FILED: NEW YORK COUNTY CLERK 09/09/ :12 PM INDEX NO /2016 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/09/2016

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1 FILED: NEW YORK COUNTY CLERK 09/09/ :12 PM INDEX NO /2016 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/09/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Application of GRONICH & COMPANY, INC., Petitioner, SIMON PROPERTY GROUP, INC., SIMON PROPERTY GROUP, L.P., THE RETAIL PROPERTY TRUST and LONGSTREET ASSOCIATES L.P., Respondents. v. Index No /2016 VERIFIED ANSWER AND DEFENSES Respondents Simon Property Group, Inc. ( Simon, Inc. ), Simon Property Group, L.P. ( Simon, L.P. ), The Retail Property Trust ( RPT, and together with Simon, Inc. and Simon, L.P., the Simon Respondents ), and Longstreet Associates L.P. ( Longstreet ), by their attorneys, Paul, Weiss, Rifkind, Wharton & Garrison LLP ( Paul, Weiss ), hereby answer the Petition of Petitioner Gronich & Company, Inc. ( Gronich ) as follows: 1. Respondents deny the allegations in Paragraph 1, except admit that the court on April 29, 2015 entered a judgment against Longstreet in the amount of $2,540, (Kinnally Aff. Ex. A) (the Judgment ) in Gronich & Company, Inc. v. Longstreet Associates, L.P., No /2012 (N.Y. Sup. Ct.) (Gronich v. Longstreet) and that Simon DeBartolo Group, Inc. ( SDG ), Corporate Property Investors ( CPI ), and Corporate Realty Consultants, Inc. entered into an Agreement and Plan of Merger dated as of February 18, 1998 (Kinnally Aff. Ex. I) (the Merger Agreement). Respondents refer the Court to the Merger Agreement for its complete contents. 1 of 24

2 2. Respondents deny the allegations in Paragraph 2, except admit that Gronich purports to seek to collect on the Judgment and that the Judgment relates to a brokerage commission agreement between Longstreet and Gronich concerning a FAO Schwartz lease in the General Motors Building at 767 Fifth Avenue in New York (the GM Building ), and refer to the Judgment and the preceding Memorandum Decision and Order in Gronich v. Longstreet dated April 8, 2016 (NYSCEF Doc. No. 152) (the Summary Judgment Order ) for their complete contents. 3. Respondents deny knowledge or information sufficient to form a belief as to the truth of the allegations in Paragraph Respondents deny the allegations in Paragraph 4, except admit that Simon, Inc. indirectly owns an interest in properties and real estate investments around the world. 5. Respondents deny the allegations in Paragraph 5 because they inappropriately aggregate various entities, except admit that Simon, Inc. indirectly owns an interest in properties and has interests in real estate investments around the world. 6. Respondents admit that Paragraph 6 quotes an excerpt from Simon, Inc. s 2015 Annual Report (Kinnally Aff. Ex. C) (the SPG 2015 Annual Report ), except refer the Court to the SPG 2015 Annual Report for its complete contents. 7. Respondents admit that Paragraph 7 quotes an excerpt from Simon, Inc. s 1998 Annual Report (Kinnally Aff. Ex. D) (the SPG 1998 Annual Report ), except refer the Court to the SPG 1998 Annual Report for its complete contents. 8. Respondents deny the allegations in Paragraph 8, except admit that it quotes an excerpt from the SPG 1998 Annual Report and refer the Court to the SPG 1998 Annual Report for its complete contents. 2 2 of 24

3 9. Respondents deny knowledge or information sufficient to form a belief as to the truth of the allegations in Paragraph Respondents deny knowledge or information sufficient to form a belief as to the truth of the allegations in Paragraph Respondents admit the allegations in Paragraph Respondents admit the allegations in Paragraph Respondents admit the allegations in Paragraph Respondents admit the allegations in Paragraph Respondents deny the allegations in Paragraph 15, except admit that Longstreet was a subsidiary of CPI prior to its merger with SDG, that Longstreet became a subsidiary of Simon, Inc. thereafter, and that Longstreet owned the GM Building until it sold GM Building to Trump 767 Fifth Avenue LLC in July 1998 for $800,000, Respondents deny the allegations in Paragraph 16, except refer the Court to the Complaint in Gronich v. Longstreet dated March 19, 2012 (NYSCEF Doc. No. 2) (the Complaint ) for its complete contents. 17. Respondents deny the allegations in Paragraph 17, except refer the Court to the Complaint for its complete contents. 18. Respondents deny the allegations in Paragraph 18, except refer the Court to Summary Judgment Order for its complete contents. 19. Respondents deny the allegations in Paragraph 19, except refer the Court to the Judgment for its complete contents. 3 3 of 24

