VARDARIS TECH INC v. (and another title). (2008)

In an action to recover damages for breach of contract, the defendant appeals from an order of the Supreme Court, Queens County (O'Donoghue, J.), dated April 30, 2007, which granted the plaintiff's motion pursuant to CPLR 6401 for the appointment of a temporary receiver for its business and assets.

ORDERED that the order is reversed, on the facts and in the exercise of discretion, with costs, and the plaintiff's motion pursuant to CPLR 6401 for the appointment of a temporary receiver for the defendant's business and assets is denied.

The Supreme Court improvidently exercised its discretion in granting the plaintiff's motion pursuant to CPLR 6401 for the appointment of a temporary receiver of the business and assets of the defendant corporation.   “The appointment of a temporary receiver is an extreme remedy resulting in the taking and withholding of possession of property from a party without an adjudication on the merits” (Schachner v. Sikowitz, 94 A.D.2d 709, 709, 462 N.Y.S.2d 49).   Therefore, a motion seeking such appointment “should be granted only where the moving party has made a clear evidentiary showing of the necessity for the conservation of the property at issue and the need to protect the moving party's interests” (Lee v. 183 Port Richmond Ave. Realty, 303 A.D.2d 379, 380, 755 N.Y.S.2d 664;  see Secured Capital Corp. of N.Y. v. Dansker, 263 A.D.2d 503, 504, 694 N.Y.S.2d 409;  DaSilva v. DaSilva, 225 A.D.2d 513, 638 N.Y.S.2d 771).

Here, the unsupported allegations and accusations set forth by the plaintiff fell far short of the required “clear evidentiary showing that property of the corporation was in danger of being ‘removed from the state, or lost, materially injured or destroyed’ ” (Lee v. 183 Port Richmond Ave. Realty, 303 A.D.2d at 380, 755 N.Y.S.2d 664, quoting CPLR 6401[a];  see Iannone v. Iannone, 31 A.D.3d 713, 715, 820 N.Y.S.2d 86;  Matter of Kristensen v. Charleston Sq., 273 A.D.2d 312, 709 N.Y.S.2d 853;  cf. Friedman v. Ragin, 228 A.D.2d 642, 645 N.Y.S.2d 56).