Stock Purchase Agreement Dealership

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Stock Purchase Agreement Dealership Powered By Docstoc
					To commence the statutory time
period of appeals as of right
(CPLR 5513[a]), you are advised                              FILE AND ENTERED
to serve a copy of this order,                              ON            2006
                                                               WESTCHESTER
with notice of entry, upon all
                                                               COUNTY CLERK
parties.



         SUPREME COURT OF THE STATE OF NEW YORK
         COMMERCIAL DIVISION, WESTCHESTER COUNTY
             Present: HON. KENNETH W. RUDOLPH
                                        Justice.


  ----------------------------------------X
  ERNEST SALERNO,

                                  Plaintiff,   :   Index No. 8702/05
                                                   Motion Date: Dec. 23, 2005
                      -against-
                                                      DECISION
  LIVIO ODOARDI and NANUET CHRYSLER
  PLYMOUTH JEEP EAGLE, INC.,

                              Defendants. :
  ----------------------------------------X


  The following papers numbered 1 to 11 were read on this motion by
  plaintiff for an order granting summary judgment in favor of plaintiff
  pursuant to CPLR 3212 and dismissing defendants’ counterclaims pursuant
  to CPLR 3211.

                                                         PAPERS NUMBERED

        Notice of Motion/Affidavit                       1, 2
        Memorandum of Law                                7
        Answering Affidavit/Memorandum of Law            8, 10
        Replying Memorandum of Law                       11
        Exhibits                                         3-6, 9


            Upon the foregoing papers, it is ORDERED that this motion
  is decided as follows:

            This action arises out of a dispute between former
  business partners as to the proceeds from a settlement of an
  unrelated lawsuit. Plaintiff Ernesto Salerno contends that he is
  entitled to fifty percent of the proceeds pursuant to written
  agreements between the parties and commenced this lawsuit to recover
  the withheld amount of $61,156.95. His complaint alleges causes of
  action for breach of contract, conversion, unjust enrichment, and an
accounting.   Defendants have asserted a number of affirmative
defenses as well as counterclaims for a declaratory judgment and
contract reformation. Plaintiff moves herein for summary judgment
in his favor and for dismissal of the counterclaims.1

          Plaintiff and defendant Odoardi were co-shareholders, each
holding a 50% capital interest, of defendant Nanuet Chrysler
Plymouth Jeep Eagle, Inc. (the “Dealership”).      On September 12,
2003, Salerno and Odoardi entered into a letter agreement (the
“Letter Agreement”) which outlined the terms by which Salerno would
sell his interest in the Dealership to Odoardi. (Plaintiff’s Ex. A)
Salerno and Odoardi subsequently entered into a stock purchase
agreement dated November 4, 2003 for the sale of Salerno’s 50%
capital stock interest in the Dealership (the “Stock Purchase
Agreement”). (Plaintiff’s Ex. B) The sale became effective as of
January 12, 2004.

          At the time of these two agreements, the Dealership was a
party to a pending lawsuit entitled, Nanuet Chrysler Plymouth Jeep,
Inc. v. DaimlerChrysler Corporation (the “Chrysler litigation”). In
regard to how the proceeds, if any, from the Chrysler litigation
were to be distributed, the Letter Agreement provides in paragraph
18 as follows:

              Purchaser acknowledges that there is currently
              a lawsuit pending which is entitled Nanuet
              Chrysler Plymouth Jeep, Inc. v. DaimlerChrysler
              Corporation. In the event that Nanuet receives
              proceeds as a result of this lawsuit, by
              settlement, judgment or otherwise, Purchaser
              shall promptly pay fifty percent (50%) of said
              proceeds to Seller...

          The Stock Purchase Agreement, which attached the previous
Letter Agreement, contains a nearly identical provision at paragraph
22. The Stock Purchase Agreement also provides that in the event of
a conflict between that agreement and/or the by-laws of the
Dealership and the Letter Agreement, the Letter Agreement’s terms
shall control (Ex. B, ¶ 23).

          Subsequently, in or around May 2005, as a result of a


      1
       Although plaintiff’s notice of motion states that plaintiff
 seeks summary judgment in his favor pursuant to CPLR 3212 and
 dismissal of defendants’ counterclaims pursuant to CPLR 3211, the
 parties have fully addressed the merits of the claims and
 counterclaims in regard to summary judgment.

                                -2-
settlement in the Chrysler litigation, Odoardi and the dealership
received $531,178.15 in proceeds (the “Chrysler litigation
proceeds”). Out of those proceeds, defendants paid the amount of
$204,432.13 to Salerno, leaving a difference of $61,156.95 between
the amount defendants paid and one-half of the proceeds
($265,589.08). Plaintiff contends that he is entitled to the full
50% of the proceeds based on the unambiguous terms of the Letter
Agreement and the Stock Purchase Agreement. Defendants, however,
claim that Odoardi is entitled to more than his 50% share of
proceeds based on the Shareholders Agreement entered into on March
9, 2000 and the intention of the parties.

