Huebscher, as Litigation Trustee and Co-Liquidator v. Bialsky et al

1
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
-----------------------------------------------------------------x
In re:
Michael Maidan,
dba Grand Avenue Building II, LLC, 	Chapter 11
dba East End Ventures LLC,
dba 1907 Harrison Realty LLC, 	Case No.: 8-19-77027-LAS
dba 550 Metropolitan LLC,
dba 62 Grand Ave LLC
Debtor.
----------------------------------------------------------------x
ERIC HUEBSCHER, AS LITIGATION
TRUSTEE AND CO-LIQUIDATOR FOR
EAST END VENTURES, LLC, EAST END
VENTURES II LLC, AND EAST END
VENTURES III LLC, and ALEXANDER
TALEL, TEMPORARY ADMINISTRATOR
OF THE ESTATE OF EMIL TALEL, as
COLIQUIDATOR for EAST END VENTURES
LLC, EAST END VENTURES II LLC, and 	Adv. Proc. No. 8-23-08017-LAS
EAST END VENTURES III LLC,
Plaintiffs,
v.
JAY BIALSKY, SAG HARBOR
DEVELOPMENT HOLDINGS LLC, JAB SH
HOLDINGS LLC, AND JAB 2 WEST
WATER STREET LLC,
Defendants.
-------------------------------------------------------------------x
MEMORANDUM DECISION AND ORDER
ON CROSS MOTIONS FOR SUMMARY JUDGMENT
Before the Court are the cross-motions for summary judgment pursuant to Rule 56 of
the Federal Rules of Civil Procedure, made applicable by Rule 7056 of the Federal Rules of
Bankruptcy Procedure, filed by (i) Plaintiff Eric Huebscher (the “Trustee”), the litigation
trustee under the confirmed plan in the above-captioned chapter 11 case of Michael Maidan
(the “Debtor”) and court-appointed co-liquidator of East End Ventures LLC, East End
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

2
Ventures II LLC, and East End Ventures III LLC (collectively, “East End Ventures”), and
Intervening Plaintiff Alexander Talel (“Intervening Plaintiff” and, together with the Trustee,
“Plaintiffs”) as administrator of the estate of Emil Talel and co-liquidator of East End
Ventures [Dkt. No. 80] 1, and (ii) Defendants Jay Bialsky (“Bialsky), Sag Harbor Development
Holdings LLC (“Sag Harbor” or the “Company”), JAB SH Holdings LLC (“JAB SH”), and JAB
2 West Water Street LLC (“JAB 2 West Water”) (together with Bialsky, Sag Harbor, and JAB
SH, “Defendants”) [Dkt. No. 92].
BACKGROUND2
I. 	SAG HARBOR REAL ESTATE DEVELOPMENT PROJECT
Debtor was a real estate developer who did business as the sole member or owner of,
or held financial interests in, several limited liability companies, including East End
Ventures.3 [Dkt. No. 75 at 3.] Debtor owned 50% of the membership interests of East End
Ventures; the other 50% was held by the estate of Emil Talel, represented by its
administrator, Alexander Talel, as successor executor to former executor Bernard Jaffe. [Id.]
Defendant Bialsky has been in the business of buying, selling, and developing real estate in
the Hamptons and surrounding area since 1994. [Id.] Bialsky’s construction company,
Chateau Construction, LLC (“Chateau”), has constructed over thirty high-end residential
homes and commercial properties during this period. [Id.]
1 Unless otherwise stated, citations to docket entries in the adversary proceeding Huebscher, et al. v.
Bialsky, et al., Case No. 8-23-08017-las, are cited as “[Dkt. No. ___]”, and citations to docket entries in
the Chapter 11 bankruptcy case In re Michael Maidan, Case No. 8-19-77027-las, are cited as “[Bankr.
Dkt. No. ___]”.
2 The material facts are either uncontested, not the subject of genuine dispute, or subject to judicial
notice by this Court. Additionally, the relevant background is detailed in this Court’s prior decision
denying Plaintiffs’ request for an order of attachment and are important to understanding the context
for this adversary proceeding. [See Dkt. No. 75 at 3-7.]
3 East End Ventures is currently in dissolution, and the Trustee and Intervening Plaintiff have been
duly appointed by this Court as co-liquidators to liquidate and distribute the assets of East End
Ventures. [Id. at 3 n.3.]
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

3
East End Ventures and Defendant JAB SH4 are members of Sag Harbor—a real estate
venture established for the purpose of developing residential properties in the Village of Sag
Harbor (the “Village”). [Id.] The properties in the Village consist of four adjoining waterfront
parcels—three parcels on Ferry Road (“Ferry Road”) and one parcel on West Water Street (“2
West Water Street”).5 [Id.] Sag Harbor, East End Ventures, and JAB SH entered into the
Amended and Restated Limited Liability Company Operating Agreement of Sag Harbor
Development Holdings LLC (the “Sag Harbor Operating Agreement” or “SHOA”) on April 19,
2018. [Id.] Debtor and Emil Talel, through their shared ownership of East End Ventures,
held a 40% interest in Sag Harbor; Bialsky held the remaining 60% interest in Sag Harbor.
[Id. at 4.] Section 4.1 of the Sag Harbor Operating Agreement establishes Bialsky as the
Manager of the Company, and Section 4.2 sets forth the powers of the Manager. [Id.; see also
SHOA §§ 4.1, 4.2.] Section 6.3 sets out the Members’ capital accounts, listing Bialsky’s initial
capital contribution at $6,480,847.56. [See SHOA § 6.3.] Bialsky made at least one more
contribution of $500,000 on February 27, 2023. [Dkt. No. 75 at 19 n.14.] Section 7.3 governs
distributions to Members of the Company and sets forth a waterfall of payments in
connection therewith. [See SHOA § 7.3.] Section 7.8 and corresponding Exhibit B set forth
two buyout options—Option A and Option B—that the Manager may elect to exercise. [See
SHOA § 7.8.]
The real estate development project (the “Sag Harbor Project”) involves the sale and
construction of three properties.6 Compl. ¶ 35. The first, “Unit A,” was intended to be used as
Bialsky’s family residence. [Id.; Dkt. No. 51 at 16]. Construction on Unit A concluded on
4 Bialsky formed JAB SH, a single member LLC solely owned by him, for the purpose of taking
ownership of his interest in Sag Harbor. [Id. at 3 n.4.]
5 Defendant JAB 2 West Water is the wholly owned subsidiary of Sag Harbor and the title holder of
the 2 West Water Street property. [Id. at 3 n.5.]
6 The Sag Harbor Operating Agreement refers to these properties as Units “1, 2, and 3,” which were
later changed to Units “A, B, and C” in the Complaint. [See SHOA Ex. B; Compl. ¶ 35.]
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

4
March 9, 2023, and on April 14, 2023, Bialsky purchased and took title to Unit A by way of
deed from JAB 2 West Water. [Dkt. No. 51 at 16-17.] The second, “Unit B,” was initially listed
at a sale price of over $24 million7 on or about August of 2019, and it has not yet been sold.
[Dkt. No. 80 at 16; Dkt No. 92 at 16-17; Aug. 22 Hr’g Tr. 21:16.] Lastly, Michael Hirtenstein
purchased “Unit C” in July of 2021 for $15,003,789. [Compl. ¶ 35; see also Dkt. No. 51 at 15.]
Unit C was unfinished when Hirtenstein purchased it––he assumed responsibility for all
interior work, including but not limited to plumbing, electrical, flooring, HVAC, and drywall
installations. [See Dkt. No. 51 at 16]. JAB 2 West Water remained responsible for certain
exterior work, and escrows totaling over $750,000 were held pending completion of other
post-closing work. [Id.] Outstanding issues remain with the owner of “Unit C.” [Dkt. No. 99
at 36-38; Dkt. No. 92 at 40; D. SOF at 23-24; Aug. 22 Hr’g Tr. 21:16-17.]
II. 	DEBTOR’S CHAPTER 11 CASE
On October 11, 2019, Debtor filed a voluntary petition pursuant to chapter 11 of the
Bankruptcy Code.8 [See Dkt. No. 75 at 4; see also Bankr. Dkt. No. 1.] Debtor filed an amended
disclosure statement (the “Amended Disclosure Statement”) and plan (the “Amended Plan”)
on January 14, 2021. [See Dkt. No. 75 at 4; see also Bankr. Dkt. No. 135, 136.] The Court
entered an order confirming the Amended Plan (the “Confirmation Order”) on March 17,
2021. [See Dkt. No. 75 at 4; see also Bankr. Dkt. No. 149.]
The Amended Plan, among other things, (i) establishes a litigation trust (the
“Litigation Trust”) for the benefit of the holders of Class 4 (General Unsecured) Claims, (ii)
7 Plaintiffs’ Complaint states that Unit B’s listing price was $24,950,000. Compl. ¶ 35. In their
opposition to Plaintiffs’ motion for attachment and motion for summary judgment, Defendants state
the listing price was $24,995,000. [Dkt. No. 51 at 25; Dkt. No. 92 at 17]. Plaintiffs have the listing price
as $24,500,000 in their motion for summary judgment. [Dkt. No. 80 at 25 n.23.]
8 All statutory references to sections of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq.,
will hereinafter be referred to as “§ (section number).”
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

5
provides for the vesting of the Debtor’s Causes of Action (as defined in the Amended Plan) in
the Litigation Trust as of the Effective Date, (iii) provides that the Trustee of the Litigation
Trust has absolute discretion to determine whether to bring, settle, release, compromise or
enforce such Causes of Action, and (iv) provides that the Trustee has the authority to pursue
such litigation claims in accordance with the best interests of the Litigation Trust. [Dkt. No.
75 at 4; see also Bankr. Dkt. No. 136, Art. XI, 11.1.] The Confirmation Order approved the
retention of the Trustee as the Litigation Trustee of the Litigation Trust. [Dkt. No. 75 at 4;
see also Bankr. Dkt. No. 149 ¶ 4.] The Effective Date under the Amended Plan occurred on
or around March 18, 2021. [Dkt. No. 75 at 5; see also Bankr. Dkt. No. 136, Art. I, 1.26.]
On May 19, 2021, the Court entered an order modifying Debtor’s Amended Plan
pursuant to 11 U.S.C. § 1127(b), which appointed the Trustee (i) as the Distribution Agent
and the Disbursing Agent for Class 4 (General Unsecured) Claims and (ii) the Debtor’s sole
administrator and representative of the Debtor’s estate pursuant to Section 1.6 of the
Litigation Trust Agreement with respect to all assets to be sold or liquidated pursuant to the
Plan. [Dkt. No. 75 at 5; see also Bankr. Dkt. No. 166.]
III. 	THE ADVERSARY PROCEEDING
The Trustee commenced this adversary proceeding on March 8, 2023. [Dkt. No. 75; see
also Dkt. No. 1 (“Compl.”).] In the Complaint, the Trustee brings eight causes of action: 1) a
demand for an accounting (“Count One”); 2) an equitable accounting claim (“Count Two”); 3)
a claim for breach of contract in connection with the refusal to permit review of the Company’s
books and records (“Count Three”); 4) a claim seeking turnover of unpaid distributions or
other amounts owing to the members or liquidators of East End Ventures (“Count Four”); 5)
a claim seeking turnover of the Buyout Payment (as defined herein) to the members of East
End Ventures (“Count Five”); 6) a claim for breach of contract in connection with the failure
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

