SUPREME COURT STATE OF NEW YORK
COUNTY OF NEW YORK
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350 BLEECKER STREET APARTMENT                Index #:
CORPORATION 

               Plaintiff,                    VERIFIED
                                             COMPLAINT
          -against-

KENNETH B. NEWMAN, individually and as 
managing/general partner of BLEECKER
CHARLES COMPANY and KENNETH B. NEWMAN 
REALTY CORP.,

               Defendants.
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Plaintiff, 350 BLEECKER STREET APARTMENT CORPORATION ("the Co-op"), by its attorneys Mitchell R. Schrage & Associates, PLLC, for its complaint against defendants KENNETH B. NEWMAN, individually and as general partner of BLEECKER CHARLES COMPANY and KENNETH B. NEWMAN REALTY CORP., alleges as follows:

Parties

          1. At all relevant times, 350 BLEECKER STREET APARTMENT CORPORATION (hereinafter "the Co-op"), has been and still is a cooperative corporation organized under the laws of the State of New York with its principal place of business at 350 Bleecker Street, New York, New York.

          2. At all relevant times, defendant BLEECKER CHARLES COMPANY (hereinafter "the Sponsor" and/or "Master Lessee"), has been and still is a limited partnership organized under the laws of the State of New York with its principal place of business at 488 Madison Avenue, New York, New York 10022.

          3. At all relevant times, defendant KENNETH B. NEWMAN REALTY CORP. (hereinafter "the Managing Agent" and/or "the Transfer Agent"), has been and still is a domestic corporation organized under the laws of the State of New York with its principal place of business at 488 Madison Avenue, New York, New York 10022.

          4. At all relevant times, the defendant KENNETH B. NEWMAN (hereinafter "Newman"), has been and still is a resident of the City, County and State of New York.

          5. Newman was the general partner and managing partner of the Sponsor and Master Lessee, and was and is an attorney admitted to practice law before the Courts of the State of New York.

          6. Newman was the principal shareholder and/or operating officer of the Managing Agent and Transfer Agent.

Statement of Facts

          7. In 1984, the Sponsor, BLEECKER CHARLES COMPANY, whose Managing Partner was Kenneth B. Newman, was the owner of a building located at 350 Bleecker Street, New York, New York, (the "Premises") and who converted said Premises to cooperative ownership.

          8. The Premises consisted of a seven-story residential apartment building, two ground floor commercial spaces, and a public parking garage.

          9. The conversion of the Premises to cooperative ownership was governed by an offering plan ("the Plan") dated December 31, 1984, was written by, or was caused to by written by, Newman and the Sponsor, and was declared effective on or about April 5, 1985.

          10. The conversion of the Premises to cooperative ownership occurred when title of the Premises transferred from the Sponsor to the Co-op on July 31, 1985.

          11. On the effective date of the conversion, the Premises consisted of 138 residential apartment units. Upon information and belief, one of the units was reserved for use by the Premises' superintendent and was not included in the Plan. The remaining 137 units were offered for sale to the public pursuant to the Plan.

          12. At the time of closing on the transfer of title of the Premises as aforementioned, the Sponsor caused the Co-op to enter into a lease between the Co-op as Master Lessor and the Sponsor as Master Lessee (the "Master Lease"). The Master Lease was for the commercial portion of the Premises consisting of the two ground floor commercial spaces and the parking garage (the "Commercial Space").

          13. The Master Lease provided for a term of 75 years and further provided that the Master Lessee was to pay the Master Lessor a base rent of $86,000.00 per year, payable monthly. The Master Lease also contained a provision for certain additional rent based upon increases in the Premises' real estate and operating expenses.

          14. The Master Lessee has since 1985, subleased the Commercial Space pursuant to separate subleases.

          15. Upon information and belief, subsequent to the aforementioned conversion, several residents/shareholders purchased multiple units within the Premises and combined them into single apartments/units, which action and combination was approved by the Co-op's Board of Directors.

          16. The combination of units within the Premises as aforementioned, reduced the total number of residential units from 138 to 129, in which 128 were cooperative units, with one unit reserved for the superintendent and not included in the Plan.

