Abyssinian Lawsuit

FILED: NEW YORK COUNTY CLERK 03/16/2017 11:12 AM INDEX NO.
651376/2017
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 03/16/2017
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK
----------------------------------- x
:
THE COMMUNITY ASSOCIATION OF THE : Index No. ____________ / 2017
EAST HARLEM TRIANGLE, INC., :
: SUMMONS
Plaintiff, :
: Plaintiff designates New York County
- against - : as the place of trial. Venue of this
: action is proper in this county pursuant
ABYSSINIAN DEVELOPMENT : to CPLR 503.
CORPORATION and ENVISION TITLE :
SERVICES LLC, :
:
Defendants. :
----------------------------------- x
TO THE ABOVE-NAMED DEFENDANT(S):
You are hereby summoned to answer the verified complaint in this action and to
serve a copy of your answer on the undersigned attorney(s) for Plaintiff within twenty (20) days
after the service of this summons, exclusive of the day of service (or within thirty (30) days after
service is completed if this summons is not personally delivered to you within the State of New
York); and in case of your failure to appear or answer, judgment will be taken against you by
default for the relief demanded in the verified complaint.
Dated: New York, New York HERRICK, FEINSTEIN LLP

March 15, 2017
By: /s/ Robert F. Sanzillo

Alan D. Kaplan
Robert F. Sanzillo
2 Park Avenue
New York, NY 10016
(212) 592-1400
Attorneys for Plaintiff
HF 11331709v.1
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FILED: NEW YORK COUNTY CLERK 03/16/2017 11:12 AM INDEX NO. 651376/2017
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK
------------------------------------x
:
THE COMMUNITY ASSOCIATION OF THE :
EAST HARLEM TRIANGLE, INC., : Index No. ____________ / 2017
:
Plaintiff, : VERIFIED COMPLAINT
:
- against - :
:
ABYSSINIAN DEVELOPMENT :
CORPORATION and ENVISION TITLE :
SERVICES LLC, :
:
Defendants. :
:
------------------------------------x
Plaintiff The Community Association of the East Harlem Triangle, Inc.
(CAEHT or Plaintiff), by their attorneys, Herrick, Feinstein LLP, as and for their complaint
against Defendants Abyssinian Development Corporation (ADC) and Envision Title Services,
LLC (Envision and together with ADC, Defendants), respectfully alleges as follows:
NATURE OF THE ACTION
1. With this action CAEHT seeks to recover money owed to it. There is currently
over $2.1 million being held in an escrow account (account no. xxxxxx4330) (the Escrow
Account) by Envision that unquestionably belongs to CAEHT as a result of the sale of the real
property located at 149 East 124th Street, New York, New York (Block 1773, Lot 20) (the
Property).
2. Both ADC (a partner with CAEHT in a joint venture that sold the Property) and
Envision (the escrow agent for the funds received from the sale of the Property) are refusing to
release CAEHTs money even though all other funds have been cleared from the Escrow
Account. In addition, ADC has improperly taken funds belonging to CAEHT from the Escrow
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Account in order to pay its other unrelated expenses and other costs, and additional charges have
been improperly taken against CAEHTs portion of the Escrow Account.
3. CAEHT, a small not-for-profit organization, has tried countless times to resolve
this issue outside the purview of the Court, including, but not limited to, contacting ADC and
Envision themselves and through counsel, but ADCs representatives have been nothing but
dismissive.
4. Thus, with this action, CAEHT seeks immediate possession of the money that is
being held by Envision and to recover the monies that were incorrectly remitted from CAEHTs
account for the benefit of ADC.
THE PARTIES
5. Plaintiff The Community Association of the East Harlem Triangle, Inc. is a tax-
exempt nonprofit organization under Section 501(c)(3) of the Internal Revenue Code, and a
corporation organized and existing under the laws of the State of New York with its principal
place of business located at 145 East 126th Street, New York, New York.
6. Upon information and belief, Defendant Abyssinian Development Corporation is
a corporation organized and existing under the laws of the State of New York with its principal
place of business located at 2070 Adam Clayton Powell Blvd., New York, New York.
7. Upon information and belief, Defendant Envision Title Services, LLC is a New
York limited liability company with a principal place of business located at 3601 Hempstead
