FILED: NEW YORK COUNTY CLERK 01/18/ :36 PM INDEX NO /2017 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 01/18/2017

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1 FILED: NEW YORK COUNTY CLERK 01/18/ :36 PM INDEX NO /2017 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 01/18/2017 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK JANE GREENMAN, individually and on behalf of Millman LLC, 392 Columbus Avenue LLC and SDMJD Next Generation LLC, Index No.: v. Plaintiff, LARRY MILLER and MILLMAN LLC, Defendants. PLAINTIFF S MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION STORCH AMINI PC 2 Grand Central Tower 140 East 45th Street, 25th Floor New York, New York (212) Attorneys for Plaintiff 1 of 25

2 TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES... ii PRELIMINARY STATEMENT... 1 STATEMENT OF FACTS... 2 ARGUMENT... 9 I. IMMEDIATE AND IRREPARABLE INJURY TO PLAINTIFF WILL RESULT IF DEFENDANT IS NOT IMMEDIATELY ENJOINED PENDING A HEARING ON THE PRELIMINARY INJUNCTION... 9 II. PLAINTIFF IS IN ENTITLED TO PRELIMINARY INJUNCTIVE RELIEF A. Plaintiff Is Likely to Succeed on Her Claim for Dissolution Pursuant to N.Y. LLCL B. Plaintiff Is Likely to Succeed on Her Claims for Breach of Fiduciary Duty C. Plaintiff Faces Irreparable Injury If Interim Relief Is Not Granted D. The Balance of Equities Favors the Issuance of Preliminary Injunctive Relief E. If Plaintiff Is Required to Post an Undertaking, the Amount Should Be De Minimis CONCLUSION i 2 of 25

3 TABLE OF AUTHORITIES Cases Page(s) CanWest Global Commc ns Corp. v. Mirkaei Tikshoret Ltd., 804 N.Y.S.2d 549 (Sup. Ct. N.Y. Cty., Apr. 1, 2005) Concourse Rehabilitation and Nursing Center, Inc., et al. v. Gracon Assocs., 64 A.D.3d 405 (1st Dep t 2009) Dong-Pyo Yang v. 75 Rockefeller Café Corp., 50 A.D.3d 320 (1st Dep t 2008)... 9, 18 Doyle v. Icon, LLC, 103 A.D.3d 440 (1st Dep t 2013) EdCia Corp. v. McCormack, 44 A.D.3d 991 (2d Dep t 2007) Egan v. N.Y. Care Plus Ins. Co. Inc., 266 A.D.2d 600 (3d Dep t 1990) EMF Gen. Contr. Corp. v. Bisbee, 6 A.D.3d 45 (1st Dep t 2004) Fakiris v. Gusmar Enterprises, LLC, 53 Misc.3d 1215(A) (Sup. Ct. Queens Cty., Nov. 21, 2016) Family-Friendly Media, Inc. v. Recorder Television Network, 74 A.D.3d 738 (2d Dep t 2010) Ficus Investments, Inc. v. Private Capital Management, LLC, 61 A.D.3d 1 (1st Dep t 2009)... 10, 19 Gambar Enters. v. Kelly Servs., 69 A.D.2d 297 (1st Dep t 1979) Golden v. Steam Heat, 216 A.D.2d 440 (2d Dep t 1995) Gramercy Co. v. Benenson, 223 A.D.2d 497 (1st Dep t 1996) Gundermann & Gundermann Ins. v. Brassill, 46 A.D.3d 615 (2d Dep t 2007) ii 3 of 25

4 In re 1545 Ocean Ave., LLC, 72 A.D.3d 121 (2d Dep t 2010) , 14 In re Fassa Corp., 31 Misc.3d 782, (Sup. Ct. Nassau Cty., Feb. 1, 2011) Interoil LNG Holdings, Inc. v. Merrill Lynch PNG LNG Corp., 60 A.D.3d 403 (1st Dep t 2009) Ma v. Lien, 198 A.D.2d 186 (1st Dep t 1993) McLaughlin, Piven, Vogel, Inc. v. W.J. Nolan & Co., 114 A.D.2d 165 (2d Dep t 1986)... 17, 18 Mizrahi v. Cohen, 34 Misc.3d 1210(A) (Sup. Ct. Kings Cty., Jan. 12, 2012) Nobu Next Door, LLC v. Fine Art Hous., Inc., 4 N.Y.3d 839 (2005) Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004) Residential Bd. of Mgrs of the Columbia Condominium v. Alden, 178 A.D.2d 121 (1st Dep t 1991) Rut v. Young Adult Inst., Inc., 74 A.D.3d 776 (2d Dep t 2010) Seitzman v. Hudson Riv. Assoc., 126 A.D.2d 211 (1st Dep t 1987) Taft Partners Development Group v. Drizin, 268 A.D.2d 347 (1st Dep t 2000) Wyndham Co. v. Wyndham Hotel Co., 236 A.D.2d 220 (1st Dep t 1997)... 9 Yung Bros. Real Estate Co., Inc. v. Limandri, 26 Misc.3d 1203(A) (Sup. Ct. N.Y. Cty., Dec. 29, 2009) Statutes Limited Liability Company Law Limited Liability Company Law iii 4 of 25

