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FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022
NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
xxxxxx xxxxxx a/k/a xxxxxxxxxx xxxxxx,
individually and derivatively on behalf of Index No. 607197/2022
ROCKVILLE CORP.,
Plaintiff, Motion Seq. No. 4
-against- Hon. Sharon M.J. Gianelli
xxxxxxx xxxxx, individually and as the executor
of the Estate of xxxx xxxxx, and as co-trustee of the
disclaimer Trust under Article “Fourth” of the Last
Will and Testament of xxxx xxxxx; MAKAN
DELRAHIM, as former co-trustee of the disclaimer
Trust under Article “Fourth” of the Last Will and
Testament of xxxx xxxxx; and BAHARAK
AMIRIAN as co-trustee of the disclaimer Trust under
the Last Will and Testament of xxxx xxxxx,
Defendants,
-and-
ROCKVILLE CORP.,
Nominal Defendant.
xxxxxxx xxxxx and ROCKVILLE CORP.,
Counterclaim-Plaintiffs,
-against-
xxxxxx xxxxxx and 172 BARGAIN LIQUORS,
INC.
Counterclaim-Defendants.
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DEFENDANTS/COUNTERCLAIM-PLAINTIFFS’ RESPONSE AND
COUNTER-STATEMENT TO PLAINTIFFS/COUNTERCLAIM DEFENDANTS’
RULE 19-a STATEMENT OF MATERIAL FACTS
Pursuant to Rule 19-a(b) of the Rules of the Commercial Division of the Supreme Court of
the State of New York, Defendants and Counterclaim-Plaintiffs xxxxxxx xxxxx (“xxxxxxx”) and
Rockville Corp. (“Rockville” and together with xxxxxxx, the “Counterclaim-Plaintiffs”), by and
through their undersigned counsel, respectfully submit this response and counter-statement to
Plaintiff and Counterclaim-Defendant xxxxxx xxxxxx (“xxxxxx”) and Counterclaim-Defendant
172 Bargain Liquors Inc.’s (“Bargain Liquors” and together with xxxxxx, the “Counterclaim-
Defendants”) Rule 19-a Statement of Material Facts in support of their motion for partial summary
judgment.
I. Formation and Ownership of Rockville Corp. and 172 Bargain Liquors Inc.
1. This action seeks to resolve an intra-family dispute over the equity interests and
rights of certain family members in Rockville Corp. See Exhibits A (Complaint) and B (Answer).
Response: Disputed. This action involves claims with respect to the ownership of
Rockville and its property, and claims with respect to the parties’ rights in Bargain Liquors. See
Ex. B.
2. xxxx xxxxx (deceased in 2008 at the age of 53) and xxxxxx were brothers. Exh. B,
¶¶17, 45.
Response: Undisputed.
3. xxxx emigrated to the United States in 1975 and married his wife xxxxxxx, in 1986.
Id. at ¶¶14-15.
Response: Undisputed.
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4. In 1996, xxxxxx emigrated from Germany to the United States as a refugee from
Iran. Id. at ¶19.
5. Response: Disputed in part. It is undisputed that in 1996 xxxxxx emigrated to the
United States as a refugee from Iran.
6. After xxxxxx arrived in the United States, xxxx helped xxxxxx acquire a building
located at 172 Sunrise Highway in Rockville Centre (the “Property”) out of which xxxxxx would
operate a liquor store business. Exh. A, ¶¶22-29; Exh. B, ¶20.
Response: Disputed. xxxx did not “help[] xxxxxx acquire a building” located at the
Property. Rockville, under xxxx’s sole ownership and direction, purchased the Property in
January 1997. Ex. B, ¶ 26. xxxxxx owned no part of Rockville and had no role in obtaining
financing for the Property. Id. ¶ 28. As regards the liquor store business, 172 Bargain Liquors,
xxxx and xxxxxx “agreed that although xxxxxx would be the owner of Bargain Liquors, and had
no ownership in Rockville, because Rockville was giving xxxxxx free use of the Property, Bargain
Liquors would pay all real estate and other property-related taxes on the Property, and would pay
xxxx on an annual basis 20% of the net profits of Bargain Liquors.” Id. ¶ 32.
7. In anticipation of the Property purchase, xxxx formed Rockville Corp in or around
August 8, 1996 with the assistance of his chosen lawyer and accounting firm. Rockville Corp.
was formed to be the entity that would acquire and take title to the Property out of which xxxxxx
would operate his liquor store business. Exh. A, ¶¶24, 30; Exh. B, ¶¶23-25.
Response: Disputed. xxxx alone formed, owned, financed and operated Rockville during
his lifetime (Exh. B, ¶¶23-28). Rockville owned, and continues to own the Property. Id. ¶ 56.
Bargain Liquors operated its business rent-free on the Property in exchange for which xxxxxx
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agreed to pay all property-related taxes on the Property and would also pay xxxx xxxxx, and then
xxxxxxx xxxxx, 20% of Bargain Liquors’ annual net profits. Id. ¶ 32.
8. On that same date, August 8, 1996, xxxx and xxxxxx also formed 172 Bargain
Liquors Inc. (i.e. Bargain Liquors) to operate the liquor store business out of the Property, once
title transferred to Rockville Corp. Exh. B, ¶31; Exh. K.
Response: Undisputed.
