FILED: NEW YORK COUNTY CLERK 07/21/ :08 PM INDEX NO /2015 NYSCEF DOC. NO. 141 RECEIVED NYSCEF: 07/21/2016

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1 FILED: NEW YORK COUNTY CLERK 07/21/ :08 PM INDEX NO /2015 NYSCEF DOC. NO. 141 RECEIVED NYSCEF: 07/21/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK 1993 TRUST OF JOAN COHEN, by their Trustees, JOAN COHEN & ELLEN HAKIM and 1993 TRUST OF ELLEN HAKIM, by their Trustees, JOAN COHEN & ELLEN HAKIM, Plaintiffs, Index No /2015 -against- E. RICHARD BAUM and ANCHIN, BLOCK & ANCHIN LLP., Defendants. E. RICHARD BAUM and ANCHIN, BLOCK & ANCHIN LLP., Third-Party Plaintiffs, -against- LANGHAM MANSIONS LLC and ALAN MANOCHERIAN (as the Tax Matters Partner of Langham Mansions LLC and as the Managing Member of Langham Mansions LLC), SUMMONS FOR ADDITIONAL THIRD PARTY DEFENDANTS Third-Party Defendants. To: LANGHAM MANSIONS LLC and ALAN MANOCHERIAN (as the Tax Matters Partner of Langham Mansions LLC and as the Managing Member of Langham Mansions LLC): YOU ARE HEREBY SUMMONED to answer, pursuant to C.P.L.R. 3019, the Third Party Complaint in this action and to serve a copy of your answer, or, if the Third Party Complaint is not served with this summons, to serve a notice of appearance, on the Third-Party Plaintiffs Attorney(s) within 20 days after the service of this summons, exclusive of the day of service (or within 30 days after the service is complete if this summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the Third Party Complaint. NEWYORK/# of 22

2 Third-Party Defendants: LANGHAM MANSIONS LLC c/o National Registered Agents, Inc. 160 Greentree Drive, Suite 101 Dover, Delaware ALAN MANOCHERIAN Manocherian Brothers 150 East 58th Street Suite 2801 New York, NY Dated: New York, New York July 21, 2016 Respectfully submitted VEDDER PRICE P.C. By: s/ John H. Eickemeyer John H. Eickemeyer Marc B. Schlesinger 1633 Broadway, 47th Floor New York, NY (212) Attorneys for Defendants and Third-Party Plaintiffs NEWYORK/# of 22

3 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK 1993 TRUST OF JOAN COHEN, by their Trustees, JOAN COHEN & ELLEN HAKIM and 1993 TRUST OF ELLEN HAKIM, by their Trustees, JOAN COHEN & ELLEN HAKIM, Plaintiffs, Index No /2015 -against- E. RICHARD BAUM and ANCHIN, BLOCK & ANCHIN LLP., Defendants. E. RICHARD BAUM and ANCHIN, BLOCK & ANCHIN LLP., Third-Party Plaintiffs, -against- LANGHAM MANSIONS LLC and ALAN MANOCHERIAN (as the Tax Matters Partner of Langham Mansions LLC and as the Managing Member of Langham Mansions LLC), THIRD PARTY COMPLAINT Third-Party Defendants. Defendants E. Richard Baum ( Baum ) and Anchin, Block & Anchin LLP ( Anchin, and collectively with Baum, the Defendants or, in this third-party action, the Third-Party Plaintiffs ), by their attorneys, Vedder Price P.C., in bringing this third-party complaint for contribution against Langham Mansions LLC ( Langham ) and Alan Manocherian ( Manocherian ), in his capacity as both the Tax Matters Partners of Langham and the Managing Member of Langham, state the following: 3 of 22

