FILED: KINGS COUNTY CLERK 05/17/2016 02:49 PM INDEX NO. 512723/2015 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 05/17/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS -------------------------------------------------------------------X CHAIM MILLER and 49 DUPONT LOFTS LLC, Index No.: 512723/2015 Plaintiffs, -against- JOSEPH BRUNNER, ANMUTH HOLDINGS LLC, and BLACK ROCK TITLE AGENCY Defendants. AFFIRMATION OF ALEXANDER D. TUTTLE IN OPPOSITION TO PLAINTIFFS ORDER TO SHOW CAUSE -------------------------------------------------------------------X ALEXANDER TUTTLE, an attorney duly admitted to practice before the Courts of the State of New York, hereby affirms the following under the penalties of perjury: 1. I am a partner with the law firm, Tuttle Yick LLP, attorneys for Defendants Anmuth Holdings LLC ( Anmuth ), and Joseph Brunner ( Brunner ). 2. I respectfully submit this affirmation in opposition to Plaintiffs Order to Show Cause, dated April 27, 2016 (the OTSC ), seeking to (i) restrain and enjoin Brunner and/or Anmuth, and any other person or entity acting for or in concert with either of them, from using the $4.7 million provided as collateral (the Collateral ), or any part thereof, in connection with renewing or amending certain letters of credit (the LCs ); (ii) restrain and enjoin any person, bank, and/or entity that is given notice of the OTSC from allowing, facilitating, and/or aiding Brunner, Anmuth, or any other person or entity, to use the Collateral, or any part of the Collateral, to renew or amend the LCs; and (iii) granting such other and further relief as the Court deems just and proper. 3. What should be made clear to the Court is that by virtue of Plaintiffs OTSC, Plaintiffs have consequently (i) tortiously interfered with Defendants ability to honor the 1 of 7
underlying contract of sale between 49 Dupont Realty Corp. (the Seller ) and Dupont Street Developers LLC (the Buyer ) for the Buyer s purchase of the property located at 49 Dupont Street in Brooklyn, New York; (ii) triggered the Seller s ability, as beneficiary of the LCs, to draw down on the Collateral; and (iii) to the extent the Seller draws down on the Collateral under the LCs, extinguished Plaintiffs Third Cause of Action of the Amended Complaint, which claims that Anmuth breached the September 18, 2014 promise (the 9/14 Promise ) by Anmuth to return a portion of the Collateral to Miller upon the return of the Collateral to Anmuth. 4. For these very reasons, to the extent the Court grants the equitable relief sought by the Plaintiffs, Defendants request that Plaintiffs post the requisite undertaking, pursuant to CPLR 6312. CPLR 6312(b) states: prior to the granting of a preliminary injunction, the plaintiff shall give an undertaking in an amount to be fixed by the court, that the plaintiff, if it is finally determined that he or she was not entitled to an injunction, will pay to the defendant all damages and costs which may be sustained by reason of the injunction To the extent the OTSC is granted, Defendants could incur the full face amount of the LCs, in the amount of $4.7 million, in damages, which should be the minimum amount of Plaintiffs undertaking herein under CPLR 6312. 5. The relevant facts and documents are as follows: (a) On May 20, 2014, Investors Bank established and issued three (3) LCs in the aggregate face amount of $4,700,000.00 in favor of 49 Dupont Realty Corp, as beneficiary, expiring May 20, 2015. (Exhibit A, the LCs). Brunner supplied all of the cash Collateral to secure the LCs. (b) On September 18, 2014, Anmuth granted Miller a residual interest by signing a unilateral conditional promise (the 9/14 Promise ), stating, in the event [Anmuth] receives a return of the collateral of $4,700,000.00 that was given to Investors Bank as collateral security for the Letters of Credit, the first $70,500.00 will be used to pay Anmuth back its fees, and from the remainder, Miller shall be entitled 2 2 of 7
