JPS Partners v Binn 2013 NY Slip Op 33366(U) April 5, 2013 Sup Ct, New York County Docket Number: /12 Judge: Melvin L. Schweitzer Cases posted

Transcription

1 JPS Partners v Bnn 2013 NY Slp Op 33366(U) Aprl 5, 2013 Sup Ct, New York County Docket Number: /12 Judge: Melvn L. Schwetzer Cases posted wth a "30000" dentfer,.e., 2013 NY Slp Op 30001(U), are republshed from varous state and local government webstes. These nclude the New York State Unfed Court System's E-Courts Servce, and the Bronx County Clerk's offce. Ths opnon s uncorrected and not selected for offcal publcaton.

2 [* 1] FLED: NEW YORK COUNTY CLERK 04/11/2013 NDEX NO /2012 NYSCEF DOC. NO. 93 RECEVED NYSCEF: 04/11/2013 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: H L\ll>J L. $GHW61TUY<. PART LfS Justce NDEX NO. "so l/ 3() / 1 'l-.y. f/tore-ron 8aNN ~ ~ MOTON DATE MOTON SEQ. NO. 0 OLl The followng papers, numbered 1 to, were read on ths moton to/for Notce of Moton/Order to Show Cause - Affdavts - Exhbts No(s)., w 0 = U) ::::>..., ~ c w a:: a:: w u.. w a:: >- -.J!!?..J z ::::> 0 u.. U) t; ~ w a:: Q. (!) f3 z a:: U) 3: w.j U).J c( 0 0 u.. z - ::c w 0 = a:: 0 0 :E u.. Answerng Affdavts - Exhbts Replyng Affdavts No(s) No(s) Upon the foregong papers, n s ordered that ths moton s ~ ~~ z, ~ ~ ~~~ UC.~ De.~161)~~~ ~ NTED ~~ frv rfj.v ~~~()~. 1. CHECK ONE:... DD GCRAASNETDEDSPOSED../"NED 2. CHECK AS APPROPRATE:... MOTON S: OJ.lJtNED / ~AL DSPO TON!]?'GRANTED N PART D OTHER 3. CHECK F APPROPRATE:... D SETLE ORDER D SUBMT ORDER DDONOTPOST D FDUCARY APPONTMENT D REFERENCE

3 [* 2] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK : PART 45 J x JPS PARTNERS n ts own rght, and dervatvely n the rght of BNN AND PARTNERS, LLC, Plantffs, ndex No /12 -aganst- MORETON BNN, an ndvdual, GUGGENHEM SECURTES, LLC, MSTRAL EQUTY PARTNERS, MSTRAL CAPTAL MANAGEMENT, LLC, and LLAc: VENTURES MASTER FUND, LTD. DECSON AND ORDER Moton Sequence No and BNN!AND PARTNERS, LLC, Defendants, Nomnal Defendant ~ x MELjN L. SCHWETZER, J.:. JPS Partners (JPS) brngs ths acton, n ts own rght, and dervatvely n the rght of. Bnn and Partners, LLC (Bnn), aganst Moreton Bnn (Mr. Bnn) and Bnn nomnally ( collelvely referred to as the Bnn defendants), for dssoluton of Bnn, breach of fdu~ary duty, corpalate dverson, breach of contract and an equtable accountng. Bnn operates spas n arports around the world. Mr. Bnn and Bnn move to dsmss JPS's complant pursuant to CPLR3013, 3211 (a) (1), 3211 (a) (3) and 3211 (a) (7) on the grounds that JPS faled to properly plead hemand futlty, dssoluton of Bnn s unfounded pursuant to Bnn's operatng agreement and thk New York Lmted Lablty Company Law, Mr. Bnn dd not breach hs fducary duty to JPS or Bnn, and Mr. Bnn dd not breach the operatng agreement.

