Preview
FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020
NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021
SUPREME COURT OF THE STATE OF NEW YORK
COMMERCIAL DIVISION, NEW YORK COUNTY
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YASEMIN TEKINER, :
:
in her individual capacity, as a beneficiary and a :
Trustee of The Yasemin Tekiner 2011 :
Descendants Trust and derivatively as a holder :
of equitable interests in a shareholder or a :
member of the Company Defendants, :
:
Plaintiff, :
: Index No. 657193/20
- against – :
:
BREMEN HOUSE INC., BREMEN HOUSE TEXAS, :
INC., GERMAN NEWS COMPANY, INC., GERMAN :
NEWS TEXAS, INC., 254 - 258 W. 35TH ST. LLC, :
BERRIN TEKINER, GONCA TEKINER, and :
BILLUR AKIPEK, in her capacity as a Trustee of :
The Yasemin Tekiner 2011 Descendants Trust, :
:
Defendants. :
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PLAINTIFF’S MEMORANDUM OF LAW IN SUPPORT OF HER
APPLICATION FOR AN ORDER TO SHOW CAUSE FOR A
PRELIMINARY INJUNCTION WITH TEMPORARY RESTRAINING ORDER
PATTERSON BELKNAP WEBB & TYLER LLP
Stephen P. Younger
1133 Avenue of the Americas
New York, NY 10036-6710
(212) 336-2000
Email: spyounger@pbwt.com
MANDEL BHANDARI LLP
Evan Mandel
80 Pine Street, 33rd Floor
New York, NY 10005
(212) 269-0055
Email: em@mandelbhandari.com
Attorneys for Plaintiff
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TABLE OF CONTENTS
PRELIMINARY STATEMENT .....................................................................................................1
STATEMENT OF FACTS ..............................................................................................................3
I. Parties...................................................................................................................................3
II. The Individual Defendants’ Pattern of Mismanagement and Self-Dealing .........................3
III. The Bargain Basement Extell Transaction ..........................................................................5
IV. The Individual Defendants’ Multiple Acts of Retaliation Against Plaintiff ........................6
V. Plaintiff’s Complaint............................................................................................................7
LEGAL STANDARD ......................................................................................................................7
ARGUMENT ...................................................................................................................................8
I. DEFENDANTS SHOULD BE RESTRAINED FROM TAKING FURTHER
RETALIATORY ACTS TO CONCEAL THEIR FIDUCIARY DUTY
BREACHES AND CORPORATE WASTE AND MISMANAGEMENT,
AND FROM USING COMPANY FUNDS TO DEFEND THE INDIVIDUAL
DEFENDANTS ...................................................................................................................8
A. Plaintiff Will Likely Succeed on the Merits of Her Claims for Breaches of
Fiduciary Duty, Corporate Waste and Mismanagement ................................................8
B. Plaintiff is Likely to Succeed on Her Motion Seeking to Restrain Defendants
from Using Company Assets to Pay for the Individual Defendants’ Legal Fees
and Expenses in Defending this Action .......................................................................13
C. Plaintiff Will Suffer Irreparable Injury Absent a Preliminary Injunction With
Temporary Restraining Order ......................................................................................14
D. The Equities Strongly Favor a Preliminary Injunction With Temporary
Restraining Order .........................................................................................................15
CONCLUSION ..............................................................................................................................16
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TABLE OF AUTHORITIES
Page(s)
Cases
Ajettix Inc. v. Raub,
9 Misc.3d 908 (Sup. Ct. Monroe Co. 2005).............................................................................10
Alpert v. 28 Williams St. Corp.,
63 N.Y.2d 557 (1984) ..........................................................................................................9, 10
Bansbach v. Zinn,
1 N.Y.3d 1 (2003) ....................................................................................................................13
Birnbaum v. Birnbaum,
73 N.Y.2d 461 (1989) ................................................................................................................9
Chrysler Corp. v. Fedders Corp.,
63 A.D.2d 567 (1st Dep’t 1978) ..............................................................................................15
Derfner Mgmt., Inc. v. Lenhill Realty Corp.,
90 A.D.3d 434, 933 N.Y.S.2d 671 (1st Dep’t 2011) ...............................................................11
Doe v. Axelrod,
73 N.Y. 2d 748 (1988) ...............................................................................................................8
Doe v. Dinkins,
192 A.D.2d 270 (1st Dep’t 1993) ..............................................................................................8
Donovan v. Rothman,
253 A.D.2d 627, 677 N.Y.S.2d 327 (1st Dep’t 1998) .............................................................13
Eikenberry v Lamson,
2020 NY Slip Op 33992(U) (Sup. Ct., Kings Co. Nov. 30, 2020) ...................................12, 14
Glob. Minerals & Metals Corp. v. Holme,
35 A.D.3d 93, 824 N.Y.S.2d 210 (1st Dep’t 2006) ...................................................................9
M & M Country Store, Inc. v. Kelly,
159 A.D.3d 1102, 71 N.Y.S.3d 707 (3d Dep’t 2018) ..............................................................11
McGlaughlin, Piven, Vogel, Inc. v. W.J. Nolan & Co.,
114 A.D.2d 165 (2d Dep’t 1986) .............................................................................................15
McKinnon Doxsee Agency, Inc. v. Gallina,
187 A.D.3d 733, 132 N.Y.S.3d 144 (2d Dep’t 2020) ................................................................9
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Mr. Natural, Inc. v. Unadulterated Food Prods., Inc.,
152 A.D.2d 729 (2d Dep’t 1989) .............................................................................................15
Pilipiak v. Keyes,
286 A.D.2d 231, 729 N.Y.S.2d 99 (1st Dep’t 2001) .........................................................13, 14
Pokoik v. Pokoik,
115 A.D.3d 428, 982 N.Y.S.2d 67 (1st Dep’t 2014) .................................................................9
Reed v. Lunkard,
578 F. Supp. 40 (W.D. Va. 1983) ...........................................................................................14
Retirement Plan for Gen. Employees of City of North Miami v. McGraw Hill Cos.,
120 A.D.3d 1052 (1st Dept. 2014)...........................................................................................12
Estate of Rothko,
84 Misc. 2d 830, 379 N.Y.S.2d 923 (Sur. N.Y. Co. 1975), decree modified sub
nom. Will of Rothko, 56 A.D.2d 499, 392 N.Y.S.2d 870 (1977), aff’d sub nom.
Matter of Rothko’s Estate, 43 N.Y.2d 305 (1977) ...................................................................10
Shapiro v. Rockville Country Club, Inc.,
22 A.D.3d 657, 802 N.Y.S.2d 717 (2d Dep’t 2005) ..................................................................9
Terrell v. Terrell,
279 A.D.2d 301 (1st Dep’t 2001) ..............................................................................................9
Tucker v. Toia,
54 A.D.2d 322 (4th Dep’t 1976) ..............................................................................................15
Wolf v. Rand,
258 A.D.2d 401, 685 N.Y.S.2d 708 (1st Dept.1999)...............................................................10
Statutes
Business Corporation Law § 624 ...............................................................................................7, 12
Business Corporation Law § 626 .....................................................................................................7
Business Corporation Law § 720 .....................................................................................................7
Business Corporation Law § 721 ...................................................................................................13
CPLR § 6301....................................................................................................................................7
CPLR § 6311....................................................................................................................................7
CPLR §6313.....................................................................................................................................8
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Plaintiff Yasemin Tekiner (“Yasemin” or “Plaintiff”) respectfully submits this
memorandum of law in support of her application for an Order to Show Cause for a Preliminary
Injunction with Temporary Restraining Order against Defendants Bremen House, Inc., Bremen
House Texas, Inc., German News Company, Inc., German News Texas, Inc., 254 – 258 W. 35th
St. LLC (collectively the “Company Defendants” or “Companies”), Berrin Tekiner (“Berrin”)
and Gonca Tekiner (“Gonca”) (together the “Individual Defendants”).
