Preview
INDEX NO. 703104/2012
(FILED: QUEENS COUNTY CLERK 1270772012)
NYSCEF DOC. NO. 37 RECEIVED NYSCEF 12/07/2012
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF QUEENS
wane nnn nnn nn ne
KINGSLAND DAIRY, INC. and Index No.
DERLE FARMS, INC.,
Plaintiffs,
-against-
ELMHURST DAIRY, INC.,
Defendant.
nnn ne
PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF
MOTION FOR A PRELIMINARY INJUNCTION
WITH TEMPORARY RESTRAINING ORDER
MOSES & SINGER LLP
David Rabinowitz
Jason Canales
Jennifer Nigro
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
212-554-7800
Attorneys for Plaintiffs Kingsland Dairy, Inc. and Derle Farms, Inc.
949467 009016.0104
TABLE OF CONTENTS
Page
STATEMENT OF FACTS
ARGUMENT
1 Plaintiffs Are Likely to Succeed on the Merits
Defendant Has Breached the Supply Agreement.
The Parties’ Oral Modification of the Supply Agreement Is Enforceable...
The 10-Day Cure Period Has Not Expired
Plaintiffs Will Suffer Irreparable Harm Absent Injunctive Relief.
A Balance of the Equities Weighs in Favor of Plaintiffs 10
Defendant’s Conduct Is Deliberate and Intentional 10
The Benefit to the Plaintiffs From an Injunction Greatly Outweighs Any Harm to
Defendant ll
CONCLUSION... 12
949467v3 009016.0104 -i-
Plaintiffs, Kingsland Dairy, Inc. (“Kingsland”) and Derle Farms Inc. (“Derle”; together
with Kingsland, “Plaintiffs”), by their attorneys, Moses & Singer LLP, respectfully submit this
memorandum in support of Plaintiffs’ motion for a temporary restraining order and preliminary
injunction pursuant to CPLR §§ 6301 and 6313:
a) enjoining defendant from declaring a monetary default under the parties’
supply agreement, and
b) enjoining defendant from non-performance of its obligations under the
parties’ supply agreement
Plaintiffs need emergency relief because defendant, Elmhurst Dairy, Inc. (“Elmhurst” or
“Defendant”), has repudiated and breached its supply agreement with Plaintiffs by failing and
refusing to perform under the agreement. Specifically, Elmhurst is refusing to fulfill its duty to
supply milk and milk products to Plaintiffs on credit. Instead, Elmhurst has falsely declared a
monetary default by Plaintiffs and threatened to cut off Plaintiffs’ supply of milk and milk
products unless paid on a C.O.D. basis immediately.
A Temporary Restraining Order is necessary to prevent irreparable harm to Plaintiffs.
Plaintiffs’ businesses will effectively be shut down and their supply chain of milk and milk
products to retailers and milk consumers disrupted if Elmhurst is allowed to repudiate its
agreement.
STATEMENT OF FACTS
The relevant facts are set forth in the accompanying affidavit of Louis Abramson, Vice
President of Kingsland and Derle, sworn to on December 7, 2012 (“Abramson Aff.”), and the
Complaint, dated December 7, 2012 (the “Complaint”). The facts can be summarized as
follows:
Kingsland is a New York corporation with a principal place of business located in
Queens, New York. Derle is a New York corporation with a principal place of business located
949467 009016.0104
in Brooklyn, New York. Kingsland is a wholly owned subsidiary of Derle. Plaintiffs are
distributors of milk products manufactured by Defendant. Plaintiffs’ customers are located
throughout the New York metropolitan area. Abramson Aff. {iJ 3, 5.
Pursuant to a supply agreement dated September 12, 2006 (the “Supply Agreement”),
Plaintiffs are obligated to purchase from Defendant and Defendant is obligated to sell to
Plaintiffs specified amounts of milk products. As set forth in the Abramson Aff., the Supply
Agreement (annexed thereto as Exhibit A) was amended periodically to confirm and extend the
time when Plaintiffs were obliged to pay Defendants’ invoices. Abramson Aff. {[ 7-11, Exs. A-
C. Before the most recent modification, the Supply Agreement required Plaintiffs to pay
invoices issued by Defendant on the seventh (7"") Wednesday following the date of the invoice.
Id.
Most recently, by a July 2010 oral agreement between Abramson, on behalf of Plaintiffs
and Mr. Jay Valentine, Vice President of Elmhurst, on behalf of Defendant, Plaintiffs received an
additional 2 days’ credit; the parties agreed that going forward, Plaintiffs would remit payment
on invoices issued by Defendant on the seventh (7") Friday following the date of the invoice,
rather than on the seventh Wednesday. Abramson Aff., | 12. As set forth in the Abramson Aff.,
from that point forward, Plaintiffs punctually remitted payment on invoices issued by Defendant
on the seventh Friday following the date of the invoice; and Defendant duly accepted the
payment. The parties’ performance of the July 2010 oral agreement went on uninterrupted for 2
years and 4 months. See Abramson Aff., {| 13.
In or about October, 2012, as the January 2013 termination date for the Supply
Agreement drew near, the parties attempted to negotiate a new Supply Agreement. The
negotiation was not successful. Abramson Aff., {J 15-16.
