Preview:

[*1]


Decided on December 7, 2006
Supreme Court, Westchester County



Riccardo Tedesco, Sr., Thornwood Equities, Inc. and Anlidia, Inc.,
Plaintiffs,

against

Riccardo Tedesco, Jr. and RTJ Landscaping Company, Inc.,
Defendants.

Lydia Tedesco Nioras, Plaintiff,
against
Riccardo Tedesco, Sr., Defendant.

Riccardo Tedesco, Sr., Thornwood Equities, Inc., Briar Vista Corp. And
Anlidia, Inc., Plaintiffs,


against

Lydia Tedesco, Woodrick Partners, Inc., Patterson Acres, Inc. and
Riccardo Tedesco, jr., Defendants.




13220/05
William J. Giacomo, J.
These three related actions arise from a series of [*2]questionable real estate transactions
between Riccardo Tedesco, Sr. (Riccardo Sr.), the individual defendant in Action 1, and his son and
daughter, Riccardo Tedesco, Jr. (Riccardo Jr.) and Lydia Tedesco Nioras (Lydia). With each of
these parties jockeying for control of several properties originally purchased by Riccardo Sr.
through certain corporate entities, now before the Court are five motions seeking various forms of
interim and enforcement relief.[FN1]
I. FACTUAL AND PROCEDURAL BACKGROUNDIn 1984 Riccardo Sr. found an opportunity to purchase a shopping center located at 122-140 West Post Road in White Plains, New York (the Shopping Center). Shortly thereafter, he and his sister, Flavia Margotta (Flavia), formed 122 W.P.R. Corp. (WPR), which bought the property. Flavia transferred her interest in WPR to Riccardo Sr. on January 9, 1989. Although denied by Riccardo Sr., Lydia asserts that in December 1992 Riccardo Sr. transferred his interest in WPR to her. It is undisputed that since 1993 Lydia has managed the Shopping Center and that the corporate income tax returns filed by WPR have reported that she is the 100% shareholder of that entity.
In 1985, Riccardo Sr. also formed another corporation, Briar Vista Construction Corp. (Briar
Vista), one of the plaintiffs in Action 3 (Briar Vista). On July 27, 1985, Briar Vista purchased a
property, located at 80 Hawkes Avenue, Ossining, New York (80 Hawkes), which was improved
with a two-family home. Briar Vista transferred ownership of 80 Hawkes to Thornwood Equities,
Inc. [*3](Thornwood), another corporation owed by Riccardo Sr., on October 10, 1985. Then, on
June 9, 1987, Thornwood transferred 80 Hawkes to RTJ Landscaping Company, Inc. (RTJ), an
entity owned by Riccardo Jr., which is one of the defendants in Action 1. Riccardo Sr. alleges that
the transfer to RTJ was made upon Riccardo Jr.'s agreement that he would transfer 80 Hawkes back
to Riccardo Sr. at any time he requested. In support of that claim, he offers a one-page agreement
purportedly signed by Riccardo Jr. (the 80 Hawkes Nominee Agreement), which states in relevant
part:
"I, RICCARDO TEDESCO, JR., am the title owner of the real property together with
improvements thereon located at 80 Hawkes Avenue, Ossining, New York. I am holding this
property as Nominee for the true owner of the property, my father, RICCARDO TEDESCO. Upon
request of RICCARDO TEDESCO, without consideration, I will execute a Deed and such other documentation that may be necessary to convey fee simple title to said property to RICCARDO TEDESCO." (Riccardo Tedesco, Sr. Affid., 6/30/06, Exh.G, p.1 [capitalization in original]).
The 80 Hawkes Nominee Agreement is dated May 10, 1990, but was notarized on May 14, 1990. It bears a signature of a "Riccardo Tedesco, Jr.", although in these actions Riccardo Jr. states that he has no recollection of having signed that document.
On October 16, 1990, Riccardo Sr. purchased a property located at 542 Commerce Street, Thornwood, New York (542 Commerce) which was improved with a two-family home. However, he placed title of 542 Commerce in Riccardo Jr.'s name. It is Riccardo Sr.'s position that he did so upon the agreement that when requested by him, Riccardo Jr. would re-convey 542 Commerce to him. Unlike the situation with respect to 80 Hawkes, Riccardo Sr. does not claim that there is any written agreement providing for the reconveyance of 542 Commerce.
Another of Riccardo Sr.'s corporations, Anlidia, Inc. (Anlidia), purchased a vacant parcel of property located on Elmwood Avenue, Hawthorne, New York (Elmwood Avenue) in July 1995, financed in part with a mortgage that Riccardo Sr. obtained. In June 2001, approximately four years after that mortgage had been satisfied, Anlidia sold Elmwood Avenue to RTJ for $36,000. Among the many claims put forth by Riccardo Sr. in this litigation is that RTJ paid only $10,000 of the purchase price, and still owes the $26,000 balance.