4 NATURE OF THE CONTRIBUTION CLAIM 1. Defendants bring this claim for contribution against Langham and Manocherian, in Manocherian s capacity as both the Tax Matters Partners of Langham and the Managing Member of Langham. Langham and Manocherian failed to provide Defendants with proper and timely information concerning Langham, which caused, in whole or in part, Plaintiffs 1 alleged damages. 2. Manocherian, who was Langham s Tax Matters Partner and its Managing Member, and thus, an agent of Langham, has numerous obligations including statutory, fiduciary, contractual and otherwise to the IRS, to Langham s members (including the Plaintiff-Trusts), and to Baum, who was a trustee of, and exclusively handled all tax matters for, the Plaintiff-Trusts. Manocherian is required to provide the IRS and Langham s members with correct information concerning Langham and to provide Baum with timely information concerning Langham s tax matters. Such Langham tax matters include, but are not limited to, any IRS audit of Langham, any consent by the Tax Matters Partner to extend the Statute of Limitations for the IRS to commence or conduct an audit, any IRS determination as a result of an audit of Langham, and any decision by Langham to protest/appeal an IRS audit determination. Manocherian s obligations as Langham s Tax Matters Partner are specifically prescribed by the Internal Revenue Code ( IRC ), including Sections 6223, 6230, and related regulations. Langham and Manocherian, however, repeatedly and negligently failed to fulfill their obligations. These failures are the cause of Plaintiffs purported damages. Langham and Manocherian failed to provide the Plaintiff-Trusts and Baum with correct information regarding 1 Plaintiff 1993 Trust of Ellen Hakim, by their Trustees, Joan Cohen & Ellen Hakim is referred to herein as the Hakim Trust ; Plaintiff 1993 Trust of Joan Cohen, by their Trustees, Joan Cohen & Ellen Hakim is referred to herein as the Cohen Trust. Collectively, they are referred to as the Plaintiff-Trusts or Plaintiffs. 2 4 of 22

5 a charitable donation made by Langham, and they failed to timely notify Defendants of pertinent and statutorily required information concerning Langham, including the fact (a) that Langham was being audited, (b) that a final IRS determination was reached as a result of the audit, and (c) that Langham intended to protest/appeal the result of the audit. They also failed to provide the IRS correct information about the Plaintiff-Trusts. 3. As a result of their negligence and breaches of their duties (including fiduciary duties), Manocherian and/or Langham are responsible, in whole or in part, for all of Plaintiffs alleged damages. Defendants are therefore entitled to contribution in the full amount of such damages from Manocherian and/or Langham; or alternatively, Defendants are entitled to contribution from Manocherian and/or Langham in proportion to their pro rata share of fault for Plaintiffs damage and to the extent that Defendants are required to pay more than any pro rata share of such fault that may be attributed to Defendants. THE THIRD-PARTY DEFENDANTS 4. Plaintiff 1993 Trust of Joan Cohen, by their Trustees, Joan Cohen & Ellen Hakim (the Cohen Trust ) was established in 1993 and owns a membership interest in Langham. 5. Plaintiff 1993 Trust of Ellen Hakim, by their Trustees, Joan Cohen & Ellen Hakim (the Hakim Trust ) was established in 1993 and owns a membership interest in Langham. 6. Defendant and Third-Party Plaintiff Anchin is a professional accounting firm. 7. Defendant and Third-Party Plaintiff Baum is a partner at Anchin who provided certain tax and accounting services for the Cohen Trust and the Hakim Trust from approximately 2001 to May Baum was a trustee of the Cohen Trust from April 1, 2002 to May 31, 2013 and he was a trustee of the Hakim Trust from December 31, 2001 to June 11, of 22

6 8. Third-Party Defendant Langham Mansions LLC is a Delaware limited liability corporation that holds title to an apartment building located at 135 Central Park West. 9. Third-Party Alan Manocherian is the Tax Matters Partner for Langham, as that term is defined by the Internal Revenue Code. Upon information and belief, Manocherian is also the Managing Member (or the Manager) of Langham. FACTS APPLICABLE TO ALL CAUSES OF ACTION 10. The Plaintiff-Trusts each own a membership interest in Langham, which holds title to an apartment building located at 135 Central Park West. 11. Effective December 31, 2001, Baum was appointed as a trustee of the Hakim Trust. 12. Effective April 1, 2002, Baum was appointed as a trustee of the Cohen Trust. 13. Upon information and belief, Manocherian was the Managing Member of Langham and the Tax Matters Partner of Langham since before Baum was elected a trustee of either of the Plaintiff-Trusts, and Manocherian has continuously held both positions through the present. 14. Manocherian owes duties of due care, contractual duties and fiduciary duties to Langham and to its members (including the Plaintiff-Trusts), by virtue of his position as Langham s Managing Member. 15. Manocherian owes fiduciary duties, duties of due care and statutorily-imposed duties to Langham and to its members (including the Plaintiff-Trusts), by virtue of his position as Langham s Tax Matters Partner 16. Manocherian s statutorily-imposed duties are prescribed by the Internal Revenue Code and related regulations. 4 6 of 22