9. The brothers agreed that xxxxxx would be the sole owner of Bargain Liquors and
that xxxx would not maintain any equity interest therein. Exh. B, ¶ 32.
Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of record
of Bargain Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that
Bargain Liquors would pay all property-related taxes on the Property and would pay xxxx 20%
of Bargain Liquors’ net profits on an annual basis. Id.
10. Neither xxxx, nor his wife xxxxxxx, has ever maintained an ownership, equity or
shareholder interest in Bargain Liquors. Id. at ¶¶32-36.
Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of Bargain
Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors
would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’
net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain
Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest,
which xxxxxx acknowledged by continuing to make those annual profit participation payments to
xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24.
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11. In furtherance of xxxxxx’s business plan, on August 2, 1996, he paid one thousand
three hundred eighty dollars ($1,380) to the New York State Liquor Authority to acquire a liquor
license for his contemplated business. Exh. A, ¶32.
Response: Undisputed.
12. On January 17, 1997, Rockville Corp. purchased the Property, to wit, 172 Sunrise
Highway, Rockville Centre, New York 11570 (Section 38; Block: 317; Lot 130) for the amount
of $300,000. Exh. A, ¶33; Exh. B, ¶26.
Response: Undisputed.
13. In connection with this purchase, Rockville Corp. obtained a purchase money
mortgage from the seller (the “Seller”) in the amount of $175,000. Exh. A, ¶34.
Response: Undisputed.
14. Whereas xxxx signed the mortgage documents on behalf of Rockville Corp, he did
not contribute any of his own funds to the purchase. Exh. A, ¶36; NYSCEF Dckt. No. 27.
Response: Disputed. xxxx obtained financing for the purchase of the Property and
personally guaranteed, along with his wife, xxxxxxx xxxxx, the mortgage for the purchase. Exh. B,
¶¶ 26-28; Dkt. No. 27. Moreover, the closing statement for the purchase of the property states --
under the heading “Payments by Buyers to Sellers” -- that xxxx submitted two bank checks for a
total amount of $30,000 towards the acquisition. Dkt. No. 27.
15. Conversely, xxxxxx paid, from his personal Citibank account, sixty-five thousand
dollars ($65,000) to the Sellers as the down payment for the Property purchase. Exh. A, ¶35;
NYSCEF Dck. No. 6
Response: Disputed. The checks submitted under Dkt. No. 6 do not state, among other
critical omissions, their purpose or the account on which they are drawn. The closing statement
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for the purchase of the property also does not reflect that xxxxxx paid any amount to the Sellers
for the purchase of the Property. Dkt. No. 27. Furthermore, the closing statement reflects the
down payment for the Property purchase was $30,000, not $65,000. Id. The issue of the
significance of the contemporaneous records reflected by the closing statement, and Plaintiff’s
unsupported claim that he paid $65,000 for the Property out of his own personal account (which
is not reflected in the actual document), and the conflicting assertion by Plaintiff that xxxx paid
nothing for the acquisition, arose during oral argument on Plaintiff’s motion for a preliminary
injunction. In that context, this Court noted its skepticism as to Plaintiff’s claims that are
contradicted by the contemporaneous closing statement itself. See Transcript of Proceedings from
June 16, 2022 at 60:9-12 (“What I see happening is that I see numbers and I see the document.
And then there is sort of editorializing as to what that means. That’s not reflected directly.”).
16. Thereafter, on or about December 15, 2000, Rockville Corp. purchased an adjoining
lot: Section 38; Block 317; Lot 359 for the amount of $200,000 which acquisition was financed by a
mortgage loan in the amount of $150,000 from Eastern Funding LLC and a purchase money mortgage
loan from the Seller in the amount of $50,000. Exh. A, ¶¶39-40; Exh. B, ¶37.
Response: Undisputed.
17. On March 10, 2008, xxxx passed away. Exh. B, ¶45.
Response: Undisputed.
18. xxxx was survived by his wife, xxxxxxx, and three children. Id. at ¶46.
Response: Undisputed.
19. Thereafter, on May 17, 2010, about two years after xxxx’s death, xxxxxx
orchestrated and oversaw Rockville Corp.’s purchase of another adjoining lot, to wit, Section 38;
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Block 317; Lot 369 from the Incorporated Village of Rockville Centre in the amount of $25,000.
Exh. A, ¶44.
Response: Disputed. The Nassau County public records available for Section 38; Block
317; Lot 369 indicate only Rockville’s ownership, and do not name xxxxxx in any capacity, much
less demonstrate that “xxxxxx orchestrated and oversaw” the purchase. xxxxxx, to date, has not
produced any documents establishing anything regarding this alleged purchase or anything else in
this action, despite Defendants and Counterclaim-Plaintiffs having served their document requests
on November 8, 2022. xxxxxx’s claims in this regard are contradicted by the public record
referenced above, and are otherwise completely unsupported.
20. xxxxxx retained counsel to negotiate the purchase of Lot 369 and signed the
purchase documents on behalf of Rockville Corp. Id.
Response: Disputed. The Nassau County public records available for Section 38; Block
317; Lot 369 indicate only Rockville’s ownership, and do not name xxxxxx in any capacity, much
less demonstrate that xxxxxx “signed the purchase documents on behalf of Rockville.” xxxxxx, to
date, has not produced any documents establishing anything regarding this alleged purchase or
anything else in this action, despite Defendants and Counterclaim-Plaintiffs having served their
document requests on November 8, 2022. xxxxxx’s claims in this regard are contradicted by the
public record referenced above, and are otherwise completely unsupported.
