioning of the Companies, impeded the ability of the
Companies to fulfill their purpose and made it no longer reasonably practicable to carry
on the business as intended, including but not limited to:
Negotiating tenant security deposit terms with tenants without the approval and behind the backs of Gary Krim and the Krim Family;
Reneging on commitments made by Gary Krim to vendors and
service providers hired to provide maintenance and construction services at the Properties;
Demanding renegotiation of pricing terms previously agreed upon
by Hiller Family members and Gary Krim with contractors and vendors hired to provide maintenance and construction services at the Properties;
Threatening to sue Gary Krim and other Krim Family members;
Reneging on prior commitments respecting Company expenditures
and other matters;
Providing inconsistent instructions to Gary Krim respecting Company expenditures and other matters;
Attempting to instruct Adam Krim to withhold information from
other Krim Family members;
15
Objecting to lengthy leases for commercial or retail space due to
the complexity and presumed cost involved;
Reneging on their commitment to keep Jason Hiller away from contractors and tenants. That commitment was made by the Hiller Family after Jason Hiller instructed a building superintendent to open an apartment which Jason Hiller entered resulting in the female tenant’s complaint of intrusion as she was emerging from the shower;
Declaring a rift between the Krim and Hiller Families and
demanding under threat that the management of the Properties be handed over to the control of Hiller Family members, which members lacked the necessary experience and infrastructure to effectively manage the Properties;
Engaging third-party property management companies without the
consent or prior knowledge of the Krim Family;
Refusing to share details of its communications with third-party property managers with Gary Krim and the Krim Family;
Refusing to fully disclose the scope of the duties and
responsibilities of the third-party property managers to Gary Krim and the Krim Family;
Refusing to effectively participate in Company decision making
regarding Property maintenance and other matters;
Ignoring notices and other correspondence received from Gary Krim;
Withholding critical business information from the Krim Family;
and
Refusing even to consider or discuss reasonable proposals received from prospective third-party buyers for the sale of certain of the Properties owned by the Companies.
108. The relationships between the Krim and Hiller families have deteriorated
so greatly that they are beyond repair.
109. The interests of the Krim and Hiller families as perceived by each have
become divergent.
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110. The owners and managers of the Companies are now embroiled in patently
fundamental disputes respecting the day to day management of the Companies and the
Properties.
111. The owners and managers of the Companies are now embroiled in
patently fundamental disputes respecting whether to dissolve the Companies and to sell
the Properties.
112. The Companies are no longer able to operate in an effective or efficient
manner.
113. The Companies have become non-functional.
114. The continuation of an effective business relationship is now impossible.
115. The Hiller Family’s pattern and practice of obstruction and interference
has frustrated the purpose of the Companies.
116. The Hiller Family has made effective and efficient management of the
Properties impossible.
117. The Hiller Family’s actions in respect of the Companies have been
careless, negligent and reckless.
118. The Hiller Family’s actions in respect of the Companies have endangered
the Krim Family’s investments.
119. Upon information and belief, the Hiller Family is attempting to cause the
members of the Krim Family to sell their interests in the Companies to the Hiller Family
for less than fair market value and in a manner that is disadvantageous from a tax
standpoint.
17
F. The Special Meetings of September 24, 2015: Deadlock 120. Special meetings of the Companies were conducted on September 24,
2015.
121. The noticed purpose of the special meetings was to discuss the following
agenda items:
Agenda Item 1 - To review the management of the Properties of each of the Companies; Agenda Item 2 - To decide whether to retain a new management company to manage each of the Properties, and if so, to set the fee that each of the Companies shall pay to such new management company; Agenda Item 3 - To decide whether to engage a real estate broker to offer each of the Companies’ Properties for sale; and Agenda Item 4 - To decide whether to dissolve each of the Companies.
122. Agenda Items 1 and 2 were included in the notice of the special meeting at
the demand of the Hiller Family and Agenda Items 3 and 4 were included in the notice of
the special meeting at the demand of the Krim Family.
123. The meetings were consolidated into a single meeting.
124. A quorum was present for each company.
125. When Agenda Item 1 came up for discussion, the Hiller Family meeting
participants announced that they had no interest in hearing a report regarding the
management of the Properties. Thus, there was no review of Company Property
management issues at the meeting.
126. Thereafter, there was disagreement and/or deadlock with respect to each
and every other Agenda Item.
127. There was even disagreement as to who would vote with respect to
Agenda Item 2.
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128. Although decisions regarding Property management are “day-to-day”
decisions to be made by the managing members of the Companies for purposes of the
1995 Conversion Agreements and the 2009 Operating Agreements, the Hiller Family
took the position that Agenda Item 2 should be voted on by the members of the
Companies.
