Defendant, Randolph Froehlich ("Froehlich"), moves to consolidate an action commenced in Supreme Court, Suffolk County captioned Sandpit Operations Partners Inc., and Daniel Erhlich, individually and derivatively as a shareholder of Sandpit Operations Partners, Inc., and as a partner in the General Partnership between Michael Loturco and himself, Plaintiffs against Sandpit Operations Partners Inc., as a nominal defendant, Michael Loturco and Randolph Froehlich, Defendants, Suffolk County, Index No. 27959/07 ("Suffolk County Action") with this action ("Nassau County Action"), extending Froehlich's time to appear, answer and move in the Suffolk County Action pending the further order of this Court and staying all proceedings in both actions pending further order of this Court.

A.Nassau County Action ^[FN1]

Reduced to its basics, the Nassau County Action is an action brought by Plaintiff, Mel Ehrlich ("Mel"), to recover on a $145,000 loan.

Defendants, William Froehlich and Randolph Froehlich (collectively "Froehlich"), own real property in Yaphank, New York. At the time of the transactions alleged in the Nassau County Action, the Froelich property was an inactive sand mine. The property allegedly had substantial value as a commercial sand mine and/or for residential real estate development. [*2]

Mel, who is in the real estate development business, introduced the Froehlichs to Defendant, The Christopher Companies, Ltd. ("CCL"). As a result of this introduction, CCL supposedly entered into a contract to purchase and develop the property.

Mel alleges that disputes arose between CCL and the Froehlichs. As a result, CCL never purchased the property. CCL then supposedly brought an action to recover the deposit it had paid on contract.

At that point, Plaintiff, Daniel Ehrlich ("Daniel"), was approached by Defendant, Michael Loturco ("Loturco"). Loturco proposed that Daniel and he enter into an

agreement to lease or purchase the property from the Froehlichs subject to the resolution of the litigation then pending between CCL and the Froehlichs.

During the course of the negotiations between Daniel and Loturco, Daniel introduced Mel to Loturco. Mel advised Loturco that he would like to acquire an interest in the property.

At Loturco's request, Mel wired $10,000 to Kennedy Funding, Inc. to obtain a loan commitment on the property.

Loturco then advised Mel and Daniel that, in exchange for a loan of $145,000, which would be used to settle the litigation between the Froehlichs and CCL, Mel and Daniel would receive a 25% interest in the corporation Loturco was forming for the purpose of entering into a long-term lease on the property with the Froehlichs.

The proposed corporation would operate a sand mine on one-half of the property and would develop the other half for residential use. Once the sand assets on the property had been exhausted, that portion would be developed for residential use as well.

Mel agreed to make the loan to Loturco provided that the loan was collateralized. Loturco allegedly agreed to give Mel a security interest in certain heavy equipment. Loturco was supposed to have his attorney, Defendant, Paul V. Craco, Esq. ("Craco"), prepare the necessary documents to reflect Mel's security interest in the heavy equipment and have them executed by Loturco. Craco was also supposed to prepare,

for Loturco's signature, the UCC Financing Statements evidencing Mel's security interest in the heavy equipment. Craco was then to file those statements

Mel claims that he was advised that all the necessary documents had been prepared, executed and filed. He then wired $145,000 into the attorney trust account of Defendant, Mark D. Mermel, Esq. ("Mermel") with the understanding that Mermel was not to disburse any of the money until Mermel and Mel had confirmed that all the necessary documents relating to Mel's security interest had been signed and filed.

Loturco never signed the security agreement or the UCC Financing Statements. Mel alleges that Loturco never formed a corporation to enter into the long-term lease on the property with the Froehlichs. Despite this, Mermel disbursed the money to settle the litigation between CCL and the Froehlichs.

Mel alleges that, during the course of discovery, he learned that the Froehlichs had entered into a contract to sell the property to Sandpit Operations Partners, LLC ("Sandpit"); not CCL. Sandpit assigned its interest in the contract to Zion Investments, Inc. ("Zion"). Mel alleges that Loturco controls both Sandpit and Zion.

It is Mel's claim that the entire scenario was an elaborate scheme to defraud him.

Mel has never been repaid. Neither Daniel nor he have received an interest in the [*3]property or any business entity formed for the purpose of leasing or purchasing the property. In the Nassau Action, Mel and Daniel have sued everyone involved in the alleged scheme to recover this money.

The Nassau County Action has proceeded to the point where discovery is significantly, if not fully, completed. The action should be certified for trial shortly.

B.Suffolk County Action

The Suffolk County Action was commenced in September 2007. The action seeks specific performance of two agreements.

The first agreement is an August 16, 2001 letter signed by Daniel and Loturco. The purpose of the letter was to memorialize their agreement relating to the purchase and development of the Froehlichs' Yaphank property. The letter references a corporation formed or to be formed. Loturco was to have a 75% interest in the corporation, while Daniel was to have a 25% interest in the corporation. The letter reflects that Daniel was to obtain a $145,000 loan for the business. The letter further reflects the loan was to be collateralized and that Daniel and Loturco would be personally liable to repay the loan. The letter contains other information regarding Loturco and Daniel's respective interests and positions in the corporation to be formed. The final sentence of their letter reflects that Loturco and Daniel were to complete a formal agreement within 30 days of the date of the letter.

Since Loturco and Daniel did not enter into the formal agreement and Loturco never formed the corporation envisioned by the letter, the complaint in the Suffolk County Action characterizes this letter as creating a joint venture or partnership between Loturco and Daniel. Daniel seeks to cancel Loturco's interest in the joint venture or partnership as a result of Loturco's failure to comply with the agreement.

