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FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024
SUPREMECOURTOFTHESTATEOFNEWYORK
COUNTYOFKINGS
LEONARD
STEINMETZand ANTONIASTEINMETZ, Index No.:
Plaintiff.
- against - VERIFIED COMPLAINT
MOSHEKHOSHKHERAMAN
and RICHARDSON
PROPERTY,LLC,
Defendant.
Plaintiffs, Leonard Steinmetz and Antonia Steinmetz, (hereinafter together referred to as
"Steinmetz"), by and through their attorneys, CARLINSKY, DUNN& PASQUARIELLO,
PLLC., for their Verified Complaint, respectfully allege, upon information and belief:
PARTIES
1. At all times herein mentioned, Plaintiffs Leonard Steinmetz and Antonia Steinmetz,
"Steinmetz" and/or "Plaintiffs") of
(hereinailer together referred to as are adult residents
the State of the Florida, a married couple and the owners of the property known as 140
Richardson Street, Brooklyn, NewYork 11211. ("Premises").
2. At all times herein mentioned, Defendant Moshe Khoshkheraman (hereinafter
"Khoshkheraman") is an adult resident of the State of NewYork.
3. Upon information and belief, at all times herein mentioned, Richardson Property, LLC.,
(hereinafter "LLC") is a sham limited liability company created by Khosherkherman for
the purpose of perpetuating a fraud against the Plaintiffs.
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FACTS
4. The Premises consists of a 3 story structure which contains 5 residential units.
5. Prior to March of 2000, the Premises contained 6 residential units.
6. OnMarch 6, 2000 the Premises suffered extensive damages due to a fire and was
subsequently substantially rehabilitated and converted to 5 residential units.
7. OnDecember 1, 2005, a new certificate of occupancy was issued by the City of New
York, Department of Buildings, permitting the Premises to be occupied as 5 residential
units. see annexed Exhibit
8. OnJuly 10, 2023, Plaintiffs filed an Application with the Division of Housing and
Community Renewal ("DHCR") to remove the Premises from rent stabilization, (DHCR
Application")
9. Thereafter Plaintiffs, through their realtor, M&JRealty, ("M&J") began marketing the
Premises for sale.
10. Commencing in July of 2023, Defendant Khosherkherman and M&Jbegan negotiations
for the purchase of the Premises.
11. Between July and September of 2023, Khosherkherman, accompanied by a representative
of M&J, conducted not less than 5 physical inspections of the Premises.
12. At all times, Khosherkherman had actual knowledge that the Premises suffered a fire in
2000, was substantially rehabilitated and converted from a 6 to 5 family home, that a
certificate of occupancy for a 5 family home was issued in 2005 and that there was a
pending DHCRApplication to remove the Premises from rent regulation.
sheet"
13. On September 7, 2023, M&Jcirculated "term which stated as follows:
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140 Richardson Street
5 Residential Units
Sale Price: $3,200,000
Broker fee from sellers: $50,000
Closing: Onour about 45 Days.
No other realtors were involved.
14. On September 8, 2023, Plaintiffs delivered a Contract of Sale ("Contract") to
Khosherkherman's counsel.
15. The Contract utilized for this transaction is a form contract intended for use in both
a in the
blank"
residentialandcommercialtransactions, par. 16(b) thereof contains "fill
option which permits the drafter to insert the number of residential units and, if any, the
number of commercial units. .
16. Par. 16(b) of the Contract specifically states "The delivery by Seller to Purchaser of
Certificate of Occupancy or other required certificate of compliance, or evidence that
none was required, covering the building(s) and all of the other improvements on the
property and authorizing their use as a 5 residential units and commercial
Closing."
units at the date of
17. Par. 11 of the Seller's Rider specifically states that there are 5 Tenants occupying the
Premises.
18. On September 9, 2023, Defendant Khosherkherman's counsel returned comments to the
Contract and Seller's Rider and attached their own rider, ("Purchaser's Rider").
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19. Defendant Khosherkherman did not propose any comments to either Par. 16(b) or Par. 11
but did request representations regarding the status of each tenancy, specifically that each
unit was "free market" and not subject to rent stabilization.
20. Defendant Khosherkherman did not request any representation related to the Premises
"commercial"
use as
21. At no time did Khosherkherman inquire about any commercial tenants or leases
22. Between September 13, 2023 and September 20, 2023, Plaintiffs and Defendant
Khosherkherman continued to exchange comments and negotiate the terms of the
Contract.
23. Nearly all comments discussed and negotiated related directly to delivery of notices to
terminate to the tenants and potential lost rents by the Plaintiffs.
