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In re General Home Store LLC

Court of Chancery of Delaware

July 13, 2017

In re GENERAL HOME STORE LLC, a Delaware limited liability company

          POST-TRIAL ORDER

          TAMIKA MONTGOMERY-REEVES VICE CHANCELLOR

         WHEREAS, Petitioners seek dissolution of General Home Store, LLC, a Delaware limited liability company, ("General Home Store" or "GHS") under 6 Del. C. § 18-802;

         WHEREAS, the parties have stipulated to the dissolution of General Home Store, and the Court has appointed Patricia L. Enerio as a liquidating trustee (In re General Home Store, LLC, C.A. No. 11612-VCMR (Del. Ch. Mar. 6, 2017) (ORDER));

         WHEREAS, the remaining issues in this case are (1) who owns the 50% membership interest in General Home Store designated as "Maris Ventures" in the General Home Store operating agreement; (2) are Petitioners entitled to an accounting of General Home Store at Respondent's expense; and (3) who is responsible for $70, 745.09 in attorneys' fees from litigation in New York related to the General Home Store bank account (the "New York Litigation") and attorneys' fees in this litigation;

         WHEREAS, the Court held a trial in this case on February 1 and 2, 2017 and has reviewed the parties' stipulations, 109 exhibits, and the testimony of five live witnesses;[1]

         NOW, THEREFORE, THE COURT HEREBY FINDS AND ORDERS:

1. The Starec Trust and Bonnie Krupinski are the two 50% members of General Home Store. The General Home Store liquidating trustee, Patricia Enerio, has the authority and discretion to decide whether to conduct an accounting for General Home Store, and this Court will defer to her judgment as to whether an accounting is necessary. General Home Store will bear the expense of any accounting. This Court does not address the question of who is responsible for the attorneys' fees in the New York Litigation because that question is under advisement in the New York court. In this case, each party shall bear its own attorneys' fees.
2. Ira Statfeld and Krupinski formed General Home Store on March 14, 2005 to operate a home goods store in East Hampton, New York. JX 11. Krupinski and Statfeld are both managers of General Home Store. JX 12. In the early years of the business, Statfeld was involved in the daily management of the store "from selling, to the cash register, to stocking, to cleaning." Tr. 38 (Statfeld). In 2013, he moved to Miami Beach, Florida (id.), and Krupinski took a more active role in managing General Home Store.
3. In 2002, Statfeld and his life partner Michael Recanati formed the Starec Trust, an Alaska trust. Id. at 32-33. The purpose of the trust was to replicate a marriage, and at the time of the formation of General Home Store, Statfeld considered all of his and Recanati's assets to be held in the trust for his and Recanati's benefit. Id. at 33. Statfeld and Recanati's son Raphael Statfeld Recanati was a contingent beneficiary of the Starec Trust. Id. The Starec Trust's current trustees are Statfeld, Michele Kahn, and Eric Goldberg. Id. at 34. The Peak Trust Company is an administrative trustee of the Starec Trust. Recanati passed away on July 9, 2015 (JX 44), and Esther Cohen is the substitute administrator of his estate (JX 5, at 15).
4. On July 26, 2005, Krupinski signed the General Home Store operating agreement as a member and as a manager. On August 12, 2005, Statfeld signed the agreement for himself as a manager and for "Maris Ventures" as a member. JX 12. The General Home Store operating agreement lists the two 50% members of General Home Store as Bonnie Krupinski and "Maris Ventures." Id. The parties agree that "Maris Ventures" is an unregistered trade name and not an entity that can hold property. But they disagree about who or what entity "Maris Ventures" references.
5. The evidence shows that the Starec Trust owns the "Maris Ventures" 50% membership interest in General Home Store. Statfeld testified that he signed for "Maris Ventures" as a trustee of the Starec Trust because "Maris Ventures" is a trade name of the Starec Trust, and the Starec Trust is "the other 50-percent partner in this LLC." Tr. 41 (Statfeld). Further, Recanati's estate, through its substitute administrator Cohen, testified in a deposition that General Home Store is a Starec Trust investment. JX 5, at 58. And Krupinski testified that when General Home Store was formed, she did not care how the other 50% membership interest was held because Statfeld, Recanati, Krupinski, and Krupinski's husband were all friends. Tr. 259-60 (Krupinski).
6. In 2010, Statfeld and Krupinski's relationship started to become strained. Statfeld discussed with Krupinski the possibility of purchasing her interest in General Home Store. Id. at 49-51 (Statfeld). As such, they hired Empire Valuation Consultants to perform an appraisal of General Home Store. JX 20. The appraisal report is addressed to both Krupinski and Statfeld, and it states, "[a]s of the Valuation Date, GHS had two members, Bonnie Krupinski and Starec Trust, each of which held a 50% membership interest in the Company." Id. at 3.
7. The General Home Store financial records support Statfeld's testimony and the characterization in the appraisal report. General Home Store records indicate that the Starec Trust made the capital contributions to General Home Store for the "Maris Ventures" 50% interest. The General Home Store general ledger and financial statements for 2013, 2014, and 2015 show that "Starec Trust Norad" has a capital account comprising 50% of General Home Store's capital. JX 38 (General Home Store 2013 financial statements); JX 43 (General Home Store 2014 financial statements); JX 68 (General Home Store 2015 financial statements); JX 93, at GHS_000411 (General Home Store general ledger). Further, the General Home Store tax returns for 2013, 2014, and 2015 list "Starec Trust Norad" as a 50% owner of General Home Store. JX 37 (General Home Store 2013 tax return); JX 42 (General Home Store 2014 tax return); JX 67 (General Home Store 2015 tax return). Krupinski was the General Home Store manager in charge of tax matters, and she signed the General Home Store tax returns, which listed "Starec Trust Norad" as the other 50% member of General Home Store. Tr. 275 (Krupinski).
8. Starec Trust trustees Kahn and Goldberg signed an affidavit stating that "Starec Trust Norad" is an incorrect name for the Starec Trust that refers to the Starec Trust's Northern Advantage account at Northern Trust. JX 63. Kahn also testified at trial that "Starec Trust Norad" is an incorrect name for the Starec Trust, but she was not concerned with the incorrect name on the tax documents because the tax identification number associated ...

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