On January 01, 2018 a
Motion-Secondary
was filed
involving a dispute between
Gurney'S Innb Resort & Spa, Ltd., A New York Corporation,
and
Alan Sparks,
Anthony Carbone,
Christine Lauria,
Dolly Wander Irrevocable Trust,
George Rosenfeld Inc.,
Janice Katz,
Janice Scansaroli,
Jay Scansaroli,
Joseph Scognamiglio,
Kevin Cotter,
Lorraine Ferretti,
Marcia Ruskin,
Michael Giordano,
Nancy Arzanipour,
Neil Carbone,
Neil Carboone Irrevocable Trust,
Patricia Frank-Janewicz,
Paul Arzanipour,
Systematci Control Corp.,
Vito Vitrano,
for Commercial Division
in the District Court of New York County.
Preview
FILED: NEW YORK COUNTY CLERK 01/15/2019 06:56 PM INDEX NO. 154466/2018
NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 01/15/2019
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
In the Matter of the Application of: INDEX NO.: 154466/2018
GURNEY'S INN RESORT & SPA, LTD., a (Hon. Barry R. Ostrager)
New York corporation,
Petitioner,
and
NANCY ARZANIPOUR, et al.,
Respondents,
To Determine the Fair Value of the Common
Shares of Gurney's Inn Resort & Spa, Ltd.
Held By Respondents Pursuant to Section 623
of the New York Business Corporation Law.
RESPONDENTS'
MEMORANDUM OF LAW IN SUPPORT OF MOTION
FOR AWARD OF FEES, COSTS AND INTERESTS PURSUANT_TO BCL 623
Respondents Paul Lorraine Patricia Frank-
Nancy Arzanipour, Arzanipour, Ferretti,
Janewicz, George Rosenfeld Inc., Michael Giordano, Janice Katz, Christine Lauria, Marcia
Ruskin, Jay Scansaroli, Janice Scansaroli, Joseph Scognamiglo, Alan Sparks, and Vito Vitrano,
representing 2,350 dissenting Class A shares, submit this post-hearing Memorandum of Law.
Respondents' $118.80'
dissented from Gurney's offer of per share offered in the Merger.
A hearing was held on Monday, December 3, 2018 and Wednesday, December 5th.
I. Introduction
New York's Business Corporation Law 623 delegates to the Court the discretion to make
an award of fees and costs to Respoñdeñts under the following circumstances: ifthe award
valuation."
"This payment operates as a flooron Rand v.610 Smith St.Corp., 992 NYS 2d 609, 44 Misc.
3d 783 (New York City Supreme Court,2014) (J.Sherwood) (holding further thatthere isno support for contention
thatvalue can be reduced below amount already paid). Id.at *612.
1 of 4
FILED: NEW YORK COUNTY CLERK 01/15/2019 06:56 PM INDEX NO. 154466/2018
NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 01/15/2019
materially exceeds the offer. The Court has the further discretion to determine the amount of
attorney's fees and to determine which expenses incurred by Respondents shall be ordered to be
paid by Gurney's. Finally, an award of interests is required under BCL.
IL Respondents Are Entitled To
An Award Of Attorney's Fees, Costs And Interest
fees"
According to BCL 623(h)(7): the Court may award "costs, expenses and upon
finding that the fairvalue of the shares as determined materially exceeds the amount which the
pay."²
corporation offered to In Matter of Shore the Second Department held "the appraisal
statute in this State . .. [provides] as a general rule, that the costs and expenses of the proceeding
corporation."
shall be assessed against the Id. at 533.
appraisers'
Expert fees, such as fees, are "freely awarded to the dissenting shareholders
where the fair value of the shares materially exceeded the amount which the corporation offered
them."
to pay Id. at 533,
attorneys'
Thus, the Court can award fees, expert fees and other costs ifRespondents
obtain a value finding that materially exceeds the $118 offer. In Matter of Shore, the Second
exceeded."
Department opinion collected cases as examples of Matter Lipe-
"materially of
Rollway Corp. v. Abrams, 33 AD 2d 1094 [fair value of $22.50 per share; offer of $19.75 per
share; 14% increase over amount offered by corporation] ; Matter of Dynamics Corp. of Amer.