          17. Thereafter, a reduction of 3 units from the total number of units within the Premises was reflected on the Co-op's Certificate of Occupancy. Upon information and belief, the remaining combinations of 5 units which further reduced the number of total units within the Premises, did not require changes to the Certificate of Occupancy due to the amendment to the New York City Charter by Local Law 77, effective November 27, 1968, which amendment eliminated the requirement for an amendment of the Certificate of Occupancy when apartment units in a cooperative are combined. As a result thereof, the remaining 5 unit combinations were accomplished by the filing of a building application and a copy of the construction plans.

          18. As a result of these unit combinations and the reduction in the total number of units within the Premises, the Sponsor's holdings in the premises were reduced to 25% or less of the units on November 5, 1998, when, upon the sale of unit 1E, the Sponsor then owned 32 of the then existing 128 cooperative units.

          19. Newman was and continues to be the liquidating partner of the Sponsor.

          20. Newman was and continues to be the sole Managing Partner or General Partner of the Sponsor and the Master Lessee.

          21. Newman was, until January 31, 2001, the sole Managing Partner or General Partner of the Managing Agent.

          22. Upon information and belief, Newman is an attorney admitted to practice law before the Courts of the Sate of New York and represented the Co-op and the Board of Directors from July 31, 1985 until he lost control of the Board of Directors in November 1999.

          23. Upon information and belief, Newman also controls the Selling Agent, Kenneth B. Newman Realty Corp.

          24. At all relevant times, Newman performed all of his functions as an attorney for the Board of Directors, controlling shareholder or operating officer of the Managing Agent and Transfer Agent, and Managing Partner or General Partner of the Sponsor and Master Lessee from one office located at 488 Madison Avenue, New York, New York.

          25. Newman was, from inception to November 1999, a member of the Co-op's Board of Directors and was its President.

          26. That at such time the Board of Directors consisted of seven members, of which three other members were controlled by Newman.

          27. Upon information and belief, in 1998, a member of the Co-op's Board of Directors suggested that the Board consult outside legal counsel as in regard to what was viewed as Newman's potential conflict of interest acting as attorney for the Co-op, President of the Board of Directors, Managing Agent, Sponsor, Master Lessee and Transfer Agent all simultaneously and the Board member further questioned Newman's desired renewal of the three-year managing agent contract for the Managing Agent.

          28. Upon information and belief, Newman became infuriated at the suggestion of possible conflict of interests, and with his nominees on the Board of Directors, prevailed in defeating a vote by the Board of Directors to retain outside counsel to advise the Board on possible conflicts of interest.

          29. As a result of the aforementioned, a member of the Board of Directors, personally retained outside counsel privately and for the first time was informed of the existence of the Federal Conversion Protection and Abuse Relief Act (hereinafter "the Abuse Act").

          30. Newman, as the attorney for the Co-op, never advised his client, the Co-op, of the existence of the Abuse Act and the Co-op's rights thereunder, and further did frustrate the Coop's attempt to get outside legal advise in regard of same.

          31. The Sponsor never informed the shareholders of the existence of the Abuse Act and their rights thereunder.

          32. The Managing Agent never advised the shareholders or the Board of Directors of the existence of the Abuse Act and their rights thereunder

          33. In part, the Abuse Act provided for the right, under certain conditions, for a cooperative corporation to terminate the "sweetheart deals" that a sponsor gave itself at the time of conversion of a building to cooperative ownership. The Abuse Act offers a cooperative corporation a limited time period, after the sponsor's control of the Board of Directors is reduced by reason of the sale by the sponsor of sponsor held units, to terminate contractual commitments or "sweetheart deals" entered into while the sponsor dominated the cooperative.

          34. Under the Abuse Act, "sweetheart" contracts may be terminated by a vote of the shareholders of a cooperative corporation only within a two-year period beginning on the date on which the sponsor owned no more than 25% of the units in the conversion project. 15 U.S.C. 3607 (b)(2).

