Preview
FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023
NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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RAJENDRA AGGARWAL, individually and as a Index No. 651815/2023
Member of 343 WEST 46 LLC,
Plaintiff, Motion Seq. 1 and 2
-against-
MICHA KALBO, individually and as a Member of 343
WEST 46 LLC, MAURICE BERABI individually and as
a Member of 343 WEST 46 LLC, and 343 WEST 46 LLC,
Defendants.
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DEFENDANTS’ REPLY MEMORANDUM OF LAW IN FURTHER
SUPPORT OF DEFENDANTS’ MOTION TO COMPEL ARBITRATION
AND STAY THE ACTION AND IN OPPOSITION TO THE PLAINTIFF’S
MOTION FOR THE APPOINTMENT OF A RECEIVER
GOLDBERG WEPRIN FINKEL
GOLDSTEIN LLP
Attorneys for Defendants
125 Park Avenue, 12th Floor
New York, New York 10017
By: Kevin J. Nash, Esq.
A Member of the Firm
Kevin J. Nash, Esq.
212-301-6944
knash@gwfglaw.com
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TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... ii
PRELIMINARY STATEMENT .................................................................................................... 1
LEGAL ARGUMENT .................................................................................................................... 2
A. There is No Reason to Limit the Broad Arbitration Clause.......................................... 2
B. No Receiver is Warranted Here .................................................................................... 3
CONCLUSION ............................................................................................................................... 5
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TABLE OF AUTHORITIES
Cases Page(s)
DaSilva v DaSilva, 225 A.D.2d 513 (2d Dep’t 1996) .........................................................4
Demchick v. American Eutectic Welding Alloy Sales Co., 22 Misc. 2d 920
(S.Ct. Queens Co. 1960) ..........................................................................................2
Groh v. Halloran, 86 A.D.2d 30 (1st Dep’t 1982) ..............................................................3
HSBC Bank USA v. National Equity Corp., 279 A.D.2d 251 (1st Dep’t 2001) .............. 2-3
LeBoyer v. Steinleger, 131 N.Y.S.2d 847 (S.Ct. N.Y. Co. 1954) ........................................3
Mitzvah B’Hidur, LLC v. 13th Ave. Seforim Onc., 2018 WL 3756877 (S.Ct. NY Co.
Aug. 08, 2018) ..................................................................................................... 3-4
Secured Capital Corp, of NY v. Dansker, 263 A.D.2d 503 (2d Dep’t 1999).......................3
Simon v. Vogel, 9 A.D.2d 63 (1st Dep’t 1959) ....................................................................2
Trepper v. Goldbetter, 205 A.D.2d 363 (1st Dep’t 1994) ....................................................3
Statutes Page(s)
CPLR 2201...........................................................................................................................1
CPLR 6401.......................................................................................................................3, 4
CPLR §§ 7503(a) .........................................................................................................1, 2, 3
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PRELIMINARY STATEMENT
The defendants herein, Micha Kalbo (“Kalbo”), Maurice Berabi (“Berabi”) and 343 West
46 LLC (the “Company,” together with Kalbo and Berabi, collectively, the “Defendants”), by and
through their undersigned counsel, Goldberg Weprin Finkel Goldstein LLP, respectfully submit
this Reply Memorandum of Law in further support of the Defendants’ motion (the “Stay Motion”)
to compel arbitration and stay this action (the “Action”) pursuant to CPLR §§ 7503(a) and CPLR
2201, and in Opposition to the separate motion (the “Receiver Motion”) of the plaintiff, Rajendra
Aggarwal (the “Plaintiff”) seeking the appointment of a Receiver. For the reasons set forth below,
the Stay Motion should be granted and the Receiver Motion should be denied as the arbitration
provisions at issue do not permit piecemeal litigations.