Abraham & Co., 6 AD 2d 683, modfg. 5 Misc. 2d 652 [fair value of $19 per share; offer of $15
per share; 27% increase over offer; the Appellate Division, First Department, modified by
increasing allowance to experts]; Matter of Dorsey v. Stern Bros., 31 Misc. 2d 747 [fair value of
2
According tothe Second Department's decision in Matter ofShore (Parklane Hosiery Co.), 67 A.D. 2d
526, 532 415 NYS 2d 878 (2dDept. 1979) "the expenses incurred in an
litigating appraisal proceeding can actas a
deterrentto theindividual shareholder particularly ifhe does not own a large number of shares . . . [citations
omitted] the appraisalstatuteseeks to dealwith these practicalimpediments to fullenjoyment of theremedy by
corporation."
previding, as a generalrule,that thecost and expenses of theproceeding shallbe assessed against the
2
2 of 4
FILED: NEW YORK COUNTY CLERK 01/15/2019 06:56 PM INDEX NO. 154466/2018
NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 01/15/2019
$27.50 per share; $24 per share offer; 15% increase over offer amounting to $6,125]; see also,
Matter of Dimmock v. Reichhold Chems., 41 NYS 2d 273, supra [suggesting that upon remand,
Special Term could re-open the question of counsel fees where the differential between $3.82,
the amount offered, and $4.75, the found fair value (24% increase) totaled nearly $14,000). See
also, Matter of Dimmock v. Reichhold Chen, 41 N.Y.S. 2d 273 (increase of 24%); Stine v.
Parklane Hosiery Co., Inc., 67 A.D. 2d 1094 (14% increase); Matter of Dynamics Corp. of
America v. Abraham & Co., 6 A.D. 2d 638 (17% increase); Matter of Dorsey, 31 Misc. 2d 747
(1961) (15% increase). Barash v. Williams Real Estate Co., Inc., 33 Misc. 3d 1219(A) (New
York City, Supreme Court 2011) (J. Fried).
III. Interest Should Be Applied To The Award
BCL Rule 523(h)(6) states: The final Order sj1all include an allowance for interest at
such rate as the Court finds to be equitable from the date the corporate action was consummated
payment."
to the date of Id. BCL Rule 623(h)(6) allows an award of interest "at such rate as the
Court finds to be equitable from the date the corporate action was consummated to the date of
the payment. In determining the rate of interest, the Court shall consider all relevant factors,
3
3 of 4
FILED: NEW YORK COUNTY CLERK 01/15/2019 06:56 PM INDEX NO. 154466/2018
NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 01/15/2019
including the rate of interest which the corporation would have had to pay to borrow money
proceeding."
during the pendency of the
Dated: New York, New York
January 15, 2019
SQUITIERI & FEARON, LLP
/s/Lee Squitieri
Lee Squitieri
57th
32 East
12th Floor
New York, New York 10022
Tel: (212) 421-6492
Fax: (212) 421-6553
lee@sfclasslaw.com
Attorneys for Answering Respondents
4
4 of 4
Preview
FILED: NEW YORK COUNTY CLERK 01/15/2019 06:56 PM INDEX NO. 154466/2018 NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 01/15/2019 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK In the Matter of the Application of: INDEX NO.: 154466/2018 GURNEY'S INN RESORT & SPA, LTD., a (Hon. Barry R. Ostrager) New York corporation, Petitioner, and NANCY ARZANIPOUR, et al., Respondents, To Determine the Fair Value of the Common Shares of Gurney's Inn Resort & Spa, Ltd. Held By Respondents Pursuant to Section 623 of the New York Business Corporation Law. RESPONDENTS' MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR AWARD OF FEES, COSTS AND INTERESTS PURSUANT_TO BCL 623 Respondents Paul Lorraine Patricia Frank- Nancy Arzanipour, Arzanipour, Ferretti, Janewicz, George Rosenfeld Inc., Michael Giordano, Janice Katz, Christine Lauria, Marcia Ruskin, Jay Scansaroli, Janice Scansaroli, Joseph Scognamiglo, Alan Sparks, and Vito Vitrano, representing 2,350 dissenting Class A shares, submit this post-hearing Memorandum of Law. Respondents' $118.80' dissented from Gurney's offer of per share offered in the Merger. A hearing was held on Monday, December 3, 2018 and Wednesday, December 5th. I. Introduction New York's Business Corporation Law 623 delegates to the Court the discretion to make an award of fees and costs to Respoñdeñts under the following circumstances: ifthe award valuation." "This payment operates as a flooron Rand v.610 Smith St.Corp., 992 NYS 2d 609, 44 Misc. 3d 783 (New York City Supreme Court,2014) (J.Sherwood) (holding further thatthere isno support for contention thatvalue can be reduced below amount already paid). Id.at *612. 