6
to pay the Buyout Payment and improper distributions made from the Company to Bialsky
(“Count Six”); 7) a claim for breach of fiduciary duty (“Count Seven”); and 8) a claim seeking
entry of a declaratory judgment (“Count Eight”). [See generally Dkt. No. 1.] Defendants filed
their answer to the Complaint on May 23, 2023. [Dkt. No. 14.]
IV. 	TRUSTEE’S MOTION SEEKING ORDER OF ATTACHMENT
On November 7, 2023, the Trustee filed a motion seeking entry of an order of
attachment, along with accompanying Huebscher Declaration, in the above-captioned
adversary proceeding. [See Dkt. No. 75 at 6; see also Dkt. Nos. 48, 49.] In the motion, the
Trustee alleged, inter alia, that Bialsky divested the Company of funds for his “personal
benefit” in making certain challenged distributions to himself and that Bialsky has “failed to
provide a sufficient accounting” of these transactions. [Dkt. No. 75 at 6.] The Trustee sought
to prevent Bialsky from rendering himself, as well as the entities he controls, judgment-proof
before the Court rules on Defendants’ liability in this action. [Id.] As such, the Trustee sought
entry of an order of attachment under New York law. [Id.] The Trustee filed corrected exhibits
to the Huebscher Declaration on November 9, 2023. [Id.; see also Dkt. No. 50.]
On November 21, 2023, Defendants filed their opposition, along with accompanying
declarations and exhibits. [Dkt. No. 75 at 6; see also Dkt. No. 51.] The Trustee filed a reply,
as well as the Wickouski Declaration, on November 27, 2023. [Dkt. No. 75 at 6; see also Dkt.
Nos. 52, 53.] Intervening Plaintiff filed a joinder to the motion on November 29, 2023. [Dkt.
No. 75 at 6; see also Dkt. No. 54.]
The Court held a hearing on November 30, 2023, at which the Court inquired whether
the parties intended to request an evidentiary hearing in connection with the motion. [Dkt.
No. 75 at 6; Nov. 30 Hr’g Tr. at 48:22-51:24.] The parties submitted letters in response to the
Court’s inquiry. [Dkt. No. 75 at 6-7; see also Dkt. Nos. 55, 56.] The Court entered an order
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

7
scheduling an evidentiary hearing, which was held on December 11, 2023. [Dkt. No. 75 at 7;
see also Dkt. No. 58.] On February 1, 2024, the Court issued a decision denying the motion.
[See generally Dkt. No. 75.]
V. 	SUMMARY JUDGMENT BRIEFING
On February 22, 2024, the Court entered an order scheduling the parties’ summary
judgment briefing schedule. [Dkt. No. 78.] On March 18, 2024, Plaintiffs filed their motion
for summary judgment (“PMSJ”) [Dkt. No. 80], along with accompanying Statement of Facts
(“P. SOF”) [Dkt. No. 81], Feener Declaration [Dkt. No. 82]9, and Huebscher Declaration [Dkt.
No. 83].10 Plaintiffs move for summary judgment on Counts One, Two, Four, Five, Six, and
Eight.
On April 18, 2024, Defendants filed their motion for summary judgment and
opposition to Plaintiffs’ MSJ (“DMSJ”), along with their Statement of Facts (“D. SOF”),
Response to Plaintiffs Statement of Facts (“D. Resp. to P. SOF”), and other accompanying
materials [Dkt. No. 92].11 Defendants move for summary judgment on all counts in the
9 On March 19, 2024, Plaintiffs filed a motion to redact the Feener Declaration. [Dkt. No. 85.] The
Court entered an order granting the motion on March 22, 2024. [Dkt. No. 87.] Plaintiff filed corrected
exhibits to the Feener Declaration on April 4, 2024 [Dkt. No. 90], as well as a redacted Feener
Declaration on April 8, 2024 [Dkt. No. 91].
10 On March 18, 2024, Plaintiffs filed a Motion for Preclusion and to Exclude Evidence, seeking an
order (i) precluding Defendants from introducing or relying on their alternative “Exhibit B” at
summary judgment and trial and (ii) prohibiting Defendants from introducing any evidence to support
any cost allocation of the Sag Harbor development or any calculation of what is owed to Bialsky or
Plaintiffs. [Dkt. No. 84.] On March 21, 2024, Defendants filed a letter requesting that the return date
and briefing schedule in connection with Plaintiffs’ motion correlate with the schedule for the parties’
summary judgment motions. [Dkt. No. 86.] On April 1, 2024, the Court entered a scheduling order in
connection with the preclusion motion. [Dkt. No. 88.] On April 18, 2024, Defendants filed a cross-
motion to preclude the Trustee’s summary of cost analysis evidence, as well as their opposition to
Plaintiff’s preclusion motion. [Dkt. No. 93]. On May 9, 2024, Plaintiffs filed their reply in support of
their preclusion motion, as well as their opposition to Defendants’ cross-motion. [Dkt. No. 98.] On
August 20, 2024, the Court so-ordered a stipulation resolving the parties’ cross-motions for preclusion.
[Dkt. No. 102.]
11 The parties adequately cite to the record in their respective statements of fact. See generally P. SOF;
D. SOF. Defendants have done the same in responding to Plaintiffs’ Statement of Facts. See generally
D. Resp. to P. SOF. Plaintiffs, however, repeatedly object to certain material facts stated by the
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

8
Complaint. On May 9, 2024, Plaintiffs filed their opposition to Defendants’ motion and reply
in support of their motion (“P. Opp.”) [Dkt. No. 97], as well as their response to Defendants’
Statement of Facts (“P. Resp. to D. SOF”) [Dkt. No. 99]. On May 24, 2024, Defendants filed
their reply in support of their motion for summary judgment (“D. Reply”) [Dkt. No. 100.] The
Court held a hearing on the cross-motions for summary judgment on August 22, 2024 (the
“August 22 Hearing”).
As discussed infra Discussion Section I.C., the heart of this dispute is the parties’
differing interpretations of key provisions of the Sag Harbor Operating Agreement. For the
reasons set forth below, the Court concludes as follows: (i) as to Count Six, Defendants’
motion is granted and Plaintiffs’ motion is denied; (ii) as to Count Eight, Defendants’ motion
is granted and Plaintiffs’ motion is denied; (iii) as to Counts Four and Five, Defendants’
motion is granted and Plaintiffs’ motion is denied; (iv) as to Counts One and Two, Defendants’
Defendants without citing to the record whatsoever. See, e.g., P. Resp. to D. SOF at 25. Additionally,
Plaintiffs did not respond to Defendants’ statement of additional material facts not in dispute. As this
Court has stated, “[a] mere denial by [a party] without citation to admissible evidence in the record is
insufficient” on a motion for summary judgment. Ethelberth v. Omogun (In re Omogun), No. 16-75566-
las, Adv. No. 17-08023-las, 2022 WL 2517160, at *1 (Bankr. E.D.N.Y. July 6, 2022) (citation omitted).
Rule 7056-1(c) of the Local Bankruptcy Rules for the U.S. Bankruptcy Court for the Eastern District
of New York provides as follows: “All material facts set forth in the statement required to be served by
the moving party will be deemed to be admitted by the opposing party unless controverted by the
statement required to be served by the opposing party. Each statement of material fact by a movant
or opponent must be followed by citation to evidence which would be admissible, set forth as required
by Federal Rule of Civil Procedure 56(c).” “Where the party opposing a motion for summary judgment
fails to submit a proper counterstatement of material facts, controverting the moving party's
statement, courts have deemed the moving party's statement of facts to be admitted and have granted
summary judgment in favor of the moving party on the basis of the uncontroverted facts.” Aptive Env’t,
LLC v. Vill. of East Rockaway, N.Y., 19-CV-3365, 2020 WL 9211148, at *4 (E.D.N.Y. Dec. 23, 2020)
(citation omitted). However, the Court has “broad discretion to determine whether to overlook a party’s
failure to comply with local court rules.” Omogun, 2022 WL 2517160, at *8 (quoting Hotlz v. Rockefeller
& Co., 258 F.3d 62, 73 (2d Cir. 2001)). Where material facts in a party’s statement go uncontested,
either in part or in full, they are not automatically accepted—they may be disregarded and the record
independently reviewed if not properly supported with appropriate citations. See Giannullo v. City of
N.Y., 322 F.3d 139, 140 (2d Cir. 2003). Here, the Court has opted to independently review the record
in reaching its decision.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

9
motion is granted and Plaintiffs’ motion is denied; and (v) as to Counts Three and Seven,
Defendants’ motion is granted.
LEGAL STANDARD
Under Rule 56 of the Federal Rules of Civil Procedure, made applicable to this
adversary proceeding by Bankruptcy Rule 7056, summary judgment may not be granted
unless the movant shows, based on admissible evidence in the record placed before the court,
“that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S.
317, 322-23 (1986) (“[S]ummary judgment is proper ‘if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party is entitled to judgment
as a matter of law.’”) (quoting former Fed. R. Civ. P. 56(c)). A fact is considered material if it
“might affect the outcome of the suit under the governing law,” and a genuine dispute exists
where “the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party bears the burden of demonstrating the absence of a genuine dispute
as to any material fact. Celotex, 477 U.S. at 322-23. The evidence on each material element
of its claim or defense must be sufficient to entitle the moving party to relief in its favor as a
matter of law. Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004).
If the movant meets its initial burden, the nonmoving party “must come forward with
‘specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co.
Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting former Fed. R. Civ. P. 56)
(emphasis omitted). “[M]ere speculation or conjecture as to the true nature of facts” will not
suffice. Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010). Thus, to meet its burden, the
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

10
nonmoving party must offer more than a “scintilla of evidence” that a genuine dispute of
material fact exists, Anderson, 477 U.S. at 252, or that there is some “metaphysical doubt as
to the material facts.” Matsushita, 475 U.S. at 586. It must present “significant probative
evidence” that a genuine issue of fact exists. Anderson, 477 U.S. at 249 (internal citations
and quotations marks omitted). In addition, “[o]nly admissible evidence need be considered
by the trial court in ruling on a motion for summary judgment.” Porter v. Quarantillo, 722 F.
3d 94, 97 (2d Cir. 2013) (internal quotation marks and citation omitted).
On a motion for summary judgment, the court must “construe all evidence in the light
most favorable to the nonmoving party, drawing all inferences and resolving all ambiguities
in its favor.” Dickerson v. Napolitano, 604 F.3d 732, 740 (2d Cir. 2010). The Court’s job is “not
to weigh the evidence or resolve issues of fact.” Lucente v. Int’l Bus. Machs. Corp., 310 F.3d
243, 254 (2d Cir. 2002). “Assessments of credibility and choices between conflicting versions
of the events are matters for the jury, not for the court on summary judgment.” Jeffreys v.
N.Y.C., 426 F.3d 549, 553 (2d Cir. 2005) (citation omitted). A court should grant the motion
if “the record taken as a whole could not lead a rational trier of fact to find for the non-moving
party, there [being] no genuine issue for trial.” Matsushita, 475 U.S. at 587 (internal
quotation marks omitted).
“When deciding cross-motions for summary judgment, the standard to be applied ‘is
the same as that for individual summary judgment motions and a court must consider each
motion independent of the other.’” Hallingby v. Hallingby, 693 F. Supp. 2d 360, 364 (S.D.N.Y.
2010) (quoting Schultz v. Stoner, 308 F.Supp.2d 289, 298 (S.D.N.Y. 2004)), aff'd, 453 F. App'x
121 (2d Cir. 2012) (summary order). “[E]ach party’s motion must be examined on its own
merits, and in each case all reasonable inferences must be drawn against the party whose
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

