MOTION DATE:II- SUBMIT DATE: 12- SEQ. NUMBER - 001

Transcription

1 ') ( '-l, SHORT FORM ORDER SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU Present: HON. DANIEL PALMIERI Acting Justice Supreme Court x JPMORGAN CHASE BANK, N.A., as successor-byassignment from THE BANK OF NEW YORK, TRIAL TERM PART: 48 Plaintiff, INDEX NO. : /08 MOTION DATE:II- SUBMIT DATE: 12- SEQ. NUMBER STRANDS HAIR STUDIO, LLC, SHARON A. PAYNE A/KJA SHARON A. ROLLOCK-P A YNE Defendants x SHARON A. PAYNE, Third-Party Plaintiff -against- -against- STEPHANIE ORR Af A STEPHANIE JONES, Third-Party Defendant x The following papers have been read on this motion: Order to Show Cause, dated Third-Party Summons and Complaint, dated Affirmation in Support, dated Affidavit (in opposition), dated Reply Affidavit, dated

2 The motion by the defendant/third part Sharon A. Payne, in effect, for a preliminary injunction enjoining the third-part defendant from denying her access to the premises and books and records of the defendant Strands Hair Studio, LLC ("Strands ), and directing third-part defendant to pay all expenses of Strands, including payments owed to the plaintiff under a business loan made to Strands, is granted to the extent that Payne may submit an order, on notice, directing that Stephanie Orr, a/k/a Stephanie Jones, shall permit Payne and/or her attorney access to the premises of Strands, on reasonable notice, and shall make available for inspection and copying at such time all the books and records respecting the business operating therein, whether or not identified as Strands. An undertaking in the amount of $5 000 must be provided, in the form of cash held by Payne s attorney or by giving an acceptable bond. CPLR 6312(b). The motion is otherwise denied. This is an action to enforce a loan agreement made by Strands in connection with the operation of a hair salon in Baldwin, New York. The loan was guaranteed by Payne. Initially, the Court finds no merit to the assertion made by Ms. Orr/Jones that this Court has no jurisdiction over her person. The affidavits of service submitted by third -par plaintiff indicates valid service of process pursuant to CPLR 308(2). Mere denial of such service is patently insufficient to raise an issue of fact with regard thereto. See, e. Anderson GHI Auto Service 45 AD3d 512 (2d Dept. 2007). Turning to the merits, it is well established that in order to obtain a preliminary injunction the movant must demonstrate a likelihood of success on the merits, irreparable harm absent the granting of the relief, and a balancing of the equities in the movant' s favor.

3 Aetna Ins. Co. Capasso 75 NY2d 860, 862 (1990); W. T. Grant Co. Srogi 52 NY2d 496 (1981). The Court finds Payne has made these showings to the extent indicated in this decision. Payne s third-part complaint alleges four causes of action. Read generously (see CPLR 3026), the pleading seeks to have the Court restore Payne to a position of equal control over Strands, from which (both literally and figuratively) she alleges to have been excluded. As indicated above, Strands and Payne are defendants in the main action, in which the plaintiff seeks to collect money owned by Strands under a business loan. Payne is a guarantor of that loan, and to avoid personal liabilty wishes to hold Orr/Jones responsible for payment for some or all of what is owed to the plaintiffby Strands. CPLR Payne alleges inter alia that Orr/Jones has essentially converted the Stands location and business to her own personal use, against the interests of Strands. The documentar proof submitted by Payne, including a store lease where Strands was to operate as tenant (signed by Orr/Jones) and a printout from Westlaw s New York Public Records database in which Orr/Jones is identified as an owner of Strands" demonstrates that at a minimum, Orr/Jones held herself out as an owner of Strands. Further, there is no denial by Orr/J ones that Payne is an owner of Strands. Thus, for purposes of this motion there is evidence that both would share in the profit and loss, as well as control, of the business. Further, whether one believes that Payne walked away from the business (as Orr/J ones contends), or was excluded (as Payne contends), Payne is entitled to. at least equal control of Strands, which includes management of monies generated by Strands' business and

