Upon the foregoing papers, defendant's motion and plaintiffs' cross-motion for summary judgment are consolidated for purposes of this decision. For the reasons set forth herein, defendant's motion is denied and plaintiffs' cross-motion is granted.

In this action, plaintiffs and defendant seek competing declarations from the Court concerning the status of plaintiff and their shares ("Shares") appurtenant to a cooperative apartment owned by plaintiffs. Defendant is the owner of the cooperative buildings located at 5610-5650 and 5615-5645 Netherland Avenue, Bronx, New York. Defendant became the owner of the cooperative buildings and acquired them from the Sponsor, upon closing on August 29, 1983. In exchange for transferring title and ownership of the buildings to defendant, the Sponsor at closing acquired the shares in defendant appurtenant to all units that remained unsold including the 412 Shares appurtenant to the Unit in the building located at 5621 Netherland Avenue, Bronx, New York. The Sponsor thereafter sold the Shares to David Elliot Tash in or around March, 1990. The Shares were later seized by the United States Government from Mr. Tash in connection with his illegal drug activities. Plaintiffs purchased the Shares from the United States Government in or around May, 2004. Plaintiffs are also the proprietary lessees to the Unit. There is no dispute that neither Tash, the United States Government nor plaintiffs have ever occupied or resided in the Unit. The Unit's last occupants were Stella and Philip Ciaramella, rest regulated [*2]tenants, Mr. and Mrs. Ciaramella continuously occupied the Unit as tenants since prior to the building's cooperative conversion. Upon Philip Ciaramella's death, his wife became the Unit's sole occupant, until her death in February, 2006 and thereafter the Unit has remained vacant ever since. In or about June, 2006, plaintiffs entered into a contract for sale of their Shares and Unit with a prospective buyer. Plaintiffs represent to the buyer that he was purchasing "unsold shares" capable of transfer without prior approval of defendant. Defendant refused to recognize plaintiffs' Shares as "unsold" and insisted that the sale required its prior approval. As a result of defendant's refusal to recognize the Shares as "unsold", the prospective buyer terminated the contract.

In this motion, plaintiffs argue that the Shares are "unsold shares" and, pursuant to the term as defined by the cooperative documents, defendant's prior approval is not required before a sale. Plaintiffs contend that because the Shares were "unsold" pursuant to the Offering Plan to Convert to Cooperative Ownership Netherland Gardens (the "Offering Plan"), and the Shares were retained by the Sponsor as of Closing, they are defined as "unsold shares". Plaintiffs further contend that because the Unit has consistently been accepted by rent stabilized tenants (or vacant) and has never been accepted by plaintiffs, the Shares never ceased to be "unsold shares". In addition, plaintiffs contend that the "unsold" nature of the Shares is confirmed by the fact that, in accordance with the Offering Plan's description of Holders of Unsold Shares, plaintiffs never went before defendant or its board of directors to be approved as shareholders of the corporation. Defendant disputes plaintiffs' position and argues that the Shares are not "unsold shares" and as such its prior approval is required in connection with the sale of the Unit. Defendant argues that plaintiffs and their predecessors-in-interest purportedly failed to follow certain regulatory requirements that were enacted pursuant to the Martin Act. Specifically, defendant argues that neither plaintiffs nor Tash registered as broker-dealer with the Department of Law as required by General Business Law 359-e; provided the Department of Law with information about themselves as required of a principal of a sponsor when submitting an offering plan; and, are identified in any amendment to the Offering Plan as Holders of unsold shares.

The Offering Plan provides, in pertinent part, as follows:

If any shares of the Apartment Corporation (which have been allocated to apartments in the Buildings) are not sold or fully paid by the Closing Date ("Unsold Shares"), the Sponsor will produce, on the Closing Date, financially responsible individuals (the "Individuals") who will themselves individually purchase and acquire such Unsold Shares and who will enter into Proprietary Leases for the apartments to which such share are allocated. The Individuals will hold the Unsold Shares for their own account and not as nominees for, or the benefit of, any other individual or any corporation, partnership, joint venture or other entity of as participants in any tenancy-in-common or joint tenancy, although such purchasers may be persons affiliated with the Seller or Sponsor.

