IAS TERM PART 23 NASSAU COUNTY. COUNSEL FOR PLAINTIFF Plaintiff, Steven Cohn, P.C. Carle Place, New York against -

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1 SUPREME COURT - STATE OF NEW YORK IAS TERM PART 23 NASSAU COUNTY INDEX NO. 971 d-02 PRESENT: HONORABLE LEONARD B. AUSTIN Justice Motion R/D: J-IO-03 Submission Date: Motion Sequence No.: O02,003/MOT D X CHARLES DILLUVIO, COUNSEL FOR PLAINTIFF Plaintiff, Steven Cohn, P.C. 1 Old Country Road - Suite 497 Carle Place, New York against - COUNSEL FOR DEFENDANTS GT ASSOCIATES, GERRY BURNS, Rubin & Purcell, LLP MARIE BURNS, LEONARD 330 Vanderbilt Motor Parkway Thoubburon, and GERRARD Hauppauge, New York Thoubburon, Defendants. X - Ste 300 ORDER The following papers were read on Defendants motion to vacate the preliminary injunction or in the alternative, compel Plaintiff to post an undertaking and Plaintiff s cross-motion for summary judgment: Notice of Motion dated December 3, 2002; Affidavit of Leonard Thoubburon sworn to on November 29, 2002; Affidavit of Gerry Burns sworn to on December 3, 2002; Affirmation of David S.J. Rubin, Esq. dated December 3, 2002; Defendants Memorandum of Law; Notice of Cross-motion dated February 14, 2003; Affirmation of Mitchell Dranow, Esq. dated February 14, 2003; Affirmation of David S.J. Rubin, Esq. dated March 4, Defendants generally, and, in particular, Leonard Thoubburon, move for an order: [a] vacating the preliminary injunction granted by the court on July I, 2002 which 1

2 directed Defendant Gerry Burns to surrender 1.3 million shares of stock in Floor Decor, Inc. (now Tiger Telematics, Inc.) represented by certificate #MCI 622 to Plaintiff s prior counsel Marshal Schichtman, Esq.; [b] releasing any restraints against any sale of stock derived from the original two million shares of stock transferred to Defendant GT Associates in 2001; and/or [c] in the alternative, requiring Plaintiff to post an undertaking nunc pro tune in the sum of $2,000, together with legal fees and other expenses. Plaintiff cross-moves for an order pursuant to CPLR 3212 granting summary judgment in his favor and dismissing Defendants counterclaims. BACKGROUND Plaintiff commenced this action seeking to recover damages sustained in connection with the sale of certain securities. The complaint in this action pleads, causes of action sounding in breach of contract, fraud, conversion, replevin and lega! fees. The answer which was submitted on behalf of all.of the named Defendants sets forth general denials, six affirmative defenses and three counterclaims. The pertinent procedural history of this action is as follows: On July 1, 2002, Gerry Burns, the only Defendant who was served with process, at that time appeared in court without counsel to answer the Order to Show Cause then pending. On said date, Gerry Burns consented to PlaintiWs request for a preliminary injunction and waived the posting of any security or bond. In compliance with this court s order, Mr. Burns delivered the disputed stock certificate to Plaintiff s prior 2

3 counsel Marshal Schichtman, Esq., where it has been held in escrow since July, Subsequent thereto, Gerry Burns appeared with counsel to oppose the preliminary injunction and was advised that the injunction had already been granted and the undertaking had been waived. Thereafter, Defendant Marie Burns was served with process. Service, however, could not be effected on Defendants Leonard Thoubburon and Gerard Thoubburon. After an order of alternate service was granted by this Court, counsel for Gerry and Marie Burns agreed to accept service on behalf of all Defendants. Defendants then requested permission to make the within application. Leonard and Gerrard Thoubburon are the sons of Gerry and Marie Burns. GT Associates is a company owned by Gerrard Thoubburon and was the original owner of 2,000,OOO shares of Media Communications Group, Inc. ( MCGI ) stock which later became Floor Decor, Inc.. Defendants and, particularly Leonard Thoubburon ( Leonard ) are now seeking an order essentially vacating the preliminary injunction which was issued on consent by this Court on July 1, Alternatively, Defendants move for an order requiring Plaintiff to post an undertaking in an amount not less than $2 million. In support of this application, Leonard submits that he didnot give his parents ownership of the disputed stock certificate or authority to release or transfer same. In this regard, Leonard asserts that the certificate was simply left at his parents residence in the event the shares were to be transferred or sold. Leonard s father, Gerry Burns, 3