4 20. Respondents deny the allegations in Paragraph 20, except refer the Court to the Judgment for its complete contents and admit that Longstreet has not paid any portion of the Judgment as of the date of this Answer. 21. Respondents admit the allegations in Paragraph Respondents deny the allegations in Paragraph 22, except refer the Court to Form 10-Q dated June 30, 1998 (Kinnally Aff. Ex. E) (the Form 10-Q ) for its complete contents. 23. Respondents deny the allegations in Paragraph 23, except admit that CPI-767 Corporation ( CPI-767 ) was a wholly owned subsidiary of CPI prior to CPI s merger with SDG and refer the Court to the NYS Department of State Entity Information for CPI-767 (Kinnally Aff. Ex. H) for its complete contents. Respondents further clarify that CPI-767 was listed as inactive with the New York State Department of State as of April 12, Respondents admit the allegations in Paragraph 24 and refer the Court to Respondents answer to Paragraph 54 hereof and the letter dated September 17, 2015 from Leslie Gordon Fagen (Kinnally Aff. Ex. O) (the Fagen Letter ) for its complete contents. 25. Respondents deny the allegations in Paragraph 25, except admit that Longstreet was an indirect subsidiary of CPI prior to CPI s merger with SDG. 26. Respondents deny knowledge or information sufficient to form a belief as to the truth of the allegations in Paragraph Respondents deny the allegations in Paragraph 27, except admit that Corporate Realty Consultants, Inc., which was renamed SPG Realty Consultants, Inc., was a subsidiary of Simon, Inc. following the merger with CPI and SDG, was merged into Simon, Inc. in 2002, and filed a Certificate of Termination with the State of New York Department of State on January 6, of 24

5 28. Respondents admit the allegations in Paragraph 28, except refer the Court to the Form 10-Q for its complete contents. 29. Respondents admit the allegations in Paragraph 29, except refer the Court to the SPG 1998 Annual Report for its complete contents. 30. Respondents deny the allegations in Paragraph 30, except refer the Court to the Merger Agreement for its complete contents. 31. Respondents deny the allegations in Paragraph 31, except refer the Court to the Merger Agreement for its complete contents. 32. Respondents deny the allegations in Paragraph 32, except refer the Court to the Merger Agreement for its complete contents. 33. Respondents deny the allegations in Paragraph 33, except refer the Court to the Merger Agreement, the Form 10-Q, and the SPG 1998 Annual Report for their complete contents. 34. Respondents deny the allegations in Paragraph 34, except refer the Court to the Merger Agreement for its complete contents. 35. Respondents deny the allegations in Paragraph 35, except refer the Court to the SPG 1998 Annual Report for its complete contents. 36. Respondents deny the allegations in Paragraph 36, except refer the Court to the SPG 1998 Annual Report for its complete contents. 37. Respondents deny the allegations in Paragraph Respondents admit the allegations in Paragraph 38, except refer the Court to the NYS Department of State Entity Information for CPI-767 (Kinnally Aff. Ex. H) and the Fagen Letter for their complete contents. 5 5 of 24

6 39. Respondents deny the allegations in Paragraph 39 to the extent Longstreet was dissolved as a matter of law by virtue of the dissolution of its general partner, CPI-767 in February Respondents deny the allegations in Paragraph 40 to the extent they consist of legal conclusions and arguments rather than factual assertions, except refer the Court to Section of the Maryland General Corporation Law for its actual language and complete contents. 41. Respondents deny the allegations in Paragraph 41, except refer to the Form 10-Q and the Simon Form 8-K/A filed on December 8, 1998 (Kinnally Aff. Ex. L) for their complete contents. 42. Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph 43, except refer the Court to the Merger Agreement for its complete contents. 44. Respondents admit the allegations in Paragraph Respondents admit the allegations in Paragraph 45, except refer the Court to the Form 10-Q for its complete contents. 46. Respondents admit the allegations in Paragraph 46, except refer the Court to the Simon, Inc. Form S-4 (Kinnally Aff. Ex. M) for its complete contents. 47. Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph 48, except refer the Court to the SPG 1998 Annual Report for its complete contents. 49. Respondents deny the allegations in Paragraph 49 except admit that proceeds from the sale of the GM Building were used to fund the merger, and respectfully direct the Court to the Merger Agreement generally for its complete contents. 6 6 of 24