4 [* 3] Facts are taken from JPS's complant. Background JPS, a New York unncorporated assocaton s a busness venture between Mr. Jonathan and PJter Sobel. Bnn s a New York lmted lablty company. Bnn operates pursuant to the Thrd l\mended and Restated Operatng Agreement, dated June 16, 2008 (Operatng.. Agreenent). Mr. Bnn s the manager of Bnn. Mr. Bnn and hs wfe, Marsol Bnn, together control over 55% of Bnn. JPS holds a l.93% nterest n Bnn. Pror to February 16, 2012, Bnn held a controllng nterest n subsdares branded as Xpress Spa. n a January 30, 2012 letter, Mr. Bnn nformed the members of Bnn about a, prop osal by Mstral Captal Management (Mstral) to nvest $23 mllon n Bnn n consderaton j ' of a 42% equty nterest n the enterprse. The letter descrbed the nvestment as a recaptalzaton. t went on to explan that the nvestment captal would be used to reduce the bank debt Bnn owed to Bank of Amerca and to grow the Xpress Spa brand. The letter stated that nvestment funds would not be used to make dstrbutons. The letter requested the members consent to the proposed transacton. JPS opposed the transacton and fled ts ntal complant on February 15, JPS sought a temporary restranng order and prelmnary njuncton to stop the meetng to vote on the Mstral proposal. The court dened relef. On February 16, 2012, members of Bnn, by majorty vote, approved the Mstral ' transacton, pursuant to whch Mstral purchased an equty nterest n the spa busness of Bnn for $23.8 bllon n followng manner: ' j! L 2

5 [* 4] Frst, Bnn contrbuted ts entre nterest n the subsdares through whch t operated ts spa busness to XpressSpa Holdngs, LLC (Holdngs), a newly formed Delaware lmted lablty company. Holdngs was ntally a wholly owned ' subsdary of Bnn; then Mstral purchased the equty nterest n Holdngs. JPS clams that the January 30, 2012 letter falsely descrbed the transacton as a recaptalzaton. JPS alleges that after Mr. Bnn transferred the assets of Bnn to Holdngs, Bnn was decaptalsed and Holdngs was captalzed wth money from Mstral, and wth assets formejly under the control of Bnn. JPS asserts that snce the entre XpressSpa busness has been transferred to Holdngs, a foregn lmted lablty company, Bnn must be dssolved pursuant to the terbs of ts Operatng Agreement, and the New York Lmted Lablty Company Law. JPS alleges that Mr. Bnn breached fducary dutes owed to Bnn and JPS. JPS alleges that Mr. Bnn placed hs own fnancal nterest ahead of the nterest of Bnn and JPS. n ths respect, t s alleged that followng the transacton, Mr. Bnn was repad a porton of the loan he had mkde to Bnn; the outstandng loan was refnanced at 12% (compounded monthly) from 10% per alum; Mr. Bnn receved unspecfed salary, bonuses and equty kckers; and Mr Bnn sgnfcantly reduced hs guarantee of the loan whch had been n place snce The complant alleges that Mr. Bnn receved an mproper payment of $1.084 mllon when he exercsed hs put optons (set to expre on February 29, 2012). JPS alleges that the. payment was possble only as result of the transacton wth Mstral, and the put optons were exercked the day of the closng of the transacton, February 23, JPS clams that had the - transabton not closed, Mr. Bnn could have exercsed hs optons, but would have receved oblgatons from Bnn, nstead of cash. Based on these allegatons, JPS asserts that the Mstral transacton dd not provde any economc beneft to Bnn. 3

