Opinion
Index No. 653795/2015
07-21-2016
MEHRNAZ NANCY HOMAPOUR, individually and derivatively on behalf of 3M PROPERTIES, LLC, et al., Plaintiffs, v. MARK HAROUNIAN, et al., Defendants.
Motion Date: 4/26/2016
Motion Seq. No. 001 BRANSTEN, J.
This is an action brought by Mehrnaz Nancy Homapour against her brother, Defendant Mark Harounian, and sixteen family-held limited liability companies ("Family LLCs"), of which Homapour and Harounian are each members. Homapour alleges that Mark Harounian mismanaged the Family LLCs to further his own interest. As a result, at the commencement of this litigation, Homapour filed the instant motion for the appointment of a receiver. Defendant Harounian opposes. For the reasons that follow, Homapour's motion is denied. I. Background
The Family LLCs are 3M Properties, LLC, Balance Property, LLC, JAM Realty NYC LLC, United Chelsea, LLC, United East, LLC, United Fifth, LLC, United Flatiron LLC, United Greenwich, LLC, United Hay, LLC, United Nationwide Realty LLC, United Prime Broadway, LLC, United Prime LLC, United Seed LLC, United Village, LLC, United Square LLC and United West, LLC.
The facts cited in this section are drawn from the Amended Complaint, unless otherwise noted.
Starting in the mid-1980s, Plaintiff Homapour entered into a series of agreements with Defendant Harounian and other family members to form the sixteen Family LLCs, which were intended to acquire and develop real property in New York City. (Am. Compl. ¶ 48.) Harounian is either the Manager or the Managing Member of each Family LLC, while Homapour is a Member. Id. ¶ 50. Homapour maintains that as of 2009, Harounian agreed that she would have a 24% interest in each property owned by the LLCs. Id. ¶ 51.
The Family LLCs are governed by Operating Agreements, which set forth, inter alia, each LLC's organization, membership, management, capital contribution and distributions. Id. ¶ 54. According to Homapour, each Operating Agreement has been amended unilaterally by Harounian to include language for his exclusive benefit. Id. ¶ 55. For example, Homapour alleges that Harounian deleted an exculpatory clause providing: "A Manager's duty of care in the discharge of the Manager's duties to the Limited Liability Company and the Members is limited to refraining from engaging in grossly negligent conduct, intentional misconduct, or a knowing violation of law ... the Managers shall at all times conduct themselves in good faith and in accordance with their fiduciary responsibilities to the Limited Liability Company and to all of its members." Id. ¶ 63.
On March 3, 2015, Plaintiff made a written demand for books and records and for an accounting of the LLCs. Id. ¶ 65; see also id. ¶ 61 ("Pursuant to the Operating Agreements governing each of the Family LLCs in which Plaintiff is a Member and Harounian serves as the Manager or Managing Member, each Member may, upon certain conditions, inspect the Family LLCs' books of account."). After receiving copies of the Operating Agreements, Plaintiff reiterated her demand for financial documentation, aside from the allegedly limited tax returns produced for some of the Family LLCs. Id. ¶ 70.
After commencing the instant action, asserting a sole claim for a formal accounting, Defendants purportedly allowed Homapour access to records for the years 2013, 2014, and 2015 for the purpose of conducting an audit. Id. ¶¶ 71-72. Through this audit, Plaintiff purportedly learned that Harounian was giving himself distributions from the LLCs' accounts in the guise of commissions and personal expenditures. Id. ¶¶ 83-101. Harounian also allegedly performed a cash-out refinancing of one of the LLCs - United Fifth, LLC - and wrote himself a check for the proceeds without providing a distribution to any of the other members of United Fifth, LLC, including Plaintiff. Id. ¶¶ 80-82.
Homapour then amended her complaint to add Harounian and certain LLCs created by Harounian as defendants, as well as her father, sister, and sister-in-law. In addition, Homapour brings claims against the Family LLCs' attorney and accountant. In addition to expanding the number of defendants, Homapour likewise added to the number of claims, which now number thirteen. Seven claims are asserted against Harounian: breach of fiduciary duty; waste; conversion; unjust enrichment; fraud/fraudulent inducement; constructive trust; and, accounting. Claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and injunction are brought against the lawyer, while Plaintiff asserts aiding and abetting breach of fiduciary duty and professional negligence against the accountant.
II. Discussion
After filing her amended complaint, Plaintiff filed a motion, asking the Court to appoint a temporary receiver to take over management and control of the Family LLCs. Homapour maintains that the issue is not that Harounian "has taken too much compensation" but that "he admittedly will not stop because he thinks that the Family LLCs' funds are fair game for his taking." (Pl.'s Reply Br. at 2.) After reviewing the record on this motion, Plaintiff's request is denied.
CPLR § 6401(a) provides for the appointment of a temporary receiver where "[u]pon motion of a person having an apparent interest in property which is the subject of an action ... where there is danger that the property will be removed from the state, or lost, materially injured or destroyed." "It is well recognized that courts of equity exercise extreme caution in appointing receivers pendente lite because such appointment results in the taking and withholding of possession of property from a party without an adjudication on the merits." Hahn v. Garay, 54 A.D.2d 629, 630-31 (1st Dep't 1976). Therefore, appointment of a temporary receiver requires a showing by clear and convincing evidence of the danger of irreparable loss or damage. See McBrien v. Murphy, 156 A.D.2d 140, 140 (1st Dep't 1989).
No such showing is made here. While Plaintiff highlights certain distributions to and expenditures made by Harounian, her displeasure with Harounian's compensation and her belief that "he admittedly will not stop" do not demonstrate by clear and convincing evidence that the assets of the Family LLCs are in danger of waste, dissipation or disappearance. In re Armienti, 309 A.D.2d 659, 661 (1st Dep't 2003). Instead, her allegations, if proven, may support her claims in the litigation but do not mandate the immediate wresting of the corporation from Harounian's control for the pendency of the litigation.
For the purpose of this motion, the Court does not pass on whether these allegations actually state a claim.
Notably, Plaintiff does not challenge Harounian's assertion that the Family LLCs are profitable, going concerns; instead, Homapour asserts that the profitability of the LLCs is no bar to the imposition of a temporary receiver. However, in this instance, the unchallenged solvency of the corporations and the fact that the compensation at issue has been in effect for several years strongly detracts from Plaintiff's argument that Harounian's alleged financial diversions "pose[] an immediate danger to the Companies' well-being." (Reply Br. at 12); see Martin v. Donghia Associates, Inc., 73 A.D.2d 898, 898 (1st Dep't 1980) (determining that "it is unnecessary at this time to appoint a receiver for this profitable, on-going business"); see also B.D. & F. Realty Corp. v. Lerner, 232 A.D.2d 346, 346 (1st Dep't 1996) (affirming denial of receiver application where "the value of the realty itself provides security and the property still generates income").
Accordingly, Plaintiff's request for appointment of a receiver pursuant to CPLR § 6401(a) is denied.
II. Conclusion
Therefore it is
ORDERED that Plaintiff Mehrnaz Nancy Homapour's motion to appoint a temporary receiver is denied. Dated: New York, New York
July 21, 2016
ENTER
/s/_________
Hon. Eileen Bransten, J.S.C.