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Schindler v. Rothfeld No. 65 PDF
Schindler v. Rothfeld No. 65 PDF
Schindler v. Rothfeld No. 65 PDF
Schindler v. Rothfeld, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016) [2016 BL 349896]
Pagination
* BL
653161/2015
THIS OPINION IS UNCORRECTED AND WILL NOT BE PUBLISHED IN THE PRINTED OFFICIAL REPORTS.
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Schindler v. Rothfeld, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016) [2016 BL 349896]
required for her first two seasons on the show, Defendants By letter dated February 11, 2016, Heather Schindler and
purportedly required that Heather Schindler enter into a new Daray resigned from the Company. A little over one week
agreement with them in order to appear in a third season of later, Herman provided the 90-day notice of her resignation
the show. This new agreement required Heather Schindler required by her consulting agreement.
to pay the Company its past-due share of her RHONY
income, as well as pay the Company 50% of her income On April 26, 2016, this Court so-ordered the parties'
from the third RHONY season. Heather Schindler disputes stipulation, modifying the TRO so that Jimmy Yao replaced
that she entered into this new agreement with the Company [*3] Herman as a required signatory on Company accounts.
and therefore she did not make these payments. The Court further ordered that, in all other respects, the TRO
would continue, pending the hearing and determination of
A. The Prior Motions the within motions.
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Schindler v. Rothfeld, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016) [2016 BL 349896]
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Schindler v. Rothfeld, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016) [2016 BL 349896]
There are similar layers of uncertainty to REI's damage Accordingly, the first counterclaim is dismissed.
claim. Thus, it is completely speculative as to whether:
(1) the Company would have sold the allegedly excess 4. Breach of Contract (Second Counterclaim)
inventory; (2) the time frame (or time frames) during which
the excess inventory would have been sold; and (3) how In the second counterclaim for breach of contract, REI
much inventory would have been sold, and at what price. alleges that all plaintiffs breached "Article VIII" of the
Consequently, REI's damages claims are barred by the out- Operating Agreement by seeking to replace Rothfeld with an
of-pocket rule. Accordingly, the third and fifth counterclaims "unqualified" manager and by not following his instructions.
must be dismissed. However, REI fails to identify any specific provision in Article
VIII that was breached.
3. Breach of Contract Claim (First Counterclaim)
It is well established that "[i]n order to plead a breach
In its first counterclaim, REI alleges that Heather Schindler of contract cause of action, a complaint must allege the
breached the Operating Agreement by appearing in the third provisions of the contract upon which the claim is based"
season of the Real Housewives program without fulfilling the Atkinson v. Mobil Oil Corp., 205 A.D.2d 719 , 720 (2d
conditions imposed by the Company for her appearance. As Dep't 1994); see also Matter of Sud v. Sud, 211 A.D.2d
already noted, Section 2.10(b) of the Operating Agreement 423 , 424 (1st Dep't 1995). Defendants fail to allege which
requires Heather Schindler to devote her full time services provision in Article VIII of the Operating Agreement that
"exclusively" to the Company as long as (1) the REI loan each of the plaintiffs allegedly breached. Article VIII includes
remains outstanding and (2) she accepts a consulting fee many different provisions, including plaintiffs' right to replace
or salary from the Company. See Affirmation of John H. Rothfeld as manager.
Reichman Ex. 4 at § 2.10. According to REI, Schindler
sought the Company's permission to appear for a third Defendants respond that plaintiff have "misrepresented"
season of the show and thus not devote her efforts full their counterclaim, and that the alleged breach of Article VIII
time to the Company. This permission was granted with consists of: (1) failing to comply with notice and meeting
certain conditions. Among [*6] the alleged conditions was requirements in the Operating Agreement when they sought
the requirement that Schindler pay the Company 50% of to remove Rothfeld as Manager; and (2) not following
the income she received for the third season. As REI Rothfeld's instructions.
states in its amended counterclaims, this permission — and
the conditions imposed — constituted the granting of an The notice and meeting requirements, however, are set
"exception to her obligation to provide her services on a forth in Article VI of the Operating Agreement — not Article
full time basis exclusively to the Company under Section VIII. Further, this Court has already rejected the claim that
2.10(b) of the Operating Agreement." (Am. Counterclaims ¶ plaintiffs did not follow the notice and meeting requirements
233.) in the course of denying defendants' motion for a preliminary
injunction:
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Schindler v. Rothfeld, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016) [2016 BL 349896]
Accordingly, the Court concludes that and the restriction on the authority of Rothfeld to terminate
Section 6.9 does not contradict Section employees.