24. At no time were there any discussions related to any commercial component to the
Premises.
25. On September 22, 2023, Defendant Khosherkherman replaced his name on the Contract
with that of Defendant Richardson Property, LLC., and transmitted partially executed
Contracts to Plaintiffs, alleging them to be a final agreement.
26. Plaintiffs immediately objected since the transmitted Contracts did not represent the
agreement of the Parties, demanding that all references to the Premises being "free
market" stabilization"
be and a specific
and "not subject to rent stricken that
acknowledgment and reference to the pending DHCRapplication be inserted.
27. From September 22, 2023 through September 26, 2023, the Parties again continued to
negotiate terms and on September 26, 2023 the Contract was revised to include a specific
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provision in Purchaser's Rider par. 1 which states in relevant part, "Seller hereby
represents and warrants for the exclusive benefit of Purchaser as of the date hereof and as
of the Closing as follows, except for the application to the New York Division of
1..."
Housing and Community Renewal annexed hereto as Schedule
28. On September 27, 2023, fully executed Contracts were circulated among the parties with
a Schedule 1 which included the entire DHCRApplication, the original fire report from
the NYCFDNY, Work permits and reports issued by the NYCDOB, previous loan
application documents, Certificate of Occupancy and a survey, all of which
incontrovertibly confirm that the Premises was converted from a 6 family residential
dwelling to a 5 family residential dwelling.
29. On September 29, 2023, in accordance with the Contract, Plaintiffs prepared and
delivered Termination Notices to all 5 tenants at the Premises.
30. On October 26, 2023, at the request of Defendant Khosherkherman, Riverside Abstract
delivered a title report to the Parties which included a tax search, report from NYC
Housing Preservation Department, ("HPD") and Certificate of Occupancy, all of which
specifically described and confirmed the Premises is permitted to be legally occupied as a
5 family residential dwelling.
31. From October 26, 2023 through November 7, 2023, Parties continued to communicate
regularly regarding various issues related to the tenants and title, at no time did
Defendant Khosherkherman raise any objection to the legally permitted use of the
Premises.
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about"
32. OnNovember 7, 2023, with the approach of the "on or closing date set forth in the
Plaintiffs' Defendants'
Contract, counsel contacted counsel to discuss scheduling a
closing.
33. During the ensuing exchange, Defendants, for the first time, advised that they were
obtaining financing and intended to extend the closing date through the end of the year.
AS ANDFORA FIRST CAUSEOFACTION
JUDGMENT
FORDECLARATORY
CONFIRMINGPLAINTIFF'S ENTITLEMENT
TORETAIN THE CONTRACT DEPOSIT
34. On November 15, 2023, Plaintiffs caused a Time of the Essence Notice to be served on
Defendants declaring a law date for closing of December 18, 2023.
35. From November 15, 2023 through December 15, 2023, Plaintiffs and Defendants,
through their respective counsel, engaged in negotiations for an amendment to Contract
to extend the closing date, for Defendants to relinquish the downpayment to Plaintiffs and
Plaintiffs'
for Defendants to continue to pay for lost rent.
36. On December 18, 2023 Moshe Khoshkheraman, individually, executed the First
Amendment to Contract, in which he, individually and on behalf of Defendant LLC,
Plaintiffs'
acknowledged that lost rent was equivalent to $12,000.00 per month and
included the following provisions:
2. On consent of the Parties, the Closing scheduled for December 18, 2023, is adjourned to
February 1, 2024, Time Being of the Essence.
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3. Upon written Notice to Seller's Counsel, Purchaser may request an earlier closing date and
Seller will makeall commercially reasonable efforts to accommodate Purchaser's request.
4. Purchaser hereby authorizes and directs that the Downpaymentin the amount of $160,000.00
currently held by Carlinsky, Dunn and Pasquariello, PLLC., ("Escrow Agent") be
immediately released to the Seller. Seller will be permitted to retain the Downpaymentand
same shall be deemed non-refundable to Purchaser. Upon Delivery of the Downpayment
Escrow Agent will be released of any and all obligations to either Purchaser or Seller with
respect to the Downpayment.
5. Omitted
6. To defray Seller's continued damagesfor lost rental income and as result of Purchaser's
failure to Close in accordance with the terms of the Contract, commencing on December 18,
2023, Purchaser will pay Sellers $250 a day, pro-rated per day, each day until February 1,
2024, ("Lost Rent"). Upon execution hereof, Purchaser will pre-pay 44 days of Lost Rent in
advance in the amount of $11,000.00
7. In the event that the Closing of title occurs prior to February 1, 2023 then Seller will refund
and credit Purchaser back the Lost Rent for each day from th-e date of Closing through
February 1, 2024.