7 17. In 2004, Langham made a non-cash charitable contribution to the National Architectural Trust (the Donation ), which Langham valued at approximately $86 million. 18. The Donation was a conveyance of a property interest a conservation easement which precluded any changes to the façade of the building owned by Langham located at 135 Central Park West. 19. As Langham is an LLC, any potential benefit/detriment derived from the Donation was passed through to its members, and would be reflected on their tax returns. 20. From the mid 1990 s through 2012, Baum was responsible for preparing the Plaintiff-Trusts tax returns and submitting them to the IRS and to New York State. Baum exclusively handled all tax matters for the Plaintiff-Trusts during that time was the last year for which Baum prepared and filed the Plaintiff-Trusts tax returns. While Baum prepared the Plaintiff-Trusts 2012 tax returns, the tax returns were ultimately re-prepared and filed by a different accounting firm, unaffiliated with Defendants. 22. Baum signed each of the Plaintiff-Trusts tax returns both as tax-preparer and as trustee on behalf of the Plaintiff-Trusts. The other trustees never objected to this practice or raised any questions or concerns. 23. During the time that Baum prepared and signed the Plaintiff-Trusts tax returns, none of the other trustees of the Plaintiff-Trusts ever requested that they sign the tax returns. 24. In February 2005, Baum s former firm, Yohalem Gillman & Co. ( Yohalem ) was merged with defendant Anchin, at which time the accountants who had been affiliated with Yohalem, including Baum, were relocated to Anchin s office at 1375 Broadway, New York, New York 10018, from Yohalem s office at 477 Madison Avenue, New York, NY of 22

8 25. As a result of the merger, the mailing address of Yohalem also changed to the 1375 Broadway address. year. 26. Baum resigned as a trustee of the Cohen Trust on May 31, Baum resigned as a trustee of the Hakim Trust on June 11, Baum did not prepare any tax documents for the Plaintiff-Trusts after the 2012 tax Langham Reports Materially Incorrect Information On The Plaintiff-Trusts Schedules K-1 Concerning the Donation 29. In March 2005, Schedules K-1 for each of the Plaintiff-Trusts were prepared by or on behalf of Langham for the 2004 tax year. 30. The 2004 Schedules K-1 reflected the pro-rata share of the Donation for each of the Plaintiff-Trusts for tax reporting purposes. 31. In accordance with their respective membership interests, Langham reported on the 2004 Schedules K-1 for each of the Plaintiff-Trusts that the pro-rata allocation of the Donation for each Plaintiff-Trust was $5,848, The 2004 Schedules K-1 are the only K-1 s for the Plaintiff-Trusts that reflect the pass-through allocation concerning the Donation. 33. The 2004 Schedules K-1, prepared by or on behalf of Langham for each of the Plaintiff-Trusts, improperly report the character and deductibility of the Donation. 34. Langham (or someone on its behalf) improperly reported on the 2004 Schedules K-1, whether negligently or intentionally, that the Donation was a cash contribution that could be deducted against the Plaintiff-Trusts income, subject to a 30% AGI limitation. 35. Manocherian and Langham knew or should have known that the Schedules K-1 improperly categorized the Donation. 6 8 of 22