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Two days ago, on December 5, 2012, Defendant, by its attorney, sent a letter to Plaintiffs
alleging that Plaintiffs were in default under the Supply Agreement for paying on Fridays rather
than Wednesdays. A copy of the December 5, 2012 letter from counsel for Defendant is attached
as Exhibit H to the Abramson Aff. Specifically, it was alleged that payment on invoice number
1704135, dated October 20, 2012 (the “Invoice”) was in arrears because not paid this
Wednesday, December 5, despite the fact that Plaintiffs were paying and had paid Defendant
faithfully and timely under the Supply Agreement, as amended, for 16 years. See Abramson
Aff., Exs. H-I.
Notwithstanding the 10-day cure period contained in the parties’ Supply Agreement
(Abramson Aff., Ex. A, §1.2), Defendant’s position, as set forth in the December 5, 2012 letter,
is that due to Plaintiffs’ purported default, all future purchases by Plaintiffs under the Supply
Agreement must be C.O.D. Abramson Aff., Ex. H. This is a direct repudiation of the credit
payment terms set forth in the Supply Agreement.
As set forth in the Abramson Aff., Plaintiffs neither have the cash flow necessary nor can
they borrow the amount of money that would be needed to pay for product each day that it is
delivered while also meeting their credit payment obligations to Defendants. Abramson Aff., 1
22. Plaintiffs will be forced to pay both for the milk received seven weeks earlier and for the
current week’s milk simultaneously — in substance, paying at double the rate of what is actually
due under the Supply Agreement. Jd. This would result in an added expense of about $800,000
per week, an expense that Plaintiffs cannot sustain. Jd.
Plaintiffs have operated their business for 16 years based on their credit arrangement with
Defendant. To require Plaintiffs to come up with an additional $100,000+ in cash every day to
pay for product as it is delivered would cause immediate and irreparable harm to their entire
949467v3 009016.0104
business and to the workers, retailers and consumers who depend on them. See Abramson Aff., {
24.
Finally, it would be impossible for Plaintiffs to find a new supplier to provide covering
goods on the short notice demanded by the milk business, because no other supplier will be able
to provide, immediately, the amount of milk and milk products that Plaintiffs are getting from
Defendant. Abramson Aff., {[ 23. If Plaintiffs are forced to pay Defendant C.O.D. at this time,
Plaintiffs will have no alternative but to close their business, leaving many individuals
unemployed and many businesses without milk and milk products. Abramson Aff., {{] 23-24.
Id. Defendant is aware of this fact and is acting in bad faith, in breach of the Supply Agreement.
ARGUMENT
Generally, a party is entitled to a preliminary injunction under CPLR § 6301 when it
demonstrates (i) a probability of success on the merits, (ii) a risk of irreparable harm in the
absence of an injunction, and (iii) a balance of the equities in its favor. Aetna Ins. Co. v.
Capasso, 75 N.Y.2d 860, 862, 552 N.Y.S.2d 918 (1990); Harbor View Ass'n of North Haven v.
Sucher, 237 A.D.2d 488, 490, 655 N.Y.S.2d 97, 98 (2d Dep't 1997); Neumann v. Metropolitan
Group, 153 A.D.2d 888, 889, 545 N.Y.S.2d 592, 594 (2d Dep't 1989). A mandatory injunction,
one that usually provides the party with the relief sought as a final remedy, is appropriate where
a party acts deliberately and intentionally. Wycoff Heights Medical Ctr. v. Rodriguez, 191
Misc.2d 207, 209, 741 N.Y.2d 400, 401 (citations omitted). A mandatory injunction is
warranted to preserve the ongoing status quo where, as here, the burden on defendant would be
merely the continuation of business as usual and the harm threatened to plaintiff is the
destruction of its business. See Mr. Natural v Unadulterated Food Prods. 152 A.D.2d 729, 730,
544. N.Y.S.2d 182 (2d Dep’t 1989) (preliminary injunction necessary to maintain status quo
despite factual disputes as to merits of claim where there was no assurance that the plaintiff
949467v3 009016.0104
would be able to stay in business pending trial and was in real danger of losing its business or
suffering dissolution if injunctive relief were not imposed); U.S. Ice Cream Corp. v. Carvel
Corp., 136 A.D.2d 626, 628, 523 N.Y.S.2d 869 (2d Dep’t 1988) (preliminary injunction
necessary to maintain status quo where there was no assurance that the plaintiffs would be able
to stay in business pending trial and noting that interference with an ongoing business warranted
injunctive relief even where factual disputes exist); see also Sunrise Plaza Associates, L.P. v.
International Summit Equities Corp.288 A.D.2d 300, 301, 733 N.Y.S.2d 443 (2d Dep’t 2001).
The facts herein present a classic case for preliminary relief. In complete and utter
disregard of the credit terms agreed upon by the parties in the Supply Agreement, Defendant is
attempting to force Plaintiffs either to double the rate of their payments to Defendant or go out of
business by falsely declaring a monetary default. Defendant is also attempting to deprive
Plaintiffs of their rights to cure any monetary default (although none actually exists) under the
10-day cure period expressly provided in the parties’ Supply Agreement.