21. Unlike xxxxxx, xxxx did not contribute any of his own funds to any of the
foregoing acquisitions or mortgage financings. NYSCEF Dck. No. 44, ¶¶4-8.
Response: Disputed. As an initial matter, Counterclaim-Plaintiffs object to Paragraph 20
because it is vague and ambiguous insofar as it is unclear what Counterclaim-Defendants refer to
in this paragraph by the “foregoing acquisitions or mortgage financings;” as the paragraphs
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Counterclaim-Defendants cite from Dkt. 44 in support of Paragraph 20 refer to the time period
from the initial acquisition of the Property on January 17, 1997 (supra Paragraph 11) through the
time period after xxxx’s death in 2008 (supra Paragraph 16). The record evidence during this
inclusive time period contains direct evidence of xxxx contributing funds to property acquisitions
or mortgage financings. See, e.g., Dkt Nos. 27, 29, 30. Indeed, xxxxxx’s affidavit, on which
Counterclaim-Defendants rely on for their support in this paragraph, expressly concedes that
“xxxx’s prime role with respect to Rockville Corp. was to procure certain mortgage financing.”
Dkt. 44 ¶ 8; see also Ex. A. ¶ 22.
22. It was also xxxxxx, and not xxxx, who funded and remitted all the monthly
mortgage payments to the various lenders on account of the above-referenced financing
transactions. Id.
Response: Disputed. As an initial matter, Counterclaim-Plaintiffs object to Paragraph 21
because it is vague and ambiguous insofar as it is unclear what Counterclaim-Defendants refer to
in this paragraph by the “above-referenced financing transactions;” as the paragraphs
Counterclaim-Defendants cite from Dkt. 44 in support of Paragraphs 20 and 21 refer to the time
period from the initial acquisition of the Property on January 17, 1997 (supra Paragraph 11)
through the time period after xxxx’s death in 2008 (supra Paragraph 16). The record evidence
during this inclusive time period contains direct evidence of xxxx contributing funds for property
acquisitions and mortgage financings. See, e.g., Dkt Nos. 27, 29, 30. Indeed, xxxxxx’s affidavit,
on which Counterclaim-Defendants rely on for their support in this paragraph expressly concedes
that “xxxx’s prime role with respect to Rockville Corp. was to procure certain mortgage
financing.” Dkt. 44 ¶ 8; see also Ex. A. ¶ 22. Furthermore, xxxxxx, to date, has not produced any
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documents in this action despite being served with Defendants’ and Counterclaim-Plaintiffs’
document requests on November 8, 2022, and xxxxxx’s claims remain completely unsupported.
23. Since in or around 1997, after the Property was first acquired, xxxxxx has been the
sole and exclusive shareholder, officer, director, operator and manager of Bargain Liquors. Exh.
B, ¶¶29-36.
Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of Bargain
Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors
would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’
net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain
Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest,
which xxxxxx acknowledged by continuing to make those annual profit participation payments to
xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24. In addition, the record evidence does
not support the assertion that xxxxxx has “been the sole and exclusive shareholder, officer, director,
operator and manager of Bargain Liquors.” For instance, in a signed affidavit for judgment by
confession annexed to the closing statement for the purchase of 170 Sunrise Highway (supra
Paragraph 15), dated December 8, 2000, xxxx is named as the “President of 172 Bargain Liquors
Inc.” Dkt. 29.
24. Whereas this action seeks to resolve, among other things, a dispute between xxxxxx
and xxxxxxx, as a beneficiary of xxxx’s Estate, over the percentage of their equity interests in
Rockville Corp., there is no dispute as to who owns and maintains the equity in Bargain Liquors.
Id.
Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of Bargain
Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors
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would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’
net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain
Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest,
which xxxxxx acknowledged by continuing to make those annual profit participation payments to
xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24. The Counterclaims also establish that
“xxxx helped to purchase a second liquor store for xxxxxx, assisted xxxxxx with obtaining loans
[and] hiring staff for the second store” and that “xxxx assisted xxxxxx in incorporating Bargain
Liquors and in financing its operations.” Exh. B, ¶¶ 20, 31. Additionally, contemporaneous record
evidence demonstrates that xxxx was named as the “President of 172 Bargain Liquors Inc.” in the
executed judgment of confession affixed to the closing documents for 170 Sunrise Highway. Dkt.
29.
25. Based on Kathryn’s own admissions, there is no dispute over the fact that xxxxxx
maintains (and has always maintained) a 100% interest in Bargain Liquors as that entity was
created for xxxxxx to exclusively own and operate. Id.
Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of Bargain
Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors
would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’
net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain
Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest,
which xxxxxx acknowledged by continuing to make those annual profit participation payments to
xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24. The Counterclaims also establish that
“xxxx helped to purchase a second liquor store for xxxxxx, assisted xxxxxx with obtaining loans
[and] hiring staff for the second store” and that “xxxx assisted xxxxxx in incorporating Bargain
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Liquors and in financing its operations.” Exh. B, ¶¶ 20, 31. Additionally, contemporaneous record
evidence demonstrates that xxxx was named as the “President of 172 Bargain Liquors Inc.” in the
executed judgment of confession affixed to the closing documents for 170 Sunrise Highway. Dkt.
