Huntington Vill. Dental, PC v. Rathbauer
| Decision Date | 18 January 2013 |
| Docket Number | No. 34620–12.,34620–12. |
| Citation | 2013 N.Y. Slip Op. 50093,966 N.Y.S.2d 346,38 Misc.3d 1213 |
| Parties | HUNTINGTON VILLAGE DENTAL, PC, Plaintiff, v. John F. RATHBAUER, John Rathbauer, DMD, PC and John F. Rathbauer, DMD, LLC, Defendants. |
| Court | New York Supreme Court |
OPINION TEXT STARTS HERE
Garfunkel Wild, PC Great Neck, for Plaintiff.
Kirschenbaum & Kirschenbaum, P.C., Garden City, for Defendants.
Upon the following papers numbered 1 to 15 read on this motion for preliminary injunctive relief and cross motion for an order appointing a receiver and other relief; Notice of Motion/Order to Show Cause and supporting papers 1–3; Notice of Cross Motion and supporting papers 4–8; Answering Affidavits and supporting papers 9–11; 12–13; Replying Affidavits and supporting papers 14–15; Other; (and after hearing counsel in support and opposed to the motion) it is,
ORDERED that this motion (# 001) by the plaintiff for preliminary injunctive relief is considered under CPLR 6311 and is denied; and it is further
ORDERED that the cross motion (# 002) by the defendants for an order appointing a temporary receiver for the plaintiff and an order fixing an undertaking in the event preliminary injunctive relief is granted to the plaintiff is considered under CPLR Articles 64 and 63 and is denied.
This action arises out of the purchase of a dental practice by the plaintiff from defendant John F. Rathbauer, DMD, LLC (hereinafter “LLC”) that was evidenced by an Agreement of Sale, a Promissory Note and a Bill of Sale, each dated June 14, 2010. Also executed on that date was a lease of the entire first floor of a building owned by defendant John F. Rathbauer, DMD, P.C. (hereinafter “PC”) where the dental practice sold was housed. The action was commenced by the plaintiff by the filing of a summons with notice wherein the claims to be asserted were described as follows: 1) recovery of damages by reason of breaches by the defendants of the above described sale documents; 2) recovery of damages for fraudulent inducement; 3) recovery of damages for trespass; and 4) recovery of damages for conversion. The plaintiff claims that the defendants are liable to the plaintiff due to a failure to perform obligations imposed upon them under the terms of the sale documents which were purportedly fraudulently induced by unspecified misrepresentations made during the negotiations. The defendants are further charged with trespassing into the leasehold of the plaintiff and the conversion of certain items of personalty.
By the instant motion, the plaintiff seeks the following preliminary injunctive relief: 1) an order enjoining and restraining the defendant from taking any action to enforce paragraph 7 of the Promissory Note dated June 14, 2010; and 2) enjoining and restraining the defendants from interfering with the operation of the plaintiff's business or entering plaintiff's business premises without authorization. For the reasons stated below, the plaintiff's application for this relief is denied.
As originally constituted, Paragraph 7 of the Promissory Note addressed a default in payment on the part of the plaintiff. Upon such default, the seller was entitled to send a notice of default, with or without a notice of an acceleration of all principal amounts then due which was payable not less than 90 days from the date of the notice. The terms of Paragraph 7 were enlarged by a hand written insertion to provide as follows: “After the 90 days, if the loan is still in default, ownership of the practice and assets * shall revert back to the seller with credit to purchaser for all sums paid to date”.
In its moving papers and replies, the plaintiff claims that the defendant should be enjoined from availing itself of the remedy purportedly afforded the defendants under these “take back” provisions due to the material breach of the obligations imposed upon the defendant seller and/or other defendants under the terms of the Agreement of Sale and Bill of sale. The breaches complained of include, a failure to turn over assets of the Rathbauer practice such as patient lists, dental records, x-rays and inventory as purportedly required by the terms of the Agreement of Sale and Bill of Sale. In addition, the plaintiff claims that the “take back” provisions inserted into paragraph 7 of the Promissory Note did not create an enforceable security interest under Article 9 of the UCC in the assets of the dental practice that was the subject of the sales transaction at issue herein. The plaintiff, who stopped making the installment payments due under the terms of the note in July of, 2102, some two years after the closing of the sale of the business, contends that the defendants' material breaches of the terms of the Agreement of Sale and the unenforceability of the “take back” provisions in paragraph 7 of the note warrant the granting of a preliminary injunction restraining the defendants from taking any action to enforce such “take back” provisions.
