Beruflich Dokumente
Kultur Dokumente
E2018005833
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/27/2018
Plaintiff,
SUMMONS
v.
Index No.:
MORGAN TEXAS REALTY LLC,
1080 Pittsford-Victor Road
ROBERT C. MORGAN,
1080 Pittsford-Victor Road
Defendants.
You are hereby summoned and required to serve upon plaintiff's attorney an answer to
the verified complaint in this action within twenty (20) days after the service of this summons,
exclusive of the day of service, or within thirty (30) days after service is complete if this
summons is not personally delivered to you within the State of New York, In case of your
failure to answer, judgment will be taken against you by default for the relief demanded in the
verified complaint.
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The basis of the venue designated is the principal place of business for the plaintiff which
is located in Monroe County at 1080 Pittsford-Victor Road, Pittsford, New York 14534.
By:
Joseph E. Zdarsky, Esq.
Patrick A. Dudley, Esq.
Attorneys for Plaintiff
1600 Main Place Tower
(716) 855-3200
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Plaintiff, VERIFIED
COMPLAINT
v.
Index No.:
Defendants.
LLP, as and for its verified complaint against the defendants, states and alleges as follows:
1. Plaintiff is and at all relevant times has been a New York limited liability
company having its principal office at 1080 Pittsford-Victor Road, Pittsford, New York 14534.
2. Defendant Morgan Texas Realty LLC is and at all relevant times has been a
New York limited liability company having its principal office at 1080 Pittsford-Victor Road,
3. Defendant Bayberrytree Apartments LLC is and at all relevant times has been
a Delaware limited liability company having its principal address at 1080 Pittsford-Victor Road,
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(" Atlas"
LLC ("Grand Atlas") at all times relevant was and still is a New York limited liability company
with an office and principal place of business in the County of Monroe and State of New York.
5. Defendant The Robert Morgan Limited Partnership III is and at all relevant
times has been a New York limited partnership having its principal place of business at
7. Plaintiff is and at all relevant times has been a member of defendant Morgan
8. The other members of defendant Morgan Texas Realty LLC are and at all relevant
times have been defendant The Robert Morgan Limited Partnership III (45% membership
9. Defendant Robert C. Morgan is and at all relevant times has been the manager of
10. Defendant Morgan Texas Realty LLC is and at all relevant times was the sole
member of certain limited liability companies that owned apartment complexes located in the
State of Texas known as the Stone Ridge Apartments, the University Green Apartments and the
Veranda Apartments, to wit: Morgan Stone Ridge Apartments, LLC; Morgan University Green
11. Plaintiff Herbert Morgan II LLC is and at all relevant times has been a member of
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12. The other members of defendant Bayberrytree Apartments LLC are and at all
relevant times have been defendant The Robert Morgan Limited Partnership III (45%
membership interest) and The RJM Fund LLC (30% membership interest).
13. Defendant Bayberrytree Apartments LLC at all relevant times was the owner of a
certain apartment complex located in the State of Texas known as the Bayberrytree Apartments.
14. Defendant Robert C. Morgan is and at all relevant times has been the manager of
15. The Stone Ridge Apartments, University Green Apartments, Veranda Apartments
Three"
and Bayberrytree Apartments are hereinafter referred to respectively as the "Texas and
"Bayberrytree".
16. At all times relevant defendant Grand Atlas acted as property manager for the
Texas Three and Bayberrytree pursuant to property management agreements with the entities
which owned the respective properties, and upon information and belief, its operations were
17. Defendants, according to their interests, caused the Texas Three and Bayberrytree
to be sold and the closing of said sales took place on or about March 1, 2018.