to receive the last $4,353,500.00... (Exhibit B, the 9/14 Promise). (c) At all relevant times, the LCs have remained in full force and effect and have not been released. (Exhibit C). In fact, the LCs were extended from May 20, 2015, to May 20, 2016. No money has been withdrawn or returned to any party in connection with the LCs. (Id.). (d) On February 9, 2016, Plaintiffs filed an Amended Complaint against Defendants (Exhibit D, the Amended Complaint), alleging, under the Third Cause of Action, that Anmuth breached the 9/14 Promise by improperly extending the LCs beyond May 20, 2015. (e) In or about March 2016, Defendants sought to renew the LCs with Investors Bank. On April 20, 2016, Investors Bank approved the extension of the LCs from May 20, 2016, to May 20, 2017. (Exhibit E, Affirmation of Brian Doran, dated May 12, 2016). (f) Upon learning of the TRO issued by Justice Ash, dated April 27, 2016, Defendants took no further action to extend the LCs. Investors Bank further took the position that since the originals of the renewal documents relating to the LCs were never received by all applicable parties, and the TRO prevents any further conduct to extend the LCs, the LCs were deemed not extended and are currently set to expire on May 20, 2016. (Id.). (g) Due to the LCs expiring on May 20, 2016, the Seller may draw on the Collateral. (Exhibit F, Second and Sixth Amendments to Contract of Sale). Miller was aware of all provisions of this Contract of Sale pursuant to Plaintiff 49 Dupont Loft s contract to purchase the membership interests of Brooklyn Realty Holdings LLC (and subsequently Anmuth), dated June 27, 2013, as amended (Id.). (h) On May 2 nd and May 3 rd, 2016, I provided counsel for Plaintiffs with written notice of the following: Please be aware, however, that we have now provided you with a full understanding that, in the event the LC is not extended immediately due to the Court Order you obtained, the Seller can and will likely draw on the LC. Your client may elect to proceed as he sees fit, but as stated in my communication yesterday, this shall serve as notice that your client's actions will in fact cause him to never receive the return of any funds. At this point, my clients have no stake in this other than to advise you appropriately and protect their interest, which is to defend against the merits of your clients' claims and proceed with all counterclaims at the appropriate time. We will of course advise the Court accordingly. 3 3 of 7
6. Defendants opposition to the OTSC is limited to opposing any determination by the Court that there is a likelihood of success on the merits of Plaintiffs claims, which is a prerequisite to obtaining a preliminary injunction. In fact, there is no likelihood of success on the merits of Plaintiffs claims. Nor are any funds of Miller s at risk by denying the preliminary injunction. 7. Miller claims that the LCs were improperly extended from May 2015 until May 2016 in breach of the 9/14 Promise, which purportedly serve as the basis for Miller s Third and Fourth Causes of Action. Miller claims that he is owed $4,353,500.00 due to this claimed improper extension. He is absolutely not. 8. New York law is well settled that a condition precedent is an act or an uncertain event that must occur before the agreement of the parties becomes operative. Thor Props., LLC v. Chetrit Group LLC, 27 Misc. 3d 1216(A), 910 N.Y.S.2d 766 (Sup. Ct. 2010), aff'd, 91 A.D.3d 476 (2012). Terms such as if, provided that, when, while, after, or as soon as are often used. Id., citing 12 Am. Jur. 295, at 849; 5 Williston, Contracts [3d ed] 671, at 161. The 9/14 Promise was exactly this a promise to make the $4.35 million payment upon the condition of a specific event ( in the event [Anmuth] receives a return of the collateral of $4,700,000.00 that was given to Investors Bank as collateral security for the Letters of Credit, the first $70,500.00 will be used to pay Anmuth back its fees, and from the remainder, Miller shall be entitled to receive the last $4,353,500.00.). 9. It is undisputed, as confirmed by Investors Bank, that this event never happened. Nor can the 9/14 Promise be interpreted to include terms that were never intended nor included namely that neither the applicant nor beneficiary under the LCs could extend the LCs. 4 4 of 7
