G & B Photography, Inc. v. Greenberg

• Decision Date: 21 November 1994
• Court: New York Supreme Court — Appellate Division
• Parties: G & B PHOTOGRAPHY, INC., et al., Respondents, v. David GREENBERG, Appellant, et al., Defendants.

Page 294

619 N.Y.S.2d 294

209 A.D.2d 579

G & B PHOTOGRAPHY, INC., et al., Respondents, v. David GREENBERG, Appellant, et al., Defendants.

Supreme Court, Appellate Division,

Second Department.

Nov. 21, 1994.

Wynne B. Stern, Jr., New York City, for appellant.

Block, Amelkin & Hamburger, Smithtown (Frederic Block, of counsel), for respondents.

Before BRACKEN, J.P., and LAWRENCE, FRIEDMANN and GOLDSTEIN, JJ.

MEMORANDUM BY THE COURT.

In an action to recover damages for breach of a restrictive covenant, the defendant David Greenberg appeals from an order of the Supreme Court, Suffolk County (Lama, J.), dated January 21, 1993, which, upon reargument, granted the plaintiffs' cross motion for partial summary judgment dismissing his counterclaim.

ORDERED that the order is affirmed, with costs.

The plaintiff Robert Biello and the defendant David Greenberg each owned 50% of the stock of two corporations, to wit, Greenberg-Biello Studio of L.I., Inc., and G & B Labs, Inc. (hereinafter collectively G & B). On October 7, 1988, G & B and Greenberg entered into a written contract whereby G & B purchased Greenberg's stock in the two corporations for the sum of $225,000 payable in monthly installments of $4,562.19. Greenberg agreed not to compete with G & B for a period of one year. G & B's agreement to pay $225,000 for Greenberg's stock was secured by a promissory note personally guaranteed by Biello. In addition the debt was secured by Greenberg's stock which was to be held in escrow pending full payment of the $225,000.

The contract further provided:

"In the event of a default by Purchaser, which default is not cured within the applicable terms set forth in this agreement, the promissory note, or the security agreement, as the case may be, Seller may, without limitation of other remedies available to him, reacquire the shares held as collateral at no expense to Seller and in full satisfaction of any indebtedness due on the note. In such event, the Escrowee shall, upon written demand of Seller for possession of the shares or the Assignment of Lease, notify Purchaser of such demand in writing. Within ten (10) days after giving such notice to the purchaser, Escrowee shall, without any liability whatsoever, deliver the documents demanded to the Seller unless, during said ten (10) day[ ] period, Escrowee shall be served with an order by a court of competent jurisdiction restraining or enjoining said transfer."

Thereafter, Greenberg allegedly breached the restrictive covenant. G & B and Biello (hereinafter the plaintiffs) discontinued the monthly stock-purchase payments and commenced the instant action for breach of contract. Subsequently, in strict compliance with the foregoing terms of the parties' agreement, Greenberg, by counsel, demanded payment on the note. Thereafter, upon due notice to the plaintiffs, the escrowee released to Greenberg the corporate stock which had been held as collateral for the debt.

When Greenberg moved for summary judgment on his counterclaim for a deficiency judgment, alleging that the plaintiffs owed him $174,000 on the note, the plaintiffs cross-moved for partial summary judgment to dismiss the counterclaim, arguing that Greenberg had elected to acquire the stock in full satisfaction of the debt secured by the note. The court did not address the plaintiffs' cross motion in its original order of August 15, 1991, but upon reargument, in an order dated January 21, 1993, it granted the plaintiffs' cross motion and dismissed...