9 36. Manocherian and Langham failed to notify Baum or Anchin of these mistakes. 37. Langham, or accountants acting on its behalf, prepared and continues to prepare Schedules K-1 for each of the Plaintiff-Trusts. 38. The Schedules K-1 for the Plaintiff-Trusts, which were prepared by or on behalf of Langham, contain material errors for the 2004 to 2012 tax years. Errors on the Schedules K-1 For the Hakim Trust 39. The 2004 Schedule K-1 for the Hakim Trust, which was prepared on March 20, 2005, improperly: (a) categorizes the Donation on Line 13B of the K-1 as an other deduction of cash contributions 30% when the Donation was neither a cash contribution nor, as the Plaintiff-Trusts previously acknowledged, was the deduction limited to 30% of the Plaintiff- Trusts gross income; (b) discloses conflicting and incorrect information in the Supplemental Information section for Line 13B, including that the deduction was subject to the 30% limitation; and (c) reports the partner s name and mailing address in Line H of the K-1 as Ellen Hakim Trust, 477 Madison Avenue, New York, NY 10022, thus failing to report the correct mailing address for Baum and failing to address the Schedule K-1 to Baum s attention. 40. From 2005 through 2012, the Schedules K-1 for the Hakim Trust improperly reports the partner s name and mailing address as Ellen Hakim Trust, 477 Madison Avenue, New York, NY 10022, thus failing to report the correct mailing address for Baum and failing to address the Schedule K-1 to Baum s attention. 41. At no point were any Schedules K-1 issued for the Hakim Trust that corrected any of the above errors. 42. Manocherian and Langham failed in their obligation to notify Baum, who exclusively handled all tax matters for the Hakim Trust, or Anchin of these mistakes, failed in 7 9 of 22

10 their obligation to notify the IRS of these mistakes, and failed in their obligations to correct these mistakes. Errors on the Schedules K-1 For the Cohen Trust 43. The 2004 Schedule K-1 for the Cohen Trust, which was prepared on March 20, 2005, improperly: (a) categorizes the Donation on Line 13B of the K-1 as an other deduction of cash contributions 30% when the Donation was neither a cash contribution nor, as the Plaintiff-Trusts previously acknowledged, was the deduction limited to 30% of the Plaintiff- Trusts gross income; (b) discloses conflicting and incorrect information in the Supplemental Information section for Line 13B, including that the deduction was subject to the 30% limitation; and (c) reports the partner s name and mailing address in Line H of the K-1 as Joan Cohen Trust, 477 Madison Avenue, New York, NY 10022, thus failing to report the correct mailing address for Baum and failing to address the Schedule K-1 to Baum s attention. 44. From 2005 through 2012, the Schedules K-1 for the Cohen Trust improperly reports the partner s name and mailing address as Joan Cohen Trust, 477 Madison Avenue, New York, NY 10022, thus failing to report the correct mailing address for Baum and failing to address the Schedule K-1 to Baum s attention. 45. At no point were any Schedules K-1 issued for the Cohen Trust that corrected any of the above errors. 46. Manocherian and Langham failed in their obligation to notify Baum, who exclusively handled all tax matters for the Cohen Trust, or Anchin of these mistakes, failed in their obligation to notify the IRS of these mistakes, and failed in their obligations to correct these mistakes of 22

11 Deductions Taken on the Plaintiff-Trusts Tax Returns 47. Baum relied on the Schedules K-1 prepared by or on behalf of Langham, as is proper under professional standards relating to tax return preparation, when he prepared the tax returns for each of the Plaintiff-Trusts. 48. For five years (tax years ), and in reliance solely on the Schedules K-1 provided by Manocherian and/or Langham, Baum deducted on each of the Plaintiff-Trusts tax returns a portion of the Langham Donation as a charitable deduction in accordance with the tax reporting of the Donation on the Schedules K Thus, relying on Langham s reporting of the Donation as a deductible contribution with a 30% AGI limitation, from tax years , a total of $1,501, was deducted on the tax returns for the Cohen Trust and a total of $1,644, was deducted on the tax returns for the Hakim Trust. 50. In certain years, Baum received the Schedules K-1 via messenger from Manocherian, and in other years, Baum received the Schedules K-1 via U.S. mail from Manocherian. 51. When Baum received the Schedules K-1 for each of the Plaintiff-Trusts interests in Langham via U.S. mail from Manocherian, they were sent in a package, with Baum s correct mailing address (different from that listed on the Schedules K-1), and those K-1 s were sent along with Schedules K-1 for other entities in which the Plaintiff-Trusts held membership interests. 52. In or about July 2009, Baum had a communication with Mildred Kalik, an attorney with Simpson Thacher & Bartlett, LLP ( Simpson ) and legal counsel for the Plaintiff- Trusts, regarding the deductibility of the Donation of 22