4 payments to creditors such as plaintiff. Accordingly, to the extent the movant seeks access to the premises and records found therein, the likelihood of success has been demonstrated. Further, given the necessary role such access plays in Payne s ability to pursue her third-part claim over against Orr/Jones, irreparable harm absent the granting of the relief has been demonstrated. The equities also favor her, as she is a guarantor of the loan and Orr/Jones is not, rendering her position more perilous than Orr/Jones should Strands be unable to pay. In order to accomplish a full review of records, and in view oforr/jones own statements to the effect that she is not working as a member of Strands (even though the location is clearly the same), but instead is operating a separate business, access to all records of this business wil be directed, whether or not identified as belonging to Strands. However, the issue of whether Orr/Jones should be directed to make payments to the plaintiffbank on behalf of Strands depends upon resolving a central question that cannot be accomplished on these papers. Specifically, the Court would have to decide which part was responsible for the failure of Strands to make such payments i. e. whether Orr/J ones made it impossible for Payne to participate in the business of Strands and thus thwarted Payne efforts to insure that the loan was kept current, or whether Payne herself abandoned the business and left Orr/Jones to maintain the operation on her own. It is also possible that both parties bear responsibilty for the failure. Given the early stage ofthis litigation and the sharp factual dispute, the Court has not been presented with compellng proof by the movant that the fault lies so strongly with Orr/Jones that she has demonstrated a likelihood of success on that issue. A clear right to this form of injunction has thus not been demonstrated. See

5 Omakaze Sushi Rest. Lee - AD3d -' 2008 WL (2d Dept. 2008); Gagnon Bus Co. Vallo Transp., Ltd. 13 AD3d 334 (2d Dept. 2004). The Court notes the argument raised by Orr/J ones that Limited Liabilty Company Law 609( a) forecloses the possibilty of suit against her for any debt arising against Stands or Payne. She contends that this section protects her from any claim arising "solely by reason of being (a J member, manager or agent or acting (or omitting to act) in such capacities or participating... in the conduct of the business of the limited liabilty company." Nor, she argues, did she ever agree to be liable notwithstanding that provision in a separate writing pursuant to Limited Liability Company Law 609(b). However, an essential component of the third-part complaint, as amplified by the papers submitted on this motion is that Orr/Jones failed to pay because she was operating outside of Strands ' business, on her own and in opposition to Strands ' interests. This appears to bring Orr/Jones within the scope of 610, which permits a member to be a part to a proceeding "to enforce a member s right against or liability to the limited liabilty company. Finally, the Court notes that notwithstanding the rulings made here, the granting or denial of a preliminary injunction cannot be used as the law of the case or an adjudication on the merits in favor of either part. Town of Concord Duwe 4 NY3d 470 (2005). Accordingly, the motion is granted to the extent indicated. As an undertaking required, and before the directions contained in this order become effective, Payne shall submit an order on notice accompanied by the undertaking described herein. Either an acceptable bond, or a statement from Payne s attorney that he is in possession of the sum

6 ~~~~ directed and that it wil remain in his escrow account pending further order ofthis Court,wil be deemed adequate. This shall constitute the Decision and Order of this Court. Submit order and undertaking, on notice. DATED: December ENTER TO: Cullen and Dykman, LLP Attorney for Plaintiff 100 Quentin Roosevelt Boulevard Garden City, NY Acting Supreme Eisenberg & Carton Attorneys for Defendants/Third-Party Plaintiff Sharon A. Payne 2631 Merrick Road, Ste. 201 Bellmore, NY l!e RED DEC 2 2 ZOOf: ",v.. i", i COUNTY CLERK' OFFICE Steven Greenfield, Esq. Attorney for Third-Party Defendant Stephanie Orr aik/a Stephanie Jones 869 Dune Road West Hampton Dunes, NY 11978