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FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017
NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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CHARLES KORN; NATHAN BERKOWITZ; ARON Index No. 652804/2017
FROM, M.D.; RABBI AZRIEL SIFF; MOSES
WACHSMAN; RABBI DOV TROPPER; AARON
KLOPOWITZ; BARUCH ZALMEN LICHTENSTEIN;
and BERNARD WACHSMAN,
Plaintiffs,
-against-
RABBI SAMUEL ASCHKENAZI; SAMUEL Y.
SEIDENFELD; ABRAHAM BRODJAK; HYMAN
FRIEDMEN; YEDIDIYA GREENSTEIN; STEPHEN
WERDIGER; MEIR KAGAN; AVROHOM M. JALAS;
ARON STRYN; GOLDBERG RIMBERG & WEG
PLLC; and FISHER & FISHER, LLC,
Defendants,
-and-
HOME OF THE SAGES OF ISRAEL, INC.,
Nominal Defendant.
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MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR TEMPORARY
RESTRAINING ORDER, PRELIMINARY INJUNCTION, AND APPOINTMENT
OF A TEMPORARY RECEIVER
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TABLE OF CONTENTS
Page
Preliminary Statement ............................................................................................... 1
Statement of Fact ....................................................................................................... 3
ARGUMENT ............................................................................................................... 5
I. A Temporary Restraining Order and Preliminary
Injunction Should Issue Enjoining Defendants
from Prosecuting or Defending the Actions Until
This Action is Resolved............................................................................... 5
II. This Court Should Stay the Specific
Performance Action, Corporate Governance Action,
and the NPL § 511 Proceeding During the Pendency
of this Action ............................................................................................... 8
III. A Receiver Should Be Appointed To Manage the
Business Affairs of Home of the Sages ...................................................... 9
CONCLUSION............................................................................................................ 10
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TABLE OF AUTHORITIES
Page(s)
Cases
Block v. The Home of the Sages of Israel, Inc.,
Index No. 607962/2015 (Supreme Court, Nassau County) ....................................... 4
Chaline Estates v. Furcraft Assoc.,
278 A.D.2d 141 (1st Dep’t 2000) ................................................................................ 9
Diallo v. Grand Bay Assoc. Enterp., Inc.,
64 A.D.3d 428 (1st Dep’t 2009) .................................................................................. 9
Doe v. Axelrod,
73 N.Y.2d 748, 750 N.E.2d 1272 (1988) ..................................................................... 5
Fieldstone Capital, Inc. v. Loeb Partners Realty,
105 A.D.3d 559 (1st Dep’t 2013) ................................................................................ 8
Hamilton Heights Cluster Assoc., L.P. v. Urban Green Mgmt., Inc.
2015 WL 4197881, *9 (Sup. Ct. N.Y. Co. 2015) ......................................................... 9
In re Application of The Home of the Sages of Israel, Inc.,
Index No. 153111/2015 (Supreme Court, New York County) .................................. 3
In re Bozorth,
161 A.D.2d 405 (1st Dep’t 1990) ................................................................................ 6
Interested Underwriters at Lloyd's v. H.D.I. III Associates,
213 A.D.2d 246 (1st Dep’t 1995) ................................................................................ 6
MacIntyre v. Metropolitan Life Ins. Co.,
221 A.D.2d 602 N.Y.S.2d 180 (2d Dep’t 1995) ........................................................... 5
McVay v. Wing,
303 A.D.2d 727 N.Y.S.2d 88 (2d Dep’t 2003) ............................................................. 5
On the Way to Brooklyn, LLC v. Charles Korn, et al.,
Index No. 155728/2016 (Supreme Court, New York County) ................................... 3
On the Way to Brooklyn, LLC v. Home of the Sages of Israel, Inc.,
Index No. 152021/2017 (Supreme Court, New York County) ................................... 4
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People v. Lexington Sixty-First Assocs.,
38 N.Y.2d 588 (1976) .................................................................................................. 6
Ryan v. Dowicz,
306 A.D.2d 396 (2d Dep’t 2003) ................................................................................. 8
Statutes
CPLR 2201 ................................................................................................................. 1, 8
CPLR 3211 ..................................................................................................................... 1
CPLR 6313 ..................................................................................................................... 6
CPLR 6401 ............................................................................................................... 9, 10
CPLR 6401(a) ................................................................................................................. 9
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Plaintiffs Charles Korn; Nathan Berkowitz; Aron From, M.D.; Rabbi Azriel
Siff; Moses Wachsman; Rabbi Dov Tropper; Aaron Klopowitz; Baruch Zalman
Lichtenstein; and Bernard Wachsman, (“Plaintiffs”) by their attorneys, Abrams,
Fensterman, Fensterman, Eisman, Formato, Ferrara & Wolf, LLP, submit the
following Memorandum of Law in support of their motion, by order to show cause,
for an order (i) temporarily restraining and preliminarily enjoining all defendants
from prosecuting or defending the Actions (as defined below) in which nominal
defendant Home of the Sages of Israel, Inc. (“Home of the Sages”) is a party, until
this action is resolved, (ii) staying the Actions pursuant to CPLR 2201 until this
action is resolved, and (iii) appointing a temporary receiver to receive income, pay
expenses, and otherwise manage the corporate affairs of Home of the Sages during
the pendency of this action.