12 53. Ms. Kalik informed Baum that because of the character of the Donation being a conservation easement and not made from Langham s gross income it was improper for the Plaintiff-Trusts to take a deduction on their tax returns for the Donation under IRC 642(c)(1). 54. Shortly after that conversation, on July 21, 2009, Baum received certain written materials via from Ms. Kalik that conclusively showed that IRC 642(c)(1) precludes the deductibility of the Donation on the tax returns of the Plaintiff-Trusts because the Donation (i.e., the façade conservation easement), was not made from of the gross income of either the Plaintiff- Trusts or Langham as required by IRC 642(c)(1). 55. Based on Ms. Kalik s advice, Baum informed the other trustees that the prior years tax returns should be amended. 56. The other trustees, however, were not in favor of amending the prior years tax returns, and so no amended tax returns were filed. 57. Based on Ms. Kalik s advice, Baum also informed the Plaintiff-Trusts that they should no longer take any deduction for the Donation, which was still available on a carryforward basis, and Baum stopped taking any further deductions for the Donation on the Plaintiff-Trusts subsequently-filed tax returns. 58. Thus, as of 2009, Baum did not take any further deductions for either of the Plaintiff-Trusts in connection with the Donation. The IRS Audit of Langham, Forms 870-PT, and the Numerous Failures of Manocherian and Langham to Provide Information to Defendants Concerning the Langham Audit 59. Upon information and belief, as required by statute and/or regulation, the IRS notified Manocherian of the IRS s intent to audit Langham s 2004 tax return prior to the expiration of the three-year statute of limitations via a Notice of Beginning of Administrative Proceeding ( NBAP ) of 22

13 60. Pursuant to IRC 6230 and 26 CFR (e)-1, upon receiving the NBAP, Manocherian (as Langham s Tax Matters Partner) had an obligation to provide the IRS with the correct names and addresses of each of Langham s partners, including the Plaintiff-Trusts. 61. Manocherian, as the Tax Matters Partner, was required to provide the IRS with this information so that the IRS agent conducting the audit could contact Langham s other partners to provide them notice and information about the audit. 62. As discussed in paragraphs above, Manocherian failed to provide the IRS with the correct mailing addresses for the Plaintiff-Trusts, which information was incorrectly detailed on the Schedules K-1 issued by Langham as well as on other Langham documents, and Manocherian also failed to correct this incorrect information. 63. Upon information and belief, after determining that it would in fact audit Langham s 2004 tax return, the IRS agent, relying on Langham s tax information (including the errors on Langham s Schedules K-1), sent the NBAP to the Plaintiff-Trusts, but sent the notices to the wrong address to the old Yohalem mailing address, as detailed on Langham s Schedules K-1 s, with no reference to Baum. 64. Thus, Defendants never received the NBAP from the IRS. 65. A forwarding address for Baum, notifying the Post-Office of his new address, would not help correct this error by Manocherian and/or Langham because the Schedules K-1 did not even list Baum as the recipient on behalf of the Trusts. 66. Additionally, Defendants never received the NBAP from anyone else, including from Manocherian or Langham. 67. Upon information and belief, in connection with the NBAP, Manocherian consented to an extension of the statute of limitations period, allowing the IRS to commence of 22

