The petitioner and the respondent are brothers who jointly owned two entities, Corner 160 Associates, Inc. (Corner) and Mall 92-30 Associates, LLC (Mall). Petitioner owned 25% of both entities and respondent owned 75% of both entities. Both Corner and Mall are real-estate holding entities. Together, both entities own three unimproved parcels of land in Jamaica, Queens. The brothers operated a parking lot and a flea market on the three lots.
On March 4, 2013, respondent told petitioner to get out of the office after discovering petitioner was diverting money from the gross receipts of the businesses. By way of a three day surveillance conducted at the parking lot, it was determined that the ledgers maintained by respondent also under-reported the number of vehicles utilizing the parking lot and consequently the amount of income the parking lot produced. Since the parties’ payments to themselves were unauthorized, as a matter of law, they are mutually liable for breach of fiduciary duty. As there is fault on both parties, the Court found that dissolution is a viable option to prevent further conduct of this kind. However, the Court also permitted respondent to purchase petitioner’s 25% interest in Corner and Mall at their respective fair values, as determined by a business valuation expert.
In determining the fair value of Corner and Mall, the valuation expert did not apply any marketability discount as time on the market was already considered in determining the value of the main underlying asset (property) owned by Corner and Mall.