          35. The Garage Portion of the Master Lease was a "sweetheart" deal contemplated by the Abuse Act.

          36. The shareholders called a meeting for June 1, 1999 for the purpose of voting for a resolution for the Co-op to terminate the Garage Portion of the Master Lease pursuant to the Abuse Act. The Board of Directors believed, at this time, that the 25% sponsor ownership threshold had been crossed.

          37. At said meeting, Newman and another attorney he brought to the meeting announced to the shareholders in person and in writing that any shareholder voting for the termination of the Garage Portion of the Master Lease could and/or would be sued individually by Newman.

          38. Newman's threat was meant to and did intimidate the shareholders since the Co-op was using an "open ballot" system of voting.

          39. The shareholders voted on June 24, 1999 on the issue of terminating the Garage Portion of the Master Lease and the shareholders failed by three votes to approve the termination resolution, which said outcome was obviously affected by Newman's threats.

          40. On June 1, 2000, after Newman was defeated for a position on the Board of Directors, the shareholders called for a shareholders' meeting to be held on June 27, 2000 at which time a vote would be had to approve a resolution terminating the Garage Portion of the Master Lease under Abuse Act. Newman again threatened the shareholders that they would be sued if they voted for the termination. At that meeting, despite Newman's threats, the Garage Portion of the Master Lease was terminated by a vote of shareholders of not less than two-thirds of the units other than the units owned by the Sponsor or an affiliate of the Sponsor. The Board issued a Notice of Termination of the Garage Portion of the Master Lease with the termination to become effective 90 days later on October 18, 2000.

          41. On October 13, 2000, the Sponsor brought an action in the United States District Court, Southern District of New York, for a declaratory judgment declaring that the Co-op's notice to terminate the Garage Portion of the Master Lease was legally ineffective and null and void under the Abuse Act, and that the Master Lease remain in full force and effect and that the Sponsor was entitled to continue in possession and operation of the Garage Portion of the Master Lease ("the Federal Action"). In the Federal Action, the Sponsor also asked for attorneys' fees and other expenses incurred in connection with the action.

          42. On October 3, 2001, District Judge Gerard E. Lynch granted summary judgment for the plaintiff Sponsor holding the Co-op's attempted termination of the Garage Portion of the Master Lease was ineffective and awarded the Sponsor attorneys' fees and costs incurred in the action (the "Decision").

          43. The Decision was based in part upon a review of the controlling Co-op's documents which revealed that the Co-op had 137 cooperative units, notwithstanding, as aforementioned, that units had been combined resulting in a total number of units of 128. According to the documents, which were not properly maintained by the Managing Agent and Transfer Agent, by October 16, 1997, the Sponsor had sold all but 34 of the units, and owned less than 25% of the units. Over the years, the Co-op's original 137 units were combined to approximately 128 units, which, if properly documented, would have affected the time period when the Sponsor's 25% ownership threshold was reached. Because the stock certificates and the proprietary leases were not changed when certain apartments were combined, the Court based its calculation on the 137 units, not 128 units. For this reason, the Co-op must have acted within the two years prior to October 16, 1999, in order to terminate the Garage Portion of the Master Lease. As it did not, the attempted termination in 2000 was ineffective.

          44. The Managing Agent did not instruct and supervise the Transfer Agent to assure that when units in the Co-op were combined that the necessary action was taken in the books and records of the Co-op to reflect that new stock certificates and proprietary leases had been issued to the owners of multiple adjacent units and that the books and records of the Coop reflect that there had been a reduction in the total number of units that comprised the Premises.

          45. The Transfer Agent did not properly maintain the books and records of the Co-op as stated above.

          46. The Federal Action was unsuccessful for the Co-op because, (1) the Sponsor, Newman, and/or Managing Agent failed to properly identify to the shareholders the Act and their rights thereunder or, (2) because the stock certificates and proprietary leases for the Co-op's shares were not reissued when single apartments were combined thus reducing the total number of units in the Premises, or (3) Newman threatened the shareholders with litigation.

