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  • Antonia Bregianos derivatively on behalf of Kosmetech Corp. v. Kosmetech Corp., Secant Logistics Inc., Dimitri Konteleon, Helen KonteleonCommercial Division document preview
  • Antonia Bregianos derivatively on behalf of Kosmetech Corp. v. Kosmetech Corp., Secant Logistics Inc., Dimitri Konteleon, Helen KonteleonCommercial Division document preview
  • Antonia Bregianos derivatively on behalf of Kosmetech Corp. v. Kosmetech Corp., Secant Logistics Inc., Dimitri Konteleon, Helen KonteleonCommercial Division document preview
  • Antonia Bregianos derivatively on behalf of Kosmetech Corp. v. Kosmetech Corp., Secant Logistics Inc., Dimitri Konteleon, Helen KonteleonCommercial Division document preview
  • Antonia Bregianos derivatively on behalf of Kosmetech Corp. v. Kosmetech Corp., Secant Logistics Inc., Dimitri Konteleon, Helen KonteleonCommercial Division document preview
  • Antonia Bregianos derivatively on behalf of Kosmetech Corp. v. Kosmetech Corp., Secant Logistics Inc., Dimitri Konteleon, Helen KonteleonCommercial Division document preview
  • Antonia Bregianos derivatively on behalf of Kosmetech Corp. v. Kosmetech Corp., Secant Logistics Inc., Dimitri Konteleon, Helen KonteleonCommercial Division document preview
  • Antonia Bregianos derivatively on behalf of Kosmetech Corp. v. Kosmetech Corp., Secant Logistics Inc., Dimitri Konteleon, Helen KonteleonCommercial Division document preview
						
                                

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FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS ANTONIA BREGIANOS, derivatively on behalf of Kosmetech Corp., Motion Sequence No. 3 Plaintiff, Index No.: 501950/2021 v. KOSMETECH CORP., SECANT LOGISTICS INC., DIMITRI KONTOLEON AND HELEN KONTOLEON, Defendants. MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ OPPOSITION TO PLAINTIFF’S EMERGENCY ORDER TO SHOW CAUSE KOUTSOUDAKIS & IAKOVOU LAW GROUP, PLLC Ralph Preite, Esq. Agatha C. Mingos, Esq. Attorney for Plaintiffs 90 Broad Street, 3rd Floor New York, NY 10004 (O) 212.386.7606 (E) agatha@kilawgroup.com i 1 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 TABLE OF CONTENTS PRELIMINARY STATEMENT .......................................................................................................... - 1 - FACTUAL BACKGROUND ................................................................................................................ - 2 - LEGAL ARGUMENT ........................................................................................................................... - 4 - STANDARD OF REVIEW ................................................................................................................... - 4 - POINT I .............................................................................................................................................. - 5 - PLAINTIFF HAS FAILED TO MEET THE REQUISITE LEGAL ELEMENTS TO JUSTIFY A TRO OR A PRELIMINARY INJUNCTION .................................................................................. - 5 - 1. Plaintiff will not suffer immediate and irreparable harm and the OSC must be denied. ......... - 5 - 2. Plaintiff Fails to Establish a Likelihood of Success on the Merits. ......................................... - 6 - 3. The Balance of the Equities Tips in Favor of the Defendants. ................................................ - 7 - POINT II ............................................................................................................................................. - 8 - PLAINTIFF IS SEEKING MONEY DAMAGES BY WAY OF A PRELIMINARY INJUNCTION .................................................................................................................................... - 8 - POINT III ......................................................................................................................................... - 10 - PLAINTIFF IS SEEKING FOR THE COURT TO DETERMINE THE ULTIMATE RIGHTS OF THE PARTIES AND TO DISAVOW THE BUSINESS JUDGMENT RULE .................... - 10 - 1. The Company properly issued payments for fees and costs and Plaintiff’s request for reimbursement on