PRELIMINARY STATEMENT
This case concerns family real estate companies that have been the subject of a protracted
course of mismanagement, self-dealing, waste and concealment. When Plaintiff Yasemin has
raised issues about company management, she has repeatedly been met with acts of retaliation.
To prevent additional acts of retaliation, Plaintiff Yasemin seeks a preliminary injunction
with temporary restraining order to prohibit Defendants from further retaliating against her for
bringing this action and exposing the gross mismanagement and self-dealing perpetrated by the
Individual Defendants. She also seeks to enjoin Defendants from using any funds or assets of
the Company Defendants to pay for the Individual Defendants’ legal fees and expenses in
defending against this action.
For years, the Individual Defendants have engaged in numerous acts of mismanagement
and self-dealing by using the funds of the Companies as their own personal piggy bank. These
misdeeds have led to a steep decline in the Companies’ financial performance. To conceal their
misconduct, the Individual Defendants have repeatedly engaged in acts of retaliation designed to
muzzle Yasemin from raising concerns about their abuse of the Companies.
Recently, Plaintiff became distressed over the Individual Defendants’ inability to
properly manage the Companies largely due to their personal health problems and their lack of
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real estate management training, and triggered by their agreement to sell off various of the
Companies’ most valuable development properties at a fire sale price. Plaintiff therefore made
both informal and formal books and records demands as a Director of Defendant Bremen House,
Inc. (“Bremen House”), as Treasurer of Defendant German News Company, Inc. (“German
News”) and as the beneficiary and a Trustee of The Yasemin Tekiner 2011 Descendants Trust
(the “Trust”), which holds major interests in the Company Defendants for her benefit. These
requests were denied.
In a blatant act of retaliation, Plaintiff was locked out of the Bremen House email account
to prevent her from accessing the company’s communications. In further retaliation, Defendant
Berrin secretly signed a document purporting to remove Plaintiff as a Trustee of the Trust.
Given the Individual Defendants’ modus operandi of retaliating against Plaintiff and
threatening her livelihood for raising any questions about the Companies’ affairs, Plaintiff faces
the immediate prospect of further retaliation for bringing this action – such as possibly being
removed as a director and/or officer of the Companies, and/or being deprived of her salary and
her home, which she leases from Bremen House. The Individual Defendants should not be
permitted to take retaliatory steps designed to muzzle Plaintiff and cover up their misconduct.
Furthermore, in light of the Individual Defendants’ ongoing practice of using the
Companies’ funds to pay for their personal expenses, there is an imminent risk that the
Individual Defendants will seek to use assets of the Company Defendants to pay their legal fees
and expenses in defending this action. Since the Individual Defendants’ misuse of the
Companies’ funds and assets lies at the center of this action, controlling case law precludes them
from using company funds to pay for their defense of their misconduct.
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STATEMENT OF FACTS
I. Parties
Plaintiff is a beneficiary and has long been a Trustee of the Trust, which holds major
interests in the Company Defendants, directly and indirectly, for the benefit of Plaintiff and her
descendants. Tekiner Aff. ¶ 1. She is also a director or officer of certain of the Company
Defendants, including serving as Treasurer of German News. Id. Plaintiff earns a salary for her
work on behalf of the Companies. Id. ¶ 26. She also lives in a house owned by Bremen House
pursuant to a lease on which she makes annual rental payments. Id. This house was purchased
with the proceeds from the sale of a New York City apartment in which Yasemin previously
lived. Id.
Defendants, Bremen House, Bremen House Texas, Inc., German News, German News
Texas, Inc. and 254 – 258 W. 35th St. LLC, own valuable real estate properties, which were
largely assembled by Plaintiff’s father over a 70-year period. Id. ¶ 3. After the death of
Plaintiff’s father, her mother Berrin took over the formal management of the Companies. Id. ¶ 4.
In the early 2000s, Plaintiff’s sister Gonca began working for the Companies. Id.
Berrin and Gonca lack any formal training in real estate management or investment; and
they both suffer from serious personal health issues which make their conduct erratic and have
called into question their fitness to serve as executives of the Companies. Id.
II. The Individual Defendants’ Pattern of Mismanagement and Self-Dealing
For years, the Individual Defendants have used the funds of the Companies as their own
personal piggy bank. Id. They have used the Companies’ funds to pay for a wide assortment of
personal expenses including paying for:
● large personal phone bills;
● pet food;
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● housekeeping and landscaping expenses for their homes; and
● Berrin’s personal driver. Id. ¶¶ 5, 28.
In 2017, the Companies took out a $6 million blanket mortgage in order to, among other
things, buy a luxurious home in Bronxville, New York for Gonca – even though she already
benefited from a multi-million-dollar Manhattan apartment owned by the company. Id. ¶ 7.
Gonca was given an exorbitant salary and severance agreement for her work in the
Companies. She was hired as Bremen House’s President and CEO at a highly favorable salary
of $480,000 (which has since been raised further), plus bonuses and expense reimbursements.
Id. ¶ 12. Unbeknownst to Plaintiff, the company signed a lucrative employment contract with
Gonca which gave her 10 years of guaranteed severance should she leave the company. Id. The
cost of this excessive severance would effectively preclude the company from engaging
professional management should it choose to do so. Id.
In addition to such acts of self-dealing, the Individual Defendants have grossly
mismanaged the Company Defendants. Indeed, Berrin admitted to Plaintiff around late 2019 or
early 2020 that “Gonca had mismanaged the companies and faulted Gonca for [the Companies’]
expenses being so high.” Id. ¶ 13. A relapse of Gonca’s personal health problems further
spurred tensions between her and Berrin, which caused Berrin to terminate Gonca from her
positions with the Companies. Id. ¶ 14. But Berrin, as part of her erratic nature, eventually
reinstated Gonca back into her company positions – even though Gonca’s personal health issues
had caused her to check into a facility and those personal circumstances satisfied one of the
limited grounds on which Bremen House could fire Gonca without paying her the guaranteed
severance. Id. ¶ 16.
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At the recommendation of Plaintiff, the Companies hired an independent real estate
adviser to devise a strategic plan for their properties. Id. ¶ 17. But the Individual Defendants
terminated that adviser shortly before he was to present the proposed plan to the Companies. Id.
The Individual Defendants’ mismanagement of the Company Defendants has caused
them to experience negative cash flow in recent years, leading to annual losses of over $1
million. Id. ¶ 5. The Companies’ investment properties have incurred substantial debt, and their
large expenses—particularly to pay for the Individual Defendants’ personal expenses—make it
difficult if not impossible for the Companies to turn a profit. Id.
