Preview
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NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021
SUPREME COURT OF THE STATE OF NEW YORK
COMMERCIAL DIVISION, NEW YORK COUNTY
YASEMIN TEKINER,
Index No. 657193/2020
In her individual capacity, as a beneficiary
and a Trustee of The Yasemin Tekiner 2011
Descendants Trust and derivatively as a
holder of equitable interests in a shareholder
or a member of the Company Defendants,
Plaintiff,
- against -
BREMEN HOUSE INC., BREMEN HOUSE
TEXAS, INC., GERMAN NEWS COMPANY,
INC., GERMAN NEWS TEXAS, INC., 254 – 258
W. 35TH ST. LLC, BERRIN TEKINER, GONCA
TEKINER, and BILLUR AKIPEK, in her capacity
as a Trustee of The Yasemin Tekiner 2011
Descendants Trust,
Defendants.
PLAINTIFF’S MEMORANDUM OF LAW IN FURTHER SUPPORT OF APPLICATION
FOR PRELIMINARY INJUNCTION WITH TEMPORARY RESTRAINING ORDER
MANDEL BHANDARI LLP
Evan Mandel
80 Pine Street, 33rd Floor
New York, NY 10005
Tel: (212) 269-5600
em@mandelbhandari.com
PATTERSON BELKNAP
WEBB & TYLER LLP
Stephen P. Younger
1133 Avenue of the Americas
New York, NY 10036-6710
spyounger@pbwt.com
Attorneys for Plaintiff
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TABLE OF CONTENTS
Pages
PRELIMINARY STATEMENT .................................................................................................... 1
STATEMENT OF FACTS ............................................................................................................. 3
ARGUMENT .................................................................................................................................. 3
I. THIS COURT SHOULD GRANT
PLAINTIFF’SREQUEST FOR A PRELIMINARY INJUNCTION ..................... 3
A. Plaintiff Will Likely Succeed on the Merits ............................................... 3
B. A Preliminary Injunction Is Necessary
To Preserve the Status Quo ....................................................................... 10
C. Plaintiff Will Suffer Irreparable Harm
Without A Preliminary Injunction ............................................................ 11
D. The Equities Favor An Injunction............................................................. 14
CONCLUSION ............................................................................................................................. 15
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TABLE OF AUTHORITIES
Pages
Cases
Aronson v. Crane,
139 Misc. 2d 744 (Sup. Ct., Nassau Cnty. 1988)........................................................................ 6
Bank of Am., N.A. v. PSW NYC LLC,
No. 651293/10, 2010 WL 4243437 (Sup. Ct. N.Y. Cnty. Sep. 16, 2010) ................................ 13
Berkowitz v. Astro Moving & Storage, Co.,
240 A.D.2d 450 (2d Dept. 1997) .............................................................................................. 15
Brenner v. Hart Sys., Inc.,
114 A.D.2d 363 (2d Dept. 1985) .............................................................................................. 16
CanWest Global Comms. Corp. v. Mirkaei Tikshoret Ltd.,
9 Misc.3d 845 (Sup. Ct. N.Y. Cnty. Apr. 1, 2005) ................................................................... 14
Carrillo v. Schneider Logistics, Inc.,
No. CV-11-8557 CAS DTBX, 2012 WL 556309 (C.D. Cal. Jan. 31, 2012) ..................... 14, 15
Citibank, N.A. v. Am. Banana Co., Inc.,
50 A.D.3d 593 (1st Dept. 2008) .................................................................................................. 7
Cohen v. Cocoline Prod.,
309 N.Y. 119 (1955) ................................................................................................................. 16
Crossroads ABL LLC v Canaras Capital Mgt., LLC,
105 A.D.3d 645 (1st Dept 2013) ............................................................................................... 10
Derfner Mgmt., Inc. v. Lenhill Realty Corp.,
90 A.D.3d 434 (1st Dept. 2011) ................................................................................................ 15
DiPrima v. DiPrima,
111 A.D.2d 901 (2d Dept. 1985) .............................................................................................. 12
Donovan v. Rothman,
253 A.D.2d 627 (1st Dept. 1998)............................................................................................... 11
Fletcher v. Dakota, Inc.,
99 A.D.3d 43 (1st Dept. 2012) .................................................................................................... 6
Haynes v. Kleinewefers & Lembo Corp.,
921 F.2d 453 (2d Cir. 1990)........................................................................................................ 9
Hooper Assocs., Ltd. v. AGS Computers, Inc.,
74 N.Y.2d 487 (1989) ............................................................................................................... 10
Huang v. Sy,
62 A.D.3d 660 (2d Dept. 2009) .................................................................................................. 5
In re Adelphia Comms. Corp.,
323 B.R. 345 (Bankr S.D.N.Y. 2005) ....................................................................................... 10
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In re Dissolution of Stony Creek Pres., Inc.,
121 A.D.3d 1376 (3d Dept. 2014) ............................................................................................ 16
In re Estate of Wallens,
9 N.Y.3d 117 (2007) ................................................................................................................... 9
Miller v. Schreyer,
200 A.D.2d 492 (1st Dept. 1994) ................................................................................................ 6
Miltland Raleigh-Durham v. Myers,
807 F. Supp. 1025 (S.D.N.Y. 1992)............................................................................................ 5
N. Am. Soccer League, LLC v. United States Soccer Fed'n, Inc.,
883 F.3d 32 (2d Cir. 2018).................................................................................................. 11, 12
Out of Box Promotions, LLC v. Koschitzki,
55 A.D.3d 575 (2d Dept. 2008) .................................................................................................. 5
Pokoik v. 575 Realties, Inc.,
143 A.D.3d 487 (1st Dept. 2016) .............................................................................................. 17
Redmond v. Redmond,
42 A.D.2d 542 (1st Dept. 1973) .................................................................................................. 9
Reyes v. Transamerica Life Ins. Co.,
No. CV153452DMGFFMX, 2015 WL 13376523 (C.D. Cal. Dec. 23, 2015) ................... 14, 15
Rise Above Capitol Partners, LLC v. Long Island Fiber Exchange, Inc.,
2010 N.Y. Slip Op. 31819(U), 2010 WL 2897848 (Sup. Ct. Suffolk Cnty. July 14, 2010)..... 13
Romita v. Castle Oil Corp.,
No. 53145/2011, 2012 WL 12088492 (Sup. Ct. Westchester Cnty. Dec. 5, 2012) .................. 11
Street v. Vitti,
685 F. Supp. 379 (S.D.N.Y. 1988) ........................................................................................... 16
Waldman by Waldman v. United Talmudical Acad. Torah V'Yirah,
558 N.Y.S.2d 781 (Sup. Ct. Orange Cnty. 1990) ..................................................................... 12
Wisdom Imp. Sales Co. v. Labatt Brewing Co.,
339 F.3d 101 (2d Cir. 2003)...................................................................................................... 13
Wolf v. Rand,
258 A.D.2d 401 (1st Dept. 1999) ................................................................................................ 5
Statutes
California Labor Code § 1102.5(b) ....................................................................................... 1, 7, 12
California Labor Code § 98.6(b)(1) .......................................................................................... 1, 12
New York Business Corporations Law Section 624....................................................................... 7
New York Business Corporations Law Section 720....................................................................... 7
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PRELIMINARY STATEMENT
This case is about family real estate companies that have been subjected to years of
mismanagement and waste. Defendants claim it is about accelerating an inheritance. It is not.