5 Rules CPLR 6312(b) CPLR 6301, 6311 and , 9, 10 iv 5 of 25

6 Plaintiff Jane Greenman ( Jane or Plaintiff ), by her attorneys, Storch Amini PC, hereby submits this memorandum of law in support of her motion for a temporary restraining order and preliminary injunction, pursuant to CPLR 6301, 6311 and Jane seeks an order enjoining Defendant Larry Miller ( Miller or Defendant ) from: (a) making payments or distributions outside of the ordinary course of business of each Millman LLC ( Millman ), 392 Columbus Avenue LLC ( 392 Columbus ) and SDMJD Next Generation LLC ( SDMJD ) (collectively, the Entities ); (b) making distributions, disbursements, loans or payments of any kind to interested parties, including himself and his children, for any purpose; (c) transferring, assigning, restructuring, refinancing, encumbering or in any way diminishing any assets or opportunities of any of the Entities; (d) changing or amending any of the operative agreements of the Entities; or (e) changing any capital accounts or tax returns of any Entity without Jane s express written consent. This memorandum of law is accompanied by the Affidavit of Jane Greenman dated January 18, 2017 (the Greenman Aff. ), and the exhibits thereto, the Affirmation of Steven G. Storch, sworn to on January 18, 2017 (the Storch Aff. ), and the exhibits thereto and the complaint dated January 18, 2017 ( Complaint ). PRELIMINARY STATEMENT As set forth in detail in the Complaint and Greenman Aff., Defendant Miller, a 50% owner and managing member of the Entities, in violation of his fiduciary duty, has unilaterally seized control of the Entities without accounting for what happened to the assets the Entities once owned, engaged in self-dealing transactions and converted corporate opportunities belonging to the Entities to himself. 1 6 of 25

7 Since the passing of Jane s late husband, Charles Greenman in February 2014, Miller (Charles friend and business partner) has taken the following steps: (i) refused to account for approximately $27 million of Millman s loan portfolio, (ii) terminated business relationships between Millman and third parties and converted such opportunities to himself (at Jane and Millman s expense), (iv) restructured Millman s loan business (for his sole benefit), effectively eliminating Millman s ability to make money, (v) concealed his improper activities by attempting to remove Jane as distributee of certain Millman bank statements, and, when, for example, Merrill Lynch refused to cease sending Jane Millman statements, Miller emptied the account of all but $0.02 and opened a new Millman account which Jane could not access, (vi) taken a $4.3 million distribution from Millman while Jane received nothing, (vii) unilaterally taken a $230,000 distribution from 392 Columbus while Jane received nothing, (viii) unilaterally amended Jane s Millman K-1 by reducing her capital account by $750,0000, (ix) unilaterally increased his own capital account by $4.08 million from 2013 to 2015 without accounting for the source of those funds, (x) used Millman to make unauthorized loans to his children, (xi) announced his intentions to pay himself unauthorized management fees, and (xii) refused to conduct the business of the Entities in accordance with their respective operating agreements and previous course of dealing between Charles and Miller. Unless injunctive relief is granted to maintain the status quo of the Entities and their existing assets, and so that an orderly dissolution of Millman can proceed, Miller will continue to (and has in fact brazenly announced that he intends to) engage in self-benefiting transactions at the expense of the Entities and to the direct detriment of Jane, a member of each of the Entities. Thus, by this motion, Jane simply seeks an order that will allow ensure the status quo is maintained and that all assets of the Entities will be marshaled pending resolution of the underlying action. 2 7 of 25

8 STATEMENT OF FACTS Jane is a member of a number of limited liability companies of which Miller is the manager. (Greenman Aff. 4). These Entities were created and jointly controlled by Miller and Jane s late husband, Charles Greenman ( Charles ), until his untimely death in February (Id. 5). Charles, a partner at the law firm of Troutman Sanders, LLP, was able to source business connections through his client relationships. Miller, who had access to a favorable line of credit, was more than happy to partner with Charles and take advantage of the opportunities Charles provided. Charles and Miller enjoyed a close, personal relationship in addition to their business ventures and celebrated holidays and life events with their respective families. (Id. 6). Upon Charles death, Miller became the successor manager of the Entities. (Id. 10). Charles membership interests in the Entities passed to Jane (save for Millman, in which Jane has always been a 50% owner), as such, Jane is a 50% member in each of the Entities. (Id.) Since Charles passing, as described in detail below and in the Greenman Aff. and the Complaint, Miller has taken control of the Entities, converted business opportunities and relationships belonging to the Entities to himself, taken money belonging to the Entities as his own, refused Jane s requests and demands for information on the status of the Entities, refused to make distributions to Jane and her family and unilaterally, and unlawfully, amended corporate tax returns and books and records of the Entities. Miller continues to use the Entities for his own ends, misappropriate assets belonging to the Entities and has jeopardized the Entities existing and potential business opportunities as well as the Entities real estate interests. (Id. 13, 16-30, 33-35, 37-40). Millman Millman is a New York limited liability company of which Jane and Miller each have (and have always held) a 50% membership interest. (Id. 14). Charles was the manager of Millman, 3 8 of 25