III. The Bargain Basement Extell Transaction
Recently, two of the Companies—Bremen House and German News—sought to sell
some of their valuable Manhattan development properties in order to take steps toward returning
to profitability. Id. ¶ 18. They reached a deal to sell certain of these properties to Extell
Acquisitions LLC (“Extell”), a major developer, in two tranches for a total sales price of $60
million – even though Extell had previously indicated that it would pay substantially more. Id.
This sales price is well below the prices recorded for recent sales of comparable properties in the
area. Id.
Thereafter, Berrin – without consulting Plaintiff and contrary to prior assurances she had
given to Plaintiff – agreed to drop the price of a portion of these sales by a further $10 million.
Id. ¶ 19. Even the company’s real estate lawyer recommended against agreeing to this reduced
price, absent receipt of some additional consideration from Extell. Id. The lawyer stated that
Extell’s conduct in lowering the price was “disgusting” and “underhanded.” Id.
Concerned about the impact of these sales on the Companies’ finances and the ability of
the Individual Defendants to re-invest the sale proceeds prudently, Yasemin asked, both
informally and formally, to inspect company records. These requests were rebuffed – even
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though Yasemin has an absolute right to review these records as a company director and officer.
Id. ¶¶ 20-22.
IV. The Individual Defendants’ Multiple Acts of Retaliation Against Plaintiff
Throughout the years, Plaintiff has raised various concerns about the mismanagement of
the Company Defendants, which have been met with a pattern of retaliatory actions designed to
cover up the Individual Defendants’ misconduct.
Notably, when Plaintiff questioned the company’s purchase of a lavish Bronxville home
for Gonca—who already benefited from a multi-million dollar company apartment—Berrin
threatened to cut Plaintiff off. Id. ¶¶ 7–8. In an email to Yasemin, Berrin apologized for her
threats and suggested that the family “do whatever [they] can to make everyone feel secure and
feel better.” Id. ¶ 8, Ex. A. Berrin admitted that her threatening action “was wrong. I thought
you knew me better and ignore my empty threats. But it was WRONG and SMALL of me.” Id.
Berrin concluded by saying: “I am sorry and apologize for speaking so carelessly and
unnecessarily.” Id.
As a reflection of her erratic behavior, despite having apologized, Berrin ultimately
followed through on her threatened retaliation against Yasemin. Berrin removed Yasemin as a
Director of Bremen House and as a Trustee of her Trust, and she instructed Plaintiff not to ask
questions of the Companies’ employees. Id. ¶ 9. Plaintiff was only reinstated to these positions
after she had repaired her relationship with Berrin, and Berrin had grown concerned over the
Companies’ increasing financial difficulties. Id. ¶ 10.
On another occasion, Berrin evicted Yasemin from the Manhattan apartment in which she
was then living, simply because Yasemin objected to racist comments that Gonca made at a
family dinner. Id. ¶ 11.
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Recently, after Plaintiff raised questions concerning the Extell sales price reduction and
asked to inspect company records, Plaintiff was locked out of her Bremen House email account
in order to keep her from accessing company communications. Id. ¶¶ 20-22. On December 10,
2020, after learning of Yasemin’s plans to file this lawsuit, Berrin secretly signed a document
purporting to remove Plaintiff as a Trustee of her Trust in another act of retaliation. Id. ¶ 23.
Given their past pattern, Plaintiff is justifiably concerned that the Individual Defendants
are likely to take further retaliatory actions against her. Id. ¶¶ 25, 27.
V. Plaintiff’s Complaint
Unable to resolve these issues consensually, Plaintiff has filed this suit asserting claims,
inter alia: 1) under Business Corporation Law § 720, requiring the Individual Defendants to
account for all their self-interested transactions and benefits and their waste of company assets;
2) under Business Corporation Law § 626 and common law, derivatively to cause the Company
Defendants to pursue the Individual Defendants’ acts of self-dealing, waste and concealment;
3) derivatively for unjust enrichment; 4) to inspect the Company Defendants books and records
pursuant to Business Corporation Law § 624 and New York common law; and 5) for an
accounting.
LEGAL STANDARD
A preliminary injunction may be granted “in any action where the plaintiff has demanded
and would be entitled to a judgment restraining the defendant from the commission or
continuance of an act, which, if committed or continued during the pendency of the action,
would produce injury to the plaintiff.” CPLR §§ 6301, 6311. Specifically, a preliminary
injunction will be granted when the party seeking such relief demonstrates: “(1) a likelihood of
ultimate success on the merits; (2) the prospect of irreparable injury if the provisional relief is
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withheld; and (3) a balance of equities tipping in the moving party’s favor.” Doe v. Axelrod, 73
N.Y. 2d 748, 750 (1988).
A temporary restraining order likewise may be granted pending a hearing for a
preliminary injunction where “it appears that immediate and irreparable injury, loss or damage
will result unless the defendant is restrained before the hearing can be had.” CPLR §§ 6301,
6313. As discussed below, the equities of this case and the high risk of injury to Plaintiff and
even the Company Defendants cry out for a TRO followed by a preliminary injunction.
ARGUMENT
I. DEFENDANTS SHOULD BE RESTRAINED FROM TAKING FURTHER
RETALIATORY ACTS TO CONCEAL THEIR FIDUCIARY DUTY BREACHES
AND CORPORATE WASTE AND MISMANAGEMENT, AND FROM USING
COMPANY FUNDS TO DEFEND THE INDIVIDUAL DEFENDANTS
Plaintiff has met each of the prerequisites for a preliminary injunction and TRO:
1) Plaintiff is likely to succeed on the merits of her claims for fiduciary duty breaches, corporate
waste and mismanagement, and on her motion to prohibit the use of the Companies’ funds and
assets to pay for the Individual Defendants’ defense costs incurred in this action; 2) Plaintiff will
suffer irreparable harm if the Defendants are not enjoined from retaliating against Plaintiff to
further conceal the Individual Defendants’ misconduct and if the Companies use their dwindling
funds for the Individual Defendants’ defense costs; and 3) the equities overwhelmingly favor
granting the requested injunctive relief during the pendency of this action.
A. Plaintiff Will Likely Succeed on the Merits of Her Claims for Breaches of
Fiduciary Duty, Corporate Waste and Mismanagement
In determining whether a “likelihood of success” on the merits exists, a court need not
finally determine the merits of an action and a plaintiff need not demonstrate that success is an
absolute certainty. See Doe v. Dinkins, 192 A.D.2d 270, 275-76 (1st Dep’t 1993) (“The
plaintiffs need not demonstrate a certainty of success . . . .”). A plaintiff is only required to make
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a prima facie showing of the likelihood of success. See Terrell v. Terrell, 279 A.D.2d 301, 303
(1st Dep’t 2001); Akos Really Corp. v. Vandemark, 157A.D.2d 632, 634 (1st Dep’t 1990). Here,
Plaintiff has made far more than a prima facie showing that she will likely succeed on her claims
of breaches of fiduciary duties and corporate waste and mismanagement.