Plaintiff’s injunction motion simply seeks to protect her against retaliation so she can
take prudent steps to prevent the dissipation of her Trust’s valuable assets--which will be the
inevitable result of denying her requested injunction. Already, the Individual Defendants, Berrin
and Gonca, have used extraordinary self-help to retaliate against Yasemin for speaking up about
their pervasive mismanagement of the Company. In direct response to her filing of this lawsuit,
they removed Plaintiff as a Company Director on the same day as the TRO hearing held in this
motion sequence, and within days, fired her as an officer and employee of the Company. If that
improper retaliation is allowed to stand, Defendants’ self-dealing, waste, and mismanagement
will likely result in further squandering of the assets of Yasemin’s Trust.
Likely Success on the Merits:
First, Defendants used corporate assets to purchase a multi-million dollar yacht and an
estate in the South of France, to pay for a driver, housekeeper, and pet food, and to give
sweetheart deals to friends. Contrary to their conclusory claims, they just sold a pool of valuable
assets for a fraction of their value -- when better offers were on the table and their own lawyers
advised against the deal as presented. Defendants are guilty of self-dealing, and
mismanagement.
Second, California law expressly barred Defendants’ retaliation against Plaintiff (who
lives and works in California) for complaining about illegal workplace behavior. See California
Labor Code §§ 98.6(b)(1), 1102.5(b). Yet, Defendants admit to terminating her as an employee
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and removing her as a Director in reaction to her filing of this lawsuit, which challenges
Defendants’ unlawful conduct. (NYSCEF Doc. 21 at 10.)
Third, as a director and officer, Plaintiff has an absolute right to corporate records, and
even Defendants do not dispute denying her access to such records.
Fourth, Plaintiff is likely to prevail on her request to enjoin the use of Company assets to
pay the legal fees of the Individual Defendants here. The bylaws specifically limit corporate
payments for legal fees to cases where the director or officer was “successful” on the merits of
the case, and require any such indemnification to be authorized by a vote of disinterested
directors, shareholder vote, or by “independent legal counsel in a written opinion.” Defendants
do not even argue that these pre-requisites were satisfied.
Preservation of the Status Quo: In order to prevent parties from benefiting from any
effort to change the status quo after an action has been filed, in ruling on preliminary injunctions,
courts look to the status quo immediately before an action is filed. As a result, in this case,
preserving the status quo requires restoring Plaintiff to her roles as a Director, officer, and
employee of the Companies, which she held when this case was filed. Such injunctions are
regularly granted to employees under California’s anti-retaliation statute.
Irreparable Harm: Yasemin’s loss of her right to management input into and oversight
over the Companies constitutes irreparable harm as a matter of law – particularly when the
Companies are on the brink of re-investing a material portion of their assets. As courts have
held, being subject to unlawful employment retaliation also irreparably harms Yasemin because
it chills her and other employees from complaining about Defendants’ illegalities. Denying
Yasemin access to books and records also constitutes irreparable harm that cannot be
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compensated by money. Courts regularly grant preliminary injunctions to prevent these types of
harm.
Accordingly, the motion should be granted in its entirety.
STATEMENT OF FACTS
Defendants’ opposition papers are filled with misstatements about the operative facts.
The relevant facts detailed in Plaintiff’s opening brief as well as in Plaintiff’s Reply Affidavit,
which attaches numerous contemporaneous documents that set the record straight.1 It is
noteworthy that Defendants submit no affidavit from Zeynep Tekiner, Defendant Billur Akipek
or the Company accountants – who are all key participants in the events at issue.
ARGUMENT
I. THIS COURT SHOULD GRANT PLAINTIFF’S REQUEST FOR A
PRELIMINARY INJUNCTION
A. Plaintiff Will Likely Succeed on the Merits
1. Plaintiff Will Likely Prevail on Her Claims for Fiduciary Duty Breaches,
Corporate Waste and Mismanagement
A cursory review of the Company Defendants’ affairs under Defendants’ stewardship
shows that they have not only failed to manage their finances with minimal adherence to sound
financial and accounting practices required of such a company, but they have also engaged in
egregious corporate waste, mismanagement and self-dealing.
Defendants attempt to portray the Individual Defendants’ extravagant spending as
“corporate expenses” to try to justify their bleeding of the Companies’ funds. (NYSCEF Doc. 21
at 14.) Yet Defendants do not dispute the expenditures set forth in Plaintiff’s papers, including:
1
The Court is also referred to Plaintiff’s Supplemental Affidavit filed under seal as to the
debilitating health issues affecting the Individual Defendants.
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- Buying a multi-million dollar yacht (Yasemin Rep. Aff. ¶ 6);
- Borrowing $6 million to pay for multi-million dollar homes (as well as buying a
house in the South of France) for no identifiable corporate purpose (Tekiner Opening
Aff. ¶¶ 5, 28);
- Secretly granting Gonca an unheard-of 10-year severance payment in her
employment contract (id. ¶ 8);
- Paying for Berrin’s driver and housekeeper, and the Individual Defendants’
landscaping, phone and pet food bills (id. ¶¶ 5, 28);
- Putting their friends, relatives, and staff up in Company apartments with sweetheart
leases (Yasemin Rep. Aff. ¶ 57);
- Repeatedly making investments that result in negative cash flow (Yasemin Rep. Aff.
¶¶ 41, 48);
- Going on vacation and returning to find their Texas properties being auctioned off,
forcing the Companies to pay to re-acquire these properties (NYSCEF Doc. 2 ¶ 42;
Yasemin Rep. Aff. ¶ 41); and
- Concluding that a real estate advisor provided useful advice but then terminating him
before receiving his report (Yasemin Rep. Aff. ¶ 55).
Defendants’ mismanagement caused the Companies to lose roughly $1.8 million in 2018.
(Yasemin Rep. Aff. ¶ 50.) The situation in 2019 was so precarious that Defendants were forced
to liquidate several assets to stay afloat. (Id. ¶ 51.) Because rental income has declined by one-
third, 2020’s financial picture will be far worse. (Id. ¶ 52.)
This pattern of abuse came to a head late last year when Defendants liquidated some of
the Companies’ most valuable development properties at fire sale prices during the real estate
crash caused by the Pandemic. Critically, they agreed to an 11th hour multi-million dollar drop
in the buyer’s final offer -- despite having received significantly higher offers for those same
properties and their own lawyers’ advice to negotiate for better terms. (Yasemin Rep. Aff. ¶¶ 66,
70.) Moreover, Defendants failed to cure multiple legal violations on these properties, and failed
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to keep accurate records of the regulated status of apartments -- causing buyers to offer much
less than the properties were worth. (Yasemin Rep. Aff. ¶¶ 59, 61.)
Notably, the Individual Defendants have admitted mismanaging the Companies.
(Yasemin Opening Aff. ¶ 13.) And the Companies’ own accountant agrees that they are simply
not up to the task of running the Companies. (Yasemin Rep. Aff. ¶ 47.)
These sorts of waste, mismanagement and misuses of funds by Company officers
entrusted with access to them are all canonical breaches of fiduciary duty. See, e.g., Huang v.