Alternatively, Daniel alleges that he formed Sandpit as the corporation referenced by the August 16, 2001 letter.

The second agreement is a letter dated August 22, 2001 sent by Loturco's attorney to the Froehlichs' attorney indicating that the pending litigation regarding the Yaphank property was being settled and discontinued. The letter further indicates that upon discontinuance of the litigation, the Froehlichs had agreed to sell the property to Loturco or a corporation he was forming for that purpose. The letter contains a purchase price and various other terms regarding the proposed sale. The letter indicates possession was to be delivered on of before September 7, 2001. The letter further states:

"It is understood by both Mr. Loturco and your clients [the Froehlichs] that the above represents a recitation of the intention to enter into a contract in the future, and the above terms and conditions are subject to alteration at the parties wishes."

The letter indicates that if the stated terms were acceptable to the Froehlichs, then it should be signed by Randolph Froehlich. Randolph Froehlich signed the letter.

Froehlich and Loturco never entered into the contract contemplated in the August 22, 2001 letter. Apparently, the Froehlichs have never sold the property to Loturco or anyone else.

Daniel alleges that the August 21, 2001 letter constitutes a contract to sell the property. The complaint alleges that Sandpit, as Loturco's undisclosed principal, has

the right to enforce the contract. The complaint seeks specific performance of the contract on [*4]behalf of Sandpit.

Alternatively, the complaint alleges that Daniel, as a general partner, seeks to compel specific performance on behalf of the Daniel-Loturco joint venture/partnership.

Issue has not yet been joined in the Suffolk County Action. The order to show cause granted by this Court stayed all proceedings in the Suffolk County Action pending further order of this Court.

CPLR 602(b) permits the Supreme Court to remove to itself an action pending in another court and direct consolidation or joint trial. Consolidation or joint trial will be directed only if the cases involve common questions of law or fact. CPLR 602(a).

Consolidation is inappropriate where the cases involve different factual or legal issues. Pau v. Bellavia, 145 AD2d 609 (2nd Dept. 1988).

Froehlich fails to establish that the Nassau County and Suffolk County Actions involve common questions of law and fact. Mel is not a party to the Suffolk County Action. None of the causes of action he asserts in the Nassau County Action are involved in any of the causes of action plead in the Suffolk County Action. In fact, Mel opposes consolidation of these actions

Mel is seeking to recover on a $145,000 loan. The questions of law and fact raised in the Nassau County Action involve to whom did Mel loan the money, was it properly disbursed and who is obligated to make repayment.

The Suffolk County Action involves causes of action for specific performance. Mel is not a party to the contracts that give rise to those causes of action. Neither are Craco, Mermel or CCL, who are Defendants in the Nassau County Action. The questions of law and fact in the Suffolk County Action involve the question of whether the writings upon which Daniel relies are enforceable contracts and, if so, what rights does Daniel or Sandpit have, if any, pursuant to those contracts.

One of the primary reasons for directing consolidation or joint trial is to avoid irreconcilably inconsistent results. Dolce v. Jones, 145 AD2d 594 (2nd Dept. 1988). Since Mel is not a party to the Suffolk County Action and the causes of action he pleads in the Nassau County Action are not involved in or affected by the causes of action alleged in the Suffolk County Action, the possibility of irreconcilably inconsistent results is not a real concern.

In addition, where discovery in one action is significantly completed and is still at the pleadings stage in the other action, a party establishes significant prejudice to a substantial right requiring that consolidation be denied. Smith v. Smith, 261 AD2d 928 (4th Dept. 1999). Discovery in the Nassau County Action is substantially, if not fully, completed. The attorneys have completed 15 days of depositions. Most, if not all, of the document discovery has been completed. The Nassau County Action is or will shortly be ready for trial.

The Suffolk County Action was commenced in September 2007. Issue has not yet been joined. A preliminary conference has not been held. Discovery has not been begun. Based upon a reading of the complaint and the documents upon which Daniel relies as the basis for his causes of action, this Court believes that Froehlich is likely to move to dismiss the Suffolk County Action. A motion to dismiss the Suffolk County Action would extend Froehlich's time to serve a responsive pleading pending the hearing and determination of that motion. CPLR 3211(f). Even if the motion to dismiss is denied, in whole or in part, issue will not be joined and discovery in the Suffolk County Action will not commence for months. Given the nature of the issues involved and the discovery that will have to be conducted, the Suffolk County Action will [*5]almost certainly not be ready for trial for a substantial period of time. Under such circumstances, consolidation is inappropriate. Dias v. Berman, 188 AD2d 331 (1st Dept. 1992).

Finally, consolidation in Nassau County would be improper. CPLR 507 requires that venue of an action affecting title to or use, possession or enjoyment of real property be in the county in which the property is located. The Suffolk County Action seeks specific performance of a contract to sell real property located in Suffolk County. If the Court were to grant consolidation, and it is not, the mandatory venue provisions of CPLR 507 would require that consolidation be in Suffolk County. GAM Property Corp. v. Sorrento Lactalis, Inc., 41 AD3d 645 (2nd Dept. 2007). Such a result would be unfair to the parties in the Nassau County Action. For this reason as well, the motion must be denied.

Accordingly, it is,

ORDERED, that Froehlich's motion to consolidate is denied; and it is further,

ORDERED, that Froehlich's time to answer or move in regard to the complaint in the Suffolk County Action is hereby extended for a period of twenty (20) days from the service of this order with notice of entry; and it is further,

This constitutes the decision and order of this Court.

Dated: Mineola, NY_____________________________

January 28, 2008Hon. Leonard B. Austin, J.S.C.