8. In the event Purchaser fails to close on title on or before February 1, 2024, Time Being of the
Essence, at 11:00 am, at the office of Carlinsky, Dunn and Pasquariello, PLLC., 410 Graham
Avenue, Brooklyn, NewYork 11211, then Purchaser will be in material default of the
Contract of Sale
9. In addition to all other remedies available to Seller in the Contract, law and equity, Purchaser
will also be obligated to pay Seller an increased Lost Rent in the amount of $600 per day each
day until the earlier of Closing or until Seller elects to terminate the Contract. Seller may
terminate by delivering an email notice of termination to Purchaser's Counsel.
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10. If Seller elects to terminate the Contract then Seller shall be entitled to all Lost Rent through
the date of Termination along with costs, disbursements and attorney's fees incurred through
the date of Termination. Upon delivery of Notice of Termination and receipt of the Additional
DownpaymentSeller and Escrow Agent shall have no further obligation to Purchaser and the
Contract will be deemed null and void and except to the extent that Purchaser's obligation and
liability to pay all outstanding Lost Rent and to reimburse Seller for costs, disbursements and
Attorney's fees incurred in enforcing its rights hereunder shall continue until payment in full.
11. Until Seller elects to terminate the Contract and receives all payments permitted herein,
Seller's remedies shall be deemed cumulative in nature and not exclusive. The election of one
or more of the permitted remedies shall not be deemed a waiver of any other remedies
available under contract, law or equity.
37. On December 18, 2023, in accordance with the terms of the First Amendment to
Contract, the Contract Deposit was delivered to the Plaintiffs.
38. The clear and unambiguous language of the First Amendment to Contract of Sale states
that, as consideration, "Seller will be permitted to retain the Downpayment and same
Purchaser."
shall be deemednon-refundable to
39. Based on the foregoing, Plaintiffs respectfully request Judgment against the Defendants
on the First Cause of Action declaring that Plaintiffs are permitted to retain the
$160,000.00 Contract Deposit and that Defendants are deemed to have waived claim
thereto.
AS ANDFORA SECOND
CAUSEOFACTION
OFCONTRACT
FORBREACH
40. Plaintiffs repeat and reallege each and every allegation set forth hereinabove as if fully
repeated hereinafter.
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41. On January 18, 2024, Parties agreed the Time of the Essence closing would be held
virtually on January 31, 2024 with Riverside Abstract acting as settlement and escrow
agent.
42. On January 23, 2024, Plaintiff received a response to its pending DHCRapplication and
immediately, in good faith, delivered a copy thereof to Defendants.
43. The same day, Defendants advised Plaintiff that their lender could not fund the loan until
February 1, 2024, the parties reaffirmed the Time of the Essence closing for January 31,
2024 and agreed that funding would occur the following date.
44. On January 26, 2024, in anticipation of the virtual closing, Plaintiff delivered a duly
executed deed and transfer documents to Riverside Abstract.
45. Throughout the morning on January 31, 2024, the parties continued to communicate over
matters related to closing, then, at approximately 1:00 pm, without explanation,
Defendants counsel advised Plaintiff that they would not close on title.
46. Plaintiffs, through counsel, immediately delivered a correspondence to Defendants and
Defendants'
Title memorializing cancellation and advising that if the closing did not
occur on February 1, 2024 that Defendants would be held in breach.
47. Defendants refused to close therefore are in Breach of Contract.
48. Plaintiffs respectfully request Judgment against Defendants on the Second Cause of
Action, jointly and severely, declaring that Defendants are in Breach of Contract and
awarding Plaintiffs a sum in excess of the jurisdictional limits of the lower courts.
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AS ANDFORA THIRD CAUSEOFACTION
FORLOSTRENTS
49. Plaintiffs repeat and reallege each and every allegation set forth hereinabove as if fully
repeated hereinafter.
50. As set forth hereinabove, Paragraph 9 of the First Amendment to Contract of Sale
Defendants'
requires that if fail to close "on or before February 1, 2024, Time Being of
Essence" remedies in the Contract, law and
the then in addition to all available equity,
Plaintiffs will also be entitled to Lost Rent in the amount of $600 per day each day until
the earlier of Closing or until Seller elects to terminate the Contract.
51. Through the date of this Action, Defendants are obligated by contract to pay Plaintiffs,
as of the date of the filing of this Action, a sum of not less than $72,600.00 for lost rents.