Sy, 62 A.D.3d 660, 661 (2d Dept. 2009) (affirming determination that partner breached fiduciary
duties by “ma[king] payments to himself, and to…entities under his sole control, from funds
belonging to the partnerships of which the plaintiffs were members”); Out of Box Promotions,
LLC v. Koschitzki, 55 A.D.3d 575, 578 (2d Dept. 2008) (LLC member breached fiduciary duty
to co-members by use of company credit and funds for personal expenses); see also Miltland
Raleigh-Durham v. Myers, 807 F. Supp. 1025, 1058 (S.D.N.Y. 1992) (fiduciary duties breached
where partner “uses or obtains the benefit of partnership credit or assets for himself . . .”).
The business judgment rule does not shield Defendants’ misconduct. It does not protect
corporate officials who engage in self-dealing, or who make decisions affected by inherent
conflicts of interest. Wolf v. Rand, 258 A.D.2d 401 (1st Dept. 1999) (burden of proof on
officers of corporation to show their expenditures of corporate funds for car expenses, insurance
payments, union and temple dues, personal income taxes, and other incidental expenses were
reasonable). Buying yachts and lavish homes and paying for personal expenses is
unquestionably self-dealing.
Similarly, “arbitrary or malicious decision making or decision making tainted by
discriminatory considerations is not protected by the business judgment rule.” Fletcher v.
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Dakota, Inc., 99 A.D.3d 43, 48 (1st Dept. 2012). The burden of proving a bona fide business
purpose shifts to the directors where, as here, a prima facie case of unequal shareholder
treatment is shown. Aronson v. Crane, 139 Misc. 2d 744 (Sup. Ct., Nassau Cnty. 1988), aff’d,
145 A.D.2d 455 (2d Dept. 1988).
Finally, the First Department has held that where the wrong alleged in a derivative action
is the inaction of the board -- rather than a conscious decision approving some action -- the
business judgment rule does not apply. Miller v. Schreyer, 200 A.D.2d 492, 493-94 (1st Dept.
1994), adhered to on rearg., 257 A.D.2d 358 (1st Dept. 1999). Thus, for example, failing to stop
the Texas properties from being auctioned off, failing to keep rent stabilization records, and
failing to cure various violations on the properties all fall outside the business judgment rule’s
protection.
Defendants claim “unclean hands” bar the claims here. (NYSCEF Doc. 21 at 14-15.) But
that doctrine only applies when the party invoking it was injured by the conduct and the other
party is “guilty of immoral or unconscionable conduct directly related to the subject
matter.” Citibank, N.A. v. Am. Banana Co., Inc., 50 A.D.3d 593, 601 (1st Dept. 2008). Neither
is true here. Defendants’ accountants considered Yasemin’s home expense (which was
purchased by selling her apartment – not taking out a mortgage as was done by Gonca)
“reasonable,” she pays annual rent for her home, and she pays various personal expenses for that
home, including gas, phone and cable bills. (Yasemin Rep. Aff. ¶¶ 83-84.) Her annual
compensation from the Companies – which is her sole source of income – is modest and
reasonable in light of the work she does, especially compared to other family members’ salaries
and the reasonable return on her Trust’s sizeable holdings, which have never made any
distribution to her. Id. ¶¶ 29-43; 81-83.
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2. Defendants’ Termination of Plaintiff Was Unlawful
Plaintiff lives and works in California. California law expressly prohibits retaliation
against an employee who complains about workplace conduct that violates any statute, rule, or
regulation:
An employer, or any person acting on behalf of the employer, shall
not retaliate against an employee for disclosing information, or
because the employer believes that the employee disclosed or may
disclose information, to a government or law enforcement agency,
to a person with authority over the employee or another employee
who has the authority to investigate, discover, or correct the
violation or noncompliance, or for providing information to, or
testifying before, any public body conducting an investigation,
hearing, or inquiry, if the employee has reasonable cause to believe
that the information discloses a violation of state or federal statute,
or a violation of or noncompliance with a local, state, or federal rule
or regulation, regardless of whether disclosing the information is
part of the employee's job duties.
Cal. Lab. Code § 1102.5(b). Defendants undoubtedly violated this anti-retaliation law by
terminating her employment and removing her as a director and officer in response to her filing
this lawsuit.
After Jasemin had been employed by Defendants for almost 20 years, Defendants
suddenly and without warning removed her as a Director on January 5, 2021, and then
terminated her as an employee on January 8. This was just weeks after Plaintiff complained in
writing about Defendants’ unlawful conduct (Yasemin Rep. Aff. ¶ 94), just days after she filed
the instant lawsuit, which alleged violations of various laws, including concealing books and
records in violation of Section 624 of the B.C.L. and waste and breach of fiduciary duty in
violation of Section 720 of the B.C.L., and the very same day that the Court heard a TRO
application in this case. Realizing that it would be futile to claim that it was a mere coincidence
that they terminated her so shortly after this action was filed, Defendants admit that this very
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lawsuit led to her firing. Berrin asserts that Plaintiff was terminated because of her “incursions
and disruptions” in late December 2020 – when she demanded to review Company records in her
role as Treasurer. (NYSCEF Doc. 22 ¶ 30.) And Defendants’ brief openly acknowledges that
the “disruptive behavior in the past few months[ ] include[es] this lawsuit.” (NYSCEF Doc. 21
at 8)(emphasis added).
Further, such retaliation is the Individual Defendants’ central modus operandi. Berrin
previously removed Plaintiff as a director and trustee because Plaintiff had questioned the
Individual Defendants’ actions, and Berrin evicted Plaintiff from her apartment after she
complained about racist comments made by Gonca. (NYSCEF Doc. 2 ¶ 48; NYSCEF Doc. 7 ¶¶
6-11; Yasemin Rep. Aff. ¶ 90.) And Defendants threatened to retaliate against Plaintiff when she
questioned the corporation’s plan to take out a $6 million mortgage to pay for a second home for
Gonca. (NYSCEF Doc. 2 ¶¶ 45-46.) Berrin even acknowledged that “it was WRONG” to make
those threats – but she followed through on them anyway. (Id.) Given Defendants’ track record
and admissions in this case, Plaintiff will readily succeed on her retaliation claim.
Moreover, as a fiduciary duty matter Yasemin’s termination was improper. The Trustee
of Yasemin’s own Trust – who was in a seriously conflicted position owing both fiduciary duties
to Yasemin while being beholden to the Individual Defendants – consented to Plaintiff’s removal
as a Bremen Director. (Yasemin Rep. Aff. ¶ 95; NYSCEF Doc. 29.) This conflict-laden action
smacks of a fiduciary duty breach. See In re Estate of Wallens, 9 N.Y.3d 117, 122 (2007) (it is
“well settled that a fiduciary owes a duty of undivided and undiluted loyalty ... a trustee is under
a duty to the beneficiary to administer the trust solely in the interest of the beneficiary”). And
Defendants then used this removal to engineer Yasemin’s firing through a Board action from
which she was excluded. (NYSCEF Doc. 29.)
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Because Plaintiff has a clear statutory right to reinstatement, Defendants’ reliance on
Redmond v. Redmond, 42 A.D.2d 542 (1st Dept. 1973), is misplaced. In that case, “[t]he record
fail[ed] to support plaintiff's clear right to the relief demanded.”
