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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
HF 11331709v.1
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(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:
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
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
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.
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
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8. Jurisdiction is proper pursuant to CPLR 301 and 302 since Defendants transact
FACTUAL BACKGROUND
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
13. EHAT LP purchased the Property with NYCEDC in order to develop a Pathmark
14. EHAT LP owned fifty-one percent (51%) of the Property, and NYCEDC owned
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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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
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
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
22. The periodic charges and withdrawals made against the ADC Funds and the
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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
24. As of on or about September 30, 2016, all of the ADC Funds have now been
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
27. The only remaining money being held in escrow by Envision is $2,105,031.99
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
31. On or about May 13, 2014, a wire in the amount of $3,218,887 was correctly
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32. On or about October 29, 2015, a wire in the amount of $24,232.93 was correctly
33. However, there have been three wire transfers, totaling $238,801.01, made from
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
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
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
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
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
Improper Wire from the ADC Funds, Envision improperly remitted payment from the CAEHT
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
42. Upon information and belief, the Third Improper Wire was sent to ADCs
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.
46. Neither ADC nor Envision notified CAEHT that the Improper Wires were being
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
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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 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
50. Because CAEHT received 25.5% of the remaining Net Proceeds, CAEHT was, in
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
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
53. Accordingly, the Windels Marx fees were improperly charged to CAEHT and
54. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
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
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57. Defendants exercised unauthorized dominion over the CAEHT Funds to the
recover the losses they have suffered in an amount to be determined at trial, including, but not
59. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
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
61. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
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.
recover the losses they have suffered from Envision in an amount to be determined at trial, but
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66. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
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
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.
71. Accordingly, ADC has been unjustly enriched in the amount of $238,801.01 plus
interest thereon.
72. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
73. ADC materially misrepresented to CAEHT that CAEHT needed to keep a certain
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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77. As a result of ADCs fraud, CAEHT was damaged and is entitled to recover the
78. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
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
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.
83. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
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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.
88. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
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
91. The Agreement was that ADC would pay the entire amount of the Windels Marx
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
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.
95. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through
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98. Envision and ADC each have a duty to account and have failed and refused to do
99. As a result of the foregoing, CAEHT has suffered and will continue to suffer
be determined at trial, including, but not limited to, $2,105,031.99 plus additional interest;
be determined at trial, including, but not limited to, $238,801.01 plus interest thereon;
amount to be determined at trial, including, but not limited to, $238,801.01 plus interest thereon;
determined at trial;
(f) as to its Sixth Cause of Action (Breach of Fiduciary Duty), for damages in
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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.
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