RIQUELME KA v. CONSOLE 145 LLC 12 LLC LLC (2025)

I. Facts and Procedural History

The 26-page complaint in this action spins a yarn of marital problems, deceit, and fraud. As pertinent here, plaintiff, Katia Riquelme (Katia), was married to Robert O'Connor (Robert) from 2005 until 2021. Katia commenced divorce proceedings against Robert in California in 2019, and they were divorced by a California court in March 2021 (Judgment, NYSCEF doc. no. 14). The California court did not divide Katia and Robert's assets in the judgment, though it expressly retained jurisdiction to do so (Stipulation re Bifurcation of Marital Status; Order Thereon, NYSCEF doc. no. 14 [after the judgment in the same NYSCEF document]). Robert died on January 27, 2025. Katia conceded that the California court has not yet divided her and Robert's assets as part of the divorce proceedings (Complaint at ¶ 2).

Katia commenced this action on April 2, 2025 -- 65 days after Robert's death -- alleging that she currently owns 50 percent of the shares of KA & B Properties Inc. (KA & B), an entity formed during her marriage to Robert. She claims that KA & B purchased two commercial properties at 135 West Main Street and 145 West Main Street, both in Smithtown. Nominal defendants Karisma Salon LLC, Karisma Salon East Inc., and Long Island Goldmine LLC (collectively, the 135 Tenants) are tenants at 135 West Main Street, while nominal defendant Katie Donegans Inc. (Katie's) is a tenant at 145 West Main Street. Katia further claims that Robert, without her knowledge or consent, opened up a separate bank account for KA & B with her forged signature, and that he gave defendants Alida Console (Alida), Breana O'Connor (Breana), and Tyler O'Connor (Tyler) access to that account. Katia alleges that in the California divorce proceedings, KA & B was determined to be community property.

Katia pleads that in 2024, she discovered that Robert, in October 2020, transferred the premises at 145 West Main Street from KA & B to defendant 145 West Main Street LLC, an entity in which she owned no shares, and at a time when Robert did not own any shares of KA & B and, under California law, was legally prohibited from transferring any marital assets. She also alleges that Katie's has been paying its rent directly to Breana and Alida.

Katia further claims that Robert misappropriated KA & B funds to purchase 12 Hemlock Court, which was allegedly adjudicated to be community property by the California court, in the name of 12 Hemlock Court LLC. She further alleges that she is the 50 percent owner of premises at 30 Lone Oak Path in Smithtown, in which premises Robert apparently allowed Alida to reside. She claims that after Robert died in January 2025, defendant Martin Lang (Martin) moved into 12 Hemlock Court. She also posits that Breana, Tyler, and Alida have been selling Robert's vehicles and other personal assets.

Katia's complaint pleads claims labeled as the imposition of a constructive trust (against Breana, Tyler, Alida, and Martin); conversion, equitable tracing, and disgorgement (against Breana, Tyler, Alida, and Martin); injunctive relief barring Breana, Tyler, Alida, and Martin from alienating the assets of KA & B, 145 West Main LLC, and any other assets held by Robert at the time of his death; injunctive relief requiring the 135 Tenants and Katie's to pay their monthly rent to KA & B's bank account at Chase Bank; fraudulent conveyance against 145 West Main LLC; fraud against 145 West Main LLC; the appointment of a receiver; and “[m]iscellaneous [i]njunctive [r]elief” seeking a temporary restraining order and preliminary injunction. Robert's estate is not a party to this action. Katia now moves, via order to show cause, for a preliminary injunction. She filed this motion the day after filing the summons and complaint. In fact, the request for judicial intervention filed contemporaneously with the order to show cause states that none of the defendants had been served with the summons and complaint. The motion seeks a preliminary injunction granting the following relief:¹

 As against Breana, Tyler, Alida, and Martin:

1. Imposing a constructive trust over the assets of KA & B, 145 West Main LLC, 12 Hemlock Court LLC, and other assets held by Robert at his death “until such time as the Surrogate[’]s Court takes jurisdiction over all or part of the assets of decedent Robert O'Connor”;