The facts set forth in the Abramson Aff, establish an overwhelming likelihood of success
on the merits of Plaintiffs’ claim of Defendants’ repudiation and breach of contract. Without
immediate injunctive relief, Plaintiffs will be irreparably harmed. Plaintiffs’ business will
effectively be shut down. Abramson Aff., {| 23-24. Plaintiffs will lose their customers and will,
accordingly, be out of business. Jd. The balance of equities tips strongly in favor of Plaintiffs
because Defendant has repudiated and breached the Supply Agreement, while Plaintiffs have
faithfully and timely performed all of their obligations under that agreement.
949467v3 009016.0104
1. Plaintiffs Are Likely to Succeed on the Merits
Plaintiff’s burden is to establish a likelihood of success, not a certainty. See Incorporated
Vil. of Babylon v Anthony's Water Café, 137 A.D.2d 791, 525 N.Y.S.2d 341 (2d Dep’t 1988)
(plaintiff not obligated to show success is certain). Here, Plaintiffs demonstrate a strong
likelihood of success on the merits of their claims.
Defendant Has Breached the Supply Agreement
Defendant is obligated to perform under the Supply Agreement, including the payment
terms thereof, as amended, including, without limitation, under the July 2010 modification. By
the letter dated December 5, 2012, seeking to declare a monetary default on the part of Plaintiffs
under the Supply Agreement, Defendant seeks to declare a monetary default where none exists,
to unilaterally change the payment terms of the Supply Agreement, and to ignore the 10-day cure
period in which Plaintiffs may cure a, albeit here non-existing, monetary default. Defendant’s
breach and its own non-performance are deliberate and willful and is plainly retaliation for
Plaintiffs’ failure to agree to Defendant’s terms for continuation of the Supply Agreement after
next February. Defendant is trying to pressure Plaintiffs by putting them in an impossible
situation where they cannot get product from Defendant and cannot obtain covering goods in
time to save their business.
The Parties’ Oral Modification of the Supply Agreement Is Enforceable
The parties’ Supply Agreement contains a clause whereby the agreement “cannot be
modified or amended except by a writing executed and signed by both the parties.” Abramson
Aff., Ex. A, [ 18. Notwithstanding the foregoing, under New York law, an oral modification of a
contract is enforceable even in the face of such a provision, where (1) there has been partial
performance or (2) where there is reliance and/or subsequent performance referable to the
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modification. See Seneca Beverage Corp. v. Healthnow New York, Inc., 2006 WL 2787454, *2-
3 (2d Cir. 2006) (applying New York law) (reversing District Court’s grant of summary
judgment dismissing plaintiff's common-law contract claim based on oral modification of a
written agreement that prohibited oral modifications thereto); Rose v. Spa Realty Assocs., 42
N.Y.2d 338, 366 N.E.2d 1279, 397 N.Y.S.2d 922 (reversing Appellate Division and reinstating
judgment of trial court which upheld oral modification of the parties’ written agreement). Where
a parties’ partial performance of a contract was unequivocally referable to oral modification,
sellers, by their conduct, which was incompatible with the written agreement, “actively lulled”
purchasers into believing oral modification was accepted, are therefore estopped from invoking
writing requirement. Rose v. Spa Realty Assocs., 42 N.Y.2d at 345-46, 366 N.E.2d at 1284, 397
N.Y.S.2d at 928.
As set forth in the Abramson Aff., Defendant’s acceptance of payments on the seventh
Friday following the date of invoices issued to Plaintiffs for over 2 years is not otherwise
consistent with the written payment terms under the Supply Agreement (calling for payment on
the seventh Wednesday after date of invoice), but is undoubtedly consistent with the July 2010
oral modification. See Abramson Aff., {{{[ 13-14. Therefore, Defendant is estopped from
invoking the writing requirement under the Supply Agreement as well as under section 15-301 of
the N.Y. General Obligations Law.
The 10-Day Cure Period Has Not Expired.
Even if Plaintiffs had made a late payment, the 10-day cure period expressly provided in
section 1.2 of the Supply Agreement (see Abramson Aff., Ex. A) has not expired. The Supply
Agreement states, in pertinent part, that the parties’ agreement can be terminated by Defendant if
“(i) [Kingsland] fails to make any required payment hereunder when due after ten (10) days
written notice.” Abramson Aff., Ex. A. §1.2 (emphasis supplied).
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The “late payment” cited by the Fluskey letter is the “failure” to make payment this
Wednesday, December 5. Defendants have 10 days to “cure” this “breach,” and will in fact
make the payment due today (which is the actual due date).
2. Plaintiffs Will Suffer Irreparable Harm Absent Injunctive Relief
Plaintiffs have begun to suffer — and will continue to suffer — irreparable harm without
injunctive relief. “Irreparable harm” is that which cannot be adequately compensated by money
damages. See Klein, Wagner & Morris v. Lawrence A. Klein, P.C., 186 A.D.2d 631, 633, 588
N.Y.S.2d 424, 426 (2d Dep’t 1992); see also Board of Higher Educ. of City of N.Y. v Marcus, 63
Misc., 2d 268, 272, 311 N.Y.S.2d 579 (N.Y. Sup. 1970) (remedy at law is inadequate when the
damages are not capable of measurement or difficult to determine or there would be long delay
in its availability).