6 [* 5] JPS clams that Mr. Bnn looted the assets of Bnn by transferrng all ts assets to Holdngs (a Mstral controlled entty), and convertng Bnn from an entty wth.a controllng nterdt n a spa- busness nto a non-controllng nomnal parent of Holdngs. Pror to flng the amended complant, JPS dd not make a demand on Bnn. JPS clams - that a pre-acton demary.d would have been futle. JPS alleges that the transacton was made possble because of Mr. Bnn's majorty nterest n Bnn, and that hs votng of the unts he controlled was the only vote necessary to make the transacton possble. JPS alleges that Mr. Bnn, n hs capacty as the manager of Bnn, s emdowered by the Operatng Agreement to enter nto and execute all contracts and agre~ments on bejalf of Bnn. No decson wth respect to any matter wthn the scope ofbnn's busness could be made unless approved by Mr. Bnn. Mr. Bnn s enttled to an addtonal and decdng vote r the event of a board deadlock. JPS alleges that some of the members on Bnn's board were Lerested n the transacton, whle the dsnterested members had no authorty to act on behalf of Bnn wthout Mr. Bnn' s approval. JPS alleges that the detals of the February 16, 2012 transacton, ncludng the conse4uences for mnorty members, were not adequately communcated to the dsnterested memblrs, pror to the transacton. JPS alleges that snce the transacton was such an egregous oppre~son of the nterests of the mnorty members, for the beneft of Mr. Bnn, that t could not have ~een a product of sound busness judgment. Based on these allegatons, JPS clams that gven the extent of domnance and control Mr. Bnn exercsed on the board, the board of Bnn wouldl not have been n favor of pursung ltgaton and demand was futle. j 4

7 [* 6] Dscusson On a moton to dsmss for falure to state a clam, the court accepts all factual allegatons pleadeb n plantffs complant as true, and gves plantff the beneft of every favorable. nference. CPLR 3211 (a) (7); Shela C. v Pavch, l l-ad3d 120 (1st Dept 2004). The court must determne whether "[from the complant's] four comers[,] factual allegatons are dscerned j. whch taken together manfest any cause of acton cognzable at law." Gorelk v Mount Sna Hosp. CTR., 19 AD3d 319, 319 (1st Dept 2005) (quotng Guggenhemer v Gnzburg, 43 NY2d! 26888, (1977)). Vague and conclusory allegatons, however, are not suffcent to sustan a cause Jr acton. Fowler v Amercan Lawyer Meda, nc., 306 AD 2d 113 (1st Dept 2003 ). On a moton to dsmss on the ground that defenses are founded upon documentary evden1e, evdence mu~t be unambguous, authentc and undenable. CPLR 3211 (a) (1); Fontanetta v Doe, 73 AD3d 78 (2d Dept 2010). "To succeed on a [CPLR 3211 (a) ()] moton'... a defendant must show that the documentary evdence upon whch the moton s predjted resolves all factual ssue as a matter of law and defntvely dsposes of the plantffs clam." Ozdemr v Cathness Corp., 285 AD2d 961, 963 (3d Dept 2001), leave to appeal 1 dened97 NY2d 605. n other words, "documentary evdence must utterly refute plantffs factual!allegaton, conclusvely establshng a defense as a matter oflaw." Goshen v Mutual Lfe ns. Co'. of New York, 98 NY2d 314, 326 (2002). Falurelto plead Demand. JPS Partners frst, second, thrd, seventh and nnth causes of acton are dervatve actonsl n a dervatve acton, the member who seeks to fle such a clam s. requred to frst serve a:ctemand upon the company. BCL 626 (c); Bansbach v Znn, 1NY3d1, 8 (2003). A 5