Preliminary Statement
At present, Home of the Sages is a party to four lawsuits in addition to this
one. In two of those actions, denominated below as the Specific Performance Action
and the Corporate Governance Action, separate law firms have appeared on behalf
of Home of the Sages and have made diametrically opposed filings: one filed an
answer to the complaint, while the other moved to dismiss the same complaint
pursuant to CPLR 3211. Similar occurrences are likely to repeat themselves in the
other Actions unless the Court intervenes. Strategic decisions need to be made on
behalf of Home of the Sages, not just in the pending cases but also regarding its
long-term operations and affairs.
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The Complaint in this action seeks a declaratory judgment that Plaintiffs are
the legitimately elected board of trustees pursuant to an election meeting the
procedural requirements set forth in the Not-For-Profit Corporation Law. In other
words, the relief sought in this action will definitively resolve which group of
individuals is entitled to govern the affairs of Home of the Sages.
By this motion, Plaintiffs seek to enjoin defendants, who are either purported
trustees of Home of the Sages or its counsel of record in the Actions, from taking
any further steps in the Actions until this action fully and finally determines who is
authorized to control Home of the Sages. Plaintiffs are likely to succeed on the
merits of their claim to be the properly constituted Board of Trustees of Home of the
Sages, and can demonstrate irreparable harm if the Actions are permitted to
proceed--indeed, Home of the Sages has already suffered such harm by virtue of its
inconsistent filings in the Specific Performance and Corporate Governance Actions.
The equities also favor the entry of such relief, and Plaintiffs’ injunction should be
granted in all respects—or, at a minimum, all Actions should be stayed pending the
final resolution of this action.
The record is equally clear that a receiver should be appointed to manage the
business affairs of Home of the Sages during the pendency of this action. At
present, Defendant Samuel Aschkenazi (“Aschkenazi”) receives all of the rents
generated by Home of the Sages’ principal asset, a sublease with an entity owned in
part by Aschkenazi’s business partner. Aschkenazi has repeatedly refused to
provide either the funds, or an accounting, to Plaintiffs, or otherwise accept that he
is no longer in control of Home of the Sages. On these facts, appointment of a
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receiver is more than warranted.
Statement of Fact
This action is brought to determine, once and for all, who should control
Home of the Sages, a non-profit corporation which operates a synagogue in the
Lower East Side of Manhattan. Complaint ¶ 1. Plaintiffs, on the one hand, are
individuals who were duly elected to the Board of Directors of Home of the Sages in
a duly-noticed meeting held on March 20, 2016. Id. ¶¶ 2, 78-81. Defendants, on the
other hand, are engaging in a series of self-interested transactions aimed at
depriving Home of the Sages of its sole valuable asset, the land and building it owns
in Manhattan (the “Property”). Id. ¶¶ 44-57. Defendant Aschkenazi will personally
pocket three million dollars from this sale, which he arranged in part by causing a
group of strangers, none of whom were regular attendants at Home of the Sages, to
be bused into lower Manhattan for the sole purpose of approving the sale of the
Property at a meeting which followed precisely none of the rules of corporate
governance applicable to religious corporations such as Home of the Sages. Id.
The Actions which are the subject of this motion consist of the following
proceedings:
1. In re Application of The Home of the Sages of Israel, Inc., Index No.
153111/2015 (Supreme Court, New York County) (the “NPL § 511
Proceeding”). This proceeding was brought by Aschkenazi on behalf of
Home of the Sages, and seeks approval of the proposed sale of the
Property pursuant to NPL § 511. Complaint ¶¶ 58-60.
2. On the Way to Brooklyn, LLC v. Charles Korn, et al., Index No.
155728/2016 (Supreme Court, New York County) (the “Corporate
Governance Action”). This action seeks to disqualify Plaintiffs from
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acting on behalf of Home of the Sages; a motion to dismiss the
complaint for lack of standing is currently sub judice. Didora Aff. ¶ 3.c,
Exs. 3, 11.
3. On the Way to Brooklyn, LLC v. Home of the Sages of Israel, Inc.,
Index No. 152021/2017 (Supreme Court, New York County) (the
“Specific Performance Action”). This action was commenced by the
proposed purchaser of the Property and seeks specific performance of
the sale contract. Didora Aff. ¶ 3.d, Ex.4.
