FILED: NEW YORK COUNTY CLERK 08/17/2016 10:58 AM INDEX NO. 654332/2016 NYSCEF DOC. NO. 5 RECEIVED NYSCEF: 08/17/2016 SUPREME COURT OF THE STATE OF NEW COUNTY OF NEW YORK COBY EMPIRE, LLC x - Plaintiff/Petition Index 654332/2016 MIKE KOHN et al Defendant/Responde x NOTICE OF COMMENCEMENT OF ACTION SUBJECT TO MANDATORY ELECTRONIC PLEASE TAKE NOTICE that the matter captioned above has been commenced as an electronically filed case in the New York State Courts Electronic Filing System ( NYSCEF ) as required by CPLR 2111 and Uniform Rule 202.5-bb (mandatory electronic filing). This notice is being served as required by that rule. NYSCEF is designed for the electronic filing of documents with the County Clerk and the court and for the electronic service of those documents, court documents, and court notices upon counsel and unrepresented litigants who have consented to Electronic filing offers significant benefits for attorneys and litigants, permitting papers to be filed with the County Clerk and the court and served on other parties simply, conveniently, and quickly. NYSCEF case documents are filed with the County Clerk and the court by filing on the NYSCEF Website, which can be done at any time of the day or night on any day of the week. The documents are served automatically on all consenting e-filers as soon as the document is uploaded to the website, which sends out The NYSCEF System charges no fees for filing, serving, or viewing the electronic case record, nor does it charge any fees to print any filed documents. Normal filing fees must be paid, but this can be done on-line. Parties represented by an attorney: An attorney representing a party who is served with this notice must either: 1) immediately record his or her representation within the e-filed matter on the NYSCEF site; or 2) file the Notice of Opt-Out form with the clerk of the court where this action is pending. Exemptions from mandatory e-filing are limited to attorneys who certify in good faith that they lack the computer hardware and/or scanner and/or internet connection or that they lack (along with all employees subject to their direction) the operational knowledge to comply with e-filing Parties not represented by an attorney: Unrepresented litigants are exempt from efiling. They can serve and file documents in paper form and must be served with documents in paper form. However, an unrepresented litigant Page 1 of 2 EFM-1
For information on how to participate in e-filing, unrepresented litigants should contact the appropriate clerk in the court where the action was filed or visit www. nycourts.gov/efileunrepresented. Unrepresented litigants also are encouraged to visit www.nycourthelp.gov or contact the Help Center in the court where the action was filed. An unrepresented litigant who consents to e-filing may cease participation at any time. However, the other parties may continue to e-file their court documents in the case. For additional information about electronic filing and to create a NYSCEF account, visit the NYSCEF website at www.nycourts.gov/efile or contact the NYSCEF Resource Center (phone: 646-386-3033; e-mail: efile@nycourts.gov). Dated 08/16/2016 Signature Abraham Neuhaus JOSEPH ZELMANOVITZ Name Stahl & Zelmanovitz Firm Name 747 3RD AVE Address NEW YORK, NY 10017 City, State, and Zip (212) 826-6422 Phone joezelmanovitz@aol.com E-Mail To: Mike Kohn 873 Pacific Street Owner LLC 71-85 Lewis Avenue LLC 71-85 Lewis Avenue Member LLC 834 Pacific Street Owner LLC Pacific Dean Holdings LLC 9/3/15 Index 654332/2016 Page 2 of 2 EFM-1
FILED: NEW YORK COUNTY CLERK 08/16/2016 10:33 PM INDEX NO. 654332/2016 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 08/16/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK --------------------------------------------------------------------x COBY EMPIRE, LLC, Index No.: - against - Plaintiff, Date Filed: August 16, 2016 MIKE KOHN, 873 PACIFIC STREET OWNER LLC, 71-85 LEWIS AVENUE LLC, 71-85 LEWIS AVENUE MEMBER LLC, 834 PACIFIC STREET OWNER LLC, and PACIFIC DEAN HOLDINGS LLC, Defendants. --------------------------------------------------------------------x TO THE ABOVE-NAMED DEFENDANTS: SUMMONS YOU ARE HEREBY SUMMONED and required to serve upon the plaintiff's attorneys an answer to the complaint in this action, within twenty (20) days after service of this summons, exclusive of the date of service, or within thirty (30) days after service is complete if the summons is not personally delivered to you within the State of New York. In case of your failure to answer, judgment will be taken against you by default for the relief demanded in the complaint. Plaintiff designates New York County as the place of trial. This is an action for a declaratory judgment to ascertain and secure the rights and interests in and to certain collateral as described in the verified complaint; and for such other and further relief as is described in the said verified complaint. 1 1 of 2