Here, money damages will not be adequate compensation. Without an injunction,
Plaintiffs will be out of business, its 100 employees will be jobless, and Plaintiffs will default on
orders from its customers — including nursing homes, senior centers and small businesses.
Abramson Aff., ff] 23-24. Plaintiffs’ ultimate goals in commencing and prosecuting this lawsuit
are: to prevent Defendant from failing to perform under the parties’ Supply Agreement and from
breaching the agreement — specifically the payment terms thereof as amended by the parties’ July
2010 modification, and the 10-day cure period under which Plaintiffs are expressly permitted to
cure any default. Indeed, the 10-day cure period under section 1.2 of the Supply Agreement has
yet to expire as of the date of this motion.
If Defendant is permitted to breach the parties’ agreement, including, without limitation,
the July 2010 modification, and unilaterally change the payment terms thereof, Plaintiffs’
business is threatened with destruction and Plaintiffs will thereby be irreparably harmed.
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3. A Balance of the Equities Weighs in Favor of Plaintiffs
A balancing of the equities requires the Court to look to the relative prejudice to each
party accruing from a grant or denial of the requested relief. See Bank of America, N.A. v. PSW
NYCLLC, 29 Misc.3d 1216(A), 918 N.Y.S.2d 396, 2010 WL 4243437 (N.Y.Sup.) (awarding
preliminary injunction where the balance of equities favored plaintiff). For the reasons explained
above, and in the Abramson Aff., the equities here weigh strongly in favor of Plaintiffs. Under
the present circumstances, the relief sought is urgently needed to ensure that all legal and
contractual obligations by and among the parties under the Supply Agreement are met, to prevent
Defendants from repudiating and breaching the credit and payment terms under the parties’
agreement, and to permit Plaintiffs to continue their business and service their customers.
4. Defendant’s Conduct Is Deliberate and Intentional
A mandatory injunction is appropriate where the invasion of the plaintiff's rights is
deliberate and intentional. Wycoff Heights Medical Ctr. v. Rodriguez, 191 Misc.2d at 209, 741
N.Y.2d at 401 (ordering mandatory injunction requiring patient to vacate hospital).
Defendant’s conduct here is a deliberate and intentional attempt to punish Plaintiffs for
not agreeing to a new Supply Agreement after the impending expiration of the parties’ existing
Supply Agreement. Abramson Aff. { 17. Defendant has declared a monetary default where,
manifestly, none exists because (1) payment of Defendant’s Invoice is not due until the seventh
Friday after invoice date (in this week’s case today, December 7, 2012), under the parties’ July
2010 modification of the Supply Agreement, which the parties repeatedly ratified by their course
of conduct over 2 years and 4 months leading up to the failed negotiation of a new Supply
Agreement; and (2) because the 10-day cure period in which Plaintiffs may remedy any
monetary default has yet to expire. Defendant seeks to wrongfully avoid its obligations under
the Supply Agreement with respect to payment terms. To cut off Plaintiffs’ supply of milk and
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milk products in contravention of the terms of payments established and performed for 2 years
and 4 months is nothing short of a deliberate attempt to harm Plaintiffs and put them in a position
whereby they cannot perform under the Supply Agreement. Immediate injunctive relief is
necessary.
5. The Benefit to the Plaintiffs From an Injunction Greatly Outweighs Any Harm to
Defendant
Plaintiffs are asking the Court to enjoin Defendant from breaching the Supply Agreement
by unilaterally changing the payment terms thereof. The parties have been doing business since
1996 under the credit provisions of the Supply Agreement as amended. Defendant will not
suffer any harm as a result of having to continue to perform under the Supply Agreement as it
has for 16 years. By comparison, without an injunction, Plaintiffs will likely be out of business,
its 100 employees will be jobless, and Plaintiffs will default on orders from its customers —
including nursing homes, senior centers and small businesses. Abramson Aff., {[ 23-24.
Defendant will be unable to point to any harm resulting from the Court upholding the
payment terms of the Supply Agreement by an injunction. Defendant will be paid just as it has
been for 16 years. Defendant is being paid today on the Invoice cited in its lawyer’s letter.
Abramson Aff. { 19, n. 1, Ex. K. Thereafter, for the limited time period remaining under the
parties’ Supply Agreement, Plaintiffs will continue to purchase milk products from Defendant
and make payments to Defendant in a manner consistent with the payment terms of the Supply
Agreement.
CONCLUSION
The Court should grant a Temporary Restraining Order compelling Defendant to
continue conducting business as usual, supplying milk and milk products to Plaintiffs on the
credit terms established by their Supply Agreement, pending a hearing on Plaintiffs’ motion for a
949467v3 009016.0104 10
preliminary injunction. Upon the hearing of the motion for a preliminary injunction, the Court
should grant a preliminary injunction to the same effect pending final disposition of this case.