29.
II. The Alleged Verbal Agreement Regarding Bargain Liquors Profits and
xxxxxxx’s Counterclaims Derived Therefrom
26. Notwithstanding Kathryn’s admission that neither she, nor her late husband, xxxx,
ever maintained an equity interest in Bargain Liquors, Kathryn alleges that during xxxx’s life
xxxx and xxxxxx entered into a “verbal agreement” (at some unspecified date) whereby xxxxxx
agreed to pay xxxx 20% of the annual net profits of Bargain Liquors (the “Verbal Agreement”).
Id. at ¶¶ 32, 57.
Response: Disputed as to the following: “Notwithstanding Kathryn’s admission that
neither she, nor her late husband, xxxx, ever maintained an equity interest in Bargain Liquors.”
As set forth above, xxxxxxx does have a 20% profit participation interest in Bargain Liquors, as
evidenced by xxxxxx making such payments to xxxxxxx up to 2013. Dkt. No. 23 ¶ 24; Ex. B ¶ 32.
The remainder of the statement is not disputed.
27. The Answer alleges that a Verbal Agreement was entered into but it fails to allege
inter alia: (i) the date(s) when the alleged Verbal Agreement was entered into; (ii) the facts and
circumstances under which the Verbal Agreement was entered into; (iii) who the parties are (or
were) to the alleged Verbal Agreement; (iv) the term or time period that the Verbal Agreement
was to cover, if any; or (v) whether the Verbal Agreement was intended to be assignable to xxxx’s
successors, assigns or estate beneficiaries. Id. at ¶¶ 57, 89-96.
Response: Disputed. The Answer alleges the existence and terms of the agreement
including that the brothers agreed that xxxxxx would be the sole owner of Bargain Liquors but, in
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return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors would pay all
property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’ net profits
on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain Liquors, and
following xxxx’s death, xxxxxxx inherited that 20% profit participation interest, which xxxxxx
acknowledged by continuing to make those annual profit participation payments to xxxxxxx for
five years after xxxx’s death. Dkt. No. 23 ¶ 24.
28. The Answer does allege, however, that xxxx and xxxxxx each “performed” under
the Verbal Agreement up through xxxx’s untimely death in 2008 and that through 2013, xxxxxx
made payments to Kathryn under the Verbal Agreement until 2013. Id. at ¶¶89-92.
Response: Undisputed.
29. Kathryn alleges that “after 2013”, xxxxxx stopped making the 20% payments from
the profits of Bargain Liquors in alleged breach of the Verbal Agreement. Id.
Response: Undisputed.
30. As a result of this alleged breach of the Verbal Agreement and in furtherance of
xxxxxxx’s other allegations relating to xxxxxx’s management of Bargain Liquors, xxxxxxx
interposed the following counterclaims in her Answer: a second counterclaim (breach of contract),
a third counterclaim (unjust enrichment), a fourth counterclaim (accounting) and a fifth
counterclaim (appointment of receiver for Bargain Liquors) (together, the “Counterclaims”). Id. at
¶¶88-116.
31. Response: Disputed in part. The Court is respectfully referred to the pleading for
its contents. In addition to the claims identified above, Counterclaim-Plaintiffs also asserted
claims for tortious interference with prospective business advantage (first counterclaim) and
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declaratory relief (sixth counterclaim), which Counterclaim-Defendants have not moved to
dismiss.
32. The Counterclaims allege and set forth as follows:
a. The second counterclaim interposed by Kathryn is for breach of
contract based on allegations that xxxxxx breached the Verbal
Agreement in or around 2013 and that damages are due Kathryn based
thereon (id. at ¶¶88-97);
b. The third counterclaim interposed by Kathryn is for unjust enrichment
and is based on allegations that Kathryn has been deprived of her
rightful share of 20% of Bargain Liquors profits since in or around
2013 and that Bargain Liquors has been unjustly enriched based
thereon (id. at ¶¶98-104);
c. The fourth counterclaim interposed by Kathryn is for an accounting
“of all the books and records, tax returns and other documents of
Bargain Liquors, to ascertain the exact amount she is owed since
2013” (id. at ¶¶105-112);
d. The fifth counterclaim interposed by Kathryn is for the appointment
of a receiver “for Bargain Liquors’ funds and property” based on
certain allegations relating to the entity’s reporting of “the [ ] income,
the inventory, the employees, the salary....which deprived xxxxxxx of
her rightful share of the true 20% profits of Bargain Liquors” (id. at
¶¶113-116)
Response: Disputed in part. Paragraph 32 states legal conclusions to which no response
is required. The Court is respectfully referred to the pleading for its contents. The foregoing
summaries do not set forth the true contents of the pleading.
33. On or about November 14, 2022, xxxxxx and Bargain Liquors filed (and served)
their Reply to xxxxxxx’s Counterclaims wherein they denied the allegations on which the second
through fifth counterclaims are based and interposed affirmative defenses regarding xxxxxxx’s lack
of standing and on statute of limitation grounds. Exh. C.
Response: Undisputed.
