Nesheiwat v. ElJamal, Sup Ct, Westchester County, 2012, Index No. 615/2011

The firm represented the plaintiff in a successful share holder derivative action and contract dispute involving the sale of commercial property in Westchester County, which plaintiff co-owned with the defendant as equal members of a limited liability company (LLC). The plaintiff and the defendant, jointly through their LLC, contracted with a third party commercial developer to sell the property, which was to be the site of a large-scale commercial development project, including a Costco store. When the defendant’s personal business interests started to conflict with the third-party’s proposed Costco development, which had included plans for a gasoline station that the defendant subsequently felt competed with defendant’s own stations, defendant began to oppose the development and obstruct the LLC’s ability to move forward with the transaction. After the defendant refused to proceed with the transaction, the plaintiff brought a shareholder derivative action against his co-member defendant on behalf of the LLC, seeking, among other relief, specific performance of the contract between the LLC and third party. After reviewing the history of the transaction, the court concluded on a motion for summary judgment that there was a valid purchase agreement and contract of sale between the LLC and third party, neither of which limited what use the third party buyer could make of the property, and that the contract of sale allowed the developer to seek whatever permits it needed without limitation. Based on these and other considerations, the court concluded that the defendant’s expressed opposition to the project and refusal to take the proper actions to finalize the transaction evidenced a breach of fiduciary and good faith obligations to the plaintiff and the LLC. After rejecting the defendant’s cross motion for summary judgment based on arbitration and on an argument that the agreement was invalid, the court concluded that the plaintiff was entitled to specific performance of the purchase agreement and contract of sale, as well as an order compelling the defendant to sign the documents necessary to finalize the transaction.