56 E. Invs. LLC v. Upreal Brooklyn LLC

2024 NY Slip Op 31050(U)

Opinion

56 E. Invs. LLC v Upreal Brooklyn LLC 2024 NY Slip Op 31050(U)

March 28, 2024

Supreme Court, Kings County Docket Number: Index No. 503964/2019 Judge: Leon Ruchelsman

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.

FILED: KINGS COUNTY CLERK 03/28/2024 02:24 PM INDEX NO. 503964/2019 NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 03/28/2024

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KING$' : CIVIL TERM: COMMERCIAL PART 8 -----~------------------------ . ---- --x 56 EAST INVESTORS LLC, individually as well as derivatively on behalf of EAST UPREAL LLG, and EAST UPREAL LLC, Plaintiffs, Decision arid otder

- against - Index No. 503964/20.19

UPREAL BROOI<LYN LLC, DAVID GOLDBERGERi EYAL YAGEV, BOAZ GILAD, ASSAF FITOUSSI & BROOKLAND UPREAL LIMITED, March 28, 2024 Defendants,

- against -

EAST UPREAL LLC, Nominal Defendant,

-- ... -- --------- -- -------~ -- ~-------x PRESENT: HON. LEON RUCHELSMAN Motion Seq. #8

The defendants David Goldberger and Eyal Yagev have moved pursuant to CPLR §3211 seeking to dismiss the amended complaint. The plaintiff opposes the motion.. Papers were submitted by the parties arid arguments held. After reviewing all the arguments, this court now makes th€:! following determination.

As recorded in prior orders, during 2014 the plaintiff 56 Ea.st Investors LLG, which comprised eighteen individual investors, invested over two million dollars in a real estate development project located i;lt 56 Ea.st 2ist Street in Kings County. Pursuant to the operating agreement defendants D.avid Goldberger an,d Eyal Y:agev were made manag.ers o;f: the plaintiff corporation. Further, in .connection with the proj eat E.ast Upteal LLC was fo.rmed which .had two mernl:iers., the plaintiff, .56 East Invest.ors LLC and defenda.nt

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Upteal Brooklyn. LLC a holding company owned by defendant Brookland Upreal Limited,

Essentially, the amended complaint alleges the defendants defrauded the plaintiff by failing to invest the funds and by committing waste, mismanagement, gross negligence and self .... dealing. The amended coITtplaint alleges the entire investment has been lost. The amended complaint alleges seven causes of action including breach Of fiduciary duty directly and derivatively, fraud directly and derivati ve,ly, an accounting, breach of contract and conversion. The defendants have now moved, once again, seeking to dismiss the complaint. While pribr c;r.ders held that any Israeli settlement reci.c:::hed concerning the bankruptcy of defendant Brookland Upreal Limited, had no conriectioh to the plaintiff herein, the defendants now argue that subsequent activity compels the dismissal of this action. Specifically, Guy Gissim the trustee of claims in

the Israeli bankruptcy court entered into a creditor settlernent agreement which among other relief provided a methodology of

payment to creditors_ Foll.owing that settlemeht all claims existing in New York were settled except the claims in this case. In 2022 Gissim commenced an action in Kings County and pursuant to th·at action the defendants assert the plaintiff in this case assigned all e.pist.ing claims to Gissiin and that ;;3.ll claims w:ill be settled pursuant to I-sraeli iaw, Gonsequerttly, the defendants move seeking to dismis.s this action. As noted, the motion is oppo.s.ed.

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FILED: KINGS COUNTY CLERK 03/28/2024 02:24 PM INDEX NO. 503964/2019 NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 03/28/2024

Conclusions of Law

It is well settled that upon a motion to dismiss the co1.1rt must determine, accepting the allegations of the complaint as true, whether the party can succeed upon any reasonable view of those facts (Perez v. Y & M Transportation Corporation, 219 AD3d 1449, 196 NYS3d 145 [2d Dept., 2023]). Furth~rj all the

allegations in the complaint are deemed true ahd all reasonable inferences may be drawn in favor of the plaintiff (Archival Inc.;

v. 177 Realty Corp., 220 AD3d 90·9, 198 NYS2d 5 67 [ 2d Dept.; 2023]). Whether the complaint will later survive a motion for

summary judgment, or w:hether the plaintiff will ultimately be able to prove its claims, of course, plays no part in the

determination of a pre-discovery CPLR §3211 motion to dismi.ss (see, Lam v. Weiss, 219 AD3d 713, 195 NYS3d 488 [2d Dept., 2023] ) .

On July 20, 2023 the plairitiff in this action, referred to as 'Investors', assigned "(I) all of Investors 1 rightsi title and interest, in East Upreal LLC; (ii) any claims (known and unknown) rielating the Project, the Investors and/or .East Upreal LLC Upreal Brooklyn LLC, Brooklyn Upreal Limited group of companies, its prior and current members and managers and their insurance company; (iii) any claims Invet;;_tors asserteo. or could have asserted· in the action styled, 5 6 East Investors, LLC, e:t al v.

Upreal Brooklyn, LLC, et a.l. New York State Supreme Court, Kings County, Index No. 5039.6.4/2019" and further clairrt.s (see~

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FILED: KINGS COUNTY CLERK 03/28/2024 02:24 PM INDEX NO. 503964/2019 NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 03/28/2024

Assignment of Claims [NYSCEF Doc. No. 173]). Thus; by its plain tersm the plaintiff has assigned "any claims" asserted in this act-ion. The plaintiff argues that '\the assignment contained an annexed to the Gissim Settlement specifically contemplated the assignment and continuation of this Action by Gissin" (see, Memorandum in Opposition, page 2 [NYSCEF Doc. No. 178]). However, there can be no reasonable. interpretation of the assignment wherein claims in this action were permitted to continue.

Next, the plaintiff argues that East Upreal LLC was riot a party to the assignment and claims brought by East Upreal must continue. However, the assignment states that Investors assigned its interests in East tlpreal. Further, the assignment states that any claims Investors or East Upreal maintains against many parties including the defendants David Goldberger- and Eyal ·Yagev are hereby assigned to Gissirn. Thus, any interests of East Upreal through its owner 56 East Investors LC have been assigned to Gissim.. Gonsequ_ently, there are no claims that East Upreal LLC ~ay ~tidividu~lly pursue ?gainst the defendants in this action.

Nor does CPLR §1018 demand a contrary result. CPLR §1018 permitrs a par:t;:.y in interest .such as an assignee to continue a

laWsuit in place of the original party. It does npt siand 'for the proposition that when an assignment .has be.en ritade

transferring all interests to a third party that third party must

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continue the lawsuit. Indeed, the posture of the opposition is

curious, The plaihtifft owher of East upreal assigned its interests in East Upreal and any claims against any of the

defendants to Gissim. East Up.teal, now denuded of any ability to pursue any claims, opposes the dismissal on the grounds it shou,1d be given the opportunity to pursue its claim in this action. That circular reasoning really has no legitimacy considering the assignment. Any clairns a.te adequately protected by Gissim's pursuit of therri. in Israel. Therefore, there are no claims that can be pursued in this action. Consequently; the motion of the defendants seeking dismissal of the complaint is granted.

So ordered.

ENTER:

.,,,.......,,,.

DATED: March 28, 2024 Brooklyn N.Y. Hon. Leon Ruchelsman JSC

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