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Dated: New York, New York
March 22, 2023
KASOWITZ BENSON TORRES LLP
By: /s/ David E. Ross
David E. Ross
(dross@kasowitz.com)
Michael C. Pecorini
(mpecorini@kasowitz.com)
1633 Broadway
New York, New York 10019
212-506-1700
Counsel for Defendants/Counterclaim-Plaintiffs
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FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU xxxxxx xxxxxx a/k/a xxxxxxxxxx xxxxxx, individually and derivatively on behalf of Index No. 607197/2022 ROCKVILLE CORP., Plaintiff, Motion Seq. No. 4 -against- Hon. Sharon M.J. Gianelli xxxxxxx xxxxx, individually and as the executor of the Estate of xxxx xxxxx, and as co-trustee of the disclaimer Trust under Article “Fourth” of the Last Will and Testament of xxxx xxxxx; MAKAN DELRAHIM, as former co-trustee of the disclaimer Trust under Article “Fourth” of the Last Will and Testament of xxxx xxxxx; and BAHARAK AMIRIAN as co-trustee of the disclaimer Trust under the Last Will and Testament of xxxx xxxxx, Defendants, -and- ROCKVILLE CORP., Nominal Defendant. xxxxxxx xxxxx and ROCKVILLE CORP., Counterclaim-Plaintiffs, -against- xxxxxx xxxxxx and 172 BARGAIN LIQUORS, INC. Counterclaim-Defendants. 1 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 DEFENDANTS/COUNTERCLAIM-PLAINTIFFS’ RESPONSE AND COUNTER-STATEMENT TO PLAINTIFFS/COUNTERCLAIM DEFENDANTS’ RULE 19-a STATEMENT OF MATERIAL FACTS Pursuant to Rule 19-a(b) of the Rules of the Commercial Division of the Supreme Court of the State of New York, Defendants and Counterclaim-Plaintiffs xxxxxxx xxxxx (“xxxxxxx”) and Rockville Corp. (“Rockville” and together with xxxxxxx, the “Counterclaim-Plaintiffs”), by and through their undersigned counsel, respectfully submit this response and counter-statement to Plaintiff and Counterclaim-Defendant xxxxxx xxxxxx (“xxxxxx”) and Counterclaim-Defendant 172 Bargain Liquors Inc.’s (“Bargain Liquors” and together with xxxxxx, the “Counterclaim- Defendants”) Rule 19-a Statement of Material Facts in support of their motion for partial summary judgment. I. Formation and Ownership of Rockville Corp. and 172 Bargain Liquors Inc. 1. This action seeks to resolve an intra-family dispute over the equity interests and rights of certain family members in Rockville Corp. See Exhibits A (Complaint) and B (Answer). Response: Disputed. This action involves claims with respect to the ownership of Rockville and its property, and claims with respect to the parties’ rights in Bargain Liquors. See Ex. B. 2. xxxx xxxxx (deceased in 2008 at the age of 53) and xxxxxx were brothers. Exh. B, ¶¶17, 45. Response: Undisputed. 3. xxxx emigrated to the United States in 1975 and married his wife xxxxxxx, in 1986. Id. at ¶¶14-15. Response: Undisputed. 2 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 4. In 1996, xxxxxx emigrated from Germany to the United States as a refugee from Iran. Id. at ¶19. 5. Response: Disputed in part. It is undisputed that in 1996 xxxxxx emigrated to the United States as a refugee from Iran. 6. After xxxxxx arrived in the United States, xxxx helped xxxxxx acquire a building located at 172 Sunrise Highway in Rockville Centre (the “Property”) out of which xxxxxx would operate a liquor store business. Exh. A, ¶¶22-29; Exh. B, ¶20. Response: Disputed. xxxx did not “help[] xxxxxx acquire a building” located at the Property. Rockville, under xxxx’s sole ownership and direction, purchased the Property in January 1997. Ex. B, ¶ 26. xxxxxx owned no part of Rockville and had no role in obtaining financing for the Property. Id. ¶ 28. As regards the liquor store business, 172 Bargain Liquors, xxxx and xxxxxx “agreed that although xxxxxx would be the owner of Bargain Liquors, and had no ownership in Rockville, because Rockville was giving xxxxxx free use of the Property, Bargain Liquors would pay all real estate and other property-related taxes on the Property, and would pay xxxx on an annual basis 20% of the net profits of Bargain Liquors.” Id. ¶ 32. 7. In anticipation of the Property purchase, xxxx formed Rockville Corp in or around August 8, 1996 with the assistance of his chosen lawyer and accounting firm. Rockville Corp. was formed to be the entity that would acquire and take title to the Property out of which xxxxxx would operate his liquor store business. Exh. A, ¶¶24, 30; Exh. B, ¶¶23-25. Response: Disputed. xxxx alone formed, owned, financed and operated Rockville during his lifetime (Exh. B, ¶¶23-28). Rockville owned, and continues to own the Property. Id. ¶ 56. Bargain Liquors operated its business rent-free on the Property in exchange for which xxxxxx 3 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 agreed to pay all property-related taxes on the Property and would also pay xxxx xxxxx, and then xxxxxxx xxxxx, 20% of Bargain Liquors’ annual net profits. Id. ¶ 32. 8. On that same date, August 8, 1996, xxxx and xxxxxx also formed 172 Bargain Liquors Inc. (i.e. Bargain Liquors) to operate the liquor store business out of the Property, once title transferred to Rockville Corp. Exh. B, ¶31; Exh. K. Response: Undisputed. 9. The brothers agreed that xxxxxx would be the sole owner of Bargain Liquors and that xxxx would not maintain any equity interest therein. Exh. B, ¶ 32. Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of record of Bargain Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’ net profits on an annual basis. Id. 10. Neither xxxx, nor his wife xxxxxxx, has ever maintained an ownership, equity or shareholder interest in Bargain Liquors. Id. at ¶¶32-36. Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of Bargain Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’ net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest, which xxxxxx acknowledged by continuing to make those annual profit participation payments to xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24. 4 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 11. In furtherance of xxxxxx’s business plan, on August 2, 1996, he paid one thousand three hundred eighty dollars ($1,380) to the New York State Liquor Authority to acquire a liquor license for his contemplated business. Exh. A, ¶32. Response: Undisputed. 12. On January 17, 1997, Rockville Corp. purchased the Property, to wit, 172 Sunrise Highway, Rockville Centre, New York 11570 (Section 38; Block: 317; Lot 130) for the amount of $300,000. Exh. A, ¶33; Exh. B, ¶26. Response: Undisputed. 13. In connection with this purchase, Rockville Corp. obtained a purchase money mortgage from the seller (the “Seller”) in the amount of $175,000. Exh. A, ¶34. Response: Undisputed. 14. Whereas xxxx signed the mortgage documents on behalf of Rockville Corp, he did not contribute any of his own funds to the purchase. Exh. A, ¶36; NYSCEF Dckt. No. 27. Response: Disputed. xxxx obtained financing for the purchase of the Property and personally guaranteed, along with his wife, xxxxxxx xxxxx, the mortgage for the purchase. Exh. B, ¶¶ 26-28; Dkt. No. 27. Moreover, the closing statement for the purchase of the property states -- under the heading “Payments by Buyers to Sellers” -- that xxxx submitted two bank checks for a total amount of $30,000 towards the acquisition. Dkt. No. 27. 15. Conversely, xxxxxx paid, from his personal Citibank account, sixty-five thousand dollars ($65,000) to the Sellers as the down payment for the Property purchase. Exh. A, ¶35; NYSCEF Dck. No. 6 Response: Disputed. The checks submitted under Dkt. No. 6 do not state, among other critical omissions, their purpose or the account on which they are drawn. The closing statement 5 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 for the purchase of the property also does not reflect that xxxxxx paid any amount to the Sellers for the purchase of the Property. Dkt. No. 27. Furthermore, the closing statement reflects the down payment for the Property purchase was $30,000, not $65,000. Id. The issue of the significance of the contemporaneous records reflected by the closing statement, and Plaintiff’s unsupported claim that he paid $65,000 for the Property out of his own personal account (which is not reflected in the actual document), and the conflicting assertion by Plaintiff that xxxx paid nothing for the acquisition, arose during oral argument on Plaintiff’s motion for a preliminary injunction. In that context, this Court noted its skepticism as to Plaintiff’s claims that are contradicted by the contemporaneous closing statement itself. See Transcript of Proceedings from June 16, 2022 at 60:9-12 (“What I see happening is that I see numbers and I see the document. And then there is sort of editorializing as to what that means. That’s not reflected directly.”). 16. Thereafter, on or about December 15, 2000, Rockville Corp. purchased an adjoining lot: Section 38; Block 317; Lot 359 for the amount of $200,000 which acquisition was financed by a mortgage loan in the amount of $150,000 from Eastern Funding LLC and a purchase money mortgage loan from the Seller in the amount of $50,000. Exh. A, ¶¶39-40; Exh. B, ¶37. Response: Undisputed. 17. On March 10, 2008, xxxx passed away. Exh. B, ¶45. Response: Undisputed. 18. xxxx was survived by his wife, xxxxxxx, and three children. Id. at ¶46. Response: Undisputed. 19. Thereafter, on May 17, 2010, about two years after xxxx’s death, xxxxxx orchestrated and oversaw Rockville Corp.’s purchase of another adjoining lot, to wit, Section 38; 6 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 Block 317; Lot 369 from the Incorporated Village of Rockville Centre in the amount of $25,000. Exh. A, ¶44. Response: Disputed. The Nassau County public records available for Section 38; Block 317; Lot 369 indicate only Rockville’s ownership, and do not name xxxxxx in any capacity, much less demonstrate that “xxxxxx orchestrated and oversaw” the purchase. xxxxxx, to date, has not produced any documents establishing anything regarding this alleged purchase or anything else in this action, despite Defendants and Counterclaim-Plaintiffs having served their document requests on November 8, 2022. xxxxxx’s claims in this regard are contradicted by the public record referenced above, and are otherwise completely unsupported. 20. xxxxxx retained counsel to negotiate the purchase of Lot 369 and signed the purchase documents on behalf of Rockville Corp. Id. Response: Disputed. The Nassau County public records available for Section 38; Block 317; Lot 369 indicate only Rockville’s ownership, and do not name xxxxxx in any capacity, much less demonstrate that xxxxxx “signed the purchase documents on behalf of Rockville.” xxxxxx, to date, has not produced any documents establishing anything regarding this alleged purchase or anything else in this action, despite Defendants and Counterclaim-Plaintiffs having served their document requests on November 8, 2022. xxxxxx’s claims in this regard are contradicted by the public record referenced above, and are otherwise completely unsupported. 