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(FILED: NEW YORK COUNTY CLERK 0771372011) INDEX NO. 650159/2010
NYSCEF DOC. NO. 76 RECEIVED NYSCEF: 07/13/2011
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
mete nn nn ene
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HARVEY RUDMAN and HAROLD KUPLESKY,
on behalf of Each of Them Individually And Index No. 650159/10
Derivatively,
Plaintiffs,
-against-
ANSWER OF
STARRETT CITY
PRESERVATION LLC
CAROL GRAM DEANE, ESTATE OF DISQUE D.
DEANE BY CAROL G. DEANE AS TEMPORARY
EXECUTRIX, SALT KETTLE LLC, ST. GERVAIS
LLC, STARRETT CITY PRESERVATION LLC,
DD SPRING CREEK LLC, SK SPRING CREEK
LLC, SPRING CREEK PLAZA LLC, DD
SHOPPING CENTER LLC and SK SHOPPING
CENTER LLC,
Defendants.
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Defendant Starrett City Preservation LLC, by its attorneys, Warner Partners, P.C.,
as and for its Answer to Plaintiffs' Second Amended Complaint (the "Complaint", states
as follows:
1. Denies the allegation in Paragraph 1 of the Complaint, except admits that
Starrett City is a regulated housing facility located in Brooklyn, New York, is one of the
largest and most successful federally-funded housing complexes in the nation, and that
Disque D. Deane was married to Carol Gram Deane prior to his death.
2. Denies the allegation in Paragraph 2 of the Complaint, except admits that
Rudman and Kuplesky assisted in the management of Starrett City.
3. Denies the allegation in Paragraph 3 of the Complaint.
4. Denies the allegation in Paragraph 4 of the Complaint.
5. Denies the allegation in Paragraph 5 of the Complaint, except admits that a
limited liability company called Starrett City Preservation LLC ("Preservation") was
formed and plaintiffs, among others, acquired membership interests in Preservation.
6. Denies the allegation in Paragraph 6 of the Complaint, except admits that on
December 17, 2009, a $531.4 million refinancing of Starrett City was completed.
7. Denies the allegation in Paragraph 7 of the Complaint.
8. Admits the allegation in Paragraph 8 of the Complaint.
9. Admits the allegation in Paragraph 9 of the Complaint.
10. Admits the allegation in Paragraph 10 of the Complaint.
11. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 11 of the Complaint.
12. Denies the allegation in Paragraph 12 of the Complaint.
13. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 13 of the Complaint.
14. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 14 of the Complaint.
15. Denies the allegation in Paragraph 15 of the Complaint, except admits that
Carol Gram Deane resides at 14 Walnut Street, Boston, Massachusetts, was the wife of
Disque D. Deane prior to his.death, is a co-chairperson of the MGP, the managing
member of Preservation, the manager of SKI, and the operating manager and member of
St. Gervais, a director and officer of SCI and the chairwoman of the Starrett Management
Committee of SCI.
16. Denies the allegation in Paragraph 16 of the Complaint, except admits that
Disque Deane resided with Carol Gram Deane at the same address in Boston,
Massachusetts, was Carol Gram Deane’s husband, was the managing general partner of
SCA, and the Deane family owns directly or indirectly approximately two-thirds of the
membership interests in Preservation.
17. Admits the allegation in Paragraph 17 of the Complaint.
18. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 18 of the Complaint, except admits that St. Gervais has the
largest membership percentage of Preservation.
19. Admits the allegation in Paragraph 19 of the Complaint.
20. Admits the allegation in Paragraph 20 of the Complaint, except denies that
Carol Deane is the vice-president of DD/SCA.
21. Admits the allegation in Paragraph 21 of the Complaint.
22. Denies the allegation in Paragraph 22 of the Complaint, except admits that
Spring Creek is a Delaware limited liability company formed in or about November 2009
with its principal place of business in New York, New York, that in December 2009 SCA
transferred certain parcels of land referred to to Spring Creek, that DD Shopping Center
LLC is the Managing Member of Spring Creek and that Carol Deane initially was the
Vice-President and is now the President of Spring Creek and denies knowledge or
information as to what "as discussed below" refers to.
23. Admits the allegation in Paragraph 23 of the Complaint, except denies having
knowledge or information as to what "discussed further below” refers to.
24, Admits the allegation in Paragraph 24 of the Complaint, except denies having
knowledge or information as to what "discussed further below" refers to and denies the
assertions in the last sentence of Paragraph 24.
25. Personal jurisdiction is not contested.
26. Venue is not contested.
27. Admits the allegation in Paragraph 27 of the Complaint.
28. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 28 of the Complaint.
29, Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 29 of the Complaint.
30. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 30 of the Complaint.
31. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 31 of the Complaint.
32. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 32 of the Complaint.
33. Declines to answer the allegation in Paragraph 33 of the Complaint and is
under no obligation to do so because the allegation is irrelevant, gratuitous and beyond
Preservation’s knowledge.
34, Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 34 of the Complaint.
35. Denies knowledge or information sufficient to admit or deny the truth of the
allegation in Paragraph 35 of the Complaint.
36. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 36 of the Complaint.
37. Denies the allegation in Paragraph 37 of the Complaint.
38. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 38 of the Complaint.
39. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 39 of the Complaint.
40. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 40 of the Complaint.
41. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 41 of the Complaint.
42. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 42 ofthe Complaint.
43. Denies the allegation in Paragraph 43 of the Compiaint and refers the Court to
the Sixteenth Amendment.
44. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 44 of the Complaint, except admits that Mary Clarke has a
membership interest in Preservation.
45. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 45 of the Complaint.
46. Denies the allegation in Paragraph 46 of the Complaint, except admits that a
copy of the Preservation Agreement is attached as Exhibit | to the Complaint and refers
the Court thereto.
47, Admits the allegation in Paragraph 47 of the Complaint, except denies that
Carol Deane controls any interest in the “Board” of Preservation.
48. Denies the allegation in Paragraph 48 of the Complaint, and refers the Court to
the Preservation Agreement and related writings and to the assignments.
49. Denies the allegation in Paragraph 49 of the Complaint, except admits that the
partial quotation from the Agreement is quoted accurately as far as it goes.
50. Denies the allegation in Paragraph 50 of the Complaint, except admits that the
Omnibus Assignments executed by the MGP and SKI are attached to the Complaint as
Exhibits 2 and 3, respectively, and the partial quotations from the Agreement are accurate
as far as they go.
51. Denies the allegation in Paragraph 51 of the Complaint, except admits that the
partial quotations from the Agreement are accurate as far as they go.
52. Admits the allegation in Paragraph 52 of the Complaint.
53. Admits the allegation in Paragraph 53 of the Complaint.
54, Denies the allegation in Paragraph 54 of the Complaint, except admits that the
partial quotations from the Agreement are accurate as far as they go.
55. Admits the allegation in Paragraph 55 of the Complaint.
56. Denies the allegation in Paragraph 56 of the Complaint.
57. Denies the allegation in Paragraph 57 of the Complaint, except admits that
Disque D. Deane executed certain letters to SCA/SCI’s auditors and refers the Court to
them, that the words in the incomplete quotation appear in the financial statements
referred to and that Iris Sutz, SCA's controller and a member of St. Gervais, assisted with
the preparation of the financial statements since 2006.
58. Denies having knowledge or information sufficient to admit or deny the truth
of the allegation in Paragraph 58 of the Complaint.
59. Denies the allegation in Paragraph 59 of the Complaint.
60. Denies the allegation in Paragraph 60 of the Complaint.
61. Admits the allegation in Paragraph 61 of the Complaint, except denies that
solicitations were distributed to “hundreds of prospective purchasers” and denies
knowledge or information sufficient to admit or deny the assertion that plaintiffs assisted
and participated in “substantially all aspects” of the sale efforts.
62. Denies the allegation in Paragraph 62 of the Complaint, except admits that
plaintiffs assisted in “the sale process.”
63. Denies knowledge or information sufficient to admit or deny the truth of the
allegation in Paragraph 63 of the Complaint, except admits that in or about February 2007
the MGP accepted an offer at a sale price of $1.3 billion, which was subsequently
abandoned because certain regulatory approvals could not be obtained for the purchaser.
64. Denies the allegation in Paragraph 64 of the Complaint.
65. Denies the allegation in Paragraph 65 of the Complaint, except admits that a
Memorandum of Understanding ("MOU") with respect to a sale of Starrett City was
executed in May 2008.
66. Denies the allegation in Paragraph 66 of the Complaint, except admits that
plaintiffs assisted in another sale effort after the MOU was signed.
67. Denies the allegation in Paragraph 67 of the Complaint, except admits that the
offers received during the second sales effort were considerably lower than before.
68. Denies the allegation in Paragraph 68 of the Complaint, except admits that, "to
establish a framework for SCA to complete a preservation sale of Starrett City," the MOU
was extended in or about October 2008 (emphasis added).
69. Denies the allegation in Paragraph 69 of the Complaint, except admits that a
second round of offers from several prospective purchasers of Starrett City was received,
an $810 million offer was accepted, and plaintiffs were identified in draft sale
agreements.