8 [* 7] pre-aclon demand, however, may be excused where the plantff can prove that a demand was not mle upon the company because such a demand would have been futle. Marx v Akers, 88 1 NY2d jl 89 ( 1996). n order to successfully plead that a demand was futle, plantff must plead wth p~rtcularty that a majorty of the board of drectors was nterested n the challenged transacton or the board members dd not fully nform themselves about the transacton to the extent ~easonably approprate, or that the transacton was so egregous on ts face that t could not have been the product of sound busness judgment. Bansbach, 1 NY3d 9; Marx v Akers, supra. JPS clams that a pre-acton demand on Bnn would have been futle because of the power ~nd authorty Mr. Bnn exercsed over the board of Bnn as ts manager and as a majorty. board member. JPS asserts that the board of Bnn lost ts ndependence because Mr. Bnn domn~ted and controlled ts decsons. Hence, t would have been futle to serve a demand on the bodrd. Defendants contend that JPS has faled to properly plead that a demand on Bnn would have bben futle. Defendants assert that despte the fact that Mr. Bnn, as the manager, possessed full poler and authorty to enter nto the tr~nsacton on behalf of Bnn, the transacton was approved by an overwhelmng majorty vote of dsnterested members. Thus, they assert JPS s unable to plead demand futlty. rhe court's opnon s that whether Mr. Bnn welded such nfluence over the board of Bnn that t lost the ablty to objectvely deal wth a demand upon t, rases substantal ssues of! fact. These nclude whether the mnorty members were fully nformed of the consequences of the reclptalzaton. t s not the court's task at ths stage of the proceedngs to make factual determnatons. On a moton to dsmss the court must accord the plantff, "the beneft of every 6

9 [* 8] possble nference," Nonnon v Cty of New York, 9 NY3d 825, 827 (2007). Here there s a plausble factual nference that Mr. Bnn domnated, controlled and msnformed the board of Bnn tl the extent t would be deemed nterested n the transacton. The moton to dsmss s! dened. Dsso!Uton of Bnn LLC pursuant to Operatng Agreement! JPS seeks an order for dssoluton of Bnn pursuant to the Operatng Agr~ement. asserts that Secton 8.01 of the Operatng Agreement provdes for t to be dssolved upon transfer of subltantally all of ts assets. Accordng to Bnn' s 2011 audted fnancal statement, on FebruJry 23, 2012 Bnn contrbuted all of ts assets and labltes to Holdngs. Defendants counter that the Operatng Agreement was amended pror to the transacton on FeJruary 1, 2012, and the amendment contemplated the contnued exstence of Bnn after the FebruJcy 23, 2012 transacton. Defendants clam that the amendment to the Operatng Agreelent s documentary evdence that establshes ts defense as a matter of law. n order for a defense to be founded on documentary evdence, the evdence must be unambguous, authentc and undenable. Fontanetta v John Doe, 1, 73 AD3d 78 (2d Dept 2010). Mr. B;nn s authorzed by the Operatng Agreement to make amendments to t at hs sole dscreton. Ths unfettered authorty to make unlateral amendments s lmted n certan cases, such as when a member s adversely affected by an amendment relatng to dssoluton of the compahy. n such cases, wrtten consent of the affected member s requred. JPS alleges that the amendbent to the Operatng Agreement adversely affected ts rghts to dssoluton n the event of ' a transfer of substantally all of the assets of Bnn and that ts wrtten consent was not obtaned n connecton wth adoptng ths amendment. Defendants counter that at the tme of the ' 7 JPS

10 [* 9] amendment JPS had no rght to dssoluton and consent was not requred. They argue the. amendment, and the subsequent transacton, dd not adversely affect JPS. The documentary evdence submtted by the defendants s not ncontrovertble. JPS d~putes Mr. Bnn's authorty to make amendments to the Operatng Agreement on the subject of dssoluton wthout t's wrtten consent. The defendants have not establshed that the amendment dd not requre the wrtten consent of the plantff. Ther argument regardng a rght to dslluton not beng extant at the tme of the amendment gnores the plan meanng of the. Operatmg Agreement. t s wthout mert. The amendment s not documentary evdence under New York law, and does not establsh a defense as a matter oflaw under CPLR 3211 (a) (). JPS hl pleaded suffcent facts to state a cause of acton for dssoluton, the defendant's moton to ds~ss the frst cause of acton s dened. Judcal dssoluton of Bnn LLC Secton 702 of the New York Lmted Lablty Company Law (NYLLC) provdes that: "On applcaton by or for a member, the supreme court... may decree dssoluton of a lmted labl& company whenever t s not reasonably practcal to carry on the busness n conformty wth the artcles of organzaton or operatng agreement." JPS clams that snce Secton 8.01 of the Operatng Agreement provdes for dssoluton of Bnn, and because the transacton wth Mstral s an event of dssoluton, Bnn cannot carry on busne'ss and hence, ought to be dssolved. JPS clams that judcal dssoluton s warranted because the management,.e., Mr. Bnn, s unable to promote the stated purpose of Bnn. JPS ctes Secton 1.06 of the Operatng Agreement whch says the stated purpose of Bnn s "to engage n spa servces predomnantly at 8

