[*1]
Singer v Seavey
2013 NY Slip Op 50615(U) [39 Misc 3d 1214(A)]
Decided on April 9, 2013
Supreme Court, New York County
Jaffe, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on April 9, 2013
Supreme Court, New York County


Dorothy Singer, NORMA BRANDES, MARS ASSOCIATES, INC., NORMEL CONSTRUCTION CORP., GARY A. SINGER, BRAD C. SINGER, STEVEN G. SINGER, WENDY BRANDES, FREIDA TYDINGS, ADINE D. BRANDES, GEORGE KLEINMAN, GBK ASSOCIATES INC., ELISE WEINGARTEN, LOREN KLEINMAN, and GAYLE REISMAN, individually and on behalf of FIFTH AND 106th ST. ASSOCIATES, L.P., Plaintiffs,

against

Robert W. Seavey, JOHN L. EDMONDS, BNA REALTY COMPANY, LLC, PHYLLIS SEAVEY, DALTON MANAGEMENT CO. LLC, Defendants.




602568/08



For plaintiff:

Sabrina H. Cochet, Esq.

Dennis H. Tracey, III, Esq.

Hogan Lovells USA LLP

875 Third Ave.

New York, NY 10022

212-918-3000

For Seavey defendants:

Marshall R. King, Esq.

Randy M. Maestro,Esq

Gibson, Dunn & Crutcher, LLP

200 Park Ave.

New York, NY10166

212-351-4000

Eric H. Seltzer, Esq.

Gilbride, Tusa, Last & Spellane, LLC

708 Third Ave., 26th FL.

New York, NY 10017

212- 692-9666

For defendant Edmonds:

Charles Simpson, Esq.

Windels Marx, et al.

156 West 56th St.

New York, NY 10019

212- 237-1000

Formerly:

M. Douglas Haywoode, Esq.

71 Maple St.

Brooklyn, NY 11225

718-940-880

Barbara Jaffe, J.



By order to show cause dated July 12, 2012, M. Douglas Haywoode, on behalf of John L. Edmonds, moves pursuant to CPLR 6301 for an order enjoining Seavey defendants from selling Lakeview Apartments, an order appointing a judicial officer or referee to supervise the sale, and an order appointing a guardian for Edmonds. Edmonds and Seavey defendants oppose.

By notice of cross-motion dated July 20, 2012, Seavey defendants move for an order finding that Edmonds is incompetent to act as a general partner of Fifth and 106th St. Associates, L.P. Edmonds opposes the motion.

I. BACKGROUND

Fifth and 106th St. Associates, L.P. (partnership) owns and manages Lakeview Apartments, a large Manhattan apartment building. (Singer v Seavey, Sup Ct, NY County, October 3, 2011, Mot. Seq. 006, Feinman, J., index No. 602568/2008 [Oct. 11 decision]). The partnership was formed in 1973, has both limited and general partners, and is organized and doing business in New York. (Id.; Affirmation of E. Douglas Haywoode, Esq., dated July 12, 2012 [Haywoode Aff.] at ¶ 2).

Edmonds and Robert W. Seavey were the managing general partners. ("Seavey" alone connotes Robert Seavey, not defendant Phyllis Seavey). (Oct. 11 decision). BNA Realty is a general partner, and Dalton Management is the managing agent; Phyllis Seavey is the principal of Dalton Management (hereinafter, Robert and Phyllis Seavey, BNA, and Dalton are, collectively, Seavey defendants). (Id.).

In 1999, Edmonds entered into a sale and repurchase agreement to secure a loan from BNA. He transferred a portion of his partnership share to BNA, and was thereby demoted to limited partner. (Id.). The agreement secured a loan to Edmonds, which he paid back. (Id.). In January 2011, he regained his shares. (Id.). Defendants deny that Edmonds regained his position as a managing general partner along with his shares, and assert that he remained a limited partner, without any authority to manage or sell the property. (Id.).

In 2008, the limited partners sued the general partners who moved to compel arbitration. On appeal, all claims were stayed pending arbitration, except plaintiffs' fourth cause of action seeking a declaration as to the status of Edmonds's interest in the partnership. (Seavey v Singer, 83 AD3d 48 [1st Dept 2011]).

In April 2011, Edmonds suffered a stroke. (Affirmation of Eric H. Seltzer, Esq., dated Nov. 20, 2011 [Seltzer Aff.], Exh. 1, at ¶ 14). He is approximately 85 years old, and because he is bedridden and has trouble communicating, he is being cared for by his niece Suzette Edmonds Irish. (Id. at ¶¶ 2, 16, 20-22, 25). According to his doctor, Edmonds is physically injured, but "his mental capacity has not been impaired." (Affidavit of Charles E. Simpson, Esq., dated July 20, 2012 [Simpson Affid.], Exh. B).

On July 12, 2012, Haywoode, allegedly on behalf of Edmonds, moved for an order enjoining Seavey defendants from selling Lakeview Apartments. (Haywoode Aff., ¶ 1). In filing this motion, Haywoode implicitly raises the question of who represents Edmonds's interests now. That same day, Seavey commenced a proceeding in the Supreme Court, Queens County, seeking the appointment of a guardian for Edmonds. After a court-ordered evaluation and hearing, Irish was appointed Temporary Special Guardian of Edmonds for "the limited purpose of protecting and representing [Edmonds's] partnership interests." (Supplemental Affirmation of Charles E. Simpson, Esq. [Simpson Supp. Aff.], Exh. G). Subsequently, the order was modified with the following provision: "nothing contained herein shall be deemed a determination or finding by this court that the Special Guardian may exercise the rights and/or powers of a General Partner or Managing Partner of a partnership." (Supplemental Affirmation of Eric H. Seltzer, Esq., dated [*2]Dec. 19, 2012, Exh. A).

