Opinion
Index 501950/21
11-29-2021
ANTGNIA BREGIAWOS;, derivatively on behalf of Kosmetech Corp., Plaintiff, v. KOSMETECH CORP., SECANT LOGISTICS INC., DIMITRI KONTELEON & HELEN KNOTELEON, Defendants,
Unpublished Opinion
PRESENT: HON. LEON RUCHELSMAN, JUDGE
DECISION AND ORDER
Leon Ruchelsman, Judge
The plaintiff has moved seeking a preliminary injunction pursuant to CPLR §6301. The defendants have opposed the motion. Papers were: submitted by the parties and arguments held. After reviewing all the arguments this court now makes the following determination.
As recorded in a prior order, essentially,, the plaintiff a fifty percent owner of Kosmetech Corp. has sued the other fifty percent owner, defendant Dimitri Konteleon and his wife: alleging they diverted a million dollars from the corporation to their own privately owned entity. The plaintiff has now moved seeking two forms of relief. The first is a demand the defendants return the sum of $81,629.95 which they allege the defendants took to pay attorney's fees defending this action. The second is a request enjoining the defendants: from incurring any debt and from paying any of Kosmotech's bills without the express consent of the plaintiff. As noted the motion is opposed On the grounds it has no merit.
Conclusions of Law
CELR §6301, as it pertains to this case, permits the court to issue a preliminary injunction "in any action... where the plaintiff has demanded and would be entitled to a judgement restraining defendant from the commission or the continuance of an act, which, if committed or continued during the pendency of the action, would produce injury to the plaintiff" (id). A party seeking a preliminary injunction “must demonstrate a probability of success on the merits, danger of irreparable injury in the absence of the injunction and a balance of the equities in its favor" (Nobu Next Door, LLC v. Fine Arts Hosing, Inc., 4 N.Y.3d 839, 800 N.Y.S.2d 48 [2005], see also, Alexandru v. Pappas, 68 Ad3d 690, 890 N.Y.2d 593 [2d Dept., 2009]). Further, each of the above elements must be proven by the moving party with "clear and convincing evidence" (Liotta v. Mattone, 71 A.D.3d 741, 900 N.Y.S.2d 62 [2d Dept., 2010]). Moreover, the plaintiff also seeks to impose upon the defendant a mandatory injunction requiring them to. return corporate funds utilized to pay attorney's fees.
A mandatory injunction is rarely granted and only under unusual circumstances to maintain the status quo pending trial (Matos v. City of New York, 21 A.D.3d 936, 801 N.Y.S.2d 610 [2d Dept., 2005]). Thus, where a party is engaged in unlawful conduct which is continuous then a mandatory injunction is proper (Rosenthal v. Heifer, 136 Misc.2d 9, 516 N.Y.S.2d 1020 [Civil Court New York County, 1987]). Moreover, where a party acts deliberately and intentionally which- affects, the plaintiff's rights or where the party engages in unlawful conduct which is capable of repetition then a mandatory injunction requiring the party to cease is likewise proper (Marcus v. Village, of Mamaroneck, 283 NY 325, 28 N.E.2d 856 [1940], Kombom v. Weberman, 2002 WL 1461890 [Supreme Court Kings County 2002]) .
In this case the plaintiff has not presented any evidence that mandating the defendant return the attorney's fees is of such unusual circumstances as to warrant the imposition of the injunction (Zoller v. HSBC Mortgage Corp., (VSA), 135 A.D.3d 932, 24 N.Y.S.3d 168 [2d Dept., 2016]). This is particularly true since this lawsuit is about whether the defendants acted properly in their management of the business and whether their defense of this action is therefore proper. Thus, imposing a mandatory injunction would effectively resolve this portion of the lawsuit-In Spectrum Stanford LLC v. 400 Atlantic Title LLC, 162 A.D.3d 615, 81 N.Y.S.3d 5 [1st Dept., 2018] the court stated that "a mandatory injunction should not be granted, absent extraordinary circumstances, where the: status quo would be disturbed and the plaintiff would receive the ultimate relief sought, pendente lite" (id). The plaintiff argues that pursuant to Business Corporation Law §720, §721, §722, §723 and §724 the defendants must first obtain the right to indemnification either from the corporation or by court order (see, Federico v. Brancato, 188 A.D.3d 1158, 137 N.Y.S.3d 502 [2d Dept., 2020]), While those provisions apply to individual directors and officers and not to the corporation itself being sued derivatively there is insufficient evidence such expenses were used for attorney's fees for the individual defendants and not the corporation itself. The entire basis for the-mandatory: injunction request is: based upon a single line item in an income statement termed "Legal Fees- Kosmetech Corporation" (see. Income Statement, submitted as Exhibit 'H' to plaintiff's Order to Show Cause). However, there is no evidence such fees were expended for the individuals and not the corporation. The plaintiff argues the defendants used the corporation's funds to pay the legal fees of the defendant's other wholly owned entity. Thus, plaintiff asserts "that Kosmetech has paid the legal fees of the Konteleon's other shell entity, Secant" (see. Affirmation in Support, ¶ 21). However, that allegation is. not. substantiated at all. Further, as noted, even if the funds were used to defend the individuals there has been no showing why such mandatory injunction must be issued.
Therefore,, based on the foregoing, the motion seeking to require the return of -attorney's fees is denied.
Turning to the request to enjoin the defendants from acting without the plaintiff's participation, as recorded in the prior order, the court already noted the plaintiff's have not presented anything harm other than money damages which is insufficient to obtain any injunction- In this motion, support for-an injunction is not even argued at all. Antonia Bregianos does assert that "in view of the self-dealing and unauthorized actions by defendants, i fear that defendants will continue to misappropriate and divert -corporate assets. Accordingly, I respectfully request that this Court restrain and enjoin the defendants, pendete lite, from using the; credit of Kosmetech and/or making or incurring any credit Card charges or incurring any other liability in the name of Kosmetech Without the prior written consent of the plaintiff in all instances pending the final determination of this action" (see, Affirmation of Antonia Bregianos:, ¶ 43) . However, simply alleging corporate funds are being diverted, even if true, is not an irreparable harm warranting an injunction. At root, those allegations are mere money claims which cannot support the granting of any injunction.
Therefore, based on the foregoing, the motion seeking any injunction is denied.
So ordered.