### Matter of Stapleton 2024 NY Slip Op 31055(U) March 27, 2024 Surrogate's Court, New York County Docket Number: File No. 2016-3795/C Judge: Hilary Gingold Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York State and local government sources, including the New

York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.SURROGATE'S COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK 

### --------------------------------------------------------------------------x Petition by the Executor ofthe Estate of ANTHONY P. STAPLETON, Deceased, for Turnover ofthe Value ofHarlem Properties Pursuant to SCPA 2103 

### --------------------------------------------------------------------------x GING OLD, S. The following papers were read in determining this motion:

Notice ofMotion -Affirmation ofJonathan G. Kortmansky And Exhibits

- Memorandum ofLaw Notice ofCross-Motion

- Affidavit ofEric J. Sarner and Exhibits

- Affirmation ofRobert C. Santoro and Exhibits

- Memorandum ofLaw Memorandum ofLaw in Further Support Respondents' Memorandum ofLawin Further Support NewYorkCountySurrogate'sCourt DATA ENTRY DEPT.



### MAR 

## t 72024

DECISION & ORDER File No. 2016-3795/C

Papers Numbered
1-3

4-7 8 9 Petitioner, as the executor ofdecedent's estate, commencedthis miscellaneousproceeding (SCPA 2103) seeking the turnover of decedent's interest in Cogswell Realty Group, LLC ("Cogswell") pursuant to the terms ofCogswell's operating agreement. Petitioner now moves for partial summaryjudgment seeking a court order interpreting the meaning ofcertain terms used in the operating agreement which would determine the value of petitioner's interest in Cogswell. Respondent opposesthe motion and cross-moves for summaryjudgmentseeking an orderholding that Cogswell's valuation ofdecedent's membership interest pursuant to its operating agreement is final and binding on petitioner.



### ICogswell is aNewYork basedreal estate investmentcompany which was founded in 1996 by decedent and respondents. Decedent died on July 30, 2016, and his surviving spouse was appointed executor ofhis estate on October 21, 2016. The company's operating agreement, as amended and restated on January 1, 2004 ("Operating Agreement") provides that upon the death ofa founding member, such as decedent, his estate is entitled to a buy-out ofthe member's shares by Cogswell's remaining founding members. The parties, however, were unable to agree on a purchase price and on March 15, 2018, petitioner filed this proceeding pursuant to SCPA 2103 to compel respondents to turnover to the estate approximately $1.3 million, a sum which petitioner claims is the value of decedent's interest in Cogswell as ofthe time ofhis death. Respondents answered the petition disputing the valuation ofsuch interest and then filed a motion to compel arbitration. Petitioner opposed the motion and cross-moved to dismiss respondents' counterclaim for arbitration. By decision and order dated August 23, 2019, this court denied the respondents' motion to compel arbitration and dismissed respondents' counterclaim for mandatory arbitration. These motions followed. Under SCPA 2103, a fiduciary may commence a proceeding showing that any property or the proceeds or value thereof which should be paid or delivered to him is in the possession or control ofanother (SCPA 2103(l)(a); see also Matter ofE!mezzi, 124 AD 3d 886,886 [2d Dep't 2015]). Property, as used in this section, is defined as any personal or real property in which decedent had any interest (Id at 887). The proceeding is likened to an action for conversion or replevin and the court's function is to determine if assets should be delivered to the petitioner (Matter of Asch, 164 AD3d 787, 788 [2d Dep't 2018]). 

### It is well-established that "[t]he proponent ofa summaryjudgment motion must make a prima facie showing ofentitlement to judgment as a matter oflaw, tendering sufficient evidence


### 2to eliminate any material issues offact from the case" (Pullman vSilverman, 28 NY3d 1060, 1062 [2016]). The burden then shifts to the motion's opponent "to present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact" (Sumitomo Mitsui Banking Corp. v Credit Suisse, 89 AD3d 561, 563 [1st Dept 2011], citing Zuckerman v City ofNew York, 49 NY2d 557, 562 [1980]). Ifthere is any doubt as to the existence ofa triable issue offact, the motion for summaryjudgment must be denied (0 'Brien v. PortAuth. of NY andNJ, 29 NY3d 27, 37 [2017], citing Sillman v Twentieth Century-Fox Film Corp., 3NY2d 395, 404 [19571). In her motion for partial summaryjudgment, petitioner claims that the parties disagree as to the meaning ofcertain terms in section 11.1(a) ofthe Operating Agreement and seeks a court order interpreting the meaning ofthese terms. Petitioner argues that the parties' dispute regarding the definition ofthese terms is one for the court to decide, as a question ofcontract interpretation. However, the meaning ofthese terms is only relevant to the valuation of decedent's shares in Cogswell which is atthe heart ofthis dispute. Thus, by way ofthis motion, petitioner seeks a court determination which would ultimately decide the value ofdecedent's interest in Cogswell. In opposition, respondents argue that petitioner's interpretation ofthe relevantterms ofthe contract is flawed and contrary to the plain terms ofthe Operating Agreement. More importantly, however, respondents arguethatthe meaning ofthese terms andthe valuationofdecedent's shares in Cogswell is not for the court to decide. Rather, respondents argue that under the terms ofthe OperatingAgreement, petitioneris nowbound by Cogswell'sdetermination ofthe purchase price. The general principles ofcontract interpretation are well-established. "The fundamental, neural preceptofcontractinterpretation is thatagreements are construedin accord withthe parties' intent and the best evidence ofwhat parties to a written agreement intend is what they say in their writing" (Donohue v Cuomo, 38 NY3d 1, 12 [2022]). Extrinsic or parol evidence is generally