          In support of his motion, plaintiff argues that the terms
of the Letter Agreement and the Stock Purchase Agreement are clear
and unambiguous, and that the intent of the parties must be found
within the four corners of the contract. Plaintiff further contends
that it is clear from the agreements that the parties intended to
divide the Chrysler litigation proceeds in half, without any
offsets, carve-outs, or regard to extrinsic formulas. Therefore,
according to plaintiff, defendants cannot use extrinsic or parol
evidence to show a different intent.        Additionally, plaintiff
asserts that the Shareholders Agreement upon which defendants rely
was expressly terminated and canceled by the parties. Pursuant to
the Stock Purchase Agreement at paragraph 25(k), all prior
agreements, except the Letter Agreement, among the parties regarding
the disposition of their shares of stock in the Dealership or any
other subject addressed [in the Stock Purchase Agreement] are
rescinded or rendered void and of no effect.

          In opposition, defendants do not dispute the existence of
the agreements or the fact that they paid plaintiff less than 50% of
the Chrysler litigation proceeds. Rather, defendants claim that the
amount of the proceeds paid was proper because the Letter Agreement
and the Stock Purchase Agreement refer only to those damages
recovered in the Chrysler litigation for the period during which
plaintiff was a shareholder in Nanuet, as reduced by profit
participation to which Odoardi was entitled pursuant to the
Shareholders Agreement with plaintiff. Defendants state that since
plaintiff only had an interest in the dealership through the end of
2003, plaintiff suffered no economic loss as a result of Chrysler’s
unlawful practices after that and is not entitled to the proceeds
for any period after 2003. The second basis for reduction of the
division of the proceeds alleged by defendants is that the
Shareholders Agreement provided that Odoardi would receive
additional compensation of 10% of the monthly profits of the
Dealership up to $1,000,000 per annum.      Defendants contend that
since Chrysler’s conduct resulted in reduced net profits, Odoardi is
entitled to 10% of the funds as if they had been received in the

                                -3-
normal course of the Dealership’s business.

          Whether a writing is ambiguous is a question of law to be
resolved by the court (see W.W.W. Assocs. v. Giancontieri, 77 N.Y.2d
157). The intent of the parties to a contract can be determined as
a matter of law without a trial where that intent is discernible
from the four corners of an unambiguously-worded agreement (see
Hartford Acc. & Indem. Co. v. Wesolowski, 33 N.Y.2d 169; Funding
Partners v. RIT Auto Leasing Group, 288 A.D.2d 431).      Thus, the
interpretation of an unambiguous contract provision is a function
for the court, and matters extrinsic to the agreement may not be
considered when the intent of the parties can be gleaned from the
face of the instrument (Chimart Assocs. v. Paul, 66 N.Y.2d 570;
Teitelbaum Holdings v. Gold, 48 N.Y.2d 51). When the parties set
down their agreement in a clear, complete document, their writing
should be enforced according to its terms, and evidence outside the
four corners of the document as to what was really intended but
unstated or misstated is inadmissible to add to or vary the writing
(W.W.W. Assocs. v. Giancontieri, supra). Furthermore, extrinsic and
parol evidence is not admissible to create an ambiguity in a written
agreement which is complete and clear and unambiguous upon its face
(id.). Where, however, the language is susceptible of varying but
reasonable interpretations, the parties may submit extrinsic
evidence as an aid in construction, and the resolution of the
ambiguity is for the trier of fact (see State of New York v. Home
Indem. Co., 66 N.Y.2d 669; Siegel v. Golub, 286 A.D.2d 489).

          In the instant case, the Court finds that there is no
uncertainty or ambiguity in the terms of the agreements. Both the
Letter Agreement and the Stock Purchase Agreement clearly provide in
almost identical terms that Odoardi, as the purchaser of the
Dealership, shall pay 50% of the Chrysler litigation proceeds to the
seller, Salerno. Furthermore, the Stock Purchase Agreement clearly
terminated and canceled the Shareholders’ Agreement upon which
defendants rely to justify their retention of part of the proceeds.
In any event, the Letter Agreement and the Stock Purchase Agreement
clearly divide the Chrysler litigation proceeds in half, and do not
make any provision for adjustments according to any additional
compensation (i.e., 10% of monthly net profits) that Odoardi may
have been receiving pursuant to the Shareholders Agreement.
Moreover, Odoardi’s contention that it was intended for Salerno to
receive a portion of the proceeds that was proportionate to his
ownership (i.e. Salerno should not receive any portion of the 2004
proceeds because his ownership was terminated then) is contradicted
by the plain language of the Agreements.        When the provision
governing distribution of the Chrysler litigation proceeds was
drafted, the Chrysler litigation was still pending and it was
clearly contemplated by the parties that Salerno would no longer be

                                -4-
a shareholder if and when the funds from the resolution of the case
were received.   Nonetheless, no provision to divide the proceeds
according to ownership interest was included in the Agreements.
Based on the foregoing, plaintiff has made a prima facie showing of
entitlement to judgment as a matter of law based on the clear and
unambiguous terms of the subject Agreements.

