LLC v. ARIS PLUMBING HEATING ARON LANDAU (2026)

The following papers were read on Defendants' application,by proposed order to show cause, for a temporary restraining order and a preliminary injunction:

PAPERS NUMBERS

Proposed Order to Show Cause and Memorandum of Law NYSCEF Doc. Nos. 6—7

Affirmation of John S. Morabito, Esq. NYSCEF Doc. No. 8

Affidavit of Aron Landau and Exhibits NYSCEF Doc. Nos. 9—14

Letter in Opposition of Yosef C. Feldman, Esq. NYSCEF Doc. No. 23

Upon the foregoing papers, the application is decided as follows.

Defendants ARIS PLUMBING & HEATING INC. d/b/a ARIS PLUMBING & HEATING ("Aris") and ARON LANDAU (together, "Defendants") presented a proposed order to show cause at approximately 4:30 p.m. on August 26, 2026. They seek temporary and preliminary injunctive relief that would (i) suspend the June 25, 2026 notice by which Plaintiff EXPANSION CAPITAL GROUP LLC ("Expansion") directed non-party Intuit, Inc. ("Intuit") to remit to Expansion all funds owed to or collected for Aris (the "Enforcement Notice"), and (ii) compel Expansion affirmatively to advise Intuit, in writing, that the withheld funds may be released to Aris, either in full or in an amount this Court determines necessary to fund essential operations. Expansion submitted opposition by letter filed at 10:09 p.m. the same evening.

For the reasons set forth below, the Court signs the order to show cause but declines to grant temporary restraining relief. The motion for a preliminary injunction is set down on an expedited schedule, with directions for supplementation of the record.

BACKGROUND

On March 13, 2026, Expansion and Aris entered into a Future Receivables Sales Agreement (the "Agreement"), under which Expansion purchased $92,757.00 of Aris's future receivables at a Purchased Percentage of nine percent. Expansion alleges that Aris defaulted on or about May 6, 2026.

On June 25, 2026, Expansion's counsel transmitted the Enforcement Notice to Intuit pursuant to UCC § 9-406. The Enforcement Notice states that $103,265.00 is "due and owing" and directs Intuit to remit to Expansion all funds owed to or collected for Aris until that sum accrues. On or about July 15, 2026, Intuit placed a hold on Aris's account. Intuit presently holds approximately $60,000.00. See Landau Aff. ¶ 7.

Expansion commenced this action on July 16, 2026, the day after the hold took effect, seeking $81,732.00 in damages together with fees, costs and attorneys' fees. Expansion's Remittance Register (see NYSCEF Doc. No. 3) reflects $600.00 in fees and a "Remaining Obligation" of $82,332.00.

Defendants answered on August 7, 2026. On August 10, 2026, a letter was transmitted to Intuit on Defendants' behalf requesting, among other things, that Intuit refrain from releasing funds to Expansion while the underlying claim and the scope of enforcement remained disputed. See Morabito Aff. ¶ 8 & Ex. 5. On August 21, 2026, Defendants served an amended answer pleading a counterclaim for a declaration concerning the amount and permissible scope of the Enforcement Notice. Mr. Landau swore his affidavit on August 24, 2026. Defendants' counsel notified Expansion's counsel of this application by electronic mail at approximately 2:24 p.m. on August 26, 2026, and filed the application at 4:26 p.m. that afternoon.

Defendants identify three figures that they contend cannot be reconciled: the $103,265.00 stated in the Enforcement Notice, the $82,332.00 "Remaining Obligation" appearing on Expansion's own Remittance Register, and the $81,732.00 pleaded as damages in the Complaint. They further contend that the Complaint's allegation that no remittance was tendered after April 24, 2026, is contradicted by Expansion's own transaction history, which reflects remittances applied after that date, including a $3,000.00 remittance on June 4, 2026, nearly a month after the alleged default. Expansion responds that the figures are consistent because the Complaint pleads damages exclusive of contractual fees and costs, and that the June 4 remittance failed because Defendants placed a stop payment on the account.

THE ADEQUACY OF NOTICE

Expansion asks the Court to decline to sign the order to show cause because notice was inadequate. The objection has merit, though on this record it is not dispositive.

22 NYCRR § 202.7(f) requires that an application for temporary injunctive relief be supported by "an affirmation demonstrating there will be significant prejudice to the party seeking the restraining order by the giving of notice," and provides that "[i]n the absence of a showing of significant prejudice, the affirmation must demonstrate that a good faith effort has been made to notify the party against whom the temporary restraining order is sought of the time, date and place that the application will be made in a manner sufficient to permit the party an opportunity to appear in response to the application" (emphasis added). Section 202.8-e is to like effect.