The basis for venue is CPLR 509. Plaintiff s address is 250 Greenpoint Avenue, Brooklyn, New York 11222. Dated: New York, New York August 16, 2016 STAHL & ZELMANOVITZ Attorneys for plaintiff Coby Empire, LLC By: /s/ Joseph Zelmanovitz Joseph Zelmanovitz Abraham Neuhaus 747 Third Avenue, Suite 33B New York, New York 10017 (212) 826-6422 TO: Mike Kohn 266 Broadway, Suite 501 Brooklyn, New York 11211 873 Pacific Street Owner LLC 266 Broadway, Suite 501 Brooklyn, New York 11211 71-85 Lewis Avenue LLC 266 Broadway, Suite 501 Brooklyn, New York 11211 71-85 Lewis Avenue Member LLC 266 Broadway, Suite 501 Brooklyn, New York 11211 834 Pacific Street Owner LLC 266 Broadway, Suite 501 Brooklyn, New York 11211 Pacific Dean Holdings LLC 236 Broadway, Second Floor Brooklyn, New York 11211 2 2 of 2
FILED: NEW YORK COUNTY CLERK 08/16/2016 10:33 PM INDEX NO. 654332/2016 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 08/16/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK --------------------------------------------------------------------x COBY EMPIRE, LLC, Index No.: 654332/2016 - against - Plaintiff, MIKE KOHN, 873 PACIFIC STREET OWNER LLC, 71-85 LEWIS AVENUE LLC, 71-85 LEWIS AVENUE MEMBER LLC, 834 PACIFIC STREET OWNER LLC, and PACIFIC DEAN HOLDINGS LLC, Defendants. --------------------------------------------------------------------x VERIFIED COMPLAINT Coby Empire, LLC ( COBY ), by its attorneys, Stahl & Zelmanovitz, for its verified complaint, alleges as follows: INTRODUCTION 1. This is an action to declare COBY s secured rights in and to proceeds of a contract of sale of interests in defendant limited liability companies and to permanently enjoin the dissipation of such proceeds by defendants. PARTIES 2. Plaintiff COBY is a limited liability company duly organized under the laws of the State of New York, with an office located at 250 Greenpoint Avenue, Brooklyn, New York 11222. 3. Defendant Mike Kohn ( Kohn ) is a Canadian citizen who, upon information and belief, regularly conducts his real estate business in the State of New York and maintains an office at 266 Broadway, Suite 501, Brooklyn, New York 11211. Kohn is the owner of 100% of the membership interests in defendants 873 Pacific Street 1 1 of 93
Owner LLC, 71-85 Lewis Avenue LLC, 71-85 Lewis Avenue Member LLC, and 834 Pacific Street Owner LLC. 4. Defendant 873 Pacific Street Owner LLC ( 873 ), is a limited liability company duly organized under the laws of the State of Delaware, with an office at 266 Broadway, Suite 501, Brooklyn, New York 11211. 5. Defendant 71-85 Lewis Avenue LLC ( Lewis Avenue ) is a limited liability company duly organized under the laws of the State of Delaware, with an office at 266 Broadway, Suite 501, Brooklyn, New York 11211. Lewis Avenue is the present tenant and long-term leaseholder of the premises located at 71-85 Lewis Avenue, Brooklyn, New York. 6. Defendant 71-85 Lewis Avenue Member LLC ( Lewis Avenue Member ) is a limited liability company duly organized under the laws of the State of Delaware, with an office at 266 Broadway, Suite 501, Brooklyn, New York 11211. Lewis Avenue Member is the owner of 100% of the membership interests in Lewis Avenue. As the 100% owner of Lewis Avenue Member, Kohn effectively owns and controls Lewis Avenue. 7. Defendant 834 Pacific Street Owner LLC ( 834 ) is a limited liability company duly organized under the laws of the State of Delaware, with an office at 266 Broadway, Suite 501, Brooklyn, New York 11211. 834 is the present long-term tenant and leaseholder of the premises located at 834 Pacific Street, Brooklyn, New York. 8. Upon information and belief, defendant Pacific Dean Holdings LLC ( Dean ) is a limited liability company duly organized under the laws of the State of New York with an office at 236 Broadway, 2 nd Floor, Brooklyn, New York 11211. 2 2 of 93
FACTS 9. Kohn is a real estate investor and speculator in the New York metropolitan area. In order to fund deals involving the long-term leases of real property in Brooklyn, New York, Kohn along with his wholly owned limited liability companies -- defendants 873, Lewis Avenue, Lewis Avenue Member, and 834 -- entered into a financing arrangement with COBY. Defendants Kohn, 873, Lewis Avenue, Lewis Avenue Member, and 834 are collectively referred to as the Borrowers. 10. On July 24, 2015, COBY agreed to lend the Borrowers (which would all be jointly and severally liable for the full amount of the loan) an amount up to $12,000,000, plus interest. The Loan is evidenced by an Amended and Restated Secured Promissory Note (the Note ), dated July 24, 2015. A true copy of the Note is attached to this verified complaint as Exhibit A. The original executed Note is in the custody and possession of COBY and the Note has not been transferred by COBY. 11. By letter dated July 26, 2016, attached to this verified complaint as Exhibit B, the Borrowers acknowledged that funds totaling $7,450,000 have been advanced to the Borrowers under the Note: $3,000,000 on July 9, 2015; $3,000,000 on July 24, 2015; $500,000 on August 4, 2015; $400,000 on December 2, 2015; 250,000 on January 26, 2016; and $300,000 on March 11, 2016. 12. The Borrowers also acknowledged, inter alia; that (a) repayment of $2,800,000 was made to COBY (leaving a balance owed under the Note of $4,650,000), (b) on September 1, 2015, the Borrowers defaulted under the terms of the loan documents 3 3 of 93