9 and, upon his death, Miller became the successor manager. (Id. 10). Millman holds a number of real estate and private equity investments. (Id. 15). Principally, Millman held a large loan portfolio, evaluated at around $32 million at the time of Charles death. (Id.). The Millman loan portfolio was assembled via Miller s ability to obtain loans at favorable interest rates, which enabled him to borrow money at such favorable rates, and prior to Charles passing, lend the money to Millman, which would then lend funds to third parties at a higher rate. (Id. 14). Millman would recognize as income the spread in interest rates, which would be distributed to Jane and Miller, each year, on a fifty-fifty basis. (Id.). The borrowers were obtained almost exclusively through Charles business and personal connections. (Id. 15). Currently, Miller cannot account for $27 million of that loan portfolio. (Id. 16). Despite repeated requests for the documentation of what happened to the loan portfolio, or even an updated loan schedule of what loans Millman still in fact holds, Miller has refused to provide such information to Jane. (Id.). Millman has already lost over 90% of its once lucrative portfolio, and faces further decimation of the existing lending opportunities that Millman once capitalized upon. In further violation of his fiduciary duties, Miller has in fact cancelled SWAP contracts entitling Millman to access money at specified rates of interest, incurring well in excess of $1 million in penalties, only to turn around and lend money, individually, to Millman at interest rates in excess of the locked in SWAP contract rates. In so doing, Miller enabled himself to charge interest to Millman for his sole benefit at Millman and Jane s expense. (Id. 17). Because of the increased rate of interest at which Millman borrowed money from Miller, Miller has effectively extinguished Millman s ability to make money in its lending business, as Millman recognizes little to no income in the spread between interest rates from what it borrows, 4 9 of 25

10 from Miller in his personal capacity, and what it lends to third parties. The lending business was Millman s main source of income prior to Miller s restructuring for his own benefit. Miller has also taken extraordinary efforts to block Jane from accessing Millman s records. As an owner of Millman, Jane previously and regularly received bank statements for Millman directly from Merrill Lynch. (Id. 18). Miller attempted to have her removed as a distributee of the statements, and upon Jane s inquiries to the institutions regarding the removal, Miller transferred all but $0.02 from the accounts to a new account to which she could not access. (Id.). Miller has endeavored to do the same with respect to accounts Jane (directly or through Charles) receives from Goldman Sachs. (Id. 19) Further, Miller has refused to make distributions to Jane. Miller has claimed that there are no funds available for distribution, yet Jane s capital account at one point showed a balance of over $5 million. (Id. 20). In the past Jane received a yearly distribution from Millman, but has not received any distributions from Millman since (Id.). In stark contrast, Miller received a $3.4 million distribution from Millman in (Id. 21). Not only has Miller refused to cause Millman to make a distribution to Jane, in September 2016 he also unilaterally amended her Millman K-1 (without Jane s authorization and over her objection), which reduced her Millman capital account by $750,000. (Id. 22). Miller failed to offer substantiation for the amendment. His accountant and childhood friend, Michael Block, offered in the inadequate statement that it was for alleged transfers that needed to be reversed that took place at some in the eleven-year period between 2004 and 2015, but did not identify the time or nature of those purported transfers. (Id ; Exh. F). Not only did Miller sign off on Jane s Millman 2013 return the year before, but his personal accountant has prepared and filed Millman s tax returns from its inception, yet never raised any 5 10 of 25

11 allegation of transfers that needed reversing prior to last year. (Id.). For context, Miller s capital account increased from 2013 to 2015, by $4.08 million. (Id. 24). Miller has also used Millman to make unauthorized loans to his children. (Id. 25). The Millman Agreement prohibits such transactions between Millman and the manager (Miller) or affiliates of the manager without the good faith disclosure to, and the consent of, the Millman members. (Id.; Exh. A 6.4(2)). Not only has Miller used Millman to make these loans over Jane s express objection (id. 22), he has announced his intentions to lend even more money to his sons without obtaining Jane s consent. (Storch Aff. Exh. 2). Miller also intends to pay himself a management fee for his work as manager of Millma despite the terms of the Millman Agreement that prohibit such compensation. (Greenman Aff. Exh. A 6.2(3)). He has also charged over $100,000 to himself or his affiliates for various overhead expenses and fees that were not contemplated by the previous course of dealing between Charles and Miller. (Id. 26). Miller has also threatened Jane s interest in a valuable real estate property located on West 61 st Street in Manhattan. Millman owns 25% of another entity, Walsam 61 LLC, which in turn owns 85% of 61 Owner LLC, the owner of the property. (Id. 28). Miller failed to inform Jane of the upcoming refinancing of the property, but, upon inquiry, announced his intentions to pay himself some $5.7 million and lend some $700,000 to his children before making any possible distribution to Jane. (Storch Aff. Exh. 2). 392 Columbus Jane is a member and 50% owner of 392 Columbus, a New York limited liability company which was initially formed in connection with the purchase of a building at 392 Columbus Avenue, New York, New York. Charles was the manager of 392 Columbus, and, upon his death, Miller 6 11 of 25

