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SUPREME COURT: NEW YORK COUNTY In The Matter Of An Article 75 Proceeding DANIEL B.

HAYES, Petitioner, - against DAVIS, SHAPIRO, LEWIT & HAYES, LLP, STEVEN G. SHAPIRO AND PETER LEWIT, Respondents,
VERIFIED PETITION IN AID OF ARBITRATION

Index No.:

STATE OF NEW YORK, COUNTY OF NEW YORK. 1. PETITIONER, Daniel B. Hayes ("Petitioner"), for his petition seeking an

order of attachment and injunction in aid of arbitration against respondents, Davis Shapiro Lewit & Hayes LLP ("DSLH" or "Partnership Respondent"), Steven G. Shapiro ("Shapiro") and Peter Lewit ("Lewit") (jointly, the "Individual Respondents"), states: THE PARTIES, JURISDICTION AND VENUE 2. DSLH. 3. The Individual Respondents are licensed attorneys and named equity Petitioner is a licensed attorney and a named equity partner in respondent

partners in respondent DSLH. Petitioner and the two Individual respondents are the only equity partners of respondent DSLH. 4. Respondent DSLH is a limited liability partnership organized under the

laws of the State of New York and registered to transact business in California. Respondent DSLH maintains offices at 689 Fifth Avenue, Fifth Floor, New York, New York and in Beverly Hills, California. 5. Petitioner engages in the practice of law at DSLHs California office. The

Individual Respondents engage in the practice of law at DSLHs New York office. 6. Venue is proper in this county pursuant to CPLR 7502(a) in that

Respondents are doing business in this county. FACTS MATERIAL TO THE PETITION 7. 2005, Petitioner and the Individual Respondents On or about January 1,

entered into a written partnership agreement (the "Partnership Agreement"). A copy of the Exhibit Partnership Agreement is annexed hereto as A.

8.

Sections 6.01 and 6.02 of the Partnership Agreement provides that "all of

the Partners" would be responsible for managing DSLH, and any determination affecting the Partnership would be "made by unanimous consent of the Partners." (See Partnership Agreement, p. 4) (emphasis added).

9.

Regarding net cash flow, the Partnership Agreement further provides that

the Partnership "shall distribute Net Cash Flow (to the extent cash is available for distribution) to the Partners from time to time (but no less frequently than annually) in such amounts as shall be determined in the discretion of the Partners." (See Partnership Agreement added). 3.03) (emphasis

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10.

The Partnership Agreement also requires arbitration of any dispute arising

out of or relating to this Agreement. (See Section 9.07 of the Partnership Agreement.) 11. Respondent DSLH has a line of credit of $1,000,000 with JP Morgan

Exhibit Chase Bank, N.A. (the "Credit Line"). A copy of the Note is annexed hereto as B. It is a requirement of the Credit Line that its balance be paid in full, and maintained at a zero balance for thirty consecutive days during its term.

12.

The Credit Line is scheduled to mature on December 13, 2012 and the

current balance on the Credit Line is $400,000. Because it must maintain a zero balance for thirty (30) days, repayment to zero must occur by no later than November 13, 2012 to avoid default on December 13, 2012.

13.

Payment of the Credit Line is jointly, severally, and personally guaranteed

by Petitioner and the Individual Respondents pursuant to a written guaranty of payment (the "Guaranty"). A copy of the Guaranty is annexed hereto as C. Exhibit

14.

As of October 2, 2012, DSLH was in straightened financial circumstances,

it (i) had only about $600,000.00 in cash in the operating account; (ii) had collected $4,300,000 of the $5,300,000 revenue projected for 2012, while still owing over $1,000,000 in projected 2012 expenses; (iii) still owed $400,000 on the Credit Line; and (v) has additional unbudgeted moving costs, bonuses, and equipment and furniture expenses of$100,000 to 300,000 for 2012.

15.

On October 2, 2012 (and again on October 10), the Individual

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Respondents requested Petitioners consent to drawing on the Credit Line so the Individual Respondents could receive partnership distributions of $865,000. Petitioner withheld his consent. Petitioner then requested that each partner post collateral. The Individual Defendants refused.

16.

Upon information and belief, neither Lewit nor Shapiro have the financial

wherewithal to be able to pay back their share of the Credit Line on or before November 13, 2012, if the money in the operating account was first distributed to them; nor do they have the financial ability to pay back the other DSLH debts and obligations for which they and Petitioner are personally liable.