4. Block v. The Home of the Sages of Israel, Inc., Index No. 607962/2015
(Supreme Court, Nassau County) (the “Donation Action”). This case
was brought against Home of the Sages based upon a purported
scheme to fraudulently solicit donations, a scheme allegedly
masterminded by Aschkenazi. Complaint ¶¶ 71-72.
Aschkenazi is continuing to purport to make litigation decisions on behalf of
Home of the Sages in the Actions, and is being assisted in this effort by defendants
Goldberg Rimberg & Weg (“GRW”) (currently purporting to act on behalf of Home of
the Sages in the Specific Performance Action and the Donation Action) and Fisher
& Fisher LLC (counsel in the NPL § 511 Proceeding). Aschkenazi’s efforts have
already caused substantial confusion in the Actions:
• GRW, at the direction of Aschkenazi, recently filed a motion to dismiss
the Specific Performance Action on behalf of Home of the Sages.
Didora Aff. Ex. 7. However, the Plaintiffs’ undersigned counsel have
also appeared for Home of the Sages in the Specific Performance
Action and filed an answer. Id. Ex. 6.
• Similarly, in the Corporate Governance Action: GRW filed an answer
on behalf of Home of the Sages, while Israel Vider, Esq., taking
instruction from Plaintiffs, filed a motion to dismiss. Didora Aff. Exs.
11, 12.
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• GRW was terminated by Plaintiffs on behalf of Home of the Sages by
letter dated April 21, 2017. Didora Aff. Ex. 8. GRW, however, has
refused to accept its termination and has continued to file papers in
the Specific Performance Action as counsel for Home of the Sages. Id.
Ex. 9.
• GRW was disqualified from proceeding as counsel to Home of the
Sages in the NPL § 511 Proceeding by order of the Hon. Geoffrey D.
Wright dated December 8, 2016, with the Court finding that GRW’s
intimate involvement in organizing the March 20 sale approval made
it a material witness. Complaint ¶ 90. GRW has recently perfected an
appeal of that order without Plaintiffs’ knowledge or approval. Id.
• Fisher & Fisher subsequently filed an appearance in the NPL § 511
Proceeding and is taking instructions from Aschkenazi and the other
Defendants, also without Plaintiffs’ knowledge or approval.
In short, until this Court definitively determines which of the contending
groups are entitled to act on behalf of Home of the Sages, the Actions will become
increasingly difficult to administer.
ARGUMENT
I. A Temporary Restraining Order and Preliminary Injunction Should
Issue Enjoining Defendants from Prosecuting or Defending the Actions
Until This Action is Resolved
In order to obtain a preliminary injunction, a movant must demonstrate: (1) a
likelihood of ultimate success on the merits; (2) irreparable injury absent a granting
of the preliminary injunction; and (3) a balancing of the equities in the movant’s
favor. See e.g., Doe v. Axelrod, 73 N.Y.2d 748, 750, 532 N.E.2d 1272 (1988); McVay
v. Wing, 303 A.D.2d 727, 758 N.Y.S.2d 88 (2d Dep’t 2003); MacIntyre v.
Metropolitan Life Ins. Co., 221 A.D.2d 602, 634 N.Y.S.2d 180 (2d Dep’t 1995). This
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Court may enter a temporary restraining order if “immediate and irreparable
injury, loss, or damages” will result unless the defendant is restrained before a
hearing can be had. CPLR 6313.
Plaintiffs can satisfy each of these elements, and the temporary restraining
order and preliminary injunction they request should issue forthwith. This Court’s
authority to enjoin a party or parties over whom it has jurisdiction from proceeding
with litigation pending in another forum is well established. In People v. Lexington
Sixty-First Assocs., 38 N.Y.2d 588, 598 (1976), the Court of Appeals stated that
[i]t is beyond question that the Supreme Court, acting under the broad
powers conferred upon it, has the inherent power in a proper case to restrain
the parties before it from taking action which threatens to defeat or impair
its exercise of jurisdiction . . .This power of courts of equity, in interfering by
way of injunction with judicial proceedings, is sparingly exercised and then
only upon a clear showing of the necessity therefor, each case depending
largely upon its own circumstances . . . Such an injunction is not addressed to
the other court, it is directed to and acts only on the litigant party . . .
In Lexington Sixty-First Assocs., the Court of Appeals approved an injunction
which, inter alia, stayed eviction actions from proceeding against non-purchasing
tenants of a building which had been fraudulently converted into a co-operative. Id.
at 594. The courts have not hesitated to uphold similar injunctions in appropriate
cases. See In re Bozorth, 161 A.D.2d 405, 406–07 (1st Dep’t 1990) (Executors of
estate were enjoined from proceeding with related action in Delaware, where
requisites for preliminary injunction were established and the Delaware action
would “likely interfere with the Surrogate Court’s jurisdiction [and] its
administration of the estate and its appointed fiduciaries”) See also Interested
Underwriters at Lloyd's v. H.D.I. III Associates, 213 A.D.2d 246 (1st Dep’t 1995).