12 became the manager. (Id. 31). When the building sold and final distribution of proceeds occurred in 2012, Charles and Miller agreed that any proceeds owed to 392 Columbus after Charles and Miller received their respective investments back, with 8% interest, would be split between the Greenman family and Miller fifty-fifty. (Id.). When the final distribution was made in 2012 upon repayment of the mortgage, the pure profit above the amount of their initial investments (with interest), went to the Greenman family and Miller, equally. (Id.). This distribution was reviewed by Miller s longtime friend and accountant, Michael Block. (Id.). The fifty-fifty ownership interests between Charles and Miller were documented in the 2013, 2014 and Columbus tax returns, which were also prepared by Michael Block and certified under penalty of perjury by Miller, as the tax matters partner of 392 Columbus. (Id. 34). Charles and Miller also used the 392 Columbus entity to acquire an interest in W2 Labs LLC ( W2 ). (Id. 32). Charles found the opportunity and brought it to Miller, and they used 392 Columbus to acquire the interest. Pursuant to the agreement between Charles and Miller, the Greenman family and Charles would share equally in 392 Columbus interest in W2, as all prior investments had been repaid. (Id.). 392 Columbus received a $230,000 distribution from W2 in the summer of (Id. 33). Subsequent to receipt of the W2 distribution, Miller confronted Jane regarding the 2012 distribution, alleging it was improperly paid fifty-fifty between Miller and the Greenmans. (Id.). Miller threatened to sue Jane unless she immediately agreed to pay the amount he calculated as owed to the himself (plus inflated interest). (Id.). Miller withrdrew all cash due to the Greenmans as members of 392 Columbus and in fact paid over to himself the $230,000 distribution 392 Columbus received from W2. (Id.). He has indicated he will continue to take further distributions 7 12 of 25

13 from W2 for himself. (Id.). Miller has excluded Jane from any opportunities that 392 Columbus has, or will have in the future, with W2. (Id.). Miller has refused Jane s requests for information regarding 392 Columbus ownership interests in W2. (Id. 35). SDMJD Jane is a 50% Class A member of SDMJD, a New York limited liability company. SDMJD held to principal real estate interests. (Id. 36). First, it held interest in a parking garage located on West 96 th Street, New York, New York. (Id. 37). SDMJD received profit distributions in excess of $3.6 million from the sale of that parking garage in (Id.). Prior to Charles death, he and Miller had always intended that any profits from that sale be reinvested in a like-kind exchange. (Id.). Jane made that request of Miller when SDMJD received the sale proceeds (of over $3.6 million), and Miller arbitrarily refused, costing the Greenman family approximately $600,000 in tax liability. (Id.). Other investors (exclusive of SDMJD members) who held an interest in the parking garage were able to reinvest in a like-kind exchange. (Id.). Because Miller refuses to disclose financial information, Jane does not know whether Miller invested his share of the profits in a like-kind exchange solely for his benefit. The Greenmans, however, were precluded from such action because sole control was exercised by Miller. (Id.). Second, SDMJD still holds an interest in a property at 90 Hudson Street, New York, New York, through its ownership interests in the entity 90 Hudson Street LLC. (Id. 38). Though SDMJD has received at least $300,000 stemming from its interest in that property, Miller has refused to make any distributions to the Greenmans or provide the status of SDMJD s assets and liabilities. (Id.). Further, Miller has refused to provide Jane with the most recent general ledger for SDMJD, or any documents that SDMJD received from 90 Hudson Street LLC, including tax 8 13 of 25