2. Disclosing all moneys diverted by Breana, Tyler, Alida, and Martin for their personal use from KA & B, 145 West Main LLC, 12 Hemlock Court LLC, and other properties owned by Robert;

3. Imposing a constructive trust over 12 Hemlock Court LLC;

4. Enjoining Breana, Tyler, Alida, and Martin from alienating the assets of KA & B, 145 West Main Street LLC, and other assets held by Robert at his death “until such time as the Surrogate[’]s Court takes jurisdiction over all or part of the assets of decedent Robert O'Connor”;

5. Prohibiting Breana, Tyler, Alida, and Martin from disposing of Robert's personal property;

6. Directing Martin to disclose any document that gives him a right to reside at 12 Hemlock Court;

7. Directing Martin to pay into “escrow such sum as is deemed reasonable by the [C]ourt to ensure payment of fair market rent, and that such sum be ordered to continue during the duration of this proceeding”;

8. Directing Breana and Alida to pay into “escrow such sum as is deemed reasonable by the [C]ourt to ensure payment of fair market rent, and that such sum be ordered to continue during the duration of this proceeding”;

9. Directing the disclosure of all powers of attorney authorizing any defendant to act on Robert's behalf;

10. Directing the disclosure of all financial and business records of KA & B, 145 West Main LLC, and 12 Hemlock Court LLC.

 As to the 135 Tenants and Katie's:

11. Directing the 135 Tenants to pay rent to KA & B's bank account at Chase Bank; and

12. Directing Katie's to pay rent to KA & B's bank account at Chase Bank.

II. Analysis

“To obtain a preliminary injunction, a movant must establish (1) a likelihood of success on the merits, (2) irreparable injury absent a preliminary injunction, and (3) a balancing of the equities in the movant's favor” (Samaha v Brooklyn Bridge Park Corp., 230 AD3d 608, 610 [quotation marks and citations omitted]; see e.g. Doe v Axelrod, 73 NY2d 748, 750). In order to show a likelihood of success on the merits, “a prima facie showing of a reasonable probability of success is sufficient” (Bass v WV Preserv. Partners, LLC, 209 AD3d 480, 481 [quotation marks and citations omitted]). When damages are compensable through money, there is generally no irreparable injury warranting a preliminary injunction (Smith v Smith, 217 AD3d 1484, 1487; Matter of Rice, 105 AD3d 962, 963), and the alleged harm cannot be remote or speculative (Family-Friendly Media, Inc. v Recorder Tel. Network, 74 AD3d 738, 739). Balancing the equities requires a “court to determine the relative prejudice to each party accruing from a grant or denial of the requested relief” (Barbes Rest. Inc. v ASRR Suzer 218, LLC, 140 AD3d 430, 432). A preliminary injunction is a “drastic remedy that will not be granted unless” the movant establishes a clear legal right to such relief “under the law and the undisputed facts upon the moving papers. The burden of showing an undisputed right rests upon the movant” (Corporate Coffee Sys., LLC v R.U.G. Consulting, LLC, 235 AD3d 829, 830; see Shake Shack Fulton St. Brooklyn, LLC v Allied Prop. Group, LLC, 177 AD3d 924, 926). Deciding whether to grant or deny a request for a preliminary injunction is addressed to the court's discretion, and “[a]bsent unusual or compelling circumstances, appellate courts are reluctant to disturb that determination” (Cushing v Sanford Equities Corp., 223 AD3d 870, 871 [quotation marks and citations omitted]).

Katia's motion contains a plethora of problems that require its total denial.