an OSC is wholly improper. ............................................................................. - 10 - 2. Plaintiff’s request to determine the ultimate rights of the party through a TRO or Preliminary Injunction must be denied. ............................................................................................................. - 13 - CONCLUSION .................................................................................................................................... - 14 - ii 2 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 TABLE OF AUTHORITIES Cases Page 19 Patchen, LLC v. Rodriguez, 153 A.D.3d 1382 (2d Dep’t 2017)………….………………….13 Begleiter v. Moreland, 33 Misc.2d 118 (Sup. Ct., N.Y. County 1961)……….………………….14 Bianchi v. Mille, 2014 NY Slip Op 31390 (Sup. Ct., Suffolk County, 2014)……….……………7 Castelloti v. Free, 138 A.D. 3d 198 (1st Dep’t 2016)…......……………………….……………..7 Daley v. Related Companies, Inc., 179 A.D.2d 55 (1st Dep’t 1992)………………….…………..9 Dana Distr., Inc. v. Crown Imports, LLC, 48 A.D.3d 613 (2d Dep’t 2008)..…….….…………....8 Destiny USA Holdings, LLC v. Citigroup Global Markets Realty Corp., 69 A.D.3d.212 (4th Dep’t 2009)...………………………………………………………………...7 Fisher v. Deitsch, 168 A.D.2d 599 (2d Dep’t 1990)………..…………………………………......7 Heller v. Bailey, 50 Misc.3d 1203(A) (Sup. Ct. 2015)…………………………………………..14 In re Angiolillio, 1993 WL 13714819 (Sup. Ct., N.Y. County 1993)………..…….…………....11 JSC VTB Bank v. Mavlyanov, 154 A.D.3d 560 (1st Dep’t 2017)………………………………....9 Master Mechanical Corp. v. Macaluso, 51 A.D.3d 739 (2d Dep’t 2008) ..………………………5 McDaniel v. 162 Columbia Heights Housing Corp., 25 Misc.3d 1024 (Sup. Ct. 2009).………..11 Mucchi v. Eli Haddad Corp., 101 A.D.2d 724 (1st Dep’t 1984)………………………………….13 Nobu Next Door LLC v. Fine Arts Housing, Inc., 4 N.Y.3d 839 (2005)…...……………………..4 Petition of Levitt, 109 A.D.2d 501 (1st Dep’t 1985)……………..….…………..........................11 Sakow v. Seafood Restaurant, Inc., 2005 WL 6234507 (Sup. Ct., N.Y. County 2005)................11 Schlossberg v Schwartz, 43 Misc 3d 1224(A) (Sup Ct., Nassau County 2014)..………………..12 Scomello v. Pascarella, 33 Misc. 3d 1217(A) (Sup. Ct., Suffolk County 2011)………………….4 Sequa Corp. v. Gelmin, 828 F.Supp. 203 (S.D.N.Y. 1993)…………...........................................12 SHS Bailey, LLC v. Res Land, Inc., 18 A.D.3d 727 (2d Dep’t 2005)………...………………….13 St. Paul Fire & Marine Ins. Co., v. York Claims Serv., Inc., 308 A.D.2d 347 (1st Dep’t 2003)..13 Twelve Lions Renaissance Corp. v. 684 Owners Corp., 157 A.D.2d 577 (1st Dep’t 1990), appeal denied 76 N.Y.2d 704 (1990) ……………………………………………………….…………..11 VMVS Assocs. v. Consolidated Equities, Inc., 116 A.D.2d 491 (1st Dep’t 1986)..….…………....9 West View Hills, Inc. v. Lizau Realty Corp., 6 N.Y.2d 344 (1959)……………..…….…………10 iii 3 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 Statute BCL §722…………………………………..………………………………………………….…12 BCL § 723………………………………………………………………………………..………12 BCL § 724………………………………………………………………………………..………12 CPLR § 6301...………………………………………………………………….………...…..4, 13 67A N.Y. Jur.2d, § 57..……………………………………………………………………………5 iv 4 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 PRELIMINARY STATEMENT Defendants Kosmetech Corp. (“Kosmetech”), Secant Logistics Inc. (“Secant”), Dimitri Kontoleon (“Mr. Kontoleon”) and Helen Kontoleon (“Mrs. Kontoleon”) (collectively, the “Defendants”), by and through their respective undersigned counsel, respectfully submit this opposition in response to the improper “Emergency” Order to Show Cause (“OSC”) filed by the Plaintiff Antonia Bregianos (“Plaintiff” or “A. Bregianos”). The Complaint (“Complaint”) filed by Plaintiff derivatively and on behalf of Kosmetech Corp. (“Plaintiff”), and also against Kosmetech Corp., was dismissed in part on the Defendants’ Motion to Dismiss, and Plaintiff filed an Amended Complaint (“Amended Complaint”). (NY St Cts Elec Filing [NYSCEF] 41). Defendants filed their Answer and Counterclaims, denying the false allegations propounded against them by Plaintiff and also asserting meritorious counterclaims against Plaintiff and her husband Paul Bregianos (“Counterclaimant Defendant” or “P. Bregianos”), individually and derivatively on behalf of the Defendant