14 returns, financial statements or current tenant rent rolls and leases. (Id.; Storch Aff. Exhs. 1 and 2). ARGUMENT Miller s misconduct and refusal to provide Jane visibility into the status of the Entities has escalated in the last few months to the point where the Entities face imminent threat due to his misconduct and breaches of his fiduciary duties. Such circumstances warrant injunctive relief pending determination of Jane s Complaint. I. IMMEDIATE AND IRREPARABLE INJURY TO PLAINTIFF WILL RESULT IF DEFENDANT IS NOT IMMEDIATELY ENJOINED PENDING A HEARING ON THE PRELIMINARY INJUNCTION The only way to stop Miller from his unilateral actions is to enjoin him from continuing to engage in self-interested transactions and looting of the Entities while the Court considers Jane s action for dissolution and for damages stemming from Miller s breaches of fiduciary duties owed to her and to Entities. Pursuant to CPLR 6301 and 6313, a temporary restraining order ( TRO ) may be granted pending a hearing on an application for a preliminary injunction where it appears that immediate and irreparable injury, loss or damage will result unless the defendant is restrained before the hearing can be had. CPLR The decision to grant a temporary restraining order lies within the sound discretion of the court. See Dong-Pyo Yang v. 75 Rockefeller Café Corp., 50 A.D.3d 320 (1st Dep t 2008); Wyndham Co. v. Wyndham Hotel Co., 236 A.D.2d 220, 221 (1st Dep t 1997) (continuing TRO to maintain the status quo). The harm posed to Jane and the Entities is indeed irreparable and immediate, resulting from the loss of existing and potential investment opportunities held by the Entities. Specifically, Millman faces the loss of the invaluable present and future lending opportunities Millman (which originated via Charles business contacts). Further, Miller has usurped 392 Columbus business 9 14 of 25

15 opportunities with W2 (another contact of Charles ) by cutting Jane out of any profits 392 Columbus will receive from W2 and blocking her contact with the head of W2. Miller s ongoing and imminent misappropriation of these corporate opportunities and Miller s threats to sell or transfer real estate interests that will have unforeseen and financial repercussions which cannot be quantified. These circumstances are more than sufficient grounds for the entry of provisional relief. CPLR 6301; see also Ficus Investments, Inc. v. Private Capital Management, LLC, 61 A.D.3d 1, 5 (1st Dep t 2009) (discussing series of temporary restraining orders that prevented defendants from making certain transfers or distributions, prevented defendants from removing, destroying, concealing or altering Company books and records or documents pertaining to Company business, and required the return of any Company assets that had been transferred without full consideration pending resolution of dispute between former business partners.) Jane has met the standards for issuance of a TRO and preliminary injunction as set forth below. Jane asks this Court to enter a temporary restraining order prohibiting Miller from taking actions which would upset the status quo of the Entities and cause irreparable injury to the Entities and to Jane. The precise relief sought is set forth in the draft order to show cause submitted concurrently herewith. II. PLAINTIFF IS ENTITLED TO PRELIMINARY INJUNCTIVE RELIEF Jane is also entitled to preliminary injunctive relief. A party is entitled to a preliminary injunction where it demonstrates (1) a probability of success on the merits, (2) the danger of irreparable harm in the absence of an injunction, and (3) a balance of equities in its favor. Nobu Next Door, LLC v. Fine Art Hous., Inc., 4 N.Y.3d 839, 840 (2005). Because Jane makes a prima facie showing of these three factors with respect to her claim for dissolution of Millman and for of 25

16 breach of fiduciary duty against Millman (in both her individual capacity and on behalf of the Entities) and has demonstrated that absent an injunction and restraint she (and the Entities) will be at risk of losing investment and business opportunities and real estate interests which cannot be quantified and will thus be irreparably harmed, she is entitled to the preliminary injunctive relief requested. 1 A plaintiff need only make a prima facie showing of a likelihood of success on the merits of its claim, and need not demonstrate a certainty of success on a motion for the purposes of a preliminary injunction. See Ma v. Lien, 198 A.D.2d 186, 187 (1st Dep t 1993); Egan v. N.Y. Care Plus Ins. Co. Inc., 266 A.D.2d 600, 601 (3d Dep t 1999) ( [T]he first requirement does not compel a demonstration that success on the merits is practically a certitude. ). A. Plaintiff is Likely to Succeed on Her Claim for Dissolution New York Limited Liability Company Law ( N.Y. LLCL ) 702 (entitled Judicial Dissolution ) provides that On application by or for a member, the supreme court in the judicial district in which the office of the limited liability company is located may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement. A certified copy of the order of dissolution shall be filed by the applicant with the department of state within thirty days of its issuance. The N.Y. LLCL does not provide a definition for not reasonably practicable with respect to dissolution of a limited liability company, however, under New York law, the petitioning member must establish, in the context of the terms of the operating agreement or articles of incorporation, that (1) the management of the entity is unable or unwilling to reasonably permit or promote the 1 The Complaint also states causes of action for an accounting and a books and records request pursuant to the New York Limited Liability Company Law which are not addressed in this motion but are being pursued in the action against Miller of 25