52. Plaintiffs respectfully request Judgment against Defendants, jointly and severely, on the
Third Cause of Action directed Defendants, jointly and severely, to pay Plaintiffs the sum
of $72,600.00 for lost rent from February 1, 2024 through the date of the filing of this
Action along with $600.00 a day each day until they close on title.
AS ANDFORA FOURTH
CAUSEOFACTION
FORFRAUDIN THEINDUCEMENT
53. Plaintiffs repeat and reallege each and every allegation set forth hereinabove as if fully
repeated hereinafter.
54. At all times prior to September 27, 2023, Defendant Khoshkheraman held himself out as
the purchaser for the Premises.
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55. At all times prior to September 27, 2023, in order to entice Plaintiffs to accept his offer,
Khoshkheraman represented that he was utilizing this transaction to complete a "like kind
exchange" in accordance with Internal Revenue Code § 1031, that he had recently sold an
investment property and that he had sufficient funds to consummate the transaction
without financing, ie. "all cash".
56. In reliance on Khoshkheraman's representation, Plaintiffs inserted the following language
Seller'
into Paragraph 3 of Rider to the Contract of Sale, "No Financing Contingency:
This contract is not mortgage contingent. Although Purchaser may elect to seek
financing, its obligations to fully and timely perform the obligations set forth herein are
not subject to financing. This transaction is deemed a "Cash Deal". Purchaser represents
that he/she has sufficient liquid assets to consummate this transaction without the need of
financing and has agreed to proceed for "all cash".
57. The Contract, as presented, listed "Moshe Khoshkheraman, and/or an LLC in formation"
as the Purchaser.
58. On September 22, 2023, Defendant Khoshkheraman crossed out his name and replaced it
LLC."
with "Richardson Property, as the Purchaser.
"1031"
59. Defendant further represented that the Contract Deposit would be delivered by a
agent, presumably referring to a Qualified Intermediary.
60. Plaintiffs, in reliance on the representation that this transaction was pursuant to IRC
§1031, and acknowledging that the statute requires the identity of the "Exchanger" to the
same for both the initial sale and the subsequent purchase, did not raise objection.
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61. It wasn't until November 7, 2023, that Defendants, in the course of asking for a delay of
Closing, disclosed for the first time that, contrary to their representation in the Contract,
they were seeking financing.
62. Plaintiffs have since learned that Defendant LLC, is a newly formed entity, having been
formed on September 21, 2023, the day before it allegedly executed the Contract.
"Purchaser"
63. Creating a new LLC to act as a is a violation of the statutory requirements of
IRC § 1031.
"Purchaser"
64. That fact that Defendant Khoshkheraman formed a new entity to act as
illustrates that at all times he misrepresented to Plaintiff that this transaction was part of a
"1031 like kind exchange".
65. At all times Defendant Khoshkerheraman formed Defendant LLC for the sole purpose
and with the intent to perpetuate a fraud upon Plaintiffs to avoid personal liability.
66. Defendant Khoshkerheraman exercised complete dominion and control of Defendant
LLC.
67. Defendant LLC is the alter ego of Defendant Khoshkerheraman.
68. Defendant Khoshkerheraman's dominion and control of Defendant LLC was used to
commit fraud against the Plaintiff and resulted in injury.
69. Defendant Khoshkerheraman abused the privilege of doing business in the corporate
form to perpetuate its fraud.
70. Defendant Khoshkerheraman failed to adhere to corporate formalities, failed to publish
the LLC in accordance with violation of New York Limited Liability Company Law
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Section 206, failed to adequately capitalize the entity and commingled assets and utilized
funds for personal use.
71. Khoshkheraman created a sham entity to further facilitate his scheme to intentionally and
fraudulently induce Plaintiffs to enter into the Contract to their detriment.
72. Plaintiffs respectfully request judgment against Defendant Khoshkheraman and the LLC,
jointly and severely, on the Fourth Cause of Action disregarding the corporate entity, and
awarding Plaintiffs damages for fraudulent inducement in an amount in excess of the
jurisdictional limits of the lower courts.
AS ANDFORA FIFTH CAUSEOFACTION
FORFRAUD
73. Plaintiffs repeat and reallege each and every allegation set forth hereinabove as if fully
repeated hereinafter.
74. On several occasions prior September 22, 2023, Defendant Khoshkheraman personally
and in the presence of his agents and hired professionals inspected the Premises,
including all units and all commonareas.
75. At all times prior to September 22, 2023, Defendant Khoshkheraman was aware that the
Premises was a three story structure containing 5 residential units.
76. At all times prior September 22, 2023, Defendant Khoshkheraman was aware that the
Premises previously contained 6 residential units and was subject to Rent Stabilization.