11 [* 10] large, hgh-traffc arport locatons." JPS alleges that Bnn s prevented from engagng n ts stated purpose snce substantally all of ts assets have been transferred to Holdngs. The defendants counter that the Operatng Agreement and February 1, 2012 amendment address when dssoluton s to be decreed, and judcal dssoluton s unwarranted. The defendants reject JPS's allegaton that Bnn s prevented from engagng n ts stated purpose. They Lsert that after the transacton Bnn contnues to operate n accordance wth ts Operatng Agree~ent and run spas, although n a dfferent corporate structure, ndrectly through Holdngs. The operatng agreement determnes the rules applcable to the operaton of a partcular lmte~ lablty company. n re Matter of the Dssoluton of 1545 Ocean Avenue LLC v Van Houte, 72 AD3d 121, 128 (2d Dept 2010). Only where the operatng agreement s ambguous, contrah to law or does not contan any provson for the partcular matter at ssue, do the statutjry provsons control. d. at 129. Nether party argues that the Operatng Agreement s ambguous. Both have cted the Operatng Agreement to support ther arguments, although they. dsputl the applcable provson. There s no need to tum to the default provson of the NYLLC. Plantffs cause of acton for judcal dssoluton s dsmssed. Breach of Fducary Duty aganst Mr. Bnn, manager of Bnn LLC (Dervatvely) JPS states that Mr. Bnn, as manager of B~n, owed a fducary duty to Bnn to conduct ts J busne'ss n a far, just and equtable manner and to act n furtherance of ts best nterests. JPS 's amendled complant makes two dstnct allegatons of bre~ch ofth_s duty. JPS alleges that Mr. Bnn breached hs fducary duty by negotatng and executng a transatton that put hs fnancal nterests ahead of Bnn' s. JPS alleges that Mr. Bnn receved, cash dstrbutons from Xpress. JPS alleges that he structured the transacton to reduce hs own 9

12 [* 11] personal bank guarantee, and receve dvdends, fees, nterest, and the ablty to sell unts 1 regardless of whether other members, partcularly JPS, receved any return on ther nvestments. JPS alleges that Mr. Bnn breached hs fducary duty by mproperly transferrng assets of Bnn tb Xpress, gven that Mstral contrbuted cash to Xpress and not to Bnr. JPS clams that Mr. Bnn's actons converted Bnn from a company wth a controllng nterest n ts busness nto a shell whch s now a non-controllng nomnal parent of a Mstral controlled entty. j JPS alleges that Mr. Bnn's rresponsble and excessve corporate spendng contrbuted to Bnn DLC's alleged nablty to meet ts budgeted expenses.. Mr. Bnn contends that the exculpatory provson n the Operatng Agreement provdes a sheld from the breach of fducary duty allegatons. He asserts that the allegatons wth respect to brjch of fducary duty must be dsmssed because JPS has faled to plead that hs alleged actoj amount to falure to act 'n good fath' or 'gross neglgence' or 'reckless ndfference' n order for the court to not enforce the exculpatory provson n the Operatng Agreement. To the contrafy Mr. Bnn clams that hs actons ncludng personally guaranteeng loans for Bnn, and makng personal loans to Bnn, llustrate that he always acted n the best nterests of Bnn. n addto'n, Mr. Bnn ctes the busness judgment rule, hs relance upon fnancal advsors, and j dsclosure of hs purported fnancal nterest to the members when the approval of the transacton was ob~aned, as defenses aganst the clam of breach of fducary duty. The exculpatory clause n the Operatng Agreement, whch shelds Mr. Bnn from lablt)' n many stuatons, reads as follows: "Lablty of Partes. No Manager or offcer shall be lable to the Company or to any Member for () the performance of, or omsson to perform, any actl or duty on behalf of the Company f, n good fath, the Manager or the offcer determned 10