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(Trial court did not improvidently exercise its discretion in granting plaintiff's
motion to temporarily stay defendant's subsequently commenced action in another
state only as against plaintiff pending disposition of declaratory judgment action,
where New York action was properly placed, defendant caused numerous delays
therein, contrary decision in other state would interfere with New York court's
ability to resolve issues before it, and facts indicated that defendant may have
engaged in forum shopping.)
Given the facts outlined in the Complaint, the only appropriate course of
action is for this Court to utilize its equitable authority to enjoin all defendants
from proceeding with the Actions until this Court definitively rules that Plaintiffs
constitute the true governing body of Home of the Sages. 1 Plaintiffs can
demonstrate a likelihood of success on the merits because they can demonstrate
that they have complied with the requirement of the Religious Corporation Law,
while defendants indisputably have not. See Complaint ¶¶ 78-82.
Irreparable harm is present for several separate reasons. First, if the
Specific Performance Action proceeds and is resolved against Home of the Sages,
the Property will be lost, and it is well settled that loss of a particular parcel of real
1 To the extent defendants will argue that this question can be resolved in any of
the Actions, they are mistaken. The Corporate Governance Action was brought by a
party, the proposed purchaser of the Property, who is a stranger to Home of the
Sages and therefore has no standing to challenge Plaintiffs’ election as Trustees,
and a motion to dismiss that action for lack of standing is currently sub judice.
Didora Aff. Ex. 11. Similarly, the NPL § 511 Proceeding will only decide the narrow
issue of whether the Aschkenazi board had the authority to approve the sale of the
Property; it will not resolve whether Plaintiffs or Defendants should control Home
of the Sages going forward, and it is this issue which is critical to protecting the
company’s interests in the Actions.
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property constitutes harm which cannot be remedied via an award of damages.
E.g., Ryan v. Dowicz, 306 A.D.2d 396 (2d Dep’t 2003). Second, the confusion
surrounding Home of the Sages’ proper corporate governance has already resulted
in two sets of lawyers filing incompatible pleadings in the Specific Performance and
Corporate Governance Actions, and such inconsistent filings are only likely to
proliferate through the other Actions as they progress. It is well settled that a
principal suffers irreparable harm by being represented by an agent not of their
own choosing, see Fieldstone Capital, Inc. v. Loeb Partners Realty, 105 A.D.3d 559,
560 (1st Dep’t 2013), yet this is precisely the harm which will befall Plaintiffs unless
they obtain the relief sought by this motion. Finally, the equities favor Plaintiffs, as
they seek to do nothing more than maintain the status quo while this lawsuit
proceeds. For all of the foregoing reasons, an injunction should issue preventing
defendants from taking any further steps in the Actions until this lawsuit is
resolved.
II. This Court Should Stay the Specific Performance Action, Corporate
Governance Action, and the NPL § 511 Proceeding During the
Pendency of this Action
Should this Court decline to grant the injunction requested by Plaintiffs, it
may nevertheless enter a stay of the Actions pending before it pursuant to CPLR
2201. At present, the Specific Performance Action, the Corporate Governance
Action, and the NPL § 511 Proceeding are each pending before this Court.
Although these Actions were filed before the instant case, it is respectfully
submitted that resolution of Plaintiff’s claims herein would dispose entirely of the
NPL § 511 Proceeding, as the current Plaintiffs have no intention of selling the
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Property and would voluntarily dismiss it if they could. See Diallo v. Grand Bay
Assoc. Enterp., Inc., 64 A.D.3d 428 (1st Dep’t 2009). Determining which board has
the authority to speak for Home of the Sages would also streamline the resolution of
the other two Actions. For these reasons, this Court should stay the above-
referenced Actions in the event it declines to enter the injunctive relief requested by
Plaintiffs.
III. A Receiver Should Be Appointed To Manage the Business Affairs of
Home of the Sages
Section 6401(a) of the CPLR authorizes this Court to appoint a temporary
receiver over property upon motion by a party with an “apparent interest” in the
property, “where there is danger that the property will be . . . lost, materially
injured or destroyed.” It is well settled that “[a] receivership pending trial is a
conservation remedy resting in the sound discretion of the court. A receiver is
proper where the applicant makes a clear evidentiary showing of the necessity for
the conservation of property and the protection of the interests of the litigant.”