and that such default remains outstanding, and (c) there is now due and owing the principal sum of $4,650,000 by the Borrowers to COBY, plus default interest. COBY s Security 13. To secure COBY s interests while the loans under the Note remain outstanding, contemporaneously with the execution of the Note, Kohn and Lewis Avenue Member, which collectively own the remaining limited liability company Borrowers, executed a Pledge and Security Agreement dated July 24, 2015 ( PSA ). The PSA secures COBY s interests in the Borrower entities until the loan is satisfied. A true copy of the Pledge and Security Agreement is attached to the verified complaint as Exhibit C. 14. The purpose of the PSA is to collateralize and securitize the Borrowers obligation with a first lien on the collateral for COBY s benefit and for the future satisfaction of loans made under COBY s Note. 15. The Pledged Interests are defined in Section 2(k) of the PSA to include all of the Borrower entities. The Collateral is liberally defined in Section 1 of the PSA and generally covers all of the Borrowers interests. The PSA also provides that Collateral includes the Proceeds of any sale of Collateral (which is liberally defined in Section 1(f) of the PSA). 16. Pursuant to Section 6(a)(i) of the PSA, the Borrowers may not sell, assign [] pledge, or hypothecate or otherwise dispose of, or grant any option with respect to, any of the Collateral, except to Lender pursuant to this Agreement. The Borrowers also covenant in Section 6(b)(i) not to vote for, agree or consent to, the sale, transfer, pledge or encumbrance of the Pledged Interests while the loan is outstanding. Similarly, pursuant to Section 6(b)(vi), the holder of the membership interests cannot be altered. 4 4 of 93
17. COBY secured its interests in the Collateral in accordance with the provisions of the New York Uniform Commercial Code ( UCC ). Defendants, including Dean, are thus on notice of COBY s rights in the Collateral. True copies of the UCC filings, which were also recorded with the City Register for the City of New York on August 26, 2015 under CRFN# 2015000296442, are attached to this verified complaint as Exhibit D. AS AND FOR A FIRST CAUSE OF ACTION (Declaratory Judgment) 18. COBY repeats and realleges each of the allegations contained in paragraphs 1 17 above, as if fully set forth herein. The Borrowers Violate The Terms Of The PSA 19. On September 11, 2015, Lewis Avenue Member and Kohn entered into a Contract of Sale with defendant Dean. A true copy of the Contract of Sale dated September 11, 2015 (the Contract ), is attached to this verified complaint as Exhibit E. 20. The Contract provides -- in violation of the PSA -- that the Borrowers shall sell Dean a 50% membership interest in Lewis Avenue and a 50% membership interest in 834 for the amount of $4,750,000, with a deposit of $1,100,000. Additionally, Section 15 of the Contract grants Dean the option to purchase the remaining 50% interest in Lewis Avenue and 834, in plain violation of the PSA. 21. The Contract was entered into by the Borrowers and Dean without notice to COBY, and COBY had no knowledge of the Contract when it was entered into. 22. The Contract was entered into by the Borrowers and Dean without COBY s consent. 23. Upon information and belief, the Contract was executed but has not yet 5 5 of 93
been consummated by a closing. 24. However, in a very recent conversation between COBY and Kohn, Kohn admitted to COBY that the deposit of $1,100,00 set forth in the Contract has been stripped away: Kohn admitted that the funds are not maintained in the Borrowers entities corporate accounts. 25. As a result of the Contract, the Borrowers have stripped the Borrower entities of at least 50% of the worth of the Collateral and have also stripped the Borrowers of $1,100,00 paid by Dean under the terms of the Contract. These conveyances should be set aside under Article 10 of the New York Debtor and Creditor Laws as intentional fraudulent conveyances of the Borrowers interests. 26. The Borrowers, which concealed the existence of the Contract and have stripped the deposit owned by the Borrowers, have acted to hinder, delay, or defraud COBY, who is a present creditor. 27. Ultimately, if Dean closes on the Contract in violation of the PSA and the funds are not directed to COBY, COBY will be fraudulently divested of its secured interests in the Collateral, which will be rendered worthless because the Borrowers will be rendered an insolvent shell as a result of the funds being disposed of and stripped away from the Borrowers. The defendants are presently engaged in the destruction of COBY s secured interests and the dissipation of funds secured for the payment of COBY s Note. Upon information and belief, the Borrowers, which have already transferred away the $1.1 million deposit, have no intention of honoring the PSA executed in favor of COBY. 28. COBY has superior rights to the Collateral and any Collateral Proceeds by 6 6 of 93
