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Matter of Franzese v Daly 2009 NY Slip Op 33139(U) December 16, 2009 Supreme Court, Nassau County Docket Number: 18355-09 Judge: Timothy S. Driscoll Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

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SUPREME COURT - STATE OF NEW YORK SHORT FORM ORDER

Present:
HON. TIMOTHY S. DRISCOLL Justice Supreme Court
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In the mater of the Application of
PATRICK FRANZESE,

TRIAL/IAS PART: 25 NASSAU COUNTY
Index No: 18355-

Petitioner,

Motion Seq. No: 1

For The Dissolution of
FRANZESE REALTY ASSOCIATES, a partnership and,
-v-

Date of Submission: 11/13/09

DONNA DALY and EUGENE MESSINA, as Executor of the Estate of Rosemarie Messina,

Respondents.
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The following papers having been read on this order to show cause:

Order to Show Cause, Affidavit in Support, Petition and Exhibits....
Affidavit in Partial Op positio D........ ...... ........ .... ........ ... ......... ... .... ..... ......

This matter is before the Cour for decision on the Order to Show Cause fied

by

Petitioner Patrick Franzese on September 9 , 2009 , which was submitted on November 13 2009.

The Court grants the Order to Show Cause in part and denies it in part. For the reasons set forth
below , the Cour 1) directs that the partnership of Franzese Realty Associates (" Parnership
) is

dissolved; 2) authorizes the Partnership business to be continued , during the pendency of the
action , by Petitioner and Respondent Daly, upon their executing and fiing
with the clerk an

undertaking, in the sum of $50 000 with sureties to the effect that they wil

obey

all orders of the

court , and in the action , and perform all things which this Order requires them to perform;

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3) denies Petitioner s application for the appointment of a receiver; 4) denies Petitioner

application for injunctive relief with respect to Daly; and 5) directs Petitioner and Daly to

conduct the winding up in the maner prescribed by Parnership Law 9 71.
BACKGROUND
A.

Relief Sought

Petitioner Patrick Franese (" Franzese " or " Petitioner ) moves for an Order 1) declaring

that , pursuant to Partnership Law 9 62(4), the Partnership was dissolved on March 18 2009 as a

result of the death of Rosemarie Messina (" Messina ) and directing that the affairs of the
Parnership be wound up, and that an accounting be prepared of its assets , accounts , debts , rights

and liabilities and all of the Parnership s dealings and transactions; 2) directing that, during the

winding up of its affairs (" winding up ), the Parnership s business be continued in order to
protect and preserve its assets; 3) directing that the winding up be conducted by the Petitioner and that Respondent Donna Daly (" Daly ) be enjoined and restrained from interfering with the winding up; or 4) alternatively, declaring that, pursuant to Parnership Law 968 , the winding up
be conducted by the Court; 5) appointing Petitioner receiver of the assets and accounts of the
Parnership, and directing him to marshal and manage the assets and collect the accounts

receivable and pay the liabilties of the Partnership pursuant to the winding up of its affairs;
6) granting to the Petitioner , in the capacity of receiver , full authority to sell the assets of the

Parnership, including its real propert,

under the supervision of

the Court , at public auction and

directing that, upon the sale of that propert,

the proceeds be deposited with the Clerk of

the

Court pending the final accounting and an order of the Cour directing their distribution; and
7) authorizing Petitioner , in the capacity of receiver , to retain the services of Hyde Park Realty

and Lucile Messina, at no cost or expense to the Parnership, to serve at its managing agent
during the winding up of its affairs.
B.

The Paries '

History

In the Petition fied September 9 2009 , Petitioner alleges as follows:
The business of Franzese Realty Associates (" Parnership ) consists of the ownership and
Square ,

management of real property located in New Hyde Park and Franlin

New York

Propert" ).

Prior to

March 18 , 2009 , Messina ,

Franzese and Daly were equal parners in the

partnership. The Partnership terminated on March 18 2009 , by operation of law, due to the

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death of Messina.

Since Messina s death , Franese has managed the Parnership, to preserve its assets during the winding up period. Franzese affrms that , due to the acrimonious relationship
s affairs between Daly and him , it is impossible to conduct a winding up of the Parnership without the Cour' s intervention pursuant to Parnership Law 9 68. Further , to preserve the

Parnership s assets and effect an orderly dissolution of the Parnership,

Franzese requests an

Order, pursuant to Parnership Law 975 , appointing Franese as sole receiver of the Parnership s assets , and authorizing him to continue the Parnership s business during the
pendency of this action.

In the Petition , Franzese outlines the history of the Parnership, which is a family business that once included his father Charles Franese (" Charles ), who died in 1987. Franzese

also provides a history of litigation that Daly has instituted since 1987

, which Franese

characterizes as " a series of vexatious and meritless legal challenges to the operations of the Parnerships , her parents ' testamentar plans and the operations of the family business

contesting the decisions of the majority members of the Parnership... which actions were
intended to wrest control of the Parnership
s assets for her benefit" (Petition at

26). Franese

alleges that Daly commenced the following litigation: 1) Daly fied objections with the Surogate s Court challenging the admission of Charles

wil to probate. On September
Charles ' wil to probate.