7 50. Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph 51, except admit that certain Longstreet and CPI-767 tax returns were signed by Stephen Stouffer and that certain checks to pay taxes on behalf of Longstreet and CPI-767 were signed by Stephen Sterrett. 52. Respondents admit the allegations in Paragraph 52, except that the check issued to pay CPI-767 s New York Corporation Tax on September 10, 1999 was for the amount of $1, Respondents admit the allegations in Paragraph Respondents deny the allegations in Paragraph 54, except admit that it quotes an excerpt from the Fagen Letter and refer the Court to the Fagen Letter for its complete contents. 55. Respondents deny the allegations in Paragraph 55, except admit that the Fagen Letter indicates that Melvin Simon, Herbert Simon, and David Simon previously held positions as officers for CPI-767 and refer the Court to the Fagen Letter for its complete contents. 56. Respondents admit the allegations in Paragraph 56, except refer the Court to the 1999 Proxy Statement for Simon, Inc. (Kinnally Aff. Ex. P) for its complete contents. 57. Respondents deny the allegations in Paragraph 57, except admit that Simon, L.P. has paid to retain legal counsel on Longstreet s behalf, and that Thomas E. Stagg verified a thirdparty complaint in Gronich v. Longstreet as counsel for Longstreet on June 12, 2014 (NYSCEF Doc. No. 20) (Kinnally Aff. Ex. Q) (the Third Party Complaint ), but refer the Court to the Third Party Complaint for its complete contents. 58. Respondents deny the allegations in Paragraph 58, except admit that Paul, Weiss has and continues to represent Respondents, including Longstreet, and that Stagg, Terenzi, Confusione & Wabnik, LLP also previously represented Longstreet. 7 7 of 24

8 59. Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph Respondents deny knowledge or information sufficient to form a belief as to the truth of the allegations in Paragraph Respondents deny the allegations in Paragraph 62 and aver that they consist of legal conclusions and arguments rather than factual assertions. 63. Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph 64, except Respondents admit that proceeds of the sale of the GM building were used to fund the merger dividend. 65. Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph 66 and aver that they consist of legal conclusions and arguments rather than factual assertions. 67. Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph Respondents deny the allegations in Paragraph Respondents deny that Gronich is entitled to any of the relief requested in the WHEREFORE clause. DEFENSES 72. This proceeding in effect constitutes an effort by Gronich to redraft a contract with Longstreet to add new parties nearly twenty years after the contract was signed. Having secured a judgment against Longstreet based on an alleged breach of that contract, Gronich is now fearful of judgment collection problems and seeks to enforce the judgment against the 8 8 of 24

9 Simon Respondents, who were never contracting parties. Gronich s efforts, however, are based on thoroughly meritless contentions without factual or legal basis. 73. Accordingly, Respondents respectfully request that the Court dismiss the Petition as against the Simon Respondents based on the following defenses (as well as the foregoing paragraphs): (1) the Court lacks personal jurisdiction; (2) Gronich has not pleaded any basis for relief under C.P.L.R. Section 5225(b); and (3) Gronich has not pleaded a basis for entering a judgment against the Simon Respondents. Respondents further respectfully request that the Court dismiss the Petition as against Longstreet because Gronich has not asserted any cause of action against Longstreet. FIRST AFFIRMATIVE DEFENSE The Court Lacks Personal Jurisdiction over the Simon Respondents. 74. This Court lacks personal jurisdiction over all of the Simon Respondents. 75. Simon, Inc. is a Delaware corporation with its principal place of business in Indiana. Simon, L.P. is a Delaware limited partnership with its principal place of business in Indiana. RPT is a Massachusetts Real Estate Investment Trust with its principal place of business in Indiana. (Fivel Aff ) 76. As a matter of general personal jurisdiction under C.P.L.R. Section 301, none of the Simon Respondents is incorporated or headquartered in New York. As a matter of specific personal jurisdiction under C.P.L.R. Section 302, none of the Simon Respondents engaged in transactions in New York purportedly giving rise to Gronich s claims. A. The Court Lacks General Personal Jurisdiction. 77. First, the Court lacks general personal jurisdiction over the Simon Respondents. The United States Supreme Court has ruled that the Fourteenth Amendment Due Process Clause precludes a court from exercising general jurisdiction over a corporate defendant except where a 9 9 of 24