In 1996, Riccardo Sr., who already had a State Court felony conviction for a crime involving fraudulent conduct, entered a guilty plea in Federal District Court in New Jersey to the crimes of Conspiracy to Commit Bank Fraud and Bribery of a Bank Officer, in satisfaction of certain charges related to fraudulent mortgages obtained by him. At his sentencing he was spared incarceration, apparently as a result of his cooperation in the investigation. However, he was ordered to make certain [*4]restitution payments. In addition, there were substantial money judgments outstanding against him.
Seeking a reduction of the amounts that he was required to pay as restitution, Riccardo Sr. filed a financial affidavit with the Federal District Court in which he denied owning any real property or having any other assets. Based upon that application, in June 1997 Federal District Court Judge Alfred J. Lechner, Jr. issued an order reducing the amount that Riccardo Sr. was required to pay Surburban National Bank from $50,000 to $25,000.
In May 2005, Lydia and Riccardo Jr. commenced a proceeding pursuant to Mental Hygiene Law Part 81 seeking to have themselves appointed as co-guardians of Riccardo Sr.'s property (the Guardianship Proceeding). Their petition alleged, inter alia, that Riccardo Sr. was suffering from "dementia and/or other neurological disorders" and that he was the victim of certain scams involving the transfer of substantial assets to Nigeria (Riccardo Tedesco Sr. Affid., 6/30/06, Exh. A, Petition, p.2,3). Shortly after commencing the Guardianship Proceeding, which was opposed by their father, Lydia and Riccardo Jr. withdrew their petition.
Riccardo Sr.'s response to the Guardianship Proceeding was to demand the reconveyance of 80 Hawkes and 542 Commerce. Faced with Riccardo Jr.'s refusal to transfer those properties back to him. Riccardo Sr., together with Thornwood and Anlidia, commenced Action 1 against Riccardo Jr. and RTJ, seeking declaratory relief and money damages.
Unknown to Riccardo Jr., while Action 1 was pending Riccardo Sr. obtained a $175,000 mortgage against 542 Commerce from Ashlar Mechanical Corp. (Ashlar), notwithstanding that neither Riccardo Sr. nor any of his entities was the titled owner of that property. On February 16, 2006, Ashlar filed a satisfaction of its mortgage (the Ashlar Mortgage) after Riccardo Sr. repaid the obligation.
Lydia then commenced Action 2 against Riccardo Sr., concerning her claim of ownership of WPR and the Shopping Center. Finally, Riccardo Sr., Buena Vista and Anlidia sued Lydia, Riccardo Jr. and two of their corporations with regard to other properties whose ownership is in dispute.
Beginning in March of this year, the parties engaged in the motion practice that is the subject of this decision and order. First, on March 1, 2006, Lydia filed an order to show cause (OTSC L1) to bring on a motion (Lydia Motion 1) seeking a preliminary injunction against Riccardo Sr. that would bar him from taking any action with respect to WPR and the Shopping Center. When OTSC L1 was signed by Justice Orazio R. Bellantoni on March 1st, it included a temporary restraining order (TRO L1) which prohibited Riccardo Sr. "from entering into or recording any mortgage or [*5]other encumbrance upon any properties of record in the name of, or owned or managed by, or claimed to be owned by, [Lydia], or [WPR]" (OTSC L1, p.2-3).
Simultaneously with the filing of OTSC L1, Riccardo Jr. filed an order to show cause (OTSC Jr.) to bring on his motion (Riccardo Jr. Motion) for a preliminary injunction, leave to serve an amended answer including claims related to the Ashlar Mortgage and other relief with respect to 80 Hawkes, 542 Commerce and Elmwood Avenue (collectively hereinafter "the Three Riccardo Jr. Properties"). On March 1st, when he signed OTSC Jr., Justice Bellantoni included a temporary restraining order (TRO Jr.) prohibiting Riccardo Sr. from "entering into or recording any mortgage or other encumbrance upon any properties of record in the name of, or owned by, or claimed to be owned by, [Riccardo] Jr. or jointly by [Riccardo] Jr. and Lydia Tedesco Norias".