Turnpike, Suite LL-D, Levittown, New York.
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JURISDICTION AND VENUE
8. Jurisdiction is proper pursuant to CPLR 301 and 302 since Defendants transact
business within the State of New York.
9. Venue is proper pursuant to CPLR 503.
FACTUAL BACKGROUND
The Property is Purchased
10. In 1994, ADC and CAEHT formed East Harlem Abyssinian Triangle Limited
Partnership (EHAT LP) and East Harlem Abyssinian Triangle Corporation (EHAT Corp.) to
purchase the city owned Property through the New York City Economic Development
Corporation (NYCEDC).
11. ADC and CAEHT were equal (50/50) partners in EHAT LP.
12. EHAT Corp. became the Managing General Partner of EHAT LP and is a
corporation organized and existing under the laws of the State of New York with its principal
place of business located c/o ADC.
13. EHAT LP purchased the Property with NYCEDC in order to develop a Pathmark
supermarket to aid in the growth of the surrounding community.
14. EHAT LP owned fifty-one percent (51%) of the Property, and NYCEDC owned
the remaining forty-nine percent (49%) of the Property.
15. Because ADC and CAEHT were equal partners in EHAT LP, ADC and CAEHT
each owned twenty-five and one half percent (25.5%) of the Property, respectively.
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The Property is Sold and an Escrow Account is Opened with Envision
16. On or about April 13, 2014 (the Closing), the Property was sold to 160 East
125th Owner LLC for $39 million, plus certain title charges and attorneys fees (the Sale
Proceeds).
17. After the closing costs (totaling approximately $16.9 million) were subtracted
from the Sale Proceeds, the remaining net proceeds of $22,089,625.47 (the Net Proceeds) were
deposited into the Escrow Account managed by Envision.
18. EHAT LPs portion of the remaining Net Proceeds ($11,265,708.99) was
included in the total amount placed in the Escrow Account managed by Envision (the EHAT LP
Funds).
19. The EHAT LP Funds were thereafter divided into separate accounts representing
ADCs share ($5,632,854.49) (the ADC Funds) and CAEHTs share ($5,632,854.50) (the
CAEHT Funds) of the Net Proceeds. The funds remained segregated in the Escrow Account.
20. NYCEDCs share of the Net Proceeds ($10,823,916.48) was also deposited in the
Escrow Account (the NYCEDC Funds). The NYCEDC Funds remained segregated in the
Escrow Account, as well.
The ADC Funds and NYCEDC Funds have been Totally Withdrawn
from the Escrow Account and Disbursed to ADC and NYCEDC
21. The ADC Funds and the CAEHT Funds had been held in the Escrow Account
with periodic charges and withdrawals made against their respective shares pursuant to
instructions by EHAT Corp. (which was, in effect, controlled by ADC).
22. The periodic charges and withdrawals made against the ADC Funds and the
CAEHT Funds were done without notice given to CAEHT.
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23. Pursuant to the Disbursement Schedule prepared and maintained by Envision
and provided to all Parties, which summarized the activity in the Escrow Account (the
Disbursement Schedule), a total of twenty-nine withdrawals and/or transfers were made from
the ADC Funds during the past three years.
24. As of on or about September 30, 2016, all of the ADC Funds have now been
withdrawn from the Escrow Account. and disbursed to ADC.
25. Since the time of the Closing, until recently, Envision held the NYCEDC Funds
in escrow.
26. As of on or about September 12, 2016, all of the NYCEDC Funds have now been
withdrawn from the Escrow Account and disbursed to NYCEDC.
27. The only remaining money being held in escrow by Envision is $2,105,031.99
that is owed to CAEHT (the Remaining CAEHT Escrow Funds).
28. Because the escrow account with Envision is in the name of EHAT LP, EHAT
Corp. (as Managing General Partner of EHAT LP) has complete control of any funds with
Envision.
29. Envision and ADC (which controls EHAT Corp.) have refused to distribute the
Remaining CAEHT Escrow Funds to CAEHT although demand for the Remaining CAEHT
Escrow Funds has been made by CAEHT.
CAEHT Funds are Improperly Distributed to ADC
30. Pursuant to the Disbursement Schedule provided by Envision, a total of five
withdrawals and/or transfers were made from the CAEHT Funds.
31. On or about May 13, 2014, a wire in the amount of $3,218,887 was correctly
directed out of the CAEHT Funds to Michael Singer, as attorney.