To establish a fiduciary duty breach, Plaintiff must show “the existence of a fiduciary
relationship, misconduct by the other party, and damages directly caused by that party’s
misconduct.” Pokoik v. Pokoik, 115 A.D.3d 428, 429, 982 N.Y.S.2d 67, 70 (1st Dep’t 2014).
Plaintiff has demonstrated that she will likely prevail on all of these elements for multiple
reasons.
As directors and officers of the Company Defendants, the Individual Defendants owe
fiduciary duties to those companies and to their shareholders or members. See Glob. Minerals &
Metals Corp. v. Holme, 35 A.D.3d 93, 98, 824 N.Y.S.2d 210, 214 (1st Dep’t 2006) (directors and
officers of close corporations owe fiduciary duties to the corporations and their shareholders);
McKinnon Doxsee Agency, Inc. v. Gallina, 187 A.D.3d 733, 132 N.Y.S.3d 144, 148 (2d Dep’t
2020) (managing member of an LLC and non-member manager of an LLC owe fiduciary duties
to the LLC). They are obligated to avoid “not only blatant self-dealing, but also…situations in
which a fiduciary’s personal interest possibly conflicts with the interest of those owed a fiduciary
duty.” Birnbaum v. Birnbaum, 73 N.Y.2d 461, 466, (1989). They further owe a duty of “good
and prudent management of the corporation.” Alpert v. 28 Williams St. Corp., 63 N.Y.2d 557,
569 (1984). “Further, directors are liable for all forms of waste of assets regardless of whether
they were intentional or negligent.” Shapiro v. Rockville Country Club, Inc., 22 A.D.3d 657,
658, 802 N.Y.S.2d 717, 719 (2d Dep’t 2005). They also owe a duty to act, not only with candor
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and honesty, but to fully disclose all material information. Ajettix Inc. v. Raub, 9 Misc.3d 908,
912 (Sup. Ct. Monroe Co. 2005); see also Alpert., 63 N.Y.2d at 569.
The Individual Defendants have breached each of these duties, wasted corporate assets to
the financial detriment of the Company Defendants, engaged in multiple acts of self-dealing and
tried to conceal their misconduct.
First, corporate fiduciaries engage in improper self-dealing when they benefit themselves
“at the expense” of the company. Estate of Rothko, 84 Misc. 2d 830, 844, 379 N.Y.S.2d 923,
940 (Sur. N.Y. Co. 1975), decree modified sub nom. Will of Rothko, 56 A.D.2d 499, 392
N.Y.S.2d 870 (1977), aff’d sub nom. Matter of Rothko’s Estate, 43 N.Y.2d 305 (1977). For
years, the Individual Defendants have benefited themselves to the detriment of the Companies.
They have used the Companies’ funds to pay for “a wide assortment of personal expenses for
Berrin and Gonca, including large phone bills, housekeeping and landscaping expenses for their
homes…pet food,” and Berrin’s own personal driver. Tekiner Aff. ¶¶ 5, 6, 28. The Companies
took out a $6 million mortgage it could ill afford principally to buy a luxurious Bronxville home
for Gonca – even though she already benefited from a multi-million-dollar apartment in
Manhattan. Id. ¶ 6. These expenses and purchases were made solely for the personal benefit of
the Individual Defendants, and did not confer any benefit on the Company Defendants. Gonca
was also given an exorbitant salary, and a prohibitively lengthy severance agreement stretching
out over ten years. Id. ¶ 12.
These multiple acts of self-dealing constitute a prima facie showing of the Individual
Defendants’ fiduciary duty breaches. See Wolf v. Rand, 258 A.D.2d 401, 404, 685 N.Y.S.2d 708
(1st Dept.1999) (corporate fiduciaries who engage in self-dealing, or make decisions affected by
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an inherent conflict of interest as here cannot be protected by the business judgment rule, and the
burden shifts to the fiduciaries). They also amount to corporate waste.
Second, the Individual Defendants mismanaged the Companies’ funds and assets by
engaging in activities entirely devoid of any legitimate or lawful business purpose. Although
under the business judgment rule “courts defer to the determinations of directors and officers as
to the best interests of the corporations…this rule will not insulate a director or officer from
liability where his or her actions lack a legitimate and lawful business purpose and waste
corporate assets.” M & M Country Store, Inc. v. Kelly, 159 A.D.3d 1102, 1103, 71 N.Y.S.3d
707, 709–10 (3d Dep’t 2018). Emblematic of their lack of capacity to run a major real estate
firm, the Individual Defendants have made business decisions that were detrimental to the
Companies, and caused company expenses to skyrocket. Even Berrin admitted that “Gonca had
mismanaged the companies and faulted Gonca for [the Companies’] expenses being so high.”
Tekiner Aff. ¶ 13. The Individual Defendants terminated an independent real estate advisor
shortly before he was to present a proposed strategic plan. Id. ¶ 17. And, without consulting
Plaintiff, they also agreed to sell the Companies’ development properties to Extell at a fire sale
price which was $10 million less than its prior below-market offer, against the advice of the
Companies’ legal advisor. Id. ¶ 18.
Third, the Individual Defendants breached their duties of candor by refusing to disclose
to Plaintiff the details of their various business decisions, including the unfavorable Extell sales
price reduction, and concealing key financial documents. Id. ¶¶ 20, 21. As a Director of Bremen
House and as Treasurer of German News, Yasemin has “an absolute, unqualified right” under
New York law to inspect the Companies’ books and records. Derfner Mgmt., Inc. v. Lenhill
Realty Corp., 90 A.D.3d 434, 435, 933 N.Y.S.2d 671, 672 (1st Dep’t 2011). In addition, as a
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NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021
beneficiary and Trustee of the Trust for her benefit–which, among other things, holds large
blocks of shares in the Companies, directly and indirectly–Yasemin has both statutory and
common law rights to inspect the Companies’ corporate records. Retirement Plan for Gen.
Employees of City of North Miami v. McGraw Hill Cos., 120 A.D.3d 1052, 1055-56 (1st Dept.
2014); see Bus. Corp. L. § 624. Despite all this, the Companies, acting at the instruction of the
Individual Defendants who sought to hide the evidence of their misdeeds, have denied Yasemin
access to requested corporate records and have shut her out of the company email system
Tekiner Aff. ¶¶ 22–23.
Finally, the Individual Defendants, instead of disclosing the material facts, have taken
multiple acts of retaliation against Yasemin in reaction to her raising legitimate questions about
their management – all in an effort to conceal their own misconduct. These retaliatory acts have
included: removing Yasemin as a Director of Bremen House; removing Yasemin as a Trustee of
her Trust; and evicting Yasemin from her Manhattan apartment. Id. ¶¶ 9-11. Berrin even
admitted that her threats were “WRONG” but followed through on her retaliation against
Yasemin anyway. Id. ¶ 8, Ex. A. In the last couple of months, the Individual Defendants have
taken further retaliatory acts against Yasemin in an effort to conceal their misdeeds. They have
denied Yasemin her legal right to access to company records, they have shut Yasemin out of the
Companies’ email system, and Berrin has once again secretly removed Yasemin as a Trustee of
her Trust. Id. ¶¶ 22–23. Because they are taking these actions to cover up their own wrongdoing
and to silence Yasemin from questioning their misdeeds, these retaliatory acts constitute further
fiduciary duty breaches. See Eikenberry v Lamson, 2020 NY Slip Op 33992(U) (Sup. Ct., Kings
Co. Nov. 30, 2020)(granting injunction requiring distributions to plaintiff during pendency of
business divorce litigation).