On May 5, 2006, E.R. Holdings LLC filed a mortgage in the amount of $550,000 against the Shopping Center (the First Shopping Center Mortgage) that had been executed on February 13, 2006 by Riccardo Sr., as President of WPR. Upon learning of that mortgage, Lydia moved by order to show cause (OTSC L2) to bring on a motion (Lydia Motion 2) for various forms of interim relief against her father with respect to WPR and the Shopping Center (Lydia Motion 2).
When she signed OTSC L2, Justice Linda S. Jamieson, to whom Action 1 and Action 2 were then assigned, issued three interim orders, as follows:
1. Riccardo Sr. was "restrained and enjoined from entering into or recording any mortgage or other encumbrance upon any properties of record in the name of, or owned or managed by, or claimed to be owned by [Lydia], by Riccardo Tedesco, Jr., or by [WPR]" (OTSC L2, p.3-4 [hereinafter "the May 17 Encumbrance TRO"]);2. Riccardo Sr. was "stayed and enjoined from spending, disbursing or utilizing any monies from the [First Shopping Center] Mortgage proceeds, except that [he], his agents, servants and employees are directed to timely make any and all payments required on the [First Shopping Center] Mortgage until the hearing and determination of [Lydia] Motion 2" (id., p.4 [hereinafter "the First Shopping Center Mortgage TRO"]; and3. Riccardo Sr. was "stayed and enjoined from interfering with [Lydia's] operation of the [Shopping Center] ... or collecting or seeking to collect any rents or other income therefrom pending further order of this Court" (ibid.).
Justice Jamieson also required the parties to appear before her for a conference on June 2, 2006 (the June 2 Conference).
At the June 2 Conference, the parties addressed several of the cross-accusations related to the properties at issue. During the conference Riccardo Sr.'s new counsel, John C. Guttridge, [*6]Esq., conceded that his client had obtained the First Shopping Center Mortgage, before the issuance of TRO L1, and had obtained another mortgage for $320,000 against the Shopping Center (the Second Shopping Center Mortgage) after that restraining order was issued. Under questioning from Justice Jamieson, it was also acknowledged that the proceeds of the Second Shopping Center Mortgage had been sent to Africa by Riccardo Sr. as part of an investment. Moreover, Guttridge represented that his client's position is that he could not currently return those monies to the jurisdiction of the Court.
After hearing from the parties and expressing her preliminary view that Riccardo Sr. had violated TRO L1 by securing the Second Shopping Center Mortgage, Justice Jamieson issued certain directives from the bench. Among those was an order requiring Riccardo Sr. to submit a list of his properties to the Court by the following Wednesday, that being June 7, 2006. As evident from Justice Jamieson's remarks during the conference, the purpose of ordering the production of that information was to provide a basis for her to subsequently establish some type of security for the proceeds of the First Shopping Center Mortgage and the Second Shopping Center Mortgage (together hereinafter "the Two Shopping Center Mortgages").
By letter dated June 7, 2006, Guttridge identified three properties purportedly owned by his client, but requested an additional two weeks to provide a complete list of Riccardo Sr.'s assets. That letter drew a June 8, 2006 letter in response from counsel for Lydia and Riccardo Jr. challenging Riccardo Sr.'s claims to ownership of one of those three properties and disputing Riccardo Sr.'s representations as to the current values of the two others.
One month after the June 2 Conference, Riccardo Sr. filed an order to show cause (OTSC Sr.) to bring on a motion (the Riccardo Sr. Motion) for injunctive relief in his favor and the appointment of a receiver for the Shopping Center, 80 Hawkes, 542 Commerce and two other properties located at 677 Commerce Street and 696 Commerce Street in Thornwood, New York (hereinafter "677
Commerce" and "696 Commerce", respectively).[FN2] Included in OTSC Sr. was a proposed temporary restraining order and an order appointing a temporary receiver for those properties. [*7]
Upon receipt of OTSC Sr. and pursuant to its IAS Part rules, this Court conducted a conference to determine whether to grant the interim relief as Riccardo Sr. proposed. After hearing from the parties, the Court signed OTSC Sr. but denied the request for interim relief pending the determination of the Riccardo Sr. Motion.