17 stated purpose of the entity to be realized or achieved, or (2) continuing the entity is financially unfeasible. In re 1545 Ocean Ave., LLC, 72 A.D.3d 121, 131 (2d Dep t 2010); see also Doyle v. Icon, LLC, 103 A.D.3d 440 (1st Dep t 2013). i. It Is No Longer Possible to Realize the Purpose of Millman In re 1545 Ocean Ave., LLC also provides that dissolution is reserved for situations in which the LLC s management has become so dysfunctional or its business purpose so thwarted that it is no longer practicable to operate the business, such as in the case of a voting deadlock or where the defined purpose of the entity has become impossible to fulfill. Id. As recited above, Jane and Miller are at such an impasse. Miller refuses to conduct the business in accordance with the purposes of Millman as outlined by the Millman Agreement. The Millman Agreement provides that the purpose of the company is to engage in the Business (i) to purchase, own, operate and dispose of [a membership interest in Walsam 501 Partners, LLC, a New York limited liability company], (ii) to engage in such other business to which the Members from time to time Consent, and (iii) any other acts or activities and to exercise any powers permitted to [Millman] under the [New York Limited Liability Company Law, as amended], and any activities incidental thereto. (Greenman Aff. Exh. A at 1.1). Charles and Miller used Millman to engage in a variety of business ventures, as they were entitled to do under the terms of the Millman Agreement as other business to which the Members from time to time Consent. Greenman Aff. Exh. A 1.1. As set forth in the Greenman Aff., Millman s business evolved to hold a number of real estate interests along with a lucrative lending business. (Greenman Aff ). Miller has also unilaterally terminated Millman s lending business which was conducted over many years and which has generated millions of dollars of revenue. By converting to himself of 25

18 Millman s lending opportunities which became available to him only through Millman and restructuring the way Millman makes loans to third-parties, he has effectively eliminated Millman s loan business. Millman also has an interest in a valuable piece of real estate on West 61st Street in Manhattan through its 25% ownership of the part owner of that real estate, Walsam 61 LLC. (Greenman Aff. 28). Miller has brazenly announced that before any distributions of proceeds of the refinancing to Jane, he will unilaterally pay himself some $5.7 million, and loan $700,000 to his children before distributing any possible proceeds to Jane as a member of Millman. (Storch Aff. Exh. 2). In essence, Miller is systematically shutting down Millman, diverting opportunities to himself, and unilaterally paying himself and his family at the expense of Jane. Such actions have resulted in the management of Millman that is at odds with the terms of the Millman Agreement and at do not comport with the purpose of Millman. Therefore, Jane has established that it is no longer reasonably practicable to operate Millman pursuant to the terms of its operating agreement. Fakiris v. Gusmar Enterprises, LLC, 53 Misc.3d 1215(A) at *3 (Sup. Ct. Queens Cty., Nov. 21, 2016) (Judicial dissolution warranted because the management of the company has become so dysfunctional that it is no longer practicable to operate the business. ) In Fakiris, the relationship between the plaintiff and defendant had deteriorated to the point where they could not agree on fundamental matters of the business, including the release of funds held in escrow for the benefit of the company. Jane has more than established that Miller will not agree with her on the fundamental operations of the business. See also In re Fassa Corp., 31 Misc.3d 782, 785 (Sup. Ct. Nassau Cty., Feb. 1, 2011) (judicial dissolution would have been appropriate because disagreement or conflict among the members regarding the means, methods, or finances of the of 25

19 company s operations is so fundamental and intractable as to make it unfeasible for the company to carry on its business as originally intended. ) (citing In re 1545 Ocean Ave, 72 A.D.3d at 133). ii. Continuing Millman is Not Financially Feasible As recited above, Miller restructured the way that Millman made loans by cancelling the SWAP contracts that entitled Millman to access money at specified rates of interest. Instead, he lent money, individually, to Millman at interest rates in excess of the locked in SWAP contract rates. Miller thereby enabled himself to charge increased interest to Millman (and to Jane). Millman cannot recognize as income (as it previously had) any spread in interest rates on the loans from Miller to Millman and the loans from Millman to third-parties because Miller increased the rate at which Millman borrowed. Further, Miller has announced he has no intention of continuing the Millman loan business (save for extending unauthorized loans to his children). The lending business was Millman s main source of income prior to Miller s restructuring for his own benefit, and without it, Millman it is no longer financially feasible to continue its operation. Mizrahi v. Cohen, 34 Misc.3d 1210(A) at * 8 (Sup. Ct. Kings Cty., Jan. 12, 2012) (judicial dissolution of limited liability company warranted where economic purpose of the limited liability company is not met. ) (citing In re 1545 Ocean Ave, 72 A.D.3d at ). B. Plaintiff Is Likely to Succeed on Her Claims for Breach of Fiduciary Duty [T]he elements of a cause of action to recover damages for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant s misconduct. Rut v. Young Adult Inst., Inc., 74 A.D.3d 776, 777 (2d Dep t 2010). Jane has brought claims for fiduciary duty in both her individual capacity, and derivatively on behalf of the Entities of 25