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32. On or about October 29, 2015, a wire in the amount of $24,232.93 was correctly
directed out of the CAEHT Funds to Michael Singer, as attorney.
33. However, there have been three wire transfers, totaling $238,801.01, made from
the CAEHT Funds that were improperly approved and distributed.
34. The nature of these improper transfers was not disclosed to CAEHT until recently
when Envision, for the first time, provided back-up documentation regarding the transfers.
35. In an email dated, on or about July 7, 2014, James Howard, in his capacity as
Senior Vice President of Real Estate for ADC, directed Envision to wire transfer to Fred L.
Seeman as Attorney for the Board the sum of $45,801.01 to be taken from the escrow amount
Envision was holding on behalf of ADC (the First Improper Wire).
36. Contrary to the July 7, 2014 email, and as indicated in the Disbursement
Schedule, Envision incorrectly remitted payment for the First Improper Wire from the CAEHT
Funds instead of the ADC Funds.
37. Upon information and belief, the First Improper Wire was for the purpose of ADC
paying off an unrelated settlement agreement it had entered into with Odell Clark Place
Condominium. This transaction had nothing to do with EHAT LP or CAEHT.
38. In an email dated, on or about October 1, 2014, James Howard, in his capacity as
Senior Vice President of Real Estate for ADC, directed Envision to wire transfer $160,000 from
the Escrow Account to an escrow account at the law firm of Windels Marx Lane and Mittendorf
(Windels Marx) (the Second Improper Wire).
39. Upon information and belief, the Second Improper Wire was to facilitate a
payment ADC was making to 63-65 West 125th Street LLC and Empire Baptist Missionary
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Convention of New York Inc., as part of a Membership Interest Purchase Agreement that
involved ADC. This transaction had nothing to do with EHAT LP or CAEHT.
40. As indicated in the Disbursement Schedule, instead of funding the Second
Improper Wire from the ADC Funds, Envision improperly remitted payment from the CAEHT
Funds (not the ADC Funds).
41. As part of the same transaction that occurred on or about October 1, 2014, James
Howard directed Envision to wire transfer $33,000.00 from the Escrow Account directly to ADC
(the Third Improper Wire).
42. Upon information and belief, the Third Improper Wire was sent to ADCs
operating account and had nothing to do with EHAT LP or CAEHT.
43. According to the Disbursement Schedule, Envision again improperly sent the
Third Improper Wire utilizing the CAEHT Funds (not the ADC Funds).
44. Additionally, the First Improper Wire, Second Improper Wire and Third Improper
Wire (together, the Improper Wires) each imposed an unnecessary wire fee at CAEHTs
expense.
45. The Improper Wires were never approved by CAEHT.
46. Neither ADC nor Envision notified CAEHT that the Improper Wires were being
sent from the CAEHT Funds.
47. In fact, CAEHT was unaware of the nature of the Improper Wires until CAEHTs
counsel became involved in an effort to have the CAEHT Funds disbursed in or about February
2017. At that time, Envision, for the first time, provided back-up documentation revealing the
purpose of the Improper Wires.
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48. In spite of having been notified of the Improper Wires and the mistake,
negligence, or intentional conduct behind the Improper Wires, neither Defendant has reimbursed
CAEHT or responded to its demand for payment.
CAEHT Should Not have been Charged Windels Marxs Legal Fees at the Closing
49. At the Closing, on April 13, 2014, a total of $240,000 was taken from the Net
Proceeds for Windels Marx attorneys fees.
50. Because CAEHT received 25.5% of the remaining Net Proceeds, CAEHT was, in
effect, charged $61,200 for Windels Marx fees.
51. Prior to the Closing, sometime during 2014, there was an oral agreement between
James Howard, an officer of ADC, and CAEHT, that ADC would pay the entire amount of the
Windels Marx fees at the Closing.
52. James Howard, as an officer of ADC, had the authority to bind ADC into an
agreement with CAEHT. Mr. Howard has admitted and reaffirmed ADCs obligation to pay for
CAEHTs attorneys fees.
53. Accordingly, the Windels Marx fees were improperly charged to CAEHT and
should be reimbursed by ADC.
AS FOR THE FIRST CAUSE OF ACTION