Thereafter, counsel for the parties met with the Court's Law Clerk to establish a comprehensive schedule for the filing of papers on the pending motions. Pursuant to the discussion at that conference, on July 14, 2006 Lydia and Riccardo Jr. filed an order to show cause (OTSC L3) to bring on a motion seeking a contempt adjudication against Riccardo Sr. for allegedly violating certain of the interim orders issued in this case (the Contempt Motion). With all papers now before the Court, the Court addresses the five motions in the order that it deems most logical.
II. RICCARDO JR. MOTION
On his motion, Riccardo Jr. seeks eight forms of relief. Riccardo Sr. consents to some, but not all, of these requests.
A. Amendment: First, Riccardo Jr. asks for leave to serve an amended Answer asserting a counterclaim against Ashlar seeking a declaration that the Ashlar Mortgage is invalid. Because it is undisputed that the Ashlar Mortgage has been satisfied, this application is denied as moot.
B. Service: Second, Riccardo Jr. requests permission to serve his proposed Amended Answer upon counsel for Riccardo Sr. and upon Ashlar pursuant to CPLR 311. In view of the denial of the first application, this request is also denied as moot.
C. Caption: Third, Riccardo Jr. moves for leave to amend the caption of Action 1 to reflect Ashlar's position as an additional defendant on the proposed counterclaims. Again, the denial of leave to serve the proposed amended answer compels the denial of this branch of the motion as moot.
D. Cancellation of Mortgage: Fourth, it is requested that the Court declare the Ashlar Mortgage to be invalid and to "cancel and expunge [it]" (OTSC Jr., p.3). This application is also denied as moot since the Ashlar Mortgage has been satisfied.
E. Notice of Pendency: The fifth branch of the motion seeks an order cancelling and expunging the two notices of pendency filed by Riccardo Sr. on August 10 and 18, 2006, respectively, because they were superceded by amended notices of pendency filed on September 12, 2005, the latter of
which do not include Elmwood Avenue.[FN3] Because neither party has provided this Court with [*8]copies of any of the notices of pendency in issue, it cannot be determined whether there is a valid ground for the relief sought. For that reason, this application is denied, without prejudice.
F. Injunction: At the core of this motion is Riccardo Jr.'s request for a temporary injunction barring Riccardo Sr. from further encumbering "[any] properties owned by, or claimed to be owned by, any of the children of [Riccardo] Sr., or as to which any of them, or a corporation or entity owned by them, is the title holder of record, without prior permission from this Court" (ibid.). In response, Riccardo Sr. consents to this relief, although arguing on his own motion that he is also entitled to a similar preliminary injunction against Riccardo Jr.
Based upon the showing made by Riccardo Jr. and the consent of Riccardo Sr., this application is granted to the extent set forth below. Riccardo Sr.'s request for injunctive relief is addressed in the discussion of his motion that follows.
G. Discovery: Included as part of the application for a preliminary injunction is Riccardo Jr.'s request that Riccardo Sr. be ordered "to produce and disclose to this Court immediately any other mortgage transactions he has entered into since 1996, and any mortgage applications he has made or filed since 1996, and any financial statements he has made or filed since 1996" (ibid.). Riccardo Sr. opposes this request, arguing that this information should be part of the pretrial discovery that shall be exchanged by the parties.
Ordinarily, the Court would agree that all of the information sought by Riccardo Jr. should await pretrial discovery. Here, however, there is a history of efforts by Riccardo Sr. to obtain mortgages on properties that, at least as appears from the existing title documents, are not owned by him or any entity controlled by him. For that reason, as relates to the properties in issue, some immediate discovery is warranted.
Accordingly, this branch of the motion is granted to the extent that by no later than December 29, 2006, Riccardo Sr. shall submit his own affidavit to Riccardo Jr. in which he identifies all mortgages that he has taken out against the Three Riccardo Jr. Properties since January 1, 2005. In all other respects, this application is denied, and the parties shall exchange required information pursuant to a schedule to be established at the preliminary conference, as directed below.