10 foreign corporation s affiliations with the State are so continuous and systematic as to render it essentially at home in the forum State. Daimler AG v. Bauman, 134 S. Ct. 746, 749 (2014) (internal citations omitted). While the Daimler Court declined to foreclose the possibility of an exceptional case, it stated that a corporation generally must have its headquarters or principal place of business in the state in order for a court of that state to exercise general jurisdiction. Id. at 761 n.19. Because none of the Simon Respondents is incorporated in or has its principal place of business in New York State, and no exceptional circumstances have been alleged, it is clear that the Court lacks general jurisdiction over the Simon Respondents. 78. The First Department has held based on Daimler that New York courts may not exercise general jurisdiction under C.P.L.R. Section 301 unless the defendant is either incorporated in or has its principal place of business in New York State. D & R Global Selections, S.L. v. Pinero, 128 A.D.3d 486, 487 (N.Y. App. Div. 1st Dep t 2015); see also Serov ex. rel. Serova v. Kerzner Intern. Resorts, Inc., No /2015, 2016 WL (Table), at *3 (N.Y. Sup. Ct. July 26, 2016). 79. Notwithstanding this controlling case law, Gronich appears to assert that, as a matter of general personal jurisdiction, this court has power to adjudicate claims against Longstreet and against Longstreet s and CPI-767 s supposed alter egos, the Simon Respondents. 80. But Gronich asserts no cause of action against Longstreet or CPI-767 in its Petition. And in its purported causes of action against the Simon Respondents, Gronich fails, as shown below, to allege facts that could overcome the strong presumption of juridical separateness and show that any of the Simon Respondents are alter egos of Longstreet and its general partner, CPI-767. The burden is on Gronich to show that the Court has jurisdiction over Respondents, and conclusory allegations are not enough to establish personal jurisdiction of 24

11 DirecTV Latin America, LLC v. Park 610, LLC, 691 F. Supp. 2d 405, (S.D.N.Y. 2010). Because Gronich has failed to allege non-conclusory facts that would show that the Simon Respondents are alter egos of Longstreet or CPI-767, Gronich has not demonstrated any legitimate basis on which Longstreet s contacts with New York should be imputed to any of the Simon Respondents. 81. Any attempt by Gronich to replead in order to establish an exceptional case under Daimler would be rejected. While the Simon Respondents have offices and conduct business within the State of New York, such commercial contacts are insufficient to render either Simon, Inc. or Simon, L.P. at home under the Daimler standard. (Fivel Aff. 7 9, 15 16, ) Indeed, in Daimler the Court denied general jurisdiction existed in California even though Daimler s subsidiary in California operated multiple facilities and was the largest supplier of luxury vehicles to the California market. 134 S. Ct. at 752, ; see also Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 226 (2d Cir. 2014) (denying general jurisdiction where the defendant had a New York office location and transacted business within the state). B. The Court Lacks Specific Personal Jurisdiction. (i) Gronich has Failed to Allege a Basis for Specific Personal Jurisdiction. 82. This Court also lacks specific personal jurisdiction over the Simon Respondents. Because Gronich s contentions against the Simon Respondents do not arise out of connections to New York State, the New York long-arm statute, C.P.L.R. Section 302, does not provide any basis for jurisdiction. The critical question here is what actions the Simon Respondents took that were directed to New York State and whether those actions gave rise to the claims at issue. As shown below, the answer is none of 24

12 83. Gronich s turnover claim under C.P.L.R. Section 5225(b) purports to arise out of the Simon Respondents possession of money that at one point came from Longstreet following its sale of the GM Building. Even assuming any of the Simon Respondents are in possession of Longstreet s property, which they are not, Gronich has alleged no facts to suggest that this property is held in New York, a jurisdiction in which none of the Simon Respondents is headquartered or incorporated. Moreover, Gronich cannot rely on conclusory, unsupported alter ego allegations to sustain personal jurisdiction over the parent entities based on Longstreet s ties to New York. (ii) Purported Transaction of Business. 84. Gronich may attempt to argue that the Court has jurisdiction based on C.P.L.R. Section 302(a)(1), which applies to a non-domiciliary who transacts any business within the state or contracts anywhere to supply goods or services in the state, provided that the cause of action arises out of that transaction of business. 85. However, in order to establish personal jurisdiction under Section 302(a)(1), the court must find that a non-domiciliary s activities were purposeful and established a substantial relationship between the transaction and the claim asserted. Paterno v. Laser Spine Institute, 23 N.E.3d 988, 992 (N.Y. 2014). 86. In this case, there are no allegations of any such nexus between any business the Simon Respondents conduct in New York and the claims at issue here. Gronich contends in the first paragraph of its Petition that Respondents liability in this proceeding arises out of two transactions: (1) the 1998 merger of CPI and SDG and (2) the 1998 sale of the GM Building by Longstreet to a Trump entity. But these transactions do not actually give rise to the cause of action here, which is based on the Simon Respondents alleged possession of Longstreet s of 24