Dated: December 7, 2012
New York, New York
MOSES & SINGER LLP
Attorneys for Plaintiffs
By
David Rabin
Jason Canales
Jennifer Nigro
405 Lexington Avenue
New York, New York 10174
Telephone: (212) 554-7800
949467v3 009016.0104 ll
Preview
INDEX NO. 703104/2012 (FILED: QUEENS COUNTY CLERK 1270772012) NYSCEF DOC. NO. 37 RECEIVED NYSCEF 12/07/2012 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF QUEENS wane nnn nnn nn ne KINGSLAND DAIRY, INC. and Index No. DERLE FARMS, INC., Plaintiffs, -against- ELMHURST DAIRY, INC., Defendant. nnn ne PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR A PRELIMINARY INJUNCTION WITH TEMPORARY RESTRAINING ORDER MOSES & SINGER LLP David Rabinowitz Jason Canales Jennifer Nigro The Chrysler Building 405 Lexington Avenue New York, New York 10174 212-554-7800 Attorneys for Plaintiffs Kingsland Dairy, Inc. and Derle Farms, Inc. 949467 009016.0104 TABLE OF CONTENTS Page STATEMENT OF FACTS ARGUMENT 1 Plaintiffs Are Likely to Succeed on the Merits Defendant Has Breached the Supply Agreement. The Parties’ Oral Modification of the Supply Agreement Is Enforceable... The 10-Day Cure Period Has Not Expired Plaintiffs Will Suffer Irreparable Harm Absent Injunctive Relief. A Balance of the Equities Weighs in Favor of Plaintiffs 10 Defendant’s Conduct Is Deliberate and Intentional 10 The Benefit to the Plaintiffs From an Injunction Greatly Outweighs Any Harm to Defendant ll CONCLUSION... 12 949467v3 009016.0104 -i- Plaintiffs, Kingsland Dairy, Inc. (“Kingsland”) and Derle Farms Inc. (“Derle”; together with Kingsland, “Plaintiffs”), by their attorneys, Moses & Singer LLP, respectfully submit this memorandum in support of Plaintiffs’ motion for a temporary restraining order and preliminary injunction pursuant to CPLR §§ 6301 and 6313: a) enjoining defendant from declaring a monetary default under the parties’ supply agreement, and b) enjoining defendant from non-performance of its obligations under the parties’ supply agreement Plaintiffs need emergency relief because defendant, Elmhurst Dairy, Inc. (“Elmhurst” or “Defendant”), has repudiated and breached its supply agreement with Plaintiffs by failing and refusing to perform under the agreement. Specifically, Elmhurst is refusing to fulfill its duty to supply milk and milk products to Plaintiffs on credit. Instead, Elmhurst has falsely declared a monetary default by Plaintiffs and threatened to cut off Plaintiffs’ supply of milk and milk products unless paid on a C.O.D. basis immediately. A Temporary Restraining Order is necessary to prevent irreparable harm to Plaintiffs. Plaintiffs’ businesses will effectively be shut down and their supply chain of milk and milk products to retailers and milk consumers disrupted if Elmhurst is allowed to repudiate its agreement. STATEMENT OF FACTS The relevant facts are set forth in the accompanying affidavit of Louis Abramson, Vice President of Kingsland and Derle, sworn to on December 7, 2012 (“Abramson Aff.”), and the Complaint, dated December 7, 2012 (the “Complaint”). The facts can be summarized as follows: Kingsland is a New York corporation with a principal place of business located in Queens, New York. Derle is a New York corporation with a principal place of business located 949467 009016.0104 in Brooklyn, New York. Kingsland is a wholly owned subsidiary of Derle. Plaintiffs are distributors of milk products manufactured by Defendant. Plaintiffs’ customers are located throughout the New York metropolitan area. Abramson Aff. {iJ 3, 5. Pursuant to a supply agreement dated September 12, 2006 (the “Supply Agreement”), Plaintiffs are obligated to purchase from Defendant and Defendant is obligated to sell to Plaintiffs specified amounts of milk products. As set forth in the Abramson Aff., the Supply Agreement (annexed thereto as Exhibit A) was amended periodically to confirm and extend the time when Plaintiffs were obliged to pay Defendants’ invoices. Abramson Aff. {[ 7-11, Exs. A- C. Before the most recent modification, the Supply Agreement required Plaintiffs to pay invoices issued by Defendant on the seventh (7"") Wednesday following the date of the invoice. Id. Most recently, by a July 2010 oral agreement between Abramson, on behalf of Plaintiffs and Mr. Jay Valentine, Vice President of Elmhurst, on behalf of Defendant, Plaintiffs received an additional 2 days’ credit; the parties agreed that going forward, Plaintiffs would remit payment on invoices issued by Defendant on the seventh (7") Friday following the date of the invoice, rather than on the seventh Wednesday. Abramson Aff., | 12. As set forth in the Abramson Aff., from that point forward, Plaintiffs punctually remitted payment on invoices issued by Defendant on the seventh Friday following the date of the invoice; and Defendant duly accepted the payment. The parties’ performance of the July 2010 oral agreement went on uninterrupted for 2 years and 4 months. See Abramson Aff., {| 13. In or about October, 2012, as the January 2013 termination date for the Supply Agreement drew near, the parties attempted to negotiate a new Supply Agreement. The negotiation was not successful. Abramson Aff., {J 15-16. 