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Deborah Int'l Beauty v. Quality King Distr

Appellate Division of the Supreme Court of New York, Second Department
Aug 5, 1991
175 A.D.2d 791 (N.Y. App. Div. 1991)


August 5, 1991

Appeal from the Supreme Court, Nassau County (McCabe, J.).

Ordered that the order dated November 21, 1989, is affirmed; and it is further,

Ordered that the orders dated January 12, 1990, and January 25, 1990, are affirmed insofar as appealed from; and it is further,

Ordered that the respondent is awarded one bill of costs.

The Supreme Court properly concluded that the terms of the shareholders' agreement upon which Deborah K. Richman's fifth, sixth, seventh and ninth causes of action in Action No. 1 are based are ambiguous. The relevant portions of the shareholders' agreement are subject to competing interpretations, thereby raising triable issues of fact as to the parties' intent and requiring the consideration of relevant extrinsic evidence (see, Hartford Acc. Indem. Co. v Wesolowski, 33 N.Y.2d 169, 172; River Park Assocs. v Meyerbank Elec. Co., 116 A.D.2d 709, 710; see also, Lachs v Fidelity Cas. Co., 306 N.Y. 357, 365). The appellants' claims that Richman's conduct under the shareholders' agreement established a practical construction of the subject terms and estopped her from disputing the meaning of the agreement raise sharply contested issues of fact. Accordingly, summary judgment was properly denied.

The court properly granted Richman partial summary judgment when it ordered Deborah International Beauty, Ltd. to distribute sufficient funds to cover Richman's tax obligation for the "paper" profits. Richman alleged that the parties had agreed that such distributions would be made and that they had been made prior to the commencement of litigation. The appellants presented no contrary evidence. The claim by the corporation on appeal that it did not have adequate notice that the motion would be treated as one for summary judgment is belied by its opposition to the motion where it repeatedly stated that Richman's motion was, in effect, a motion for summary judgment (see, Franklin v Pee Dee Jay Amusement Co., 71 A.D.2d 866). Indeed, there can be little doubt that Richman and the corporation "submit[ed] facts and arguments clearly indicating that they were `deliberately charting a summary judgment course'" (Mihlovan v Grozavu, 72 N.Y.2d 506, 508, quoting Four Seasons Hotels v Vinnik, 127 A.D.2d 310, 320).

Although the complaint did not directly address the claim for a distribution by the corporation to cover tax owing by shareholders on "paper" profits, summary judgment was properly awarded on the unpleaded cause of action for taxes owing on undistributed profits because the proof supported such a cause and the opposing party was not misled or prejudiced (see, Rubenstein v Rosenthal, 140 A.D.2d 156, 158; see also, Johnson v Gaughan, 128 A.D.2d 756). To the extent necessary, we deem that the pleadings are amended to conform with the proof (see, Dampskibsselskabet Torm A/S v Thomas Paper Co., 26 A.D.2d 347, 352). The grant of partial summary judgment did not in any way involve the contested issue of the actual profitability of the corporation so as to constitute improper interim relief.

Finally, although the corporation ultimately obtained a stay of the January 12, 1990, order pursuant to CPLR 5519 (a) (2) pending appeal, we find that the Supreme Court did not improvidently exercise its discretion in awarding Richman attorneys' fees under 22 N.Y.CRR 130 on her application to find the corporation in contempt based upon its initial failure to comply with the January 12, 1990, order (see, Matter of Minister, Elders Deacons of Prot. Dutch Church v 198 Broadway, 76 N.Y.2d 411).

We have considered the parties' remaining contentions and find them to be without merit. Mangano, P.J., Bracken, Sullivan and Ritter, JJ., concur.

Summaries of

Deborah Int'l Beauty v. Quality King Distr

Appellate Division of the Supreme Court of New York, Second Department
Aug 5, 1991
175 A.D.2d 791 (N.Y. App. Div. 1991)
Case details for

Deborah Int'l Beauty v. Quality King Distr

Case Details


Court:Appellate Division of the Supreme Court of New York, Second Department

Date published: Aug 5, 1991


175 A.D.2d 791 (N.Y. App. Div. 1991)
573 N.Y.S.2d 189

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