11
motion is under consideration.” Morales v. Quintel Ent., Inc., 249 F.3d 115, 121 (2d Cir. 2001)
(citation omitted).
JURISDICTION
The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §
1334(b) and the Standing Order of Reference of the United States District Court for the
Eastern District of New York, dated August 28, 1986 (Weinstein, C.J.), as amended by Order
dated December 5, 2012 (Amon, C.J.) entered in accordance with 28 U.S.C. § 157(a).
DISCUSSION
I. 	COUNT SIX
In Count Six, Plaintiffs seek damages for breach of the Sag Harbor Operating
Agreement. Compl. ¶¶ 104-14. Count Six is brought against the Company, Bialsky, and JAB
SH. See id. Plaintiffs and Defendants now cross-move for summary judgment in their favor
on Count Six.
A. Legal Standard
To state a claim for breach of contract under New York law, a plaintiff must show “(1)
the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3)
breach of the contract by the defendant, and (4) damages.” New York City Transit Auth. v.
Express Scripts, Inc., 588 F. Supp. 3d 424, 434 (S.D.N.Y. 2022) (quoting Harsco Corp. v. Segui,
91 F.3d 337, 348 (2d Cir. 1996)), reconsideration denied, No. 19-CV-5196 (JMF), 2022 WL
3577426 (S.D.N.Y. Aug. 19, 2022), objections overruled, No. 19-CV-5196 (JMF), 2022 WL
20056027 (S.D.N.Y. Oct. 12, 2022). The plaintiff must also “identify what provisions of the
contract were breached as a result of the acts at issue.” Id. (quoting Chefs Diet Acquisition
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

12
Corp. v. Lean Chefs, LLC, No. 14-CV-8467 (JMF), 2016 WL 5416498, at *8 (S.D.N.Y. Sept.
28, 2016)).
Generally, a court may grant summary judgment “only when the contractual language
on which the moving party's case rests is found to be wholly unambiguous and to convey a
definite meaning.” Id. (quoting Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir.
2008)); see also Postlewaite v. McGraw-Hill, Inc., 411 F.3d 63, 67 (2d Cir. 2005) (citation
omitted) (explaining that “when the meaning of the contract is ambiguous and the intent of
the parties becomes a matter of inquiry, a question of fact is presented which cannot be
resolved on a motion for summary judgment”). “A contract is ambiguous if its language is
‘capable of more than one meaning when viewed objectively by a reasonably intelligent
person who has examined the context of the entire integrated agreement.’” Express Scripts,
Inc., 588 F. Supp. 3d at 434 (quoting Sayers v. Rochester Tel. Corp. Supplemental Mgmt.
Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993)); see also Topps Co., 526 F.3d at 68 (citation
omitted) (“Ambiguity here is defined in terms of whether a reasonably intelligent person
viewing the contract objectively could interpret the language in more than one way.”).
“Conversely, ‘a contract is unambiguous if the language it uses has a definite and precise
meaning, as to which there is no reasonable basis for a difference of opinion.’” Express Scripts,
Inc., 588 F. Supp. 3d at 434 (quoting Lockheed Martin Corp. v. Retail Holdings, N.V., 639
F.3d 63, 69 (2d Cir. 2011)). “Whether contract language is ambiguous is a question of law
that is resolved by reference to the contract alone.” Id. (quoting O'Neil v. Ret. Plan for
Salaried Emps. of RKO Gen., Inc., 37 F.3d 55, 58-59 (2d Cir. 1994)).
Several courts in this Circuit have acknowledged that, “[a]lthough a determination
that a contract is ambiguous ordinarily requires denial of summary judgment, the court may
nonetheless grant summary judgment where the extrinsic evidence illuminating the parties'
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

13
intended meaning of the contract is so one-sided that no reasonable person could decide to
the contrary.” E.g., Mindspirit, LLC v. Evalueserve Ltd., 346 F. Supp. 3d 552, 574–75
(S.D.N.Y. 2018) (quoting New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d
102, 115 (2d Cir. 2010)). “Similarly, summary judgment may be granted despite any
ambiguities in the contract where there is no extrinsic evidence that would support a
resolution of the ambiguities in favor of the nonmoving party's case.” Id. (citation omitted);
see also Topps Co., 526 F.3d at 68 (citation omitted) (“To the extent the moving party's case
hinges on ambiguous contract language, summary judgment may be granted only if the
ambiguities may be resolved through extrinsic evidence that is itself capable of only one
interpretation, or where there is no extrinsic evidence that would support a resolution of
these ambiguities in favor of the nonmoving party's case.”).
B. 	Provisions of the Sag Harbor Operating Agreement
1. 	Management of the Company
Article IV of the Sag Harbor Operating Agreement concerns the management of the
Company. Section 4.1 provides that “[m]anagement of the Company shall be vested in its
Member, Jay Bialsky” and defines Bialsky as the Manager. SHOA § 4.1.
Section 4.2 provides as follows:
The business, affairs and assets of the Company shall be managed, arranged
and caused to be coordinated by the Manager, who shall have, except as
otherwise provided in this Agreement, full, exclusive and complete discretion
with respect thereto. Subject to and in accordance with the provisions of this
Agreement, the Manager shall have all necessary and appropriate powers to
carry out the purposes of the Company set forth in Section 2.6. Except as
otherwise provided in this Agreement, the Manager shall have the unilateral
power and authority acting in good faith to make and implement all decisions
with respect to all matters which the Company has the authority to perform[.]
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

14
SHOA § 4.2. Section 4.2 further enumerates certain powers of the Manager, including, among
others, “the power to . . . deposit, withdraw, invest, pay, retain and distribute the Company’s
funds in a manner consistent with the provisions of this Agreement[.]” SHOA § 4.2(ix).
2. 	Distributions
Article VII of the Sag Harbor Operating Agreement concerns “Allocations and
Distributions.” Section 1.1(f) defines “Distribution” as “any cash and other property paid to a
Member by the Company from the operations of the Company.” SHOA § 1.1(f).
Section 7.3, titled “Distributions,” provides that “[t]he Manager may from time to
time, in the discretion of the Manager, make Distributions to the Members.” SHOA § 7.3.
Section 7.3 further requires that “[a]ll Distributions shall be made to the Members in the
following order or priority”:
First: to pay Manager Thirty-Five percent (35%) of the net proceeds of the sale
of the Ferry Road lot to the Town of Southampton, but only after payment of
65% of such net proceeds to Mid First Bank;
Second: to pay all interest, principal and other sums payable with respect to
the balance of loans for acquisition and construction financing made to the
subsidiaries of the Company;
Third: 	Twelve 	percent 	(12%) 	preferred 	distribution 	on 	all 	Capital
Contributions12 and guaranteed loans by JAB SH HOLDINGS LLC or Jay
Bialsky which shall include the initial loan of Seven Hundred Fifty Thousand
Dollars ($750,000) of which Two Hundred Fifty Thousand Dollars ($250,000)
has been advanced by the date hereof;
Fourth: to pay the Capital Contribution by JAB SH HOLDINGS LLC to the
Company; and
Fifth: to each Member in proportion to such Member's Membership Interest.
SHOA § 7.3.
12 Section 1.1(c) defines “Capital Contribution” as “any contribution by a Member to the capital of the
Company in cash, property, or services rendered.” SHOA § 1.1(c).
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

15
Section 7.4, titled “Offset,” provides that “[t]he Company may offset all amounts owing
to the Company by a Member against any Distribution to be made by such Member.” SHOA
§ 7.4.
Section 	7.5, 	titled 	“Limitations 	Upon 	Distributions,” 	provides 	as 	follows: 	“No
Distribution shall be declared and paid unless, after such Distribution is made, the assets of
the Company are in excess of all liabilities of the Company.” SHOA § 7.5.
3. 	“Member Buyout Options” in Section 7.8 and Exhibit B
Section 7.8 of the Sag Harbor Operating Agreement, titled “Buyout,” provides as
follows: “At any time after the date hereof, Manager shall have the buyout options as set
forth on Exhibit B attached hereto and made a part hereof.” SHOA § 7.8.
Exhibit B, titled “2 West Water Street, Sag Harbor – Member Buyout Options,” sets
forth the following:
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

16
C. Summary of the Parties’ Arguments
Plaintiffs argue that Defendants breached the Sag Harbor Operating Agreement by i)
failing to pay the Buyout Payment (as defined below) to East End Ventures, and ii) making
allegedly improper distributions to Bialsky from the Company.
1. 	Buyout Payment
The parties’ conflicting interpretations of provisions relevant to the Buyout Payment
stems, in part, from differing views of what the “buyout” under the agreement is, more
broadly. Plaintiffs read the buyout provisions as setting forth the amount due to East End
Ventures in exchange for their membership interests in the Company. See PMSJ at 12, 14;
P. Opp. at 3. Defendants, however, read the “buyout” provisions as referring to a potential
buyout of 2 West Water Street—not the buyout of East End Ventures’ membership interests.
See DMSJ at 2, 22, 25-28; D. Reply at 2-3.
For their part, Plaintiffs maintain that Bialsky elected Option A under Exhibit B to
the operating agreement on July 24, 2019, and East End Ventures is thus entitled to the
“Buyout Payment”—a term coined by Plaintiffs that is not expressly defined in the
agreement. See PMSJ at 11-12 (arguing that Option A was “irrevocably elected . . . in
connection with the closing of the sale of Ferry Road to the town of Southampton and the
approval by the town of the plan to construct the Sag Harbor Project as three units”); see also
id. at 4 (defining “Buyout Payment”). Under Plaintiffs’ reading of the agreement, Exhibit B
sets forth a formula, which provides that East End Ventures is entitled to “(i) the land value
of Unit A (which, in the operative Exhibit B to the Sag Harbor Operating Agreement, is
$5,400,000), plus (ii) 45% of the ‘profit of constructed units’—i.e., Units B and C.” See id. at
12-13; P. Opp. at 4 (“The Buyout Payment is calculated according to the formula in Exhibit
B: in essence, the land value of Unit A plus 45% of the net profits on Units B and C after land
value and construction costs.”). Plaintiffs further maintain that, “[b]ecause the Unit C sale
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

17
closed over two years ago, the portion of the Buyout Payment attributable to the profits on
Unit C, in addition to the land value of Unit A, are presently due and owing.” PMSJ at 13.
Defendants respond that Bialsky did not elect Option A until April 14, 2023, when he
purchased and took possession of Unit A. See DMSJ at 16, 32-33. Defendants read Section
7.8 and Exhibit B to provide as follows:
To purchase Unit [A], Bialsky would pay Sag Harbor $5.4 million13, which is
equal to 60% of the agreed $9 million land book value of the entire property,
with the land for the other two units, referred to as Units [B] and [C], each
comprising 20% of the property and valued at $1.8 million each (excluding soft
costs). . . . Units [B] and [C] would be constructed and placed on the market.
The Members would divide the net profits from the sale of Units [B] and [C]
with JAB SH receiving 55% and East End Ventures receiving 45%.
Id. at 25. Under Defendants’ reading, neither Option A nor Option B “contemplates or
otherwise requires Bialsky or JAB SH to buy out the membership interests of East End
Ventures or otherwise pay East End Ventures anything.” Id. (emphasis in original). Rather,
the only payment that Bialsky is required to make is to the Company, not East End Ventures,
in the event he decided to purchase Unit [A], as “Option A says nothing about Bialsky (or
JAB SH) tendering payment of the purchase price to East End Ventures.” Id.; see also Aug.
22 Hr’g Tr. at 22:10-24 (wherein counsel for Defendants argues that the purchase price
“cannot possibly be construed as a payment to East End Ventures because Unit-A is not
owned by East End Ventures” and the split of profits does not contemplate “payment from
one member to another”). Defendants argue that East End Ventures is only to receive the
13 Defendants maintain that the purchase price for the land for Unit A was properly adjusted from
$5.4 million to $3.69 million due to changes in the building foundation plan ultimately approved by
the town. See DMSJ at 33-36. This is reflected in what Defendants refer to as “New Exhibit B,” which
was never signed by anyone associated with the Maidan or Talel estates. See id.; see also PMSJ at 6-
7, 17. In their summary judgment briefing, Plaintiffs contended that Defendants’ reliance on “New
Exhibit B”—an inoperative amendment to Exhibit B of the Sag Harbor Operating Agreement—was
improper. See id.; see also P. Opp. at 7. Defendants respond that “New Exhibit B” was offered not
because they contend it amended and replaced the current Exhibit B, but as parol evidence of the
parties’ understanding concerning the intent of the original Exhibit B. See DMSJ at 35. “New Exhibit
B” was not considered by the Court in reaching its decision.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