          47. The Decision demonstrated that Co-op's documents were not properly maintained by the Sponsor, the Managing Agent and the Transfer Agent; and because of the Sponsor's, the Managing Agent's and the Transfer Agent's wrongdoing, the time period in which the Co-op had to terminate the Garage Portion of the Master Lease had expired as determined by the Court.

          48. That Newman and the other Defendants benefited directly and indirectly from their own actions, inactions, wrongdoing and unclean hands, and by reason of the Decision which was occasioned by Newman and the other defendants' intentional and negligent inaction, malfeasance, breach of fiduciary duty, fraud, violation of statute and conflicts of interest.

AS AND FOR A FIRST CAUSE OF ACTION AGAINST
BLEECKER CHARLES COMPANY

          49. Plaintiff repeats, reiterates and realleges each and every allegation contained in paragraphs 1-48 with the same force and effect as though more fully set forth at length herein.

          50. That because the Sponsor was an active participant in the management of the Co-op, it was the Sponsor's fiduciary duty to inform the shareholders of the existence of the Abuse Act and their rights thereunder.

          51. That the Sponsor knew or should have known that it was its fiduciary duty to inform the shareholders of the existence of the Act and their rights thereunder.

          52. That the Sponsor intentionally, maliciously, recklessly, fraudulently and negligently did not inform the shareholders of the existence of the Act and their rights thereunder.

          53. That the Sponsor intentionally, maliciously, recklessly, fraudulently and negligently concealed the existence for preservation of his own self interest and financial benefit stemming from his relationships in connection with the Co-op and the Commercial Lease.

          54. That the Federal Action was lost due to the Sponsor intentionally, maliciously, recklessly, fraudulently and negligently failing to properly inform the Co-op's shareholders of the existence of the Abuse Act and their rights thereunder.

          55. That due to the Sponsor intentionally, maliciously, recklessly, fraudulently and negligently failing to properly inform the Co-op's shareholders of the existence of the Abuse Act and their rights thereunder, the Co-op's action in pursuing the termination of the Garage Portion of the Master Lease was not timely, and the two-year statute of limitations to terminate the Garage Portion of the Master Lease as a sweetheart deal was not met, resulting in the Co-op's loss in the Federal Action.

          56. But for defendant Sponsor's fraud, the plaintiff would have been successful in terminating the Garage Portion of the Lease, and failing to do so resulted in damages to plaintiff in the approximate amount of $12,285,000.00.

          57. In addition to the foregoing, by reason of the defendant Sponsor's fraud, plaintiff incurred legal expenses in the Federal Action in the approximate amount of $100,000.00, and having been directed to pay Sponsor's legal fees in the amount of $367,000.00, plaintiff has been additionally damaged in the amount of $467,000.00.

          58. That by reason of the foregoing fraud by the defendant BLEECKER CHARLES COMPANY, plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A SECOND CAUSE OF ACTION AGAINST
BLEECKER CHARLES COMPANY

          59. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First cause of action with the same force and effect as though more fully set forth at length herein.

          60. That by reason of the foregoing negligence by the defendant BLEECKER CHARLES COMPANY, plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A THIRD CAUSE OF ACTION AGAINST
BLEECKER CHARLES COMPANY

          61. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First and Second causes of action with the same force and effect as though more fully set forth at length herein.

          62. That the Sponsor was also the Master Lessee of the Master Lease.

          63. That the Sponsor had a fiduciary duty not to usurp for itself a corporate opportunity.

          64. That the Sponsor knew or should have known that it was its fiduciary duty not to usurp for itself a corporate opportunity.

          65. That the opportunity for the Co-op to enter into the Master Commercial Lease with a lessee at a fair market value was a corporate opportunity for the Co-op.

          66. That the opportunity for the Co-op to terminate the garage portion of the Master Lease was a corporate opportunity for the Co-op.

          67. That due to the Sponsor intentionally, maliciously, recklessly, fraudulently and negligently failing to properly inform the Co-op's shareholders of the existence of the Abuse Act and their rights thereunder, the Co-op's action in pursuing the termination of the Garage Portion of the Master Lease was not timely, and the two-year window to terminate the Garage Portion of the Master Lease as a sweetheart deal was not met, resulting in the Co-op's loss in 2001 in the Federal Action.