22 ,

1994 , the Surogate dismissed Daly s objections and admitted

2) In or about 1990 , Daly commenced an action in Nassau County Supreme Court
Supreme Court" ) alleging that Petitioner and others had defrauded her of her interest in the
Propert and

mismanaged the Partnership, and seeking to terminate Messina as the Partnership , while this action was managing agent. Maria Franzese (" Maria ), Charles ' wife , died in 1993
pending. In 1994 ,

the court granted the Partnership s motion to dismiss Daly s causes of action

to set aside the deed for certain Property. In 1998 , the court granted the motion by Messina
Eugene Messina (" Eugene ) and Petitioner to dismiss the causes of action for fraud. In 2000 immediately before the trial on the remaining causes of action , Daly voluntarily discontinued the

litigation. These orders were affirmed by the Appellate Division , Second Deparment. influence by 3) In 1993 , Daly filed objections to Maria s wil, alleging fraud and undue

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Messina and her husband Eugene. Prior to the trial of that matter , Daly withdrew her petition
with prejudice.
4) In 2003 , Daly fied
an action in

Supreme Court against Messina and the Parnership

alleging a breach of fiduciar

duty and

demanding an accounting with respect to certain accounts

and fees. After trial , the court granted judgment dismissing Daly s claims , and Daly did not
appeal that decision.

5) In 2007 , Daly commenced an action in Supreme Court against Petitioner , Messina and

the Parnership, seeking partition of the Property. The court granted judgment dismissing the
Complaint , and the Appellate Division , Second Deparment affirmed that dismissal.

Petitioner affrms that , since Charles ' death in 1987 , virtually all of the Parnership
actions have been determined on a 2/3 majority vote , with Daly as the lone dissenter. Petitioner
and Messina determined that the Partnership required the services of a management company.

With Petitioner s approval , Messina formed Hyde Park Management Corp. (" Hyde Park" ) to act

as the management company for the Partnership. The Parnership selected Messina, who was a
licensed real estate broker , to operate Hyde Park. Since on or about 1990 , Messina and her

daughter Lucile Messina (" Lucile ), as an employee of Hyde Park , have performed all duties
related to the marketing and financial obligations of the Parnership. Since Messina s death in

March of2009 , Lucile has continued to manage the day-to- day operations of the Partnership.

Petitioner affrms that he has been actively involved in the management of the
Parnership for thirt (30) years and, since Messina s death , has managed the Parnership

business to preserve its assets pending the winding up of its affairs. Hyde Park and Lucile

are

prepared to continue to serve as the Parnership s management company, and to waive the fees

for their services , during the winding up period.

The Petition seeks the same relief that Petitioner seeks in the instant Order to Show
Cause , except that the Petition also contains a request for an Order directing that , if the Cour

grants Petitioner s application to be appointed as the Parnership s receiver , the Court require

Petitioner to post an undertaking in favor of the Parnership, Daly and the Estate of Messina in

the sum of$50 000 as security during the pendency of this action.
Daly has submitted an Affidavit in Parial Opposition, in which she affirms that she
agrees with the request of Petitioner (her brother) to wind up the Parnership s business affairs

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and sell its assets at public auction. Daly opposes Petitioner s applications to 1) appoint him as sole receiver of the Parnership; 2) retain the services of Hyde Park and Lucile; and 3) enjoin
Daly from acting in a Parnership role.

Daly concedes that , as a minority partner in the Parnership, she instituted the litigation

which the Petition refers. She submits , however , that it was her prerogative to institute these
lawsuits , based on her position that the Partnership made improper financial decisions. Daly

also provides inter alia a transcript ofthe testimony of Messina at an examination before trial
on December 1 ,

2004 at which Messina testified that she was the only employee of Hyde Park

and that Hyde Park never hired any other employees. Daly submits that this testimony refutes

Petitioner s assertion that Lucile worked for Hyde Park.

Daly affirms that she has " no problem " working with Petitioner to wind up the

Parnership s affairs (Aff. in Partial Opp. at ~ 8). She submits , as one of the two surviving

parers , that the Cour should appoint Petitioner and her as joint receivers of the Parnership
assets.
C.

The Parties ' Positions
(30) years ,

Petitioner submits that the Court should grant his Order to Show Cause in light of 1) his

active involvement in the management ofthe Partnership for thirt

2) his

management of the Parnership s business , since the date of Messina s death , to preserve its
assets pending the winding up of its affairs , and 3) the willngness of Hyde Park and Lucile to
continue to serve as the Parnership s management company, and to waive the fees for their

services , during the winding up period.

Daly opposes Petitioner s application and submits that the Cour should appoint

Petitioner and Daly as joint receivers of the Parnership s assets.
RULING OF THE COURT

Pursuant to Partnership Law 9 62(4), dissolution is caused by the death of any partner.