9494673 009016.0104 Two days ago, on December 5, 2012, Defendant, by its attorney, sent a letter to Plaintiffs alleging that Plaintiffs were in default under the Supply Agreement for paying on Fridays rather than Wednesdays. A copy of the December 5, 2012 letter from counsel for Defendant is attached as Exhibit H to the Abramson Aff. Specifically, it was alleged that payment on invoice number 1704135, dated October 20, 2012 (the “Invoice”) was in arrears because not paid this Wednesday, December 5, despite the fact that Plaintiffs were paying and had paid Defendant faithfully and timely under the Supply Agreement, as amended, for 16 years. See Abramson Aff., Exs. H-I. Notwithstanding the 10-day cure period contained in the parties’ Supply Agreement (Abramson Aff., Ex. A, §1.2), Defendant’s position, as set forth in the December 5, 2012 letter, is that due to Plaintiffs’ purported default, all future purchases by Plaintiffs under the Supply Agreement must be C.O.D. Abramson Aff., Ex. H. This is a direct repudiation of the credit payment terms set forth in the Supply Agreement. As set forth in the Abramson Aff., Plaintiffs neither have the cash flow necessary nor can they borrow the amount of money that would be needed to pay for product each day that it is delivered while also meeting their credit payment obligations to Defendants. Abramson Aff., 1 22. Plaintiffs will be forced to pay both for the milk received seven weeks earlier and for the current week’s milk simultaneously — in substance, paying at double the rate of what is actually due under the Supply Agreement. Jd. This would result in an added expense of about $800,000 per week, an expense that Plaintiffs cannot sustain. Jd. Plaintiffs have operated their business for 16 years based on their credit arrangement with Defendant. To require Plaintiffs to come up with an additional $100,000+ in cash every day to pay for product as it is delivered would cause immediate and irreparable harm to their entire 949467v3 009016.0104 business and to the workers, retailers and consumers who depend on them. See Abramson Aff., { 24. Finally, it would be impossible for Plaintiffs to find a new supplier to provide covering goods on the short notice demanded by the milk business, because no other supplier will be able to provide, immediately, the amount of milk and milk products that Plaintiffs are getting from Defendant. Abramson Aff., {[ 23. If Plaintiffs are forced to pay Defendant C.O.D. at this time, Plaintiffs will have no alternative but to close their business, leaving many individuals unemployed and many businesses without milk and milk products. Abramson Aff., {{] 23-24. Id. Defendant is aware of this fact and is acting in bad faith, in breach of the Supply Agreement. ARGUMENT Generally, a party is entitled to a preliminary injunction under CPLR § 6301 when it demonstrates (i) a probability of success on the merits, (ii) a risk of irreparable harm in the absence of an injunction, and (iii) a balance of the equities in its favor. Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860, 862, 552 N.Y.S.2d 918 (1990); Harbor View Ass'n of North Haven v. Sucher, 237 A.D.2d 488, 490, 655 N.Y.S.2d 97, 98 (2d Dep't 1997); Neumann v. Metropolitan Group, 153 A.D.2d 888, 889, 545 N.Y.S.2d 592, 594 (2d Dep't 1989). A mandatory injunction, one that usually provides the party with the relief sought as a final remedy, is appropriate where a party acts deliberately and intentionally. Wycoff Heights Medical Ctr. v. Rodriguez, 191 Misc.2d 207, 209, 741 N.Y.2d 400, 401 (citations omitted). A mandatory injunction is warranted to preserve the ongoing status quo where, as here, the burden on defendant would be merely the continuation of business as usual and the harm threatened to plaintiff is the destruction of its business. See Mr. Natural v Unadulterated Food Prods. 152 A.D.2d 729, 730, 544. N.Y.S.2d 182 (2d Dep’t 1989) (preliminary injunction necessary to maintain status quo despite factual disputes as to merits of claim where there was no assurance that the plaintiff 949467v3 009016.0104 would be able to stay in business pending trial and was in real danger of losing its business or suffering dissolution if injunctive relief were not imposed); U.S. Ice Cream Corp. v. Carvel Corp., 136 A.D.2d 626, 628, 523 N.Y.S.2d 869 (2d Dep’t 1988) (preliminary injunction necessary to maintain status quo where there was no assurance that the plaintiffs would be able to stay in business pending trial and noting that interference with an ongoing business warranted injunctive relief even where factual disputes exist); see also Sunrise Plaza Associates, L.P. v. International Summit Equities Corp.288 A.D.2d 300, 301, 733 N.Y.S.2d 443 (2d Dep’t 2001). The facts herein present a classic case for preliminary relief. In complete and utter disregard of the credit terms agreed upon by the parties in the Supply Agreement, Defendant is attempting to force Plaintiffs either to double the rate of their payments to Defendant or go out of business by falsely declaring a monetary default. Defendant is also attempting to deprive Plaintiffs of their rights to cure any monetary default (although none actually exists) under the 10-day cure period expressly provided in the parties’ Supply Agreement. The facts set forth in the Abramson Aff, establish an overwhelming likelihood of success on the merits of Plaintiffs’ claim of Defendants’ repudiation and breach of contract. Without immediate injunctive relief, Plaintiffs will be irreparably harmed. Plaintiffs’ business will effectively be shut down. Abramson Aff., {| 23-24. Plaintiffs will lose their customers and will, accordingly, be out of business. Jd. The balance of equities tips strongly in favor of Plaintiffs because Defendant has repudiated and breached the Supply Agreement, while Plaintiffs have faithfully and timely performed all of their obligations under that agreement. 