Hamilton Heights Cluster Assoc., L.P. v. Urban Green Mgmt., Inc. 2015 WL
4197881, *9 (Sup. Ct. N.Y. Co. 2015) (internal citations and quotations omitted); see
also Chaline Estates v. Furcraft Assoc., 278 A.D.2d 141, 142 (1st Dep’t 2000)
(upholding appointment of receiver where partners were causing partnership to
transfer real property without notice to plaintiff partner, where transfer “manifests
a predisposition to take unilateral action in disregard of plaintiff’s rights, thereby
demonstrating a danger of material injury to the property within the meaning of
CPLR 6401”). Plaintiffs, as the legitimate trustees of Home of the Sages,
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FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -------------------------------------------------------------------------x CHARLES KORN; NATHAN BERKOWITZ; ARON Index No. 652804/2017 FROM, M.D.; RABBI AZRIEL SIFF; MOSES WACHSMAN; RABBI DOV TROPPER; AARON KLOPOWITZ; BARUCH ZALMEN LICHTENSTEIN; and BERNARD WACHSMAN, Plaintiffs, -against- RABBI SAMUEL ASCHKENAZI; SAMUEL Y. SEIDENFELD; ABRAHAM BRODJAK; HYMAN FRIEDMEN; YEDIDIYA GREENSTEIN; STEPHEN WERDIGER; MEIR KAGAN; AVROHOM M. JALAS; ARON STRYN; GOLDBERG RIMBERG & WEG PLLC; and FISHER & FISHER, LLC, Defendants, -and- HOME OF THE SAGES OF ISRAEL, INC., Nominal Defendant. -------------------------------------------------------------------------x MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNCTION, AND APPOINTMENT OF A TEMPORARY RECEIVER 1 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 TABLE OF CONTENTS Page Preliminary Statement ............................................................................................... 1 Statement of Fact ....................................................................................................... 3 ARGUMENT ............................................................................................................... 5 I. A Temporary Restraining Order and Preliminary Injunction Should Issue Enjoining Defendants from Prosecuting or Defending the Actions Until This Action is Resolved............................................................................... 5 II. This Court Should Stay the Specific Performance Action, Corporate Governance Action, and the NPL § 511 Proceeding During the Pendency of this Action ............................................................................................... 8 III. A Receiver Should Be Appointed To Manage the Business Affairs of Home of the Sages ...................................................... 9 CONCLUSION............................................................................................................ 10 i 2 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 TABLE OF AUTHORITIES Page(s) Cases Block v. The Home of the Sages of Israel, Inc., Index No. 607962/2015 (Supreme Court, Nassau County) ....................................... 4 Chaline Estates v. Furcraft Assoc., 278 A.D.2d 141 (1st Dep’t 2000) ................................................................................ 9 Diallo v. Grand Bay Assoc. Enterp., Inc., 64 A.D.3d 428 (1st Dep’t 2009) .................................................................................. 9 Doe v. Axelrod, 73 N.Y.2d 748, 750 N.E.2d 1272 (1988) ..................................................................... 5 Fieldstone Capital, Inc. v. Loeb Partners Realty, 105 A.D.3d 559 (1st Dep’t 2013) ................................................................................ 8 Hamilton Heights Cluster Assoc., L.P. v. Urban Green Mgmt., Inc. 2015 WL 4197881, *9 (Sup. Ct. N.Y. Co. 2015) ......................................................... 9 In re Application of The Home of the Sages of Israel, Inc., Index No. 153111/2015 (Supreme Court, New York County) .................................. 3 In re Bozorth, 161 A.D.2d 405 (1st Dep’t 1990) ................................................................................ 6 Interested Underwriters at Lloyd's v. H.D.I. III Associates, 213 A.D.2d 246 (1st Dep’t 1995) ................................................................................ 6 MacIntyre v. Metropolitan Life Ins. Co., 221 A.D.2d 602 N.Y.S.2d 180 (2d Dep’t 1995) ........................................................... 5 McVay v. Wing, 303 A.D.2d 727 N.Y.S.2d 88 (2d Dep’t 2003) ............................................................. 5 On the Way to Brooklyn, LLC v. Charles Korn, et al., Index No. 155728/2016 (Supreme Court, New York County) ................................... 3 On the Way to Brooklyn, LLC v. Home of the Sages of Israel, Inc., Index No. 152021/2017 (Supreme Court, New York County) ................................... 4 ii 3 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 People v. Lexington Sixty-First Assocs., 38 N.Y.2d 588 (1976) .................................................................................................. 6 Ryan v. Dowicz, 306 A.D.2d 396 (2d Dep’t 2003) ................................................................................. 8 Statutes CPLR 2201 ................................................................................................................. 1, 8 CPLR 3211 ..................................................................................................................... 1 CPLR 6313 ..................................................................................................................... 6 CPLR 6401 ............................................................................................................... 