Defendants make no claim of prejudice from the giving of notice. They rely on the good- faith-effort prong. Two hours and six minutes' notice of an application comprising a memorandum of law, an attorney affirmation, an affidavit and eleven exhibits is not, in the ordinary case, notice sufficient to permit an opportunity to appear in response. The rule requires a meaningful opportunity, not a formal one. That is particularly so here, where nothing in the record explains why the application could not have been made on ordinary notice: by Defendants' own account, the hold had been in place for approximately six weeks.

The Court nonetheless declines to rest its disposition on the notice defect alone. Expansion did appear, in writing, within approximately six hours, and has been heard. The prejudice the rule guards against has been substantially mitigated, and the Court has considered Expansion's submission in full. Counsel for Defendants is cautioned that any future application for interim relief in this action must comply with § 202.7(f) in substance and not merely in form.

The abbreviated notice is relevant in a second respect. A movant's own treatment of a matter as one that may be managed by correspondence for six weeks, and then must be resolved within two hours, bears on whether the injury asserted is genuinely immediate. The Court returns to that point below.

THE GOVERNING STANDARD

Civil Practice Law and Rules § 6301 authorizes a preliminary injunction where a party threatens or is about to do an act in violation of the movant's rights respecting the subject of the action, tending to render the judgment ineffectual. Civil Practice Law and Rules § 6313(a) separately authorizes temporary restraining relief, pending determination of a preliminary injunction motion, upon a showing that immediate and irreparable injury, loss or damage will result before a hearing can be had.

A movant must demonstrate (1) a likelihood of success on the merits, (2) irreparable injury absent the relief, and (3) a balance of equities in its favor. See Nobu Next Door, LLC v Fine Arts Hous., Inc., 4 NY3d 839, 840 [2005]; See also Heung Man Lau v South Brooklyn Ry. Co., 250 AD3d 722 [2d Dept 2026]; Edgewater Ventures, LLC v SI Funding, LLC, 246 AD3d 787 [2d Dept 2026]. The remedy is a drastic one, and the movant bears the burden of establishing "a clear right to relief which is plain from the undisputed facts." Matter of Related Props., Inc. v Town Bd. of Town/Vil. of Harrison, 22 AD3d 587, 590 [2d Dept 2005]. The determination rests in the sound discretion of the court. See Heung Man Lau, 250 AD3d 722.

Two further principles govern this application. First, "[a] mandatory injunction, which is used to compel the performance of an act, is an extraordinary and drastic remedy which is rarely granted and then only under unusual circumstances where such relief is essential to maintain the status quo pending trial of the action." Shake Shack Fulton St. Brooklyn, LLC v Allied Prop. Group, LLC, 177 AD3d 924, 927 [2d Dept 2019]. Second, "absent 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 Baisley, LLC v Res Land, Inc., 18 AD3d 727, 728 [2d Dept 2005].

A threshold point resolves in Defendants' favor. A defendant may obtain provisional relief only where it has interposed a counterclaim supplying the jurisdictional predicate; absent one, a court is "without the power to grant a preliminary injunction" to that party. See Wells Fargo Bank

N.A. v Area Plumbing Supply, Inc., 150 AD3d 932, 935 [2d Dept 2017]. Defendants' amended answer pleads a declaratory counterclaim directed precisely to the amount and scope of the Enforcement Notice. The predicate is satisfied, and the application is properly before the Court.

One observation about the opposition is also in order. Expansion's submission is an attorney's letter, which is acceptable opposition in that it was submitted prior to this Court's issuance of a briefing schedule. Nonetheless, the letter is unsworn, and its factual assertions, including the assertion that the June 4, 2026, remittance failed by reason of a stop payment, are not evidence. That circumstance does not assist Defendants. The burden on this application is theirs, and, as set forth below, the difficulty with their showing appears on the face of their own papers.

LIKELIHOOD OF SUCCESS ON THE MERITS

Defendants' merits showing is carefully limited, and the limitation proves fatal to the interim relief they seek.

Defendants expressly disclaim any contention that Expansion lacks Article 9 enforcement rights: "Defendants do not ask the Court at this stage to declare that Expansion possesses no Article 9 rights" See Mem. of Law at 8. That concession matters, because those rights are what the Enforcement Notice exercises. A secured party holding a presently exercisable security interest in accounts may notify the account debtor and direct that payment be made to it. See UCC §§ 9-406, 9-607[a][1], [3]; see also Worthy Lending LLC v New Style Contractors, Inc., 39 NY3d 99, 103- 106 [2022].