Soon thereafter, Irish commenced an action in this court seeking an order confirming the validity of a 2003 durable power of attorney naming her as Edmonds's attorney-in-fact. The durable power permits her to make "business operating transactions." (Simpson Affid., Exh. A). By order dated August 15, 2012, the power was validated.

Irish then moved to substitute Windels Marx Lane & Mittendorf, LLP for Haywoode as counsel of record for Edmonds. Over his opposition, Haywoode was relieved as counsel of record effective September 12, 2012.

According to Seavey, the partnership loses money every month, and he believes that it is "important that [he] retain flexibility as Managing General Partner to sell the Property if it becomes necessary." (Affidavit of Robert Seavey, dated July 20, 2012 [Seavey Affid.] ¶¶ 5, 6). Seavey also claims that he cannot sell the property until Edmonds's status in the partnership is resolved. (Id. at ¶ 7).

II. MOTION FOR AN INJUNCTION


In support of his motion to enjoin the sale of the building, Haywoode argues that he is Edmonds's counsel. The undisputed record, however, reflects that he has no authority to speak for Edmonds. Rather, Irish, as Edmonds's attorney-in-fact since 2003, has that authority. (Simpson Affid. at ¶ 5, Exh. A). An attorney-in-fact is an alter-ego of the principal, authorized to make litigation decisions in the principal's place. (See Perosi v LiGreci, 98 AD3d 230, 237 [2d Dept 2012]; Zaubler v Picone, 100 AD2d 620 [2d Dept 1984]). Moreover, the power is durable in that Irish remains attorney-in-fact even if Edmonds is incapacitated, and a third party must accept the power unless there is reasonable cause to believe it is invalid. (General Obligations Law [GOL] §§ 5-1501A, 1504).

Haywoode offers no reason why he did not honor Edmonds's power of attorney and abide by Irish's litigation strategies. Instead, he filed the instant motion over her repeated objections (Simpson Affid. at ¶¶ 8, 9), and was subsequently relieved as counsel of record for Edmonds. As Haywoode's own client opposes the motion, the motion for an injunction is moot.

III. CROSS-MOTION FOR ORDER DECLARING EDMONDS INCOMPETENT TO ACT AS

MANAGING GENERAL PARTNER



If Edmonds regained his position as a managing general partner when he repaid BNA Realty in 2001, Irish seeks to act in his stead given Edmonds's illness. Seavey defendants argue that Irish may not act as a general partner because: 1) under, the Revised Limited Partnership Act (RLPA) § 121-402(f), an incompetent partner "ceases" to be a general partner; and 2) Seavey defendants chose to partner with Edmonds, not Irish. (Mem. of Law, dated July 20, 2012; Mem. of Law, dated Nov. 21, 2012).

In response, Edmonds argues that the issue of whether Irish is empowered to act as managing general partner was decided in Irish and/or Roberts, and thus, the issue is not properly before me. Rather, he maintains that the only issue is the amount of his percentage of the partnership. (Edmonds s Mem. of Law, dated Dec. 5, 2012). Seavey complains, however, that he cannot sell the building until he knows whether Edmonds's consent is required. Thus, he cross-moves, in effect, for an order ousting Edmonds to the extent he is still a general partner. (Seavey Affid. ¶ 8).

Absent any ruling of any court on the issue of whether Irish may make partnership decisions, that issue must be resolved.

An attorney-in-fact is permitted, by statute, to act as a general partner. (GOL § 5-1502E [attorney-in-fact who is authorized to make "business operating transactions" may "act for a principal, to discharge and to perform any duty or liability and also to exercise any right, power, privilege or option which the principal has, or claims to have, under any contract of partnership whether the principal is a general or special partner thereunder."]). In other words, an attorney-in-fact is an alter-ego who may act as a general partner on the principal's behalf. (Zaubler, 100 AD2d 620; see also Perosi, 98 AD3d 230 [attorney-in-fact may amend trust on principal's [*3]behalf]).

Additionally, the Revised Limited Partnership Act applies only to partnerships formed after 1991, unless a partnership, if formed before 1991, adopts it. (RLPA §§ 121-1201, 1202). Here, Seavey defendants submit no evidence that their partnership, formed in 1973, adopted the RLPA. While they rely in part on the partnership agreement, Seavey defendants fail to submit it here.

Moreover, even if applicable, section 121-402(f) is triggered only when a court finds that the partner is "incompetent." Notably, the court that appointed Irish as Temporary Special Guardian for Edmonds did not find that Edmonds is incompetent, and pursuant to Mental Hygiene Law § 81.02, a person is not incapacitated if, while they still had capacity, arranged their affairs and appointed an attorney-in-fact to make decisions on their behalf. (See Matter of May Far C., 61 AD3d 680 [2d Dept 2009]).

While the powers of a general partner may not be sold to a third party without the other partners' consent, and even though a partner may be expelled from a partnership (see In re Schick, 232 BR 318 [SDNY 1999]; Gelder Medical Group v Webber, 41 NY2d 680 [1977]; Levy v Nassau Queens Med. Group, 102 AD2d 845 [2d Dept 1984]), absent any authority for the more general proposition that an attorney-in-fact may never act as a general partner on a general partner's behalf, Seavey defendants have not met their burden here.

IV. CONCLUSION


Accordingly, it is hereby

ORDERED, that the defendant Edmonds's motion is denied as moot; and it is further

ORDERED, that the Seavey defendants' motion for an order finding that Edmonds is incompetent is denied.

ENTER:

_______________________________Barbara Jaffe, JSC

DATED:April 9, 2013

New York, New York