9, 10 CPLR 6401(a) ................................................................................................................. 9 iii 4 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 Plaintiffs Charles Korn; Nathan Berkowitz; Aron From, M.D.; Rabbi Azriel Siff; Moses Wachsman; Rabbi Dov Tropper; Aaron Klopowitz; Baruch Zalman Lichtenstein; and Bernard Wachsman, (“Plaintiffs”) by their attorneys, Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Wolf, LLP, submit the following Memorandum of Law in support of their motion, by order to show cause, for an order (i) temporarily restraining and preliminarily enjoining all defendants from prosecuting or defending the Actions (as defined below) in which nominal defendant Home of the Sages of Israel, Inc. (“Home of the Sages”) is a party, until this action is resolved, (ii) staying the Actions pursuant to CPLR 2201 until this action is resolved, and (iii) appointing a temporary receiver to receive income, pay expenses, and otherwise manage the corporate affairs of Home of the Sages during the pendency of this action. Preliminary Statement At present, Home of the Sages is a party to four lawsuits in addition to this one. In two of those actions, denominated below as the Specific Performance Action and the Corporate Governance Action, separate law firms have appeared on behalf of Home of the Sages and have made diametrically opposed filings: one filed an answer to the complaint, while the other moved to dismiss the same complaint pursuant to CPLR 3211. Similar occurrences are likely to repeat themselves in the other Actions unless the Court intervenes. Strategic decisions need to be made on behalf of Home of the Sages, not just in the pending cases but also regarding its long-term operations and affairs. 1 5 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 The Complaint in this action seeks a declaratory judgment that Plaintiffs are the legitimately elected board of trustees pursuant to an election meeting the procedural requirements set forth in the Not-For-Profit Corporation Law. In other words, the relief sought in this action will definitively resolve which group of individuals is entitled to govern the affairs of Home of the Sages. By this motion, Plaintiffs seek to enjoin defendants, who are either purported trustees of Home of the Sages or its counsel of record in the Actions, from taking any further steps in the Actions until this action fully and finally determines who is authorized to control Home of the Sages. Plaintiffs are likely to succeed on the merits of their claim to be the properly constituted Board of Trustees of Home of the Sages, and can demonstrate irreparable harm if the Actions are permitted to proceed--indeed, Home of the Sages has already suffered such harm by virtue of its inconsistent filings in the Specific Performance and Corporate Governance Actions. The equities also favor the entry of such relief, and Plaintiffs’ injunction should be granted in all respects—or, at a minimum, all Actions should be stayed pending the final resolution of this action. The record is equally clear that a receiver should be appointed to manage the business affairs of Home of the Sages during the pendency of this action. At present, Defendant Samuel Aschkenazi (“Aschkenazi”) receives all of the rents generated by Home of the Sages’ principal asset, a sublease with an entity owned in part by Aschkenazi’s business partner. Aschkenazi has repeatedly refused to provide either the funds, or an accounting, to Plaintiffs, or otherwise accept that he is no longer in control of Home of the Sages. On these facts, appointment of a 2 6 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 receiver is more than warranted. Statement of Fact This action is brought to determine, once and for all, who should control Home of the Sages, a non-profit corporation which operates a synagogue in the Lower East Side of Manhattan. Complaint ¶ 1. Plaintiffs, on the one hand, are individuals who were duly elected to the Board of Directors of Home of the Sages in a duly-noticed meeting held on March 20, 2016. Id. ¶¶ 2, 78-81. Defendants, on the other hand, are engaging in a series of self-interested transactions aimed at depriving Home of the Sages of its sole valuable asset, the land and building it owns in Manhattan (the “Property”). Id. ¶¶ 44-57. Defendant Aschkenazi will personally pocket three million dollars from this sale, which he arranged in part by causing a group of strangers, none of whom were regular attendants at Home of the Sages, to be bused into lower Manhattan for the sole purpose of approving the sale of the Property at a meeting which followed precisely none of the rules of corporate governance applicable to religious corporations such as Home of the Sages. Id. The Actions which are the subject of this motion consist of the following proceedings: 1. In re Application of The Home of the Sages of Israel, Inc., Index No. 153111/2015 (Supreme Court, New York County) (the “NPL § 511 Proceeding”). This proceeding was brought by Aschkenazi on behalf of Home of the Sages, and seeks approval of the proposed sale of the Property pursuant to NPL § 511. Complaint ¶¶ 58-60. 2. On the Way to Brooklyn, LLC v. Charles Korn, et al., Index No. 155728/2016 (Supreme Court, New York County) (the “Corporate Governance Action”). This action seeks to disqualify Plaintiffs from 3 7 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 acting on behalf of Home of the Sages; a motion to dismiss the complaint for lack of standing is currently sub judice. Didora Aff. ¶ 3.c, Exs. 3, 11. 