SUPREME COURT FOR THE STATE OF NEW YORK COUNTY OF NEW YORK KWANG YOUNG CHUN, Index No.: 650605/2017 Plaintiff, Hon. Andrea Masley - against - IAS Part 48 SARAH HASTED and JOSEPH KRAEUTLER, AMENDED Individually and d/b/a HASTED KRAEUTLER, PRE-ARGUMENT STATEMENT Defendants. Defendant Joseph Kraeutler ("Kraeutler") by his attorneys, Davidoff Hutcher & Citron LLP, hereby submits the following Pre-Argument Statement pursuant to 22 NYCRR 600.17 of the First Judicial Department: 1. Title of the action: KWANG YOUNG CHUN v. SARAH HASTED and JOSEPH KRAEUTLER, Individually and d/b/a HASTED KRAETLER, Index No. 650605/2017 (Hon. Andrea Masley) (Sup. Ct. N.Y. Co.) 2. Full names of original parties and any change in the parties: Plaintiff: KWANG YOUNG CHUN Defendants: SARAH HASTED and JOSEPH KRAEUTLER, Individually and d/b/a HASTED KRAETLER 3. Name, address and telephone number of counsel for Defendant/Appellant: Larry Hutcher Joshua Krakowsky Davidoff Hutcher & Citron LLP 605 Third Avenue, 34ti' Floor New York, New York 10158 (212) 557-7200 Attorneys for Defendant/Appellant Joseph Kraeutler 4. Name, address and telephone number of counsel for Plaintiff/Respondent and co-defendant/co-appellant: 1 of 5
Michael A. Rosenberg, Esq. of counsel Roger Pierro, Jr., Esq. 42-40 Bell Boulevard, Suite 300 Bayside, New York 11361 (718) 463-0606 Attorneys for Plaintiff-Respondent Melissa A. Peña, Esq. Norris McLaughlin 4 Marcus, P.A. 875 Third Ave 8th Floor New York, New York 10022 (917) 369-8847 Attorneys for co-defendant/co-appellant Sarah Hasted 5. Court and county, or administrative body from which appeal is taken: This is an appeal from a Decision and Order of the Supreme Court of the State of New York, County of New York (Hon. Andrea Masley), dated April 3, 2018 and so ordered on May 21, 2018, which was duly entered in the office of the Clerk of this Court on May 21, 2018, where Notice of Entry was filed on May 22, 2018, which denied Kraeutler's motion pursuant to CPLR "Complaint" 3211(a)(7) to dismiss the complaint (the "Complaint") in this action as against Kraeutler, and (" Plaintiff" granted plaintiff KWANG YOUNG CHUN's ("Plaintiff") cross-motion pursuant to CPLR 3211(a)(1) and (5), and CPLR 3212(a), (b), (c) and (g) granting summary judgment on liability only in Plaintiff's favor and against Kraeutler. 6. Nature and object of cause of action or special proceeding: "Gallery" Plaintiff consigned certain artworks to HASTED KRAEUTLER LLC (the "Gallery"), an art gallery in Chelsea where Plaintiff and the Gallery agreed that the Gallery would sell Plaintiff's artwork and the proceeds from any sale would be split 50/50 between Plaintiff and the Gallery. The Gallery went out of business and is now essentially defunct. Certain artwork consigned to the Gallery was not returned to Plaintiff. Given that the Gallery has no assets, Plaintiff commenced this action asserting that the relevant consignment agreement was between 2 619434v,2 2 of 5
Plaintiff and the two owners of the Gallery in their individual capacities, so as to avoid the fact that the Gallery has no assets. Essentially, Plaintiff is seeking to pierce the corporate veil of the Gallery in order to obtain damages for the artwork that has not been returned. 7. Result reached in the Court or Administrative body below: Kraeutler moved to dismiss the Complaint primarily on the ground that the Limited Liability Company Law shields individual owners from liability stemming from debts of the limited liability company of which they are members, unless the company's corporate veil is pierced. Plaintiff failed to allege facts sufficient to pierce the Gallery's corporate veil, and the Complaint should have been dismissed. The IAS Court disagreed, finding that the relevant consignment agreement's signature block listed Kraeutler and Sarah Hasted without explicitly stating that they were signing on behalf of the Gallery, even though the agreement is on Gallery stationery, the body of the agreement refers only to the Gallery, and the parties all understood that the Gallery was a party to the agreement and not the individual owners of the Gallery in their personal capacity. Plaintiff cross-moved for summary judgment against Kraeutler based on an email that he was not copied on, wherein co-defendant Sarah Hasted stated that Plaintiff's artwork was sold and the proceeds were received by the Gallery. Based on this evidence alone, the IAS Court mistakenly granted summary judgment on liability against Kraeutler on Plaintiff's claim for breach of contract, and maybe also on Plaintiff's claim for account stated, although the record is not entirely clear on that. Amazingly, the Court even told Plaintiff at oral argument that "[y]ou can't get summary judgment when the most important parts of your Complaint are on information and belief. It's just inappropriate. You can certainly do discovery and come back 3 619434v.2 3 of 5
with an appropriate summary judgment motion with appropriate facts, documents, whatever you have. But you have nothing. You have nothing." 8. Grounds for seeking reversal, annulment or modification: First, the IAS Court made a mistake in finding that Kraeutler was a party to the relevant consignment agreement in his individual capacity. The agreement was on the Gallery's letterhead, the crux of the agreement made clear that it was an agreement between Plaintiff and the Gallery, and the parties all understood that the agreement was one between Plaintiff and the Gallery. While those facts may be disputed by Plaintiff, without the benefit of any discovery, the Court was mistaken in finding, as a matter of law, that Kraeutler was a party to an agreement when the facts concerning whether he was a party to that agreement are hotly disputed. If anything, the Court should have granted Kraeutler's motion to dismiss since the Limited Liability Company Law shields company members from individual liability stemming from company debt. The IAS Court erred in not granting Kraeutler's motion to dismiss on that basis. 9. State whether there is any related action or proceeding now pending in any court of this or any other jurisdiction and, if so, the status of such case: Yes, a separate notice of appeal and pre-argument statement was filed by co- Defendant Sarah Hasted seeking an appeal of portions of the same decision and order appealed from herein on June 20, 2018. Dated: New York, New York DAVIDOFF HUTCHER & CITRON LLP June 21, 2018 By: Larry Joshua 605 Third Avenue "" c, Hutcher Krakowsky New York, New York 10158 (212) 557-7200 ' Attorneys for Defendant/Appellant Joseph Kraeutler 4 C)19434v,2 4 of 5
TO: Michael A. Rosenberg, Esq. of counsel Roger Pierro, Jr., Esq. 42-40 Bell Boulevard, Suite 300 Bayside, New York 11361 (718) 463-0606 Attorneys for Plaintiff Melissa A. Peña, Esq. Norris McLaughlin & Marcus, P.A. 875 Third Ave 8th Floor New York, New York 10022 (917) 369-8847 Attorneys for co-defendant/appellant Sarah Hasted 5 6t9434v.2 5 of 5