Kosmetech. (NYSCEF Doc No. 80). Plaintiff has now filed an OSC seeking to disrupt Kosmetech’s operations and seeking to further hurdle the Company from conducting and operating its business. Plaintiff has utterly failed in every possible way to contribute to Kosmetech and has further taken no part in the operations of the Company, nor has Plaintiff fulfilled the requisite duties as an employee and officer. (NYSCEF Doc No. 80). Instead, A. Bregianos continues to propound false allegations against the Defendants and continues to embark on a spiteful journey to disrupt Kosmetech’s operations. The OSC must be denied for several primary reasons: (1) Plaintiff fails to meet the legal standard for a TRO and a Preliminary Injunction, (2) Plaintiff is seeking money damages by way -1- 5 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 of a Preliminary Injunction, (3) Plaintiff unlawfully seeks to have the Court determine the ultimate rights of the parties and disavow the business judgment rule. FACTUAL BACKGROUND Plaintiff has no meritorious grounds to support the request that a TRO and Preliminary Injunction be granted. The OSC is premised on Plaintiff’s attempt to stifle Kosmetech from operating, to further decrease business and Kosmetech’s ability to function, and to recoup legal fees paid by Kosmetech to defend against itself and bring forth its Counterclaims against the Plaintiff. (NYSCEF Doc No. 80). The Plaintiff seeks judicial activism to interfere with the operations of Kosmetech, and further requests the Court to grant money damages and make a determination with regards to the parties’ ultimate rights on her OSC. The parties to the action were in a business relationship that unfortunately soured due to the Plaintiff’s inability to contribute to the business in any meaningful way. 1 (NYSCEF Doc No. 80). Plaintiff’s Complaint formulates a speculative series of allegations that have no foundational basis, nor do they support the causes of action presented therein. Even more problematic is that the Plaintiff sought to bring claims derivatively on behalf of Kosmetech, but also names Kosmetech as a Defendant and asserts claims directly against Kosmetech. In response, Kosmetech asserted counterclaims against the Plaintiff as did the individual Defendants Mr. and Mrs. Kontoleon. (NYSCEF Doc No. 80). Plaintiff has not participated in the operations of Kosmetech in any meaningful way before this action and since she filed this action. (NYSCEF Doc No. 80). Plaintiff has refused to provide any labor or contribution despite continuing to collect a paycheck until recently when Kosmetech was forced to stop paying her for doing absolutely nothing but suing the company, its officer, and 1 Plaintiff nonetheless has drained hundreds of thousands of dollars from Kosmetech annually, even where unproductive. -2- 6 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 director. Counterclaims were asserted against the Plaintiff individually and derivatively by the Defendants, Kosmetech, and Mr. and Mrs. Kontoleon. (NYSCEF Doc No. 80). Mr. and Mrs. Kontoleon have been forced to work longer hours and take on more responsibilities to keep Kosmetech open. Mr. Kontoleon is no longer receiving a paycheck but continues to work countless hours at Kosmetech. A. Bregianos and Mr. Kontoleon are the named shareholders of Kosmetech, and yet A. Bregianos has not contributed in any meaningful way. (NYSCEF Doc No. 80). Similarly, her husband P. Bregianos has also failed to fulfil his duties as the Chief Financial Offer. (NYSCEF Doc No. 80). Mr. Kontoleon embraced several roles for Kosmetech, including being a 50% shareholder, an officer, an employee, and a director as alleged by the Amended Complaint. (NYSCEF Doc No. 80). The Amended Complaint incorrectly presumes that there are two members of the board of directors. (NYSCEF Doc No. 41). Kosmetech retained Secant to perform logistical services. (NYSCEF Doc No. 41, 80). 