3. On the Way to Brooklyn, LLC v. Home of the Sages of Israel, Inc., Index No. 152021/2017 (Supreme Court, New York County) (the “Specific Performance Action”). This action was commenced by the proposed purchaser of the Property and seeks specific performance of the sale contract. Didora Aff. ¶ 3.d, Ex.4. 4. Block v. The Home of the Sages of Israel, Inc., Index No. 607962/2015 (Supreme Court, Nassau County) (the “Donation Action”). This case was brought against Home of the Sages based upon a purported scheme to fraudulently solicit donations, a scheme allegedly masterminded by Aschkenazi. Complaint ¶¶ 71-72. Aschkenazi is continuing to purport to make litigation decisions on behalf of Home of the Sages in the Actions, and is being assisted in this effort by defendants Goldberg Rimberg & Weg (“GRW”) (currently purporting to act on behalf of Home of the Sages in the Specific Performance Action and the Donation Action) and Fisher & Fisher LLC (counsel in the NPL § 511 Proceeding). Aschkenazi’s efforts have already caused substantial confusion in the Actions: • GRW, at the direction of Aschkenazi, recently filed a motion to dismiss the Specific Performance Action on behalf of Home of the Sages. Didora Aff. Ex. 7. However, the Plaintiffs’ undersigned counsel have also appeared for Home of the Sages in the Specific Performance Action and filed an answer. Id. Ex. 6. • Similarly, in the Corporate Governance Action: GRW filed an answer on behalf of Home of the Sages, while Israel Vider, Esq., taking instruction from Plaintiffs, filed a motion to dismiss. Didora Aff. Exs. 11, 12. 4 8 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 • GRW was terminated by Plaintiffs on behalf of Home of the Sages by letter dated April 21, 2017. Didora Aff. Ex. 8. GRW, however, has refused to accept its termination and has continued to file papers in the Specific Performance Action as counsel for Home of the Sages. Id. Ex. 9. • GRW was disqualified from proceeding as counsel to Home of the Sages in the NPL § 511 Proceeding by order of the Hon. Geoffrey D. Wright dated December 8, 2016, with the Court finding that GRW’s intimate involvement in organizing the March 20 sale approval made it a material witness. Complaint ¶ 90. GRW has recently perfected an appeal of that order without Plaintiffs’ knowledge or approval. Id. • Fisher & Fisher subsequently filed an appearance in the NPL § 511 Proceeding and is taking instructions from Aschkenazi and the other Defendants, also without Plaintiffs’ knowledge or approval. In short, until this Court definitively determines which of the contending groups are entitled to act on behalf of Home of the Sages, the Actions will become increasingly difficult to administer. ARGUMENT I. A Temporary Restraining Order and Preliminary Injunction Should Issue Enjoining Defendants from Prosecuting or Defending the Actions Until This Action is Resolved In order to obtain a preliminary injunction, a movant must demonstrate: (1) a likelihood of ultimate success on the merits; (2) irreparable injury absent a granting of the preliminary injunction; and (3) a balancing of the equities in the movant’s favor. See e.g., Doe v. Axelrod, 73 N.Y.2d 748, 750, 532 N.E.2d 1272 (1988); McVay v. Wing, 303 A.D.2d 727, 758 N.Y.S.2d 88 (2d Dep’t 2003); MacIntyre v. Metropolitan Life Ins. Co., 221 A.D.2d 602, 634 N.Y.S.2d 180 (2d Dep’t 1995). This 5 9 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 Court may enter a temporary restraining order if “immediate and irreparable injury, loss, or damages” will result unless the defendant is restrained before a hearing can be had. CPLR 6313. Plaintiffs can satisfy each of these elements, and the temporary restraining order and preliminary injunction they request should issue forthwith. This Court’s authority to enjoin a party or parties over whom it has jurisdiction from proceeding with litigation pending in another forum is well established. In People v. Lexington Sixty-First Assocs., 38 N.Y.2d 588, 598 (1976), the Court of Appeals stated that [i]t is beyond question that the Supreme Court, acting under the broad powers conferred upon it, has the inherent power in a proper case to restrain the parties before it from taking action which threatens to defeat or impair its exercise of jurisdiction . . .This power of courts of equity, in interfering by way of injunction with judicial proceedings, is sparingly exercised and then only upon a clear showing of the necessity therefor, each case depending largely upon its own circumstances . . . Such an injunction is not addressed to the other court, it is directed to and acts only on the litigant party . . . In Lexington Sixty-First Assocs., the Court of Appeals approved an injunction which, inter alia, stayed eviction actions from proceeding against non-purchasing tenants of a building which had been fraudulently converted into a co-operative. Id. at 594. The courts have not hesitated to uphold similar injunctions in appropriate cases. See In re Bozorth, 161 A.D.2d 405, 406–07 (1st Dep’t 1990) (Executors of estate were enjoined from proceeding with related action in Delaware, where requisites for preliminary injunction were established and the Delaware action would “likely interfere with the Surrogate Court’s jurisdiction [and] its administration of the estate and its appointed fiduciaries”) See also Interested Underwriters at Lloyd's v. H.D.I. III Associates, 213 A.D.2d 246 (1st Dep’t 1995). 