Preview:

Matter of Toscano
2002 NY Slip Op 30019(U)
July 22, 2002
Supreme Court, Suffolk County
Docket Number: 0018561/8561
Judge: Donald Kitson
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.




[* 1 ]
SHORT FORM ORDER
INDEXNO.:
SUPREME COURT - STATE OF NEW YORK
PART 29    SUFFOLK COUNTY
P r e s e n t :                                                                                                                               MOTION DATE:  03/18/2002
Hon .                                                                    DONALD                                                               SUBMIT DATE:  05/02/2002
                                                                                                                               MOTION NO. :   015
                                                                         J u s t i c e
                                                                                                                                              DISPOSITION: FINAL
                                                                         NAPOLITANO,  LLP
In the Matter  of  the Application  of ANTHONY                           548 Roanoke  Avenue
TOSCANO,  one  of the  Shareholders  and Directors
of  SOUTHAMPTON BRICK    TILE,  INC.  for  the
                                                                         RICHARD  A.  KRASLOW,  P.C.
Voluntary Dissolution  of  said  Corporation,
                                                                         425 Broad  Hollow  Road,  Suite  206
                                                                         Melville,  New  York  11747
RECEIVER
AURELIUS  J.
50  Hampton  Street
Sayville, New  York  11782
The Court in its deliberations herein has considered;
1.   Order to Show Cause and supporting papers;
2.    Affidavit  in Opposition;
3.    Reply Affidavit.
MOT I ON
ANTHONY TOSCANO, one of the shareholders and directors of
SOUTHAMPTON BRICK    TILE, INC.                                          (SOUTHAMPTON), seeks an order removing
ANGELO TOSCANO as officer and director and the further appointment of
ANTHONY TOSCANO as  receiver to operate the tile division on behalf of
SOUTHAMPTON.
In this action  for a corporate dissolution, ANTHONY  TOSCANO, who
claims that ANGELO                                                       is the brother of  50% shareholder, ANGELO TOSCANO,
ANTHONY operates the masonry                                             TOSCANO is diverting  corporate assets.
division of the corporation while ANGELO operates the tile division
of the corporation.                                                      ANTHONY  states that in January of this year,
Elizabeth Barrett, Office Manager  for masonry and Diane Downs, CPA
were able to  access  some of  the tile records and they noted
substantial irregularities.
They state the  last known figures for the tile division showed




[* 2 ]
accounts receivable in the sum of  $981,476.66 and accounts payable of
$1,259,861.60 or a difference of approximately $278,385.  The masonry
division is profitable as the accounts receivable far exceed the
accounts payable.
Based upon the Supporting Affidavit of Elizabeth Barrett who,
with Ms.  Downs, spent six hours reviewing the tile division records,
it is claimed that ANGELO  is diverting some of the corporation’s
assets to a business  known as Tile Works,  Inc. now owned by his son,
Ryan Toscano, which business  it is alleged is in competition with
this corporation.   In addition, renovations were made  to the premises
of Tile Works,  Inc., b u t  were  in fact charged to SOUTHAMPTON.
Ms.  Barrett and Ms.  Downs also observed  that numerous deliveries
were being made  to Tile Works,  Inc. and based on same, it is alleged
that  inventory is being diverted from SOUTHAMPTON to Ryan
corporation, Tile Works,  Inc.  ANTHONY  further believes  that ANGELO,
who has  rented a  large warehouse in Calverton, has  inventory being
delivered and  shipped to the Calverton warehouse without  passing
through the inventory records of SOUTHAMPTON.  It is noted that Ms.
Barrett requested keys to the Calverton warehouse so that a physical
inventory could be made; however, said request was not  granted.
ANTHONY’S  counsel, John Munzel, Esq., complains that it is
impossible to obtain  financial information from ANGELO  TOSCANO.   It
is further alleged that ANGELO will not provide a copy of the program
disc for the new  computer system, despite the  fact that this is one
corporation and both brothers are equal shareholders and  should have
equal access to  information.  Ms. Barrett also complains that
invoices disappeared in between her visits.
ANGELO TOSCANO does admit that certain expenses were paid  for by
the corporation on behalf of Ryan Toscano and/or Tile Works,  Inc.;
however, these payments were  fully disclosed on the  books  and records
of SOUTHAMPTON.  According  to ANGELO, both brothers  often pay  certain
personal  expenses out of corporate assets.  According  to ANGELO,
these sums have been charged to the Accumulated Adjustment  Account of
ANGELO TOSCANO; however, the Court has no specifics regarding this
alleged account.  ANGELO  explains that when he took over the tile
division, he was  already starting in a negative position as payables
were  h i g h e r  than  receivables.  While there  is evidence of one of
employee spending some time working at Tile Works,
Inc., ANGELO asserts that it was  only  for three or  four hours.