2 At all relevant times, A. Bregianos and her husband were aware of the money that was being distributed from Kosmetech (including all sums paid to Secant as well as other vendors and/or suppliers) and further reaffirmed those distributions. Plaintiff now seeks to obtain control of Kosmetech’s finances and to restrain the company from operating, premised solely on the paranoid presumption that Secant was not a third-party vendor providing logistical services. (NYSCEF Doc No. 80). Plaintiff also seeks for the return of funds that were used for legitimate business purposes and made on behalf of the company under the business judgment rule during the course of litigation that was initiated by the Plaintiff. Essentially, the Plaintiff is seeking money damages and for the 2 Similarly, the Plaintiff collected rent from Kosmetech for years since Plaintiff leased spaced to Kosmetech. -3- 7 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 court to make a decision as to the ultimate rights of the parties by improperly using the mechanism of a TRO and Preliminary Injunction. LEGAL ARGUMENT STANDARD OF REVIEW The Court must deny the Plaintiff’s request for a temporary restraining order and a preliminary injunction because the Plaintiff has failed to meet the three requisite elements: (1) a likelihood of success on the merits; (2) immediate and irreparable injury to the plaintiff; (3) and the balancing of the equities favors the plaintiff. Scomello v. Pascarella, 33 Misc. 3d 1217(A) (Sup. Ct., Suffolk County 2011)(Granting preliminary injunction where the defendant displayed reckless behavior under the influence of drugs, and failed in his role as the management member)(citing Nobu Next Door LLC v. Fine Arts Housing, Inc., 4 N.Y.3d 839 (NY 2005)). The Court may grant a preliminary injunction and temporary restraining order pursuant to CPLR § 6301 where: …it appears that the defendant threatens or is about to do, or is doing or procuring or suffering to be done, an act in violation of the plaintiff's rights respecting the subject of the action, and tending to render the judgment ineffectual, or in any action where the plaintiff has demanded and would be entitled to a judgment restraining the defendant from the commission or continuance of an act, which, if committed or continued during the pendency of the action, would produce injury to the plaintiff. A temporary restraining order may be granted pending a hearing for a preliminary injunction where it appears that immediate and irreparable injury, loss or damage will result unless the defendant is restrained before the hearing can be had. An OSC should not be used as a tool to perpetrate judicial activism by requesting a Court to improperly operate a business, and questioning the business judgment of the company’s officers, directors, and shareholders. -4- 8 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 POINT I PLAINTIFF HAS FAILED TO MEET THE REQUISITE LEGAL ELEMENTS TO JUSTIFY A TRO OR A PRELIMINARY INJUNCTION Plaintiff has failed to demonstrate the requisite legal elements that meet the standard and that would allow a court to consider the drastic remedy of a TRO or a Preliminary Injunction. In fact, the Plaintiff has not even argued that those elements are met, and simply put forth deficient affidavits before the Court hoping that this would detract from the lack of merit. Given Plaintiff’s failure to support the request for a TRO and a Preliminary Injunction, and present any legal precedent supporting this concocted theory, the Plaintiff is barred from now attempting to argue that the elements are met. Instead, the Plaintiff solely focuses on the statutory provisions of the BCL. Coincidentally, these BCL provisions support indemnification and ultimately granting the Defendant’s their attorneys’ fees and costs, as further enumerated below. However, the focus here is a TRO and Preliminary Injunction request and Plaintiff must cease from using the question of indemnification for attorneys’ fees as a red herring to detract from the lack of merit underlying the OSC for a TRO and Preliminary Injunction. 1. Plaintiff will not suffer immediate and irreparable harm and the OSC must be denied. “Temporary restraining orders are drastic remedies and should be used sparingly.” 