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77. At all times prior September 22, 2023, Defendant Khoshkheraman was aware
Preview
FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 SUPREMECOURTOFTHESTATEOFNEWYORK COUNTYOFKINGS LEONARD STEINMETZand ANTONIASTEINMETZ, Index No.: Plaintiff. - against - VERIFIED COMPLAINT MOSHEKHOSHKHERAMAN and RICHARDSON PROPERTY,LLC, Defendant. Plaintiffs, Leonard Steinmetz and Antonia Steinmetz, (hereinafter together referred to as "Steinmetz"), by and through their attorneys, CARLINSKY, DUNN& PASQUARIELLO, PLLC., for their Verified Complaint, respectfully allege, upon information and belief: PARTIES 1. At all times herein mentioned, Plaintiffs Leonard Steinmetz and Antonia Steinmetz, "Steinmetz" and/or "Plaintiffs") of (hereinailer together referred to as are adult residents the State of the Florida, a married couple and the owners of the property known as 140 Richardson Street, Brooklyn, NewYork 11211. ("Premises"). 2. At all times herein mentioned, Defendant Moshe Khoshkheraman (hereinafter "Khoshkheraman") is an adult resident of the State of NewYork. 3. Upon information and belief, at all times herein mentioned, Richardson Property, LLC., (hereinafter "LLC") is a sham limited liability company created by Khosherkherman for the purpose of perpetuating a fraud against the Plaintiffs. 1 1 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 FACTS 4. The Premises consists of a 3 story structure which contains 5 residential units. 5. Prior to March of 2000, the Premises contained 6 residential units. 6. OnMarch 6, 2000 the Premises suffered extensive damages due to a fire and was subsequently substantially rehabilitated and converted to 5 residential units. 7. OnDecember 1, 2005, a new certificate of occupancy was issued by the City of New York, Department of Buildings, permitting the Premises to be occupied as 5 residential units. see annexed Exhibit 8. OnJuly 10, 2023, Plaintiffs filed an Application with the Division of Housing and Community Renewal ("DHCR") to remove the Premises from rent stabilization, (DHCR Application") 9. Thereafter Plaintiffs, through their realtor, M&JRealty, ("M&J") began marketing the Premises for sale. 10. Commencing in July of 2023, Defendant Khosherkherman and M&Jbegan negotiations for the purchase of the Premises. 11. Between July and September of 2023, Khosherkherman, accompanied by a representative of M&J, conducted not less than 5 physical inspections of the Premises. 12. At all times, Khosherkherman had actual knowledge that the Premises suffered a fire in 2000, was substantially rehabilitated and converted from a 6 to 5 family home, that a certificate of occupancy for a 5 family home was issued in 2005 and that there was a pending DHCRApplication to remove the Premises from rent regulation. sheet" 13. On September 7, 2023, M&Jcirculated "term which stated as follows: 2 2 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 140 Richardson Street 5 Residential Units Sale Price: $3,200,000 Broker fee from sellers: $50,000 Closing: Onour about 45 Days. No other realtors were involved. 14. On September 8, 2023, Plaintiffs delivered a Contract of Sale ("Contract") to Khosherkherman's counsel. 15. The Contract utilized for this transaction is a form contract intended for use in both a in the blank" residentialandcommercialtransactions, par. 16(b) thereof contains "fill option which permits the drafter to insert the number of residential units and, if any, the number of commercial units. . 16. Par. 16(b) of the Contract specifically states "The delivery by Seller to Purchaser of Certificate of Occupancy or other required certificate of compliance, or evidence that none was required, covering the building(s) and all of the other improvements on the property and authorizing their use as a 5 residential units and commercial Closing." units at the date of 17. Par. 11 of the Seller's Rider specifically states that there are 5 Tenants occupying the Premises. 18. On September 9, 2023, Defendant Khosherkherman's counsel returned comments to the Contract and Seller's Rider and attached their own rider, ("Purchaser's Rider"). 3 3 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 19. Defendant Khosherkherman did not propose any comments to either Par. 16(b) or Par. 11 but did request representations regarding the status of each tenancy, specifically that each unit was "free market" and not subject to rent stabilization. 20. Defendant Khosherkherman did not request any representation related to the Premises "commercial" use as 21. At no time did Khosherkherman inquire about any commercial tenants or leases 22. Between September 13, 2023 and September 20, 2023, Plaintiffs and Defendant Khosherkherman continued to exchange comments and negotiate the terms of the Contract. 23. Nearly all comments discussed and negotiated related directly to delivery of notices to terminate to the tenants and potential lost rents by the Plaintiffs. 24. At no time were there any discussions related to any commercial component to the Premises. 