17.

On October 17, 2012, Petitioner demanded arbitration against 9.07 of

Respondents to resolve these compensation and distribution issues, as provided for by the Partnership Agreement. See Exhibit P (Demand for Arbitration).

18.

On or about October 18, 2012, the Individual Respondents purported to 8.02 of the Partnership Agreement, and then

terminate Petitioner, apparently in violation of

purported to unilaterally distribute $500,000.00 for partnership distributions from DSLHs operating account at Chase Manhattan Bank (the "Operating Account"), without Petitioners consent, in violation of (Notice of Termination). Exhibit E 3.03, 6.01 and 6.02 of the Partnership Agreement. See

19.

As part of this purported "distribution," the Individual Respondents sent

Petitioner a $96,138.83 check. This amount reflects a distribution weighted in favor of the

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Individual Respondents, and does not reflect the sum to which Petitioner is entitled. As Petitioner has not cashed the check, this part of the Funds remains with Respondents.

20.

These compensation and distribution issues (as well as the validity of the

Individual Respondents' retaliatory expulsion of Petitioner) will be determined in the already commenced arbitration between Petitioner and the Individual Respondents. Petitioner is likely to prevail in arbitration, given that, among other things, the Individual Defendants' unilateral actions violate the plain language of the Partnership Agreement.

21.

Petitioner is entitled to provisional relief in aid of arbitration. Absent an

order of attachment and injunction that restores the Funds to the Operating Account, and protects the Funds and other monies in the Operating Account from future misappropriation by the Individual Respondents, any arbitration award rendered in Petitioner's favor will be ineffectual. First, the Funds will no longer be available to pay an award. Second,DSLH will not in a position to pay its Credit Line on or before November 13, 2012, will default, and may well cease to exist. Without the Funds and/or an operating law firm, any arbitration award rendered in Petitioner's favor will be ineffectual.

22.

Upon information and belief, the Individual Respondents are well-aware

of, and intended, the irreparable, negative consequences resulting from their misappropriation of the Funds (a fuller description of these negative consequences are set forth in the accompanying Petitioner's Affidavit, the contents of which are incorporated herein by reference).

23.

Petitioner's claim against Respondents exceeds all known counterclaims

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Respondents may have against Petitioner. WHEREFORE, petitioner Daniel B. Hayes, respectfully requests (i) an order of attachment in aid of arbitration, pursuant to CPLR 7502(c)and Article 62, directing the sheriff of New York County to attach and levy upon all monies in the custody of respondents Steven G. Shapiro and Peter Lewit or any transferee thereof, in an amount up to $500,000, for placement in the Operating Account of respondent DSLH; (ii) a preliminary injunction in aid of arbitration, pursuant to CPLR 7502(c) and Article 63, enjoining and restraining Respondents from disbursing the Funds or any other monies in the DSLH operating account for partnership distributions until DSLH's line of credit has been paid and the underlying arbitration between Petitioner and the Individual Respondents has been completed; and (iii) for such other and further relief as the Court deems just and proper. Dated: New York, New York October 28, 2012

ZEICHNER ELLMAN & KRAUSE LLP

oav M . Griver Tracee E. Davis 575 Lexington Avenue New York, New York 10022 (212) 223-0400 - and Daniel B. Garrie, Esq. GARRIE LLP 6506 3rd Ave. NW, Suite C Seattle, WA 98117 (855) 529-2466 Attorneys for petitioner Daniel B. Hayes

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ATTORNEY VERIFICATION

Yoav M. Griver, an attorney duly admitted to practice law before the Courts of the State of New York, affirms the following to be true under the penalties of perjury: I am a member of the law firm Zeichner Eliman & Krause LLP, attorneys of record for Petitioner. I have read the annexed Petition and know the contents thereof, and the same are true to my knowledge, except those matters therein which are stated to be alleged upon information and belief, and, as to those matters, I believe them to be true. My beliefs are based upon facts, records, and other pertinent information contained in my files and/or provided by Petitioner. The reason this verification is made by me and not Petitioner is that Petitioner is not presently in the county wherein the attorneys for Petitioner maintain their offices. Dated: New York, New York October 28, 2012

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