          68. That because the Sponsor entered into the Master Lease as Master Lessee, it was to Sponsor's benefit not to inform the Co-op's shareholders of the Abuse Act and their rights thereunder.

          69. That due to Sponsor's self-dealing and self-interest, the Sponsor did not inform the Co-op's shareholders of the Abuse Act and their rights thereunder.

          70. That, not only did the Sponsor fail to inform the Co-op's shareholders of the Abuse Act and their rights thereunder, the Sponsor also threatened and intimidated the shareholders with legal action if they voted for the termination of the garage portion of the Master Lease.

          71. That because Sponsor did not inform the Co-op's shareholders of the Abuse Act and their rights thereunder in order to preserve its own interests, Sponsor usurped for itself a corporate opportunity of the Co-op.

          72. But for defendant Sponsor's diversion of a corporate opportunity of the Co-op, the plaintiff would have been successful in terminating the Garage Portion of the Lease, and failing to do so resulted in damages in 2001 to plaintiff in the approximate amount of $12,752,000.00.

          73. That by reason of the foregoing diversion of a corporate opportunity by the defendant Sponsor BLEECKER CHARLES COMPANY, plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A FOURTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN REALTY CORP.

          74. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second and Third causes of action with the same force and effect as though more fully set forth at length herein.

          75. That at all times hereinafter mentioned, KENNETH B. NEWMAN REALTY CORP., was the Managing Agent for the Co-op.

          76. That, the Managing Agent had a contractual and fiduciary duty to advise the Board of Directors and the Co-op of the existence of the Abuse Act and their rights thereunder.

          77. That the Managing Agent knew or should have known that it was his fiduciary duty to advise the Board of Directors and the Co-op of the existence of the Abuse Act and their rights thereunder.

          78. That the Managing Agent intentionally, maliciously, recklessly, fraudulently and negligently did not advise the Board of Directors and the Co-op of the existence of the Abuse Act and their rights thereunder.

          79. That the Managing Agent intentionally, maliciously, recklessly, fraudulently and negligently concealed the existence of the Abuse Act from the Board of Directors and the Co-op for preservation of his own self interest and financial benefit stemming from his relationships in connection with the Co-op and the Commercial Lease.

          80. That the Federal Action was lost due to the Managing Agent intentionally, fraudulently and negligently failing to properly identify the existence of the Abuse Act to the Board of Directors and shareholders and their rights thereunder.

          81. That due to the Managing Agent intentionally, maliciously, recklessly, fraudulently and negligently failing to properly identify the existence of the Abuse Act to the Board of Directors and shareholders and their rights thereunder, the Co-op's action in pursuing the termination of the Garage Portion of the Master Lease was not timely, and the two-year window to terminate the sweetheart deal was not met, resulting in the Co-op's loss in the Federal Action.

          82. That a duty of the Managing Agent was to insure and/or instruct and supervise the Transfer Agent to assure that when units in the Co-op were combined, that the necessary action was taken in the books and records of the Co-op so as to report the current number of units comprising the Premises.

          83. That the Managing Agent did not assure or did not instruct and supervise the Transfer Agent to assure that when units in the Co-op were combined that the necessary action was taken in the books and records of the Co-op to reflect that new stock certificates and proprietary leases had been issued to the owners of multiple adjacent units and that the books and records of the Co-op reflect that there had been a reduction in the total number of units that comprised the Premises.

          84. That the Co-op lost the Federal Action in 2001, in part, because the stock certificates for the Co-op's shares were not reissued when single apartments were combined, therefore, the books and records of the Co-op did not accurately reflect the total number of units comprising the Co-op.

          85. That the Decision clearly demonstrated that corporate documents, including the Co-op's stock certificates and the proprietary leases, were not properly maintained, and that based upon the Co-op's books and records and information contained therein, the two-year window to terminate the sweetheart deal was not met.