In support of its demands for a preliminary injunction restraining the defendants from interfering with plaintiff's business and from entering into its leasehold without permission, the plaintiff alleges that “the defendants have spread deliberate falsehoods among patients, staff and referral sources regarding Village Dental and its principal, Dr. Rongo, in an attempt to interfere with and capture the good of will of the acquired Rathbauer practice” ( see ¶ 5 of the affirmation of plaintiff's counsel in support of its motion). In addition, the plaintiff's claim that individual defendant “Rathbauer has entered Huntington Village's premises and removed documents in attempt to conceal defendants' misrepresentations and other misconduct” ( see id; and ¶ 5 of the Rongo affidavit in support of the plaintiff's motion). The plaintiff further claims that individual defendant Rathbauer entered the plaintiff's leasehold using his landlord's key, as he is a principal of the defendant PC which owns the building in which the plaintiff's leasehold is housed ( see ¶¶ 27–29 of the Rongo affidavit in support of the motion).
The defendants oppose the motion and move for the appointment of a receiver of the plaintiff dental practice and for an order imposing an undertaking in the amount of the balance due under the terms of the note in the event the court grants preliminary injunctive relief to the plaintiff. In opposing the plaintiff's motion, the defendants contend that the additional terms inserted in paragraph 7 of the Promissory Note create a valid and binding “reverter” not a security interest as the plaintiff suggests. Upon the occurrence of the condition subsequent upon which the “reverter” is premised, namely, the plaintiff's failure to pay installments due in July and August of 2012, the issuance of the LLC's August 16, 2012 notice of default, acceleration and demand for payment within 90 days, the practice automatically reverted back to the defendant seller upon the plaintiff's failure to pay the accelerated amount due. The defendant LLC is thus alleged to be the current owner of the dental practice. These circumstances are alleged to preclude the issuance of a preliminary injunction restraining the defendants from enforcing the inserted, handwritten terms providing for the reverter in favor of the defendant LLC as seller. The defendants further claim that the conclusory allegations of wrongdoing on the part of the defendants, including their purported breaches of the Agreement of Sale, fraudulent misrepresentations and other purportedly wrongful conduct, are insufficient to warrant the granting of the preliminary injunctive relief demanded.
It is well established that to prevail on a motion for preliminary injunctive relief, the movant must clearly demonstrate a likelihood of success on the merits, the prospect of irreparable harm or injury if the relief is withheld and that a balance of the equities favors the movant's position ( see Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860, 862, 552 N.Y.S.2d 918 [1990];Wheaton/TMW Fourth Ave., LP v. New York City Dept. of Bldgs., 65 AD3d 1051, 886 N.Y.S.2d 41 [2d Dept 2009]; Pearlgreen Corp. v. Yau Chi Chu, 8 AD3d 460, 778 N.Y.S.2d 516 [2d Dept 2004] ). The decision to grant a preliminary injunction is committed to the sound discretion of the court ( see Tatum v. Newell Funding, LLC, 63 AD3d 911, 880 N.Y.S.2d 542 [2d Dept 2009]; Bergen–Fine v. Oil Heat Inst., Inc., 280 A.D.2d 504, 720 N.Y.S.2d 378 [2d Dept 2001] ), as the remedy is considered to be a drastic one ( see Doe v. Axelrod, 73 N.Y.2d 748, 536 N.Y.S.2d 44 [1988] ). Consequently, a clear legal right to relief, which is plain from undisputed facts, must be established ( see Wheaton/TMW Fourth Ave., LP v. New York City Dept. of Bldgs., 65 AD3d 1051,supra; Gagnon Bus Co., Inc. v. Vallo Transp., Ltd., 13 AD3d 334, 786 N.Y.S.2d 107 [2d Dept 2004]; Blueberries Gourmet v. Avis Realty, 255 A.D.2d 348, 680 N.Y.S.2d 557 [2d Dept 1998] ).
Factors militating against the granting of preliminary injunctive relief include: 1) that the movant can be fully recompensed by a monetary award or other adequate remedy at law ( see Mar v. Liquid Mgt. Partners, LLC, 62 AD3d 762, 880 N.Y.S.2d 647 [2d Dept 2009]; Dana Distr., Inc. v. Crown Imports, LLC, 48 AD3d 613, 853 N.Y.S.2d 111 [2d Dept 2008]; White Bay Enter. v. Newsday, Inc., 258 A.D.2d 520, 685 N.Y.S.2d 257 [1999] ); 2) that the granting of the requested injunctive relief would confer upon the plaintiff the ultimate relief requested in the action ( see Wheaton/TMW Fourth Ave. LP v. New York City Dept. of Bldgs., 65 AD3d 1051,supra; SHS Baisley, LLC v. Res Land, Inc., 18 AD3d 727, 795 N.Y.S.2d 690 [2d Dept.2005] ); or 3) that an alteration rather than a preservation of the status quo of the parties or res at issue would result from a granting of provisional injunctive relief ( see Automated Waste Disposal, Inc. v. Mid–Hudson Waste, Inc., 50 AD3d 1072, 857 N.Y.S.2d 648 [2d Dept 2008]; Matter of 35...
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