18. After paying the balance of the mortgage owing on Bayberrytree and other
expenses associated with the sale, defendant Bayberrytree received net proceeds from the sale in
19. After paying the balance of the combined mortgage owing on the Texas Three
and other expenses associated with the sale, defendant Morgan Texas Realty LLC received net
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20. Upon information and belief, defendants have caused distributions of the net sales
proceeds to be made to defendant The Robert Morgan Limited Partnership III or some other
entity under the dominion and control of defendant Robert C. Morgan, and to the RJM Fund
21. Defendants did not give any notice of the closings to Herbert Morgan, the
majority member and a manager of plaintiff, which had a 25% interest in the transactions.
22. Upon information and belief, the closings were concealed from Herbert Morgan
so that defendant Robert C. Morgan, individually and as manager of the other defendants, could
take control of the proceeds from the sales and distribute those proceeds in such a way so as to
23. Since learning of the closings, Herbert Morgan, on behalf of plaintiff, has made
repeated demands upon defendant Robert C. Morgan for information regarding plaintiff's share
24. However, despite repeated demands, defendants have failed and refused to
provide any information or make any distribution of the 25% share of the net sales proceeds
25. Upon information and belief, for its 45% interest in Bayberrytree Apartments
LLC and Morgan Texas Realty LLC, defendant The Robert Morgan Limited Partnership Ill has
26. Upon information and belief, for its 30% membership interest in Bayberrytree
Apartments LLC and Morgan Texas Realty LLC, the RJM Fund LLC has received the sum of
approximately $5,776,431.00.
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27. Plaintiff has received nothing and, upon information and belief, its 25% share of
the sales proceeds totaling approximately $4,813,692.00 has been diverted by defendants to
either defendant The Robert Morgan Limited Partnership III or some other entity or person under
28. Under the terms of the operating agreements for defendants Bayberrytree
Apartments, LLC and Morgan Texas Realty LLC, Section 18-504 of the Delaware Limited
Liability Company Act, and Section 504 of the New York Limited Liability Company Law,
distributions, if made, must be made on a pro rata basis according to the percentage of
29. Based upon the foregoing, for its 25% membership interest in defendant
Bayberrytree Apartments LLC and Morgan Texas Realty LLC, plaintiff Herbert Morgan II LLC
30. Upon information and belief, the defendant Robert C. Morgan, acting individually
and/or through defendant Grand Atlas, misappropriated the share of net sales proceeds payable to
plaintiff, and diverted the sum of $4,813,692.18 to defendant The Robert Morgan Limited
Partnership III, defendant Robert C. Morgan or some other entity or person under the dominion
31. Plaintiff repeats each and every allegation contained in paragraphs 1 through 30
32. Section 18-606 of the Delaware Limited Liability Company Act and Section 506
of the New York Limited Liability Company Law provide that, subject to certain provisions not
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applicable here, unless otherwise provided in the limited liability company agreement, at the
time a member becomes entitled to receive a distribution, the member has the status of, and is
entitled to all remedies available to, a creditor of the limited liability company with respect to the
distribution.
operation of the aforementioned statutes, plaintiff is and has been entitled to receive a
34. The operating agreement for Bayberrytree Apartments LLC does not contain
35. By virtue of the foregoing, defendant Morgan Texas Realty LLC is indebted to
(DEBTOR/CREDITOR)
36. Plaintiff repeats and realleges each and every allegation contained in paragraphs
37. Section 18-606 of the Delaware Limited Liability Company Act and Section 504
of the New York Limited Liability Act provide that, subject to certain provisions not applicable
here, unless otherwise provided in the limited liability company agreement, at the time a member
becomes entitled to receive a distribution, the member has the status of, and is entitled to all
remedies available to, a creditor of the limited liability company with respect to the distribution.
operation of the aforementioned statutes, plaintiff is and has been entitled to receive a
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39. The operating agreement for Bayberrytree Apartments LLC does not contain
41. Plaintiff repeats and realleges each and every allegation contained in paragraphs
42. As manager of Bayberrytree Apartments LLC and Morgan Texas Realty LLC,
defendant Robert C. Morgan owes fiduciary duties of loyalty, honesty, fidelity and fair dealing to
the other members of those companies, including plaintiff Herbert Morgan 11 LLC.