14 and/or conduct the audit of Langham s 2004 tax return after the three-year statute of limitations would have otherwise expired. 68. Pursuant to IRC 6223(g) and 26 CFR (g)-1, Manocherian was required to notify the Plaintiff-Trusts regarding Langham s consent to the extension of the statute of limitations period within 30 days of when such consent was given. 69. Neither Manocherian nor any other person notified Baum, who exclusively handled all tax matters for the Plaintiff-Trusts, or Anchin of Manocherian s consent to extend the statute of limitations period. 70. Thus, Baum was never made aware of the commencement of the audit and no one informed him otherwise. 71. Upon information and belief, the IRS began auditing Langham shortly after the initial three year statute limitation would have otherwise expired, as Manocherian had extended the statute. 72. In connection with the audit, the IRS questioned Langham about the validity and the value of the supposed $86 million Donation. 73. The audit was conducted by the IRS at the partnership (Langham) level, not the individual partner (the Plaintiff-Trusts) level. 74. The audit solely concerned the validity of the Donation from a valuation perspective at the partnership level whether the Donation was overvalued or even had any value at all, and thus whether it was a valid Donation deduction. 75. Thus, the audit was not premised on, and did not concern, in any way, IRC 642(c)(1), or the validity of the pro-rata deduction taken at the partner level by the members of Langham, including by the Plaintiff-Trusts of 22

15 76. Upon information and belief, at the conclusion of the IRS s audit of Langham, the IRS contacted Manocherian to set up a closing conference to discuss the fact that the IRS would disallow the Donation deduction in its entirety at the partnership (Langham) level. 77. Pursuant to IRC 6223(g) and 26 CFR (g)-1, Manocherian was required to provide the Plaintiff-Trusts with information about the closing conference in advance of that conference being held. 78. The closing conference allows the partners to obtain information regarding the IRS audit and to learn of any potential issues and proposed adjustments. 79. Manocherian failed to notify Baum, who exclusively handled all tax matters for the Plaintiff-Trusts, or Anchin about the closing conference, and as a result, Defendants did not attend any closing conference and were not even aware that it was taking place. 80. In addition to other fiduciary, statutory and common law obligations, pursuant to IRC 6223(g) and related regulations, within 30 days of action by, or receiving information from, the IRS, Manocherian as the Tax Matters Partner was required to keep each partner informed of all administrative and judicial proceedings for the adjustment at the partnership level of partnership items. (Emphasis added.) 81. Manocherian and Langham failed in their express statutory obligations to notify Baum, who exclusively handled all tax matters for the Plaintiff-Trusts, or Anchin about the commencement of the audit, about the extension of the statute of limitations, about the audit closing conference, and about administrative and judicial proceedings for the adjustment at the partnership level of partnership items. 82. These foregoing failures were also breaches of Manocherian s fiduciary obligations to the Plaintiff-Trusts of 22

16 83. In October 2011, Baum received Forms 870-PT from the IRS for each of the Plaintiff-Trusts. 84. Manocherian never forwarded to Baum a copy of the 60-day letter he received from the IRS, which upon information and belief he received on or about October 17, Form 870-PT, titled Offer of Agreement to Partnership Items and Partnership Level Determinations as to Penalties, Additions to Tax, and Additional Amounts & Waiver of Restrictions on Assessment for Partnership Items, Penalties, Additions to Tax, and Additional Amounts, represents the IRS s final resolution of a tax matter, although such determination can be subject to appeal. Generally, absent fraud, malfeasance, or misrepresentation of fact, once Form 870-PT is signed by the taxpayer or its representative, the taxpayer can no longer appeal or contest the matter at issue. 86. Because of Manocherian s and Langham s failure to provide Baum, who exclusively handled all tax matters for the Plaintiff-Trusts, with any information concerning the audit, and because of their failure to provide the IRS with correct information so that Baum would receive information from the IRS, Baum first obtained information about the results of the IRS audit of Langham when he received the Forms 870-PT. 87. Without any information from Langham, Manocherian or anyone else concerning the Langham audit, Baum believed that the Forms 870-PT reflected the final result of the IRS s audit of Langham s conservation easement Donation deduction. 88. From the Forms 870-PT, Baum correctly determined that the IRS s audit of Langham had concluded and that as a result of that audit, the IRS had disallowed Langham s $86 million Donation deduction in its entirety, with the effect that the deductions taken by the Plaintiff-Trusts on a pass-through basis were similarly disallowed of 22