H. Counsel Fees: Finally, Riccardo Jr. seeks an award of counsel fees based upon his claim that Riccardo Sr. was guilty of fraud by obtaining the Ashlar Mortgage. Because an insufficient [*9]showing of entitlement to fees as a sanction under 22 NYCRR Part 130 has been made by
Riccardo Jr., this application is denied.[FN4]
III. LYDIA MOTION 1
Lydia's first motion requests four forms of relief. Once again, Riccardo Sr. consents to the motion in part.
A. Consolidation: First, Lydia moves to consolidate Action 1 and Action 2. Riccardo Sr. consents to this relief. In fact, consolidation of the two actions was previously granted by Justice Jamieson at the June 2 Conference. Moreover, the parties subsequently consented to consolidation of all three actions captioned above. Therefore, this application is moot.
B. Injunction: Like her brother, Lydia asks the Court to award her a preliminary injunction against their father. Specifically, she proposes that the interim relief prohibit Riccardo Sr. from "attempting to enter into or to record, or entering into or recording any encumbrances or mortgages on property owned by, or claimed to be owned by, [her] or a corporation or entity wholly owned or partly owned by her, or as to which she or it is the record owner, without prior permission from the Court" (OTSC L1, p.2). As with his son's similar request, Riccardo Sr. consents to this relief, although arguing that he is entitled to injunctive relief against Lydia.
Based upon the showing made by Lydia and Riccardo Sr.'s consent, this branch of the motion is granted to the extent set forth below. Riccardo Sr.'s request for injunctive relief against Lydia is addressed in the discussion of his motion that follows.
C. Discovery: Third, Lydia seeks the same discovery as to mortgages and mortgage applications that was made by her brother. In addition, she asks the Court to require Riccardo Sr. to produce "the minute books, management books and stock transfer ledger for [WPR] and any other materials in the possession, custody or control of [Riccardo Sr.] relating to said corporation" (OTSC L1, p.2). Riccardo Sr. responds with a demand that any disclosure be made reciprocal, to include an accounting by Lydia of rent monies received by her from the Shopping Center tenants.
Under the circumstances presented, Lydia is entitled to the same type of information as ordered above on her brother's [*10]motion. Therefore, this application is granted to the extent that by no later than December 29, 2006, Riccardo Sr. shall submit his own affidavit to Lydia in which he identifies all mortgages that he has taken out against the Shopping Center since January 1, 2005. In all other respects, this request is denied, and the parties shall exchange required information pursuant to a schedule to be established at the preliminary conference, as directed below.
D. Rent Collection: Finally, as part of the third branch of her motion Lydia also urges the Court to bar Riccardo Sr. "from advising tenants of [WPR] that [he] or his agents are authorized or empowered to collect rents therefrom and/or accepting or retaining such rents" (ibid.). In view of the discussion below concerning the lack of merit of Riccardo Sr.'s claim to the Shopping Center and the other properties in issue in these actions, this branch of the motion is also granted, and a temporary injunction shall issue as directed below.
IV. RICCARDO SR. MOTIONComplaining that he is actually the aggrieved party in this litigation,
and that he has been the victim of his ungrateful children's efforts to steal his assets from him, Riccardo Sr. moves for two forms of interim relief and summary judgment on his claims of ownership of the Shopping Center, 80 Hawkes, 542 Commerce, 677 Commerce and 696 Commerce (collectively hereinafter "the Five Properties"). Lydia and Riccardo Jr. oppose the motion in all respects.
A. Injunction: First, Riccardo Sr. asks the Court for a preliminary injunction barring Lydia and Riccardo Jr. from "selling, gifting or otherwise transferring, entering into or recording any encumbrances or mortgages on property owed by, or claimed to be owned by [him] or any corporation or entity wholly or partly owned by him, or as to which he or it is the record owner", including the Five Properties. To prevail on this branch of his motion under CPLR 6301, Riccardo Sr. "must prove three things: (1) likelihood of his ultimate success on the merits; (2) irreparable injury to him absent granting of the preliminary injunction; and (3) a balancing of equities" in his favor (Albini v. Solork Associates, 37 AD2d 835 [2d Dept. 1971]). Here, consideration of only the first element of this standard warrants the conclusion that Riccardo Sr. is not entitled to injunctive relief.