43. The operating agreements for Bayberrytree Apartments LLC and Morgan Texas
44. Moreover, the operating agreements for Bayberrytree Apartments LLC and
Morgan Texas Realty LLC provide at Section 5.6(f) that Robert C. Morgan, as manager, is liable
to other members of the companies for loss or damage incurred by reason of actions taken in bad
faith, intentional breach of the operating agreements or any other action taken by him in a
manner not reasonably believed by him to be within the scope of the authority granted to the
45. Defendant Robert C. Morgan's acts, in his capacity as manager, in causing the
companies to pay the sales proceeds distributions to two of the three members, including
diverting plaintiff's 25% share of the total distributions to some entity controlled by him, and
refusing to make any distribution to the plaintiff, were taken in bad faith, constitute an
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intentional breach of the operating agreements and were, upon information and belief, not
46. Moreover, the acts of defendant Robert C. Morgan were taken with the express
47. Upon information and belief, there is no legal justification for the disparate
treatment of plaintiff and refusal to pay plaintiff a distribution in the amount of its pro rata share
of the proceeds from the sales of the Bayberrytree Apartments and the Texas Three apartments.
defendants'
48. As a result of the breaches of fiduciary duty and of the operating
49. By virtue of the foregoing, defendant Robert C. Morgan is liable to plaintiff in the
sum of $4,813,692.00.
(CONVERSION)
50. Plaintiff repeats and realleges each and every allegations contained in paragraphs
51. Upon information and belief, following the sale of the properties, defendant
Grand Atlas, through its officers, agents, servants and employees, transferred the net proceeds of
52. Defendants Robert C. Morgan, Grand Atlas and The Robert M.organ Limited
Partnership 111 have unlawfully failed and refused to pay plaintiff its rightful 25% share of the
proceeds of the sales of the Texas Three and the Bayberrytree apartments.
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53. Upon information and belief, those defendants have diverted the distributions
owing to plaintiff to defendant The Robert Morgan Limited Partnership lll or some other entity
54. In so doing, defendants assumed dominion and control over property belonging to
the plaintiff by disposing of it, misusing it or otherwise dealing with it in a manner inconsistent
55. Based upon the foregoing, defendants Robert C. Morgan, Grand Atlas and
The Robert Morgan Limited Partnership III are liable, jointly and severally, to plaintiff for
56. Plaintiff repeats and realleges each and every allegation contained in paragraphs
57. At all relevant times, plaintiff has been ready, willing and able to perform, and
has performed, all duties and obligations owed under the operating agreements for Morgan Texas
Realty LLC and Bayberrytree Apartments LLC, including without limitation with respect to
58. The operating agreements for the companies provide that the sale or other
disposition of all of substantially all of the assets of each company shall be a dissolution event.
59. The sale of the subject apartment complexes was a sale or other disposition of all
of the assets of Morgan Texas Realty LLC and Bayberrytree Apartments LLC and was therefore
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60. The operating agreements for the companies provide that upon the occurrence of
a dissolution event, the companies shall continue solely for the purposes of winding up their
affairs and making distributions in accordance with the terms thereof, including without
61. The operating agreements for the companies provide that the manager Robert C.
Morgan shall be responsible for overseeing the winding up and liquidation of the companies and
63. Defendants have refused and continue to refuse to comply with the express
64. Plaintiff has no adequate remedy at law to enforce the provisions of the
terms and provisions of the operating agreements for Morgan Texas Realty LLC and
Bayberrytree Apartments LLC by decree of this Court ordering defendants to wind up the affairs
of the companies and pay distributions to the plaintiff in the amount of its 25% membership
66. Plaintiff repeats and realleges each and every allegation contained in paragraphs 1
10
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67. As manager of Bayberrytree Apartments LLC and Morgan Texas Realty LLC,
defendant Robert C. Morgan owes fiduciary duties of loyalty, honesty, fidelity and fair-dealing
to the other members of those companies, including plaintiff Herbert Morgan II LLC.
