Ronis v. Carmine's Broadway Feast, Inc. et al
Filing
151
OPINION re: 133 CROSS MOTION for Summary Judgment. filed by Carmine's Broadway Feast, Inc., Times Square Barbeque, Inc., Little Fish Corp., Time Square Barbeque, Inc., Carmine's Atlantic City, LLC, Carmine's Broadway Feat, Inc., [121 ] MOTION for Summary Judgment against Defendants and Other Relief. filed by Ellen Libman Ronis. Accordingly, summary judgment must be denied as to these claims. The court similarly holds that summary judgment must be denied with respect to the remaining claims and counterclaims subject to the present motions. The parties applied various and confusing labels to the payments they made to each other. A trial will best illuminate the true nature of these transactions and their impact on the present action. Thus, the cross-motions for summary judgment are denied. This opinion resolves docket items numbers 121 and 133. (Signed by Judge Thomas P. Griesa on 10/10/2012) (pl) Modified on 10/10/2012 (pl).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------x
ELLEN LIBMAN RONIS, as Executrix of
the Estate of Michael Ronis, Deceased,
10 Civ. 3355 (TPG)
Plaintiff,
OPINION
- againstCARMINE'S BROADWAY FEAST, INC.,
LITTLE FISH CORP., TIMES SQUARE
BARBEQUE, INC., and CARMINE'S
ATLANTIC CITY, LLC,
Defendants.
-----------------------------------------
--x
GARY CROLAND,
Intervening
Counterclaim Plaintiff
and Cross-Claimant,
USDCSDNY
DOCUMENT
ELECrRONICALLY FILED
DOC#: __~~_____
DATEFlLED: lOlto Il L
•
- againstELLEN LIBMAN RONIS, as Executrix of
the Estate of Michael Ronis, Deceased,
Counter-Defendant
and
CARMINE'S BROADWAY FEAST, INC.,
LITTLE FISH CORP., TIMES SQUARE
BARBEQUE, INC., and CARMINE'S
ATLANTIC CITY, LLC,
Counter-Defendants.
------------------------x
i*R
...,
a
Plaintiff Ellen Ronis, the widow of Michael Ronis ("Ronis") and
executrix of his estate, brings this diversity action against various
corporate defendants that allegedly breached agreements governing the
redemption of Ronis' stock upon his death. Plaintiff and defendants now
cross-move for summary judgment on plaintiffs claims concerning the
redemption price of Ronis' shares in the three defendant companies, as
well as on claims and counterclaims concerning loans allegedly made by
the parties to one another.
In an opinion dated September 26, 2011, the court held that
issues of fact precluded summary judgment on the very claims subject to
the present motions. The court reaches the same conclusion now.
The crux of this dispute concerns the valuation of Ronis' shares by
defendants' accountants. Pursuant to shareholder agreements between
Ronis and defendants Little Fish Corp. and Times Square Barbeque, Inc.,
this valuation was to include a downward adjustment for "management
and administrative fees, not to exceed six (6%) percent of net sales."
Plaintiff argues that defendants evaded the six-percent cap by wrongfully
removing certain distributions and consulting fees from the category of
management and administrative fees. As a result, these distributions and
consulting fees were deducted in full as costs from the earnings figure
used to arrive at the redemption price, meaning that expenses plaintiff
believes should have been capped at six percent of net sales actually
exceeded the cap and wrongfully reduced the valuation.
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Defendants argue that the accountants' actions were entirely
proper, citing standard accounting practice in the restaurant industry
and the companies' general ledgers. Indeed, both parties ground their
arguments on this issue not in the plain language of the shareholder
agreements, but in the past practices of the companies, deposition
testimony, and financial data. The substantial documentary record only
reinforces the court's opinion that an issue of fact exists as to what the
term "management and administrative fees" properly encompassed as of
the date of the shareholder agreements. Accordingly, summary judgment
must be denied as to these claims.
The court similarly holds that summary judgment must be denied
with respect to the remaining claims and counterclaims subject to the
present motions. The parties applied various and confusing labels to the
payments they made to each other. A trial will best illuminate the true
nature of these transactions and their impact on the present action.
Thus, the cross-motions for summary judgment are denied. This
opinion resolves docket items numbers 121 and 133.
Dated: New York, New York
October 10,2012
rLpL
Thomas P. Griesa
U.S.D.J.
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