G.B.G., Inc. v. Kolinsky (In Re Kolinsky)

140 B.R. 79, 1992 Bankr. LEXIS 720, 1992 WL 101602
CourtUnited States Bankruptcy Court, S.D. New York
DecidedMay 8, 1992
Docket19-35297
StatusPublished
Cited by2 cases

This text of 140 B.R. 79 (G.B.G., Inc. v. Kolinsky (In Re Kolinsky)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
G.B.G., Inc. v. Kolinsky (In Re Kolinsky), 140 B.R. 79, 1992 Bankr. LEXIS 720, 1992 WL 101602 (N.Y. 1992).

Opinion

DECISION ON MOTION FOR SUMMARY JUDGMENT FOR A PROTECTIVE ORDER AND TO COMPEL THE PRODUCTION OF DOCUMENTS

HOWARD SCHWARTZBERG, Bankruptcy Judge.

G.B.G., Inc. (“G.B.G.”) and Jay Russ (“Russ”) have moved for summary judgment to dismiss the affirmative defenses and counterclaim asserted by the defendants, Joseph T. Kolinsky (“Kolinsky”), the debtor, and his wholly owned nondebtor *81 corporation, Conjo Realty Corp. (“Conjo”), in an adversary proceeding for specific performance of a contract for the purchase and sale of real property. In support of their motion, G.B.G. and Russ argue that there are no material facts at issue. The movants contend that the facts found by the court in connection with previous litigation between the parties are res judicata. They further assert that those claims which could have been raised in prior proceedings are also barred from being raised now by res judicata. In addition, G.B.G. and Russ seek a protective order against particular discovery demands made by the defendants on the grounds that the requests are impermissible under Federal Rule of Civil Procedure 26(b) and are precluded by collateral estoppel. They have also asked the court to order the defendants to produce certain documents and to bear the costs of this motion.

Kolinsky and Conjo oppose G.B.G. and Russ’s motion for summary judgment. The defendants argue that the defenses and the counterclaim are not precluded by res judicata because the cause of action presently before the court differs from the claims upon which this court previously rendered a decision. They assert that in order for res judicata to apply, the causes of action which are the subject of the proceedings must be the same. The defendants also urge the court to deny G.B.G. and Russ’s request for a protective order, contending that their discovery demands are valid and differ from the discovery demands made by the defendants in a prior adversary proceeding. Additionally, the defendants seek a protective order against the discovery demands made by G.B.G. and Russ because they are overbroad.

FACTUAL BACKGROUND

On May 8, 1986, Kolinsky filed with this court a petition for reorganizational relief under Chapter 11 of the Bankruptcy Code and has continued in possession and management of his property in accordance with 11 U.S.C. §§ 1107 and 1108. Kolinsky is the sole shareholder of Conjo, a New York corporation. Conjo’s primary asset is a parcel of approximately three and a half acres of real estate with buildings and improvements located on waterfront property on City Island, New York.

On April 7, 1987, Conjo entered into a contract (the “Conjo contract”) with Joseph P. Gagliano, Alexander M. Goren, and James G. Goren (collectively, the “Purchasers”) for the sale and purchase of Conjo’s property. The contract contained the following basic provisions:

A. The purchase price was $1.7 million, with $100,000.00 down.
B. Purchasers would pay another $500,-000.00 to fund a plan to pay the creditors in the bankruptcy of Transportation Services, Inc. (“TSI”), a New York corporation wholly owned by Kolinsky and located on the Conjo property.
C. Purchasers would have responsibility for attempting to obtain a rezoning of the property to allow for condominium and waterfront development.
D. Purchasers would have five years from the contract date to exert their best efforts to obtain the rezoning.
E. Purchasers would attempt to obtain rezoning to construct 72 condominium units and 72 boat slips.
F. In the event that the rezoning application was denied, or approved for fewer than 72 units and slips, or not acted upon by the expiration of the five year period, purchasers at their sole option could elect to close title for the full contract price or cancel the contract.
G. During the five years, Kolinsky and TSI could remain on the property rent-free.
H. During this period, Conjo could continue to collect and keep all rents from the existing tenancies.
I. During the contract period, purchasers would be responsible for paying all real estate taxes on the property.

Under the contract, a “First Closing” was to take place on May 7, 1987 and “Second Closing” was to occur either 45 days after Purchasers obtained the required zoning approvals or at any time at the Purchasers’ behest upon giving 30 days written notice to Kolinsky. The contract also provided *82 that Conjo would pay a commission to Russ, the real estate broker who procured the purchasers. Kolinsky, as sole shareholder of Conjo, signed the contract indicating his approval and acceptance of the contract.

Kolinsky also personally entered into a joint venture agreement with the Purchasers which provided that the corporation formed by the Purchasers to be the assign-ee of the Conjo contract would have full charge of the development of the Conjo property and that the net profits from the development project would be distributed 70% to the corporation or its assignees and 30% to Kolinsky. Conjo also executed a mortgage note in favor of the Purchasers. Shortly thereafter, the Purchasers assigned their rights in the contract and joint venture agreement to G.B.G., the corporation which they formed to purchase Conjo’s real property. The Purchasers are G.B.G.’s sole shareholders. Russ was named as an officer and director of G.B.G.

Subsequently, Kolinsky and Conjo commenced an action in this court against the Purchasers to rescind the contract for the sale of the Conjo property on several grounds including misrepresentation and breach of contract. In the complaint, Ko-linsky and Conjo sought rescission of the Conjo contract, alleging that the Purchasers fraudulently induced Kolinsky, on behalf of Conjo, to execute the sale of the real property by falsely representing that they would diligently use their best efforts to obtain rezoning and proceed with the development, while intending not to proceed with best efforts to obtain rezoning until they secured a purchaser to whom they could assign the deal for a substantial profit. It was also alleged that the defendants had breached the contract of sale by delaying development of the property, failing to pay the real estate taxes with respect to the property and by not using their best efforts to obtain the necessary zoning variances and permits. Based upon these claims, the plaintiffs sought to rescind the Conjo contract, the joint venture agreement between Kolinsky and the defendants and Conjo’s mortgage which was issued to the Purchasers. Russ was also named as a defendant in the action. However, the complaint did not allege that he acted wrongfully and no affirmative relief was sought from him.

Thereafter, the defendants made a motion to dismiss the complaint on various grounds. See In re Kolinsky, 100 B.R.

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Ramsay v. G.C. Evans Sales & Manufacturing Co.
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145 B.R. 170 (S.D. New York, 1992)

Cite This Page — Counsel Stack

Bluebook (online)
140 B.R. 79, 1992 Bankr. LEXIS 720, 1992 WL 101602, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gbg-inc-v-kolinsky-in-re-kolinsky-nysb-1992.