68. The operating agreements for Bayberrytree Apartments LLC and Morgan Texas
69. At all times relevant defendant Grand Atlas acted as property manager for
defendants Bayberrytree Apartments LLC and Morgan Texas Realty LLC pursuant to property
management agreements with those companies and, upon information and belief, its operations
70. Upon information and belief, following the sale of the properties, defendant
Grand Atlas, through its officers, agents, servants and employees, transferred the net proceeds of
71. Plaintiff has heretofore duly demanded of defendants Robert C. Morgan and
Grand Atlas that they account for their acts, undertaken by defendant Robert C. Morgan either
individually or through his control over defendant Grand Atlas, in collecting and dispersing the
proceeds of the sales of the Texas Three and Bayberrytree and that they pay over to plaintiff all
72. However, defendant Robert C. Morgan has failed and refused to do so and has
never rendered any accounting for the monies received and dispersed by him or as directed by
73. Upon information and belief, defendant Robert C. Morgan intends to use the
monies due and owing to the plaintiff for his own individual purposes and/or purposes of one or
more entities under his dominion and control, all in derogation of the rights of plaintiff.
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74. By reason of the foregoing, and pursuant to the fiduciary duties owed by
defendant Robert C. Morgan to the plaintiff, plaintiff is entitled to a full accounting from the
defendants for the monies received from the sales of the Texas Three and Bayberrytree, and
defendant Robert C. Morgan or such other defendant as is in possession of the monies due and
owing to the plaintiff holds the said monies as trustee of a constructive trust for the sole and
Robert C. Morgan, Grand Atlas Property Management LLC and The Morgan Limited
Partnership III, jointly and severally, in the sum of $4,813,692.00, with interest thereon;
performance and directing defendants Morgan Texas Realty LLC, Bayberrytree Apartments LLC
and Robert C. Morgan, jointly and severally, pay distributions to the plaintiff in the sum of
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defendants Robert C. Morgan and Grand Atlas provide a full accounting to plaintiff for all of the
monies received from the sales of the Texas Three and Bayberrytree apartments and declaring
and imposing a constructive trust upon $4,813,692.00 of those proceeds, with interest thereon,
being the amount of plaintiff's 25% interest therein, to be held by defendant Robert C. Morgan
or such other defendant or entity controlled by him that is in possession of the said funds for the
g. Granting such other and further relief as to the Court seems just and
proper.
By:
Joseph E. Zdarsky, Esq.
Patrick A. Dudley, Esq.
Attorneys for Plaintiff
1600 Main Place Tower
350 Main Street
(716) 855-3200
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V E R I F I C A T I O N
STATE OF PENNSYLVANIA )
) ss:
COUNTY OF YORK )
Herbert Morgan, being duly sworn, deposes and says that he is the general partner of the
managing member of Herbert Morgan II LLC, the plaintiff in this action, that he has read the
foregoing Verified Complaint and knows the contents thereof; that the same is true to his own
knowledge, except as to the matters therein stated to be alleged on information and belief and
that as to those matters he believes it to be true.
Deponent further says that the reason this verification is made by deponent and not by
Herbert Morgan II LLC is because Herbert Morgan II LLC is a limited liability company and the
grounds of deponent's belief as to all matters in the said Complaint not stated upon his own
knowledge, are investigations which deponent has caused to be made concerning the subject
matter of the Complaint and information acquired by deponent in the course of his duties as
general partner of the Manager of Herbert Morgan II LLC and from the books and papers of
Herbert Morgan II LLC.
'I
Herbert Morgan
(Notary ic)
COMMONWEALTH OF PENNSYLVANIA
NOTARIAL SEAL
DIANE Y. GROSS, Notary PubEc
York Twp., York County
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