Defendants are right that neither Worthy Lending nor § 9-607 fixes the quantum of the secured obligation. Section 9-607(e) provides that "[t]his section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party," and the amount and permissible scope of an enforcement notice depend on the underlying agreement and the account record. Defendants are also right that this record discloses genuine and, at present, unexplained inconsistencies. The Enforcement Notice asserts $103,265.00. Expansion's own Remittance Register records a "Remaining Obligation" of $82,332.00. The Complaint pleads $81,732.00. The pleaded allegation that no remittance was tendered after April 24, 2026, sits uneasily with a transaction history reflecting a $3,000.00 remittance on June 4, 2026. Expansion's explanation may well prove correct, but at this juncture it is offered in an unsworn letter and is not established here.

The difficulty is that likelihood of success must be measured against the relief sought, and in this application the two do not meet. The relief sought is release of approximately $60,000.00 that Intuit holds. Assume Defendants prevail on their counterclaim in the fullest form in which they have pleaded it, and the enforceable sum is reduced from $103,265.00 to the $81,732.00 alleged in the Complaint. Every dollar Intuit holds would still fall within the reduced amount, leaving more than $21,000.00 unsatisfied. The same is true if the operative figure proves to be the $82,332.00 appearing on Expansion's Remittance Register. On Defendants' own arithmetic, complete success on the counterclaim as pleaded would not entitle Aris to a single dollar of the funds Defendants ask this Court to release. A movant does not demonstrate a likelihood of success by showing that it may prevail on a claim that could not produce the relief it requests.

This is not to say the quantum dispute is unimportant. The Enforcement Notice operates as a continuing directive: it instructs Intuit to remit all funds owed to or collected for Aris until the stated amount accrues. The difference between $103,265.00 and $81,732.00 will therefore determine when that directive is exhausted and Aris's receivables again become available to it. That is a reason to adjudicate the counterclaim, and to do so promptly. It is not a reason to release the fund now.

Nor have Defendants shown a clear right to relief plain from undisputed facts. They do not deny entering the Agreement. They do not deny that a sum is owed. They do not, on this application, contest the fact of default. What is disputed is how much. Where the material facts are in sharp dispute, temporary injunctive relief will not issue. See Related Props., 22 AD3d at 590.

Defendants' reliance on Masjid Usman, Inc. v Beech 140, LLC, (68 AD3d 942, 943 [2d Dept 2009]) does not alter the analysis. The reduced degree of proof recognized there applies where "the denial of a preliminary injunction ... would disturb the status quo and likely render the final judgment ineffectual." Neither condition obtains. As explained below, denial preserves rather than disturbs the status quo; and a judgment declaring the amount and scope of the Enforcement Notice will remain fully effective, because the funds are held, not dissipated beyond accounting.

IRREPARABLE INJURY

"Economic loss, which is compensable by money damages, does not constitute irreparable harm" (EdCia Corp. v McCormack, 44 AD3d 991, 994 [2d Dept 2007]; see Di Fabio v Omnipoint Communications, Inc., 66 AD3d 635, 637 [2d Dept 2009]; Heung Man Lau, 250 AD3d 722). The injury at the center of this application is the temporary unavailability of approximately $60,000.00. That is the paradigm of compensable loss.

Defendants invoke the exception recognized in Reuschenberg v Town of Huntington (16 AD3d 568, 570 [2d Dept 2005]), where the irreparable-injury requirement was satisfied by proof that the challenged act "threatens to destroy an ongoing business concern." The exception is a real one, and this Court does not treat the threatened failure of a small contracting business as a merely monetary injury. Defendants likewise invoke Gundermann & Gundermann Ins. v Brassill (46 AD3d 615, 617 [2d Dept 2007]) for the proposition that lost goodwill and lost business opportunities are difficult to quantify and may support a finding of irreparable harm. So they may. But those authorities identify categories of injury that qualify; they do not relieve the movant of proving that the injury is in fact threatened. "Bare, conclusory allegations" will not do (EdCia, 44 AD3d at 994).

On the papers submitted, the showing falls short in three respects.

First, it is largely unquantified. The submission describes a negative operating account, unpaid payroll, the departure of one employee, insurance deficiencies and impairment of roughly three active projects. It does not supply the figures that would permit the Court to measure any of it: no account balance, no payroll amount, no premium figure, no receivables ledger, no identification of the projects said to be at risk or of the obligations said to have been missed. The business described is also one that continues to operate, with employees, subcontractors and active projects.