          86. But for defendant Managing Agent's fraud, the plaintiff would have been successful in terminating the Garage Portion of the Master Lease, and failing to do so resulted in the accrual of damages to plaintiff in 2001 in the approximate amount of $12,752,000.00.

          87. In addition to the foregoing, by reason of the defendant Managing Agent's fraud, plaintiff incurred legal expenses in the 2001 Federal Action in the approximate amount of $100,000.00, and having been directed to pay Sponsor's legal fees in the amount of $367,000.00, plaintiff has been additionally damaged in the amount of $467,000.00.

          88. That by reason of the Managing Agent's foregoing fraud by the defendant KENNETH B. NEWMAN REALTY CORP., plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A FIFTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN REALTY CORP.

          89. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third and Fourth causes of action with the same force and effect as though more fully set forth at length herein.

          90. That by reason of the Managing Agent's foregoing negligence by the defendant KENNETH B. NEWMAN REALTY CORP., plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A SIXTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN REALTY CORP.

          91. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third, Fourth and Fifth causes of action with the same force and effect as though more fully set forth at length herein.

          92. That by reason of the Managing Agent's foregoing negligence by the defendant KENNETH B. NEWMAN REALTY CORP., plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A SEVENTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN REALTY CORP.

          93. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third, Fourth, Fifth and Sixth causes of action with the same force and effect as though more fully set forth at length herein.

          94. That the Managing Agent and the Master Lessee are related entities with the defendant Newman being the controlling partner/shareholder/officer of each.

          95. That because the Managing Agent and Master Lessee are related entities, the Managing Agent benefited directly from the Sponsor's fraud, negligence, breach of contract and diversion of a corporate opportunity.

          96. That the Managing Agent conspired with the Sponsor in the Sponsor's fraud, negligence, breach of contract and diversion of a corporate opportunity.

          97. But for defendant Managing Agent's conspiracy to divert a corporate opportunity of the Co-op, the plaintiff would have been successful in terminating the Garage Portion of the Master Lease, and failing to do so resulted in damages in 2001 to plaintiff in the approximate amount of $12,752,000.00.

          98. That by reason of the Managing Agent's foregoing diversion of a corporate opportunity by the defendant KENNETH B. NEWMAN REALTY CORP., plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR AN EIGHTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN REALTY CORP. FOR FAILURE TO
COLLECT MONIES DUE PURSUANT TO MASTER LEASE

          99. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third, Fourth, Fifth, Sixth and Seventh causes of action with the same force and effect as though more fully set forth at length herein.

          100. That, pursuant to section (i) of the Master Lease, and pursuant to the Managing Agent Contract between the Co-op and Kenneth B. Newman Realty Corp., it was the Managing Agent's duty to collect monies from the Master Lessee on the Commercial Lease for the upkeep of the sidewalks and curbs in front of the commercial premises, and for repairs to the building.

          101. That the Managing Agent failed to collect said money from Master Lessee on the Commercial Lease.

          102. That the Managing Agent and the Master Lessee are related entities with the defendant Newman being the controlling partner/shareholder/officer of each.

          103. That by reason of the foregoing Managing Agent's breach of contract by the defendant KENNETH B. NEWMAN REALTY CORP., plaintiff has been damaged in the amount of $200,000.00.

AS AND FOR A NINTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN REALTY CORP.

          104. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third, Fourth, Fifth, Sixth, Seventh and Eighth causes of action with the same force and effect as though more fully set forth at length herein.

          105. That at all times hereinafter mentioned, KENNETH B. NEWMAN REALTY CORP., was the Transfer Agent for the Co-op.

          106. That it was the duty of the Transfer Agent to assure that when units in the Co-op were combined, that the necessary action was taken in the books and records of the Co-op.

          107. That several residents/shareholders purchased multiple units within the premises and combined them into single apartments/units.

          108. That the Transfer Agent did not, when units in the Co-op were combined, take the necessary action in the books and records of the Co-op to reflect that new stock certificates and proprietary leases had been issued to the owners of multiple adjacent units and did not assure that the books and records of the Co-op reflected that there had been a reduction in the total number of units that comprised the Premises.