70. Denies the allegation in Paragraph 70 of the Complaint, except admits that the
New York Times reported that SCA told public officials that "they were exploring their
options, including a possible refinancing of the complex."
71. Denies the allegation in Paragraph 71 of the Complaint, except admits that in
April 2009 Wachovia Bank was paid $150,000 in connection with a refinancing effort for
Starrett City.
72. Admits the allegation in Paragraph 72 of the Complaint, except denies that the
plan referred to was “concrete.”
73. Admits the allegation in Paragraph 73 of the Complaint.
74. Admits the allegation in Paragraph 74 of the Complaint that on July 30, 2009,
the MGP circulated a cover letter and a Consent Solicitation dated July 29, 2009, and
refers to those documents for the terms and conditions of that Consent Solicitation.
75. Admits the allegation in Paragraph 75 of the Complaint.
76. Denies knowledge or information sufficient to admit or deny the truth of the
allegation in Paragraph 76 of the Complaint.
77. Admits the allegation in Paragraph 77 of the Complaint.
78. Admits the allegation in Paragraph 78 of the Complaint, except denies the use
of the word “similarly.”
79, Admits the allegation in Paragraph 79 that on December 17, 2009, the
refinancing of Starrett City closed and refers to the Closing Documents for the terms and
conditions of that refinancing.
80. Denies the allegation in Paragraph 80 of the Complaint.
81. Admits the allegation in Paragraph 81 of the Complaint, except denies that a
$250,000 reserve for the shopping center exists.
82. Denies the allegation in Paragraph 82 of the Complaint, except admits that on
or about December 23, 2009, SCA returned the partners’ original net equity contribution
aggregating approximately $119 million.
83. Denies the allegation in Paragraph 83 of the Complaint and refers the Court to
the legal documents involved.
84. Denies the allegation in Paragraph 84 of the Complaint and refers the Court to
the legal documents involved, except admits that the total interest of the MGP and SKI in
SCA increased to 19.9%.
85. Denies the allegation in Paragraph 85 of the Complaint
86. Denies the allegation in Paragraph 86 of the Complaint
87 . Denies the allegation in Paragraph 87 of the Complaint
88 . Denies the allegation in Paragraph 88 of the Complaint
89 . Denies the allegation in Paragraph 89 of the Complaint.
90 . Denies the allegation in Paragraph 90 of the Complaint.
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91. Denies the allegation in Paragraph 91 of the Complaint, except admits that
Preservation distributed approximately $3.7 million to plaintiffs, who purported to accept
that distribution with a reservation of rights.
92. Denies the allegation in Paragraph 92 of the Complaint.
93. Denies the allegation in Paragraph 93 of the Complaint, except admits that
Kuplesky ceased employment by Deane-related entities no later than December 15, 2008,
and ceased being a member of Cork and a member of the Board of Preservation no later
than December 15, 2008, and admits that Rudman ceased employment by Deane-related
entities no later than April 29, 2009.
94. Admits the allegation in Paragraph 94 of the Complaint, except asserts that the
share ratios of plaintiffs have been reduced to zero in accordance with the Preservation
Agreement.
95. Denies the allegation in Paragraph 95 of the Complaint.
96. Admits the allegation in Paragraph 96 of the Complaint.
97. Denies the allegation in Paragraph 97 of the Complaint.
98. Admits the allegation in Paragraph 98 of the Complaint.
99. Admits the allegation in Paragraph 99 of the Complaint.
100. Admits the allegation in Paragraph 100 of the Complaint.
101. Denies the allegation in Paragraph 101 of the Complaint, except admits that
footnote | is quoted accurately.
102. Denies the allegation in Paragraph 102 of the Complaint.
It
103. Admits the allegation in Paragraph 103 of the Complaint.
104. Denies the allegation in Paragraph 104 of the Complaint, except admits that
Exhibit 5 to the Solicitation is attached as Exhibit 4 to the Complaint.
105. Denies the allegation in Paragraph 105 of the Complaint.
106. Denies the allegation in Paragraph 106 of the Complaint
107 . Admits the allegation in Paragraph 107 of the Complaint.
108 . Denies the allegation in Paragraph 108 of the Complaint.
109. . Denies the allegation in Paragraph 109 of the Complaint, except admits that a
non-Deane family employee was hired and he replaced Rudman as President of SCI in
April 2009 and was also appointed as President of Spring Creek upon its creation.
110. Denies the allegation in Paragraph 110 of the Complaint.
111. Denies the allegation in Paragraph 111 of the Complaint.
ANSWERING THE FIRST THROUGH FOURTH CLAIMS FOR RELIEF
112-139. Makes no response to the allegations in Paragraphs 112-139 of the
Complaint because it is not a named party under the First through Fourth Claims for
Relief.