Although Plaintiff acknowledges that the underlying operating agreement requires all
disputes to be resolved through arbitration (requiring that this action be stayed), Plaintiff
nonetheless seeks to carve-out an exception and asks the Court to limit the stay and permit the
parties to litigate whether the appointment of a Receiver is warranted. Importantly, however,
Plaintiff fails to cite any legal basis for imposing such a carve-out or exception. To the contrary,
the arbitration clause is broad, and by its plain language encompasses “[a]ny dispute, controversy
or claim arising out of or in connection with this Agreement or any breach or alleged breach [of
the Operating Agreement]”. There is no carve-out for provisional remedies such as appointment
of a Receiver listed or mentioned anywhere. Accordingly, there is no legal predicate to modify
the stay of this Action in contravention of the parties’ express agreement. Moreover, even,
arguendo, if this Court were to consider the request for a Receiver (which it should not), Plaintiff’s
Receiver Motion should be denied as there is no legal or factual justification for the drastic and
limited remedy of appointing a Receiver here. All matter relating to the occupancy and leasing of
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the premises will be addressed in the arbitration and the Arbitrator will determine what remedies,
if any, are available. Certainly, there is no imminent danger of waste mentioned, let alone
established by Plaintiff.
Legal Argument
A. There is No Reason to Limit the Broad Arbitration Clause
CPLR § 7503(a) provides that where the disputes at issue are subject to a valid arbitration
agreement between the parties the Court “shall direct the parties to arbitrate”, and that the order
compelling arbitration “shall operate to stay a pending or subsequent action, or so much of it as is
referable to arbitration.”
In his opposition to the Stay Motion, Plaintiff acknowledges that the disputes raised in this
complaint are subject to the arbitration provisions. Yet, Plaintiff nonetheless argues that this Court
should first appoint a Receiver and then impose a stay. Importantly, not one of the dozen or so
cases cited by Plaintiff in support of his Receiver Motion analyzes the request for a receivership
in the context of arbitration. In fact, the question of permitting a provisional remedy in the face of
an arbitration clause was resolved decades ago by the Appellate Division in Defendants’ favor.
The Appellate Division expressly held that a request for the appointment of a Receiver is stayed
along with the rest of the litigation, finding: “Our conclusion that the action must be stayed, in and
of itself, effectively precludes appointment of a receiver pendente lite in this action.” Simon v.
Vogel, 9 A.D.2d 63, 64 (1st Dep’t 1959). See, also, Demchick v. American Eutectic Welding Alloy
Sales Co., 22 Misc. 2d 920, 923 (S.Ct. Queens Co. 1960) (“This Court’s conclusion that the action
mut be stayed, in and of itself, precludes the provisional remedy”).
While the First Department permitted consideration of a motion for the provisional remedy
of seizure of collateral notwithstanding a stay pending arbitration in HSBC Bank USA v. National
2
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Equity Corp., 279 A.D.2d 251 (1st Dep’t 2001), that case provides no support to Plaintiff here,
because in HSBC, the arbitration clause was limited and by its express language did not apply to
requests for provisional remedies. Here, the arbitration clause contains no such limitation, but
includes “[a]ny dispute, controversy or claim”. Accordingly, based upon controlling precedent the
stay of the Action required by CPLR 7503(a) bars consideration of the Receiver Motion as a matter
of law.
B. No Receiver is Warranted Here
CPLR 6401 provides in relevant part that a temporary receiver of property “which is the
subject of an action in the supreme or a county court” may be appointed “where there is danger
that the property will be removed from the state, or lost, materially injured or destroyed” (emphasis
supplied). The law is well-settled that appointment of a receiver is a drastic remedy, (Secured
Capital Corp, of NY v. Dansker, 263 A.D.2d 503 (2d Dep’t 1999)) and, therefore, the stringent
requirements of CPLR 6401 have been narrowly construed by the courts. See, e.g., Trepper v.
Goldbetter, 205 A.D.2d 363 (1st Dep’t 1994).
A party seeking the appointment of a receiver must provide “clear proof of the danger of
irreparable loss or damage, and proof that a receiver is necessary for the protection of the parties
to the action and their interests. Groh v. Halloran, 86 A.D.2d 30 (1st Dep’t 1982); LeBoyer v.
Steinleger, 131 N.Y.S.2d 847, 849-50 (S.Ct. N.Y. Co. 1954) (when plaintiff seeks the appointment
of a receiver, “[t]he proof must be clear and convincing before such a drastic remedy is applied in
advance of trial”). In general, “courts of equity exercise extreme caution in appointing receivers
pendent lite because such appointment results in the taking and withholding of possession of
property from a party without an adjudication on the merits.” See Groh v. Halloran, supra, 86
A.D.2d at 33; Mitzvah B’Hidur, LLC v. 13th Ave. Seforim Onc., 2018 WL 3756877, at *1 (S.Ct.