Partnership Law 9 68 provides that , unless otherwise agreed , the parners who have not
wrongfully dissolved the partnership or the legal representative of the last surviving partner , not

banupt , has the right to wind up the partnership affairs; provided , however , that any parner
his legal representative , or his assignee , upon cause shown , may obtain winding up by the court.
Parnership Law 9 71 provides the rules for distribution of a parnership s assets and satisfaction
of a parnership

s liabilties. Partnership Law 9 75 provides as follows:

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In an action brought to dissolve a partnership, or for an accounting between parners or affecting the continued prosecution of the business , the cour may, in its discretion

by order , authorize the parnership business to be continued , during the pendency of the action by one or more of the partners , upon their executing and fiing with the clerk an undertaking, in such a sum and with such sureties as the order prescribes , to the effect that they wil obey all orders of the cour , in the action , and perform all
things which the judgment therein requires them to perform. The cour may impose

such other conditions as it deems proper , and it may in its discretion at any time thereafter require a new undertaking to be given. The court may also ascertain the value of the parnership property, and of the interest of the respective parners by a reference or otherwise , and may direct an accounting between any of the parners; and the judgment may make such provision for the payment to the retiring parners , for their interest , and with respect to the rights of creditors, the title to the parnership property, and otherwise , as justice requires , with or without the appointment ofa receiver , or a sale of the parnership propert.

With respect to Petitioner s application for the appointment of a receiver , CPLR 9 6401 provides as follows:

of temporar receiver; joinder of moving par. Upon motion of a person having an apparent interest in propert which is the subject of an action in the supreme or a county court , a temporar receiver of the propert may be appointed before or after service of summons and at any time prior to judgment , or during the pendency of an appeal , where there is danger that the propert wil be removed from the state , or lost , materially injured or destroyed. A motion made by a person not already a par to the action constitutes an appearance in the action and the person shall be joined as a part.
( a) Appointment

(b) Powers of temporar receiver. The court appointing a receiver may authorize him to take and hold real and personal property, and sue for , collect and sell debts or claims , upon such conditions and for such purposes as the court shall direct. A receiver shall have no power to employ counsel unless expressly so authorized by order of the cour. Upon motion of the receiver or a pary, powers granted to a temporar receiver may be extended or limited or the receivership may be extended to another action involving the property.

(c) Duration of temporary receivership. A temporar receivership shall not continue
after final judgment unless otherwise directed by the cour.

The appointment of a receiver is an extreme remedy resulting in the taking and

withholding of possession of propert
Vardaris Tech v.

from a pary without an

adjudication on the merits.
Schachner

PaZeros Inc. 49 AD. 3d 631

632 (2d Dept. 2008), quoting

Sikowitz 94 AD.2d 709 (2d Dept. 1983).

The cour should

grant a motion seeking such an

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appointment only when the moving par has made a clear evidentiary showing of the necessity for the conservation of the propert at issue and the need to protect the moving par' s interests.
Id.
quoting Lee v. 183 Port Richmond Ave. Realty,

303 AD.2d 379 380 (2d Dept.

2003). The appointment of a receiver should be used sparingly in partnership dissolution
actions. Ronan v. Valley Stream Realty,

249 AD. 2d 288

290 (2d Dept. 1998).

The Court concludes that Petitioner has not made the requisite showing to warant the

appointment of a receiver. While it is clear that the relationship between Petitioner and Daly is
strained , and that Daly has instituted extensive litigation related to the Parnership in which she

has not been successful , the Court cannot conclude that she has engaged in fraud or waste that

would support the appointment of a receiver. For the same reasons , the Cour denies Petitioner

applications for injunctive relief and an accounting. The Cour is hopeful that Daly is being
candid when she affirms that she is wiling to work with Petitioner in the winding up, and that
the winding up can be effected without future litigation.

In light of the foregoing, the Court 1) directs that the Parnership is dissolved , as the
paries apparently agree that dissolution is appropriate; 2) authorizes the parnership business to

be continued , during the pendency of the action , by Petitioner and Daly, upon their executing

and fiing with the clerk an undertaking, in the sum of $50 000 , with sureties to the effect that

they wil obey all orders of the court , and in the action , and perform all things which this Order
requires them to perform; 3) denies Petitioner s application for the appointment of a receiver; 4)
denies Petitioner s application for injunctive relief with respect to Daly; and 5) directs Petitioner
and Daly to conduct the winding up in the manner prescribed by Parnership Law 9 71.

All matters not decided herein are hereby denied.
This constitutes the decision and order of the Court.

Counsel are reminded of their required appearance before the Court on
December 18 ,

2009 at 9:30 a.

DATED: Mineola , NY
December 16 , 2009
ENTER

I'.
. TIMOTHY S. B SCOLL

. DEe 2 1 2009

",u "uvwTY CONT CLERK' S OFFIC!



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