21. Unlike xxxxxx, xxxx did not contribute any of his own funds to any of the foregoing acquisitions or mortgage financings. NYSCEF Dck. No. 44, ¶¶4-8. Response: Disputed. As an initial matter, Counterclaim-Plaintiffs object to Paragraph 20 because it is vague and ambiguous insofar as it is unclear what Counterclaim-Defendants refer to in this paragraph by the “foregoing acquisitions or mortgage financings;” as the paragraphs 7 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 Counterclaim-Defendants cite from Dkt. 44 in support of Paragraph 20 refer to the time period from the initial acquisition of the Property on January 17, 1997 (supra Paragraph 11) through the time period after xxxx’s death in 2008 (supra Paragraph 16). The record evidence during this inclusive time period contains direct evidence of xxxx contributing funds to property acquisitions or mortgage financings. See, e.g., Dkt Nos. 27, 29, 30. Indeed, xxxxxx’s affidavit, on which Counterclaim-Defendants rely on for their support in this paragraph, expressly concedes that “xxxx’s prime role with respect to Rockville Corp. was to procure certain mortgage financing.” Dkt. 44 ¶ 8; see also Ex. A. ¶ 22. 22. It was also xxxxxx, and not xxxx, who funded and remitted all the monthly mortgage payments to the various lenders on account of the above-referenced financing transactions. Id. Response: Disputed. As an initial matter, Counterclaim-Plaintiffs object to Paragraph 21 because it is vague and ambiguous insofar as it is unclear what Counterclaim-Defendants refer to in this paragraph by the “above-referenced financing transactions;” as the paragraphs Counterclaim-Defendants cite from Dkt. 44 in support of Paragraphs 20 and 21 refer to the time period from the initial acquisition of the Property on January 17, 1997 (supra Paragraph 11) through the time period after xxxx’s death in 2008 (supra Paragraph 16). The record evidence during this inclusive time period contains direct evidence of xxxx contributing funds for property acquisitions and mortgage financings. See, e.g., Dkt Nos. 27, 29, 30. Indeed, xxxxxx’s affidavit, on which Counterclaim-Defendants rely on for their support in this paragraph expressly concedes that “xxxx’s prime role with respect to Rockville Corp. was to procure certain mortgage financing.” Dkt. 44 ¶ 8; see also Ex. A. ¶ 22. Furthermore, xxxxxx, to date, has not produced any 8 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 documents in this action despite being served with Defendants’ and Counterclaim-Plaintiffs’ document requests on November 8, 2022, and xxxxxx’s claims remain completely unsupported. 23. Since in or around 1997, after the Property was first acquired, xxxxxx has been the sole and exclusive shareholder, officer, director, operator and manager of Bargain Liquors. Exh. B, ¶¶29-36. Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of Bargain Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’ net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest, which xxxxxx acknowledged by continuing to make those annual profit participation payments to xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24. In addition, the record evidence does not support the assertion that xxxxxx has “been the sole and exclusive shareholder, officer, director, operator and manager of Bargain Liquors.” For instance, in a signed affidavit for judgment by confession annexed to the closing statement for the purchase of 170 Sunrise Highway (supra Paragraph 15), dated December 8, 2000, xxxx is named as the “President of 172 Bargain Liquors Inc.” Dkt. 29. 24. Whereas this action seeks to resolve, among other things, a dispute between xxxxxx and xxxxxxx, as a beneficiary of xxxx’s Estate, over the percentage of their equity interests in Rockville Corp., there is no dispute as to who owns and maintains the equity in Bargain Liquors. Id. Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of Bargain Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors 9 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’ net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest, which xxxxxx acknowledged by continuing to make those annual profit participation payments to xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24. The Counterclaims also establish that “xxxx helped to purchase a second liquor store for xxxxxx, assisted xxxxxx with obtaining loans [and] hiring staff for the second store” and that “xxxx assisted xxxxxx in incorporating Bargain Liquors and in financing its operations.” Exh. B, ¶¶ 20, 31. Additionally, contemporaneous record evidence demonstrates that xxxx was named as the “President of 172 Bargain Liquors Inc.” in the executed judgment of confession affixed to the closing documents for 170 Sunrise Highway. Dkt. 29. 25. Based on Kathryn’s own admissions, there is no dispute over the fact that xxxxxx maintains (and has always maintained) a 100% interest in Bargain Liquors as that entity was created for xxxxxx to exclusively own and operate. Id. Response: Disputed. The brothers agreed that xxxxxx would be the sole owner of Bargain Liquors but, in return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’ net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest, which xxxxxx acknowledged by continuing to make those annual profit participation payments to xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24. The Counterclaims also establish that “xxxx helped to purchase a second liquor store for xxxxxx, assisted xxxxxx with obtaining loans [and] hiring staff for the second store” and that “xxxx assisted xxxxxx in incorporating Bargain 10 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 Liquors and in financing its operations.” Exh. B, ¶¶ 20, 31. Additionally, contemporaneous record evidence demonstrates that xxxx was named as the “President of 172 Bargain Liquors Inc.” in the executed judgment of confession affixed to the closing documents for 170 Sunrise Highway. Dkt. 29. II. The Alleged Verbal Agreement Regarding Bargain Liquors Profits and xxxxxxx’s Counterclaims Derived Therefrom 26. Notwithstanding Kathryn’s admission that neither she, nor her late husband, xxxx, ever maintained an equity interest in Bargain Liquors, Kathryn alleges that during xxxx’s life xxxx and xxxxxx entered into a “verbal agreement” (at some unspecified date) whereby xxxxxx agreed to pay xxxx 20% of the annual net profits of Bargain Liquors (the “Verbal Agreement”). Id. at ¶¶ 32, 57. Response: Disputed as to the following: “Notwithstanding Kathryn’s admission that neither she, nor her late husband, xxxx, ever maintained an equity interest in Bargain Liquors.” As set forth above, xxxxxxx does have a 20% profit participation interest in Bargain Liquors, as evidenced by xxxxxx making such payments to xxxxxxx up to 2013. Dkt. No. 23 ¶ 24; Ex. B ¶ 32. The remainder of the statement is not disputed. 