### 3inadmissible unless the court finds an ambiguity in the contract (Id at 13). Consistent with these principles, "a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning ofits terms" (Id). Here, section 11.1 ofthe Operating Agreement governs the terms ofCogswell's buy-out of a deceased member's interest in the company. This section prescribes the methodology for determining the value ofthese shares. It also provides that Cogswell's determination as to price "shallbe final andbinding uponthe
...representative [ ofthe estate ofa deceased member] unless [such representative] electsto contest such determination
... by electingto pursue the arbitration remedies" set forth in the agreement within 30 days (Sarner Aff., Exh. 1 ). On March 16, 2018, Cogswell delivered to petitioner its determination of the purchase price of decedent's membership interest in Cogswell, which it calculated as $272,034. It is undisputed that petitioner did not challenge this purchase price by pursuing the arbitration remedies set forth in the agreement. Indeed, petitioner did everything in her power to avoid arbitration, including successfully opposing respondents' motion to compel arbitration and then bringing the instant motion for partial summaryjudgment in which she seeks, under the guise of contract interpretation, a court determination as to the value ofdecedent's membership interest. As previously stated in this court's August 23, 2019 decision, petitioner had two options under section 11. 1 ofthe Operating Agreement: either accept Cogswell's valuation or elect arbitration. Since petitioner did not elect arbitration, she is now bound, under the plain terms ofthe section 11.1(a) ofthe OperatingAgreement,by Cogswell'sdeterminationofthe purchaseprice (see Island Cash Register v Data Terminal Services, 244 AD2d 117, 120 [1st Dep't 1998] [dismissing wrongful termination claim where plaintiff failed to timely elect arbitration, which was the exclusive remedy to challenge termination]).


### 4Petitioner argues that Cogswell's March 16, 2018 letter is a nullity because it was not sent within thirty days ofdecedent's death, as required by section 11.l(a) ofthe Operating Agreement and therefore the buy-out provisions ofthe contract should not control. However, petitioner fails to address section 10.4 ofthe Operating Agreement, which lays outthe procedure for initiatingthe buy-out of a deceased member's interest in Cogswell (see Teliman Holding Corp v VCW Associates, 211 AD3d 499, 500 [1st Dep't 2022] ["In interpreting a contract, the court should adopt an interpretation which gives meaning to every provision of a contract."]). Under this section, petitioner was required to timely notify Cogswell of the appointment of a personal representative ofthe deceased member's estate and schedule a closing date. Petitioner did not notify Cogswell about a closing date until November 21, 2016, approximately two and a half months after decedent died. Thus, this is the relevant date for determining the timeliness of Cogswell's letter. Petitioner's November 21, 2016 notice scheduled a closing date ofMarch 21, 2017. As petitioner admits in her pleading, the parties subsequently agreed to extend the date ofthe closing to September 22, 2017. Prior to this deadline, the parties entered into a tolling agreement, which tolled all time-related defenses to enable the parties to negotiate the purchase price. Cogswell's letter was sent on March 16, 2018, the day the tolling agreement expired. Thus, petitioner's argument that Cogswell's valuation letter is a nullity because it was untimely is rejected. Accordingly, it is ORDERED that petitioner's motion for partial summary judgment is denied; and it is further ORDERED that respondents' cross-motion for summary judgment is granted; and it is further


### 5ORDERED thatthe parties shall settle decree; and it is further ORDERED that the Clerk shall email the parties a copy ofthis decision and order.

# rDated: March 

## d.... 7 ,2024

To: Jonathan G. Kortmansky, Esq. Braunhagey & Borden LLP 7 Times Square, 27th Floor New York, New York 10036 (646) 829-9403 kortmansky@braunhagey.com Co-counsel.for Petitioner Marc L. Stem, Esq. Sullivan & Worcester 1633 Broadway New York, New York 10019 mstern@sullivanlaw.com Co-counselfor Petitioner Mark L. Deckman, Esq. DLA Piper LLP (US) 1251 Avenue ofthe Americas New York, New York 10020 (212) 335-4557 Mark.deckrnan(iilus.dlapiper.com Counselfor Respondents



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