13 property. Therefore, that both the merger and the sale of the GM Building nearly two decades ago have connections to New York is irrelevant. Because these connections to New York are unrelated to the actual claim against the Simon Respondents, neither transaction can give rise to the requisite nexus to assert personal jurisdiction over the Simon Respondents. (iii) Real Property Within the State 87. Gronich may also attempt to argue that the Court has jurisdiction based on C.P.L.R. Section 302(a)(4), which applies to a non-domiciliary who owns, uses or possesses any real property situated within the state, provided that the cause of action arises out of the ownership of that property. The Simon Respondents do own and operate a number of malls in the State of New York. (Fivel Aff. 7 8, 15 16, ) Nevertheless, there is no assertion of any articulable nexus between the ownership and operation of those malls and the causes of action at issue here. And in fact, those properties have absolutely nothing to do with the claims made here and thus cannot provide a basis for specific personal jurisdiction. 88. Because the Court lacks either general or specific personal jurisdiction as to any of the Simon Respondents, the claims in the Petition should be dismissed as against the Simon Respondents. SECOND AFFIRMATIVE DEFENSE Gronich is Not Entitled to Relief Under C.P.L.R. 5225(b). 89. Gronich has alleged no viable basis for relief under C.P.L.R. Section 5225(b). 90. C.P.L.R. Section 5225(b) states in relevant part: Upon a special proceeding commenced by the judgment creditor, against a person in possession or custody of money or other personal property in which the judgment debtor has an interest, or against a person who is a transferee of money or other personal property from the judgment debtor, where it is shown that the judgment debtor is entitled to the possession of such property or that the judgment creditor s rights to the property are superior to those of the transferee, the court of 24

14 shall require such person to pay the money, or so much of it as is sufficient to satisfy the judgment, to the judgment creditor and The purpose of C.P.L.R. Section 5225(b) is to allow a judgment creditor to collect a judgment debtor s property that is in the possession of a third party. In this case, the Simon Respondents are not in possession of any property belonging to Longstreet. Section 5225(b) is not a device to trace money that a party once held but rather a device to allow for seizure of a judgment debtor s property that is currently in the possession of a third party. 92. Courts have articulated a two-step analysis for claims under Section 5225(b): By its express language, the rule provides for a two-step analysis in determining whether property belonging to a judgment debtor but in the possession of a third party should be turned over to a judgment creditor. First, it must be shown that the judgment debtor has an interest in the property the creditor seeks to reach. Where this first step is satisfied, the trial court must, second, then make one of two findings: it must find either that the judgment debtor is entitled to the possession of such property, or it must find that the judgment creditor s rights to the property are superior to those of the party in whose possession it is. Beauvais v. Allegiance Secs., Inc., 942 F.2d 838, 840 (2d Cir. 1991) (emphasis in original); see also Matter of Miraglia v. Essex Ins. Co., 96 A.D.3d 945, 945 (N.Y. App. Div. 2d Dep t 2012) (citing Beauvais two-step analysis); Key Lease Corp. v. Manufacturers Hanover Trust Co., 117 A.D.2d 560, (N.Y. App. Div. 1st Dep t 1986) (holding that neither of the predicate conditions for a turnover order pursuant to CPLR 5225(b) was established because judgment debtor [] is not presently entitled to the possession of the property here in question, and the judgment creditor[ s] rights to the property are not superior to [the third party s] possessory rights ). Gronich has not alleged facts in its petition that would satisfy either condition. 93. First, Gronich must show that Longstreet as judgment debtor has an interest in the property being sought. This must be a legal or beneficial interest and must exist as of the time of the petition. See Weinstein, Korn & Miller, New York Civil Practice: CPLR In this case, Gronich seeks proceeds from Longstreet s 1998 sale of the GM Building that were used to of 24

15 fund the SDG/CPI merger nearly two decades ago. Gronich fails to show how Longstreet could possibly claim to have an interest today in funds that were transmitted to a parent entity decades earlier. Moreover, C.P.L.R. Section 5201(b), which sets forth certain general rules for money judgments, states that [a] money judgment may be enforced against any property which could be assigned or transferred. Again, Longstreet plainly could not claim a right today to assign or transfer long departed revenues from the 1998 GM Building sale. 94. Second, even if Longstreet had a present interest in the revenues from the GM Building sale, which it plainly does not, Gronich would still need to show either that Longstreet would be entitled to take possession of that money or that Gronich s right to the money is superior to that of the Simon Respondents. Again, just as Longstreet has no interest at this point in money that it transferred decades ago, Longstreet plainly could not claim any entitlement to take possession of that money. Further, Gronich has asserted no facts whatsoever that would suggest that it has a right to revenues from the GM Building sale that is somehow superior to those of the Simon Respondents. Even if Gronich were entitled to a commission from Longstreet, that claim would not have accrued until, at the earliest, January 2011 when FAO Schwartz s successor in interest exercised the option to extend its lease for five years. Gronich provides no basis on which to conclude that it somehow has a claim on money that Longstreet distributed to its parent entities more than twelve years earlier. 95. Because Gronich has not asserted facts that could sustain a claim under C.P.L.R. Section 5225(b), that claim should be dismissed as against all Respondents. THIRD AFFIRMATIVE DEFENSE Gronich Has Failed to Allege a Basis for Entering a Judgment Directly Against the Simon Respondents. 96. In its prayer for relief, Gronich demands that the Court enter a judgment directly against the Simon Respondents. Gronich s claim appears to rest on two primary theories: of 24

