Matter of Kennelly v. Myron & Selina Siegel Family Ltd. Partnership LP

2024 NY Slip Op 33278(U)
CourtNew York Supreme Court, New York County
DecidedSeptember 17, 2024
DocketIndex No. 654950/2023
StatusUnpublished

This text of 2024 NY Slip Op 33278(U) (Matter of Kennelly v. Myron & Selina Siegel Family Ltd. Partnership LP) 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
Matter of Kennelly v. Myron & Selina Siegel Family Ltd. Partnership LP, 2024 NY Slip Op 33278(U) (N.Y. Super. Ct. 2024).

Opinion

Matter of Kennelly v Myron & Selina Siegel Family Ltd. Partnership LP 2024 NY Slip Op 33278(U) September 17, 2024 Supreme Court, New York County Docket Number: Index No. 654950/2023 Judge: Shahabuddeen Abid Ally 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. 654950/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 09/17/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. SHAHABUDDEEN ABID ALLY PART 16M Justice

In the Matter of the Petition of INDEX NO. 654950/2023

MOTION DATE 9/12/2024 JAMES KENNELLY and 38 LEXINGTON AVENUE, LLC, MOTION SEQ. NO. 0011

Petitioner,

For an Order Staying Arbitration of a Certain Controversy

-against- DECISION & ORDER

MYRON AND SELINA SIEGEL FAMILY LIMITED PARTNERSHIP LP,

Respondent,

The following e-filed documents, listed by NYSCEF document number, were read on this motion (Seq. No. 1) to/for ARTICLE 75 (STAY ARBITRATION): 1-9, 14, 17-24, 27-34

In this special proceeding, petitioners JAMES KENNELLY (“Kennelly”) and 38 LEXING-

TON AVENUE, LLC (“38 Lexington”; and, together with Kennelly, “Petitioners”) move by Notice

of Petition for an order, pursuant to CPLR § 7503(c), permanently staying the arbitration that re-

spondent MYRON AND SELINA SIEGEL FAMILY LIMITED PARTNERSHIP LP (“Respondent”)

commenced before the American Arbitration Association (“AAA”) on September 25, 2023, as Case

No. 01-23-0004-2166. Petitioners commenced this proceeding by Verified Petition on October 9,

2023. Respondent opposes the application and cross-moves, by cross-motion filed on November

1 Petitioners filed their Notice of Petition on October 9, 2023 (NYSCEF Doc. 9), but then subsequently filed an Order to Show Cause (“OSC”) on October 17, 2023 (id. Doc. 12). Because the OSC sought the same relief as the Notice of Petition, the Court declined to sign the OSC. (Id. Doc 25) There appears, unfortunately, to be some confusion and discrepancies as to the assignment of motion sequences between the Notice of Petition and the OSC. Although the OSC was filed after the Notice of Petition, the OSC was assigned Motion Sequence No. 1 in NYSCEF, while the earlier-filed Notice of Petition was assigned Motion Sequence No. 2. The Court, when it uploaded its decision declining to sign the OSC, did so in connection with Motion Sequence No. 2—according to NYSCEF, the Notice of Petition. The Clerk, how- ever, marked Motion Sequence No. 1 as “declined to sign” in the Court’s internal Universal Case Management System (“UCMS”). The correct designations are as follows: (a) the Notice of Petition should be assigned Motion Sequence No. 1 in both NYSCEF and UCMS and should, pursuant to this Decision and Order, be marked “decided”; and (b) the OSC should be assigned Motion Sequence No. 2 in both NYSCEF and UCMS and should, pursuant to the Court’s prior decision not to sign it, be marked “declined to sign.” 654950/2023 James Kennelly et al. v. Myron and Selina Siegel Family Limited Partnership LP. Page 1 of 10 Mot. Seq. No. 1

1 of 10 [* 1] INDEX NO. 654950/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 09/17/2024

9, 2023, to dismiss the Verified Petition pursuant to CPLR 3211(a)(1), (2), and (7) and for costs and

expenses. For the reasons discussed below, the Notice of Petition is DENIED, the cross-motion is

GRANTED IN PART, and the Verified Petition is DISMISSED.