20 Here, there is no question that Miller, as manager and member of the Entities, owes both Jane, a member of the Entities, and the Entities themselves the fiduciary duties of loyalty and good faith. N.Y. LLCL 409 imposes the following statutory (and un-waivable) fiduciary duty on managers of New York limited liability companies: (a) A manager shall perform his or her duties as a manager, including his or her duties as a member of any class of managers, in good faith and with that degree of care that an ordinarily prudent person in a like position would use under similar circumstances. Further, the Entities operating agreements impose similar obligations. For example, the Millman Agreement states: The Manager shall (1) perform his services in such a capacity diligently and faithfully for the benefit of [Millman], (2) perform such services in accordance with all applicable policies and practices of [Millman], and (3) devote such portion of his business time and attention to the Business and affairs of [Millman] as he deems necessary or advisable to carry out his duties hereunder. (Greenman Aff. Exh. A 6.2(3); see also Greenman Aff. Exh. B at 6.3(1); Greenman Aff. Exh. C 6.1(c)). Thus, there can be no question regarding the existence of a fiduciary relationship. With respect to the second element, Jane has established a likelihood of success on her claim for breach of fiduciary duty, i.e., that Miller has engaged in misconduct which constitutes a breach of his fiduciary duties of loyalty he owes to her and the Entities. The Complaint and the Greenman Affidavit contain a multitude of factual allegations that Miller has not acted in good faith or with loyalty to the Entities by engaging in self-interested transactions. (Complaint 2-3, 29-40, 39-41, 44-46; Greenman Aff. 13, 16-30, 33-35, 37-40). For example, Miller has decimated Millman s lucrative loan portfolio without accounting for the missing Millman assets (Greenman Aff. 17), paid himself unauthorized fees and expenses and announced his intentions to pay himself a prohibited management fee (id. 26), made unauthorized loans to his children of 25

21 (id. 25) and announced his intentions to continue making such unauthorized loans and payments. (Storch Aff. Exh. 2). Further, he has refused to make distributions to Jane and her family from 392 Columbus and instead transferred funds from 392 Columbus account directly to himself, citing a four-year old error in calculating ownership interests, despite signing off on such ownership interests in three years of 392 Columbus tax returns. (Greenman Aff ). Finally, Jane has established the damages that will cause (and have caused) her and the Entities significant damages. These damages include, but are not limited to, the loss of Jane s interest in Entity assets, current potential business opportunities (including Millman s loan portfolio and future opportunities in the same vein, along with the business relationship between 392 Columbus and W2) (id. 15, 17, 30), the depletion of Jane s capital accounts (id. 18) and lost real estate interests which the Entities currently hold (including Millman s real estate investments and SDMJD s ownership interests in the property at 90 Hudson Street). (Id. 27, 34-35, 39). Accordingly, Jane has established a likelihood of success on her breach of fiduciary duty claim against Miller, both in her individual capacity and derivatively on behalf of the Entities. C. Plaintiff Faces Irreparable Injury If Interim Relief Is Not Granted A party moving for an injunction must show that the irreparable harm is imminent, not remote or speculative. Family-Friendly Media, Inc. v. Recorder Television Network, 74 A.D.3d 738, 739 (2d Dep t 2010) (quoting Golden v. Steam Heat, 216 A.D.2d 440, 442 (2d Dep t 1995)). Though it is true that [e]conomic loss, which is compensable by money damages, does not constitute irreparable harm, id. (quoting EdCia Corp. v. McCormack, 44 A.D.3d 991, 994 (2d Dep t 2007)), irreparable harm can be found where damages are difficult to quantify. Interoil of 25

22 LNG Holdings, Inc. v. Merrill Lynch PNG LNG Corp., 60 A.D.3d 403, 404 (1st Dep t 2009); see also McLaughlin, Piven, Vogel, Inc. v. W.J. Nolan & Co., 114 A.D.2d 165, 174 (2d Dep t 1986). Millman has decimated the Millman loan portfolio, already damaging the relationships Millman holds or once held with those borrowers and jeopardizing any potential for future business opportunities Millman could have had with those borrowers, or any other borrowers which could have been referred to Millman. Miller has threatened the goodwill that Millman had with previous business contacts (the relationship contacts that Charles brought to Millman) and unless injunctive relief is granted, Millman faces immediate and irreparable injury to whatever business partners and opportunities it has left. Lost goodwill and lost opportunity are damages which are difficult to quantify and merit a finding of irreparable harm absent the issuance of an injunction. Gundermann & Gundermann Ins. v. Brassill, 46 A.D.3d 615, 617 (2d Dep t 2007); see also Yung Bros. Real Estate Co., Inc. v. Limandri, 26 Misc.3d 1203(A) at *4 (Sup. Ct. N.Y. Cty., Dec. 29, 2009) ( While financial loss suffered by a party can often be calculated, the damage of a lost relationship with an existing business client is more difficult to calculate, and thus can be held to constitute irreparable harm. ); Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 404 (2d Cir. 2004) (holding that the loss of reputation, good will and business opportunities constitutes irreparable harm). Miller s acts with respect to the other Entities further support a finding of irreparable harm. For example, should Miller sell or transfer Millman s interest in the West 61 st Street property or SDMJD s interest in the 90 Hudson property, Millman and SDMJD will be irreparably harmed as it will be difficult if not impossible to quantify what SDMJD s interest in the appreciation value of the property could have been and difficult to ascertain the damages from the loss of a unique property and asset. See, e.g., Concourse Rehabilitation and Nursing Center, Inc., et al. v. Gracon of 25