A. Comity

Although not recognized by any of the parties, the most fundamental and overarching problem for Katia is comity. Comity “does not of its own force compel a particular course of action. Rather, it is an expression of one State's entirely voluntary decision to defer to the policy of another” (Debra H. v Janice R., 14 NY3d 576, 600 [quotation marks and citations omitted], rearg denied15 NY3d 767, cert denied562 US 1136). Comity “may be perceived as promoting uniformity of decision” (Ehrlich-Bober & Co. v University of Houston, 49 NY2d 574, 580; see also Concord Assoc., L.P. v EPT Concord, LLC, 101 AD3d 1574, 1575). “[G]enerally[,] the courts of this [S]tate follow the first-in-time rule, meaning that the court [that] has first taken jurisdiction is the one in which the matter should be determined[,] and it is a violation of the rules of comity to interfere” (Seneca Specialty Ins. Co. v T.B.D. Capital, LLC, 143 AD3d 971, 972 [quotation marks and citations omitted]).

The California judgment of divorce dissolved Robert and Katia's marriage, but the California court further stated that “[t]he [c]ourt severs and reserves jurisdiction over all other issues including, but not limited to, the nature and division of community, separate[,] or quasi-community property of the parties and the division of property” (Stipulation re Bifurcation of Marital Status; Order Thereon, NYSCEF doc. no. 14 [after the judgment in the same NYSCEF document]). The California court retains jurisdiction to distribute property notwithstanding Robert's death (In re Marriage of Hilke, 4 Cal 4th 215, 220; Frederick v Superior Court, 223 Cal App 4th 988, 993; In re Marriage of Drake, 53 Cal App 4th 1139, 1151 [noting that “the proper procedure is to substitute the personal representative of the deceased spouse's estate (or, if none, the spouse's successor in interest) as a party to the still-pending action, whereupon the reserved issues are properly decided under the Family Code”] [quotation marks and citations omitted]).

Crucially, Katia freely conceded that the California court has not yet distributed her and Robert's property (Complaint at ¶ 2; see also Complaint at ¶ 60). It is possible that the California court will decline to award Katia any portion of KA & B or the other assets that are the subject of this action (see Stipulation & Order re Transfer of KA & B Stock and Refinance of Property, NYSCEF doc. no. 8 [in which Katia stipulated that she “desires to receive an equalizing payment as her buy-out of her community property interest in KA&B”]; In re Marriage of Honer, 236 Cal App 4th 687, 702 [affirming a judgment that distributed a business entirely to the husband, noting, inter alia, that the wife “did not want to continue running the” business]). Surely, “[a] family court's discretion in dividing marital property includes the authority to award a marital business to one spouse as a means to achieve equity in the division of property” (In re Marriage of Greaux & Mermin, 223 Cal App 4th 1242, 1251). Having this Court adjudicate the same assets that are the subject of the California divorce proceeding could result in conflicting judicial determinations. This Court could grant relief to Katia regarding a certain asset, and then the California court could decline to distribute any part of that asset to Katia. Thus, principles of comity require this Court to first let the California court distribute Robert and Katia's property before issuing any rulings regarding same (see Bank of Tokyo-Mitsubishi Ltd., NY Branch v Kvaerner a.s., 243 AD2d 1, 9 [“sound considerations of comity — in particular the possibility of conflicting rulings on identical issues — prohibit duplicative litigation”]).

To be sure, the distribution of KA & B and the real properties at issue in this action was also at issue in the California divorce proceeding (Stipulation and Order Regarding Partial Settlement of Issues, NYSCEF doc. no. 26; Stipulation & Order re Transfer of KA & B Stock and Refinance of Property, NYSCEF doc. no. 8). Indeed, as admitted by Katia, the California court was to distribute “our community property, our quasi-community property, and our separate property” (Complaint at ¶ 60). Other California courts could not even grant relief regarding the assets at issue in the California divorce proceedings, which underscores the inability of this Court -- in an entirely different state and time zone -- to do so (see Askew v Askew, 22 Cal App 4th 942, 962 [“By imposing trusts on Bernadette's ostensible interests in the five properties, the civil court was removing from the family law court the power to characterize and divide those properties as community. Given that the family law court already had subject-matter jurisdiction to divide the community property, the civil trial court had no jurisdiction to so act.”]).

