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457 Realty Corp. v. Chamois Props. Inc.

Partner Firm's Successor 'Principal' Should Have Been Aware of Binding Arbitration Clause

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MEMORANDUM & ORDER Plaintiff 457 Realty Corp. (“Plaintiff” or “457 Realty”) commenced this action against Chamois Properties, Inc. (“Chamois”) and Robert F. Denny (“Denny”) (together “Defendants”), asserting claims for a breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, and fraud. (Compl. at 41.)Presently before the Court is defendants’ motion to dismiss pursuant to Fed. R. Civ. P. (“Rule”) 12(b)(1) for lack of subject matter jurisdiction. In the alternative, defendants seek to compel arbitration pursuant to the arbitration clause contained in the Partnership Agreement or to dismiss pursuant to Rule 12(b)(6) for failure to state a claim. For the reasons set forth below, the motion is denied to the extent it seeks dismissal for lack of subject matter jurisdiction but granted to the extent is seeks to compel arbitration.BACKGROUNDThe following allegations are drawn from the Complaint (“Compl.”) and further information garnered from the parties’ submissions.On or about May 1, 1993, Plaintiff, a New York Corporation, and Marco Properties, Inc., at the time a New York Corporation, formed a general business partnership, JB Associates, organized and existing under the laws of the State of New York. (Compl. at

4, 9.) The purpose of the partnership was to purchase and manage a parcel of commercial real estate located at 457-461 Pantigo Road, East Hampton, New York 11937 (the “Pantigo Property”). (Compl. at 11.) The relationship between Plaintiff and Marco Properties, Inc. was governed by a partnership agreement dated May 1, 1993 (“Partnership Agreement”). (Declaration of Robert F. Denny (“Denny Decl.”) at Ex. 1.) At the time of the Partnership Agreement, Denny was the sole shareholder of Marco Properties, Inc. and Joseph Cirillo was the sole shareholder of 457 Realty. (Aff. of Frances Cirillo at 3; Def. Chamois’ Mem. at 1; Denny Decl. at 5.)The Partnership Agreement appointed Denny as business manager for JB Associates. (Compl. at

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