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NY Co. Aug. 08, 2018) (“Courts do proceed with “extreme caution” in determining whether to
appoint a temporary receiver because of the drastic incursion it imposes on the defendant's interests
prior to determination of the underlying action on the merits. The appointment must be “necessary”
to protect the property from waste, dissipation or disappearance. Thus, courts require clear and
convincing evidence of the danger of irreparable loss or damage.”) (internal citations omitted).
Moreover, the remedy can only be invoked where the moving party has made a “clear
evidentiary showing of the necessity for conservation of the property and protection of the interests
of the movant”. DaSilva v DaSilva, 225 A.D.2d 513 (2d Dep’t 1996).
Here, Plaintiff’s affidavit in support of the Receiver Motion contains no allegations of any
“irreparable loss” or “material injury” to the subject property. The sole allegation is that
Defendants are not paying rent, which is the subject of the underlying dispute and excused by
modification of the lease. Indeed, the operating business suffered substantial loss of income due
to the Covid-19 pandemic and have multiple defenses to the allegations relating to nonpayment of
rent based upon these agreed modifications, as well as principles of estoppel and waiver. But,
there are no substantive allegations of irreparable loss, the imminent removal of property from the
jurisdiction or that the property is in jeopardy. Accordingly, even if the Receiver Motion is to be
considered, Plaintiff has failed to satisfy the stringent requirements for the drastic remedy of the
appointment for a temporary receiver pursuant to CPLR 6401. Thus, the relief should be denied
under any circumstances.
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CONCLUSION
WHEREFORE, Defendants request to compel arbitration and stay this entire Action,
including the request for a Receiver should be granted.
Dated: New York, New York
July 14, 2023
GOLDBERG WEPRIN FINKEL
GOLDSTEIN LLP
By: /s/ Kevin J. Nash
Kevin J. Nash, Esq.
125 Park Avenue, 12th Floor
New York, New York 10017
(212) 221-5700
Knash@gwfglaw.com
Attorneys for Defendants
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Preview
FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ------------------------------------------------------------------------x RAJENDRA AGGARWAL, individually and as a Index No. 651815/2023 Member of 343 WEST 46 LLC, Plaintiff, Motion Seq. 1 and 2 -against- MICHA KALBO, individually and as a Member of 343 WEST 46 LLC, MAURICE BERABI individually and as a Member of 343 WEST 46 LLC, and 343 WEST 46 LLC, Defendants. ------------------------------------------------------------------------x DEFENDANTS’ REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY THE ACTION AND IN OPPOSITION TO THE PLAINTIFF’S MOTION FOR THE APPOINTMENT OF A RECEIVER GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP Attorneys for Defendants 125 Park Avenue, 12th Floor New York, New York 10017 By: Kevin J. Nash, Esq. A Member of the Firm Kevin J. Nash, Esq. 212-301-6944 knash@gwfglaw.com 1 of 8 FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023 TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................................... ii PRELIMINARY STATEMENT .................................................................................................... 1 LEGAL ARGUMENT .................................................................................................................... 2 A. There is No Reason to Limit the Broad Arbitration Clause.......................................... 2 B. No Receiver is Warranted Here .................................................................................... 3 CONCLUSION ............................................................................................................................... 5 2 of 8 FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023 TABLE OF AUTHORITIES Cases Page(s) DaSilva v DaSilva, 225 A.D.2d 513 (2d Dep’t 1996) .........................................................4 Demchick v. American Eutectic Welding Alloy Sales Co., 22 Misc. 2d 920 (S.Ct. Queens Co. 1960) ..........................................................................................2 Groh v. Halloran, 86 A.D.2d 30 (1st Dep’t 1982) ..............................................................3 HSBC Bank USA v. National Equity Corp., 279 A.D.2d 251 (1st Dep’t 2001) .............. 2-3 LeBoyer v. Steinleger, 131 N.Y.S.2d 847 (S.Ct. N.Y. Co. 1954) ........................................3 Mitzvah B’Hidur, LLC v. 13th Ave. Seforim Onc., 2018 WL 3756877 (S.Ct. NY Co. Aug. 08, 2018) ..................................................................................................... 