1 of 4 FILED: NEW YORK COUNTY CLERK 01/15/2019 06:56 PM INDEX NO. 154466/2018 NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 01/15/2019 materially exceeds the offer. The Court has the further discretion to determine the amount of attorney's fees and to determine which expenses incurred by Respondents shall be ordered to be paid by Gurney's. Finally, an award of interests is required under BCL. IL Respondents Are Entitled To An Award Of Attorney's Fees, Costs And Interest fees" According to BCL 623(h)(7): the Court may award "costs, expenses and upon finding that the fairvalue of the shares as determined materially exceeds the amount which the pay."² corporation offered to In Matter of Shore the Second Department held "the appraisal statute in this State . .. [provides] as a general rule, that the costs and expenses of the proceeding corporation." shall be assessed against the Id. at 533. appraisers' Expert fees, such as fees, are "freely awarded to the dissenting shareholders where the fair value of the shares materially exceeded the amount which the corporation offered them." to pay Id. at 533, attorneys' Thus, the Court can award fees, expert fees and other costs ifRespondents obtain a value finding that materially exceeds the $118 offer. In Matter of Shore, the Second exceeded." Department opinion collected cases as examples of Matter Lipe- "materially of Rollway Corp. v. Abrams, 33 AD 2d 1094 [fair value of $22.50 per share; offer of $19.75 per share; 14% increase over amount offered by corporation] ; Matter of Dynamics Corp. of Amer. Abraham & Co., 6 AD 2d 683, modfg. 5 Misc. 2d 652 [fair value of $19 per share; offer of $15 per share; 27% increase over offer; the Appellate Division, First Department, modified by increasing allowance to experts]; Matter of Dorsey v. Stern Bros., 31 Misc. 2d 747 [fair value of 2 According tothe Second Department's decision in Matter ofShore (Parklane Hosiery Co.), 67 A.D. 2d 526, 532 415 NYS 2d 878 (2dDept. 1979) "the expenses incurred in an litigating appraisal proceeding can actas a deterrentto theindividual shareholder particularly ifhe does not own a large number of shares . . . [citations omitted] the appraisalstatuteseeks to dealwith these practicalimpediments to fullenjoyment of theremedy by corporation." previding, as a generalrule,that thecost and expenses of theproceeding shallbe assessed against the 2 2 of 4 FILED: NEW YORK COUNTY CLERK 01/15/2019 06:56 PM INDEX NO. 154466/2018 NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 01/15/2019 $27.50 per share; $24 per share offer; 15% increase over offer amounting to $6,125]; see also, Matter of Dimmock v. Reichhold Chems., 41 NYS 2d 273, supra [suggesting that upon remand, Special Term could re-open the question of counsel fees where the differential between $3.82, the amount offered, and $4.75, the found fair value (24% increase) totaled nearly $14,000). See also, Matter of Dimmock v. Reichhold Chen, 41 N.Y.S. 2d 273 (increase of 24%); Stine v. Parklane Hosiery Co., Inc., 67 A.D. 2d 1094 (14% increase); Matter of Dynamics Corp. of America v. Abraham & Co., 6 A.D. 2d 638 (17% increase); Matter of Dorsey, 31 Misc. 2d 747 (1961) (15% increase). Barash v. Williams Real Estate Co., Inc., 33 Misc. 3d 1219(A) (New York City, Supreme Court 2011) (J. Fried). III. Interest Should Be Applied To The Award BCL Rule 523(h)(6) states: The final Order sj1all include an allowance for interest at such rate as the Court finds to be equitable from the date the corporate action was consummated payment." to the date of Id. BCL Rule 623(h)(6) allows an award of interest "at such rate as the Court finds to be equitable from the date the corporate action was consummated to the date of the payment. In determining the rate of interest, the Court shall consider all relevant factors, 3 3 of 4 FILED: NEW YORK COUNTY CLERK 01/15/2019 06:56 PM INDEX NO. 154466/2018 NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 01/15/2019 including the rate of interest which the corporation would have had to pay to borrow money proceeding." during the pendency of the Dated: New York, New York January 15, 2019 SQUITIERI & FEARON, LLP /s/Lee Squitieri Lee Squitieri 57th 32 East 12th Floor New York, New York 10022 Tel: (212) 421-6492 Fax: (212) 421-6553 lee@sfclasslaw.com Attorneys for Answering Respondents 4 4 of 4