virtue of the PSA. 29. A declaratory-judgment action with specific performance is appropriate here because a conventional form of remedy is not available and an action at law for damages will not suffice. action. 30. All persons affected by such a declaration have been made parties to this 31. Therefore, COBY respectfully requests that this Court declare COBY s superior rights as it relates to the PSA, the Collateral, and the Contract. AS AND FOR A SECOND CAUSE OF ACTION (Permanent Injunction) 32. COBY repeats and realleges each of the allegations contained in paragraphs 1 31 above, as if fully set forth herein. 33. By reason of the unlawful actions of defendants, without a permanent injunction barring the consummation of the Contract, COBY will suffer irreparable harm to its Collateral which COBY has secured in order to protect COBY s Note. 34. There is no adequate remedy to COBY without the grant of an injunction. 35. The equities should not favor defendants attempt to destroy COBY s interests in the Collateral. 36. Accordingly, the defendants should be barred from taking any further actions with respect to the Contract until such time as COBY s Note is fully satisfied and repaid. AS AND FOR A THIRD CAUSE OF ACTION (Specific Performance) 37. COBY repeats and realleges each of the allegations contained in 7 7 of 93
paragraphs 1 36 above, as if fully set forth herein. 38. COBY has substantially and fully performed all of its contractual obligations in connection with the PSA and the Note, and is willing and able to complete any and all applicable remaining obligations. 39. COBY is able to perform any and all of its obligations in connection with the PSA and the Notes. 40. Defendants have breached the PSA and the Notes, as described above. 41. COBY has no adequate remedy at law. 42. Accordingly, the Court should specifically enforce COBY s rights in the PSA and the Notes. AS AND FOR A FOURTH CAUSE OF ACTION (Fraudulent Conveyance) 43. COBY repeats and realleges each of the allegations contained in paragraphs 1 42 above, as if fully set forth herein. 44. The Borrowers have intentionally concealed the existence of the Contract for the purpose of illicitly transferring COBY s Collateral to Dean. 45. The Borrowers have intentionally stripped the $1.1 million deposit paid under the Contract. 46. The Borrowers actions in connection with the Contract and the PSA are actions that hinder, delay, and defraud COBY, who is a present creditor. conveyances. 47. Accordingly, the Court should avoid the Borrowers fraudulent AS AND FOR A FIFTH CAUSE OF ACTION (Attorney s Fees) 8 8 of 93
48. COBY repeats and realleges each of the allegations contained in paragraphs 1 47 above, as if fully set forth herein. 49. COBY should be awarded its attorney s fees in this action. First, the Note at page four provides that the Borrowers must pay reasonable attorney s fees incurred by COBY, for inter alia, the pursuit, or protection of collateral or in COBY s collection efforts. Second, the PSA at Section 13 provides for such attorney s fees. Third, an award of attorney s fees is appropriate for intentional fraudulent conveyance under DCL 276-a. WHEREFORE, COBY respectfully requests judgment: (a) declaring COBY s superior rights under the PSA as it relates to the Collateral and the Contract; (b) granting specific performance enforcing the terms of the PSA in favor of COBY; (c) granting a preliminary and permanent injunction against defendants, barring them from consummating the Contract until such time as COBY s Note is fully satisfied and repaid, and until further order of the Court; (d) Setting aside the fraudulent conveyances to the extent necessary to satisfy COBY s claim, or disregarding the conveyances and attaching or levying execution upon the property conveyed; (e) granting plaintiff its reasonable attorneys fees, costs and disbursements of this action; and, 9 9 of 93
(f) granting such other and further relief as this Court may deem just and proper. Dated: New York, New York August 16, 2016 STAHL & ZELMANOVITZ Attorneys for plaintiff Coby Empire, LLC By: /s/ Joseph Zelmanovitz Joseph Zelmanovitz Abraham Neuhaus 747 Third Avenue, Suite 33B New York, New York 10017 (212) 826-6422 10 10 of 93
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