25. On September 22, 2023, Defendant Khosherkherman replaced his name on the Contract with that of Defendant Richardson Property, LLC., and transmitted partially executed Contracts to Plaintiffs, alleging them to be a final agreement. 26. Plaintiffs immediately objected since the transmitted Contracts did not represent the agreement of the Parties, demanding that all references to the Premises being "free market" stabilization" be and a specific and "not subject to rent stricken that acknowledgment and reference to the pending DHCRapplication be inserted. 27. From September 22, 2023 through September 26, 2023, the Parties again continued to negotiate terms and on September 26, 2023 the Contract was revised to include a specific 4 4 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 provision in Purchaser's Rider par. 1 which states in relevant part, "Seller hereby represents and warrants for the exclusive benefit of Purchaser as of the date hereof and as of the Closing as follows, except for the application to the New York Division of 1..." Housing and Community Renewal annexed hereto as Schedule 28. On September 27, 2023, fully executed Contracts were circulated among the parties with a Schedule 1 which included the entire DHCRApplication, the original fire report from the NYCFDNY, Work permits and reports issued by the NYCDOB, previous loan application documents, Certificate of Occupancy and a survey, all of which incontrovertibly confirm that the Premises was converted from a 6 family residential dwelling to a 5 family residential dwelling. 29. On September 29, 2023, in accordance with the Contract, Plaintiffs prepared and delivered Termination Notices to all 5 tenants at the Premises. 30. On October 26, 2023, at the request of Defendant Khosherkherman, Riverside Abstract delivered a title report to the Parties which included a tax search, report from NYC Housing Preservation Department, ("HPD") and Certificate of Occupancy, all of which specifically described and confirmed the Premises is permitted to be legally occupied as a 5 family residential dwelling. 31. From October 26, 2023 through November 7, 2023, Parties continued to communicate regularly regarding various issues related to the tenants and title, at no time did Defendant Khosherkherman raise any objection to the legally permitted use of the Premises. 5 5 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 about" 32. OnNovember 7, 2023, with the approach of the "on or closing date set forth in the Plaintiffs' Defendants' Contract, counsel contacted counsel to discuss scheduling a closing. 33. During the ensuing exchange, Defendants, for the first time, advised that they were obtaining financing and intended to extend the closing date through the end of the year. AS ANDFORA FIRST CAUSEOFACTION JUDGMENT FORDECLARATORY CONFIRMINGPLAINTIFF'S ENTITLEMENT TORETAIN THE CONTRACT DEPOSIT 34. On November 15, 2023, Plaintiffs caused a Time of the Essence Notice to be served on Defendants declaring a law date for closing of December 18, 2023. 35. From November 15, 2023 through December 15, 2023, Plaintiffs and Defendants, through their respective counsel, engaged in negotiations for an amendment to Contract to extend the closing date, for Defendants to relinquish the downpayment to Plaintiffs and Plaintiffs' for Defendants to continue to pay for lost rent. 36. On December 18, 2023 Moshe Khoshkheraman, individually, executed the First Amendment to Contract, in which he, individually and on behalf of Defendant LLC, Plaintiffs' acknowledged that lost rent was equivalent to $12,000.00 per month and included the following provisions: 2. On consent of the Parties, the Closing scheduled for December 18, 2023, is adjourned to February 1, 2024, Time Being of the Essence. 6 6 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 3. Upon written Notice to Seller's Counsel, Purchaser may request an earlier closing date and Seller will makeall commercially reasonable efforts to accommodate Purchaser's request. 4. Purchaser hereby authorizes and directs that the Downpaymentin the amount of $160,000.00 currently held by Carlinsky, Dunn and Pasquariello, PLLC., ("Escrow Agent") be immediately released to the Seller. Seller will be permitted to retain the Downpaymentand same shall be deemed non-refundable to Purchaser. Upon Delivery of the Downpayment Escrow Agent will be released of any and all obligations to either Purchaser or Seller with respect to the Downpayment. 5. Omitted 6. To defray Seller's continued damagesfor lost rental income and as result of Purchaser's failure to Close in accordance with the terms of the Contract, commencing on December 18, 2023, Purchaser will pay Sellers $250 a day, pro-rated per day, each day until February 1, 2024, ("Lost Rent"). Upon execution hereof, Purchaser will pre-pay 44 days of Lost Rent in advance in the amount of $11,000.00 7. In the event that the Closing of title occurs prior to February 1, 2023 then Seller will refund and credit Purchaser back the Lost Rent for each day from th-e date of Closing through February 1, 2024. 