* * *

Each holder of a block of Unsold Shares shall have the right freely and without charge to sublet his or her apartment to such person on such terms and conditions as he or she deems desirable, and shall have the right freely and without charge to sell such Unsold Shares and transfer the [*3]appurtenant proprietary lease to any individual third party. The consent of the Apartment Corporation or its shareholders shall not be required with respect to any such subletting, sale of transfer ... The Unsold Shares shall retain their character as such until same are purchased, and that apartment to which same relate is occupied by a purchaser for a bona fide occupancy (by himself or herself or a member of his or her family) or the holder of a block of Unsold Shares (or a member of his or her family) becomes a bona fide occupant of the apartment.

The court's function on this motion for summary judgment is issue finding rather than issue determination. Sillman v. Twenticth Century Fox Film Corp., 3 NY2d 395 (157). Since summary Judgment is a drastic remedy. It should not be granted where there is any doubt as to the existence of a triable issue. Rotubs Extruders v. Ceppos, 46 NY2d 223 (1978). The movant must come forward with evidentiary proof in admissible form sufficient to direct judgment in its favor as a matter of law. Zuckerman v. City of New York, 49 NY2d 557, 562 (1980). Thus, when the existence of an issue of fact is even arguable or debatable, summary judgment should be denied. Stone v. Goodson, 8 NY2d 8, (1960); Sillman v. Twentieth Century Fax Film Corp., supra .

The proponent of a motion for summary judgment carries the initial burden of production of evidence as well as the burden of persuasion. Alvarez v. Prospect Hospital, 68 NY2d 320 (186). Thus, the moving parry must tender sufficient evidence to demonstrate as matter of law the absence of a material issue of fact. Once that initial burden has been satisfied, the "burden of production" (not the burden of persuasion) shifts to the opponent, who must now go forward and produce sufficient evidence to admissible foam to establish the existence of a triable issue of fact. The burden of persuasion, however, always remains where it began, i.e., with the proponent of the issue. Thus, if evidence is equality balanced, the movant has failed to meet its burden. 300 East 34th Street Co. v. Habceb, 683 NYS2d 175 (1st Dept. 1997).

Defendant's motion for summary judgment must be denied. In Kralik v. 239 East 79th Street Owners Corp., 5 NY3d 54 (2005), the Court of Appeals rejected the arguments presented by defendants herein. In Kralik, the Court expressly held that the absence of compliance with regulatory requirements plays no role in determining the status of shares of their shareholders. The Court of Appeals held that regulations governing sales of shares in occupied cooperatives are not determinative of issue whether proprietary lessees are holders of unsold shares, but rather, that determination is to be made solely by applying ordinary contract principles to interpret the terms of the documents defining their contractual relationship with the cooperative corporation. Pursuant to the Offering Plan, for shares to be considered "unsold", they must have been unsold as of the Closing dote. The Closing date here was August 29, 1983. As of that date, the 412 Shares were unsold and were not sold until purchased by Mr. Tash in 1990. Therefore, by the terms of the contract, the shares were "unsold", Moreover, pursuant to the Second Amendment to the Offering Plan. "[t]he Unsold Shares shall retain their character as such until same are purchased and the apartment to which the same ?? is occupied by a purchaser for a bona fide occupancy (by himself or herself or a member of his or her family) ... or the holder of a block of Unsold Shares (or a member of his or her family) becomes a boos fide occupant of the apartment." There is no dispute here that neither Tash, the United Sates Government nor [*4]plaintiffs ever resided in the apartment and, therefore, the Shares retained their "unsold" character.

The Court has considered defendant's remaining arguments and finds them unavailing. Accordingly, defendant's motion for summary judgment is denied and plaintiffs' cross-motion for summary judgment is granted. Plaintiffs are directed to file a note of issue and request an Inquest to determine damages.

This constitutes the decision and order of this Court.

Dated: September 28, 2007

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Hon. Sallie Manzanet-Daniels

NCAS

Mittman v. Netherland Gardens Corp.