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FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 SUPREME COURT OF THE STATE OF NEW YORK COMMERCIAL DIVISION, NEW YORK COUNTY -------------------------------------- x YASEMIN TEKINER, : : in her individual capacity, as a beneficiary and a : Trustee of The Yasemin Tekiner 2011 : Descendants Trust and derivatively as a holder : of equitable interests in a shareholder or a : member of the Company Defendants, : : Plaintiff, : : Index No. 657193/20 - against – : : BREMEN HOUSE INC., BREMEN HOUSE TEXAS, : INC., GERMAN NEWS COMPANY, INC., GERMAN : NEWS TEXAS, INC., 254 - 258 W. 35TH ST. LLC, : BERRIN TEKINER, GONCA TEKINER, and : BILLUR AKIPEK, in her capacity as a Trustee of : The Yasemin Tekiner 2011 Descendants Trust, : : Defendants. : -------------------------------------- x PLAINTIFF’S MEMORANDUM OF LAW IN SUPPORT OF HER APPLICATION FOR AN ORDER TO SHOW CAUSE FOR A PRELIMINARY INJUNCTION WITH TEMPORARY RESTRAINING ORDER PATTERSON BELKNAP WEBB & TYLER LLP Stephen P. Younger 1133 Avenue of the Americas New York, NY 10036-6710 (212) 336-2000 Email: spyounger@pbwt.com MANDEL BHANDARI LLP Evan Mandel 80 Pine Street, 33rd Floor New York, NY 10005 (212) 269-0055 Email: em@mandelbhandari.com Attorneys for Plaintiff 1 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 TABLE OF CONTENTS PRELIMINARY STATEMENT .....................................................................................................1 STATEMENT OF FACTS ..............................................................................................................3 I. Parties...................................................................................................................................3 II. The Individual Defendants’ Pattern of Mismanagement and Self-Dealing .........................3 III. The Bargain Basement Extell Transaction ..........................................................................5 IV. The Individual Defendants’ Multiple Acts of Retaliation Against Plaintiff ........................6 V. Plaintiff’s Complaint............................................................................................................7 LEGAL STANDARD ......................................................................................................................7 ARGUMENT ...................................................................................................................................8 I. DEFENDANTS SHOULD BE RESTRAINED FROM TAKING FURTHER RETALIATORY ACTS TO CONCEAL THEIR FIDUCIARY DUTY BREACHES AND CORPORATE WASTE AND MISMANAGEMENT, AND FROM USING COMPANY FUNDS TO DEFEND THE INDIVIDUAL DEFENDANTS ...................................................................................................................8 A. Plaintiff Will Likely Succeed on the Merits of Her Claims for Breaches of Fiduciary Duty, Corporate Waste and Mismanagement ................................................8 B. Plaintiff is Likely to Succeed on Her Motion Seeking to Restrain Defendants from Using Company Assets to Pay for the Individual Defendants’ Legal Fees and Expenses in Defending this Action .......................................................................13 C. Plaintiff Will Suffer Irreparable Injury Absent a Preliminary Injunction With Temporary Restraining Order ......................................................................................14 D. The Equities Strongly Favor a Preliminary Injunction With Temporary Restraining Order .........................................................................................................15 CONCLUSION ..............................................................................................................................16 i 2 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 TABLE OF AUTHORITIES Page(s) Cases Ajettix Inc. v. Raub, 9 Misc.3d 908 (Sup. Ct. Monroe Co. 2005).............................................................................10 Alpert v. 28 Williams St. Corp., 63 N.Y.2d 557 (1984) ..........................................................................................................9, 10 Bansbach v. Zinn, 1 N.Y.3d 1 (2003) ....................................................................................................................13 Birnbaum v. Birnbaum, 73 N.Y.2d 461 (1989) ................................................................................................................9 Chrysler Corp. v. Fedders Corp., 63 A.D.2d 567 (1st Dep’t 1978) ..............................................................................................15 Derfner Mgmt., Inc. v. Lenhill Realty Corp., 90 A.D.3d 434, 933 N.Y.S.2d 671 (1st Dep’t 2011) ...............................................................11 Doe v. Axelrod, 73 N.Y. 2d 748 (1988) ...............................................................................................................8 Doe v. Dinkins, 192 A.D.2d 270 (1st Dep’t 1993) ..............................................................................................8 Donovan v. Rothman, 253 A.D.2d 627, 677 N.Y.S.2d 327 (1st Dep’t 1998) .............................................................13 Eikenberry v Lamson, 2020 NY Slip Op 33992(U) (Sup. Ct., Kings Co. Nov. 30, 2020) ...................................12, 14 Glob. Minerals & Metals Corp. v. Holme, 35 A.D.3d 93, 824 N.Y.S.2d 210 (1st Dep’t 2006) ...................................................................9 M & M Country Store, Inc. v. Kelly, 159 A.D.3d 1102, 71 N.Y.S.3d 707 (3d Dep’t 2018) ..............................................................11 McGlaughlin, Piven, Vogel, Inc. v. W.J. Nolan & Co., 114 A.D.2d 165 (2d Dep’t 1986) .............................................................................................15 McKinnon Doxsee Agency, Inc. v. Gallina, 187 A.D.3d 733, 132 N.Y.S.3d 144 (2d Dep’t 2020) ................................................................9 ii 3 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 Mr. Natural, Inc. v. Unadulterated Food Prods., Inc., 152 A.D.2d 729 (2d Dep’t 1989) .............................................................................................15 Pilipiak v. Keyes, 286 A.D.2d 231, 729 N.Y.S.2d 99 (1st Dep’t 2001) .........................................................13, 14 Pokoik v. Pokoik, 115 A.D.3d 428, 982 N.Y.S.2d 67 (1st Dep’t 2014) .................................................................9 Reed v. Lunkard, 578 F. Supp. 40 (W.D. Va. 1983) ...........................................................................................14 Retirement Plan for Gen. Employees of City of North Miami v. McGraw Hill Cos., 120 A.D.3d 1052 (1st Dept. 2014)...........................................................................................12 Estate of Rothko, 84 Misc. 2d 830, 379 N.Y.S.2d 923 (Sur. N.Y. Co. 1975), decree modified sub nom. Will of Rothko, 56 A.D.2d 499, 392 N.Y.S.2d 870 (1977), aff’d sub nom. Matter of Rothko’s Estate, 43 N.Y.2d 305 (1977) ...................................................................10 Shapiro v. Rockville Country Club, Inc., 22 A.D.3d 657, 802 N.Y.S.2d 717 (2d Dep’t 2005) ..................................................................9 Terrell v. Terrell, 279 A.D.2d 301 (1st Dep’t 2001) ..............................................................................................9 Tucker v. Toia, 54 A.D.2d 322 (4th Dep’t 1976) ..............................................................................................15 Wolf v. Rand, 258 A.D.2d 401, 685 N.Y.S.2d 708 (1st Dept.1999)...............................................................10 Statutes Business Corporation Law § 624 ...............................................................................................7, 12 Business Corporation Law § 626 .....................................................................................................7 Business Corporation Law § 720 .....................................................................................................7 