8.1(e) and merely provides for an
"Information Action" waiving the meeting As an initial matter, defendants' request to eliminate the
requirements as long as a majority of the dual-signature requirement is denied as moot. On April 26,
Members agreed on the [*7] action to be 2016, the parties stipulated to modification of the TRO,
taken. As a result plaintiff's exercise of replacing Herman with Jimmy Yao. See NYSCEF No. 336.
the removal rights was proper. Further, defendants' request to remove the restriction on
(Affirmation of David Yeger Ex. 8 at 11.) This ruling Rothfeld's ability to fire employees is also denied. This Court
constitutes the law of the case, and the issue therefore is reluctant to change the status quo, especially in light of
cannot be relitigated. Chanice v. Fed. Express Corp., 118 the fact that counsel for defendants represented during oral
A.D.3d 634 , 635 (1st Dep't 2014). argument that the company is profitable and being well run.
See 5/11/16 Oral Arg. Tr. at 34:21-24.1
In addition, in making the argument that plaintiffs breached
Article VIII by not following Rothfeld's instructions, they still Plaintiffs' cross-motion likewise is denied. Jonathan
fail to specify which provision of Article VIII was breached. Schindler's request for the power to approve payments in
See Sud, 211 A.D.2d at 423 . place of Herman is denied as moot, given Yao's appointment
as signatory. Plaintiffs' request for access to the books and
Accordingly, the second counterclaim for breach of contract records of the Company, as well as the Company's monthly
must be dismissed. financial statements, is also denied as moot, as, during
oral argument, defendants represented that they would fully
5. Breach of Fiduciary Duty (Fourth Counterclaim) comply with both of these requests.2 See 5/11/[*8] 16 Oral
Arg. Tr. at 36:14-20.
In its fourth counterclaim, REI alleges that Ms. Schindler
breached her fiduciary duty to the Company by seeking "to Finally, the Court denies plaintiffs' request for the right
impose an unqualified manager," and attempting to seize to approve the hiring or firing of Yummie employees or
managerial control, in violation of the Operating Agreement. consultants. This request is denied for the same reason
However, as previously discussed, a breach of fiduciary duty that defendants' request to eliminate the restriction on
claim must be based upon conduct that is independent of the termination was denied. See supra. The Court seeks
conduct constituting a breach of contract. Here, defendant's to preserve the status quo during the pendency of this
breach of fiduciary duty counterclaim is based solely on an litigation.
alleged breach of the Operating Agreement.
The Court has considered the remaining arguments and
Accordingly, the fourth counterclaim is dismissed as well. finds them to be without merit.
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Schindler v. Rothfeld, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016) [2016 BL 349896]
fn
1
The May 11, 2016 Oral Argument Transcript is available on NYSCEF as document no. 364.
fn
2
After this motion was argued, plaintiffs filed a motion to compel, arguing that defendants persisted in their refusal to allow plaintiffs full access to the Company's books and
records notwithstanding defendants' statements on the May 11, 2016 record,. The Court granted plaintiff's motion to compel on October 5, 2016. See Decision and Order on
Motion Sequence 010.
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Schindler v. Rothfeld, No. 653161/2015, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016), Court Opinion
General Information
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Schindler v. Rothfeld, No. 653161/2015, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016), Court Opinion
Schindler v. Rothfeld, No. 653161/2015, 2016 BL 349896 (Sup. Ct. Oct. 12, 2016), Court Opinion
Total 0
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