Second, the showing is undated at the point where dating matters most. The statement that payroll had gone unpaid is tied to "the time I provided this information to my representatives," a date the affidavit does not identify, in an affidavit sworn on August 24, 2026 and filed on August 26, 2026. CPLR 6313(a) requires injury that is immediate. An assertion anchored to an unspecified past date does not supply it.

Third, and most significantly, the conduct of the parties is difficult to reconcile with the emergency asserted. The hold has been in place since on or about July 15, 2026. Defendants answered on August 7 without seeking relief. They amended on August 21 to plead the very counterclaim on which this application rests, again without seeking relief. The application followed five days later, on two hours' notice. Delay of that duration is not easily squared with injury so immediate that it cannot await a hearing on notice.

Expansion presses a related point somewhat further than the record supports. It argues that Aris "itself asked Intuit to keep the funds," relying on the August 10, 2026, letter described in the Morabito Affirmation. The letter, as described, asked Intuit to refrain from releasing funds to Expansion. It did not ask Intuit to withhold funds from Aris. Those are different requests, and the Court does not find that Defendants created the hold of which they now complain. What the letter does show is that three weeks into the hold, Defendants were addressing the matter by correspondence with the stakeholder rather than by application to this Court and were evidently content for the fund to remain where it was while the dispute was sorted out. That is not the posture of a party facing injury that cannot await a hearing. Defendants should be prepared to address the letter, and its intended effect, on the return date.

THE BALANCE OF EQUITIES, THE STATUS QUO, AND THE MANDATORY CHARACTER OF THE RELIEF

The balance-of-equities inquiry requires the Court to weigh the prejudice to the movant from withholding relief against the prejudice to the opposing party from granting it. See Nobu Next Door, 4 NY3d at 84). Three considerations control.

First, the relief sought is mandatory. Defendants candidly acknowledge as much (see Mem. of Law at 11). An order compelling Expansion to write to Intuit authorizing release of the funds does not restrain conduct; it commands it. Such relief is "rarely granted and then only under unusual circumstances where such relief is essential to maintain the status quo." Shake Shack, 177 AD3d at 927. Nothing in this record makes affirmative compulsion essential.

Second, the relief sought is, in substance, the judgment. Defendants' counterclaim seeks a declaration concerning the amount and scope of the Enforcement Notice. The proposed order would suspend that Notice outright and direct its practical undoing, before Expansion has answered the counterclaim and on a record it received barely two hours before the application was made. "[A]bsent extraordinary circumstances, a preliminary injunction will not issue where to do so would grant the movant the ultimate relief." SHS Baisley, 18 AD3d at 728. No extraordinary circumstances are shown.

Third, the relief would alter rather than preserve the status quo. Defendants rely on Coinmach Corp. v Alley Pond Owners Corp. (25 AD3d 642, 643 [2d Dept 2006]) for the proposition that the status quo is measured by the parties' position prior to the litigation. Coinmach does not carry that weight here. The status quo in that case was "properly determined to be the parties' pre-lockout positions, in accordance with paragraph 11 of the lease" (emphasis added), that is, by reference to a contractual provision governing restoration. Defendants identify no analogous provision in the Agreement. More fundamentally, the chronology defeats the argument on its own terms. The Enforcement Notice issued June 25, 2026. The hold took effect on or about July 15, 2026. This action was commenced on July 16, 2026. The position of the parties prior to this litigation was the hold. To release the funds now is to change that position, not to maintain it. Weighed against these considerations, the prejudice to Defendants from denial is real but bounded. They are deprived of the use of funds securing an obligation whose existence they do not dispute, in an amount below every figure either side has advanced. Expansion, by contrast, would be stripped on an interim record, and before answering the counterclaim, of its asserted interest in the only collateral these papers identify. The equities do not tip decidedly in Defendants' favor.

RELIEF DIRECTED AT FUNDS HELD BY A NON-PARTY

One further difficulty warrants comment. Intuit holds the funds. Intuit is not a party to this action, has not been joined as a counterclaim defendant, and has not appeared.

The proposed order is drawn to run against Expansion, and to that extent it is not, strictly speaking, an injunction directed at a non-party; Civil Practice Law and Rules § 6301 permits restraint of a party respecting the subject of the action. But the order's practical operation would depend entirely on the voluntary act of a stakeholder over which this Court has not been asked to assume jurisdiction, and which has separately received correspondence from Aris's side concerning these same funds. This court hesitates to enter extraordinary mandatory relief whose efficacy it cannot ensure. If Defendants seek to reach the fund itself, the orderly course is to bring the stakeholder before the Court.