(Conversion against All Defendants)
54. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
53 above, as if fully set forth herein.
55. CAEHT had an immediate superior right of possession to the CAEHT Funds.
56. The CAEHT Funds are readily identifiable and have been segregated in the
Escrow Account by Envision since it was established in 2014.
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57. Defendants exercised unauthorized dominion over the CAEHT Funds to the
exclusion of CAEHTs rights.
58. As a result of Defendants conversion, CAEHT was damaged and is entitled to
recover the losses they have suffered in an amount to be determined at trial, including, but not
limited to, $2,105,031.99 plus additional interest.
AS FOR THE SECOND CAUSE OF ACTION

(Declaratory Judgment)
60. The Remaining CAEHT Escrow Funds unquestionably belong to CAEHT and do
not need to continue to be held in escrow. Accordingly, the Court should declare that Envision
immediately release the Remaining CAEHT Escrow Funds to CAEHT.
AS FOR THE THIRD CAUSE OF ACTION

(Negligence against Envision)
62. Envision owes CAEHT a duty as escrow agent.
63. Envision breached this duty when it negligently remitted payments (the Improper
Wires) from the CAEHT Funds that should have been remitted from the ADC Funds.
64. Envisions negligence was the proximate cause of CAEHTs damages.
65. As a result of Envisions negligence, CAEHT was damaged and is entitled to
recover the losses they have suffered from Envision in an amount to be determined at trial, but
no less than $238,801.01 plus interest thereon.
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AS FOR THE FOURTH CAUSE OF ACTION

(Unjust Enrichment against ADC)
67. Significant funds were wrongly transferred from the CAEHT Funds in order to
pay down the debts and/or obligations of ADC. These payments should have been taken from
the ADC Funds.
68. ADC improperly received this benefit.
69. CAEHT notified ADC of the improper payments, but ADC has refused to make
restitution to CAEHT for the money that was wrongly used from the CAEHT Funds.
70. Equity and good conscience requires restitution.
71. Accordingly, ADC has been unjustly enriched in the amount of $238,801.01 plus
interest thereon.
AS FOR THE FIFTH CAUSE OF ACTION

(Fraud against ADC)
73. ADC materially misrepresented to CAEHT that CAEHT needed to keep a certain
portion of the CAEHT Funds in escrow.
74. ADC knew that none of the Sale Proceeds needed to remain in escrow as
evidenced by the fact that ADC has removed all of the ADC Funds and the NYCEDC Funds
from escrow.
75. ADC made this misrepresentation with the intent to induce CAEHT to leave the
CAEHT Funds in escrow so that ADC could use the CAEHT Funds for its own benefit if
necessary.
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76. CAEHT justifiably relied on ADCs misrepresentation.
77. As a result of ADCs fraud, CAEHT was damaged and is entitled to recover the
losses they have suffered in an amount to be determined at trial.
AS FOR THE SIXTH CAUSE OF ACTION