8. In the event Purchaser fails to close on title on or before February 1, 2024, Time Being of the Essence, at 11:00 am, at the office of Carlinsky, Dunn and Pasquariello, PLLC., 410 Graham Avenue, Brooklyn, NewYork 11211, then Purchaser will be in material default of the Contract of Sale 9. In addition to all other remedies available to Seller in the Contract, law and equity, Purchaser will also be obligated to pay Seller an increased Lost Rent in the amount of $600 per day each day until the earlier of Closing or until Seller elects to terminate the Contract. Seller may terminate by delivering an email notice of termination to Purchaser's Counsel. 7 7 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 10. If Seller elects to terminate the Contract then Seller shall be entitled to all Lost Rent through the date of Termination along with costs, disbursements and attorney's fees incurred through the date of Termination. Upon delivery of Notice of Termination and receipt of the Additional DownpaymentSeller and Escrow Agent shall have no further obligation to Purchaser and the Contract will be deemed null and void and except to the extent that Purchaser's obligation and liability to pay all outstanding Lost Rent and to reimburse Seller for costs, disbursements and Attorney's fees incurred in enforcing its rights hereunder shall continue until payment in full. 11. Until Seller elects to terminate the Contract and receives all payments permitted herein, Seller's remedies shall be deemed cumulative in nature and not exclusive. The election of one or more of the permitted remedies shall not be deemed a waiver of any other remedies available under contract, law or equity. 37. On December 18, 2023, in accordance with the terms of the First Amendment to Contract, the Contract Deposit was delivered to the Plaintiffs. 38. The clear and unambiguous language of the First Amendment to Contract of Sale states that, as consideration, "Seller will be permitted to retain the Downpayment and same Purchaser." shall be deemednon-refundable to 39. Based on the foregoing, Plaintiffs respectfully request Judgment against the Defendants on the First Cause of Action declaring that Plaintiffs are permitted to retain the $160,000.00 Contract Deposit and that Defendants are deemed to have waived claim thereto. AS ANDFORA SECOND CAUSEOFACTION OFCONTRACT FORBREACH 40. Plaintiffs repeat and reallege each and every allegation set forth hereinabove as if fully repeated hereinafter. 8 8 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 41. On January 18, 2024, Parties agreed the Time of the Essence closing would be held virtually on January 31, 2024 with Riverside Abstract acting as settlement and escrow agent. 42. On January 23, 2024, Plaintiff received a response to its pending DHCRapplication and immediately, in good faith, delivered a copy thereof to Defendants. 43. The same day, Defendants advised Plaintiff that their lender could not fund the loan until February 1, 2024, the parties reaffirmed the Time of the Essence closing for January 31, 2024 and agreed that funding would occur the following date. 44. On January 26, 2024, in anticipation of the virtual closing, Plaintiff delivered a duly executed deed and transfer documents to Riverside Abstract. 45. Throughout the morning on January 31, 2024, the parties continued to communicate over matters related to closing, then, at approximately 1:00 pm, without explanation, Defendants counsel advised Plaintiff that they would not close on title. 46. Plaintiffs, through counsel, immediately delivered a correspondence to Defendants and Defendants' Title memorializing cancellation and advising that if the closing did not occur on February 1, 2024 that Defendants would be held in breach. 47. Defendants refused to close therefore are in Breach of Contract. 48. Plaintiffs respectfully request Judgment against Defendants on the Second Cause of Action, jointly and severely, declaring that Defendants are in Breach of Contract and awarding Plaintiffs a sum in excess of the jurisdictional limits of the lower courts. 9 9 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 AS ANDFORA THIRD CAUSEOFACTION FORLOSTRENTS 49. Plaintiffs repeat and reallege each and every allegation set forth hereinabove as if fully repeated hereinafter. 50. As set forth hereinabove, Paragraph 9 of the First Amendment to Contract of Sale Defendants' requires that if fail to close "on or before February 1, 2024, Time Being of Essence" remedies in the Contract, law and the then in addition to all available equity, Plaintiffs will also be entitled to Lost Rent in the amount of $600 per day each day until the earlier of Closing or until Seller elects to terminate the Contract. 51. Through the date of this Action, Defendants are obligated by contract to pay Plaintiffs, as of the date of the filing of this Action, a sum of not less than $72,600.00 for lost rents. 52. Plaintiffs respectfully request Judgment against Defendants, jointly and severely, on the Third Cause of Action directed Defendants, jointly and severely, to pay Plaintiffs the sum of $72,600.00 for lost rent from February 1, 2024 through the date of the filing of this Action along with $600.00 a day each day until they close on title. AS ANDFORA FOURTH CAUSEOFACTION FORFRAUDIN THEINDUCEMENT 53. Plaintiffs repeat and reallege each and every allegation set forth hereinabove as if fully repeated hereinafter. 