17 89. The Forms 870-PT thus reported the reversal of a deduction that should never have been taken by the Plaintiff-Trusts on account of IRC 642(c)(1), and for which Baum had, with the agreement of the other trustees, stopped taking any Donation related deductions on the Plaintiff-Trusts tax returns. 90. When Baum signed the Forms 870-PT on or around October 25, 2011, Baum had not received any indication from anyone that the IRS s decision to disallow the Donation deduction was being contested by Langham. 91. Indeed, at no time prior to the execution of the Forms 870-PT was Baum informed by anyone not the other trustees, not their spouses, not Langham, not Langham s counsel, not Langham s Managing Member and not Langham s Tax Matters Partner that the IRS s audit of Langham was not final or that Langham was contesting the IRS s determination to disallow the Donation deduction. 92. It was not until sometime in the first quarter of 2013 that anyone informed Baum that Langham was going to appeal the IRS s decision to disallow the Donation. 93. Thus, when Baum signed the Forms 870-PT on behalf of each of the Plaintiff- Trusts and submitted the forms to the IRS, he believed he was simply implementing the disallowance of a deduction at the partner level that had been disallowed by the IRS at the partnership level, and which the Plaintiff-Trusts were never entitled to take at the partner level under Section 642(c) of the Internal Revenue Code (as Baum had been advised by the Plaintiff- Trusts attorney). 94. Unbeknownst to Baum, however, there were numerous communications between Langham, its counsel and the IRS in 2010 and 2011 regarding the audit of Langham of 22

18 95. Unbeknownst to Baum, there were also communications concerning the conclusion of the IRS s audit of Langham between the IRS and Langham and Manocherian as early as October 17, 2011, and there were related discussions of whether to appeal the IRS s disallowance of the Donation-related deduction. 96. Manocherian and Langham failed in their obligations to notify Baum, who exclusively handled all tax matters for the Plaintiff-Trusts, or Anchin of Langham s intention to contest or appeal the IRS s decision to disallow that Donation. 97. Manocherian s failure to inform Baum of Langham s intent to appeal the IRS s decision was an express violation of his statutory duties as Langham s Tax Matters Partner pursuant to IRC 6223(g), and was a violation of his fiduciary duties. 98. Had Manocherian and/or Langham timely provided Defendants with information concerning the IRS s audit of Langham, Baum would not have signed Forms 870-PT on behalf of the Plaintiff-Trusts a deduction which, under Section 642(c)(1), was never properly available to the Plaintiff-Trusts in the first instance. Plaintiffs Purported Damages 99. Plaintiffs purported damages allegedly stem from a refusal by the IRS to allow the Plaintiff-Trusts to participate in any settlement between Langham, at the partnership level, and the IRS with respect to the Donation deduction The Plaintiff-Trusts assert that the IRS had excluded them from participating in any settlement proceedings because of the signed Forms 870-PT The Plaintiff-Trusts assert that they would have had certain allowable Donation deductions if they were allowed to participate in any settlement with the IRS of 22

19 102. As detailed above, however, the Plaintiff-Trusts inability to participate in the IRS settlement discussions was caused, in whole or in part, by Langham and Manocherian s failure to provide the IRS and Defendants with correct information concerning the Plaintiff-Trusts and the proceedings with the IRS Because of Langham and Manocherian s failures, Baum signed the Forms 870-PT on behalf of the Plaintiff-Trusts without knowledge of facts concerning the IRS proceeding that should have and could have been provided to him but for Langham s and Manocherian s breaches of their duties. AS AND FOR A FIRST CAUSE OF ACTION AGAINST MANOCHERIAN FOR CONTRIBUTION 104. Defendants reassert and reallege paragraphs 1 through 103 of this Third-Party Complaint as if set forth fully herein Manocherian breached his common law, contractual, fiduciary and statutory obligations to the Plaintiff-Trusts as Langham s Tax Matters Partners and as Managing Member of Langham by: (i) improperly allowing Langham to issue incorrect Schedules K-1 for the Plaintiff-Trusts; (ii) failing to correct the numerous errors contained with the Schedules K-1 for the Plaintiff-Trusts; (iii) failing to notify the IRS of the numerous errors on the Schedules K-1 for the Plaintiff-Trusts; (iv) failing to timely inform Baum of the IRS audit; (v) failing to timely inform Baum concerning the status of the IRS audit of Langham, including the extension of Langham s statute of limitations; (vi) failing to timely inform Baum about the conclusion of the IRS audit and the closing conference; and (vii) failing to timely inform Baum of Langham s intent to contest and/or appeal the IRS s decision to disallow the Donation Should Plaintiffs establish that they suffered any injury or damages as alleged in their Complaint, then all such injuries and damages will be solely the result of the negligent of 22