(Breach of Fiduciary Duty against ADC)
79. ADC owes CAEHT a fiduciary duty as partners in EHAT LP.
80. ADC breached its fiduciary duty when it improperly directed and allowed
Envision to use the CAEHT Funds to pay for ADCs debts and obligations.
81. ADC breached its fiduciary duty when it improperly refused to remit the
Remaining CAEHT Escrow Funds to CAEHT.
82. As a result of ADCs breach of fiduciary duty, CAEHT was damaged and is
entitled to recover the losses they have suffered in an amount to be determined at trial.
AS FOR THE SEVENTH CAUSE OF ACTION

(Aiding and Abetting Breach of Fiduciary Duty against Envision)
84. As detailed above, ADC breached its fiduciary duty to CAEHT.
85. Envision knowingly participated in ADCs breach by providing substantial
assistance to ADC in remitting payments from the CAEHT Funds.
86. Envisions assistance in improperly remitting payment CAEHT Funds enabled
ADCs breach of fiduciary duty to occur.
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87. As a result of Envisions aiding and abetting ADCs breach of fiduciary duty,
CAEHT was damaged and is entitled to recover the losses they have suffered in an amount to be
determined at trial.
AS FOR THE EIGHTH CAUSE OF ACTION

(Breach of Contract against ADC)
89. An oral agreement existed between ADC and CAEHT (the Agreement).
90. James Howard entered into the Agreement as an officer of ADC with the
authority to bind ADC into the Agreement with CAEHT.
91. The Agreement was that ADC would pay the entire amount of the Windels Marx
fees at the Closing.
92. At the Closing, a total of $240,000 was taken from the Net Proceeds for Windels
Marx attorneys fees and CAEHT was charged a total of $61,200 for Windels Marx fees.
93. Thus, ADC breached the Agreement when it failed to pay CAEHTs portion of
the Windels Marx fees at the Closing.
94. As a result of ADCs breach of contract, CAEHT was damaged and is entitled to
recover the losses they have suffered in an amount to be determined at trial, but no less than
$61,200.
AS FOR THE NINTH CAUSE OF ACTION

(Accounting)
96. Envision owes CAEHT a duty as escrow agent.
97. ADC owes CAEHT a fiduciary duty as partners in EHAT LP.
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98. Envision and ADC each have a duty to account and have failed and refused to do
so, deliberately withholding financial information from CAEHT.
99. As a result of the foregoing, CAEHT has suffered and will continue to suffer
irreparable harm and injury.
100. CAEHT has no adequate remedy at law.
WHEREFORE, Plaintiff demands judgment as follows:
(a) as to its First Cause of Action (Conversion), for damages in an amount to
be determined at trial, including, but not limited to, $2,105,031.99 plus additional interest;
(b) as to its Second Cause of Action (Declaratory Judgment), declaring that
Envision immediately release the Remaining CAEHT Escrow Funds to CAEHT;
(c) as to its Third Cause of Action (Negligence), for damages in an amount to
be determined at trial, including, but not limited to, $238,801.01 plus interest thereon;
(d) as to its Fourth Cause of Action (Unjust Enrichment), for damages in an
amount to be determined at trial, including, but not limited to, $238,801.01 plus interest thereon;
(e) as to its Fifth Cause of Action (Fraud), for damages in an amount to be
determined at trial;
(f) as to its Sixth Cause of Action (Breach of Fiduciary Duty), for damages in
an amount to be determined at trial;
(g) as to its Seventh Cause of Action (Aiding and Abetting Breach of
Fiduciary Duty), for damages in an amount to be determined at trial;
(h) as to its Eighth Cause of Action (Breach of Contract), for damages in an
amount to be determined at trial, but no less than $61,200;
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(i) as to its Ninth Cause of Action (Accounting), entitling the Plaintiff to an
adequate accounting of Envisions and ADCs financial books and records relating to the Sale
Proceeds; and
(j) awarding Plaintiff such other relief as the Court deems proper.
Dated: New York, New York