13 [* 12] that s~ch conduct was n the best nterests of the Company and such conduct dd not consttute fraud, ~ross neglgence or reckless or ntentonal msconduct." JPS has alleged, wth specfcty, that n negotatng and enterng nto the transacton, Mr. Bnn acted n bad fath, and n hs own self-nterest, to the detrment of Bnn. Whle Mr. Bnn' s arguments rase substantal ssues of fact, they do not detract from the suffcency of plantffs partcular pleadngs that Mr. Bnn acted h bad fath, or that there was ntentonal msconduct on hs part, thus nullfyng the excu. 1 patory prov1s1on... On a moton to dsmss, the court must accord the plantff "the beneft of every possble favorable nference," Nonnon v Cty of New York, 9 NY3d 825, 827 (2007). Snce the facts as alleged by JPS ft wthn a cognzable legal theory, Mr. Bnn's moton to dsmss the thrd cause of acton s dened. Corpo~ate Dverson (Dervatve) JPS makes two allegatons n ts clam for corporate dverson. Frst, JPS alleges that MJ. Bnn mproperly dverted corporate assets of Bnn to hs own bank account. j JPS also reterates ts allegatons that Mr. Bnn, by enterng nto the recaptalzaton transacton was able to reduce hs personal bank guarantee and make profts through dvdends, fees, clmpensaton, nterest and sale of unts. 1Mr. Bnn contends he acted n good fath and n furtherance of Bnn' s legtmate nterests. He asserts that Mr. Bnn dd not receve any mproper cash payments. The payments were due and owng under the Operatng Agreement. Plantffs frst allegaton that Mr. Bnn mproperly dverted corporate assets to hs bank account s vaguely phrased and conclusory. t s not suffcent to state a cause of acton. L.

14 [* 13] Wth respect to the second allegaton concernng mproper cash dsbursements, these concern cash payments ($1.084 mllon) Mr. Bnn receved when he exercsed hs put optons on Februlry 23, The optons were set to expre on February 29, JPS clams that Mr. Bnn ~cted n bad fath and was motvated by self-nterest. JPS asserts that had the transacton not clqsed, Mr. Bnn could have exercsed hs optons, but would have receved oblgatons from Bnn ttead of cash. The offcers and drectors of a corporaton stand n a fducary relatonshp to the corporaton, owe to the corporaton ther ndvdual loyalty, and are not permtted to derve a personal proft at the expense of the corporaton. Berton v Catucc, 117 AD2d 892 (3d Dept j 1986).! The essence of a waste clam s the dverson of corporate assets for an mproper or unnecessary purpose. Arno ff v Albanese, 85 AD2d 3 (2d Dept 1982). JPS has pleaded wth partcjlarty that Mr. Bnn profted from the payments as the result of the transacton and t was mproper to settle those oblgatons as part of the transacton. The determnaton of whether or not MJ Bnn was enttled to such payments or not s largely a queston of fact. For these reasons, defendant's moton to dsmss the clam for corporate dverson s dened. Breach of Fducary Duty aganst Mr. Bnn JPS states th~t notwthstandng ts dervatve clam for breach of duty aganst Mr. Bnn, t also h~s a drect clam aganst hm for breach of fducary duty. JPS asserts that Mr. Bnn breachbd hs fducary duty to make full dsclosure of all materal facts to t. JPS clams that. Mr. Bnn faled to dsclose materal nformaton regardng the extent of Bnn's supposed need for captall and the extent to whch the value of ts nterests n Bnn could be reduced to zero by 12