27. The Answer alleges that a Verbal Agreement was entered into but it fails to allege inter alia: (i) the date(s) when the alleged Verbal Agreement was entered into; (ii) the facts and circumstances under which the Verbal Agreement was entered into; (iii) who the parties are (or were) to the alleged Verbal Agreement; (iv) the term or time period that the Verbal Agreement was to cover, if any; or (v) whether the Verbal Agreement was intended to be assignable to xxxx’s successors, assigns or estate beneficiaries. Id. at ¶¶ 57, 89-96. Response: Disputed. The Answer alleges the existence and terms of the agreement including that the brothers agreed that xxxxxx would be the sole owner of Bargain Liquors but, in 11 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 return for Bargain Liquors’ use of the Property, xxxxxx agreed that Bargain Liquors would pay all property-related taxes on the Property and would pay xxxx 20% of Bargain Liquors’ net profits on an annual basis. Id. ¶ 32 Thus, xxxx had a 20% profit participation in Bargain Liquors, and following xxxx’s death, xxxxxxx inherited that 20% profit participation interest, which xxxxxx acknowledged by continuing to make those annual profit participation payments to xxxxxxx for five years after xxxx’s death. Dkt. No. 23 ¶ 24. 28. The Answer does allege, however, that xxxx and xxxxxx each “performed” under the Verbal Agreement up through xxxx’s untimely death in 2008 and that through 2013, xxxxxx made payments to Kathryn under the Verbal Agreement until 2013. Id. at ¶¶89-92. Response: Undisputed. 29. Kathryn alleges that “after 2013”, xxxxxx stopped making the 20% payments from the profits of Bargain Liquors in alleged breach of the Verbal Agreement. Id. Response: Undisputed. 30. As a result of this alleged breach of the Verbal Agreement and in furtherance of xxxxxxx’s other allegations relating to xxxxxx’s management of Bargain Liquors, xxxxxxx interposed the following counterclaims in her Answer: a second counterclaim (breach of contract), a third counterclaim (unjust enrichment), a fourth counterclaim (accounting) and a fifth counterclaim (appointment of receiver for Bargain Liquors) (together, the “Counterclaims”). Id. at ¶¶88-116. 31. Response: Disputed in part. The Court is respectfully referred to the pleading for its contents. In addition to the claims identified above, Counterclaim-Plaintiffs also asserted claims for tortious interference with prospective business advantage (first counterclaim) and 12 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 declaratory relief (sixth counterclaim), which Counterclaim-Defendants have not moved to dismiss. 32. The Counterclaims allege and set forth as follows: a. The second counterclaim interposed by Kathryn is for breach of contract based on allegations that xxxxxx breached the Verbal Agreement in or around 2013 and that damages are due Kathryn based thereon (id. at ¶¶88-97); b. The third counterclaim interposed by Kathryn is for unjust enrichment and is based on allegations that Kathryn has been deprived of her rightful share of 20% of Bargain Liquors profits since in or around 2013 and that Bargain Liquors has been unjustly enriched based thereon (id. at ¶¶98-104); c. The fourth counterclaim interposed by Kathryn is for an accounting “of all the books and records, tax returns and other documents of Bargain Liquors, to ascertain the exact amount she is owed since 2013” (id. at ¶¶105-112); d. The fifth counterclaim interposed by Kathryn is for the appointment of a receiver “for Bargain Liquors’ funds and property” based on certain allegations relating to the entity’s reporting of “the [ ] income, the inventory, the employees, the salary....which deprived xxxxxxx of her rightful share of the true 20% profits of Bargain Liquors” (id. at ¶¶113-116) Response: Disputed in part. Paragraph 32 states legal conclusions to which no response is required. The Court is respectfully referred to the pleading for its contents. The foregoing summaries do not set forth the true contents of the pleading. 33. On or about November 14, 2022, xxxxxx and Bargain Liquors filed (and served) their Reply to xxxxxxx’s Counterclaims wherein they denied the allegations on which the second through fifth counterclaims are based and interposed affirmative defenses regarding xxxxxxx’s lack of standing and on statute of limitation grounds. Exh. C. Response: Undisputed. 13 of 14 FILED: NASSAU COUNTY CLERK 03/22/2023 05:20 PM INDEX NO. 607197/2022 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 03/22/2023 Dated: New York, New York March 22, 2023 KASOWITZ BENSON TORRES LLP By: /s/ David E. Ross David E. Ross (dross@kasowitz.com) Michael C. Pecorini (mpecorini@kasowitz.com) 1633 Broadway New York, New York 10019 212-506-1700 Counsel for Defendants/Counterclaim-Plaintiffs 14 of 14