67A N.Y. Jur.2d, Injunctions § 57. A temporary restraining order and preliminary injunction cannot be granted where a party fails to demonstrate immediate irreparable harm to the company. Where a party fails to show either that it would likely succeed on the merits of its claim or that it was in danger of suffering irreparable harm, the request for a TRO or an injunction must be denied. Master Mechanical Corp. v. Macaluso, 51 A.D.3d 739 (2d Dep’t 2008)(Employer was not entitled to -5- 9 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 preliminary injunction preventing its former employee and his competing business from using its proprietary and confidential information to interfere with its dealings with its customers). Plaintiff has failed to demonstrate or even allege that immediate and irreparable harm would result that would warrant granting a TRO or Preliminary Injunction. As the Court held in its prior order the “Plaintiff doesn’t even allege anything other than money damages.” (NYSCEF Doc. No. 78, p12). The Court went on to address almost identical arguments and allegations presented in the Plaintiff’s affidavit: The plaintiff does imply that if the defendant continues to loot the business it will negatively affect the ownership interests in the company. However, those are merely claims for damages which can be satisfied with money damages. Thus, any alleged loss which can be compensated by money damages is not irreparable harm. An injunction based upon purely monetary damages is improper even if the passage of time will render any judgment obtained ineffectual. As noted, the entire injunction is sought merely to protect the further dissipation of the assets of the company. This is not irreparable harm, and is an improper basis upon which to obtain an injunction. Id. (citations omitted)(emphasis added). Simply because the Plaintiff thinks that it is improper for the company to pay expenses to operate, or defend itself and a director, officer, and employees, does not make it so. Plaintiff fails to meet this prong of the legal pre-requisites for a TRO and Preliminary Injunction. 2. Plaintiff Fails to Establish a Likelihood of Success on the Merits. Plaintiff has not established the likelihood of success on the merits and does not even argue such in the deficient affidavits presented to the Court. The Plaintiff has failed to demonstrate that the claims will succeed on the merits, and in fact the Defendants’ counterclaims dispute any such merit to the Plaintiff’s claims. Plaintiff does not even argue that there is a likelihood of success on any of the causes of action outlined in the Complaint. In accordance with legal precedent, the Plaintiffs will not likely succeed on the merits of each of their claims. “To state a claim for breach of fiduciary duty, a plaintiff must allege the -6- 10 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 existence of a fiduciary relationship, misconduct by the other party, and damages directly caused by that party’s misconduct.” Castelloti v. Free, 138 A.D. 3d 198, 209 (1st Dep’t 2016); Bianchi v. Mille, 2014 N.Y. Slip Op 31390 (Sup. Ct., Suffolk County 2014) (“Directors and majority shareholders of a corporation have an obligation to all shareholders to adhere to fiduciary standards of conduct and to exercise their responsibilities in good faith when undertaking any corporate action”). Plaintiff’s allegations do not support each of the elements required to demonstrate that there was a breach of a fiduciary duty by the Defendants, and simply because allegations are propounded in an amended complaint does not demonstrate a likelihood of success. There is nothing in the record to demonstrate that the Defendants have caused the Plaintiff damages. Quite the contrary, Plaintiff readily admits to wiring out $44,886.40 from Kosmetech’s bank account without any notice. This caused significant issues for the company’s operations and its ability to pay its third-party vendors and working employees. Most recently Plaintiff has refused to approve checks for payment to American Express and as a result is causing the company to incur additional fees and default on its payment obligations. Interestingly enough, the Plaintiff has approved payments that she benefits from, such as the exuberant rent she charges to Kosmetech. 