4 was in closer proximity to the transfer agent thus it was more convenient to keep the shares in New York. Moreover, Leonard avers that the shares in question were gifted to him by his brother Gerrard through his company as evidenced by certificate #MC1622 issued on April 19,2002. Similarly, Gerry Burns now maintains that he was without authority to surrender the certificate representing the 1.3 million shares in MCGI to Plaintiffs prior counsel and that this court convinced him to deliver the certificate and waive the mandatory undertaking. Based upon the foregoing, Defendants claim that issues of fact have been raised as to: (1) whether a preliminary injunction should have been issued in the instant case; (2) whether the Gerry Burns had the right to consent to a preliminary injunction and waive the posting of an undertaking affecting property of other Defendants without their knowledge or consent; and (3) whether the court had the authority to waive the requjsite undertaking pursuant to CPLR 6312(b). In addition, Defendants note that since this action was commenced and the preliminary injunction was granted on consent, the disputed shares of stock have been reduced in value from $1,040, or $80 per share to $130, or $.I0 per share. Defendants further claim that the alleged loss of $91 O,OOO.OO is attributable solely to Plaintiff s actions. In response thereto, Plaintiff moves this court for an order pursuant to CPLR 3212 granting him summary judgment in his favor on all five causes of action set forth 4

5 in his complaint. DISCUSSION A. Preliminarv Injunction In order to obtain a preliminary injunction, a movant must demonstrate a probability of success on the merits, irreparable injury in the absence of the requested relief and a balancing of the equities in its favor. Doe v. Axelrod, 73 N.Y. 2d 748, 750 (1988). Irreparable harm is that injury which is so serious that a monetary award cannot be adequate compensation. The specter of harm must not be remote or speculative but actual and imminent. Borev v. National Union Fire Ins. Co., 934 F. 2d 30 (2d Cir. 1991). It is well established that the decision to grant or deny such relief rests within the sound discretion of the court. Merscorp, Inc. v. Romaine, 295 A.D. 2d 431,432 (2nd Dept 2002). Upon review of the record submitted, this Court s discretion was exercised to grant the preliminary injunction in order to preserve the status quo during the pendency of this. litigation. Livas v. Mitzner, A.D. 2d_, 756 N.Y.S. 2d 274 (2 d Dept. 2003). At the time of the initial granting of the preliminary injunction, Plaintiff was not required to file an undertaking. CPLR 6312 (b) clearly and unequivocally mandates the party requesting a preliminary injunction to post an undertaking. See, Schwartz v. Gruber, 261 A.D. 2d 526 (2nd Dept. 1999). The fixing of theamount of an undertaking rests within the sound discretion of the court, and will not be disturbed absent an improvident exercise of discretion. Lelekakis v. Kamamis, A.D. 2d_, 755 N.Y.S. 2d 665 (2nd Dept. 2003); and Blueberries Gourmet, Inc. v. Aris Realty Corp., 255 A.D. 2d 5