16 (1) pursuant to Section 27 of the New York Partnership Law, the Simon Respondents are estopped from denying that they are de facto general partners of Longstreet; and (2) the Simon Respondents are alter egos of Longstreet. Gronich has not alleged facts that would support either theory. The Court should therefore dismiss Gronich s claims to the extent it seeks to have a judgment entered directly against the Simon Respondents. A. Gronich Has Failed to Allege Facts to Show that the Simon Respondents Should Be Estopped from Denying that They Are De Facto General Partners of Longstreet. 97. First, Gronich cites Section 27 of the New York Partnership Law to argue that the Simon respondents are estopped from denying that they are conducting themselves and holding themselves out as de facto general partners of Longstreet and are, as a result, liable for the Judgment. (Petition 62.) To the contrary, the facts support no such theory. 98. Section 27 imposes certain consequences when a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to any one, as a partner in an existing partnership or with one or more persons not actual partners. The courts have articulated two elements for partnership by estoppel under Section 27: First, that sufficient indicia of partnership be presented to the injured party to constitute a representation that the partnership exists.... Second, the injured party must have relied on this representation to his or her detriment. First Am. Corp. v. Price Waterhouse LLP, 988 F. Supp. 353, 358 (S.D.N.Y. 1997). Neither of these elements is satisfied here. 99. First, none of the Simon Respondents has ever made any representation, express or otherwise, that they are Longstreet partners. And Gronich does not assert facts to the contrary. Instead, all it can allege is that the Simon Respondents purportedly engaged law firms to defend Longstreet. That is no representation of partnership. Providing counsel for, or funding the legal defense of, a corporate subsidiary is not equivalent to a declaration of partnership and is of 24

17 hardly unusual. Gronich therefore provides no support whatsoever for the conclusion that the Simon Respondents were somehow holding themselves out as Longstreet partners Indeed, not only is it not unusual for a corporate parent to provide counsel for and fund a subsidiary s defense, it is entirely appropriate in a case as such as this. The Simon Respondents believed and continue to believe that the claims against Longstreet were meritless and that the most prudent course of action was to mount a defense of Longstreet in Gronich v. Longstreet. That Longstreet was legally dissolved does not change this analysis. Under Section 61 of the New York Partnership Law, a partnership continues even after dissolution until the winding of the partnership affairs is completed. See also Broadway Ltd. Partnership v. Minter & Gay, 255 A.D.2d 192, 192 (N.Y. App. Div. 1st Dep t 1998) (holding that partnership was amenable to legal action for purposes of winding up affairs even after dissolution). Thus, Longstreet was susceptible to a judgment and was entitled to a defense. And while Gronich appears to suggest in its Petition that it was surprised to learn that Longstreet was a dissolved entity, Gronich in fact was on notice and had a duty of inquiry as to Longstreet s status. Longstreet was obviously an entity with a limited purpose, and that purpose was achieved many years prior to the initiation of Gronich s action against Longstreet. Indeed, Longstreet s answer to Gronich s Complaint denied Gronich s allegation that Longstreet was and still is a New York limited partnership except to admit that Longstreet is currently listed as active on the website of the New York Secretary of State. (NYSCEF Doc. No. 73.) 101. Further, in merely citing to the Simon Respondents assistance to Longstreet in litigation, Gronich has utterly failed to show detrimental reliance. It articulates no real assertion or any representation of fact even suggestive of such reliance. Gronich can merely point to the fact that it has incurred costs litigating the underlying dispute with Longstreet. (Petition 61.) of 24