3. Plaintiff Will Likely Prevail on Her Claim to Enjoin the Use of Corporate
Assets to Pay Legal Fees
Advancement and indemnification rights set forth in a contract must be strictly construed.
Haynes v. Kleinewefers & Lembo Corp., 921 F.2d 453, 456 (2d Cir. 1990); accord Hooper
Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487, 491 (1989) (No indemnification “unless
the intention to do so is unmistakably clear from the language of the promise.”).
Article VII of the Bremen and German bylaws (NYSCEF Doc. 31 and NYSCEF Doc. 32)
bars advancement of the Individual Defendants’ legal bills. Article VII(c) expressly limits
corporate indemnification of legal fees to instances where the director or officer was
“successful” on the merits of the case, and Article VII(d) requires that any indemnification be
authorized by a vote of disinterested directors, shareholder vote, or by “independent legal
counsel in a written opinion.” 2 Defendants do not even try to argue that they satisfied these pre-
requisites.
Critically, both the Bremen and German bylaws are silent about any power to advance
legal fees and, as a result, advancement simply is not permitted. See Crossroads ABL LLC v
Canaras Capital Mgt., LLC, 105 A.D.3d 645, 645 (1st Dept 2013) (“Indemnification and
advancement of legal fees are two distinct corporate obligations.”); In re Adelphia Comms.
2
Defendants’ counsel at Norton Rose Fulbright is beset by a number of conflicts that preclude
them from providing such an opinion and materially limit its representation here. Plaintiff
preserves her rights to pursue these conflicts.
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Corp., 323 B.R. 345, 375-76 (Bankr S.D.N.Y. 2005) (bylaw requiring indemnification does not
require advancement).
Defendants argue that it is improper to preliminarily enjoin indemnification in intra-
corporate disputes. NYSCEF Doc. 21 at 20. However, courts routinely enjoin payment of
individuals’ legal fees by corporations in cases like this. Romita v. Castle Oil Corp., No.
53145/2011, 2012 WL 12088492, *42-43 (Sup. Ct. Westchester Cnty. Dec. 5, 2012) (“[T]he
overwhelming authority” in dissolution cases is “for courts to enjoin the payment of legal fees by
corporations on behalf of their majority shareholders,” but allowing advancement of fees in light
of corporate resolution allowing it). Defendants are also incorrect that Donovan v. Rothman,
253 A.D.2d 627 (1st Dept. 1998) – which enjoined a similar advancement of legal fees –
involved a situation where bad faith had been found by the court. NYSCEF Doc. 21 at 22. To the
contrary, the court noted that “the litigation [had] barely commenced” and good faith was still “at
issue.”
B. A Preliminary Injunction Is Necessary To Preserve the Status Quo
Although Defendants terminated Plaintiff’s employment and removed her from her
director and officer positions after the instant case and motion were filed, for purposes of this
motion, the status quo is Plaintiff’s position immediately prior to the filing of her lawsuit, which
is referred to as the “status quo ante.” See N. Am. Soccer League, LLC v. United States Soccer
Fed'n, Inc., 883 F.3d 32, 37 & n.5 (2d Cir. 2018) (“Because the proposed injunction’s effect on
the status quo drives the standard, we must ascertain the status quo—that is, ‘the last actual,
peaceable uncontested status which preceded the pending controversy.’” “The ‘status quo’ in
preliminary-injunction parlance is really a ‘status quo ante.’”); DiPrima v. DiPrima, 111 A.D.2d
901, 902 (2d Dept. 1985) (“Hence, in order to maintain the status quo ante and protect plaintiff
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and her children's possessory right in the marital residence under the judgment of divorce, Trial
Term could impose, in the exercise of its equitable powers, an injunction to prevent transfer of
the mortgage.”); see also Waldman by Waldman v. United Talmudical Acad. Torah V'Yirah, 558
N.Y.S.2d 781, 783 (Sup. Ct. Orange Cnty. 1990).
“This special ‘ante’ formulation of the status quo in the realm of equities shuts out
defendants seeking shelter under a current ‘status quo’ precipitated by their wrongdoing.” N.
Am. Soccer League, LLC, 883 F.3d at 37 n.5. Defendants should thus not be permitted to
benefit from their own self-help in trying to change the status quo while this motion was sub
judice.
C. Plaintiff Will Suffer Irreparable Harm Without A Preliminary Injunction
1. Plaintiff Will Suffer Irreparable Harm Due to a Loss of Management and
Oversight Rights
In her opening brief, Plaintiff suspected that she faced the imminent prospect of being
removed as a director and/or officer of the Company Defendants, as well as being deprived of
her salary and home. NYSCEF Doc. 11 at 14. The very day of the TRO hearing, Defendants did
in fact remove Yasemin as a director of Bremen, and the Company Defendants fired her and cut
off her salary a couple days later. (Yasemin Aff. ¶¶ 95-97.) While Defendants have not yet
evicted Yasemin from her house, subject to COVID-19 eviction restrictions, they have not
disavowed doing so in the future. Without a preliminary injunction reinstating her as a director
and/or officer and barring an eviction from her home, Plaintiff will suffer irreparable harm.
It is well-settled that the threatened loss of management rights constitutes irreparable
harm sufficient to warrant a preliminary injunction. See, e.g., Wisdom Imp. Sales Co. v. Labatt
Brewing Co., 339 F.3d 101, 114-15 (2d Cir. 2003) (“Conduct that unnecessarily frustrates efforts
to… preserve the right to participate in the management of a company may also constitute
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irreparable harm.”); Rise Above Capitol Partners, LLC v. Long Island Fiber Exchange, Inc.,
2010 N.Y. Slip Op. 31819(U), 2010 WL 2897848 (Sup. Ct. Suffolk Cnty. July 14, 2010)
(“plaintiff has demonstrated it will suffer irreparable harm if the injunctive relief is not granted
as it will be deprived of participation in the management and control of [the LLC]”); Bank of
Am., N.A. v. PSW NYC LLC, No. 651293/10, 2010 WL 4243437 (Sup. Ct. N.Y. Cnty. Sep. 16,
2010) (“the loss of a bargained-for contractual right of control can constitute irreparable harm”);
CanWest Global Comms. Corp. v. Mirkaei Tikshoret Ltd., 9 Misc.3d 845, 859-60 (Sup. Ct. N.Y.
Cnty. Apr. 1, 2005) (“Every day that CanWest is denied its right to participate in the ownership
and management of the newspaper also constitutes irreparable harm.”). This is particularly so
now given the imminent plans to re-invest the Companies’ main assets.
2. Retaliation Constitutes Irreparable Harm
California Labor Code § 98.6(b)(1) explicitly provides that any individual who is
retaliated against in violation of § 1102.5(b) “shall be entitled to reinstatement and
reimbursement for lost wages and work benefits caused by those acts of the employer.” Further,
courts applying this provision routinely grant preliminary injunctive relief reinstating employees
who have been retaliated against or other preliminary relief that prevents such retaliation. See
Carrillo v. Schneider Logistics, Inc., No. CV-11-8557 CAS DTBX, 2012 WL 556309, at *7
(C.D. Cal. Jan. 31, 2012), aff'd, 501 Fed. Appx. 713 (9th Cir. 2012) (issuing preliminary
injunction reversing termination of entire workforce); Reyes v. Transamerica Life Ins. Co., No.
