A Bronx judge has ordered Titan Concrete Inc. to post an $8 million bond to protect the interests of co-owner Peter J. Mestousis, who has asked the court to dissolve the New Rochelle business, but declined to appoint a temporary receiver to conserve the company’s assets.
While there is insufficient evidence to warrant a receiver, Bronx Supreme Court Justice Fidel E. Gomez ruled on May 22, “the record does support the conclusion that Titan is less than financially solvent. Accordingly, the petitioner is entitled to some measure of protection, given the uncertainty of Titan’s financial status.”
Titan supplies concrete to commercial and residential projects throughout the region. It operates an office in New Rochelle and facilities in the Bronx, Carmel, Putnam County, and Stamford, Connecticut.
Mestousis, who lives in Pelham and is represented by Rye attorney Anthony Piscionere, petitioned Westchester Supreme Court in January to dissolve the corporation. He argues that co-owner Michael Saccente Jr. has frozen him out of management and has looted, wasted and diverted company assets.
For instance, Mestousis claims, Saccente pocketed the money from cash-on-delivery jobs.
Mestousis says he paid about $6 million for a 50% interest in Titan and last year loaned another $2 million that has not been repaid.
Saccente and Titan broadly denied wrongdoing in their formal answers to the petition. Saccente is represented by Somers attorney Michael J. McDermott. Titan is represented by Manhattan attorney Aaron E. Zerykier.
The lawsuit was moved to the Bronx court in March, at the request of Saccente and Titan.
Appointing a receiver is a drastic remedy that should be used sparingly, Judge Gomez ruled, because it is tantamount to taking possession of property before the merits of a case have been determined.
He said a petitioner must establish the danger of an irreparable loss. While the record is replete with evidence that Titan is in the midst of financial hardship, he also found satisfactory explanations for many of the alleged wrongs and insufficient evidence of Saccente as a threat to Titan’s viability.
“Hence, it would be improper to deprive him of his property absent a determination on the merits,” Gomez says.
Mestousis asked the court to approve a $10 million bond to protect his interests. Here, the judge ruled, if allegations of waste and mismanagement are substantiated, “the corporation would be worthless.”
Saccente and Titan say they have turned a corner as a profitable and viable operation, the judge noted, but they also affirmed that the business had negative earnings and equity of $3.6 million when Mestousis invested in the company.
Gomez decided that an $8 million bond was warranted to protect Mestousis until he is paid for the reasonable value of his shares. He ordered Saccente and Titan to post the bond within 30 days.
Titan attorney Jason Samuels said in an email that the company is pleased that the court denied the request for appointment of a receiver. “This demonstrates the court’s acknowledgment and understanding that the company is operating efficiently and profitably under existing management, despite petitioner’s statements otherwise, which Titan asserts have no merit.”
Whether Titan should be dissolved has been put on hold until a hearing is held to determine the value of Mestousis’s shares.