949467v3 009016.0104 1. Plaintiffs Are Likely to Succeed on the Merits Plaintiff’s burden is to establish a likelihood of success, not a certainty. See Incorporated Vil. of Babylon v Anthony's Water Café, 137 A.D.2d 791, 525 N.Y.S.2d 341 (2d Dep’t 1988) (plaintiff not obligated to show success is certain). Here, Plaintiffs demonstrate a strong likelihood of success on the merits of their claims. Defendant Has Breached the Supply Agreement Defendant is obligated to perform under the Supply Agreement, including the payment terms thereof, as amended, including, without limitation, under the July 2010 modification. By the letter dated December 5, 2012, seeking to declare a monetary default on the part of Plaintiffs under the Supply Agreement, Defendant seeks to declare a monetary default where none exists, to unilaterally change the payment terms of the Supply Agreement, and to ignore the 10-day cure period in which Plaintiffs may cure a, albeit here non-existing, monetary default. Defendant’s breach and its own non-performance are deliberate and willful and is plainly retaliation for Plaintiffs’ failure to agree to Defendant’s terms for continuation of the Supply Agreement after next February. Defendant is trying to pressure Plaintiffs by putting them in an impossible situation where they cannot get product from Defendant and cannot obtain covering goods in time to save their business. The Parties’ Oral Modification of the Supply Agreement Is Enforceable The parties’ Supply Agreement contains a clause whereby the agreement “cannot be modified or amended except by a writing executed and signed by both the parties.” Abramson Aff., Ex. A, [ 18. Notwithstanding the foregoing, under New York law, an oral modification of a contract is enforceable even in the face of such a provision, where (1) there has been partial performance or (2) where there is reliance and/or subsequent performance referable to the 949467v3 009016.0104 modification. See Seneca Beverage Corp. v. Healthnow New York, Inc., 2006 WL 2787454, *2- 3 (2d Cir. 2006) (applying New York law) (reversing District Court’s grant of summary judgment dismissing plaintiff's common-law contract claim based on oral modification of a written agreement that prohibited oral modifications thereto); Rose v. Spa Realty Assocs., 42 N.Y.2d 338, 366 N.E.2d 1279, 397 N.Y.S.2d 922 (reversing Appellate Division and reinstating judgment of trial court which upheld oral modification of the parties’ written agreement). Where a parties’ partial performance of a contract was unequivocally referable to oral modification, sellers, by their conduct, which was incompatible with the written agreement, “actively lulled” purchasers into believing oral modification was accepted, are therefore estopped from invoking writing requirement. Rose v. Spa Realty Assocs., 42 N.Y.2d at 345-46, 366 N.E.2d at 1284, 397 N.Y.S.2d at 928. As set forth in the Abramson Aff., Defendant’s acceptance of payments on the seventh Friday following the date of invoices issued to Plaintiffs for over 2 years is not otherwise consistent with the written payment terms under the Supply Agreement (calling for payment on the seventh Wednesday after date of invoice), but is undoubtedly consistent with the July 2010 oral modification. See Abramson Aff., {{{[ 13-14. Therefore, Defendant is estopped from invoking the writing requirement under the Supply Agreement as well as under section 15-301 of the N.Y. General Obligations Law. The 10-Day Cure Period Has Not Expired. Even if Plaintiffs had made a late payment, the 10-day cure period expressly provided in section 1.2 of the Supply Agreement (see Abramson Aff., Ex. A) has not expired. The Supply Agreement states, in pertinent part, that the parties’ agreement can be terminated by Defendant if “(i) [Kingsland] fails to make any required payment hereunder when due after ten (10) days written notice.” Abramson Aff., Ex. A. §1.2 (emphasis supplied). 949467v3 009016.0104 The “late payment” cited by the Fluskey letter is the “failure” to make payment this Wednesday, December 5. Defendants have 10 days to “cure” this “breach,” and will in fact make the payment due today (which is the actual due date). 2. Plaintiffs Will Suffer Irreparable Harm Absent Injunctive Relief Plaintiffs have begun to suffer — and will continue to suffer — irreparable harm without injunctive relief. “Irreparable harm” is that which cannot be adequately compensated by money damages. See Klein, Wagner & Morris v. Lawrence A. Klein, P.C., 186 A.D.2d 631, 633, 588 N.Y.S.2d 424, 426 (2d Dep’t 1992); see also Board of Higher Educ. of City of N.Y. v Marcus, 63 Misc., 2d 268, 272, 311 N.Y.S.2d 579 (N.Y. Sup. 1970) (remedy at law is inadequate when the damages are not capable of measurement or difficult to determine or there would be long delay in its availability). Here, money damages will not be adequate compensation. Without an injunction, Plaintiffs will be out of business, its 100 employees will be jobless, and Plaintiffs will default on