18
amount payable from the Company’s net profits from the sale of Units B and C. See DMSJ at
25-26. Defendants also argue that Plaintiffs fail to identify any clause requiring Bialsky to
distribute interim net profits after the sale of Unit B, id. at 30, and that the breach of contract
claim is premature because any recoverable damages would be contingent on the sale of Unit
B and the final resolution of the issues concerning Unit C—neither of which have occurred.
Id. at 40-42.
The parties also disagree about the relationship between the provisions in Section 7.8
and Exhibit B, and the waterfall provisions set forth in Section 7.3. In sum, Plaintiffs
maintain that Sections 7.3 and 7.8 are mutually exclusive: Section 7.3 governs distributions
to members of the Company, and the Buyout Payment is not a “distribution” subject to the
waterfall. See PMSJ at 13-16; P. Opp. at 2-3; see also Aug. 22 Hr’g Tr. at 10:11-11:3 (arguing
that “the buyout is a fundamentally different transaction than a distribution by the manager
on behalf of the LLC from profits of the LLC”). Defendants, however, do not interpret the
waterfall in Section 7.3 to be overridden by Section 7.8. Defendants cite Section 7.1, which
provides that “Net Profit”—a defined term in the agreement that appears in Exhibit B14—is
allocated “after the application of Section 7.3.” See DMSJ at 31. Defendants also read Section
3.7—“Priority and Return of Capital”—to clarify that the order of priority of Distributions in
the waterfall takes priority over any Member’s right to claim priority over any other Member
with respect to Net Profits. Id.
14 Plaintiffs dispute this contention. See Aug. 22 Hr’g Tr. at 11:4-14 (wherein counsel for Trustee argues
that the buyout provisions in Exhibit B do not use the term “Net Profits” as defined in Section 1.1(m)
of the Sag Harbor Operating Agreement, as the term is not capitalized in the exhibit); see also P. Opp.
at 5 n.11.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

19
2. 	Distributions
Plaintiffs 	allege 	that 	Bialsky 	took 	$10,410,784.96 	in 	purportedly 	improper
distributions over the period February 2019 through April 23, 2023. See PMSJ at 18.
Plaintiffs maintain that these distributions were improper for several reasons. First,
Plaintiffs note that, under Section 7.5 of the Sag Harbor Operating Agreement, “no
Distribution shall be made unless, after such Distribution is made, the assets of the Company
are in excess of all liabilities of the Company,” and maintain that Defendants produced no
evidence of any solvency analysis undertaken before each of these distributions was made.
Id. Second, Plaintiffs argue that “the Manager has been improperly accruing for himself a
12% ‘preferred distribution’ on liabilities of [the Company] to which he has no right.” Id. at
18-19.
Defendants counter that the distributions were proper. They maintain that no formal
solvency analysis is required under the Sag Harbor Operating Agreement and cite the
balance sheet on the Company’s tax returns indicating that the book value of the Company’s
assets exceeded its liabilities in each year from 2019 to 2022. See DMSJ at 36-37.
Additionally, Defendants cite the third paragraph of the waterfall, arguing that the 12%
preferred distribution is due for all monies that Bialsky or JAB SH personally invested, or
that are derived from loans that either one guaranteed. Id. at 37.
D. Discussion
In evaluating the parties’ cross-motions for summary judgment, the Court has applied
the same standard as that which is applicable to individual summary judgment motions and
considered each motion independent of the other. See Hallingby, 693 F. Supp. 2d at 364. The
Court has examined Plaintiffs’ and Defendants’ motions on their own merits, see Morales,
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

20
249 F.3d at 121, and has determined that Defendants have carried their burden, while
Plaintiffs failed to carry their burden, in connection with the breach of contract claim.
Therefore, the Court denies Plaintiffs’ motion, and grants Defendants’ motion, as to
Count Six. See generally Bassi v. New York Med. Coll., No. 19 Civ. 7542 (NSR), 2023 WL
2330478, at *14 (S.D.N.Y. Mar. 2, 2023) (granting defendants’ motions for summary
judgment, and denying plaintiff’s cross-motion for summary judgment, on breach of contract
claim where plaintiff failed to raise a genuine dispute of material fact as to plaintiff’s alleged
breaches), aff'd, No. 23-278, 2024 WL 3717317 (2d Cir. Aug. 8, 2024) (summary order);
McKenzie v. Fishko, No. 12CV7297-LTS-KNF, 2015 WL 685927, at *7 (S.D.N.Y. Feb. 13,
2015) (concluding that plaintiffs “failed to proffer evidence sufficient to sustain the burden of
proof on their breach of contract claim,” granting defendants’ motion for summary judgment
dismissing that cause of action, and denying plaintiffs’ cross-motion for summary judgment).
1. 	Meaning of “Buyout”
There is no support for Plaintiffs’ contention that the “Member Buyout Options” set
forth in Exhibit B contemplate a “buyout” of East End Ventures’ membership interests in the
Company.
The Court begins with an analysis of the plain language of the agreement. See
Ellington v. EMI Music, Inc., 21 N.E.3d 1000, 1003 (N.Y. 2014) (quoting Greenfield v. Philles
Recs, Inc., 780 N.E.2d 166, 170 (N.Y. 2002)) (“The best evidence of what parties to a written
agreement intend is what they say in their writing . . . a written agreement that is complete,
clear and unambiguous on its face must be enforced according to the plain meaning of its
terms.”). Plaintiffs appear to rely, in part, on the headings for Section 7.8, “Buyout,” and
Exhibit B, which includes the language, “Member Buyout Options.” SHOA § 7.8. As a
preliminary matter, Section 11.4 provides that “[t]he headings in this Agreement are for
convenience only and shall not be used to interpret or construe any provision of this
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

21
Agreement.” Id. § 11.4. Significantly, while “buyout” is not defined in the agreement15,
“Membership Interests”—a term defined in Section 1.1(i)—does not appear anywhere in
Exhibit B. 	See id. § 1.1(i). The only provisions that expressly provide for the transfer of
“Membership Interests” appear in Article IX, and no provision of Article IX references the
“buyout” mechanism in Section 7.8 and Exhibit B. See generally SHOA art. IX.
Plaintiffs’ argument that the deduction from East End Ventures’ capital account
reflected their right to Defendants’ buyout of East End Ventures’ membership interest is
unfounded. See PMSJ at 11-12. Defendants correctly note that capital accounts can
fluctuate––and can even reflect a zero or negative balance––but such a reduction would not
automatically terminate East End Ventures’ membership. See DMSJ at 26-27; SHOA § 6.3
(describing when members’ capital accounts will increase and decrease); SHOA § 6.4
(contemplating a negative balance in a member’s capital account). Nor have Plaintiffs
substantiated their contention that the definition of “Membership Interests” in Article I
points to a buyout because of East End Ventures’ purported lack of capital contributions.16
See PMSJ at 12. The agreement defines “Capital Contribution” as “any contribution by a
Member to the capital of the Company in cash, property or services rendered.” SHOA § 1.1(c).
Plaintiffs seem to ask the Court to read this portion to mean that a deduction from East End
Ventures’ capital account somehow coincides with a deduction of its capital contribution. See
PMSJ at 12. The agreement itself belies Plaintiffs’ characterization––in addition to the
15 Plaintiffs cite to Merriam-Webster’s definition of “buyout” for support. PMSJ at 12 n.17. Plaintiffs’
requested “Buyout Payment” does not exist in the agreement itself, making their attempt to define the
term unwarranted here. See generally SHOA art. IX. Moreover, as the Court discusses infra, the drop
in East End Ventures’ capital account balance after Bialsky exercised Option A is of no consequence
to the members’ interests in the Company. See SHOA §§ 1.1, 6.1, 6.3 (differentiating between capital
accounts and capital contributions).
16 In their motion, Plaintiffs claim “[n]o Capital Contributions from East End Ventures means no
Membership Interests, because the Manager bought them out.” PMSJ at 12.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

22
definition of capital contribution in Section 1.1, Sections 6.1 and 6.3 clearly spell out the
difference between a capital account and contribution. See SHOA §§ 1.1, 6.1, 6.3.
2. 	Buyout Payment
It is well-established that “[c]ourts may ‘not by construction add or excise terms, nor
distort the meaning of those used and thereby make a new contract for the parties under the
guise of interpreting the writing.’” Abundance Partners LP v. Quamtel, Inc., 840 F. Supp. 2d
758, 767 (S.D.N.Y. 2012) (quoting Vt. Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d
470, 475 (N.Y.2004)) (granting defendant’s motion for summary judgment dismissing breach
of contract claims); see also Kaplin v. Buendia, No. 15 Civ. 649 (PAC), 2021 WL 1405517, at
*7 (S.D.N.Y. Apr. 14, 2021) (observing that “Plaintiff's proposed construction invites the
Court to add or at least redefine terms, which would effectively (and impermissibly) rewrite
the contract” and declining to do so here); Mercury Partners LLC v. Pac. Med. Bldgs., L.P.,
No. 02 Civ. 6005 (HBP), 2007 WL 2197830, at *14 (S.D.N.Y. July 31, 2007) (quoting John
Doris, Inc. v. Solomon R. Guggenheim Found., 209 A.D.2d 380, 381 (2d Dep't 1994)) (“Under
New York law, ‘the courts may not rewrite the agreement to relieve a sophisticated
contracting party from terms that it later deems disadvantageous.’”).
As discussed supra, the term “Buyout Payment” does not appear in the Sag Harbor
Operating Agreement. In defining the term, Plaintiffs cobble together a formula by combining
provisions that appear in Exhibit B. This is an impermissible departure from the plain
language in Exhibit B. See Bank v. Verde Energy USA, Inc., 19-cv-01472, 2020 WL 5596046,
at *6 (E.D.N.Y. Sept. 18, 2020) (quoting W.W.W. Assocs. v. Giancontieri, 77 N.Y.2d 157, 163
(N.Y. 1990)) (“By ignoring the plain language of the contract, [the] plaintiff effectively
rewrites the bargain that was struck.”).
As a preliminary matter, there is no textual support for Plaintiffs’ contention that
East End Ventures is entitled to the $5.4 million purchase price for Unit A. The Court need
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

23
only consider the plain language of the agreement to reach this conclusion. See Ellington, 21
N.E.3d at 1003. The “East End Members” are not referenced anywhere in the relevant portion
of Option A in Exhibit B discussing “Jay’s Purchase of his unit at $5,400,000.00 based on a
$9,000,000.00 land book value[.]” See SHOA Ex. B. This makes logical sense: Defendants
highlight—and Plaintiffs do not dispute—that Unit A was owned by, and purchased from,
the Company, not East End Ventures. See DMSJ at 25. Indeed, the only reference to “East
End Members” under Option A in Exhibit B appears in connection with their entitlement to
“45% of potential profit of constructed units[.]” See SHOA Ex. B. Thus, Plaintiffs “seek[] to
rewrite the contract to say something other than what it says. Far from compelling that
outcome, New York law expressly prohibits it.” Golden Unicorn Enters., Inc. v. Audible, Inc.,
682 F. Supp. 3d 368, 376 (S.D.N.Y. 2023).
It is widely acknowledged that “[c]ourts should be ‘extremely reluctant to interpret an
agreement as impliedly stating something which the parties have neglected to specifically
include.’” Ambac Assurance Corp. v. U.S. Bank Nat'l Ass'n, No. 18 Civ. 5182 (LGS), 2020 WL
7211217, at *8 (S.D.N.Y. Dec. 7, 2020) (quoting Global Reinsurance Corp. of Am. v. Century
Indem. Co., 91 N.E.3d 1186, 1193 (N.Y. 2017)), aff'd, No. 21-70-cv, 2021 WL 6060710 (2d Cir.
Dec. 20, 2021) (summary order); see also One Stop 34, LLC v. Stimdel Properties (FL), Inc.,
No. 19-CV-04011, 2021 WL 8344133, at *7-8 (E.D.N.Y. Sept. 4, 2021) (citations omitted) (“In
the context of a commercial contract, New York courts are particularly reluctant to find
ambiguity from absent terms . . . . Because the Lease does not contain any term regarding
access to the parking and loading area of the Demised Premises, there is no basis for finding
that the parties intended to create such form of access, especially access entailing property
not covered by the Lease.”), report and recommendation adopted, No. 19-CV-04011, 2022 WL
985834 (E.D.N.Y. Mar. 31, 2022). Therefore, given the absence of any language in the
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