6 348, 350 (2nd Dept. 1998). The amount of the undertaking should be rationally related to the amount of the Defendant s potential loss if the preliminary injunction subsequently proves to be improvidently granted. Lelekakis v Kamamis, supra; Clover St. Assocs. v. Nilsson, 244 A.D. 2d 312, 313 (2nd Dept. 1997). In the event that it is later determined that the injunction was unwarranted, Defendant s sole remedy would be to proceed against the undertaking posted as a condition of the granting of the preliminary injunction. See, General Elec. Co. v Metals Resources Group Ltd., 293 A.D. 2d 417, 419 (lst Dept. 2002). Applying the foregoing principles to the case at hand and in order to properly preserve the injunction, Plaintiff is directed to file the mandatory undertaking in the amount of $250, See, Olechna v. Town of Smithtown, 51 A.D. 2d 1036 (2nd Dept. 1976). 6. Summary Judsment It is well settled that summary judgment is a drastic remedy which may only be granted where there is no clear triable issue of fact. See, Andre v. Pomeroy, 35 N.Y. 2d 361 (1974); and Moshevev v. Pilevsky, 283 A.D. 2d 469 (2nd Dept. 2001). Indeed, [e]ven the color of a triable issue, forecloses the remedy. Rudnitskv Robbins, v. 191 A.D. 2d488, 489 (2nd Dept. 1983). Moreover [i]t is axiomatic that summary judgment requires issue finding rather than issue-determination and that resolution of issues of credibility is not appropriate. Greco v. Posillico, 290 A.D. 2d 532; (2nd Dept. 2002); and Judice v. DeAnqelo, 272 A.D. 2d 583 (2nd Dept. 2000). See also, S.J. Capelin Assocs., 6

7 Inc. v Globe Mfq. Corp., 34 N.Y. 2d 338, 339 (1974). In so doing, the papers should also be scrutinized in the light most favorable to the party opposing the motion. Judice v DeAnqelo, supra, Robinson v. Strona Memorial Hosp., 98 A.D. 2d 976 (4 h Dept. 1983). It is clear from the record submitted that issues of fact have been presented. Notably, Plaintiff has submitted two versions of the facts and has even contradicted his own pleadings. That is, Plaintiff s affidavit which was submitted in support of his motion varies from his pleadings. For example, in his affidavit, Plaintiff acknowledges that in late 1999, his father-in-law, Antonio Ficarra purchased 4.5 million shares of stock in Media Communication Corp. Inc. and shortly thereafter, Mr. Ficarra transferred ownership of 2 million shares of stock to Plaintiff as a gift. Although the transaction was not memorialized in writing, Mr. Ficarra did give Plaintiff the certificate representing ownership of 2 million shares of MCGI. Plaintiff then claims that he orally negotiated the sale of the 2 million shares of MCGI with Defendants Gerry Burns and Gerard Thoubburon who represented to Plaintiff that they were acting on behalf of Defendant GT Associates. The shares of MCGI were represented by certificate numbers representing 100,000 shares per certificate; and certificate numbers 1083-I 086 representing 400,000 shares per certificate. Around the time that the certificates were seized by the government as part of an investigation of a Sam Galasso, a notarized letter of general intent transferring the 2 million shares of MCGI to Plaintiff as a gift was signed by Mr. Ficarra. The letter further 7

8 stated that the certificates had been returned by GT Associates due to GT s failure to pay any consideration for the sale of the stock. In January, 2002, Plaintiff informed Gerry Burns that due to the seizure of the certificates and other documents, Defendant Burns still needed to transfer the title to the certificates back to Plaintiff. According to Plaintiff, Gerry Burns promised that he would have the certificates canceled, re-issued in Burns name and returned to Plaintiff. Such transfer, however, did not occur. In contrast to Plaintiff s recitation of the facts as alleged in his affidavit, Plaintiff asserts that he offered to sell 2 million of these securities to Defendant GT Associates on behalf of Antonio Ficarra and GT accepted such offer. (Complaint Tq 8, 10) In 7 16, Plaintiff alleges that on or about January, 2001, Plaintiff was gifted two million shares of Floor Decor, Inc. from Antonio Ficarra. In this regard, the record seems to indicate that there was a merger between MCGI and Floor Decor, and the disputed shares are now for ownership of the corporate entity known as Tiger Telematics, Inc. Put succinctly, Plaintiff claims that Defendants have breached the oral agreement by failing to provide any consideration for the securities and by refusing to return the certificates to Plaintiff. Plaintiff further asserts that of the 2 million shares that Defendants had in their custody and control, 300,000 shares have been sold to the exclusion of Plaintiff. In particular, Defendant Marie Burns sold her interest in the corporation (300,000 shares) to someone else shortly after obtaining ownership of such shares. To prevent any more transfers and the potential gain of illicit profit, this court 8

