Conlon Holdings LLC v. Chanos

2025 NY Slip Op 30011(U)
CourtNew York Supreme Court, New York County
DecidedJanuary 3, 2025
DocketIndex No. 654768/2024
StatusUnpublished

This text of 2025 NY Slip Op 30011(U) (Conlon Holdings LLC v. Chanos) is published on Counsel Stack Legal Research, covering New York Supreme Court, New York County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Conlon Holdings LLC v. Chanos, 2025 NY Slip Op 30011(U) (N.Y. Super. Ct. 2025).

Opinion

Conlon Holdings LLC v Chanos 2025 NY Slip Op 30011(U) January 3, 2025 Supreme Court, New York County Docket Number: Index No. 654768/2024 Judge: Joel M. Cohen 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. INDEX NO. 654768/2024 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 01/03/2025

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 03M -----------------------------------------------------------------------------------X CONLON HOLDINGS LLC INDEX NO. 654768/2024

Plaintiff, MOTION DATE 09/12/2024 -v- MOTION SEQ. NO. 001 JAMES S. CHANOS,

Defendant. DECISION + ORDER ON MOTION -----------------------------------------------------------------------------------X

HON. JOEL M. COHEN:

The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29 were read on this motion for SUMMARY JUDGMENT IN LIEU OF COMPLAINT .

Plaintiff Conlon Holdings LLC (“Plaintiff”) moves for summary judgment in lieu of

complaint pursuant to CPLR 3213 against Defendant James S. Chanos (“Defendant” or

“Chanos”). The claim arises out of a December 31, 2018 Loan Agreement (the “Loan

Agreement”) entered into by Chanos and – under Plaintiff’s reading – The Limited Partners of

Kynikos Associates LP (the “Company”) “except for” James S Chanos LLC (defined

collectively as the “Lender”). According to Plaintiff, under the terms of the Loan Agreement,

Chanos agreed to repay $15,989,102.00 (the “Loan Amount”) to Lender immediately upon his

receipt of any proceeds from the sale of his properties that are set forth in the Loan Agreement.

Plaintiff alleges that Chanos sold the properties but has failed to make the required payments to

Lender.

Chanos opposed this motion and filed a cross-motion seeking to dismiss this action based

on Plaintiff’s lack of legal capacity to sue or, in the alternative, an Order pursuant to CPLR

654768/2024 CONLON HOLDINGS LLC vs. CHANOS, JAMES S. Page 1 of 12 Motion No. 001

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7503(a) staying this action and compelling arbitration. For the following reasons, Plaintiff’s

motion is denied and Chanos’s cross-motion is granted in part.

BACKGROUND

According to Plaintiff, Chanos & Company LP (f/k/a. Kynikos Associates LP) (the

“Partnership”) was founded in 1985 by Chanos and managed a variety of funds (NYSCEF 10

[“Nichols Aff.”] ¶1). The Partnership was controlled during all relevant time periods by Chanos

as the General Partner. Chanos directed the accounting of the Partnership (Nichols Aff. ¶¶2-3).

Plaintiff alleges that beginning in 2013, Chanos, in his individual capacity, began taking

monies from the Partnership, which he promised to repay with interest. From 2013 through

2018, Chanos allegedly made repeated promises to the Limited Partners that he would pay back

the amounts he took (Nichols Aff. ¶¶3-4).

To address concerns raised by the Limited Partners about Chanos's use of the funds, on

December 31, 2018, Chanos executed a loan agreement (the “Loan Agreement”) that designated

him as the Borrower of $15,989,102.00 (the “Loan Amount”) (Nichols Aff. ¶¶8-9). The Loan

Agreement provides as follows:

On December 31, 2018, One (1) individual known as James Chanos of 3 East 75th Street, New York, New York, 10021, referred to as the “Borrower”,

HAS RECEIVED AND PROMISES AS PREVIOUSLY STATED TO PAY:

The Limited Partners except for James S Chanos LLC of Kynikos Associates LP of 20 West 55th Street, 8th Floor, New York, referred to as the “Lender”, the sum of $15,989,102.00 US Dollars, referred to as the “Borrowed Money” . . . .

(NYSCEF 7 [“Loan Agreement”]).

The Agreement is signed by James Chanos as the Borrower and Brian Nichols (the

former CFO) on behalf of “Kynikos Associates LP.” (Loan Agreement at p 4). The Loan

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Agreement states that the full balance of the Loan Amount “including any accrued interest and

late fees, is due and payable immediately upon receipt of any proceeds by the Borrower from the

sale of Art Pieces, New York City Residence (3 East 756 Street, New York, NY 10021), Miami

Residence (100 S. Pointe Drive, Miami, FL 33139), and East Hampton Residence (70 Further

Lane, East Hampton, NY 11937), referred to as the ‘Due Date.’” (McGrath Aff ¶6; Loan

Agreement at p 1).

The Loan Agreement also provides that “[t]his loan shall be secured under the following:

The Borrower agrees to provide Art Pieces, New York City Residence (3 East 75th Street, New

York, NY 10021), Miami Residence (100 S Pointe Drive, Miami, FL 33139), and East Hampton

Residence (70 Further Lane, East Hampton, NY 11937), referred to as the “Security”, which

shall transfer to the possession and ownership of the Lender IMMEDIATELY if this Loan

should be in default” (Loan Agreement at p 1).

On May 8, 2019, Chanos acknowledged his obligations by signing a confirmation letter,

which provides:

I have contributed art in the amount of $12,495,359 with a $3.5 million line of credit to Kynikos Associates LP (the “Partnership”). The Partnership intends to sell the art and the proceeds will be used in partial satisfaction of my negative capital balance and my outstanding demand loan (see December 31, 2018 Loan Agreement). I will also contribute all cash proceeds received from the sale of my residences in New York City, Hampton sand Miami. This will confirm to each of you that if the Partnership receives proceeds from the sale of the art and personal residences that are less than the contributed art amount of $12,495,359; my negative capital balance; and my outstanding demand loan then I will personally contribute in cash an amount equal to each difference. These proceeds will be used to satisfy the art losses allocated to you and your outstanding capital owed to you and other limited partners of Kynikos Associates LP except for James S Chanos LLC.

(NYSCEF 8 [“Confirmation Letter”]).

654768/2024 CONLON HOLDINGS LLC vs. CHANOS, JAMES S. Page 3 of 12 Motion No. 001

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Plaintiff alleges that in or around March 2021, instead of paying monies to Lender under

the Loan Agreement, Chanos paid money to the Partnership and also contributed monies to avoid

a negative balance on the capital account of James S. Chanos, LLC (Nichols Aff. ¶16).

Plaintiff submits that Chanos owes more than $15,000,000.00 to Lender under the Loan

Agreement, with interest accruing (Nichols Aff. ¶21).

Plaintiff also asserts that on August 27, 2024, Nichols assigned his rights and the rights of

his Limited Partner entity, MMSBLLC, under the Loan Agreement to Plaintiff (Nichols Aff.

¶22).

DISCUSSION

I. Summary Judgment in Lieu of Complaint

Pursuant to CPLR 3213, a party may commence an action by motion for summary

judgment in lieu of complaint when the action is “based upon an instrument for the payment of

money only or upon any judgment” (Oak Rock Fin., LLC v Rodriguez, 148 AD3d 1036, 1039 [2d

Dept 2017]).

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2025 NY Slip Op 30011(U), Counsel Stack Legal Research, https://law.counselstack.com/opinion/conlon-holdings-llc-v-chanos-nysupctnewyork-2025.