129. Accordingly, whether to retain a new management company to manage
each Property, and if so, to set the fee that each Company would pay to such new
management company, was divided into two agenda items, with Agenda Item 2 recording
the votes of the Companies’ members and Agenda Item 5 recording the votes of the
Companies’ managers on this issue.
130. The Hiller Family appointed Jason Hiller as the manager of the
Companies for purposes of the manager vote.
131. The Krim Family appointed Gary Krim as the manager of the Companies
for purposes of the manager vote.
132. The voting at the special meetings was as follows:
a) With respect to Agenda Item 2 – voting by the members of the Companies on whether to retain a new Property management company to manage each Property, and if so, to set the fee that each Company shall pay to such new management company – the vote was deadlocked for each of the following Companies: Shellray Realty, Shell Realty, Bayshell Realty, and Eighty Eight Bleecker.
b) With respect to Agenda Item 3 – voting by the members of the Companies on whether to engage a real estate broker to offer each Company’s property for sale – the vote was deadlocked for each of the following Companies: Shellray Realty, Shell Realty, Bayshell Realty, and Eighty Eight Bleecker.
c) With respect to Agenda Item 4 – voting by the members of the Companies
on whether to dissolve each Company – the vote was deadlocked for each of the following Companies: Shellray Realty, Shell Realty, Bayshell Realty, and Eighty Eight Bleecker.
19
d) With respect to Agenda Item 5 – voting by the managers of the Companies on whether to retain a new Property management company to manage each Property, and if so, to set the fee that each Company shall pay to such new management company – the vote was deadlocked for each and every Company that voted.
133. Specifically, in each and every case, Jason Hiller, as manager, voted in
favor of retaining a new property management company while Gary Krim, as manager,
voted against retaining a new property management company.
134. Accordingly, all of the Companies are deadlocked at the manager level
and four of the Companies are deadlocked at the member level with respect to
fundamental issues affecting the continuation of the Companies.
135. As a result, no decisions can be made regarding whether to change the
existing Property management structure, whether to sell the Properties, or whether to
dissolve the Companies.
G. Irreparable Breakdown and Irreconcilable Deadlock
136. There has been an irreparable breakdown in the relationship between the
Krim and Hiller Families, and there is an irreconcilable deadlock between the parties on
matters that go to the heart of the Companies (i.e., how to manage the Properties, whether
to sell the Properties or the Companies and whether to dissolve the Companies).
137. The Krim Family has presented several fair options to allow both families
to divest their interests in the Companies. However, the Hiller Family has dismissed each
option.
138. Gary Krim in his role as manager of the Properties has presented several
reasonable offers from third-parties for the purchase of some of the Properties. However,
the Hiller Family has simply rejected each and every offer, refused to discuss the merits
20
of any of the proposals presented, refused to offer a counterproposal and refused to
discuss negotiation guidelines to pursue with the offerors.
139. The 1995 Conversion Agreements and the 2009 Operating Agreements
contain no provisions for the resolution of disagreements between the managers or the
members.
140. The 1995 Conversion Agreements and the 2009 Operating Agreements
contain no buy-out or other provisions that would permit or authorize one member to buy
out the other member in the event of a deadlock.
141. As a consequence of the disagreements and deadlocks between the
Companies’ managers and members, it is no longer “reasonably practicable to carry on
the business in conformity with the articles of organization or operating agreement” of
each Company within the meaning of LLCL § 702.
142. The Hiller Family is unwilling to reasonably permit or promote the
purposes of the Companies.
143. The Companies are paralyzed by infighting, internal dysfunction,
categorical disagreement and deadlock as to the current management and future of the
business and are in a state of limbo with no consensus on how or in which direction to
proceed.
144. Because of the internal dysfunction of the Companies and the frustration
of their business purpose it is no longer reasonably practicable to operate or to carry on
the business of the Companies.
145. Accordingly, the Companies must be judicially dissolved.
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FIRST CAUSE OF ACTION (Judicial Dissolution)
146. Plaintiffs repeat and reallege each and every allegation set forth above as
if set forth fully and at length herein.
147. LLCL § 702 states as follows:
On application by or for a member, the supreme court in the judicial district in which the office of the limited liability company is located may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement. A certified copy of the order of dissolution shall be filed by the applicant with the department of state within thirty days of its issuance.
148. As set forth above, it is no longer reasonably practicable to carry on the
business of the Companies.
149. For the foregoing reasons, Plaintiffs respectfully ask this Court for a
decree dissolving the Companies in accordance with New York's Limited Liability
Company Law.