23 Assocs., 64 A.D.3d 405 (1st Dep t 2009) (plaintiff demonstrated irreparable injury where demonstrated loss of substantial interest in real property because each parcel of real property is unique. ) (citing EMF Gen. Contr. Corp. v. Bisbee, 6 A.D.3d 45, 52 (1st Dep t 2004); Seitzman v. Hudson Riv. Assoc., 126 A.D.2d 211, 214 (1st Dep t 1987). For example, Miller could, akin to what he has already done with Millman s lending portfolio, sell Millman s interest in the West 61 st Street property at a discounted rate, and repurchase the same interest for himself, personally. In such an instance Jane s interest in the invaluable real estate property would be extinguished and incredibly difficult to quantify. D. The Balance of Equities Favors the Issuance of Preliminary Injunctive Relief When balancing the equities, courts weigh the harm the plaintiff will suffer in the absence of the injunction with the harm the defendant will suffer through imposition of the injunction. See McLaughlin, 114 A.D.2d at 174 (2d Dep t 1986). Here, the equities decidedly weigh in Jane s favor. By the issuance of interim relief, Miller will only be obligated to maintain the status quo and commit to a court-ordered standstill pending the determination of Jane s claims for dissolution and breaches of fiduciary duty. See, e.g., Residential Bd. of Mgrs of the Columbia Condominium v. Alden, 178 A.D.2d 121, 122 (1st Dep t 1991) ( [a] preliminary injunction is a provisional remedy. Its function is not to determine the ultimate rights of the parties, but to maintain the status quo until there can be a full hearing on the merits. ) (citing Gambar Enters. v. Kelly Servs., 69 A.D.2d 297, 306 (1st Dep t 1979)). Should this Court issue such relief, Miller must refrain from engaging in interested, selfdealing and harmful actions, but the affairs of the Entities will otherwise remain untouched. As such, the balance of equities weighs in Jane s favor. See Dong-Pyo, 50 A.D.3d at 320 (affirming decision to grant preliminary injunctive relief where defendant would not suffer injury as a result of 25

24 of the order maintaining the status quo with respect to corporate management and control pending litigation of the merits of plaintiff s individual and derivative claims ); see also Taft Partners Development Group v. Drizin, 268 A.D.2d 347, 348 (1st Dep t 2000) (affirming order of motion court that granted preliminary injunction which prohibited party from distributing or otherwise dissipating incoming funds pending dispute between partners); Ficus Investments, Inc., 61 A.D.3d at 5-6 (discussing preliminary injunction that prevented defendants from transferring, concealing or otherwise disposing of the approximately $9,000,000 that [defendants] had taken as undocumented loan ); CanWest Global Commc ns Corp. v. Mirkaei Tikshoret Ltd., 804 N.Y.S.2d 549, 571 (Sup. Ct. N.Y. Cty., Apr. 1, 2005) (where party merely seeks to maintain the status quo, the balance of equities tilt[s] in its favor. ) (citing Gramercy Co. v. Benenson, 223 A.D.2d 497, 498 (1st Dep t 1996)). E. If Plaintiff Is Required to Post an Undertaking, the Amount Should Be De Minimis Pursuant to CPLR 6312(b), the court may require that a plaintiff is to give an undertaking in an amount set by the Court, and, if it is finally determined that he or she was not entitled to an injunction, the plaintiff will pay the defendant all damages and costs which may be sustained by reason of the injunction. It is respectfully submitted that Miller is not at risk of sustaining any damages or costs in the event an injunction issues. The injunction merely seeks the maintenance of the status quo, namely, that Miller be enjoined from distributing assets outside the normal course of business or to himself or interested parties, that he not be allowed to amend the operative agreements or corporate tax documents without Jane s consent. Thus, any undertaking should be de minimis of 25

25 There is simply no damage to Miller from enjoining him from transferring himself money, making prohibited loans to third parties or participating in conduct that is outside the normal course of business in his management of the Entities. CONCLUSION For the foregoing reasons, Jane Greenman respectfully requests that the Court issue the preliminary injunction and temporary restraining order contained in the accompanying order to show cause, as well as any other relief the court deems appropriate. Dated: New York, New York January 18, 2017 STORCH AMINI PC By: /s/ Steven G. Storch Steven G. Storch Kelly McCullough Two Grand Central Tower 140 East 45th Street, 25th Floor New York, NY (212) Attorneys for Plaintiff Jane Greenman of 25