15 [* 14] Mstral n the future. JPS alleges that as a drect result of Mr. Bnn' s conduct, JPS was unable to prevel the transacton from closng, whch t cl~ms negatvely mpacted ts nterest n B~. Mr. Bnn moves to dsmss on the grounds that the plantff has not met wth the requrement of dstngushng ts alleged njury from other members of Bnn. Mr. Bnn contends that thle allegatons underpnnng the drect cause of acton are dentcal to those of the dervatve cause 6f acton for breach of fducary duty. 1 The managng member of a lmted lablty company owes a co-member a "fducary duty tl make full dsclosure of all materal facts." Salm v Feldsten, 20 AD3d 469, 470 (N.Y. App. Dv., 2d Dept 2005). JPS has alleged that Mr. Bnn breached hs fducary duty to fully dsclol all materal facts regardng the transacton. As a drect result of Mr. Bnn' s conduct, JPS clamj that ts nterests n Bnn have been damaged. JPS has properly stated a drect clam aganslt Mr. Bnn for breach of fducary duty. Defendant s ncorrect to assert that plantffs allegatons for a drect clam for breach of fducary duty are dentcal to ts dervatve clam for breac~ of fducary duty. Ths clam s for more dsclosure, the dervatve clam was for self dealnk. Plantff has stated suffcent facts to clam that Mr. Bnn breached hs fducary duty to t, nd~pendent of any alleged breach of fducary duty owed to Bnn. Defendant's moton to dsmjs the fourth cause of acton s dened. Breach of Contract j JPS clams that Mr. Bnn volated the terms of Secton 4.10 of the Operatng Agreement that provdes: "Lqudty. Commencng n 2010, the Company wll use reasonable efforts to createlqudty (.e., enablng the Members to sell ther Unts), ether through a sale of the Comp~ny or publc offerng by the Company, provded that ths can be done wthout havng an 1 13

16 [* 15] adverse mpact on the busness operatons or future plans of the Company." JPS alleges that Mr. Bnn's efforts n connecton wth the recaptalzaton were drected towards securng hs own ext rrbm Bnn, and creatng lqudty for select members of Bnn. JPS clams that by transferrng the spa busness of Bnn to a Mstral controlled entty, t s hghly:probable the mnorty unt holders wll be unable to sell ther unts snce Mstral can desgnlate the sale prce. JPS asserts that f Mstral were to desgnate a sale prce (at whch ts fnancal return s realstcally maxmzed), the value of unts held by mnorty unt holders mght. be zero. To adequately allege the essental elements of a breach of contract clam, the plantffs l complant must plead the exstence of a contract between the partes, plantffs performance - under the contract and defendants breach of the contract; and plantffs resultng damages. JP MLgan Chase vj.h Elec. of New York, nc., 69 AD3d 802 (2d Dept 2010). The plantffs complnt as-serts that as a result o~ the breach of contract by Mr. Bnn, t s a hghly probable 1 outcote that the busness shall be sold at a prce that would yeld substantal profts for Mstral but wpe out the nterests of JPS. The damages clamed by JPS are speculatve and there s no j argument by t to suggest that t has suffered damages to date. For ths reason, the complant - does nlot state a cause of acton for breach_ of contract. Ken.ford Co. v County of Ere, 67 NY2d 257, 261 (1986).! Defendant's moton to dsmss the eghth cause of acton s granted. ORDERED that defendant's moton to dsmss the frst, thrd, fourth and seventh causes l of acton s dened; and t s further 14

17 [* 16] grantea. ORDERED that defendant's moton to dsmss the second and eghth causes of acton s Dated: 1 Aprl ':1, 2013 J ENTER:.NELVJNL. SCHVVt:tTzt:R 15