SEC correspondence with Malkin Holdings
released November 2013
(This website is not affiliated with Malkin Holdings LLC , Empire State Building Associates LLC
or Empire State Realty Trust, Inc.)
Fiduciary Duty to ESBA Investors
"...we are of the opinion that you could not successfully deny that you had a fiduciary duty to the Participants..."
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click here for SEC original
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5. Please provide us with a legal opinion that clearly supports your disclosure that the fiduciary duty owed by the supervisor to the members of the subject LLCs also flows to the participants. In response to the Staff’s comment, we are supplementally providing a legal opinion as Exhibit A to this response letter.
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EXHIBIT A
[Proskauer Letterhead]
November , 2012
Malkin Holdings L.L.C.
One Grand Central Place
60 East 42nd Street
New York, NY 10165
Re:Empire State Building Associates L.L.C., 60 East 42nd St. Associates L.L.C. and 250 West 57th St. Associates L.L.C. (collectively, the “subject LLCs”)
Gentlemen:
The question of your fiduciary duties to the participants (the “Participants”) in the Subject LLCs has not been tested in any reported New York case that we found. Nor did we find any reported New York case addressing the fiduciary duties of a person in the same capacity as you to persons in the same position as the Participants in entities other than the subject LLCs.
The Registration Statement on Form S-4 and related proxy statements covering the consolidation (the “Consolidation”) of the subject LLCs and other entities contains the following statement under the caption “Comparison of Ownership of Participation Interests, Operating Partnership Units and Shares of Common Stock—Fiduciary Duties”:
“The supervisor is required to exercise good faith and fair dealing in providing supervisory and other services. The supervisor’s fiduciary duty to the subject LLCs also runs to the participants, as holders of participation interests in the membership interests of the subject LLCs.”
We have discussed with you that as supervisor, you are an agent for the subject LLCs and under agency law, an agent owes a fiduciary duty to the principal. We have also discussed with you that in view of the functions that you perform on behalf of the subject LLCs, taking on a role that is similar to a general partner or managing member and the fact that each of the agents of the participants is an affiliate, a court could determine that the participants could directly enforce the fiduciary duties that you owe to the subject LLCs. However, we are not aware of any New York law addressing this issue.
We assume that statement will be in the Form S-4 as of its effective date and will not thereafter be amended.
Based on and subject to the foregoing, we are of the opinion that you could not successfully deny that you had a fiduciary duty to the Participants were the issue properly presented to a New York court applying the internal law of New York State if the consolidation and related initial public offering of Empire State Reality Trust, Inc. were consummated.
Other than the addressee hereof, no one is entitled to rely on this opinion. This opinion is based on our knowledge of the law and facts as of the date hereof. We assume no duty to communicate with you with respect to any matter which comes to our attention hereafter.
Very truly yours,
"...we are of the opinion that you could not successfully deny that you had a fiduciary duty to the Participants..."
---------------------------------------------------------------------------------------------------------------------------------------------------
click here for SEC original
---cut---
5. Please provide us with a legal opinion that clearly supports your disclosure that the fiduciary duty owed by the supervisor to the members of the subject LLCs also flows to the participants. In response to the Staff’s comment, we are supplementally providing a legal opinion as Exhibit A to this response letter.
---cut---
EXHIBIT A
[Proskauer Letterhead]
November , 2012
Malkin Holdings L.L.C.
One Grand Central Place
60 East 42nd Street
New York, NY 10165
Re:Empire State Building Associates L.L.C., 60 East 42nd St. Associates L.L.C. and 250 West 57th St. Associates L.L.C. (collectively, the “subject LLCs”)
Gentlemen:
The question of your fiduciary duties to the participants (the “Participants”) in the Subject LLCs has not been tested in any reported New York case that we found. Nor did we find any reported New York case addressing the fiduciary duties of a person in the same capacity as you to persons in the same position as the Participants in entities other than the subject LLCs.
The Registration Statement on Form S-4 and related proxy statements covering the consolidation (the “Consolidation”) of the subject LLCs and other entities contains the following statement under the caption “Comparison of Ownership of Participation Interests, Operating Partnership Units and Shares of Common Stock—Fiduciary Duties”:
“The supervisor is required to exercise good faith and fair dealing in providing supervisory and other services. The supervisor’s fiduciary duty to the subject LLCs also runs to the participants, as holders of participation interests in the membership interests of the subject LLCs.”
We have discussed with you that as supervisor, you are an agent for the subject LLCs and under agency law, an agent owes a fiduciary duty to the principal. We have also discussed with you that in view of the functions that you perform on behalf of the subject LLCs, taking on a role that is similar to a general partner or managing member and the fact that each of the agents of the participants is an affiliate, a court could determine that the participants could directly enforce the fiduciary duties that you owe to the subject LLCs. However, we are not aware of any New York law addressing this issue.
We assume that statement will be in the Form S-4 as of its effective date and will not thereafter be amended.
Based on and subject to the foregoing, we are of the opinion that you could not successfully deny that you had a fiduciary duty to the Participants were the issue properly presented to a New York court applying the internal law of New York State if the consolidation and related initial public offering of Empire State Reality Trust, Inc. were consummated.
Other than the addressee hereof, no one is entitled to rely on this opinion. This opinion is based on our knowledge of the law and facts as of the date hereof. We assume no duty to communicate with you with respect to any matter which comes to our attention hereafter.
Very truly yours,
(This website is not affiliated with Malkin Holdings LLC , Empire State Building Associates LLC
or Empire State Realty Trust, Inc.)
or Empire State Realty Trust, Inc.)