CV153452DMGFFMX, 2015 WL 13376523, at *7 (C.D. Cal. Dec. 23, 2015) (preliminary
injunction prohibiting retaliatory termination).
Such injunctive relief is imperative here because retaliation has a chilling effect on
workplace complaints, which causes irreparable injury that cannot be compensated with a
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FILE
Preview
FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 SUPREME COURT OF THE STATE OF NEW YORK COMMERCIAL DIVISION, NEW YORK COUNTY YASEMIN TEKINER, Index No. 657193/2020 In her individual capacity, as a beneficiary and a Trustee of The Yasemin Tekiner 2011 Descendants Trust and derivatively as a holder of equitable interests in a shareholder or a member of the Company Defendants, Plaintiff, - against - BREMEN HOUSE INC., BREMEN HOUSE TEXAS, INC., GERMAN NEWS COMPANY, INC., GERMAN NEWS TEXAS, INC., 254 – 258 W. 35TH ST. LLC, BERRIN TEKINER, GONCA TEKINER, and BILLUR AKIPEK, in her capacity as a Trustee of The Yasemin Tekiner 2011 Descendants Trust, Defendants. PLAINTIFF’S MEMORANDUM OF LAW IN FURTHER SUPPORT OF APPLICATION FOR PRELIMINARY INJUNCTION WITH TEMPORARY RESTRAINING ORDER MANDEL BHANDARI LLP Evan Mandel 80 Pine Street, 33rd Floor New York, NY 10005 Tel: (212) 269-5600 em@mandelbhandari.com PATTERSON BELKNAP WEBB & TYLER LLP Stephen P. Younger 1133 Avenue of the Americas New York, NY 10036-6710 spyounger@pbwt.com Attorneys for Plaintiff 12305927v.1 1 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 TABLE OF CONTENTS Pages PRELIMINARY STATEMENT .................................................................................................... 1 STATEMENT OF FACTS ............................................................................................................. 3 ARGUMENT .................................................................................................................................. 3 I. THIS COURT SHOULD GRANT PLAINTIFF’SREQUEST FOR A PRELIMINARY INJUNCTION ..................... 3 A. Plaintiff Will Likely Succeed on the Merits ............................................... 3 B. A Preliminary Injunction Is Necessary To Preserve the Status Quo ....................................................................... 10 C. Plaintiff Will Suffer Irreparable Harm Without A Preliminary Injunction ............................................................ 11 D. The Equities Favor An Injunction............................................................. 14 CONCLUSION ............................................................................................................................. 15 i 12305927v.1 2 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 TABLE OF AUTHORITIES Pages Cases Aronson v. Crane, 139 Misc. 2d 744 (Sup. Ct., Nassau Cnty. 1988)........................................................................ 6 Bank of Am., N.A. v. PSW NYC LLC, No. 651293/10, 2010 WL 4243437 (Sup. Ct. N.Y. Cnty. Sep. 16, 2010) ................................ 13 Berkowitz v. Astro Moving & Storage, Co., 240 A.D.2d 450 (2d Dept. 1997) .............................................................................................. 15 Brenner v. Hart Sys., Inc., 114 A.D.2d 363 (2d Dept. 1985) .............................................................................................. 16 CanWest Global Comms. Corp. v. Mirkaei Tikshoret Ltd., 9 Misc.3d 845 (Sup. Ct. N.Y. Cnty. Apr. 1, 2005) ................................................................... 14 Carrillo v. Schneider Logistics, Inc., No. CV-11-8557 CAS DTBX, 2012 WL 556309 (C.D. Cal. Jan. 31, 2012) ..................... 14, 15 Citibank, N.A. v. Am. Banana Co., Inc., 50 A.D.3d 593 (1st Dept. 2008) .................................................................................................. 7 Cohen v. Cocoline Prod., 309 N.Y. 119 (1955) ................................................................................................................. 16 Crossroads ABL LLC v Canaras Capital Mgt., LLC, 105 A.D.3d 645 (1st Dept 2013) ............................................................................................... 10 Derfner Mgmt., Inc. v. Lenhill Realty Corp., 90 A.D.3d 434 (1st Dept. 2011) ................................................................................................ 15 DiPrima v. DiPrima, 111 A.D.2d 901 (2d Dept. 1985) .............................................................................................. 12 Donovan v. Rothman, 253 A.D.2d 627 (1st Dept. 1998)............................................................................................... 11 Fletcher v. Dakota, Inc., 99 A.D.3d 43 (1st Dept. 2012) .................................................................................................... 6 Haynes v. Kleinewefers & Lembo Corp., 921 F.2d 453 (2d Cir. 1990)........................................................................................................ 9 Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487 (1989) ............................................................................................................... 10 Huang v. Sy, 62 A.D.3d 660 (2d Dept. 2009) .................................................................................................. 5 In re Adelphia Comms. Corp., 323 B.R. 345 (Bankr S.D.N.Y. 2005) ....................................................................................... 10 ii 12305927v.1 3 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 In re Dissolution of Stony Creek Pres., Inc., 121 A.D.3d 1376 (3d Dept. 2014) ............................................................................................ 16 In re Estate of Wallens, 9 N.Y.3d 117 (2007) ................................................................................................................... 9 Miller v. Schreyer, 200 A.D.2d 492 (1st Dept. 1994) ................................................................................................ 6 Miltland Raleigh-Durham v. Myers, 807 F. Supp. 1025 (S.D.N.Y. 1992)............................................................................................ 5 N. Am. Soccer League, LLC v. United States Soccer Fed'n, Inc., 883 F.3d 32 (2d Cir. 2018).................................................................................................. 11, 12 Out of Box Promotions, LLC v. Koschitzki, 55 A.D.3d 575 (2d Dept. 2008) .................................................................................................. 5 Pokoik v. 575 Realties, Inc., 143 A.D.3d 487 (1st Dept. 2016) .............................................................................................. 17 Redmond v. Redmond, 42 A.D.2d 542 (1st Dept. 1973) .................................................................................................. 9 Reyes v. Transamerica Life Ins. Co., No. CV153452DMGFFMX, 2015 WL 13376523 (C.D. Cal. Dec. 23, 2015) ................... 14, 15 Rise Above Capitol Partners, LLC v. Long Island Fiber Exchange, Inc., 2010 N.Y. Slip Op. 31819(U), 2010 WL 2897848 (Sup. Ct. Suffolk Cnty. July 14, 2010)..... 13 Romita v. Castle Oil Corp., No. 53145/2011, 2012 WL 12088492 (Sup. Ct. Westchester Cnty. Dec. 5, 2012) .................. 11 Street v. Vitti, 685 F. Supp. 379 (S.D.N.Y. 1988) ........................................................................................... 16 Waldman by Waldman v. United Talmudical Acad. Torah V'Yirah, 558 N.Y.S.2d 781 (Sup. Ct. Orange Cnty. 1990) ..................................................................... 12 Wisdom Imp. Sales Co. v. Labatt Brewing Co., 339 F.3d 101 (2d Cir. 2003)...................................................................................................... 13 Wolf v. Rand, 258 A.D.2d 401 (1st Dept. 1999) ................................................................................................ 5 Statutes California Labor Code § 1102.5(b) ....................................................................................... 