18 But those expenses were not incurred because Longstreet s indirect corporate parents represented themselves as general partners. Gronich does not even state how such facts were communicated in the circumstances, and it does not and cannot explain how or why it would have prosecuted its case differently depending on whether it perceived the Simon Respondents as playing the role of corporate parents or general partners. Indeed, Gronich made its own tactical judgment to prosecute its purported claims solely against Longstreet and cannot now claim reliance on the conduct of anyone else. Moreover, Gronich made this decision to bring a claim exclusively against Longstreet before any counsel had appeared on behalf of Longstreet. Therefore, Gronich could not possibly have made this decision in reliance upon the Simon Respondents funding of Longstreet s defense. Because Gronich has not asserted facts to support a theory of liability against the Simon Respondents based on Section 27 of the New York Partnership Law, and its claims should be dismissed to the extent they depend on such a theory of liability. B. Gronich Has Failed to Allege Facts to Show that the Simon Respondents Are Alter Egos of Longstreet Gronich also alleges that the Simon Respondents are alter egos of both Longstreet and Longstreet s general partner, CPI-767. Because CPI-767 is directly liable for all of Longstreet s obligations by virtue of its position as general partner, the issue then is whether any of the Simon Respondents are alter egos of CPI-767. Gronich has not alleged facts that come anywhere near satisfying the very high standard for an alter ego showing Instead, the facts show that CPI-767 operated as a separate, legitimate corporation, and not as a sham entity. Exhibits 1 47 to the Affirmation of Andrew J. Markquart reflect, for example, records of meetings of stockholders, annual joint consents of shareholders and directors in lieu of such meetings, and other corporate formalities. These are exactly the of 24

19 types of activities that demonstrate a bona fide separate existence. Gronich cannot overcome the presumption of separateness with conclusory or thin assertions of alter ego Because CPI-767 was a Delaware corporation, Delaware law determines the standard for piercing that entity s corporate veil. In order to make out an alter ego showing under Delaware law, a party must demonstrate (1) that both the parent and subsidiary corporation were operated as a single economic entity, (2) and that there is an overall element of injustice or unfairness present. See, e.g., Trevino v. Merscorp, Inc., 583 F. Supp. 2d 521, 528 (D. Del. 2008); see also Mobil Oil Corp. v. Linear Films, Inc., 718 F. Supp. 260, (D. Del. 1989). Neither of these elements is satisfied here As to the first factor, courts typically look to: (1) whether the subsidiary corporation was undercapitalized or insolvent; (2) whether it kept corporate records or observed corporate formalities; (3) whether both corporations shared the same staff, office space, phone number, logo, slogan, or company title; (4) whether the parent corporation conveniently and informally had access to funds from the subsidiary s account; (5) and to what extent, if any, the parent corporation s management is distinguishable from that of the subsidiary. See Trevino, 583 F. Supp. 2d at In sum, courts look to factors indicative of whether the subsidiary has any meaningful existence independent of the parent In this case, these factors weigh decisively against a finding that the Simon Respondents are alter egos of CPI-767. There is no evidence, and Gronich has not suggested, that CPI-767 was ever undercapitalized or insolvent. As already noted, CPI-767 observed the ordinary corporate formalities. (Markquart Aff. Exs ) Following the 1998 merger between SDG and CPI, the officers of CPI-767 were all employees of Simon, Inc. But this is not unusual, and it is not sufficient in itself to sustain an alter ego finding. See EBG Holdings LLC v of 24

20 Vredezicht s Gravenhage 109 B.V., No. Civ. A VCP, 2008 WL , at *13 (Del. Ch. Sept. 2, 2008) (declining to pierce corporate veil even where, among other things, parent and subsidiary shared the same officers); Porter v. LSB Indus., Inc., 192 A.D.2d 205, , (N.Y. App. Div. 4th Dep t 1993) (applying materially identical standard under New York law and noting that factors such as overlapping officers and directors are intrinsic to the parentsubsidiary relationship and, by themselves, not determinative ). Finally, none of the Simon Respondents had the ability informally to access funds in CPI-767 s accounts. (Fivel Aff , 17 18, ) Respondents: 107. In an effort to support its alter ego claim, Gronich alleges that the Simon (i) paid corporate taxes of CPI-767 and Longstreet in 1999 and 2000; (ii) managed the business affairs of CPI-767 and Longstreet after September 24, 1998; (iii) appeared for and defended Longstreet in the First Gronich Action; (iv) asserted a third-party claim against Trump; (v) dissolved Longstreet s general partner, CPI-767 in 2006; and (vi) installed officers and principals of the Simon respondents as officers of CPI-767 between 1998 and 2006 (i.e., Melvin Simon, Herbert Simon and David Simon). (Petition 67.) Not one of these factors, even if credited, would support an alter ego finding. First, that the Simon Respondents may have issued modestly sized checks to pay corporate taxes for Longstreet and CPI-767 in 1999 and 2000 is not particularly remarkable and does not suggest a degree of entanglement beyond that of an ordinary parent-subsidiary relationship. Second, the suggestion that the Simon Respondents managed the affairs of the subsidiary entities is conclusory and unsupported. It is not clear what Gronich means, and, in any event, it is apparent from the CPI-767 corporate records that its own officers managed its affairs. (See Markquart Aff. Exs ) Further, the fact that the Simon Respondents may have funded Longstreet s defense against Gronich and third-party claim against various Trump defendants is entirely of 24