[* 3 ]
3
ANGELO  also  states that he has been cooperative  in disclosing
financial information, which is disputed by Ms.  Barrett.   The Court
also notes that ANGELO  TOSCANO does not  address the Calverton
warehouse issue; nor, does he explain why ANTHONY  has been denied
access to the inventory  there, or the corporate records to verify the
status of the inventory.
The Court agrees with ANTHONY TOSCANO that a receiver should be
appointed in light of the evidence before this Court that reveals:
1)                                                                                corporate checks being written by  a  stockholder for
personal  expenses,                                                               and what may be  for a competitive
corporation,
2)   inability to proceed with discovery on the  civil case,
3)   the hostility  between the stockholders.
Accordingly, the Court hereby appoints                                                                                                                                                                                               J. Sclafani,
                                                                                                                                                       Esq., 50 Hampton Street, Sayville, New York,  11782, telephone number
                                                                                                                                                       (631)588-3000.  The Court notes that a neutral receiver is necessary
                                                                                  because there are  special circumstances present here, notably the
extreme hostility between  these two                                                                                                                                                                                                 shareholders.
(see, in  re Border,  2 6 5                                                       218 ,                                                                696                                                                     459   Dept.,  1 9 9 9 ) )
Pursuant to Business  Corporation  Law  5 1 2 0 4 ,  the Court hereby
directs Mr.  Sclafani to post a bond  in the sum of  $1,000,000.  Mr.
Sclafani may  submit any order to this Court for signature together
with  a supporting affirmation so as to effectuate his duties as
receiver.  Mr.  Sclafani  shall be  compensated pursuant  to  CPLR  5 8 0 0 4 ,
at a rate of  2.5% in consideration of the size and assets of the
corporation.                                                                      (see,                                                                v                                                                       42    483 ,                 346   834
Dept.,  1 9 7 3 ) )
BACKGROUND HISTORY
Initially, ANGELO brought an action against ANTHONY based upon
conversion, breach of  fiduciary duty, dissipation of assets and
seeking an accounting.   Thereafter, ANTHONY TOSCANO brought an action
for dissolution of the corporation.                                               Those actions were  joined for
trial by Order of this Court dated June                                           1999.
A  second action, under Index Number                                              was brought by
ANTHONY TOSCANO  a n d  SOUTHAMPTON BRICK     T I L E ,   INC. against ANGELO
TOSCANO and RYAN TOSCANO for conversion of corporate assets,                      breach
of  fiduciary duty, to  impress a trust and  for an accounting.




[* 4 ]
4
In June of  2000, ANTHONY TOSCANO moved  for partial  summary
judgment, granting  dissolution of the corporation.                        The Court noted
in its Order dated  September 25,  2000 that there was  no necessity for
a hearing because  the existence of dissension among these two
brothers was  clear.
As  the Court noted  in that Order, ANGELO  accused ANTHONY of
demolishing the tile  showroom and displays on August  7,  2000,
necessitating a motion  for injunctive relief.                             ANGELO  also accused
ANTHONY of entering  the premises  and destroying portions  of the tile
showroom.   In July of  1999, ANTHONY  sought an order enjoining his
brother  from continuing construction on the premises because both
brothers could not  agree as to whether the premises  should be
improved for a tile or a tile plus masonry  showroom.                      There have
claims and counter-claims of removal of  financial records and non-
cooperation with discovery in this case.
Pursuant to the Order of this Court dated September  25,  2000,
the Court found that there were no  issues of  fact precluding  summary
That Order remains in full                                                 judgment on the  issue of dissolution.
force and effect and  is law of the case.  Thus, there is no hearing
required for dissolution.
In said Order,  the Court also granted the application of ANTHONY
TOSCANO to appoint  a referee.  The Court then issued an Order dated
February  21,  2001 appointing as Referee, Alan B.                         to determine
whether to divide or dissolve the corporation in the best  interests
of the parties.                                                            The parties stipulated that the Referee be
compensated on a  reasonable hourly basis.
On September  13,  2001, the Referee was directed to retain the
services of an appraiser to value the three corporate properties.
There were numerous  conferences.  At  the last conference held by  this
Court on May  14,  2002, it was  clear to the Court that although the
Referee reported that a division of the assets of the corporation
would be  in the best  financial interests of the parties, ANTHONY
would not agree to the proposal.
In this corporation, the shareholders are akin to that of
partners and it is evident, based upon the voluminous motion practice
that has ensued and the acrimony present  in this case,  as  reflected
in these brothers’ multiple affidavits, that the deterioration of
this business and  family                                                  is complete.   This dissension
No.




[* 5 ]
5
is unequivocally impairing the orderly functioning of  SOUTHAMPTON
                                                                        BRICK    TILE, INC.                                                                                     (see, Molod  v  Berkowitz,  2 3 3                                         149 ,                               649
438                                                                     Dept. , 1 9 9 6 ) )
                                                                                                                                                                                As  noted in this Court's  Order of September  25,  2000, the mere
                                                                                                                                                                                fact that the dissension present herein has not  yet  impacted on the
                                                                                                                                                                                firm's  profitability does not  require denial of dissolution.                                                (see,
                                                                                                                              Tavlin  v Munsey  Candlelight  Corp.,  6 9        865 ,                                                                     415                                 438
                                                                                                                              Dept.,  1 9 7 9 ) ;  Business  Corporation  Law                                                                                                                 A  corporate
                                                                                                                                                                                dissolution proceeding  is no different from any other litigated
                                                                                                                                                                                proceeding wherein  summary judgment can be  granted when  there are no
                                                                        issues of  fact.                                                                                        (see, People v  Oliver  Schools  Inc.,  2 0 6                                                                 143 ,
619                                                                     911                                                   Dept.,                                            1994 ) )                                                                  Accordingly, Court hereby directs
that SOUTHAMPTON BRICK    TILE, INC. be dissolved.
The                                                                     counsel are directed to contact Mr.  Sclafani on or
before August  1, 2002.
The Court  sua  sp o n te  severs the case of                           TOSCANO on behalf
of himself as shareholder of SOUTHAMPTON BRICK    TILE, INC. and in
the right of SOUTHAMPTON BRICK    TILE, INC., and on behalf of all
other shareholders similarly situated against ANTHONY  TOSCANO, Index
No.                                                                     from this action.
The Court hereby directs receiver Sclafani to report to the
Court by  September  12, 2002 on the status of dissolution.             The Court
further directs counsel  for the parties to appear before  this Court
on October  3,  2002 for the two remaining cases under  Index Numbers
and
The foregoing constitutes the  ORDER  of this Court.
DATE:                                                                   22 ,
s .    c .

Download 2002_30019.pdf

New York Law