March 15, 2017
HERRICK, FEINSTEIN LLP
By: /s/ Robert F. Sanzillo

Alan D. Kaplan
Robert F. Sanzillo
2 Park Avenue
New York, NY 10016
212.592.1400
Attorneys for Plaintiff
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Abyssinian Lawsuit

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Abyssinian Lawsuit

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FILED: NEW YORK COUNTY CLERK 03/16/2017 11:12 AM INDEX NO.

SUPREME COURT OF THE STATE OF NEW YORK

TO THE ABOVE-NAMED DEFENDANT(S):

default for the relief demanded in the verified complaint.

Dated: New York, New York HERRICK, FEINSTEIN LLP

By: /s/ Robert F. Sanzillo

Attorneys for Plaintiff

SUPREME COURT OF THE STATE OF NEW YORK

Plaintiff The Community Association of the East Harlem Triangle, Inc.

NATURE OF THE ACTION

been improperly taken against CAEHTs portion of the Escrow Account.

3. CAEHT, a small not-for-profit organization, has tried countless times to resolve

account for the benefit of ADC.

6. Upon information and belief, Defendant Abyssinian Development Corporation is

Turnpike, Suite LL-D, Levittown, New York.

JURISDICTION AND VENUE

business within the State of New York.

9. Venue is proper pursuant to CPLR 503.

The Property is Purchased

place of business located c/o ADC.

supermarket to aid in the growth of the surrounding community.

the remaining forty-nine percent (49%) of the Property.

The Property is Sold and an Escrow Account is Opened with Envision

deposited into the Escrow Account managed by Envision.

Escrow Account, as well.

instructions by EHAT Corp. (which was, in effect, controlled by ADC).

CAEHT Funds were done without notice given to CAEHT.

23. Pursuant to the Disbursement Schedule prepared and maintained by Envision

the ADC Funds during the past three years.

withdrawn from the Escrow Account. and disbursed to ADC.

withdrawn from the Escrow Account and disbursed to NYCEDC.

that is owed to CAEHT (the Remaining CAEHT Escrow Funds).

Escrow Funds has been made by CAEHT.

CAEHT Funds are Improperly Distributed to ADC

30. Pursuant to the Disbursement Schedule provided by Envision, a total of five

withdrawals and/or transfers were made from the CAEHT Funds.

directed out of the CAEHT Funds to Michael Singer, as attorney.

directed out of the CAEHT Funds to Michael Singer, as attorney.

the CAEHT Funds that were improperly approved and distributed.

Envision was holding on behalf of ADC (the First Improper Wire).

Funds instead of the ADC Funds.

Condominium. This transaction had nothing to do with EHAT LP or CAEHT.

(Windels Marx) (the Second Improper Wire).

involved ADC. This transaction had nothing to do with EHAT LP or CAEHT.

40. As indicated in the Disbursement Schedule, instead of funding the Second

Funds (not the ADC Funds).

(the Third Improper Wire).

operating account and had nothing to do with EHAT LP or CAEHT.

45. The Improper Wires were never approved by CAEHT.

sent from the CAEHT Funds.

purpose of the Improper Wires.

CAEHT or responded to its demand for payment.

Proceeds for Windels Marx attorneys fees.

effect, charged $61,200 for Windels Marx fees.

Windels Marx fees at the Closing.

CAEHTs attorneys fees.

should be reimbursed by ADC.

AS FOR THE FIRST CAUSE OF ACTION

53 above, as if fully set forth herein.

Escrow Account by Envision since it was established in 2014.

exclusion of CAEHTs rights.

58. As a result of Defendants conversion, CAEHT was damaged and is entitled to

limited to, $2,105,031.99 plus additional interest.

AS FOR THE SECOND CAUSE OF ACTION