1, 7, 12 California Labor Code § 98.6(b)(1) .......................................................................................... 1, 12 New York Business Corporations Law Section 624....................................................................... 7 New York Business Corporations Law Section 720....................................................................... 7 iii 12305927v.1 4 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 PRELIMINARY STATEMENT This case is about family real estate companies that have been subjected to years of mismanagement and waste. Defendants claim it is about accelerating an inheritance. It is not. Plaintiff’s injunction motion simply seeks to protect her against retaliation so she can take prudent steps to prevent the dissipation of her Trust’s valuable assets--which will be the inevitable result of denying her requested injunction. Already, the Individual Defendants, Berrin and Gonca, have used extraordinary self-help to retaliate against Yasemin for speaking up about their pervasive mismanagement of the Company. In direct response to her filing of this lawsuit, they removed Plaintiff as a Company Director on the same day as the TRO hearing held in this motion sequence, and within days, fired her as an officer and employee of the Company. If that improper retaliation is allowed to stand, Defendants’ self-dealing, waste, and mismanagement will likely result in further squandering of the assets of Yasemin’s Trust. Likely Success on the Merits: First, Defendants used corporate assets to purchase a multi-million dollar yacht and an estate in the South of France, to pay for a driver, housekeeper, and pet food, and to give sweetheart deals to friends. Contrary to their conclusory claims, they just sold a pool of valuable assets for a fraction of their value -- when better offers were on the table and their own lawyers advised against the deal as presented. Defendants are guilty of self-dealing, and mismanagement. Second, California law expressly barred Defendants’ retaliation against Plaintiff (who lives and works in California) for complaining about illegal workplace behavior. See California Labor Code §§ 98.6(b)(1), 1102.5(b). Yet, Defendants admit to terminating her as an employee 12305927v.1 5 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 and removing her as a Director in reaction to her filing of this lawsuit, which challenges Defendants’ unlawful conduct. (NYSCEF Doc. 21 at 10.) Third, as a director and officer, Plaintiff has an absolute right to corporate records, and even Defendants do not dispute denying her access to such records. Fourth, Plaintiff is likely to prevail on her request to enjoin the use of Company assets to pay the legal fees of the Individual Defendants here. The bylaws specifically limit corporate payments for legal fees to cases where the director or officer was “successful” on the merits of the case, and require any such indemnification to be authorized by a vote of disinterested directors, shareholder vote, or by “independent legal counsel in a written opinion.” Defendants do not even argue that these pre-requisites were satisfied. Preservation of the Status Quo: In order to prevent parties from benefiting from any effort to change the status quo after an action has been filed, in ruling on preliminary injunctions, courts look to the status quo immediately before an action is filed. As a result, in this case, preserving the status quo requires restoring Plaintiff to her roles as a Director, officer, and employee of the Companies, which she held when this case was filed. Such injunctions are regularly granted to employees under California’s anti-retaliation statute. Irreparable Harm: Yasemin’s loss of her right to management input into and oversight over the Companies constitutes irreparable harm as a matter of law – particularly when the Companies are on the brink of re-investing a material portion of their assets. As courts have held, being subject to unlawful employment retaliation also irreparably harms Yasemin because it chills her and other employees from complaining about Defendants’ illegalities. Denying Yasemin access to books and records also constitutes irreparable harm that cannot be 2 12305927v.1 6 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 compensated by money. Courts regularly grant preliminary injunctions to prevent these types of harm. Accordingly, the motion should be granted in its entirety. STATEMENT OF FACTS Defendants’ opposition papers are filled with misstatements about the operative facts. The relevant facts detailed in Plaintiff’s opening brief as well as in Plaintiff’s Reply Affidavit, which attaches numerous contemporaneous documents that set the record straight.1 It is noteworthy that Defendants submit no affidavit from Zeynep Tekiner, Defendant Billur Akipek or the Company accountants – who are all key participants in the events at issue. ARGUMENT I. THIS COURT SHOULD GRANT PLAINTIFF’S REQUEST FOR A PRELIMINARY INJUNCTION A. Plaintiff Will Likely Succeed on the Merits 1. Plaintiff Will Likely Prevail on Her Claims for Fiduciary Duty Breaches, Corporate Waste and Mismanagement A cursory review of the Company Defendants’ affairs under Defendants’ stewardship shows that they have not only failed to manage their finances with minimal adherence to sound financial and accounting practices required of such a company, but they have also engaged in egregious corporate waste, mismanagement and self-dealing. Defendants attempt to portray the Individual Defendants’ extravagant spending as “corporate expenses” to try to justify their bleeding of the Companies’ funds. (NYSCEF Doc. 21 at 14.) Yet Defendants do not dispute the expenditures set forth in Plaintiff’s papers, including: 1 The Court is also referred to Plaintiff’s Supplemental Affidavit filed under seal as to the debilitating health issues affecting the Individual Defendants. 3 12305927v.1 7 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 - Buying a multi-million dollar yacht (Yasemin Rep. Aff. ¶ 6); - Borrowing $6 million to pay for multi-million dollar homes (as well as buying a house in the South of France) for no identifiable corporate purpose (Tekiner Opening Aff. ¶¶ 5, 28); - Secretly granting Gonca an unheard-of 10-year severance payment in her employment contract (id. ¶ 8); - Paying for Berrin’s driver and housekeeper, and the Individual Defendants’ landscaping, phone and pet food bills (id. ¶¶ 5, 28); - Putting their friends, relatives, and staff up in Company apartments with sweetheart leases (Yasemin Rep. Aff. ¶ 57); - Repeatedly making investments that result in negative cash flow (Yasemin Rep. Aff. ¶¶ 41, 48); - Going on vacation and returning to find their Texas properties being auctioned off, forcing the Companies to pay to re-acquire these properties (NYSCEF Doc. 2 ¶ 42; Yasemin Rep. Aff. ¶ 41); and - Concluding that a real estate advisor provided useful advice but then terminating him before receiving his report (Yasemin Rep. Aff. ¶ 55). Defendants’ mismanagement caused the Companies to lose roughly $1.8 million in 2018. (Yasemin Rep. Aff. ¶ 50.) The situation in 2019 was so precarious that Defendants were forced to liquidate several assets to stay afloat. (Id. ¶ 51.) Because rental income has declined by one- third, 2020’s financial picture will be far worse. (Id. ¶ 52.) This pattern of abuse came to a head late last year when Defendants liquidated some of the Companies’ most valuable development properties at fire sale prices during the real estate crash caused by the Pandemic. Critically, they agreed to an 11th hour multi-million dollar drop in the buyer’s final offer -- despite having received significantly higher offers for those same properties and their own lawyers’ advice to negotiate for better terms. (Yasemin Rep. Aff. ¶¶ 66, 70.) Moreover, Defendants failed to cure multiple legal violations on these properties, and failed 4 12305927v.1 8 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 