24
agreement17 in support of Plaintiffs’ contention that East End Ventures is entitled to the $5.4
million, the Court concludes that the Sag Harbor Operating Agreement is unambiguous on
this point, and Defendants have not breached the agreement by failing to turn this amount
over to East End Ventures.18
Additionally, Defendants have not breached the Sag Harbor Operating Agreement by
failing to pay “45% of potential profit of constructed units” to East End Ventures at this
juncture. As relevant here, the parties agree that: 1) “potential profit of constructed units,”
as used in the two pertinent provisions of Option A in Exhibit B concerning the “55%/45%”
17 In response to Plaintiffs’ argument concerning the $5.4 million, Defendants cite Debtor’s bankruptcy
filings wherein (i) Debtor listed a $0 valuation of his 50% interest in East End Ventures on October
11, 2019; (ii) Debtor’s son filed a disclosure statement representing that East End Ventures has a
minority interest in the development project and will receive a distribution “if there are any profits
after the sale of the developed properties”; and (iii) Debtor’s son filed a proposed liquidating plan
stating that “[t]he Debtor’s estate is entitled to equity in the project after the project is completed and
all debts are paid.” See id. at 3-4 (citing [Bankr. Dkt. Nos. 15, 135, 136]). Because the agreement is
unambiguous, however, on the question of whether East End Ventures is entitled to the $5.4 million,
the Court need not consider any extrinsic evidence beyond the four corners of the agreement. See Elecs.
& Telecomms. Rsch. Inst. v. Acacia Rsch. Grp., LLC, No. 15-CV-3419 (VSB), 2017 WL 2389699, at *5
(S.D.N.Y. June 1, 2017) (quoting Chesapeake Energy Corp. v. Bank of N.Y. Mellon Trust Co., 773 F.3d
110, 114 (2d Cir. 2014)) (“If the court finds that the contract is unambiguous, ‘the intent of the parties
must be found within the four corners of the contract’ and the court should interpret the contract
without the aid of extrinsic evidence.”).
18 By concluding that the Sag Harbor Operating Agreement unambiguously does not entitle East End
Ventures to the purchase price of $5.4 million, the Court is not making any findings as to what
ultimately does happen to the funds under the agreement. This issue is not outcome-determinative for
purposes of resolving the motions for summary judgment presently before the Court. See Kaplin v.
Buendia, No. 15 Civ. 649 (PAC), 2021 WL 1405517, at *4 (S.D.N.Y. Apr. 14, 2021) (“[T]he mere
existence of some alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that there be no genuine issue of material
fact . . . . [T]he substantive law ... identif[ies] which facts are material, and [o]nly disputes over facts
that might affect the outcome of the suit under the governing law will properly preclude the entry of
summary judgment”) (internal citations omitted).
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

25
split, refers to profits from the sale of Units B and C19; 2) Unit C has sold20; and 3) Unit B
has not yet sold.21
First, Plaintiffs fail to cite any provision of the Sag Harbor Operating Agreement that
obligates the distribution of amounts owed to the East End Members pursuant to Option A
in Exhibit B on an interim basis. See Elecs. & Telecomms. Rsch. Inst., 2017 WL 2389699,
at *7 (denying plaintiff’s motion for partial summary judgment on breach of contract claim
where, 	among 	other 	things, 	plaintiff 	failed 	to 	identify 	language 	in 	support 	of 	its
interpretation in governing agreements); see also DMSJ at 30. Upon review of the agreement,
the Court concludes that no such provision exists. Second, Defendants correctly highlight—
and Plaintiffs concede—that Unit B has not sold, so the profits cannot even be ascertained.
See Aug. 22 Hr’g Tr. at 21:13-19, 32:7-15; Ashland Mgmt. Inc. v. Janien, 624 N.E.2d 1007,
1010 (N.Y. 1993) (“A party may not recover damages for lost profits unless they were within
the contemplation of the parties at the time the contract was entered into and are capable of
measurement with reasonable certainty.”).
19 See PSMJ at 12-13 (citing East End Ventures’ entitlement to 45% of the “profit of constructed
units”—i.e., Units B and C) (emphasis added); P. Opp. at 4 (arguing that East End Ventures is
entitled to the Buyout Payment, which includes “45% of the net profits on Units B and C after land
value and construction costs”) (emphasis added); id. at 8 (arguing that East End Ventures are entitled
to net profits from the sale of Unit C, which has occurred, and from the sale of Unit B, which has not
yet occurred); DMSJ at 30-31 (arguing that the operating agreement “establishes a 55%/45% allocation
of potential net profits between the Members on the sale of Units 2 and 3 (i.e. B and C)”) (emphasis
added); see also Aug. 22 Hr’g Tr. at 8:24-9:2 (wherein counsel for Trustee represents that the “buyout
amount” includes “45% of the profits on Unit-B and C”).
20 See P. SOF at 11-12; D. SOF at 21-24; see also PMSJ at 2, 7 (representing that Unit C has sold); P.
Opp. at 8-9; DMSJ at 30 (representing that “Unit C sold in July 2021” while noting that “there are still
open issues and disagreements that remain between Sag Harbor and the buyer of that unit”).
21 See D. SOF at 26-27; see also PMSJ at 16; P. Opp. at 12-13; DMSJ at 16-17; P. Resp. to D. SOF at
43; Aug. 22 Hr’g Tr. at 21:16 (wherein counsel for Defendants represents that Unit B is not sold).
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

26
Because Defendants are not in breach for failing to provide the Buyout Payment22—
as defined by Plaintiffs—to East End Ventures, and because the action is otherwise
premature, the Court grants summary judgment in favor of Defendants on Count Six.
3. 	Distributions
The Court also denies Plaintiffs’ motion, and grants Defendants’ motion, seeking
summary judgment on Count Six concerning the allegedly improper distributions.
First, Plaintiffs argue that Defendants produced no evidence that a solvency analysis
was undertaken before each of the distributions made to Bialsky and, “[a]bsent any such
analysis, none of the Manager’s distributions are valid under the Sag Harbor Operating
Agreement.” PMSJ at 18. The Court again returns to the plain language of the Sag Harbor
Operating Agreement, which imposes no affirmative requirement that a “solvency analysis”
be formally prepared or documented, as Plaintiffs seem to suggest. See DMSJ at 36-37; see
Kaplin, 2021 WL 1405517, at *7 (ruling in favor of a contractual interpretation that “gives
the words of the contract their plain meaning”). Section 7.5 merely provides as follows: “No
Distribution shall be declared and paid unless, after such Distribution is made, the assets of
the company are in excess of all liabilities of the Company.” SHOA § 7.5. There are no other
provisions pertinent to Distributions that impose the obligation referenced by Plaintiffs.
Plaintiffs cannot now create an obligation that plainly does not exist in the unambiguous text
of the Sag Harbor Operating Agreement. See N. Am. Photon Infotech Ltd. v. ZoomInfo LLC,
22 See, e.g., Malmsteen v. Universal Music Grp., Inc., 940 F. Supp. 2d 123, 136 (S.D.N.Y. 2013) (rejecting
plaintiff’s reading of agreement, granting defendants’ cross-motion for summary judgment—and
denying plaintiff’s cross-motion for summary judgment—on breach of contract claim); MBIA Ins. Corp.
v. Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., No. 09 Civ. 10093 (RJS), 2011 WL 1197634,
at *13 (S.D.N.Y. Mar. 25, 2011) (denying plaintiffs’ cross-motion for summary judgment—and granting
defendants’ cross-motions for summary judgment—on breach of contract claim for lack of consent
based on unambiguous language in governing documents); Sussman v. Rabobank Int'l, 739 F. Supp.
2d 624, 629 (S.D.N.Y. 2010) (concluding that, in light of the plain language in the agreements at issue,
plaintiff “failed to raise a genuine issue of any material fact” that supports a finding of breach of
contract, granting defendant’s motion for summary judgment, and denying plaintiff’s cross-motion).
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

27
No. 20 CIV. 2180 (JPC), 2021 WL 4482208, at *5 (S.D.N.Y. Sept. 30, 2021) (citation omitted)
(noting that “the Court will not create an obligation absent from the contract”), aff’d as to
liability, No. 22-1979, 2024 WL 4799843 (2d Cir. Nov. 15, 2024) (summary order).
Critically, Plaintiffs offered no evidence on the record to suggest that the Company’s
assets did not, in fact, exceed liabilities after the Distributions were made, nor do they contest
Defendants’ contentions regarding the balance sheets on the Company’s tax returns from
2019 through 2022. See DMSJ at 37. Plaintiffs do not dispute Defendants’ representations
that the book value of the Company’s assets exceed its liabilities at the beginning and end of
the years 2019, 2020, 2021, and 2022, and that the Company issued Schedule K-1s to East
End Ventures for those tax years. See P. Resp. to D. SOF at 63-65.
Second, Plaintiffs improperly argue that construing Section 7.3 as to entitle Bialsky
to a 12% preferred distribution on “every penny loaned to Sag Harbor . . . as long as he
personally guarantees it” runs afoul of contract interpretation principles. See PMSJ at 19;
SHOA § 7.3. Defendants correctly note that the plain language of the waterfall provision in
Section 7.3 entitles Bialsky to just that. See DMSJ at 37; SHOA § 7.3. Plaintiffs take the
position that it would be “commercially absurd” to suggest Mr. Maiden and Talel would agree
to this preference. See Aug. 22 Hr’g Tr. at 19:22-20:6. The plain language of the agreement
says otherwise, putting third in order of distributions––which are within the “discretion of
the Manager” to make––“[t]welve percent (12%) preferred distribution on all Capital
Contributions and guaranteed loans by JAB SH [] or Jay Bialsky . . . .” SHOA § 7.3. The Court
will not “rewrite the contract” based on Plaintiffs’ discontent with the reasonableness of their
own terms. Kaplin, 2021 WL 1405517, at *7; Verde Energy USA, Inc., 2020 WL 5596046, at
*6; Mercury Partners LLC, 2007 WL 2197830, at *14 (quoting New England Merch. Nat’l
Bank v. Iran Power Gen. & Transmission Co., 502 F. Supp. 120, 127 (S.D.N.Y. 1980),
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