Moreover, Katia claims that many of Robert's allegedly fraudulent acts and fraudulent transfers occurred while the California divorce proceeding was pending, in violation of California law and California court orders (Complaint at ¶¶ 55, 61, 73-75, 79). Any alleged breaches of California law and California court orders are properly resolved by a California court. Breaches of fiduciary duty, too, may be taken into account by California courts in the asset distribution phase of a divorce proceeding (see California Family Code §§ 721 [b] [imposing a fiduciary duty between spouses],² 1100 [imposing restrictions on the disposition of community property], 1101 [allowing a claim of breach of fiduciary duty regarding the disposition of community property, and allowing for certain remedies therefor], 2602 [allowing an additional award if community property has been “deliberately misappropriated by the party to the exclusion of the interest of the other party in the community estate”]; In re Marriage of Kamgar, 18 Cal App 5th 136, 144-148 [awarding a payment to the wife in dividing the parties’ property due to the husband's breach of his fiduciary duties]). As one California court recently explained,

[w]here there is a breach of fiduciary duty by one spouse, the family court must award the other spouse 50 percent of any asset transferred in breach of the fiduciary duty plus attorney fees and court costs. And when clear and convincing evidence proves that the breach constitutes oppression, fraud, or malice, the family court must award the other spouse 100 percent of such asset

(In re Marriage of Gilbert-Valencia & McEachen, 98 Cal App 5th 520, 526 [citations omitted]). The California court could even grant Katia's request for the appointment of a receiver (see In re Marriage of Economou, 224 Cal App 3d 1466, 1484-1485).

Ultimately, the California court must address all of these issues or otherwise finally adjudicate them before this Court begins issuing rulings regarding ownership or operation of the same assets (see generally Koob v IDS Fin. Servs., 213 AD2d 26, 35 [“Involvement in affairs properly within the province of the courts of another State is objectionable on the ground of comity.”]). Accordingly, principles of comity preclude this Court from adjudicating Katia and Robert's assets before the California court acts upon them (see Robinson v Robinson, 120 AD2d 415, 415-416, lv dismissed68 NY2d 804; see also De Ganay v De Ganay, 269 AD2d 157, 157).³

B. Other Issues with Katia's Motion

Katia's motion lacks merit for a multitude of other reasons too.

Katia seeks the imposition of constructive trusts in her motion. But her complaint seeks the same relief, and the Court will not grant the ultimate relief sought by the complaint under the guise of a preliminary injunction (see Matter of St. Michael's Home v Valmas, 230 AD3d 1320, 1322; Shake Shack Fulton St. Brooklyn, LLC, 177 AD3d at 927-928). That is especially true in this procedural context, when Katia moved for this preliminary injunction before defendants answered the complaint or had even been served with it (see Northern Funding, LLC v 244 Madison Realty Corp., 41 AD3d 182, 183; St. Paul Fire & Mar. Ins. Co. v York Claims Serv., 308 AD2d 347, 349).

To the extent that Katia seeks the disclosure of documents or other things, she never served any request for discovery under CPLR article 31. She cannot circumvent the discovery rules in CPLR article 31 by filing motions instead. Discovery motions are not even allowed without an affirmation of good faith by counsel, which presupposes a proper discovery demand, refusal by the receiving party, and good-faith attempts by the requesting party to resolve the discovery dispute (see22 NYCRR §§ 202.7, 202.20-f; Bayview Loan Servicing, LLC v Evanson, 230 AD3d 1091, 1092).

Items number 1 and 4 of Katia's requested relief request certain injunctive relief that will last “until such time as the Surrogate[’]s Court takes jurisdiction over all or part of the assets of” Robert. This is improper because, accepting the premise that relief will be sought in Surrogate's Court, tying the duration of a preliminary injunction in this action to activity in another action pending in another court could result in a preliminary injunction that outlasts final resolution of this action. Ultimately, the Court cannot grant a preliminary injunction with such an opaque duration.⁴

Katia has failed to show a likelihood of success on the merits insofar as her claims seek to restrict what Breana, Tyler, and Alida may do with Robert's unspecified personal property. Katia has submitted a copy of Robert's will, in which he devised significant portions of his estate to Breana, Tyler, and Alida.