Business Corporation Law § 721 ...................................................................................................13 CPLR § 6301....................................................................................................................................7 CPLR § 6311....................................................................................................................................7 CPLR §6313.....................................................................................................................................8 iii 4 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 Plaintiff Yasemin Tekiner (“Yasemin” or “Plaintiff”) respectfully submits this memorandum of law in support of her application for an Order to Show Cause for a Preliminary Injunction with Temporary Restraining Order against Defendants Bremen House, Inc., Bremen House Texas, Inc., German News Company, Inc., German News Texas, Inc., 254 – 258 W. 35th St. LLC (collectively the “Company Defendants” or “Companies”), Berrin Tekiner (“Berrin”) and Gonca Tekiner (“Gonca”) (together the “Individual Defendants”). PRELIMINARY STATEMENT This case concerns family real estate companies that have been the subject of a protracted course of mismanagement, self-dealing, waste and concealment. When Plaintiff Yasemin has raised issues about company management, she has repeatedly been met with acts of retaliation. To prevent additional acts of retaliation, Plaintiff Yasemin seeks a preliminary injunction with temporary restraining order to prohibit Defendants from further retaliating against her for bringing this action and exposing the gross mismanagement and self-dealing perpetrated by the Individual Defendants. She also seeks to enjoin Defendants from using any funds or assets of the Company Defendants to pay for the Individual Defendants’ legal fees and expenses in defending against this action. For years, the Individual Defendants have engaged in numerous acts of mismanagement and self-dealing by using the funds of the Companies as their own personal piggy bank. These misdeeds have led to a steep decline in the Companies’ financial performance. To conceal their misconduct, the Individual Defendants have repeatedly engaged in acts of retaliation designed to muzzle Yasemin from raising concerns about their abuse of the Companies. Recently, Plaintiff became distressed over the Individual Defendants’ inability to properly manage the Companies largely due to their personal health problems and their lack of 1 5 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 real estate management training, and triggered by their agreement to sell off various of the Companies’ most valuable development properties at a fire sale price. Plaintiff therefore made both informal and formal books and records demands as a Director of Defendant Bremen House, Inc. (“Bremen House”), as Treasurer of Defendant German News Company, Inc. (“German News”) and as the beneficiary and a Trustee of The Yasemin Tekiner 2011 Descendants Trust (the “Trust”), which holds major interests in the Company Defendants for her benefit. These requests were denied. In a blatant act of retaliation, Plaintiff was locked out of the Bremen House email account to prevent her from accessing the company’s communications. In further retaliation, Defendant Berrin secretly signed a document purporting to remove Plaintiff as a Trustee of the Trust. Given the Individual Defendants’ modus operandi of retaliating against Plaintiff and threatening her livelihood for raising any questions about the Companies’ affairs, Plaintiff faces the immediate prospect of further retaliation for bringing this action – such as possibly being removed as a director and/or officer of the Companies, and/or being deprived of her salary and her home, which she leases from Bremen House. The Individual Defendants should not be permitted to take retaliatory steps designed to muzzle Plaintiff and cover up their misconduct. Furthermore, in light of the Individual Defendants’ ongoing practice of using the Companies’ funds to pay for their personal expenses, there is an imminent risk that the Individual Defendants will seek to use assets of the Company Defendants to pay their legal fees and expenses in defending this action. Since the Individual Defendants’ misuse of the Companies’ funds and assets lies at the center of this action, controlling case law precludes them from using company funds to pay for their defense of their misconduct. 2 6 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 STATEMENT OF FACTS I. Parties Plaintiff is a beneficiary and has long been a Trustee of the Trust, which holds major interests in the Company Defendants, directly and indirectly, for the benefit of Plaintiff and her descendants. Tekiner Aff. ¶ 1. She is also a director or officer of certain of the Company Defendants, including serving as Treasurer of German News. Id. Plaintiff earns a salary for her work on behalf of the Companies. Id. ¶ 26. She also lives in a house owned by Bremen House pursuant to a lease on which she makes annual rental payments. Id. This house was purchased with the proceeds from the sale of a New York City apartment in which Yasemin previously lived. Id. Defendants, Bremen House, Bremen House Texas, Inc., German News, German News Texas, Inc. and 254 – 258 W. 35th St. LLC, own valuable real estate properties, which were largely assembled by Plaintiff’s father over a 70-year period. Id. ¶ 3. After the death of Plaintiff’s father, her mother Berrin took over the formal management of the Companies. Id. ¶ 4. In the early 2000s, Plaintiff’s sister Gonca began working for the Companies. Id. Berrin and Gonca lack any formal training in real estate management or investment; and they both suffer from serious personal health issues which make their conduct erratic and have called into question their fitness to serve as executives of the Companies. Id. II. The Individual Defendants’ Pattern of Mismanagement and Self-Dealing For years, the Individual Defendants have used the funds of the Companies as their own personal piggy bank. Id. They have used the Companies’ funds to pay for a wide assortment of personal expenses including paying for: ● large personal phone bills; ● pet food; 3 7 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 ● housekeeping and landscaping expenses for their homes; and ● Berrin’s personal driver. Id. ¶¶ 5, 28. In 2017, the Companies took out a $6 million blanket mortgage in order to, among other things, buy a luxurious home in Bronxville, New York for Gonca – even though she already benefited from a multi-million-dollar Manhattan apartment owned by the company. Id. ¶ 7. Gonca was given an exorbitant salary and severance agreement for her work in the Companies. She was hired as Bremen House’s President and CEO at a highly favorable salary of $480,000 (which has since been raised further), plus bonuses and expense reimbursements. Id. ¶ 12. Unbeknownst to Plaintiff, the company signed a lucrative employment contract with Gonca which gave her 10 years of guaranteed severance should she leave the company. Id. The cost of this excessive severance would effectively preclude the company from engaging professional management should it choose to do so. Id. In addition to such acts of self-dealing, the Individual Defendants have grossly mismanaged the Company Defendants. Indeed, Berrin admitted to Plaintiff around late 2019 or early 2020 that “Gonca had mismanaged the companies and faulted Gonca for [the Companies’] expenses being so high.” Id. ¶ 13. A relapse of Gonca’s personal health problems further spurred tensions between her and Berrin, which caused Berrin to terminate Gonca from her positions with the Companies. Id. ¶ 14. But Berrin, as part of her erratic nature, eventually reinstated Gonca back into her company positions – even though Gonca’s personal health issues had caused her to check into a facility and those personal circumstances satisfied one of the limited grounds on which Bremen House could fire Gonca without paying her the guaranteed severance. Id. ¶ 16. 