20 and/or intentional wrongful conduct by Manocherian, in his capacity as Tax Matters Partner for Langham and Managing Member of Langham. Thus, any recovery by Plaintiffs against Defendants will cause Defendants damages for which Manocherian is liable, in whole or in part Accordingly, if Plaintiffs recover any damages from Defendants, Defendants shall be entitled to contribution in the full amount of such damages from Manocherian. Alternatively, Defendants shall be entitled to contribution from Manocherian in proportion to his pro rata share of the fault for such damage and to the extent that Defendants are required to pay more than any pro rata share of such fault that may be attributed to them. AS AND FOR A SECOND CAUSE OF ACTION AGAINST LANGHAM FOR CONTRIBUTION 108. Defendants reassert and reallege paragraphs 1 through 107 of this Third-Party Complaint as if set forth fully herein Manocherian is an agent of Langham because of his role as its Tax Matters Partner and its Managing Member, each of which is sufficient by itself to establish an agency relationship Accordingly, Langham also breached its obligations to the Plaintiff-Trusts by: (i) improperly issuing (or allowing to be issued on its behalf) incorrect Schedules K-1 for the Plaintiff-Trusts; (ii) failing to correct the numerous errors on the Schedules K-1 for the Plaintiff- Trusts; (iii) failing to notify the IRS of the numerous errors contained with the Schedules K-1 for the Plaintiff-Trusts; (iv) failing to timely inform Baum of the IRS audit; (v) failing to timely inform Baum concerning the status of the IRS audit of Langham, including the extension of Langham s statute of limitations; (vi) failing to timely inform Baum about the conclusion of the IRS audit and the closing conference; and (vii) failing to timely inform Baum of Langham s intent to contest and/or appeal the IRS s decision to disallow the Donation of 22

21 111. Should Plaintiffs establish that they suffered any injury or damages as alleged in their Complaint, then all such injuries and damages solely will be the result of the negligent and/or intentional wrongful conduct by Langham. Any recovery by Plaintiffs against Defendants will cause Defendants damages for which Langham is liable, in whole or in part Accordingly, if Plaintiffs recover any damages from Defendants, Defendants shall be entitled to contribution in the full amount of such damages from Langham. Alternatively, Defendants shall be entitled to contribution from Langham in proportion to its pro rata share of the fault for such damage and to the extent that Defendants are required to pay more than any pro rata share of such fault that may be attributed to them. WHEREFORE, Defendants respectfully request that this Court enter judgment: 1. against Manocherian and Langham and in favor of Defendants for contribution in the full amount of any damages awarded to Plaintiffs; or alternatively, for contribution from Manocherian and Langham in proportion to their pro rata share of fault for Plaintiffs damage and to the extent that Defendants are required to pay more than any pro rata share of such fault that may be attributed to Defendants; 2. awarding Defendants the costs and disbursements of this action, together with reasonable attorneys fees; and 3. granting Defendants such further relief as the court may deem just and proper of 22

22 Dated: New York, New York July 21, 2016 Respectfully submitted VEDDER PRICE P.C. By: s/ John H. Eickemeyer John H. Eickemeyer Marc B. Schlesinger 1633 Broadway, 47th Floor New York, NY (212) Attorneys for Defendants and Third-Party Plaintiffs of 22