| Winter v Brown |
| 2008 NY Slip Op 01942 [49 AD3d 526] |
| March 4, 2008 |
| Appellate Division, Second Department |
| Henri Winter, Respondent, v Laurence M. Brown et al.,Appellants. |
—[*1] Roosevelt & Benowich, LLP, White Plains, N.Y. (Leonard Benowich of counsel), forrespondent.
In an action, inter alia, to recover damages for breach of contract, the defendants appeal, bypermission, as limited by their brief, from (1) so much of an order of the Supreme Court,Westchester County (Rudolph, J.), entered January 31, 2007, as denied that branch of their crossmotion which was to stay all proceedings in the action pending arbitration, and (2) so much of anorder of the same court also entered January 31, 2007, as granted that branch of the plaintiff'smotion which was for a preliminary injunction to the extent of indefinitely continuing the termsof a temporary restraining order contained in an order to show cause of the same court datedDecember 1, 2006. Motion by the respondent, inter alia, to dismiss the appeals on the ground thatthey have been rendered academic. By decision and order on motion of this Court dated October30, 2007, that branch of the motion which was to dismiss the appeals was held in abeyance andreferred to the panel of Justices hearing the appeals for determination upon the argument orsubmission thereof.
Upon the papers filed in support of the motion, the papers filed in opposition thereto, andupon the argument of the appeals, it is
Ordered that the branch of the respondent's motion which is to dismiss, as academic, the[*2]appeal from the first order entered January 31, 2007, isgranted and the motion is otherwise denied; and it is further,
Ordered that the appeal from the first order entered January 31, 2007, is dismissed; and it isfurther,
Ordered that the second order entered January 31, 2007, is reversed insofar as appealed from,on the law, that branch of the plaintiff's motion which was for a preliminary injunction is denied,and the temporary restraining order contained in the order to show cause dated December 1,2006, is vacated; and it is further,
Ordered that one bill of costs is awarded to the appellants.
In 2000, the plaintiff and the defendants entered into an asset sale agreement (hereinafter theagreement) whereby the defendants agreed to purchase the assets of Marshall Granger &Company, CPAs, P.C. (hereinafter the original Marshall Granger). Sometime after the executionof the agreement, the defendants' business name was changed from Mangini & Company, LLP,to Marshall Granger & Company, LLP (hereinafter the new Marshall Granger). The agreementprovided, inter alia, that the plaintiff would be paid, over a period of six years, 20% of the netfees collected by the defendants from clients of the original Marshall Granger and from clientsthat were referred to the new Marshall Granger by clients of the original Marshall Granger. Thetotal agreed-upon purchase price was to be in the sum of no less than $750,000. The agreementalso provided for nonbinding arbitration in the event of a dispute involving the agreement.
In late 2006, the plaintiff commenced this breach of contract action against the defendantsalleging, inter alia, that they failed to pay him the amounts to which he was entitled under theagreement. He simultaneously filed and served an order to show cause, seeking preliminaryinjunctive relief against the defendants preventing them from disposing of certain funds duringthe pendency of the action. On December 1, 2006, the Supreme Court executed the order to showcause, which included a temporary restraining order prohibiting the defendants from, amongother things, controlling, transferring, distributing, or disposing of certain identified funds. Thedefendants cross-moved to compel arbitration and to stay the action pending arbitration. TheSupreme Court conducted a hearing on both the motion and the cross motion, which resulted intwo orders, both entered January 31, 2007. In one of the orders, the Supreme Court granted thatbranch of the defendants' cross motion which was to compel arbitration, but denied that branch oftheir cross motion which was to stay the action pending arbitration. In the second order, theSupreme Court granted that branch of the plaintiff's motion which was for a preliminaryinjunction, to the extent of indefinitely continuing the temporary restraining order. Thedefendants appeal from both orders.
While the appeals were pending, the parties proceeded to arbitration, and a final award wasmade on August 13, 2007. Thus, the appeal from so much of the first order entered January 31,2007, as denied that branch of the defendants' motion which was for a stay of the action pendingarbitration has been rendered academic.
With respect to the second order entered January 31, 2007, pursuant to CPLR 7502 (c), theSupreme Court may grant a preliminary injunction "in connection with an arbitration that ispending or that is to be commenced inside or outside this state," but such relief may be granted"only upon [*3]the ground that the [arbitration] award to whichthe applicant may be entitled may be rendered ineffectual without such provisional relief" (CPLR7502 [c]). A party seeking relief under this provision must also make a showing of the traditionalequitable criteria for the granting of temporary relief under CPLR article 63 (see Matter of K.W.F. Realty Corp. vKaufman, 16 AD3d 688, 689-690 [2005]). A party may obtain temporary injunctiverelief only upon a demonstration of (1) irreparable injury absent the grant of such relief, (2) alikelihood of success on the merits, and (3) a balancing of the equities in that party's favor(see W.T. Grant Co. v Srogi, 52 NY2d 496, 517 [1981]; New York City Off-TrackBetting Corp. v New York Racing Assn., 250 AD2d 437, 441 [1998]).
Here, neither the plaintiff's motion papers nor his hearing testimony established hisentitlement to injunctive relief under CPLR 6301. Moreover, the plaintiff failed to demonstratethat the arbitration award to which he may be entitled would be rendered ineffectual without thegrant of provisional relief. While the plaintiff argued that he was entitled to injunctive reliefbecause he had a vested interest under the agreement in 20% of the net fees generated from theclients of the original Marshall Granger, as well as from clients who were referred by them, thatmoney was not part of any specific res or fund which could rightly be regarded as the "subject ofthe action" (see CPLR 6301; Credit Agricole Indosuez v Rossiyskiy Kredit Bank,94 NY2d 541, 548 [2000]; CobyGroup, LLC v Hasenfeld, 46 AD3d 593 [2007]). Accordingly, the Supreme Court erredin continuing the temporary restraining order issued upon the plaintiff's order to show cause.
The parties' remaining contentions either are without merit or have been rendered academicby our determination. Spolzino, J.P., Miller, Dillon and McCarthy, JJ., concur.