9 granted Plaintiff s request for injunctive relief on consent. Under the circumstances extant, Plaintiff has not made a prima facie showing of entitlement to judgment as a matter of law on any of the causes of action set forth in the complaint. Turning to the first cause of action based upon breach of contract, questions of fact have been raised including, without limitations, whether an oral agreement was properly reached between Plaintiff and GT Associates, whether the agreement was properly negotiated by Gerry Burns and Gerrard Thoubuaron on behalf of GT Associates; whether such agreement was entered into on behalf of Plaintiff or his father-in-law; and whether Defendants breached the agreement by failing to either return or pay for the securities. Notably, Plaintiff and his father-in-law, Antonio Ficarra, have not been deposed nor have the two preliminary stipulations and order been fully complied with. Denial of Plaintiffs cross-motion is warranted on the ground that it is premature pursuant to CPLR 3212 (f). See, Groves v. Land s End Housing Co., Inc., 80 N.Y. 2d 978 (1992). However, Mr. Ficarra defaulted in honoring a non-party witness subpoena to be deposed. With respect to the second cause of action for conversion, it is well settled that conversion has been defined as the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner s rights. State v. Seventh Reaiment Fund, Inc., 98 N.Y. 2d 249 (2002); and Vigilant Ins. Co. of America v. Housinq Authority of City of El Paso, Tex., 87 N.Y. 2d 36, 43 (1995). Questions of fact exist relating to the assumption and ownership of the disputed stock

10 certificates. Similarly, Plaintiff has not made a prima facie showing for summary relief on his cause of action based upon fraud. To recover damages for fraud, Plaintiff must show: (1) that Defendant(s) made a representation; (2) concerning a material fact; (3) which was false; (4) and known by Defendant(s) to be false; (5) that the representation was made for the purpose of inducing Plaintiff to rely upon it; (6) that Plaintiff did so rely; (7) in ignorance of its falsity; (8) to his detriment. C.P.J. Inc. v. 234 Hish Seas Restaurant Corp., 260 A.D. 2d 524, 525 (2nd Dept. 1999); and Brown v. Lockwood, 76 A.D. 2d 721, 730 (2nd Dept. 1980). Furthermore, a cause of action may not be sustained when the only fraud charged relates to a breach of contract. Gordon v. Dino DeLaurentis Corp., 141 A.D. 2d 435 (lst Dept. 1988); and WIT Holdinq Corp. v. Klein, 282 A.D. 2d 527 (2nd Dept. 2001). The complaint in this action does not allege a misrepresentation of any material fact which is extraneous to the alleged oral agreement. See, Spodek v. Neiss, 291 A.D. 2d 551 (2nd Dept. 2002). See also, Crowley Marine Associates v. Nvconn Assocs., LP., 292 A.D. 2d 334 (2nd Dept 2002). Moreover, Plaintiff has not demonstrated, as a matter of law, that Gerry Burns and Gerrard Thoubburon made any alleged false representations. For similar reasons, Plaintiff s claim for replevin has not been sufficiently proven. To recover for replevin, a Plaintiff is required to demonstrate that he is either the owner of the disputed property or was lawfully entitled to the possession at the time the action was commenced and that Defendant s detention is wrongful. Hofferman v. Simmons,

11 N.Y. 449, (1943). See also, Michalowski v. Ey, 4 N.Y. 2d 277 (1958). No prima facie showing has been made here. Overall, the record substantiates that questions of fact have been raised surrounding the nature and parties to the underlying transaction including whether the disputed shares were a gift or part of a sale; the various transfers and retention of the disputed certificates; and whether Gerry Burns had the authority on behalf of either GT Associates or Leonard to surrender the certificates to Plaintiffs former counsel. These issues preclude the granting of summary judgment to Plaintiff. Accordingly, it is, ORDERED, that Defendants motion for an order vacating the preliminary injunction is denied, provided that Plaintiff files an undertaking in the amount of $250,000 within twenty (20) days of service of a copy of this Order with Notice of Entry. If Plaintiff fails to post such an undertaking as herein provided, Defendants motion to vacate the preliminary injunction is granted; and it is further, ORDERED, that Plaintiffs cross-motion for summary judgment is denied. This constitutes the decision and Order of the co Dated: Mineola, NY July 8, 2003 ENTERE D 11