54. At all times prior to September 27, 2023, Defendant Khoshkheraman held himself out as the purchaser for the Premises. 10 10 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 55. At all times prior to September 27, 2023, in order to entice Plaintiffs to accept his offer, Khoshkheraman represented that he was utilizing this transaction to complete a "like kind exchange" in accordance with Internal Revenue Code § 1031, that he had recently sold an investment property and that he had sufficient funds to consummate the transaction without financing, ie. "all cash". 56. In reliance on Khoshkheraman's representation, Plaintiffs inserted the following language Seller' into Paragraph 3 of Rider to the Contract of Sale, "No Financing Contingency: This contract is not mortgage contingent. Although Purchaser may elect to seek financing, its obligations to fully and timely perform the obligations set forth herein are not subject to financing. This transaction is deemed a "Cash Deal". Purchaser represents that he/she has sufficient liquid assets to consummate this transaction without the need of financing and has agreed to proceed for "all cash". 57. The Contract, as presented, listed "Moshe Khoshkheraman, and/or an LLC in formation" as the Purchaser. 58. On September 22, 2023, Defendant Khoshkheraman crossed out his name and replaced it LLC." with "Richardson Property, as the Purchaser. "1031" 59. Defendant further represented that the Contract Deposit would be delivered by a agent, presumably referring to a Qualified Intermediary. 60. Plaintiffs, in reliance on the representation that this transaction was pursuant to IRC §1031, and acknowledging that the statute requires the identity of the "Exchanger" to the same for both the initial sale and the subsequent purchase, did not raise objection. 11 11 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 61. It wasn't until November 7, 2023, that Defendants, in the course of asking for a delay of Closing, disclosed for the first time that, contrary to their representation in the Contract, they were seeking financing. 62. Plaintiffs have since learned that Defendant LLC, is a newly formed entity, having been formed on September 21, 2023, the day before it allegedly executed the Contract. "Purchaser" 63. Creating a new LLC to act as a is a violation of the statutory requirements of IRC § 1031. "Purchaser" 64. That fact that Defendant Khoshkheraman formed a new entity to act as illustrates that at all times he misrepresented to Plaintiff that this transaction was part of a "1031 like kind exchange". 65. At all times Defendant Khoshkerheraman formed Defendant LLC for the sole purpose and with the intent to perpetuate a fraud upon Plaintiffs to avoid personal liability. 66. Defendant Khoshkerheraman exercised complete dominion and control of Defendant LLC. 67. Defendant LLC is the alter ego of Defendant Khoshkerheraman. 68. Defendant Khoshkerheraman's dominion and control of Defendant LLC was used to commit fraud against the Plaintiff and resulted in injury. 69. Defendant Khoshkerheraman abused the privilege of doing business in the corporate form to perpetuate its fraud. 70. Defendant Khoshkerheraman failed to adhere to corporate formalities, failed to publish the LLC in accordance with violation of New York Limited Liability Company Law 12 12 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 Section 206, failed to adequately capitalize the entity and commingled assets and utilized funds for personal use. 71. Khoshkheraman created a sham entity to further facilitate his scheme to intentionally and fraudulently induce Plaintiffs to enter into the Contract to their detriment. 72. Plaintiffs respectfully request judgment against Defendant Khoshkheraman and the LLC, jointly and severely, on the Fourth Cause of Action disregarding the corporate entity, and awarding Plaintiffs damages for fraudulent inducement in an amount in excess of the jurisdictional limits of the lower courts. AS ANDFORA FIFTH CAUSEOFACTION FORFRAUD 73. Plaintiffs repeat and reallege each and every allegation set forth hereinabove as if fully repeated hereinafter. 74. On several occasions prior September 22, 2023, Defendant Khoshkheraman personally and in the presence of his agents and hired professionals inspected the Premises, including all units and all commonareas. 75. At all times prior to September 22, 2023, Defendant Khoshkheraman was aware that the Premises was a three story structure containing 5 residential units. 76. At all times prior September 22, 2023, Defendant Khoshkheraman was aware that the Premises previously contained 6 residential units and was subject to Rent Stabilization. 13 13 of 22 FILED: KINGS COUNTY CLERK 05/31/2024 02:38 PM INDEX NO. 515196/2024 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 05/31/2024 77. At all times prior September 22, 2023, Defendant Khoshkheraman was aware