4 8 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 At the recommendation of Plaintiff, the Companies hired an independent real estate adviser to devise a strategic plan for their properties. Id. ¶ 17. But the Individual Defendants terminated that adviser shortly before he was to present the proposed plan to the Companies. Id. The Individual Defendants’ mismanagement of the Company Defendants has caused them to experience negative cash flow in recent years, leading to annual losses of over $1 million. Id. ¶ 5. The Companies’ investment properties have incurred substantial debt, and their large expenses—particularly to pay for the Individual Defendants’ personal expenses—make it difficult if not impossible for the Companies to turn a profit. Id. III. The Bargain Basement Extell Transaction Recently, two of the Companies—Bremen House and German News—sought to sell some of their valuable Manhattan development properties in order to take steps toward returning to profitability. Id. ¶ 18. They reached a deal to sell certain of these properties to Extell Acquisitions LLC (“Extell”), a major developer, in two tranches for a total sales price of $60 million – even though Extell had previously indicated that it would pay substantially more. Id. This sales price is well below the prices recorded for recent sales of comparable properties in the area. Id. Thereafter, Berrin – without consulting Plaintiff and contrary to prior assurances she had given to Plaintiff – agreed to drop the price of a portion of these sales by a further $10 million. Id. ¶ 19. Even the company’s real estate lawyer recommended against agreeing to this reduced price, absent receipt of some additional consideration from Extell. Id. The lawyer stated that Extell’s conduct in lowering the price was “disgusting” and “underhanded.” Id. Concerned about the impact of these sales on the Companies’ finances and the ability of the Individual Defendants to re-invest the sale proceeds prudently, Yasemin asked, both informally and formally, to inspect company records. These requests were rebuffed – even 5 9 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 though Yasemin has an absolute right to review these records as a company director and officer. Id. ¶¶ 20-22. IV. The Individual Defendants’ Multiple Acts of Retaliation Against Plaintiff Throughout the years, Plaintiff has raised various concerns about the mismanagement of the Company Defendants, which have been met with a pattern of retaliatory actions designed to cover up the Individual Defendants’ misconduct. Notably, when Plaintiff questioned the company’s purchase of a lavish Bronxville home for Gonca—who already benefited from a multi-million dollar company apartment—Berrin threatened to cut Plaintiff off. Id. ¶¶ 7–8. In an email to Yasemin, Berrin apologized for her threats and suggested that the family “do whatever [they] can to make everyone feel secure and feel better.” Id. ¶ 8, Ex. A. Berrin admitted that her threatening action “was wrong. I thought you knew me better and ignore my empty threats. But it was WRONG and SMALL of me.” Id. Berrin concluded by saying: “I am sorry and apologize for speaking so carelessly and unnecessarily.” Id. As a reflection of her erratic behavior, despite having apologized, Berrin ultimately followed through on her threatened retaliation against Yasemin. Berrin removed Yasemin as a Director of Bremen House and as a Trustee of her Trust, and she instructed Plaintiff not to ask questions of the Companies’ employees. Id. ¶ 9. Plaintiff was only reinstated to these positions after she had repaired her relationship with Berrin, and Berrin had grown concerned over the Companies’ increasing financial difficulties. Id. ¶ 10. On another occasion, Berrin evicted Yasemin from the Manhattan apartment in which she was then living, simply because Yasemin objected to racist comments that Gonca made at a family dinner. Id. ¶ 11. 6 10 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 Recently, after Plaintiff raised questions concerning the Extell sales price reduction and asked to inspect company records, Plaintiff was locked out of her Bremen House email account in order to keep her from accessing company communications. Id. ¶¶ 20-22. On December 10, 2020, after learning of Yasemin’s plans to file this lawsuit, Berrin secretly signed a document purporting to remove Plaintiff as a Trustee of her Trust in another act of retaliation. Id. ¶ 23. Given their past pattern, Plaintiff is justifiably concerned that the Individual Defendants are likely to take further retaliatory actions against her. Id. ¶¶ 25, 27. V. Plaintiff’s Complaint Unable to resolve these issues consensually, Plaintiff has filed this suit asserting claims, inter alia: 1) under Business Corporation Law § 720, requiring the Individual Defendants to account for all their self-interested transactions and benefits and their waste of company assets; 2) under Business Corporation Law § 626 and common law, derivatively to cause the Company Defendants to pursue the Individual Defendants’ acts of self-dealing, waste and concealment; 3) derivatively for unjust enrichment; 4) to inspect the Company Defendants books and records pursuant to Business Corporation Law § 624 and New York common law; and 5) for an accounting. LEGAL STANDARD A preliminary injunction may be granted “in any action where the plaintiff has demanded and would be entitled to a judgment restraining the defendant from the commission or continuance of an act, which, if committed or continued during the pendency of the action, would produce injury to the plaintiff.” CPLR §§ 6301, 6311. Specifically, a preliminary injunction will be granted when the party seeking such relief demonstrates: “(1) a likelihood of ultimate success on the merits; (2) the prospect of irreparable injury if the provisional relief is 7 11 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 withheld; and (3) a balance of equities tipping in the moving party’s favor.” Doe v. Axelrod, 73 N.Y. 2d 748, 750 (1988). A temporary restraining order likewise may be granted pending a hearing for a preliminary injunction where “it appears that immediate and irreparable injury, loss or damage will result unless the defendant is restrained before the hearing can be had.” CPLR §§ 6301, 6313. As discussed below, the equities of this case and the high risk of injury to Plaintiff and even the Company Defendants cry out for a TRO followed by a preliminary injunction. ARGUMENT I. DEFENDANTS SHOULD BE RESTRAINED FROM TAKING FURTHER RETALIATORY ACTS TO CONCEAL THEIR FIDUCIARY DUTY BREACHES AND CORPORATE WASTE AND MISMANAGEMENT, AND FROM USING COMPANY FUNDS TO DEFEND THE INDIVIDUAL DEFENDANTS Plaintiff has met each of the prerequisites for a preliminary injunction and TRO: 1) Plaintiff is likely to succeed on the merits of her claims for fiduciary duty breaches, corporate waste and mismanagement, and on her motion to prohibit the use of the Companies’ funds and assets to pay for the Individual Defendants’ defense costs incurred in this action; 2) Plaintiff will suffer irreparable harm if the Defendants are not enjoined from retaliating against Plaintiff to further conceal the Individual Defendants’ misconduct and if the Companies use their dwindling funds for the Individual Defendants’ defense costs; and 3) the equities overwhelmingly favor granting the requested injunctive relief during the pendency of this action. A. Plaintiff Will Likely Succeed on the Merits of Her Claims for Breaches of Fiduciary Duty, Corporate Waste and Mismanagement In determining whether a “likelihood of success” on the merits exists, a court need not finally determine the merits of an action and a plaintiff need not demonstrate that success is an absolute certainty. See Doe v. Dinkins, 192 A.D.2d 270, 275-76 (1st Dep’t 1993) (“The plaintiffs need not demonstrate a certainty of success . . . .”). A plaintiff is only required to make 8 12 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 a prima facie showing