28
abrogated on other grounds, 646 F.2d 779 (2d Cir. 1981)) (“It is the parties’ ‘intention as it
existed at the time the contract was executed which must control rather than any subsequent
intention tailored to complement an individual’s posture once an agreement has gone sour.’”).
II. 	COUNT EIGHT
Count Eight seeks a declaratory judgment that East End Ventures is entitled to the
Buyout Payment and distributions or other amounts owing under the Sag Harbor Operating
Agreement. Compl. ¶¶ 121-28. Plaintiffs and Defendants now cross-move for summary
judgment in their favor on Count Eight.
A. Legal Standard
The Declaratory Judgment Act provides that “[i]n a case of actual controversy within
its jurisdiction . . . any court of the United States . . . may declare the rights and other legal
relations of any interested party seeking such declaration, whether or not further relief is or
could be sought.” 28 U.S.C. § 2201(a); see also Admiral Ins. Co. v. Niagara Transformer Corp.,
57 F.4th 85, 92 (2d Cir. 2023) (citing 28 U.S.C. § 2201(a)). The Second Circuit has held that
the following considerations, to the extent relevant in a particular case, should inform a
court’s exercise of discretion to decline jurisdiction under the Declaratory Judgment Act:
(1) whether the [declaratory] judgment [sought] will serve a useful purpose in
clarifying or settling the legal issues involved;
(2) whether [such] a judgment would finalize the controversy and offer relief
from uncertainty;
(3) whether the proposed remedy is being used merely for procedural fencing
or a race to res judicata;
(4) whether the use of a declaratory judgment would increase friction between
sovereign legal systems or improperly encroach on the domain of a state or
foreign court;
(5) whether there is a better or more effective remedy; and
(6) whether concerns for judicial efficiency and judicial economy favor declining
to exercise jurisdiction.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

29
See Admiral Ins. Co., 57 F.4th at 99-100 (internal quotation marks and citations omitted).
Even in circumstances where a declaratory judgment would “serve a useful purpose in
clarifying and settling the legal relations in issue or terminate and afford relief from the
uncertainty, insecurity, and controversy giving rise to the proceeding,” district courts retain
broad discretion to decline jurisdiction under the Declaratory Judgment Act. Id. at 99
(internal quotation marks and citations omitted).
Inherent in district courts’ broad discretion to decline jurisdiction is a similarly broad
discretion to weigh the factors enumerated in Admiral. Id. at 100. “[N]o one factor is
sufficient, by itself, to mandate that a district court exercise—or decline to exercise—its
jurisdiction to issue a declaratory judgment.” Id. “Likewise, ‘[t]hese factors are non-
exhaustive,’” and courts retain “wide latitude to address other factors as relevant to the
ultimate question of whether ‘the normal principle that federal courts should adjudicate
claims [over which they have] jurisdiction’ should ‘yield[] to considerations of practicality and
wise judicial administration’ in a particular case.” Id. (internal citations omitted).
B. 	Summary of the Parties’ Arguments
Defendants maintain that a declaratory judgment would not serve any useful purpose
because Count Eight is duplicative of the breach of contract claim in Count Six and, therefore,
the Court should decline to exercise jurisdiction over the declaratory judgment claim. DMSJ
at 48-49 (collecting authority). Plaintiffs respond that this consideration alone is insufficient
to support a decision to abstain from exercising jurisdiction, and that entry of a declaratory
judgment would nevertheless “serve the useful purpose of establishing East End Ventures’
entitlement to the Buyout Payment, with the amount of damages to be finally ascertained
once Unit B sells.” P. Opp. at 12-13.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

30
C. Discussion
In considering the relevant Admiral factors, the Court concludes that a declaratory
judgment would not serve a useful purpose, or finalize the controversy or offer relief from
uncertainty, and that concerns for judicial efficiency and judicial economy favor declining to
exercise jurisdiction over the claim.
Courts have recognized that, “[w]hen a plaintiff's contract claim ‘will necessarily settle
the issues for which the declaratory judgment is sought,’ a declaratory-judgment claim ‘will
serve no useful purpose and will not serve to offer relief from uncertainty.’” Del Mar TIC I,
LLC v. Bancorp Bank, No. 1:23-cv-08999 (JLR), 2024 WL 2213472, at *9 (S.D.N.Y. May 16,
2024) (quoting EFG Bank AG, Cayman Branch v. AXA Equitable Life Ins. Co., 309 F. Supp.
3d 89, 100 (S.D.N.Y. 2018)); see also Lim v. Radish Media Inc., No. 22-1610, 2023 WL
2440160, at *2 (2d Cir. Mar. 10, 2023) (summary order) (citation omitted) (concluding that
declaratory judgment claim was correctly dismissed because no useful purpose would be
served in granting declaratory relief where the issues on which plaintiff sought declaratory
relief were necessarily decided in the determination of the breach of contract claims); Ambac
Assurance Corp. v. U.S. Bank Nat'l Ass'n, No. 21-70-CV, 2021 WL 6060710, at *5 (2d Cir.
Dec. 20, 2021) (summary order) (same). Courts have thus regularly exercised their discretion
to dismiss declaratory judgment claims when they are duplicative of other claims in the suit.
See Del Mar TIC I, LLC, 2024 WL 2213472, at *9 (collecting cases); Parts Auth., LLC v. Beyda,
No. 23-CV-07656 (NCM) (VMS), 2024 WL 3553447, at *4 (E.D.N.Y. July 26, 2024) (“In federal
actions, courts have refrained from exercising jurisdiction over a declaratory action when the
issue would necessarily be determined through separate claims. Courts may compare the
declaratory claim to separate claims made within the same lawsuit or a claim raised in a
separate lawsuit.”) (comparing cases); Frommer v. MoneyLion Techs. Inc., No. 23-CV-6339
(JMF), 2024 WL 2158589, at *11 (S.D.N.Y. May 14, 2024) (“The decision whether to grant
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

31
declaratory relief under the Declaratory Judgment Act . . . is subject to the Court's ‘broad
discretion,’ to be informed by a variety of factors including ‘considerations of practicality and
wise judicial administration . . . .’ In view of such considerations, courts ‘generally reject a
DJA claim when other claims in the suit will resolve the same issues.’”) (internal citations
omitted).
Plaintiffs’ declaratory judgment claim does not “serve a useful purpose in clarifying
or settling the legal issues” where “the breach of contract claim governs the substance of this
dispute.” See Com. Tenant Servs., Inc. v. Penske Bus. Media, LLC, No. 20-CV-9756 (SHS),
2022 WL 4292971, at *6 (S.D.N.Y. Sept. 16, 2022). Therefore, the Court grants Defendants’
request for summary judgment as to Count Eight. See Apollo Capital Corp. v. Astra Veda
Corp., No. 23-CV-9708 (AS), 2024 WL 3729093, at *7 (S.D.N.Y. Aug. 7, 2024) (granting
summary judgment as to declaratory judgment claim because the claim was duplicative of
the breach of contract claim); Jakobovits v. All. Life Ins. Co. of N. Am., No. 15 cv 9977, 2017
WL 3049538, at *8 (S.D.N.Y. July 18, 2017) (same).
III. 	COUNTS FOUR AND FIVE
Count Four seeks turnover of unpaid distributions or other amounts owing to the
members or liquidators of East End Ventures. Compl. ¶¶ 90-96. This count is brought against
the Company and JAB SH. See id. Count Five seeks turnover of the Buyout Payment to East
End Ventures. Id. ¶¶ 97-103. This count is brought against JAB SH and Bialsky. See id.
Counts Four and Five are brought pursuant to 11 U.S.C. § 542(a). Plaintiffs and
Defendants now cross-move for summary judgment in their favor on Counts Four and Five.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

32
A. Legal Standard
Section 542(a) of the Bankruptcy Code provides as follows:
[A]n entity, other than a custodian, in possession, custody, or control, during
the case, of property that the trustee may use, sell, or lease under section 363
of this title, or that the debtor may exempt under section 522 of this title, shall
deliver to the trustee, and account for, such property or the value of such
property, unless such property is of inconsequential value or benefit to the
estate.
11 U.S.C. § 542(a). “To prevail on a claim under section 542(a), the party seeking turnover
must establish ‘(1) that the property is or was in the possession, custody or control of [another]
entity during the pendency of the case, (2) that the property may be used . . . in accordance
with § 363 or exempted by the debtor under § 522; and (3) that the property has more than
inconsequential value or benefit to the estate.’” In re CIL Ltd., No. 13-11272-JLG, 2024 WL
1693626, at *45 (Bankr. S.D.N.Y. Apr. 18, 2024) (quoting In re McCaffrey, No. 21-30891, 2023
WL 5612742, at *4 (Bankr. N.D.N.Y. Aug. 30, 2023)).
B. 	Summary of the Parties’ Arguments
For the reasons discussed supra Discussion Section I.C., Plaintiffs maintain—and
Defendants dispute—that they are entitled to the Buyout Payment and other amounts
purportedly owing under the Sag Harbor Operating Agreement. See PMSJ at 22-23; DMSJ
at 44-46.
C. Discussion
1. 	Plaintiffs Cannot Seek Turnover Post-Confirmation.
Courts have recognized that turnover claims cannot be brought post-confirmation.
See, e.g., Penthouse Media Grp. v. Guccione (In re Gen. Media, Inc.), 335 B.R. 66, 75 (Bankr.
S.D.N.Y. 2005); In re Rickel & Assocs., Inc., 272 B.R. 74, 97 (Bankr. S.D.N.Y. 2002). This is
because the bankruptcy estate ceases to exist, and there is no debtor-in-possession or trustee,
after confirmation. See In re Gen. Media, Inc., 335 B.R. at 75 (citations omitted) (“Once
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

33
confirmation occurs, there is no longer a trustee (i.e., the debtor in possession) to whom
property can be delivered, or an estate that can benefit. Furthermore, § 363 does not apply
to a reorganized debtor. Consequently, a turnover proceeding under § 542 will not lie
following confirmation.”); In re Rickel & Assocs., Inc., 272 B.R. at 98 (citations omitted)
(“Since there is no estate and no trustee after confirmation, there can be no turnover.”).
Here, the First Amended Plan in Debtor’s bankruptcy case was filed on January 14,
2021. [Bankr. Dkt. No. 136.] The Court entered an order confirming the plan on March 17,
2021 [Bankr. Dkt. No. 149], and an order modifying the plan on May 19, 2021 [Bankr. Dkt.
No. 166]. The Complaint in this adversary proceeding was filed on March 8, 2023—years
after the plan was confirmed. [Dkt. No. 1.]
2. 	The Funds at Issue Are Not Undisputed.
Counts Four and Five fail for an additional reason. “Turnover actions involve the
return of undisputed funds.” In re Ladder 3 Corp., 571 B.R. 525, 530 (Bankr. E.D.N.Y. 2017)
(citation omitted), aff'd, 768 F. App'x 146 (2d Cir. 2019) (summary order). “It is fundamental
to a turnover claim that the subject property belongs to the estate.” In re CIL Ltd., 2024 WL
1693626, at *45 (collecting cases); see also generally Geron v. Peebler (In re Pali Holdings,
Inc.), 488 B.R. 841, 851 (Bankr. S.D.N.Y. 2013) (“When the turnover power [under § 542] is
properly invoked, it is simply an effort to recover property—or on property—that is already
property of the estate. That, in turn, invokes the court's in rem jurisdiction over the
bankruptcy 	res.”). 	“The 	party 	seeking 	turnover 	bears 	the 	burden 	of 	proving, 	by 	a
preponderance of the evidence, that the property in question is property to the estate.” In re
CIL Ltd., 2024 WL 1693626, at *45 (collecting cases). In other words, for “section 542(a) to
apply, there must be no dispute that the property that is the object of the turnover claim is
estate property.” Id. (citation omitted). “A turnover claim is generally not a vehicle ‘to
adjudicate a debtor's underlying rights in property when ownership of that property is in
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