3 3. The Balance of the Equities Tips in Favor of the Defendants. The court should consider whether it “is more burdensome of the plaintiff than the harm caused to defendant through imposition of the injunction.” Destiny USA Holdings, LLC v. Citigroup Global Markets Realty Corp., 69 A.D.3d.212, 223 (4th Dep’t 2009); Fisher v. Deitsch, 168 A.D.2d 599 (2d Dept. 1990). Here, the Defendants, and specifically Kosmetech, will suffer tremendous harm while the Plaintiff seeks to suffer no harm if a temporary restraining order and preliminary injunction is denied. In fact, a temporary restraining order and preliminary injunction 3 See Accompanying attorney affirmation of Agatha Mingos, Esq. dated November 17, 2021 (the “Mingos Aff.”). -7- 11 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 will cause further financial ruin to Kosmetech by debilitating its ability to operate and function as a business. The Plaintiff has essentially halted the operations and the ability for Kosmetech to conduct business by filing this OSC. Plaintiff seeks to interject herself into Kosmetech’s operations after previously refusing to perform her duties to contribute to the operations. Plaintiff has no knowledge regarding how to operate Kosmetech. The Company is unable to order supplies, pay its vendors on time, defend itself and its director, officer, and employees in litigation, and further take and fill additional orders from third parties, given the Plaintiff’s spiteful protestations and assumptions all aimed to halt the operations of the company to her benefit. POINT II PLAINTIFF IS SEEKING MONEY DAMAGES BY WAY OF A PRELIMINARY INJUNCTION Courts have uniformly denied a Plaintiff’s request for a TRO and/or a Preliminary Injunction where the party is solely seeking money damages, as the Plaintiff seeks here. As discussed above, this Honorable Court previously rejected and denied the Plaintiff’s prior attempt to seek money damages by guising it as irreparable harm and “dissipation of assets.” (NYSCEF Doc. No. 78). Courts will deny a motion for a preliminary injunction where the movant has an adequate remedy at law. Dana Distr., Inc. v. Crown Imports, LLC, 48 A.D.3d 613 (2d Dep’t 2008). “Where, as here, a litigant can fully be recompensed by a monetary award, a preliminary injunction will not issue.” Id. It is black letter law that where a party seeks to recoup money damages, which Plaintiff seeks to do on this OSC, the request for TRO and Preliminary Injunction must be denied. Courts have even gone as far as holding that “[e]ven if this were an appropriate case for an injunction, the injunction should not be granted, because the fact that plaintiff can be fully compensated by -8- 12 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 damages shows that he would not suffer irreparable injury absent the injunction.” JSC VTB Bank v. Mavlyanov, 2017 N.Y. Slip Op. 07339 (1st Dep’t 2017). CPLR 6301 permits issuance of preliminary injunction where it appears that defendant threatens or is about to do an act in violation of plaintiff's rights respecting subject of action, and tending to render judgment ineffectual; plaintiff's action is essentially one for money damages, and money damages may not be considered subject of action under this statute. VMVS Assocs v. Consolidated Equities, Inc., 116 A.D.2d 491 (1st Dep’t 1986)(Holding that trial court erred in issuing preliminary injunction preventing defendant general partner from removing any funds from escrow account from which plaintiff limited partner was to draw any damages in his fraud and breach of fiduciary duty action). “Plaintiff seeks only money damages, has no specific claim to the general partnership assets of the corporate defendant, did not demonstrate fraudulent intent on the part of defendants such as would warrant issuance of an attachment (see, CPLR 6201), and failed to show that the corporate defendant was in financial distress so as to prevent any meaningful recovery.” Daley v. Related Companies, Inc., 179 A.D.2d 55 (1st Dep’t 1992); see e.g. Holdsworth v. Doherty, 231 A.D.2d 930 (4th Dep’t 1996)(Corporation was not entitled to preliminary injunction enjoining former director and officer from attempting to collect or making any purchases or commitments on corporation's behalf). Plaintiff in this instance specifically states in her deficient affidavits and proposed Order that she is