21 consistent with their role as corporate parents and does not suggest the lack of separate identity for the subsidiary entities Gronich s suggestion that the Simon Respondents dissolved CPI-767 is simply not correct. The Unanimous Written Consent of the Board of Directors of CPI-767 Corporation, Inc., effective as of January 1, 2006 indicates that it was CPI-767 s own Board of Directors that acted to dissolve the corporation, not any of the Simon Respondents. (Markquart Aff. Ex. 48.) Finally, as already noted, the overlap of directors is not unusual and is not in itself sufficient to support an alter ego finding. In short, Gronich has not and cannot put forth facts that would demonstrate that CPI-767 operated as a single economic entity with any of the Simon Respondents Even if Gronich could show that the Simon entities and CPI-767 operated as a single economic entity, it would still need to show that there was an element of unfairness or injustice in how the corporate form was used, a showing it has failed to make or even to attempt. Trevino, 583 F. Supp. 2d at 530. To show injustice or unfairness, a plaintiff has to show that the subsidiary was created or used not only to limit the parent s liability (an ordinary and accepted purpose for separate juridical entities), but to accomplish improper, fraudulent, or illegal ends or to avoid well known tort liabilities. Mobil Oil Corp., 718 F. Supp. at There is absolutely no evidence in this case that CPI-767 was created or used for abusive purposes such that respecting its corporate separateness would create an element of unfairness or injustice Therefore, because Gronich is not able to demonstrate facts that would sustain an alter ego finding, the Court should dismiss Gronich s claims as against the Simon Respondents to the extent they depend on such a theory of 24

22 FOURTH AFFIRMATIVE DEFENSE Gronich Has Failed to Assert a Cause of Action Against Longstreet Finally, the Petition should be dismissed as against Longstreet for the simple reason that Gronich has not even asserted a cause of action against Longstreet Gronich of course already has a judgment against Longstreet. The entire supposed purpose of this proceeding is to reach beyond Longstreet itself in search of some other source of payment. To that end, Gronich asks for two things in its prayer for relief: (1) turnover of the amount of money corresponding to the Judgment against Longstreet, or (2) entrance of a judgment for the same amount directly against the Simon Respondents. Neither of these requests plausibly seeks relief from Longstreet, and the second request does not even purport to do so While the first request is formally directed at all Respondents, it plainly does not apply to Longstreet. As alleged above, C.P.L.R. Section 5225(b) by its terms provides for a proceeding against a third party in possession or custody of money or other personal property in which the judgment debtor has an interest or who is a transferee of money or other personal property from the judgment debtor. This section does not provide for proceedings against the judgment debtor itself. Indeed, Section 5225(b), later states that [t]he court may permit the judgment debtor to intervene in the proceeding, further confirming that the provision does not contemplate bringing such proceedings against judgment debtors in the first instance Therefore, because Gronich does not assert any cause of action that could plausibly be directed against Longstreet, the Court should dismiss the Petition as against Longstreet. WHEREFORE, for all of the foregoing reasons, Respondents respectfully request that the Court dismiss Gronich s Petition in its entirety, and that Respondents be awarded of 24

23 the costs and fees incurred in connection with these proceedings, and any other relief as this Court may deem just and proper. Dated: New York, New York September 9, 2016 PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP By: CKMy^-- jlj^ruivn^ v ^yg^ Leslie Gordon Fagen (lfagen@paulweiss.com) Andrew J. Markquart (amarkquart@paulweiss.com) 1285 Avenue of the Americas New York, New York (212) Attorneys for Respondents Simon Property Group, Inc., Simon Property Group, LP., The Retail Property Trust, and Longstreet Associates LP of 24

24 VERIFICATION STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) Andrew J. Markquart, being duly sworn states as follows: I am an attorney admitted to practice in the courts of the State of New York and am associated with the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel to Respondents in this special proceeding, Simon Property Group, Inc., Simon Property Group, L.P., The Retail Property Trust, and Longstreet Associates L.P. I have read and know the contents of the foregoing Verified Answer and Defenses to be true to the best of my knowledge, information, and belief. My understanding is based upon a review of records furnished to me and communications with employees of Respondents. This verification is made by me pursuant to Section 3020(d)(3) of the New York Civil Practice Law and Rules because my client is not in the county where my office is located. Z 1 Andrew J. Markquart Sworn to before me this 9th day of September, 2016 NOtARYTOBLlC LAUREN C. DEVENDORF Notary Public, State of New York NO.01DE Qualified in New York County Commission Expires Aug. 31, of 24