ANSWERING THE FIFTH CLAIM FOR RELIEF
140. Answering Paragraph 140 of the Complaint, repeats and realleges its
responses to Paragraphs 1 through 139 of the Complaint as though fully set forth herein.
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141. Denies the allegation in Paragraph 141 of the Complaint because it states a
legal conclusion and therefore does not require a response, and this issue should be
referred to the Court.
142. Denies the allegation in Paragraph 142 of the Complaint.
143. Denies the allegation in Paragraph 143 of the Complaint because it states a
legal conclusion and therefore does not require a response, and this issue should be
teferred to the Court.
144. Denies the allegation in Paragraph 144 of the Complaint.
145. Denies the allegation in Paragraph 145 of the Complaint.
146. Denies the allegation in Paragraph 146 of the Complaint.
ANSWERING THE SIXTH THROUGH EIGHTH CLAIMS FOR RELIEF
147-162. Makes no response to the allegations in Paragraphs 147-162 of the
Complaint because it is not a named party under the Sixth through Eighth Claims for
Relief.
ANSWERING THE NINTH CLAIM FOR RELIEF
163. Answering Paragraph 163 of the Complaint, repeats and realleges its
responses to Paragraphs 1 through 162 of the Complaint as though fully set forth herein.
164. Denies the allegation in Paragraph 164 of the Complaint, except admits that
the interests of the MGP and SKI in SCA are continuing and that assignments to
Preservation were made, as reflected in the Omnibus Assignments.
165. Denies the allegation in Paragraph 165 of the Complaint.
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166. Admits that Section 3.3 of the Preservation Agreement is accurately but only
partially quoted in Paragraph 166 of the Complaint and refers to the Preservation.
Agreement for the full text of that Section. .
167. Denies the allegation in Paragraph 167 of the Complaint.
168. Denies the allegation in Paragraph 168 of the Complaint.
169. Admits that the allegation in Paragraph 169 of the Complaint appears to
reflect plaintiffs' baseless claim, but denies that it has any validity.
170. Denies the allegation in Paragraph 170 of the Complaint, but admits there is
a dispute between the parties.
171. Denies the allegation in Paragraph 171 of the Complaint.
ANSWERING THE TENTH CLAIM FOR RELIEF
172. Answering Paragraph 172 of the Complaint, repeats arid realleges its
responses to Paragraphs 1 through 171 of the Complaint as though fully set forth herein.
173. Denies the allegation in Paragraph 173 of the Complaint, except admits that
the interests of Deane and SKI in SCA are continuing and that assignments to
Preservation were made, as reflected in the Omnibus Assignments.
174. Denies the allegation in Paragraph 174 of the Complaint.
175. Denies the allegation in Paragraph 175 of the Complaint, except admits that
on or about December 17, 2009 SCA transferred tax free the shopping center and the
vacant parcels to Spring Creek with the same percentage structure as exists for the
interests held in SCA.
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176. Denies the allegation in Paragraph 176 of the Complaint.
177. Denies the allegation in Paragraph 177 of the Complaint.
178. Admits that the allegation in Paragraph 178 of the Complaint appears to
reflect plaintiffs' baseless claim, but denies that it has any validity.
179. Denies the allegation inParagraph 179 of the Complaint, but admits that
plaintiffs’ baseless position is at odds with defendants’ meritorious position.
180. Denies the allegation in Paragraph 180 of the Complaint.
FIRST AFFIRMATIVE DEFENSE
181. Plaintiffs’ claims are barred, in whole or in part, by the doctrine of estoppel.
SECOND AFFIRMATIVE DEFENSE
182. Plaintiffs’ claims are barred, in whole or in part, by the doctrine of waiver.
THIRD AFFIRMATIVE DEFENSE
183. Plaintiffs’ claims are barred, in whole or in part, by the doctrine of unclean
hands.
FOURTH AFFIRMATIVE DEFENSE
184, Plaintiffs lack standing to assert any of the claims in the Complaint in their
individual capacities.
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WHEREFORE, defendant Starrett City Preservation LLC demands judgment
dismissing the Fifth, Ninth and Tenth Claims for Relief in the Complaint in their entirety,
and for such other and further relief as this Court may deem just and proper.
Dated: New York, New York
July 13, 2011
WARNER PARTNERS, P.C.
Attorneys for Defendant Starrett City
Preservation LLC
By: Cs bau
Kenneth E. Warner
950 Third Avenue, 32" Floor
New York, NY 10022
Tel: 212-593-8000
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