3-4 Secured Capital Corp, of NY v. Dansker, 263 A.D.2d 503 (2d Dep’t 1999).......................3 Simon v. Vogel, 9 A.D.2d 63 (1st Dep’t 1959) ....................................................................2 Trepper v. Goldbetter, 205 A.D.2d 363 (1st Dep’t 1994) ....................................................3 Statutes Page(s) CPLR 2201...........................................................................................................................1 CPLR 6401.......................................................................................................................3, 4 CPLR §§ 7503(a) .........................................................................................................1, 2, 3 3 of 8 FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023 PRELIMINARY STATEMENT The defendants herein, Micha Kalbo (“Kalbo”), Maurice Berabi (“Berabi”) and 343 West 46 LLC (the “Company,” together with Kalbo and Berabi, collectively, the “Defendants”), by and through their undersigned counsel, Goldberg Weprin Finkel Goldstein LLP, respectfully submit this Reply Memorandum of Law in further support of the Defendants’ motion (the “Stay Motion”) to compel arbitration and stay this action (the “Action”) pursuant to CPLR §§ 7503(a) and CPLR 2201, and in Opposition to the separate motion (the “Receiver Motion”) of the plaintiff, Rajendra Aggarwal (the “Plaintiff”) seeking the appointment of a Receiver. For the reasons set forth below, the Stay Motion should be granted and the Receiver Motion should be denied as the arbitration provisions at issue do not permit piecemeal litigations. Although Plaintiff acknowledges that the underlying operating agreement requires all disputes to be resolved through arbitration (requiring that this action be stayed), Plaintiff nonetheless seeks to carve-out an exception and asks the Court to limit the stay and permit the parties to litigate whether the appointment of a Receiver is warranted. Importantly, however, Plaintiff fails to cite any legal basis for imposing such a carve-out or exception. To the contrary, the arbitration clause is broad, and by its plain language encompasses “[a]ny dispute, controversy or claim arising out of or in connection with this Agreement or any breach or alleged breach [of the Operating Agreement]”. There is no carve-out for provisional remedies such as appointment of a Receiver listed or mentioned anywhere. Accordingly, there is no legal predicate to modify the stay of this Action in contravention of the parties’ express agreement. Moreover, even, arguendo, if this Court were to consider the request for a Receiver (which it should not), Plaintiff’s Receiver Motion should be denied as there is no legal or factual justification for the drastic and limited remedy of appointing a Receiver here. All matter relating to the occupancy and leasing of 1 4 of 8 FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023 the premises will be addressed in the arbitration and the Arbitrator will determine what remedies, if any, are available. Certainly, there is no imminent danger of waste mentioned, let alone established by Plaintiff. Legal Argument A. There is No Reason to Limit the Broad Arbitration Clause CPLR § 7503(a) provides that where the disputes at issue are subject to a valid arbitration agreement between the parties the Court “shall direct the parties to arbitrate”, and that the order compelling arbitration “shall operate to stay a pending or subsequent action, or so much of it as is referable to arbitration.” In his opposition to the Stay Motion, Plaintiff acknowledges that the disputes raised in this complaint are subject to the arbitration provisions. Yet, Plaintiff nonetheless argues that this Court should first appoint a Receiver and then impose a stay. Importantly, not one of the dozen or so cases cited by Plaintiff in support of his Receiver Motion analyzes the request for a receivership in the context of arbitration. In fact, the question of permitting a provisional remedy in the face of an arbitration clause was resolved decades ago by the Appellate Division in Defendants’ favor. The Appellate Division expressly held that a request for the appointment of a Receiver is stayed along with the rest of the litigation, finding: “Our conclusion that the action must be stayed, in and of itself, effectively precludes appointment of a receiver pendente lite in this action.” Simon v. Vogel, 9 A.D.2d 63, 64 (1st Dep’t 1959). See, also, Demchick v. American Eutectic Welding Alloy Sales Co., 22 Misc. 2d 920, 923 (S.Ct. Queens Co. 