BRUDERMAN BROTHERS LLC v. GOLDBERG (2021)

Order, Supreme Court, New York County (Louis L. Nock, J.), entered October 21, 2020, which, insofar as appealed from as limited by the briefs, granted plaintiffs’ motion for a preliminary injunction in aid of arbitration, unanimously affirmed, with costs.

The motion court providently exercised its discretion in granting the preliminary injunction (see Doe v. Axelrod, 73 N.Y.2d 748, 750, 536 N.Y.S.2d 44, 532 N.E.2d 1272 [1988];  Ciminello Prop. Assoc. v. New 970 Colgate Ave. Corp., 173 A.D.3d 447, 448, 103 N.Y.S.3d 43 [1st Dept. 2019]).  Plaintiffs met their burden of showing a probability of success on the merits (see Nobu Next Door, LLC v. Fine Arts Hous., Inc., 4 N.Y.3d 839, 840, 800 N.Y.S.2d 48, 833 N.E.2d 191 [2005];  Barbes Rest. Inc. v. ASRR Suzer 218, LLC, 140 A.D.3d 430, 431, 33 N.Y.S.3d 43 [1st Dept. 2016]).  On the existing record, and in the context of the underlying transaction, in which defendant sold his investment brokerage and advisory business for a significant sum, and agreed to work for plaintiffs for five years for further substantial consideration, it cannot be said that the governing agreements’ restrictive covenants, and in particular the noncompete provision, were overbroad, as restraints on trade (see Mohawk Maintenance Co. v. Kessler, 52 N.Y.2d 276, 284–285, 437 N.Y.S.2d 646, 419 N.E.2d 324 [1981]), or in geographical or temporal scope (see New York Real Estate Inst., Inc. v. Edelman, 42 A.D.3d 321, 839 N.Y.S.2d 488 [1st Dept. 2007]).  Under the circumstances, an adjudicator could likewise find that defendant's services were unique or extraordinary for purposes of enforcement of the noncompete provision (see Henson Group, Inc. v. Stacy, 66 A.D.3d 611, 612, 887 N.Y.S.2d 582 [1st Dept. 2009];  Crown IT Servs., Inc. v. Koval–Olsen, 11 A.D.3d 263, 264–265, 782 N.Y.S.2d 708 [1st Dept. 2004]).

Defendant's contentions that plaintiffs breached the agreements at most raise issues of fact in response to plaintiffs’ prima facie showing of justification for terminating him (see Barbes Rest. Inc., 140 A.D.3d at 431, 33 N.Y.S.3d 43;  Four Times Sq. Assoc. v. Cigna Invs., 306 A.D.2d 4, 5, 764 N.Y.S.2d 1 [1st Dept. 2003]).  Issues of fact correspondingly exist as to which party was in breach.  The motion court thus providently exercised its discretion in favor of preserving the status quo with a preliminary injunction, pending definitive resolution by the arbitrator of the parties’ claims, including the issues of breach (see Republic of Lebanon v. Sotheby's, 167 A.D.2d 142, 145, 561 N.Y.S.2d 566 [1st Dept. 1990];  Congregation Erech Shai Bais Yosef, Inc. v. Werzberger, 189 A.D.3d 1165, 1167, 138 N.Y.S.3d 542 [2d Dept. 2020]).

Furthermore, defendant's contention that the motion court erred in granting the preliminary injunction pending the arbitration, rather than limiting it to the term provided in the agreements, is also unavailing.  The agreements themselves provide that, in the event of any violation of the restrictive covenants, the restricted periods “will toll and will continue thereafter to run from the first date on which the violation has ceased.”  Hence, it will be up to the arbitrator to determine which party breached, and for how long, and the duration of the resulting toll of the restrictive covenants, if any (see New York Real Estate Inst., 42 A.D.3d at 322, 839 N.Y.S.2d 488).