          Once the proponent of a motion for summary judgment has
made a prima facie showing of entitlement to judgment as a matter of
law, the party opposing the motion must demonstrate by admissible
evidence the existence of a triable issue of fact in order to defeat
the motion (see CPLR 3212; Alvarez v. Prospect Hosp., 68 N.Y.2d 320;
Zuckerman v. City of New York, 49 N.Y.2d 557).      Defendants have
failed to meet their burden on this motion. Defendants’ contentions
that the Agreements intended to include a division based on any
additional compensation received by Odoardi or based on the
percentage of time each owned the Dealership do not raise triable
issues of fact as to the intentions of the parties inasmuch as the
Agreements are unambiguous, and extrinsic or parole evidence may not
add to or vary the unambiguous terms of an agreement or create an
ambiguity where none exists (W.W.W. Assocs. v. Giancontieri, supra;
Chimart Assocs. v. Paul, supra).

          Defendants have asserted two counterclaims.      The first
counterclaim seeks a declaratory judgment and is based on the same
arguments raised in opposition to plaintiff’s motion. Therefore,
for the reasons stated above, defendants are not entitled to a
judgment declaring that the amount that defendants paid to plaintiff
as his share of the Chrysler litigation proceeds is correct.

          Defendants’   second   counterclaim,    sought   in   the
alternative, seeks a reformation of the Letter Agreement and the
Stock Purchase Agreement on the grounds that the intent of the
parties was that the disposition of the subject proceeds would take
place as if the funds had been received in the years for which
Nanuet incurred the damages, and that the agreements are silent as
to the means and manner of the accounting for the proceeds.
Reformation is permitted where there is proof of mutual mistake or
fraud (Chimart Assocs. v. Paul, supra).         There is a heavy
presumption that a deliberately prepared and executed written
instrument manifests the true intention of the parties (id.; Backer
Mgt. Corp. v. Acme Quilting Co., 46 N.Y.2d 211, 219). Therefore, a
proponent of reformation must show, by clear and convincing
evidence, not only that mutual mistake or fraud exists, but exactly
what was really agreed upon between the parties (Chimart Assocs. v.
Paul, supra; Backer Mgt. Corp. v. Acme Quilting Co., supra;
Lacoparra v. Bellino, 296 A.D.2d 480).


                                -5-
          Here, plaintiff has demonstrated that, through the clear
and unambiguous language of the Letter Agreement and the Stock
Purchase Agreement, it was the intention of the parties to equally
divide the Chrysler litigation proceeds, without set-offs or
consideration of other factors. Moreover, the Agreements at issue
were part of a transaction involving counseled parties dealing at
arm's length. In opposition to the motion, defendants have failed
to come forward with evidence or even allegations sufficient to
raise a triable issue of fact as to whether the parties had actually
reached an agreement to distribute the proceeds otherwise (mutual
mistake), or whether as a result of fraud, the Agreements did not
express the true intentions of the parties.

          Accordingly, plaintiff’s motion for summary judgment is
granted on his breach of contract cause of action to the extent that
plaintiff is entitled to a judgment against defendants in the amount
of $61,156.95 with interest from May 23, 2005 plus costs and
disbursements as taxed by the Clerk. The motion insofar as it seeks
attorneys’ fees is denied. Defendants’ counterclaim for reformation
is dismissed. Defendants’ counterclaim which seeks a declaratory
judgment as to the rights and obligations of the parties is
determined as follows:

                It is ordered and adjudged that plaintiff is entitled
                to payment by defendants in the amount of $61,156.95
                as and for the remainder of his share of the Chrysler
                litigation proceeds pursuant to the Letter Agreement
                and the Stock Purchase Agreement.

           The foregoing constitutes the Decision and Order of this
Court.   Submit judgment on notice.


Dated:   White Plains, New York
         March 14, 2006

                                         E N T E R,




                                         HON. KENNETH W. RUDOLPH
                                         Justice of the Supreme Court




                                  -6-
TO: MEISELMAN, DENLEA, PACKMAN CARTON & EBERZ, P.C.
    1311 Mamaroneck Avenue
    White Plains, New York 10605


    THE MARGOLIS LAW FIRM
    Attorneys for Defendants
    Five Becker Farm Road
    P.O. Box 420
    Roseland, New Jersey 07068




                                 -7-

				
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