to keep accurate records of the regulated status of apartments -- causing buyers to offer much less than the properties were worth. (Yasemin Rep. Aff. ¶¶ 59, 61.) Notably, the Individual Defendants have admitted mismanaging the Companies. (Yasemin Opening Aff. ¶ 13.) And the Companies’ own accountant agrees that they are simply not up to the task of running the Companies. (Yasemin Rep. Aff. ¶ 47.) These sorts of waste, mismanagement and misuses of funds by Company officers entrusted with access to them are all canonical breaches of fiduciary duty. See, e.g., Huang v. Sy, 62 A.D.3d 660, 661 (2d Dept. 2009) (affirming determination that partner breached fiduciary duties by “ma[king] payments to himself, and to…entities under his sole control, from funds belonging to the partnerships of which the plaintiffs were members”); Out of Box Promotions, LLC v. Koschitzki, 55 A.D.3d 575, 578 (2d Dept. 2008) (LLC member breached fiduciary duty to co-members by use of company credit and funds for personal expenses); see also Miltland Raleigh-Durham v. Myers, 807 F. Supp. 1025, 1058 (S.D.N.Y. 1992) (fiduciary duties breached where partner “uses or obtains the benefit of partnership credit or assets for himself . . .”). The business judgment rule does not shield Defendants’ misconduct. It does not protect corporate officials who engage in self-dealing, or who make decisions affected by inherent conflicts of interest. Wolf v. Rand, 258 A.D.2d 401 (1st Dept. 1999) (burden of proof on officers of corporation to show their expenditures of corporate funds for car expenses, insurance payments, union and temple dues, personal income taxes, and other incidental expenses were reasonable). Buying yachts and lavish homes and paying for personal expenses is unquestionably self-dealing. Similarly, “arbitrary or malicious decision making or decision making tainted by discriminatory considerations is not protected by the business judgment rule.” Fletcher v. 5 12305927v.1 9 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 Dakota, Inc., 99 A.D.3d 43, 48 (1st Dept. 2012). The burden of proving a bona fide business purpose shifts to the directors where, as here, a prima facie case of unequal shareholder treatment is shown. Aronson v. Crane, 139 Misc. 2d 744 (Sup. Ct., Nassau Cnty. 1988), aff’d, 145 A.D.2d 455 (2d Dept. 1988). Finally, the First Department has held that where the wrong alleged in a derivative action is the inaction of the board -- rather than a conscious decision approving some action -- the business judgment rule does not apply. Miller v. Schreyer, 200 A.D.2d 492, 493-94 (1st Dept. 1994), adhered to on rearg., 257 A.D.2d 358 (1st Dept. 1999). Thus, for example, failing to stop the Texas properties from being auctioned off, failing to keep rent stabilization records, and failing to cure various violations on the properties all fall outside the business judgment rule’s protection. Defendants claim “unclean hands” bar the claims here. (NYSCEF Doc. 21 at 14-15.) But that doctrine only applies when the party invoking it was injured by the conduct and the other party is “guilty of immoral or unconscionable conduct directly related to the subject matter.” Citibank, N.A. v. Am. Banana Co., Inc., 50 A.D.3d 593, 601 (1st Dept. 2008). Neither is true here. Defendants’ accountants considered Yasemin’s home expense (which was purchased by selling her apartment – not taking out a mortgage as was done by Gonca) “reasonable,” she pays annual rent for her home, and she pays various personal expenses for that home, including gas, phone and cable bills. (Yasemin Rep. Aff. ¶¶ 83-84.) Her annual compensation from the Companies – which is her sole source of income – is modest and reasonable in light of the work she does, especially compared to other family members’ salaries and the reasonable return on her Trust’s sizeable holdings, which have never made any distribution to her. Id. ¶¶ 29-43; 81-83. 6 12305927v.1 10 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 2. Defendants’ Termination of Plaintiff Was Unlawful Plaintiff lives and works in California. California law expressly prohibits retaliation against an employee who complains about workplace conduct that violates any statute, rule, or regulation: An employer, or any person acting on behalf of the employer, shall not retaliate against an employee for disclosing information, or because the employer believes that the employee disclosed or may disclose information, to a government or law enforcement agency, to a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or noncompliance, or for providing information to, or testifying before, any public body conducting an investigation, hearing, or inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employee's job duties. Cal. Lab. Code § 1102.5(b). Defendants undoubtedly violated this anti-retaliation law by terminating her employment and removing her as a director and officer in response to her filing this lawsuit. After Jasemin had been employed by Defendants for almost 20 years, Defendants suddenly and without warning removed her as a Director on January 5, 2021, and then terminated her as an employee on January 8. This was just weeks after Plaintiff complained in writing about Defendants’ unlawful conduct (Yasemin Rep. Aff. ¶ 94), just days after she filed the instant lawsuit, which alleged violations of various laws, including concealing books and records in violation of Section 624 of the B.C.L. and waste and breach of fiduciary duty in violation of Section 720 of the B.C.L., and the very same day that the Court heard a TRO application in this case. Realizing that it would be futile to claim that it was a mere coincidence that they terminated her so shortly after this action was filed, Defendants admit that this very 7 12305927v.1 11 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 lawsuit led to her firing. Berrin asserts that Plaintiff was terminated because of her “incursions and disruptions” in late December 2020 – when she demanded to review Company records in her role as Treasurer. (NYSCEF Doc. 22 ¶ 30.) And Defendants’ brief openly acknowledges that the “disruptive behavior in the past few months[ ] include[es] this lawsuit.” (NYSCEF Doc. 21 at 8)(emphasis added). Further, such retaliation is the Individual Defendants’ central modus operandi. Berrin previously removed Plaintiff as a director and trustee because Plaintiff had questioned the Individual Defendants’ actions, and Berrin evicted Plaintiff from her apartment after she complained about racist comments made by Gonca. (NYSCEF Doc. 2 ¶ 48; NYSCEF Doc. 7 ¶¶ 6-11; Yasemin Rep. Aff. ¶ 90.) And Defendants threatened to retaliate against Plaintiff when she questioned the corporation’s plan to take out a $6 million mortgage to pay for a second home for Gonca. (NYSCEF Doc. 2 ¶¶ 45-46.) Berrin even acknowledged that “it was WRONG” to make those threats – but she followed through on them anyway. (Id.) Given Defendants’ track record and admissions in this case, Plaintiff will readily succeed on her retaliation claim. Moreover, as a fiduciary duty matter Yasemin’s termination was improper. The Trustee of Yasemin’s own Trust – who was in a seriously conflicted position owing both fiduciary duties to Yasemin while being beholden to the Individual Defendants – consented to Plaintiff’s removal as a Bremen Director. (Yasemin Rep. Aff. ¶ 95; NYSCEF Doc. 29.) This conflict-laden action smacks of a fiduciary duty breach. See In re Estate of Wallens, 9 N.Y.3d 117, 122 (2007) (it is “well settled that a fiduciary owes a duty of undivided and undiluted loyalty ... a trustee is under a duty to the beneficiary to administer the trust solely in the interest of the beneficiary”). And Defendants then used this removal to engineer Yasemin’s firing through a Board action from which she was excluded. (NYSCEF Doc. 29.) 