Item of relief no. 7 is based on Martin's residing at the 12 Hemlock Court premises. Katia wants Martin to pay into escrow fair market value rent for these premises. But there is a sharp factual dispute regarding whether Martin had permission from 12 Hemlock Court LLC's owners to reside at the premises as a caretaker without paying rent (see Bilgrei v North Shore Tower Apts., Inc., 228 AD3d 814, 815; Kenner v Balkany, 219 AD3d 1504, 1506; Cooper v Board of White Sands Condominium, 89 AD3d 669, 669-670; County of Westchester v United Water New Rochelle, 32 AD3d 979, 980).

Item no. 8 of the requested relief is based on Breana and Alida's residing at the 30 Lone Oak Path premises. Katia wants Breana and Alida to pay into escrow fair market rent for these premises. But there is a sharp factual dispute as to whether Robert had anything to do with these premises (see Bilgrei, 228 AD3d at 815; Kenner, 219 AD3d at 1506; Cooper, 89 AD3d at 669-670; County of Westchester, 32 AD3d at 980). In her affidavit, Alida stated that Martin purchased these premises himself in 1995, and that she and her husband purchased these premises from Martin in 2013. Katia has not submitted any deeds or other property records contradicting Alida's affidavit.

For all of the reasons explained above, the balance of the equities militates against granting Katia's application.

III. Conclusion

Katia's motion is denied in its entirety.

Honoring the principles of comity, this action is stayed until the California court engages in a complete distribution of property or otherwise finally resolves the issue of property distribution (see Concord Assoc., L.P. v EPT Concord, LLC, 101 AD3d 1574, 1575 [holding that a stay would “promote orderly procedure by furthering the goals of comity and uniformity” when “the parties and issues” in federal and state actions “are not completely identical,” but “overlap”]; Trinity Prods., Inc. v Burgess Steel LLC, 18 AD3d 318, 319 [holding that the trial court abused its discretion in declining to stay a New York action under principles of comity when a pending “Missouri action may well determine the underlying issue here”]).⁵

This shall constitute the decision and order of the Court.

Papers considered: NYSCEF documents 2 through 61

FOOTNOTES

1.   The requested relief is organized in the same manner as in the order to show cause, though the description thereof has been paraphrased for purposes of this decision.

2.   The fiduciary duty between spouses in section 721 (b) also applies to separate property (In re Marriage of Mohammadijoo & Dadashian, 102 Cal App 5th 393, 410), should that be an issue.

3.   The Court expresses no opinion on whether, after the California court decides the property distribution issues, Katia's claims in this action, or any portion thereof, could be barred under res judicata or collateral estoppel because she had an opportunity to raise Robert's alleged misdeeds before that court and receive redress therefor. The Court notes that res judicata and collateral estoppel are affirmative defenses that must be raised in a motion to dismiss or answer (CPLR 3211 [e]; Browne v Board of Educ., 122 AD3d 563, 563; Paterno v Carroll, 75 AD3d 625, 628). The Court further notes that a waiver of these defenses is not jurisdictional and may be cured through an amended answer interposing them (GMAC Mtge., LLC v Coombs, 191 AD3d 37, 42-43; see e.g. Denisco v 405 Lexington Ave., LLC, 203 AD3d 1025, 1026).

4.   Although this Court's stay of this action is tied to future action by the California court, that is required under principles of comity.

5.   To the extent that this Court's decision may engender delay to the litigants, the Court notes, parenthetically, that the issues raised herein have laid fallow for more than four years, with none of the parties having taken any prior legal action to resolve same either here or in California.

Joseph C. Pastoressa, J.