I. BACKGROUND Kennelly and nonparty Myron Siegel are business partners in a real-estate development

venture. (See Verified Pet. (NYSCEF Doc. 1) ¶ 8) The corporate vehicle for that venture is Kelly Six

Star, LLC (“KSS”), a New York limited-liability company. (See id.) Kennelly formed 38 Lexington

to hold his 44.1% interest in KSS. (Id. ¶ 11) Seigel’s 49.9% interest in KSS is held through Respond-

ent. (Id.) The remaining 6% of KSS is held by Guy Shmuel, Seigel’s son-in-law. (Id. ¶¶ 10-11) 38

Lexington, Respondent, and Mr. Shmuel are each members of KSS, and Mr. Shmuel and Kennelly

are its managers. (Id. ¶ 12; see also id. Ex. A (NYSCEF Doc. 2), art. I, “Member” definition). The

parties’ relationship is governed by the Amended and Restated Limited Liability Company Op-

erating Agreement of Kelly Six Star, LLC, dated as of April 12, 2019 (the “Operating Agreement”).

(See Verified Pet. ¶ 4; id. Ex. A)

In its Demand for Arbitration, Respondent alleges that KSS and its managers failed to pay

Respondent all of the monies owed to it under the Operating Agreement, including the proper

distributive share of KSS’s net profits, and failed to properly manage and operate the venture’s

property. (Id. Ex. B (NYSCEF Doc. 3), ¶ 6) For these alleged breaches of the Operating Agreement,

Respondent seeks monetary damages between $1 million and $10 million, plus interest and legal

fees and expenses. (Id. ¶ 21)

The instant dispute concerns whether Respondent’s claims may be maintained in arbitra-

tion. Two provisions of the Operating Agreement, sections 12.13 and 12.14, are relevant. Section

12.13, entitled “Arbitration,” provides:

Each Member agrees that the arbitration procedures set forth below shall be the sole and exclusive method for resolving and remedying claims for money damages arising out of a breach of this Agreement (the “Dis- putes”); provided that nothing in this Section 12.13 shall prohibit a party hereto from instituting litigation to enforce any Final Determination (as defined below). The Members hereby acknowledge and agree that, except as otherwise provided in this Section 12.13 or in the Commercial Arbitra- tion Rules (the “Rules”) promulgated by the American Arbitration Asso- ciation as in effect from time to time, the arbitration procedures and any Final Determination hereunder shall be governed by, and shall be

654950/2023 James Kennelly et al. v. Myron and Selina Siegel Family Limited Partnership LP. Page 2 of 10 Mot. Seq. No. 1

2 of 10 [* 2] INDEX NO. 654950/2023 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 09/17/2024 enforced pursuant to, the United States Arbitration Act, 9 U.S.C. § 1 et. seq. If the Members are unable to select a mutually acceptable arbitrator, then they agree that the arbitrator shall be selected by the American Arbitration Association in accordance with the Rules. (b) In any arbitration pursuant to this Agreement, . . . (ii) the award or de- cision shall be rendered by a single independent arbitrator, who is a li- censed attorney in the State of New York and experienced in handling dis- putes of the type presented in the Dispute and who shall be appointed by mutual agreement of the parties in dispute; provided, that if the Dispute relates primarily to accounting issues the arbitrator should be a licensed certified public accountant in the State of New York experienced in han- dling disputes of the type presented in the Dispute. The arbitration shall be conducted in New York, NY, under the Rules as in effect from time to time. The arbitrator shall conduct the arbitration so that a final result, de- termination, finding, judgment and/or award (the “Final Determination”) is made or rendered as soon as practicable. (c) Any applicable Member may enforce any Final Determination in any state or federal court of competent jurisdiction.

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2024 NY Slip Op 33278(U), Counsel Stack Legal Research, https://law.counselstack.com/opinion/matter-of-kennelly-v-myron-selina-siegel-family-ltd-partnership-lp-nysupctnewyork-2024.