8 12305927v.1 12 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 Because Plaintiff has a clear statutory right to reinstatement, Defendants’ reliance on Redmond v. Redmond, 42 A.D.2d 542 (1st Dept. 1973), is misplaced. In that case, “[t]he record fail[ed] to support plaintiff's clear right to the relief demanded.” 3. Plaintiff Will Likely Prevail on Her Claim to Enjoin the Use of Corporate Assets to Pay Legal Fees Advancement and indemnification rights set forth in a contract must be strictly construed. Haynes v. Kleinewefers & Lembo Corp., 921 F.2d 453, 456 (2d Cir. 1990); accord Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487, 491 (1989) (No indemnification “unless the intention to do so is unmistakably clear from the language of the promise.”). Article VII of the Bremen and German bylaws (NYSCEF Doc. 31 and NYSCEF Doc. 32) bars advancement of the Individual Defendants’ legal bills. Article VII(c) expressly limits corporate indemnification of legal fees to instances where the director or officer was “successful” on the merits of the case, and Article VII(d) requires that any indemnification be authorized by a vote of disinterested directors, shareholder vote, or by “independent legal counsel in a written opinion.” 2 Defendants do not even try to argue that they satisfied these pre- requisites. Critically, both the Bremen and German bylaws are silent about any power to advance legal fees and, as a result, advancement simply is not permitted. See Crossroads ABL LLC v Canaras Capital Mgt., LLC, 105 A.D.3d 645, 645 (1st Dept 2013) (“Indemnification and advancement of legal fees are two distinct corporate obligations.”); In re Adelphia Comms. 2 Defendants’ counsel at Norton Rose Fulbright is beset by a number of conflicts that preclude them from providing such an opinion and materially limit its representation here. Plaintiff preserves her rights to pursue these conflicts. 9 12305927v.1 13 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 Corp., 323 B.R. 345, 375-76 (Bankr S.D.N.Y. 2005) (bylaw requiring indemnification does not require advancement). Defendants argue that it is improper to preliminarily enjoin indemnification in intra- corporate disputes. NYSCEF Doc. 21 at 20. However, courts routinely enjoin payment of individuals’ legal fees by corporations in cases like this. Romita v. Castle Oil Corp., No. 53145/2011, 2012 WL 12088492, *42-43 (Sup. Ct. Westchester Cnty. Dec. 5, 2012) (“[T]he overwhelming authority” in dissolution cases is “for courts to enjoin the payment of legal fees by corporations on behalf of their majority shareholders,” but allowing advancement of fees in light of corporate resolution allowing it). Defendants are also incorrect that Donovan v. Rothman, 253 A.D.2d 627 (1st Dept. 1998) – which enjoined a similar advancement of legal fees – involved a situation where bad faith had been found by the court. NYSCEF Doc. 21 at 22. To the contrary, the court noted that “the litigation [had] barely commenced” and good faith was still “at issue.” B. A Preliminary Injunction Is Necessary To Preserve the Status Quo Although Defendants terminated Plaintiff’s employment and removed her from her director and officer positions after the instant case and motion were filed, for purposes of this motion, the status quo is Plaintiff’s position immediately prior to the filing of her lawsuit, which is referred to as the “status quo ante.” See N. Am. Soccer League, LLC v. United States Soccer Fed'n, Inc., 883 F.3d 32, 37 & n.5 (2d Cir. 2018) (“Because the proposed injunction’s effect on the status quo drives the standard, we must ascertain the status quo—that is, ‘the last actual, peaceable uncontested status which preceded the pending controversy.’” “The ‘status quo’ in preliminary-injunction parlance is really a ‘status quo ante.’”); DiPrima v. DiPrima, 111 A.D.2d 901, 902 (2d Dept. 1985) (“Hence, in order to maintain the status quo ante and protect plaintiff 10 12305927v.1 14 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 and her children's possessory right in the marital residence under the judgment of divorce, Trial Term could impose, in the exercise of its equitable powers, an injunction to prevent transfer of the mortgage.”); see also Waldman by Waldman v. United Talmudical Acad. Torah V'Yirah, 558 N.Y.S.2d 781, 783 (Sup. Ct. Orange Cnty. 1990). “This special ‘ante’ formulation of the status quo in the realm of equities shuts out defendants seeking shelter under a current ‘status quo’ precipitated by their wrongdoing.” N. Am. Soccer League, LLC, 883 F.3d at 37 n.5. Defendants should thus not be permitted to benefit from their own self-help in trying to change the status quo while this motion was sub judice. C. Plaintiff Will Suffer Irreparable Harm Without A Preliminary Injunction 1. Plaintiff Will Suffer Irreparable Harm Due to a Loss of Management and Oversight Rights In her opening brief, Plaintiff suspected that she faced the imminent prospect of being removed as a director and/or officer of the Company Defendants, as well as being deprived of her salary and home. NYSCEF Doc. 11 at 14. The very day of the TRO hearing, Defendants did in fact remove Yasemin as a director of Bremen, and the Company Defendants fired her and cut off her salary a couple days later. (Yasemin Aff. ¶¶ 95-97.) While Defendants have not yet evicted Yasemin from her house, subject to COVID-19 eviction restrictions, they have not disavowed doing so in the future. Without a preliminary injunction reinstating her as a director and/or officer and barring an eviction from her home, Plaintiff will suffer irreparable harm. It is well-settled that the threatened loss of management rights constitutes irreparable harm sufficient to warrant a preliminary injunction. See, e.g., Wisdom Imp. Sales Co. v. Labatt Brewing Co., 339 F.3d 101, 114-15 (2d Cir. 2003) (“Conduct that unnecessarily frustrates efforts to… preserve the right to participate in the management of a company may also constitute 11 12305927v.1 15 of 20 FILED: NEW YORK COUNTY CLERK 01/21/2021 11:41 PM INDEX NO. 657193/2020 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 01/21/2021 irreparable harm.”); Rise Above Capitol Partners, LLC v. Long Island Fiber Exchange, Inc., 2010 N.Y. Slip Op. 31819(U), 2010 WL 2897848 (Sup. Ct. Suffolk Cnty. July 14, 2010) (“plaintiff has demonstrated it will suffer irreparable harm if the injunctive relief is not granted as it will be deprived of participation in the management and control of [the LLC]”); Bank of Am., N.A. v. PSW NYC LLC, No. 651293/10, 2010 WL 4243437 (Sup. Ct. N.Y. Cnty. Sep. 16, 2010) (“the loss of a bargained-for contractual right of control can constitute irreparable harm”); CanWest Global Comms. Corp. v. Mirkaei Tikshoret Ltd., 9 Misc.3d 845, 859-60 (Sup. Ct. N.Y. Cnty. Apr. 1, 2005) (“Every day that CanWest is denied its right to participate in the ownership and management of the newspaper also constitutes irreparable harm.”). This is particularly so now given the imminent plans to re-invest the Companies’ main assets. 2. Retaliation Constitutes Irreparable Harm California Labor Code § 98.6(b)(1) explicitly provides that any individual who is retaliated against in violation of § 1102.5(b) “shall be entitled to reinstatement and reimbursement for lost wages and work benefits caused by those acts of the employer.” Further, courts applying this provision routinely grant preliminary injunctive relief reinstating employees who have been retaliated against or other preliminary relief that prevents such retaliation. See Carrillo v. Schneider Logistics, Inc., No. CV-11-8557 CAS DTBX, 2012 WL 556309, at *7 (C.D. Cal. Jan. 31, 2012), aff'd, 501 Fed. Appx. 713 (9th Cir. 2012) (issuing preliminary injunction reversing termination of entire workforce); Reyes v. Transamerica Life Ins. Co., No. CV153452DMGFFMX, 2015 WL 13376523, at *7 (C.D. Cal. Dec. 23, 2015) (preliminary injunction prohibiting retaliatory termination). Such injunctive relief is imperative here because retaliation has a chilling effect on workplace complaints, which causes irreparable injury that cannot be compensated with a 12 12305927v.1 16 of 20 FILE