34
dispute.’” Id. (quoting Bank of Am., N.A. v. Veluchamy (In re Veluchamy), 879 F.3d 808, 816
(7th Cir. 2018)); see also In re Brown, No. 18-10617 (JLG), 2022 WL 4390454, at *21 (Bankr.
S.D.N.Y. Sept. 22, 2022) (“Congress envisioned the turnover provision of § 542 . . . to apply to
tangible property and money due to the debtor without dispute which are fully matured and
payable on demand . . . . [I]n order to state a claim for turnover of property under § 542, a
plaintiff must allege . . . that the property is . . . the undisputed property of the bankruptcy
estate.”) (emphasis added) (internal citations omitted); In re Gen. Media, Inc., 335 B.R. at 76
(citations omitted) (“Section 542(a) does not apply if title is disputed.”). Notably, “turnover is
a tool for ‘the collection rather than the creation, recognition or liquidation of a matured
debt.’” In re CIL Ltd., 2024 WL 1693626, at *45 (quoting In re Fairfield Sentry Ltd. Litig.,
458 B.R. 665, 683 (S.D.N.Y. 2011)). “In assessing whether there is a bona fide dispute
sufficient to defeat a turnover claim, the bankruptcy court must ‘determine whether there is
an objective basis for either a factual or a legal dispute as to the validity of the debt.’” Id. at
*46 (quoting Giuliano v. Fairfield Grp. Health Care Ctrs. Ltd. P'ship (In re Lexington
Healthcare Grp., Inc.), 363 B.R. 713, 716 (Bankr. D. Del. 2007)).
The parties’ voluminous briefing demonstrates that there is a bona fide dispute as to
entitlement to the Buyout Payment and challenged distributions based on conflicting
interpretations of the text of the Sag Harbor Operating Agreement. See id. at *54 (noting
that the court’s “role [in deciding whether to dismiss the turnover claim] is only to decide
whether there is a bona fide dispute” and granting defendants’ motion for summary judgment
dismissing turnover claim where “there plainly [was]” such a dispute).
For the reasons discussed above, the turnover action cannot be maintained and the
Court grants Defendants’ request for summary judgment as to Counts Four and Five.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

35
IV. 	COUNTS ONE AND TWO
Count One is a demand for an accounting based upon Section 3.4 of the Sag Harbor
Operating Agreement. Compl. ¶¶ 67-75. Count Two is a claim for equitable accounting. Id.
¶¶ 76-82. Plaintiffs and Defendants now cross-move for summary judgment in their favor on
Counts One and Two.
A. Legal Standard
“An action for accounting may be a suit in equity, or it may be a particular remedy
sought in conjunction with another cause of action.” Insured Advoc. Grp., LLC v. Spartan
Servs. Corp., 23-cv-07212 (LJL), 2024 WL 3429131, *7 (S.D.N.Y. July 16, 2024) (quoting
Brown v. Cooley Enters., Inc., No. 3:11–CV–0124–D, 2011 WL 2200605, at *1 (N.D. Tex. June
7, 2011)). “If it is a separate, equitable cause of action, it is proper ‘when the facts and
accounts in issue are so complex that adequate relief cannot be obtained by law.’” Id. (quoting
Brown, 2011 WL 2200605, at *1).
To state a claim for equitable accounting under New York law, a plaintiff must
establish “(1) relations of a mutual and confidential nature; (2) money or property entrusted
to the defendant imposing upon him a burden of accounting; (3) that there is no adequate
legal remedy; and (4) in some cases, a demand for an accounting and a refusal.” Eichenblatt
v. Kugel, No. 17-cv-559, 2018 WL 3202079, at *7 (E.D.N.Y. May 15, 2018) (quoting Associated
Mortg. Bankers, Inc. v. Calcon Mut. Mortg. LLC, 159 F. Supp. 3d 324, 338 (E.D.N.Y. 2016)).
“The purpose of an equitable accounting is to require a fiduciary to show what he did with
the principal’s property.” Sigalit v. Kahlon, No. 21-cv-8921 (AT), 2023 WL 5609099, at *2
(S.D.N.Y. Aug. 30, 2023) (quoting Soley v. Wasserman, No. 08-cv-9262, 2013 WL 6388401, at
*4 (S.D.N.Y. Dec. 6, 2013)).
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

36
As to the first element of an equitable accounting claim, “a plaintiff must show either
a fiduciary or confidential relationship with the defendant.” Eichenblatt, 2018 WL 3202079,
at *7 (quoting Calcon Mut. Mortg., 159 F. Supp. 3d at 339). Under New York law, a
“confidential relationship” is a relationship that induces a plaintiff to entrust a defendant
with money or property. See Calcon Mut. Mortg., 159 F. Supp. 3d at 339 (quoting KJ Roberts
& Co. Inc. v. MDC Partners Inc., No. 12 Civ. 5779 (LGS), 2014 WL 1013828, at *12 (S.D.N.Y.
Mar. 14, 2014)). Moreover, a “fiduciary relationship arises when one has reposed trust or
confidence in the integrity or fidelity of another who thereby gains a resulting superiority of
influence over the first, or when one assumes control and responsibility over another.” Id.
(quoting Faulkner v. Arista Records LLC, 602 F. Supp. 2d 470, 482 (S.D.N.Y. 2009) (internal
quotation marks omitted).
With respect to the third element of an equitable accounting claim, New York courts
have held that an “equitable accounting claim cannot coexist with a breach of contract claim
covering the same subject matter.” Najjar Grp., LLC v. West 56th Hotel LLC, 14-CV-
7120(RA), 2017 WL 819487, at *3 (S.D.N.Y. March 1, 2017) (citations omitted); see also
Calcon Mut. Mortg., 159 F. Supp. 3d at 340 (quoting Ellington Credit Fund, Ltd. v. Select
Portfolio Servicing, Inc., 837 F.Supp.2d 162, 207 (S.D.N.Y. 2011)) (same); Herbert H. Landy
Ins. Agency, Inc. v. Navigators Mgmt. Co., No. 14-cv-6298 (LGS), 2015 WL 170460, at *2
(S.D.N.Y. Jan. 13, 2015) (dismissing a claim for accounting on the merits because the
plaintiff’s breach of contract claim covered the same subject matter); Curtis v. Berutti, 176
N.Y.S.3d 423, 434 (Sup. Ct. 2022) (citing Physicians Mut. Ins. Co. v. Greystone Servicing
Corp., No. 07 Civ. 10490 (NRB), 2009 WL 855648, at *11 (S.D.N.Y. 2009)) (dismissing the
equitable accounting claim because it “arose from the same operative facts” as did the breach
of contract claim). “That is because a plaintiff would be able to obtain the information and
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

37
damages through discovery of his or her breach of contract claim, and thus, he or she has an
adequate remedy at law.” Calcon Mut. Mortg., 159 F. Supp. 3d at 340 (citing Gate Techs.,
LLC v. Delphix Cap. Mkts., LLC, No. 12 Civ. 7075 (JPO), 2013 WL 3455484, at *8 (S.D.N.Y.
July 9, 2013)).
The Second Circuit’s decision in Scholastic is not contrary to this proposition. See
Najjar Grp., 2017 WL 819487, *4 (citing Scholastic, Inc. v. Harris, 259 F.3d 73 (2d Cir. 2001)).
“In Scholastic, a former partner of a joint venture sought an accounting even though it had
‘been given financial reports regarding the condition of the venture since the collaboration's
inception.’” Id. (citing Scholastic, 259 F.3d at 90). The Second Circuit held that “[e]ven if
Scholastic already possessed detailed financial information regarding the joint venture,” the
partner still had “an absolute right to an accounting.” Scholastic, 259 F.3d at 90 (quoting
Koppel v. Wien, Lane & Malkin, 125 A.D.2d 230, 234 (1st Dep't 1986)). In an unpublished
summary order, the Second Circuit clarified Scholastic’s interpretation of Koppel (which had
found that “whenever there is a fiduciary relationship between the parties . . . there is an
absolute right to an accounting notwithstanding the existence of an adequate remedy at law,
125 A.D.2d at 234) by narrowing Koppel “as standing either for the proposition that the
voluntary transfer of financial documents or willingness to provide for an inspection or audit
are no substitute for a judicially supervised accounting or that a principal is not precluded
from seeking an equitable accounting merely because she could bring [but has not brought]
an action at law.” Soley v. Wasserman, 639 F. App’x. 670, 674 n.5 (2d Cir. 2016) (summary
order) (quotation marks and internal citations omitted). The Second Circuit concluded that
“New York law clearly requires that a principal demonstrate the unavailability of an
‘adequate remedy at law’ in order to prevail on a claim for an equitable accounting, in
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

38
addition to establishing the existence of a fiduciary relationship.”23 Id. at 674 (summary
order) (emphasis in original) (citations omitted).
B. 	Summary of the Parties’ Arguments
In their motion, Plaintiffs maintain that JAB SH and Bialsky are legally obligated to
provide East End Ventures with an accounting of the Company’s financial affairs, but that
Defendants are “incapable of providing the accounting to which the Plaintiffs are entitled.” 24
PMSJ at 23-24. Plaintiffs argue that “Defendants did not and cannot account for the costs of
Units B and C,” and that it is of no consequence that Defendants produced documents, as “an
action for an accounting is not mooted by the production of financial documents.” Id. at 23-
24. Plaintiffs rely on Section 3.4 of the Sag Harbor Operating Agreement in asserting that
23 This Court notes recent caselaw in New York that continues to repeat the proposition that where
“there is a fiduciary relationship between the parties, there is an absolute right to an accounting
notwithstanding the existence of an adequate remedy at law.” Mausner v. Mausner, No. 23-cv-994
(JMF), 2024 WL 4758563, at *15 (S.D.N.Y. Sept. 26, 2024) (quoting Webster v. Forest Hills Care Ctr.,
LLC, 84 N.Y.S.3d 501, 503 (2d Dep't 2018); see also Zohar v LaRock, 185 A.D.3d 987, 991 (2d Dep’t
2020); Ull v Royal Car Park LLC, 179 A.D.3d 469, 471 (1st Dep’t 2020); First Equity Realty v Harmony
Grp., II, 68 Misc.3d 1216(A), slip op. at *10-11 (Sup. Ct. N.Y. Cnty. Aug. 17, 2020) (holding the “mere
existence of a fiduciary relationship gives rise to a claim for an accounting”). There does not appear to
be controlling state law precedent from the New York Court of Appeals directly addressing this issue.
See generally Roslyn Union Free School Dist. v. Barkan, 16 N.Y.3d 643, 653 (N.Y. 2011) (citation
omitted) (noting an accounting claim is an “equitable remedy”); Hastings v. H. M. Byllesby & Co., 293
N.Y. 413, 417 (N.Y. 1944) (“The debtor corporation could have obtained complete relief by an action at
law . . . . No equitable accounting was necessary.”); Bosworth v. Allen, 168 N.Y. 157, 165 (N.Y. 1901)
(holding a court of equity could award relief in an action in equity for an accounting against directors
who resigned as part of a conspiracy even “if part of the relief could be had in actions at law”);
Castoriano v. Dupe, 145 N.Y. 250, 253 (N.Y. 1895) (holding that because the amount of a debt was
disputed, the “plaintiff was not bound to peril his whole right by an adoption of the legal remedy, but
was at liberty to redeem in equity where an accounting could be had and the ascertained debt be paid”).
On the other hand, the United States Supreme Court has pointed out that the “necessary prerequisite
to the right to maintain a suit for an equitable accounting, like all other equitable remedies, is . . . the
absence of an adequate remedy at law.” Dairy Queen, Inc. v. Wood, 369 U.S. 469, 478 (1962) (citing
Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506 (1959)).
24 In their motion, Plaintiffs requested that Defendants be bound by a “cost accounting” prepared by
the Trustee based on the Company’s books and records. See PMSJ at 25. Defendants highlighted that
this relief differed fundamentally from the relief requested in the Complaint. See DMSJ at 46. As
discussed supra note 10, the issue of the “cost accounting” was raised in connection with the parties’
cross-motions for preclusion, which was resolved by stipulation that was so-ordered by the Court on
August 20, 2024.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