Plaintiffs have no standing to object to any such extension of the LCs, as they were neither parties to the LCs nor beneficiaries to the LCs. In fact, pursuant to 49 Dupont Loft s contract to purchase the membership interests of Anmuth, which Miller was a party to, it was contractually agreed to by Miller that the LCs would be renewed under the Contract of Sale to purchase 49 Dupont Street. (See Exh. F). Miller is now falsely representing to the Court that he was not aware of the applicable provisions. 10. Plaintiffs further seek to improperly read into the 9/14 Promise an implied term of a hard date (or any date for that matter) for the return of the Collateral under the LCs, which is contrary to the plain meaning of its terms. Again, this is contrary to the underlying Contract of Sale to purchase 49 Dupont Street, which contractually requires an extension of the LCs. 11. The 9/14 Promise requires the return of funds as a contingent event and not the basis for a loan default as Plaintiffs would characterize it. If the 9/14 Promise was intended to be a loan in this sense, it surely would not be a half-page document detailing a contingency for the return of $4.35 million in funds (principal only). Instead, it would be drafted as an express default in the event funds were not returned by some date, let alone May 20, 2015. Additionally, it was certainly not the parties expectations that the LCs be absolutely returned by May 20, 2015, as the plain language in the 9/14 Promise in the event that Anmuth Holdings LLC receives a return of the collateral, has no correlation to such a date or even to the LCs themselves. 12. Moreover, as the express terms of the 9/14 Promise states [ i]n the event Anmuth Holdings LLC receives a return of the [C]ollateral, this anticipates a financial distribution event from Dupont Street Developers LLC to Anmuth (under LLC law or their 5 5 of 7
governing operating agreements). This never occurred. As specifically referenced in the 9/14 Promise, Dupont Street Developers LLC would be the initial recipient of the return of the Collateral. This also never occurred, nor is claimed to have occurred. Accordingly, it is undisputed that neither Dupont Street Developers LLC nor Anmuth has received funds from the return of the Collateral under the LCs, and therefore, there can be no breach as specifically claimed in the Amended Complaint, and no right by Miller to receive payment as that right never arose. See Consolidated Edison Inc. v. Northeast Utils., 426 F.3d 524 (2005) (where the Court of Appeals specifically ruled that a beneficiary s right to claim a breach of contract only arose after the triggering event--in that case, upon completion of the merger ). Nor is there anything in the 9/14 Promise or LCs that would give Miller an understanding of when exactly the distribution event would occur between Dupont Street Developers LLC and Anmuth. 13. To the contrary, Miller knew that the monies securing the LCs were unlikely to be returned in the short-term, if ever. This was expressly stated in the underlying Contract of Sale to purchase 49 Dupont Street. (See Exhibit F). Miller knew that the LCs secure the performance of environmental work on a superfund site located at 49 Dupont Street, which is certainly expected to take more than one year given statutory remediation requirements. 14. Plaintiffs also argue that, notwithstanding that Miller is not a beneficiary under the LCs, but rather is an interested party in such funds (much like anyone that might have participated in securing the LCs), the LCs were improperly extended, triggering a default under the 9/14 Promise. Yet, the LCs were in fact extended and Plaintiffs have no standing to object to such extension, as they are neither the beneficiary nor applicant under the LCs. Miller was only a recipient of the return of funds upon two triggering events the return to Dupont Street Investors LLC and a distribution to Anmuth. Miller never put up the Collateral. Brunner 6 6 of 7
did. 15. Accordingly, Plaintiffs Third and Fourth causes of action are simply not ripe and cannot be asserted as the event giving rise to a claim has never occurred, and cannot otherwise be deemed a reasonable interpretation of the 9/14 Promise. 16. Finally, Plaintiffs OTSC effectively negates their entire contingent claim against Anmuth to the extent the Seller draws down on the Collateral due to the OTSC and TRO they obtained. In other words, once the Seller draws down on the LCs due to the Defendants inability to extend the LCs due to the OTSC, Plaintiffs contingent interest in the Collateral under the 9/14 Promise is extinguished, and the Third Cause of Action is moot and unrecoverable as a matter of law. Dated: New York, New York May 17, 2016 TUTTLE YICK LLP By: Alexander Tuttle Alexander D. Tuttle Attorneys for Defendants Anmuth Holdings LLC and Joseph Brunner 220 East 42nd Street, 29th Floor New York, New York 10017 (646) 833-0300 To: Fisher & Fisher, LLC Andrew S. Fisher Post Office Box 61060 New Dorp Station Staten Island, New York 10306 7 7 of 7