CIVIL PRATICE LAW AND RULES § 6312(c) AND THE REQUEST FOR DETERMINATION ON SUBMISSION

Defendants correctly observe that the existence of factual disputes does not by itself require denial of preliminary injunctive relief. See Civil Practice Law and Rules § 6312[c]; See also Edgewater Ventures, 246 AD3d at 788). But Civil Practice Law and Rules § 6312(c) is conditional by its terms. It applies "[p]rovided that the elements required for the issuance of a preliminary injunction are demonstrated in the plaintiff's papers," and it then provides that an opposing evidentiary showing "shall not in itself be grounds for denial of the motion." Id. The provision relieves a movant of the consequences of a factual dispute raised in opposition. It does not supply an element that the moving papers themselves do not establish. Here the shortfall lies in the moving papers, and Civil Practice Law and Rules § 6312(c) does not reach it.

For related reasons, the Court declines Defendants' request that the preliminary injunction motion be determined on submission without argument. Given the mandatory character of the relief, the unreconciled figures, and the evidentiary gaps identified above, the motion will be heard.

DISPOSITION

Expansion asks the Court to decline to sign the order to show cause altogether. The Court declines to go that far. The inconsistencies among Expansion's own figures are unexplained on this record, and Defendants have pleaded a counterclaim that squarely raises them. Those questions warrant a hearing on notice and on an evidentiary record. What they do not warrant is extraordinary mandatory relief entered overnight, on two hours' notice, in an amount that complete success on the counterclaim would not recover.

Because Defendants assert that the continued unavailability of the funds threatens the viability of an operating business, the motion is set down on an expedited schedule, and the Court directs supplementation of the record so that the merits may be reached on something more than the present showing.

Accordingly, it is

ORDERED that the proposed order to show cause is signed, without temporary restraining relief and the conformed copy is e-filed on NYSCEF separately; and it is further

ORDERED that Defendants' application for a temporary restraining order pursuant to Civil Practice Law and Rules § 6313 is DENIED, without prejudice to the relief sought on the return date; and it is further

ORDERED that Defendants' motion for a preliminary injunction shall be heard in-person on September 22, 2026, at 9:30 a.m., in Courtroom 3, Third Floor, Rockland County Courthouse, 1 South Main Street, New City, New York; and it is further

ORDERED that Expansion shall serve and file opposition, supported by an affidavit of a person with knowledge and by documentary evidence, on or before September 8, 2026; that Defendants shall serve and file reply papers on or before September 15, 2026; and that no adjournment shall be granted absent leave of the Court; and it is further

ORDERED that Expansion's opposition shall include (a) a sworn accounting of all sums received from Intuit, or from any other account debtor, pursuant to or in consequence of the June 25, 2026 Enforcement Notice, identifying as to each the date received, the amount, and its application to the obligation asserted; and (b) a sworn reconciliation of the figures of $103,265.00, $82,332.00 and $81,732.00, identifying the contractual provisions on which each rests, and a sworn account of the remittances reflected in Expansion's transaction history after April 24, 2026, including the remittance dated June 4, 2026; and it is further

ORDERED that, pending determination of the motion, Expansion shall maintain a contemporaneous record of all sums received pursuant to the Enforcement Notice, and shall remain obligated to account for such sums to the Court and to Defendants; and it is further

ORDERED that, if Defendants continue to seek release of all or any portion of the withheld funds, their reply shall specify the dollar amount sought and its intended application, and shall be supported by documentary evidence including bank statements, payroll records, insurance invoices or notices of cancellation, and a receivables ledger, together with a statement addressing the August 10, 2026 communication to Intuit described at paragraph 8 of the Morabito Affirmation; and it is further

ORDERED that any preliminary injunction granted at the September 22, 2026, appearance shall be conditioned upon the undertaking required by Civil Practice Law and Rules § 6312(b), in an amount to be fixed by the Court (see Ying Fung Moy v Hohi Umeki, 10 AD3d 604, 605 [2d Dept 2004]) on that date; and it is further

ORDERED that nothing herein shall preclude Defendants from moving, on proper papers and appropriate notice, to join Intuit, Inc. as a party to the extent they seek relief affecting funds in its possession.

The foregoing constitutes the Decision and Order of this Court.

Dated: August 27, 2026

New City, New York

HON. JOHN P. COLLINS, JR., J.S.C.

To:

John S. Morabito, Esq., Attorney for Defendants (via NYSCEF) Yosef C. Feldman, Esq., Attorneys for Plaintiff (via NYSCEF)

John P. Collins, Jr., J.