39
Defendants have committed a breach in their failure to provide an accounting. See Compl. ¶
70. Section 3.4 reads as follows:
“Information”. Each Member may inspect during ordinary business hours and
at the principal place of business of the Company any and all books and records
and any information or documentation respecting the Company, including but
not limited to, the Certificate of Formation, the Operating Agreement, the
minutes of any meeting of the Members and any tax returns of the Company.
SHOA § 3.4.
Defendants argue that Plaintiffs have not established that they are entitled to an
accounting because they have not demonstrated that Defendants engaged in any wrongful
conduct. See DMSJ at 46 (collecting cases). Defendants reiterate that they “have already
provided Plaintiffs with over 21,000 pages of documents, which includes a full accounting,”
and argue that Plaintiffs have failed to demonstrate that the records provided are inaccurate.
Id. at 47-48. However, Defendants do not purport to deny that, as Manager of Sag Harbor,
Bialsky owes fiduciary duties to minority members of the Company. See generally DMSJ.
Defendants have also not denied that Plaintiffs entrusted Bialsky with money and property
pursuant to this relationship. See generally id. Instead, Defendants argue (1) that Plaintiffs
have not established that they are entitled to an accounting “because they have not
demonstrated that Defendants engaged in any wrongful conduct”; and (2) that Defendants
have already provided Plaintiffs with a full accounting. Id. at 46-47. Plaintiffs argue they
have an “absolute right” to an accounting and that they need not establish wrongful conduct
or a breach of fiduciary duty to assert that right. P. Opp. at 13.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

40
C. Discussion
1. 	Count One
The plain language of Section 3.4 of the Sag Harbor Operating Agreement indicates
that members have the right to inspect books and records respecting the Company. SHOA §
3.4. On its face, the Sag Harbor Operating Agreement does not indicate a right to obtain an
accounting, which is not the same as an inspection of books and records. See id.; Zyskind v.
Facecake Marketing Techs., Inc., 973 N.Y.S.2d 34, 37 (1st Dep’t 2013) (noting that “inspection
of books and records” and the “furnishing of an annual balance sheet and profit and loss
statement . . . are not the same as an accounting”); see also Sigalit, 2023 WL 5609099, at *3
(noting the “right to inspect company books and records is separate and independent from
the right to an equitable accounting”). Even the right to inspect “any information or
documentation respecting the Company” pursuant to section 3.4 of the SHOA is not the same
as the right to a judicially supervised accounting. See Soley, 639 F. App’x. at 674 n.5
(summary order) (citing Scholastic, 259 F.3d at 90); see also Najjar Grp., 2017 WL 819487,
*4 (finding that the plaintiff “did receive the information it sought through ‘judicially
supervised’ discovery in connection with its breach of contract claim, rather than through a
voluntary transfer of records” from the defendant). Because Plaintiffs have failed to point to
a provision in the Sag Harbor Operating Agreement establishing their right to an accounting,
the Court grants summary judgment in favor of Defendants on Count One.
2. 	Count Two
It is undisputed that Bialsky, as Manager of Sag Harbor, owed a fiduciary duty to
minority members of the Company and that Plaintiffs entrusted Bialsky with money and
property pursuant to this relationship. “Managing members of an LLC owe fiduciary duties
to the minority members and thus can be compelled to account.” DPB Family LLC v. Eutychia
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

41
Group LLC, No. 65255, 2018 WL 5043897, at *4 (Sup. Ct. N.Y. Cnty. Oct. 17, 2018) (citations
omitted).
With respect to whether Plaintiffs need to establish wrongdoing to assert their
equitable accounting claim, the Second Department has held that a plaintiff “must show that
there was some wrongdoing on the part of a defendant with respect to the fiduciary
relationship concerning property in which the plaintiff has an interest.” LMEG Wireless, LLC
v. Farro, 140 N.Y.S.3d 593, 598 (2d Dep’t 2021) (internal quotation marks omitted) (quoting
Pacella v. RSA Consultants, Inc., 164 A.D.3d 806, 808 (2d Dep’t 2018)); see also Benedict v.
Whitman Breed Abbott & Morgan, 110 A.D.3d 935, 938 (2d Dep’t 2013) (affirming dismissal
of an equitable accounting cause of action where petitioners failed to prove any wrongdoing
by the respondents with respect to their fiduciary roles as officers and directors of a
corporation). On the other hand, the First Department has held that “[t]he right to an
accounting is premised on the relationship of the parties” and that “[t]here is no requirement
that there be any allegation of wrongdoing.” In re Garson, 774 N.Y.S.2d 644, 646 (Sup. Ct.
N.Y. Cnty. 2003) (citing Morgulas v. J. Yudell Realty, Inc., 161 A.D.2d 211, 213-14 (1st Dep’t
1990)); see also Adam v. Cutner & Rathkopf, 238 A.D.2d 234, 242 (1st Dep’t 1997) (quoting
Morgulas, 161 A.D.2d at 213-14) (“An allegation of wrongdoing is not an indispensable
element of a demand for an accounting where the complaint indicates a fiduciary relationship
between the parties or some other special circumstance warranting equitable relief.”).
The Court finds it is unnecessary to reach the issue of whether Plaintiffs must
establish wrongful conduct or a breach of fiduciary duty to sustain a claim for equitable
accounting because Plaintiffs’ claim for equitable accounting cannot coexist with their breach
of contract claims covering the same subject matter. “New York courts have dismissed
equitable accounting claims where, as here, the plaintiff asserts a breach of contract claim
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

42
seeking similar relief.” Calcon Mut. Mortg., 159 F. Supp. 3d at 340 (citing Herbert H. Landy,
2015 WL 170460, at *2). Here, the parties have gone through extensive discovery on the
remaining claims, including claims for breach of contract covering the same subject matter
as Plaintiffs’ accounting claims. See CSI Inv. Partners II, L.P. v. Cendant Corp., 507 F. Supp.
2d 384, 425-26 (S.D.N.Y. 2007) (granting summary judgment to defendant on plaintiffs’
accounting claim because the plaintiffs already “sought money damages under their breach
of contract claims, and because discovery [] already proceeded as to the measure of damages
available to them should they prevail on those claims”). Plaintiffs have sought money
damages in their breach of contract claims, see Compl. ¶¶ 89, 114, and the accounting claims
and breach of contract claims arise from the same operative facts—rendering an accounting
duplicative of the discovery in the breach of contract claims. See Curtis, 176 N.Y.S.3d at 435.
For example, Count Six alleges “The East End Members are entitled to the payment of all
amounts due under the Sag Harbor Operating Agreement, including all distributions (as
against all Defendants), the Buyout Payment (as against JAB and Bialsky) and other
amounts owed but not less than $25,784,025, to be determined at trial.” Compl. ¶ 114. Count
One alleges that, pursuant to the Sag Harbor Operating Agreement, Defendants are
“obligated to provide an adequate and accurate accounting . . . of any distributions to which
the East End Members are entitled,” and Count Two alleges “Plaintiff is entitled to an
equitable accounting of the payouts and other distributions of the Sag Harbor Project.”
Compl. ¶ 72, 82. 	Thus, Counts One, Two, and Six all implicate information related to the
alleged buyout payment obligation to East End Ventures and distributions made to
Defendants. See Najjar Grp., WL 819487, *4 (holding that plaintiff’s claim for accounting was
duplicative of its breach of contract claim and subject to dismissal because the plaintiff
supported “its proposed claim for accounting by alleging specific breaches of [the operating
agreements]” and the plaintiff could obtain all the information it sought through its existing
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

43
claim at law “because discovery ha[d] already proceeded on the measure of damages available
to [p]laintiff should it prevail on its breach of contract claim”).
Because equitable accounting claims cannot coexist with breach of contract claims
covering the same subject matter, the Court grants summary judgment in favor of
Defendants on Count Two.
V. 	COUNTS THREE AND SEVEN
Count Three alleges breach of contract for refusing to permit review of the Company’s
books and records. See Compl. ¶¶ 83-89. This count is brought against Bialsky and JAB SH.
See id. Count Seven, also brought against Bialsky and JAB SH, is a claim for breach of
fiduciary duty. See id. ¶¶ 115-20. Plaintiffs allege that “Bialsky caused legal title to [the
property located at 2 West Water Street] to be held by [JAB 2 West Water] despite the
[Company’s] entitlement to the Property” and that “Defendants breached their fiduciary
duties by diverting the Property from [the Company].” Id. ¶¶ 116, 120. Defendants now move
for summary judgment on Counts Three and Seven.
Defendants correctly observe that Plaintiffs failed to oppose Defendants’ request for
summary judgment on Counts Three and Seven. The Second Circuit has recognized that,
“when a counseled party moves for summary judgment, ‘a partial response [by the non-
movant] arguing that summary judgment should be denied as to some claims while not
mentioning others may be deemed an abandonment of the unmentioned claims.’” Kovaco v.
Rockbestos-Surprenant Cable Corp., 834 F.3d 128, 143 (2d Cir. 2016) (quoting Jackson v. Fed.
Exp., 766 F.3d 189, 195 (2d Cir. 2014)); Jackson, 766 F.3d at 196 (observing that “preparation
of a response to a motion for summary judgment is a particularly appropriate time for a non-
movant party to decide whether to pursue or abandon some claims or defenses” and “[a]
partial response reflects a decision by a party’s attorney to pursue some claims or defenses
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

44
and to abandon others”)25; see also LPD New York, LLC v. Adidas Am., Inc., No. 15-CV-6360
(MKB), 2022 WL 4450999, at *27 (E.D.N.Y. Sept. 24, 2022) (citations omitted) (“Where a
partial 	response 	to 	a 	motion 	[for summary judgment] 	is 	made— i.e., 	referencing
some claims or defenses but not others . . . in the case of a counseled party, a court may, when
appropriate, infer from a party’s partial opposition that relevant claims or defenses that are
not defended have been abandoned.”).
As noted in Defendants’ reply, Plaintiffs opposed Defendants’ request for summary
judgment on all counts except Counts Three and Seven.26 See D. Reply at 1. At the August
22 Hearing, Defendants again raised the issue of Plaintiffs’ failure to oppose their request for
summary judgment on these counts. See Aug. 22 Hr’g Tr. at 33:25-34:3 (wherein counsel for
Defendants “point[s] out to the Court that in our motion for summary judgment, on the third
and seventh counts of the complaint, there was no opposition to those counts, so those counts
would certainly be granted as unopposed”). Counsel for Plaintiffs had the opportunity to
respond at the hearing, yet did not address either of these counts. Therefore, the Court
concludes that Plaintiffs have abandoned Counts Three and Seven and grants summary
judgment in favor of Defendants.
25 In Jackson, the Second Circuit highlighted the “relevant distinction to be drawn between fully
unopposed and partially opposed motions for summary judgment in counseled cases.” See Jackson, 766
F.3d at 196. Here, Plaintiffs filed a partial opposition to Defendants’ cross-motion for summary
judgment.
26 The Court also notes that Plaintiffs moved for summary judgment on all counts except for Counts
Three and Seven.
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45

45
CONCLUSION
For the reasons set forth above, the Court concludes as follows: (i) as to Count Six,
Defendants’ motion is granted and Plaintiffs’ motion is denied; (ii) as to Count Eight,
Defendants’ motion is granted and Plaintiffs’ motion is denied; (iii) as to Counts Four and
Five, Defendants’ motion is granted and Plaintiffs’ motion is denied; (iv) as to Counts One
and Two, Defendants’ motion is granted and Plaintiffs’ motion is denied; and (v) as to Counts
Three and Seven, Defendants’ motion is granted.
____________________________
Louis A. Scarcella
United States Bankruptcy Judge
Dated: June 30, 2026
Central Islip, New York
Case 8-23-08017-las Doc 114 Filed 06/30/26 Entered 06/30/26 18:41:45