State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: July 16, 2015 520435 

________________________________

In the Matter of the 

Dissolution of ONGWEOWEH 

CORPORATION. 

DANIEL F. BONAMIE, MEMORANDUM AND ORDER

Appellant;

ONGWEOWEH CORPORATION,

Respondent.

________________________________

Calendar Date: May 26, 2015

Before: Lahtinen, J.P., McCarthy, Rose and Clark, JJ.

__________

Hinman, Howard & Kattell, LLP, Binghamton (James S. Gleason

of counsel), for appellant. 

Harris Beach, PLLC, Pittsford (Douglas A. Foss of counsel),

for respondent.

__________

Lahtinen, J.P.

Appeal from an order and judgment of the Supreme Court

(Mulvey, J.), entered November 13, 2014 and November 24, 2014 in

Tompkins County, which, in a proceeding pursuant to Business

Corporation Law article 11, granted respondent's motion for,

among other things, summary judgment dismissing the proceeding.

Respondent is a closely held corporation in which, as of

late 2012, petitioner owned 38 shares, his father owned 37 shares

and his step-sister owned the remaining 25 shares. Petitioner's

employment with respondent was terminated in February 2014. A

detailed shareholders' agreement provided, in relevant part, that
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respondent would purchase all shares of a shareholder whose

employment was terminated, and the agreement set forth different

valuation methods depending on whether the termination was "[f]or

[c]ause" (section 3.1) or "[i]nvoluntary" (section 3.2), with the

latter involving a higher valuation method. Both petitioner and

respondent initially looked to section 3.2, but did not agree as

to the value under that section. In May 2014, respondent's

counsel notified petitioner's counsel via letter that respondent

had just discovered activities in which petitioner had engaged

while president of the corporation that justified for-cause

termination and, thus, valuing his stock under the lower method

set forth in section 3.1. Petitioner responded, in June 2014, by

commencing this proceeding seeking judicial dissolution of

respondent pursuant to Business Corporation Law § 1104-a,

alleging that he was an oppressed shareholder. In July 2014,

respondent acknowledged that it had erred in asserting section

3.1 valuation and agreed that the valuation should be calculated

pursuant to section 3.2. It then answered the petition for

dissolution, obtained an order extending the time to exercise its

purchase rights under Business Corporation Law § 1118 in the

event that the dissolution proceeding continued, and moved by

order to show cause for summary judgment dismissing the

proceeding and directing the buyout pursuant to the shareholders'

agreement. Supreme Court granted respondent's motion and

petitioner now appeals.

The issues as framed by petitioner on appeal are narrow. 

Petitioner argues that respondent's May 2014 letter constituted a

material breach of the shareholders' agreement and that,

accordingly, the provisions thereof no longer controlled

valuation. "The written terms and conditions of a contract

define the rights and obligations of the parties" (Dierkes

Transp. v Germantown Cent. School Dist., 295 AD2d 683, 684 [2002]

[citations ommitted]), and a breach thereof is material if it is

"so substantial that it defeats the object of the parties in

making the contract" (Robert Cohn Assoc., Inc. v Kosich, 63 AD3d

1388, 1389 [2009] [internal quotation marks and citation

omitted]; accord Accadia Site Contr., Inc. v Erie County Water

Auth., 115 AD3d 1351, 1353 [2014]; Fitzpatrick v Animal Care

Hosp., PLLC, 104 AD3d 1078, 1081 n 4 [2013]). In the months

immediately after petitioner was terminated by respondent, the
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parties disputed the amount that petitioner was to receive under

the agreement and, as reflected by the (later retracted) letter

of May 2014, disagreed about which provision of the agreement

applied. However, respondent did not indicate that it would not

adhere to a method of valuation set forth in the agreement or

that it did not intend to pay petitioner under the agreement. We

agree with Supreme Court that, essentially, negotiations

transpired as to which provisions applied and this did not

constitute a material breach of the agreement. We further note

that, under the relevant language of the agreement, petitioner's

commencement of this proceeding would also trigger the forcedbuyout provisions of the agreement (see Matter of El-Roh Realty

Corp., 48 AD3d 1190, 1191 [2008]). The parties do not dispute on

appeal that, if the agreement applies, then the sections thereof

set forth by Supreme Court are the appropriate ones for

determining value and, thus, we do not address such issue. The

remaining arguments are unavailing.

McCarthy, Rose and Clark, JJ., concur.

ORDERED that the order and judgment are affirmed, with

costs.

ENTER:

Robert D. Mayberger

Clerk of the Court