          109. That the Co-op lost the Federal Action in 2001, in part, because the stock certificates for the Co-op's shares and proprietary leases were not reissued when single apartments were combined thus reducing the total number of units in the Co-op and therefore, the Co-op's books and records did not accurately reflect the Sponsor's holdings.

          110. That because the stock certificates, the proprietary leases and the books and records of the Co-op were not changed when certain apartments were combined to reflect the reality of the situation, the Court in the Federal Action based its calculation, as to the window of opportunity to terminate the Garage Portion of the Master Lease, on the Premises having137 units, when in reality, the Premises had 128 units.

          111. That the Decision clearly demonstrated that corporate documents, including the stock certificates, the proprietary leases and the books and records of the Co-op, were not properly maintained.

          112. But for defendant Transfer Agent's breach of contract, the plaintiff would have been successful in terminating the Garage Portion of the Lease, and failing to do so resulted in the accrual of damages to plaintiff in 2001 in the approximate amount of $12,285,000.00.

          113. In addition to the foregoing, by reason of the defendant Transfer Agent's breach of contract, plaintiff incurred legal expenses in the 2001 Federal Action in the approximate amount of $100,000.00, and having been directed to pay Sponsor's legal fees in the amount of $367,000.00, plaintiff has been additionally damaged from the 2001 Decision in the amount of $467,000.00.

          114. That by reason of the foregoing breach of contract by the defendant Transfer Agent KENNETH B. NEWMAN REALTY CORP., plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A TENTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN REALTY CORP.

          115. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth and Ninth causes of action with the same force and effect as though more fully set forth at length herein.

          116. That by reason of the foregoing negligence by the defendant KENNETH B. NEWMAN REALTY CORP., plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR AN ELEVENTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN

          117. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth causes of action with the same force and effect as though more fully set forth at length herein.

          118. That KENNETH B. NEWMAN is an attorney who represented the Sponsor, in which he was the sole Managing Partner, and/or General Partner of the Sponsor.

          119. That Newman was the sole principal or controlling principal of the Managing Agent and Master Lessee.

          120. That it was Newman's duty as attorney to the Co-op to advise the Co-op of the Act and of their rights thereunder.

          121. That Newman, as attorney to the Co-op, never advised the Co-op of the existence of the Abuse Act and their rights thereunder, and did further frustrate the Co-op's attempts to get outside legal advise in regard of the same.

          122. That Newman, in violation of his duties as the Co-op's attorney, did threaten and intimidate the shareholders with legal action if they voted for the termination.

          123. That, as attorney for the Co-op, it was Newman's duty to advise the Board of Directors and the Co-op of the existence of the Abuse Act and their rights thereunder.

          124. That Newman knew or should have known that it was his duty to advise the Board of Directors and the Co-op of the existence of the Abuse Act and their rights thereunder.

          125. That Newman intentionally, maliciously, recklessly, fraudulently and negligently did not advise the Board of Directors and the Co-op of the existence of the Abuse Act and their rights thereunder, and did conceal same for his own self-interest and gain, all in violation of the Attorney's Code of Professional Conduct.

          126. That the Co-op lost the 2001 Federal Action, in part, due to Newman intentionally, maliciously, recklessly, fraudulently and negligently failing to properly identify to the Co-op's Board of Directors and to the shareholders the Abuse Act and their rights thereunder.

          127. That due to Newman intentionally, maliciously, recklessly, fraudulently and negligently failing to properly identify to the Board of Directors and shareholders the Abuse Act and their rights thereunder, the Co-op's action in pursuing the termination of the Garage Portion of the Master Lease was not timely, and the two-year window to terminate the sweetheart deal was not met, resulting in the Co-op's loss in the Federal Action.

          128. That Newman, who was attorney for the Co-op, is also the liquidating partner and Managing Partner/General Partner of the Sponsor, was the Managing Partner of the Managing Agent and Transfer Agent for the Co-op, and Newman was from inception to a point in time, was a member of the Co-op's Board of Directors and was its President.