6 10 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 (Trial court did not improvidently exercise its discretion in granting plaintiff's motion to temporarily stay defendant's subsequently commenced action in another state only as against plaintiff pending disposition of declaratory judgment action, where New York action was properly placed, defendant caused numerous delays therein, contrary decision in other state would interfere with New York court's ability to resolve issues before it, and facts indicated that defendant may have engaged in forum shopping.) Given the facts outlined in the Complaint, the only appropriate course of action is for this Court to utilize its equitable authority to enjoin all defendants from proceeding with the Actions until this Court definitively rules that Plaintiffs constitute the true governing body of Home of the Sages. 1 Plaintiffs can demonstrate a likelihood of success on the merits because they can demonstrate that they have complied with the requirement of the Religious Corporation Law, while defendants indisputably have not. See Complaint ¶¶ 78-82. Irreparable harm is present for several separate reasons. First, if the Specific Performance Action proceeds and is resolved against Home of the Sages, the Property will be lost, and it is well settled that loss of a particular parcel of real 1 To the extent defendants will argue that this question can be resolved in any of the Actions, they are mistaken. The Corporate Governance Action was brought by a party, the proposed purchaser of the Property, who is a stranger to Home of the Sages and therefore has no standing to challenge Plaintiffs’ election as Trustees, and a motion to dismiss that action for lack of standing is currently sub judice. Didora Aff. Ex. 11. Similarly, the NPL § 511 Proceeding will only decide the narrow issue of whether the Aschkenazi board had the authority to approve the sale of the Property; it will not resolve whether Plaintiffs or Defendants should control Home of the Sages going forward, and it is this issue which is critical to protecting the company’s interests in the Actions. 7 11 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 property constitutes harm which cannot be remedied via an award of damages. E.g., Ryan v. Dowicz, 306 A.D.2d 396 (2d Dep’t 2003). Second, the confusion surrounding Home of the Sages’ proper corporate governance has already resulted in two sets of lawyers filing incompatible pleadings in the Specific Performance and Corporate Governance Actions, and such inconsistent filings are only likely to proliferate through the other Actions as they progress. It is well settled that a principal suffers irreparable harm by being represented by an agent not of their own choosing, see Fieldstone Capital, Inc. v. Loeb Partners Realty, 105 A.D.3d 559, 560 (1st Dep’t 2013), yet this is precisely the harm which will befall Plaintiffs unless they obtain the relief sought by this motion. Finally, the equities favor Plaintiffs, as they seek to do nothing more than maintain the status quo while this lawsuit proceeds. For all of the foregoing reasons, an injunction should issue preventing defendants from taking any further steps in the Actions until this lawsuit is resolved. II. This Court Should Stay the Specific Performance Action, Corporate Governance Action, and the NPL § 511 Proceeding During the Pendency of this Action Should this Court decline to grant the injunction requested by Plaintiffs, it may nevertheless enter a stay of the Actions pending before it pursuant to CPLR 2201. At present, the Specific Performance Action, the Corporate Governance Action, and the NPL § 511 Proceeding are each pending before this Court. Although these Actions were filed before the instant case, it is respectfully submitted that resolution of Plaintiff’s claims herein would dispose entirely of the NPL § 511 Proceeding, as the current Plaintiffs have no intention of selling the 8 12 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 Property and would voluntarily dismiss it if they could. See Diallo v. Grand Bay Assoc. Enterp., Inc., 64 A.D.3d 428 (1st Dep’t 2009). Determining which board has the authority to speak for Home of the Sages would also streamline the resolution of the other two Actions. For these reasons, this Court should stay the above- referenced Actions in the event it declines to enter the injunctive relief requested by Plaintiffs. III. A Receiver Should Be Appointed To Manage the Business Affairs of Home of the Sages Section 6401(a) of the CPLR authorizes this Court to appoint a temporary receiver over property upon motion by a party with an “apparent interest” in the property, “where there is danger that the property will be . . . lost, materially injured or destroyed.” It is well settled that “[a] receivership pending trial is a conservation remedy resting in the sound discretion of the court. A receiver is proper where the applicant makes a clear evidentiary showing of the necessity for the conservation of property and the protection of the interests of the litigant.” Hamilton Heights Cluster Assoc., L.P. v. Urban Green Mgmt., Inc. 2015 WL 4197881, *9 (Sup. Ct. N.Y. Co. 2015) (internal citations and quotations omitted); see also Chaline Estates v. Furcraft Assoc., 278 A.D.2d 141, 142 (1st Dep’t 2000) (upholding appointment of receiver where partners were causing partnership to transfer real property without notice to plaintiff partner, where transfer “manifests a predisposition to take unilateral action in disregard of plaintiff’s rights, thereby demonstrating a danger of material injury to the property within the meaning of CPLR 6401”). Plaintiffs, as the legitimate trustees of Home of the Sages, 9 13 of 14 FILED: NEW YORK COUNTY CLERK 05/24/2017 01:41 PM INDEX NO. 652804/2017 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/24/2017 14 of 14