The plaintiffs in this case are Leonid Shapsis, Edward Malishkevich and Leonid Shekhets. The Defendants are Alexander Kogan, IBM Industries, 2417 Ocean Avenue and the Law offices of Alexander Sklavos PC and Alexander Sklavos, ESQ.
The plaintiffs filed an action alleging that a joint venture agreement was breached. A cross move was filed by Alexander Kogan which, according to CPLR 3211, moves for dismissal of the action.
History of the Case
The joint venture in question aimed to develop the land at 2417 Ocean Avenue in Brooklyn. The aim was to build commercial real estate. According to the plaintiffs, Kogan and the plaintiffs entered into an oral agreement where each party held 50% ownership in 2417 Ocean Avenue.
According to the original operating agreement, Shekhets and Kogan each put in $300000 into the company which entitled each to 18.75% ownership. It is alleged by the plaintiffs that Kogan, according to his statements, invested another $155K before withdrawing $195K from the project at a later date.
A New York Injury Lawyer said the Plaintiffs also allege that they were to receive 50% of the fees generated during construction as IBM would serve as the contractor. Also, they claim that Kogan recommend the Sklavos law firm as legal counsel without telling them that the same firm served Kogan in a personal capacity. According to this claim, Sklavos was improperly representing the plaintiffs, the defendants, the contractor and the company itself during all dealings. Sklavos was also accused of improperly providing advice regarding the withholding of funds to deal with personal injury lawsuits brought against 2427 Ocean. Those withheld funds were never returned to the plaintiffs upon dispersal of the profit distribution. During profit distribution, it is also alleged that on a smaller investment, Kogan received a payout that was greater than that received by the plaintiffs.
The initial action filed by the plaintiffs was dismissed, but an amended complaint was filed January 2010. After cross motions and amendments, the court allowed that the first complaint be allowed in its amended form, while the motion to dismiss by the defendants will be applied to the second complaint.
While Kogan tried to have the complaint dismissed on the basis that a joint venture was never agreed upon, inadequate evidence was provided to support this claim. It appears that a joint venture was agreed upon for the purposes of developing the property.
The second claim seeks damages for breach of the initial agreement. A Nassau Count Personal Injury Lawyer said that although Sklavos attempted to have this dismissed based on the previous case in which Shekhets was a defendant, rather than a plaintiff, the results of that action clearly stated that other claims or actions not specifically mentioned in that ruling would not be affected by it. In regards to the distribution of profits, an adequate case was built by the plaintiffs to support the claim of breach of contract.
In regards to the charge of breach of fiduciary duty by Sklavos, there was not enough evidence to prove that a fiduciary connection existed between the law firm and the plaintiffs individually. This also applies to the fourth cause of action for breach of contract which cannot be upheld because of no demonstration of client-attorney connection between the plaintiffs and Sklavos.
Further charges against Kogan based on the alleged brief of contract also needed to be dismissed. This is because the plaintiffs failed to prove that any legal relationship and obligation existed which defined the terms that they were claiming had been breached. However, an NYC Personal Injury Lawyer said that they can show adequately that the defendants Kogan, 2417 Ocean and IBM profited unjustly through their own actions, and have a claim on that basis.
The plaintiffs also proved that they were members of a joint venture. Therefore, an action that sought to have an accounting made to establish what the proper distribution of profit from the company should have been was required.
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