          129. That Newman's positions as aforementioned constituted obvious conflicts of interest which prevented Newman from performing any of his duties and responsibilities as attorney to the Co-op.

          130. That, as attorney for the Co-op, Newman is bound by and did violate the New York Code of Responsibility Disciplinary Rule DR 5-101 (A) which states that a lawyer shall not accept employment if the exercise of professional judgment on behalf of the client will be or reasonably may be affected by the lawyer's own financial, business, property, or personal interests.

          131. That Newman benefited directly and indirectly from his own actions or inactions.

          132. That Newman benefited directly and indirectly by reason of the Decision which was occasioned by Newman's inaction, malfeasance, breach of fiduciary duty, fraud, violation of statute and conflicts of interest.

          133. But for defendant Newman's legal malpractice, the plaintiff would have been successful in terminating the Garage Portion of the Lease, and failing to do so resulted in damages to plaintiff in the approximate amount of $12,285,000.00.

          134. In addition to the foregoing, by reason of the defendant Newman's legal malpractice, plaintiff incurred legal expenses in the 2001 Federal Action in the approximate amount of $100,000.00, in addition to having been directed to pay the Sponsor's legal fees in the amount of $367,000.00.

          135. That by reason of the foregoing, Newman's actions constituted legal malpractice by the defendant KENNETH B. NEWMAN, and plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A TWELFTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN

          136. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh causes of action with the same force and effect as though more fully set forth at length herein.

          137. That by reason of the foregoing breach of fiduciary duty by the defendant KENNETH B. NEWMAN, plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

AS AND FOR A THIRTEENTH CAUSE OF ACTION AGAINST
KENNETH B. NEWMAN

          138. Plaintiff repeats, reiterates and realleges each and every allegation contained in the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh and Twelfth causes of action with the same force and effect as though more fully set forth at length herein.

          139. That Newman was also the controlling principal/liquidating partner of the Master Lessee.

          140. That Newman, as an officer, director, and attorney for the Co-op, and as the liquidating partner of the Master Lessee, knew or should have known that by entering into the Master Lease as Master Lessee, he was usurping a corporate opportunity of the Co-op.

          141. That Newman, as officer, director and attorney, had a fiduciary duty not to usurp for itself a corporate opportunity.

          142. That Newman knew or should have known that it was his fiduciary duty not to usurp for himself a corporate opportunity.

          143. That the opportunity for the Co-op to terminate the garage portion of the Master Lease was a corporate opportunity for the Co-op.

          144. That because Newman was also the controlling principal/liquidating partner of the Master Lessee, it was to Newman's benefit not to inform the Co-op's shareholders of the Abuse Act and their rights thereunder.

          145. That due to Newman's self-dealing and self-interest, Newman did not inform the Co-op's shareholders of the Abuse Act and their rights thereunder.

          146. That, not only did Newman fail to inform the Co-op's shareholders of the Abuse Act and their rights thereunder, Newman also threatened and intimidated the shareholders with legal action if they voted for the termination of the Garage Portion of the Master Lease.

          147. That because Newman did not inform the Co-op's shareholders of the Abuse Act and their rights thereunder in order to preserve his own interests, Newman usurped for himself a corporate opportunity of the Co-op.

          148. But for defendant Newman's diversion of a corporate opportunity of the Co-op, the plaintiff would have been successful in terminating the Garage Portion of the Master Lease, and failing to do so resulted in damages in 2001 to plaintiff in the approximate amount of $12,752,000.00.

          149. That by reason of the foregoing diversion of a corporate opportunity by the defendant KENNETH B. NEWMAN, plaintiff has been damaged in the amount of $12,752,000.00 in compensatory damages and in the amount of $10,000,000.00 in punitive damages.

          WHEREFORE, plaintiff asks for relief in the amount requested in each of the above causes of action.

Dated: New York, New York
           June 17, 2002

TO:

KENNETH B. NEWMAN
488 Madison Avenue
New York, NY 10022

BLEECKER CHARLES COMPANY
488 Madison Avenue
New York, NY 10022

KENNETH B. NEWMAN REALTY CORP.
488 Madison Avenue