SECOND CAUSE OF ACTION (Judicial Wind-Up and Appointment of Receiver)
150. Plaintiffs repeat and reallege each and every allegation set forth above as
if set forth fully and at length herein.
151. Pursuant to LLCL § 703, and in light of the dysfunction set forth above, a
judicial wind-up is appropriate and necessary, inter alia, to dispose of and convey each
Company’s assets, discharge its debts and liabilities, and distribute its remaining assets
and income to its members.
152. Pursuant to LLCL § 703, the appointment of a receiver or liquidating
trustee is necessary to implement the judicial wind-up of the Companies for the purpose,
inter alia, of conveying each Company’s assets, discharging its debts and liabilities, and
distributing its remaining assets and income to its members.
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153. For the foregoing reasons, Plaintiffs respectfully request that the
Companies be judicially wound up and that a receiver or liquidating trustee be appointed
to preside over the wind up of the Companies.
THIRD CAUSE OF ACTION (Injunctive Relief)
154. Plaintiffs repeat and reallege each and every allegation set forth above as
if set forth fully and at length herein.
155. A preliminary injunction against the Defendants is necessary to preserve
and conserve each Company’s income and assets in order to implement a judicial wind
up of such Company, convey its assets, discharge its debts and liabilities, and distribute
its remaining assets and income, if any, to its members on a pro-rata basis upon a judicial
wind up of the said company.
156. For the foregoing reasons, the Plaintiffs respectfully request that a
preliminary injunction be issued restraining the Defendants from disposing of the
Companies’ income and assets until a judicial wind up has been completed.
FOURTH CAUSE OF ACTION (Accounting)
157. Plaintiffs repeat and reallege each and every allegation set forth above as
if set forth fully and at length herein.
158. An accounting of the Companies’ assets and liabilities is necessary to
implement a judicial wind up for the purpose, inter alia, of conveying each Company’s
assets, discharging its debts and liabilities, and distributing its remaining assets and
income to its members.
159. For the foregoing reasons, the Plaintiffs respectfully request that an
accounting of the Companies’ assets and liabilities occur upon its judicial wind-up.
WHEREFORE, Plaintiffs respectfully request that this Court enter judgment as follows:
A) Ordering that the Companies be judicially dissolved pursuant to LLCL §
702
B) Ordering that the Companies be judicially wound up and a receiver or
liquidating trustee be appointed for the Companies pursuant to LLCL § 703;
C) Issuing a preliminary injunction restraining and enjoining the disposition
of each ofthe Companies ' income and assets until a judicial wind up of the
Companies has been completed;
D) Directing an accounting of the Companies ' assets and liabilities to
implement the judicial wind up for the purpose, inter alia, of conveying its assets,
discharging its debts and liabilities, and distributing its remaining assets and
income to its members;
E) Awarding such other and further relief as is just and proper, including pre-
judgment interest, costs and reasonable attorney's fees.
Dated: New York, New York January 18, 2016
TRACHTENBERG RODES & FRIEDBERG LLP
BY: ~C? David G. Trachtenberg (6675) Stephen Arena (6391)
545 Fifth Avenue Suite 640 New York, NY 10017 (212) 972-2929
Attorneys for Plaintiffs
23
VERIFICATION
STATEOFNEWYORK ) ) ss,:
COUNTY OF NEW YORK )
Gary Krim, being duly sworn, deposes and says:
I am a general partner of L. & E. Krim Family L.P" a plaintiff in the above-titled
action, I have read the foregoing Vetified Complaint and know the contents thereof, and
the same are true except as to matters therein stated to be alleged upon information and
belief, and as to those matters I believe the~
I Gary Krim
Sworn to before me this ~ da ofJ anu,8.n<'WI'fj
AMY SALTZMAN NOTARY PUBLIC, STATE OF NEW YORK
NO, 02SA6060623 QUALIFIED IN NEW YORK COUNTY (Q COMMISSION EXPIRES JUNE 25, 20~
24
VERIFICATION
STATE OF NEW YORK ) wr/!ti!tJk", ) 55.:
COUNTY OF ~1E\lJ YORK )
Adam Krim. being duly sworn, deposes and says:
I am the trustee of the Leonard H. Krim Residuary Trust and a principal of Ariel
Company, plaintiffs in the above-titled action. I have read the foregoing Verified
Complaint and know the contents thereof, and the same are true except as to matters
therein stated to be alleged upon information and belief, and as to those matters I believe
them to be true.
Sworn to before me th is IL day of January. 2016
J ANICE VALL~JOS Notary Public · StBte of New Vorl,
NC',01VAS0290S9 Qualified In W~stchostcr County
My Commb:;lQn 5;:':01:0'" Aut:;. 9, 2017
:t\ am Krim
25