1960) (“This Court’s conclusion that the action mut be stayed, in and of itself, precludes the provisional remedy”). While the First Department permitted consideration of a motion for the provisional remedy of seizure of collateral notwithstanding a stay pending arbitration in HSBC Bank USA v. National 2 5 of 8 FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023 Equity Corp., 279 A.D.2d 251 (1st Dep’t 2001), that case provides no support to Plaintiff here, because in HSBC, the arbitration clause was limited and by its express language did not apply to requests for provisional remedies. Here, the arbitration clause contains no such limitation, but includes “[a]ny dispute, controversy or claim”. Accordingly, based upon controlling precedent the stay of the Action required by CPLR 7503(a) bars consideration of the Receiver Motion as a matter of law. B. No Receiver is Warranted Here CPLR 6401 provides in relevant part that a temporary receiver of property “which is the subject of an action in the supreme or a county court” may be appointed “where there is danger that the property will be removed from the state, or lost, materially injured or destroyed” (emphasis supplied). The law is well-settled that appointment of a receiver is a drastic remedy, (Secured Capital Corp, of NY v. Dansker, 263 A.D.2d 503 (2d Dep’t 1999)) and, therefore, the stringent requirements of CPLR 6401 have been narrowly construed by the courts. See, e.g., Trepper v. Goldbetter, 205 A.D.2d 363 (1st Dep’t 1994). A party seeking the appointment of a receiver must provide “clear proof of the danger of irreparable loss or damage, and proof that a receiver is necessary for the protection of the parties to the action and their interests. Groh v. Halloran, 86 A.D.2d 30 (1st Dep’t 1982); LeBoyer v. Steinleger, 131 N.Y.S.2d 847, 849-50 (S.Ct. N.Y. Co. 1954) (when plaintiff seeks the appointment of a receiver, “[t]he proof must be clear and convincing before such a drastic remedy is applied in advance of trial”). In general, “courts of equity exercise extreme caution in appointing receivers pendent lite because such appointment results in the taking and withholding of possession of property from a party without an adjudication on the merits.” See Groh v. Halloran, supra, 86 A.D.2d at 33; Mitzvah B’Hidur, LLC v. 13th Ave. Seforim Onc., 2018 WL 3756877, at *1 (S.Ct. 3 6 of 8 FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023 NY Co. Aug. 08, 2018) (“Courts do proceed with “extreme caution” in determining whether to appoint a temporary receiver because of the drastic incursion it imposes on the defendant's interests prior to determination of the underlying action on the merits. The appointment must be “necessary” to protect the property from waste, dissipation or disappearance. Thus, courts require clear and convincing evidence of the danger of irreparable loss or damage.”) (internal citations omitted). Moreover, the remedy can only be invoked where the moving party has made a “clear evidentiary showing of the necessity for conservation of the property and protection of the interests of the movant”. DaSilva v DaSilva, 225 A.D.2d 513 (2d Dep’t 1996). Here, Plaintiff’s affidavit in support of the Receiver Motion contains no allegations of any “irreparable loss” or “material injury” to the subject property. The sole allegation is that Defendants are not paying rent, which is the subject of the underlying dispute and excused by modification of the lease. Indeed, the operating business suffered substantial loss of income due to the Covid-19 pandemic and have multiple defenses to the allegations relating to nonpayment of rent based upon these agreed modifications, as well as principles of estoppel and waiver. But, there are no substantive allegations of irreparable loss, the imminent removal of property from the jurisdiction or that the property is in jeopardy. Accordingly, even if the Receiver Motion is to be considered, Plaintiff has failed to satisfy the stringent requirements for the drastic remedy of the appointment for a temporary receiver pursuant to CPLR 6401. Thus, the relief should be denied under any circumstances. 4 7 of 8 FILED: NEW YORK COUNTY CLERK 07/14/2023 08:19 PM INDEX NO. 651815/2023 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 07/14/2023 CONCLUSION WHEREFORE, Defendants request to compel arbitration and stay this entire Action, including the request for a Receiver should be granted. Dated: New York, New York July 14, 2023 GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP By: /s/ Kevin J. Nash Kevin J. Nash, Esq. 125 Park Avenue, 12th Floor New York, New York 10017 (212) 221-5700 Knash@gwfglaw.com Attorneys for Defendants 5 8 of 8