MP Associates Suffolk v. Americana Petroleum
Justice Joseph Pastoressa
Plaintiffs, including 50 percent shareholder Dincsalman, sought a permanent injunction enjoining Americana Petroleum from taking any action to enforce an affidavit of confession of judgment (COJ) and an assignment and assumption of lease signed by Dincsalman. They also sought an order declaring the COJ and assignment null and void, arguing they were unenforceable for failing to comply with Business Corporation Law §909. Dincsalman signed the COJ and assignment as collateral to Americana for receiving gasoline at their station, as plaintiffs fell behind nearly $1 million in payments. The court noted §909 was enacted to protect minority shareholders from divestment of substantially all of a corporation's assets without their knowledge. It ruled §909 was inapplicable as both shareholders own an equal 50 percent, noting the COJ and assignment were executed as a security, and did not constitute asset transfers. Plaintiffs argued Dincsalman did not know what he was signing, and his partner, Kaatsiz, was unaware of the debt or the COJ and assignment. The court found such allegations "patently incredible," entirely rejecting the relief sought as meritless, and ruling the COJ and assignment were entitled to full force and effect.