seeking the defendants “to immediately return and refund to Kosmetech all monies taken from or charged against Kosmetech in payment of any and all attorneys’ fees and any and all expenses, costs and disbursements paid by or charged against Kosmetech…” (NYSCEF Doc. No. 115, ¶(A)). This clearly is a request for money damages and as such the OSC must be denied in accordance with the law. -9- 13 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 Plaintiff also seeks to restrain and enjoin pendente lite, “the defendants from using the credit of Kosmetech, and/or making or incurring any credit card charges or incurring any other liability in the name of Kosmetech with any financial institution and/or credit card company…” (NYSCEF Doc. No. 115, ¶(B)). Plaintiff is not only seeking money damages as highlighted above, but she is effectively seeking to halt Kosmetech’s operations to its demise. The company has been unable to take any orders or order supplies to operate as a business. Plaintiff has failed to demonstrate any willingness or diligence in fulfilling her fiduciary duties to Kosmetech, as she has not worked or provided any meaningful contribution to Kosmetech to assist in its operations. (NYSCEF Doc. No. 80). Moreover, Plaintiff has no working knowledge to make any informed decisions on behalf of Kosmetech given her negligent extended absence from Kosmetech’s operations. (NYSCEF Doc. No. 80). In fact, Plaintiff does not dispute that she wired $44,886.40 from the Company’s funds without notice or any knowledge as to the finances of the company, which caused Kosmetech to incur significant damages by not being able to pay its third party vendors after checks had already been issued. POINT III PLAINTIFF IS SEEKING FOR THE COURT TO DETERMINE THE ULTIMATE RIGHTS OF THE PARTIES AND TO DISAVOW THE BUSINESS JUDGMENT RULE Plaintiff has neglected her duties and has not acted reasonably in her capacity as officer and fiduciary of Kosmetech, and yet Plaintiff seeks to second guess the business judgment employed to operate the company in direct contravention of the business judgment rule. 1. The Company properly issued payments for fees and costs and Plaintiff’s request for reimbursement on an OSC is wholly improper. “Corporate officers have broad discretion to prosecute lawsuits on behalf of a corporation, or to defend lawsuits on behalf of a corporation, even where the dispute is among insiders rather than - 10 - 14 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 one between the corporation and third parties.” West View Hills, Inc. v. Lizau Realty Corp., 6 N.Y.2d 344 (1959). “Moreover, officers or directors can use corporate funds to pay legal fees in corporate litigation, in the exercise of good faith and business judgment.” (Twelve Lions Renaissance Corp. v. 684 Owners Corp., 157 A.D.2d 577 (1st Dep’t 1990), appeal denied 76 N.Y.2d 704 (1990))(emphasis added). “In order to preserve those rights and interests a corporation may defend against lawsuits brought against it and, where there is no direct prohibition against it in the corporation's by-laws or by the corporation's board of directors, the managers of the corporation have the presumptive power to defend those corporate interests by defending against the lawsuits.” Id.; McDaniel v. 162 Columbia Heights Housing Corp., 25 Misc.3d 1024 (Sup. Ct. 2009)(Holding that there was no evidence that officer and director of cooperative housing corp., of which plaintiff was a shareholder and tenant, acted in bad faith in advancing legal fees in underlying outster litigation). Of course, to the extent counsel fees were incurred by the corporation in its own defense, the corporation being a party respondent, corporate funds may be utilized for such purpose. Petition of Levitt, 109 A.D.2d 502, 511 (1st Dep’t 1985)(The case held that the corporation was entitled to use corporate funds for its share of the legal fees); In re Angiolillio, 1993 WL 13714819 (Sup. Ct., N.Y. County 1993)(“A corporation may properly maintain such an action (Business Corporation Law § 720[b]), and there is no impropriety in the use of corporate funds for payment of attorney's fees in such an action.”); Sakow v. Seafood Restaurant, Inc., 2005 WL 6234507 (Sup. Ct., N.Y. County 2005). Plaintiff misconstrues the BCL in order to present a misguided argument that a Preliminary Injunction should be granted forcing the Defendants to return fees and preventing the Defendants - 11 - 15 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 from operating the company within the realm of the law and business judgment rule. Plaintiff’s affidavits articulate that she is requesting that the Court decide the ultimate rights of the parties and further to improperly grant monetary damages through a preliminary injunction request. In actuality, corporate officers can rely on the BCL §§ 722 and 724 to support indemnification for attorneys’ fees. Business Corporations Law § 722(a) provides for indemnification of officers and directors for “reasonable expenses, including attorneys' fees actually and necessarily incurred as a result of such action or proceeding . . . if [he] acted, in good faith, for a purpose which he reasonably believed to be in . . . the best interests of the [C]orporation.” Sequa Corp. v. Gelmin, 828 F.Supp. 203 (S.D.N.Y.1993). Under BCL § 724(c), courts are authorized to order indemnification of present or former corporate directors against litigation expenses, notwithstanding the corporation's refusal to do so. Id. Under BCL 724 and 722, a defendant needs to meet three elements to be entitled to indemnification: (1) defendant was sued in an action “by reason of the fact that he . . . was a director or officer of the corporation,” (BCL § 722(a)); (2) defendant seeks indemnification for “judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys’ fees actually and necessarily incurred as a result of such action,” (BCL § 722(a)); and (3) defendant must show, at the conclusion of the case, that he “acted, in good faith, for a purpose which he reasonably believed to be in, or . . . not opposed to, the best interests of the corporation.” (BCL § 722(a)). BCL § 723(c) explicitly provides that a corporation may pay expenses incurred in defending an action “in advance of the final disposition…upon receipt of an undertaking by or on behalf of the director or officer,” and with shareholder or board approval. Schlossberg v Schwartz, - 12 - 16 of 20 FILED: KINGS COUNTY CLERK 11/17/2021 05:31 PM INDEX NO. 501950/2021 NYSCEF DOC. NO. 119 RECEIVED NYSCEF: 11/17/2021 43 Misc. 3d 1224(A) (Sup Ct, Nassau County 2014)(Holding that the elements under BCL §§ 724 and 722 are met and the party was entitled to use corporate funds for his legal defense). As is clear under the law, the Defendants are in fact entitled to indemnification and their legal fees under the BCL. However, as the law makes clear, a party cannot use a TRO or Preliminary Injunction to request that the Court address the ultimate rights of the parties, as the Plaintiff is clearly seeking to do in this instance. Plaintiff’s reference to the BCL is simply a red herring and need not be decided by the Court on this TRO and Preliminary Injunction application, as this is not the tool to ultimately decide the parties’ rights. 2. Plaintiff’s request to determine the ultimate rights of the party through a TRO or Preliminary Injunction must be denied. “The purpose of a preliminary injunction is to maintain the status quo, not to determine the ultimate rights of the parties.” 19 Patchen, LLC v. Rodriguez, 153 A.D.3d 1382, 1383 (2d Dep’t 2017). “[A]bsent extraordinary circumstances, a preliminary injunction will not issue where to do so would grant the movant the ultimate relief to which he or she would be entitled in a final judgment.” SHS Bailey, LLC v. Res Land, Inc., 18 A.D.3d 727, 728 (2d Dep’t 2005). “In granting the ultimate relief sought by [Plaintiff] under the guise of a provisional remedy, the motion court, in effect, treated the motion as one for accelerated judgment (CPLR 3212).” St. Paul Fire & Marine Ins. Co., v. York Claims Serv., Inc., 308 A.D.2d 347, 349 (1st Dep’t 2003)(Holding that the lower court erred in granting the preliminary injunction). “This relief went far beyond the ordinary purpose of preliminary injunctive relief, which is to maintain the status quo and to prevent any conduct which might impair the ability of the court to render final judgment.” (see CPLR 6301;