To establish a likelihood that he will prevail on his claims of ownership of the Five Properties, Riccardo Sr. must prove that he is the titled owner of those properties, that he has a claim that the properties are held for him by others, or that on some equitable theory title must be deemed to be in his name. What is problematic for Riccardo Sr. on these motions, and may be fatal to his claims when they are addressed on a dispositive motion or [*11]at trial, is the application of the doctrine of judicial estoppel, as relied upon by his two children.
As is well-settled in the jurisprudence of this State: "Judicial estoppel, or the doctrine of inconsistent positions, precludes a party who assumed a certain position in a prior legal proceeding and who secured a judgment in his or her favor from assuming a contrary position in another action simply because his or her interests have changed" (Ford Motor Credit Company v. Colonial Funding Corp., 215 AD2d 435,436 [2d Dept. 1995]). The effect of that doctrine in the context of a sentencing proceeding wholly undermines Riccardo Sr.'s motion for a preliminary injunction, as recently explained by the Appellate Division, Second Department in Festinger v. Edrich (32 AD2d 412 [2d Dept. 2006]).
In Festinger, the plaintiff sought to impose a constructive trust upon property whose purchase he allegedly funded for his sister with the understanding that she would hold the property for his benefit. On the defendant's summary judgment motion, evidence was offered that at his sentencing for a violation of probation regarding his failure to report assets and income which were available to make restitution, "the plaintiff, through his counsel, repeatedly advised the United States District Court that he was broke,' that he had no money or assets, and that he had used all of his resources toward the payment of restitution" (id., at 413). Based upon the fact that his representation that he lacked any assets resulted in leniency from the sentencing Court, the Appellate Division held that the plaintiff was estopped from asserting an ownership interest in the property that was the subject of his lawsuit. As expressed by the Festinger Court, "the application of the doctrine [of judicial estoppel] [] was essential to avoid a fraud upon the court and a mockery of the truth-seeking function" (ibid.). In addition, that Court held that "the plaintiff is bound by his prior representations in the federal proceeding, which constitute judicial admissions" (id., at 414).
In this case, it is undisputed that in support of his application for a reduction of the financial penalty imposed upon him following his guilty plea, Riccardo Sr. represented to the Federal District Court that he owned no real estate or other assets, and that no one was holding any assets in his behalf. Those representations helped to secure him the sentence reduction that he sought. Having disclaimed ownership of any realty in a financial statement which he certified to be true on March 7, 1996, a date after the transactions giving rise to his claims in this litigation, Riccardo Sr. cannot be heard to assert any interest in the Five Properties for the purposes of any of the five motions before this Court (Festinger v. Edrich, supra). [*12]Consequently, because he has failed to demonstrate any likelihood that he will prevail on his ownership claims, the motion for a preliminary injunction is denied (see Schweizer v. Town of Smithtown, 19 AD3d 682,682-683 [2d Dept. 2005] [Injunctive relief denied where movant "did not demonstrate a likelihood of success on the merits of his claim"]).
B. Receiver: Relying upon his same claims of ownership, Riccardo Sr. moves for the appointment of a temporary receiver for the Five Properties. As has been recognized, "[the] [a]ppointment of a temporary receiver is an extreme remedy and should not be lightly granted" (Emblem v. Juras, 112 AD2d 134 [2d Dept. 1985]).
Here, as noted, there is significant doubt that Riccardo Sr. will prevail on his ownership claims in view of his representations to the contrary in Federal District Court. In view of the highly

Download 2006_52353.pdf

New York Law