WEBER v. LLC (2026)

DECISION & ORDER

In an action, inter alia, to recover damages for breach of fiduciary duty, the plaintiffs/counterclaim defendants and the additional counterclaim defendants appeal from an order of the Supreme Court, Kings County (Leon Ruchelsman, J.), dated March 1, 2023.  The order, insofar as appealed from, granted that branch of the motion of the defendant/counterclaim plaintiff and the defendants which was for a preliminary injunction enjoining the plaintiffs/counterclaim defendants and the additional counterclaim defendants from distributing, disposing, or otherwise transferring one third of the proceeds from the sale of certain real property.

ORDERED that the order is reversed insofar as appealed from, on the law and in the exercise of discretion, with costs, and that branch of the motion of the defendant/counterclaim plaintiff and the defendants which was for a preliminary injunction enjoining the plaintiffs/counterclaim defendants and the additional counterclaim defendants from distributing, disposing, or otherwise transferring one third of the proceeds from the sale of certain real property is denied.

In March 2022, the plaintiffs/counterclaim defendants (hereinafter together the plaintiffs) commenced this action against the defendant/counterclaim plaintiff, Gary Barnett, among others, inter alia, to recover damages for Barnett's alleged breach of his fiduciary duty as a shareholder of Horsepower Electric and Maintenance Corp. Barnett and the defendants HP Stock, LLC, and Extell Development Company (hereinafter collectively the defendants) interposed an amended answer with counterclaims, in which they asserted affirmative defenses and Barnett asserted counterclaims against the plaintiffs and the additional counterclaim defendants, Pascack Group, LLC, and Pascack WL Holdings.  The amended answer with counterclaims alleged, in relevant part, that Barnett owned a one-third interest in the additional counterclaim defendants pursuant to an oral joint venture agreement with the plaintiffs and that the plaintiffs and the additional counterclaim defendants violated their fiduciary duty to Barnett by usurping his interest in certain real property located in Rockland County (hereinafter the property).

The defendants moved, inter alia, for a preliminary injunction enjoining the plaintiffs and the additional counterclaim defendants from distributing, disposing, or otherwise transferring one third of the proceeds from the sale of certain parcels of the property.  The plaintiffs and the additional counterclaim defendants opposed the motion.  In an order dated March 1, 2023, the Supreme Court, among other things, granted that branch of the motion.  The plaintiffs and the additional counterclaim defendants appeal.

“Although the purpose of a preliminary injunction is to preserve the status quo pending a trial, the remedy is considered a drastic one, which should be used sparingly” (Sarker v. Das, 203 AD3d 973, 974 [internal quotation marks omitted] ).  “To be entitled to a preliminary injunction, a movant must establish (1) a probability of success on the merits, (2) a danger of irreparable injury in the absence of an injunction, and (3) a balance of the equities in the movant's favor” (Tantillo v. Cutrone, 238 AD3d 1090, 1091 [internal quotation marks omitted] ).

Here, the defendants did not show a likelihood of success on the merits, as the record reveals disputed and unresolved issues with regard to whether Barnett had an interest in the additional counterclaim defendants (see Corporate Coffee Sys., LLC v R.U.G. Consulting, LLC, 235 AD3d 829, 830;  Kenner v. Balkany, 219 AD3d 1504, 1506).  Moreover, the defendants failed to establish a danger of irreparable injury in the absence of an injunction, as money damages are an adequate remedy for the losses alleged (see Benaim v. S2 Corona, LLC, 214 AD3d 760, 761;  Recine v. Recine, 201 AD3d 827, 828–829).

Accordingly, the Supreme Court should have denied that branch of the defendants' motion which was for a preliminary injunction enjoining the plaintiffs and the additional counterclaim defendants from distributing, disposing, or otherwise transferring one third of the proceeds from the sale of certain parcels of the property.

DUFFY, J.P., CHRISTOPHER, WARHIT and GOLDBERG VELAZQUEZ, JJ., concur.