orders from its customers — including nursing homes, senior centers and small businesses. Abramson Aff., ff] 23-24. Plaintiffs’ ultimate goals in commencing and prosecuting this lawsuit are: to prevent Defendant from failing to perform under the parties’ Supply Agreement and from breaching the agreement — specifically the payment terms thereof as amended by the parties’ July 2010 modification, and the 10-day cure period under which Plaintiffs are expressly permitted to cure any default. Indeed, the 10-day cure period under section 1.2 of the Supply Agreement has yet to expire as of the date of this motion. If Defendant is permitted to breach the parties’ agreement, including, without limitation, the July 2010 modification, and unilaterally change the payment terms thereof, Plaintiffs’ business is threatened with destruction and Plaintiffs will thereby be irreparably harmed. 949467v3 009016.0104 3. A Balance of the Equities Weighs in Favor of Plaintiffs A balancing of the equities requires the Court to look to the relative prejudice to each party accruing from a grant or denial of the requested relief. See Bank of America, N.A. v. PSW NYCLLC, 29 Misc.3d 1216(A), 918 N.Y.S.2d 396, 2010 WL 4243437 (N.Y.Sup.) (awarding preliminary injunction where the balance of equities favored plaintiff). For the reasons explained above, and in the Abramson Aff., the equities here weigh strongly in favor of Plaintiffs. Under the present circumstances, the relief sought is urgently needed to ensure that all legal and contractual obligations by and among the parties under the Supply Agreement are met, to prevent Defendants from repudiating and breaching the credit and payment terms under the parties’ agreement, and to permit Plaintiffs to continue their business and service their customers. 4. Defendant’s Conduct Is Deliberate and Intentional A mandatory injunction is appropriate where the invasion of the plaintiff's rights is deliberate and intentional. Wycoff Heights Medical Ctr. v. Rodriguez, 191 Misc.2d at 209, 741 N.Y.2d at 401 (ordering mandatory injunction requiring patient to vacate hospital). Defendant’s conduct here is a deliberate and intentional attempt to punish Plaintiffs for not agreeing to a new Supply Agreement after the impending expiration of the parties’ existing Supply Agreement. Abramson Aff. { 17. Defendant has declared a monetary default where, manifestly, none exists because (1) payment of Defendant’s Invoice is not due until the seventh Friday after invoice date (in this week’s case today, December 7, 2012), under the parties’ July 2010 modification of the Supply Agreement, which the parties repeatedly ratified by their course of conduct over 2 years and 4 months leading up to the failed negotiation of a new Supply Agreement; and (2) because the 10-day cure period in which Plaintiffs may remedy any monetary default has yet to expire. Defendant seeks to wrongfully avoid its obligations under the Supply Agreement with respect to payment terms. To cut off Plaintiffs’ supply of milk and 949467v3 009016.0104 milk products in contravention of the terms of payments established and performed for 2 years and 4 months is nothing short of a deliberate attempt to harm Plaintiffs and put them in a position whereby they cannot perform under the Supply Agreement. Immediate injunctive relief is necessary. 5. The Benefit to the Plaintiffs From an Injunction Greatly Outweighs Any Harm to Defendant Plaintiffs are asking the Court to enjoin Defendant from breaching the Supply Agreement by unilaterally changing the payment terms thereof. The parties have been doing business since 1996 under the credit provisions of the Supply Agreement as amended. Defendant will not suffer any harm as a result of having to continue to perform under the Supply Agreement as it has for 16 years. By comparison, without an injunction, Plaintiffs will likely be out of business, its 100 employees will be jobless, and Plaintiffs will default on orders from its customers — including nursing homes, senior centers and small businesses. Abramson Aff., {[ 23-24. Defendant will be unable to point to any harm resulting from the Court upholding the payment terms of the Supply Agreement by an injunction. Defendant will be paid just as it has been for 16 years. Defendant is being paid today on the Invoice cited in its lawyer’s letter. Abramson Aff. { 19, n. 1, Ex. K. Thereafter, for the limited time period remaining under the parties’ Supply Agreement, Plaintiffs will continue to purchase milk products from Defendant and make payments to Defendant in a manner consistent with the payment terms of the Supply Agreement. CONCLUSION The Court should grant a Temporary Restraining Order compelling Defendant to continue conducting business as usual, supplying milk and milk products to Plaintiffs on the credit terms established by their Supply Agreement, pending a hearing on Plaintiffs’ motion for a 949467v3 009016.0104 10 preliminary injunction. Upon the hearing of the motion for a preliminary injunction, the Court should grant a preliminary injunction to the same effect pending final disposition of this case. Dated: December 7, 2012 New York, New York MOSES & SINGER LLP Attorneys for Plaintiffs By David Rabin Jason Canales Jennifer Nigro 405 Lexington Avenue New York, New York 10174 Telephone: (212) 554-7800 949467v3 009016.0104 ll