of the likelihood of success. See Terrell v. Terrell, 279 A.D.2d 301, 303 (1st Dep’t 2001); Akos Really Corp. v. Vandemark, 157A.D.2d 632, 634 (1st Dep’t 1990). Here, Plaintiff has made far more than a prima facie showing that she will likely succeed on her claims of breaches of fiduciary duties and corporate waste and mismanagement. To establish a fiduciary duty breach, Plaintiff must show “the existence of a fiduciary relationship, misconduct by the other party, and damages directly caused by that party’s misconduct.” Pokoik v. Pokoik, 115 A.D.3d 428, 429, 982 N.Y.S.2d 67, 70 (1st Dep’t 2014). Plaintiff has demonstrated that she will likely prevail on all of these elements for multiple reasons. As directors and officers of the Company Defendants, the Individual Defendants owe fiduciary duties to those companies and to their shareholders or members. See Glob. Minerals & Metals Corp. v. Holme, 35 A.D.3d 93, 98, 824 N.Y.S.2d 210, 214 (1st Dep’t 2006) (directors and officers of close corporations owe fiduciary duties to the corporations and their shareholders); McKinnon Doxsee Agency, Inc. v. Gallina, 187 A.D.3d 733, 132 N.Y.S.3d 144, 148 (2d Dep’t 2020) (managing member of an LLC and non-member manager of an LLC owe fiduciary duties to the LLC). They are obligated to avoid “not only blatant self-dealing, but also…situations in which a fiduciary’s personal interest possibly conflicts with the interest of those owed a fiduciary duty.” Birnbaum v. Birnbaum, 73 N.Y.2d 461, 466, (1989). They further owe a duty of “good and prudent management of the corporation.” Alpert v. 28 Williams St. Corp., 63 N.Y.2d 557, 569 (1984). “Further, directors are liable for all forms of waste of assets regardless of whether they were intentional or negligent.” Shapiro v. Rockville Country Club, Inc., 22 A.D.3d 657, 658, 802 N.Y.S.2d 717, 719 (2d Dep’t 2005). They also owe a duty to act, not only with candor 9 13 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 and honesty, but to fully disclose all material information. Ajettix Inc. v. Raub, 9 Misc.3d 908, 912 (Sup. Ct. Monroe Co. 2005); see also Alpert., 63 N.Y.2d at 569. The Individual Defendants have breached each of these duties, wasted corporate assets to the financial detriment of the Company Defendants, engaged in multiple acts of self-dealing and tried to conceal their misconduct. First, corporate fiduciaries engage in improper self-dealing when they benefit themselves “at the expense” of the company. Estate of Rothko, 84 Misc. 2d 830, 844, 379 N.Y.S.2d 923, 940 (Sur. N.Y. Co. 1975), decree modified sub nom. Will of Rothko, 56 A.D.2d 499, 392 N.Y.S.2d 870 (1977), aff’d sub nom. Matter of Rothko’s Estate, 43 N.Y.2d 305 (1977). For years, the Individual Defendants have benefited themselves to the detriment of the Companies. They have used the Companies’ funds to pay for “a wide assortment of personal expenses for Berrin and Gonca, including large phone bills, housekeeping and landscaping expenses for their homes…pet food,” and Berrin’s own personal driver. Tekiner Aff. ¶¶ 5, 6, 28. The Companies took out a $6 million mortgage it could ill afford principally to buy a luxurious Bronxville home for Gonca – even though she already benefited from a multi-million-dollar apartment in Manhattan. Id. ¶ 6. These expenses and purchases were made solely for the personal benefit of the Individual Defendants, and did not confer any benefit on the Company Defendants. Gonca was also given an exorbitant salary, and a prohibitively lengthy severance agreement stretching out over ten years. Id. ¶ 12. These multiple acts of self-dealing constitute a prima facie showing of the Individual Defendants’ fiduciary duty breaches. See Wolf v. Rand, 258 A.D.2d 401, 404, 685 N.Y.S.2d 708 (1st Dept.1999) (corporate fiduciaries who engage in self-dealing, or make decisions affected by 10 14 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 an inherent conflict of interest as here cannot be protected by the business judgment rule, and the burden shifts to the fiduciaries). They also amount to corporate waste. Second, the Individual Defendants mismanaged the Companies’ funds and assets by engaging in activities entirely devoid of any legitimate or lawful business purpose. Although under the business judgment rule “courts defer to the determinations of directors and officers as to the best interests of the corporations…this rule will not insulate a director or officer from liability where his or her actions lack a legitimate and lawful business purpose and waste corporate assets.” M & M Country Store, Inc. v. Kelly, 159 A.D.3d 1102, 1103, 71 N.Y.S.3d 707, 709–10 (3d Dep’t 2018). Emblematic of their lack of capacity to run a major real estate firm, the Individual Defendants have made business decisions that were detrimental to the Companies, and caused company expenses to skyrocket. Even Berrin admitted that “Gonca had mismanaged the companies and faulted Gonca for [the Companies’] expenses being so high.” Tekiner Aff. ¶ 13. The Individual Defendants terminated an independent real estate advisor shortly before he was to present a proposed strategic plan. Id. ¶ 17. And, without consulting Plaintiff, they also agreed to sell the Companies’ development properties to Extell at a fire sale price which was $10 million less than its prior below-market offer, against the advice of the Companies’ legal advisor. Id. ¶ 18. Third, the Individual Defendants breached their duties of candor by refusing to disclose to Plaintiff the details of their various business decisions, including the unfavorable Extell sales price reduction, and concealing key financial documents. Id. ¶¶ 20, 21. As a Director of Bremen House and as Treasurer of German News, Yasemin has “an absolute, unqualified right” under New York law to inspect the Companies’ books and records. Derfner Mgmt., Inc. v. Lenhill Realty Corp., 90 A.D.3d 434, 435, 933 N.Y.S.2d 671, 672 (1st Dep’t 2011). In addition, as a 11 15 of 20 FILED: NEW YORK COUNTY CLERK 01/04/2021 11:01 AM INDEX NO. 657193/2020 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 01/04/2021 beneficiary and Trustee of the Trust for her benefit–which, among other things, holds large blocks of shares in the Companies, directly and indirectly–Yasemin has both statutory and common law rights to inspect the Companies’ corporate records. Retirement Plan for Gen. Employees of City of North Miami v. McGraw Hill Cos., 120 A.D.3d 1052, 1055-56 (1st Dept. 2014); see Bus. Corp. L. § 624. Despite all this, the Companies, acting at the instruction of the Individual Defendants who sought to hide the evidence of their misdeeds, have denied Yasemin access to requested corporate records and have shut her out of the company email system Tekiner Aff. ¶¶ 22–23. Finally, the Individual Defendants, instead of disclosing the material facts, have taken multiple acts of retaliation against Yasemin in reaction to her raising legitimate questions about their management – all in an effort to conceal their own misconduct. These retaliatory acts have included: removing Yasemin as a Director of Bremen House; removing Yasemin as a Trustee of her Trust; and evicting Yasemin from her Manhattan apartment. Id. ¶¶ 9-11. Berrin even admitted that her threats were “WRONG” but followed through on her retaliation against Yasemin anyway. Id. ¶ 8, Ex. A. In the last couple of months, the Individual Defendants have taken further retaliatory acts against Yasemin in an effort to conceal their misdeeds. They have denied Yasemin her legal right to access to company records, they have shut Yasemin out of the Companies’ email system, and Berrin has once again secretly removed Yasemin as a Trustee of her Trust. Id. ¶¶ 22–23. Because they are taking these actions to cover up their own wrongdoing and to silence Yasemin from questioning their misdeeds, these retaliatory acts constitute further fiduciary duty breaches. See Eikenberry v Lamson, 2020 NY Slip Op 33992(U) (Sup. Ct., Kings Co. Nov. 30, 2020)(granting injunction requiring distributions to plaintiff during pendency of business divorce litigation).