Opinion
51797/21
09-23-2021
William M. COSTELLO, individually and as a member of and suing in the right of Curis Partners, LLC, Plaintiff, v. Ronald M. MOLLOY and Curis Partners, LLC, Defendants.
MITCHELLS LLP, By: Gilbert de Dios, Esq., Clyde Mitchel, Esq., Attorneys for Plaintiff, 84-58 151st Street, Briarwood, New York 11432 PARLATORE LAW GROUP, By: Scott D. Brenner, Esq., Attorneys for Plaintiff, One World Trade Center, Suite 8500, New York, New York 10007 HOGUET NEWMAN REGAL & KENNEDY, LLP, By: Frederic S. Newman, Esq., John P. Curley, Esq., Iricel E. Payano, Esq., Attorneys for Defendants, 60 East 42nd Street, 48th Floor, New York, New York 10165
MITCHELLS LLP, By: Gilbert de Dios, Esq., Clyde Mitchel, Esq., Attorneys for Plaintiff, 84-58 151st Street, Briarwood, New York 11432
PARLATORE LAW GROUP, By: Scott D. Brenner, Esq., Attorneys for Plaintiff, One World Trade Center, Suite 8500, New York, New York 10007
HOGUET NEWMAN REGAL & KENNEDY, LLP, By: Frederic S. Newman, Esq., John P. Curley, Esq., Iricel E. Payano, Esq., Attorneys for Defendants, 60 East 42nd Street, 48th Floor, New York, New York 10165
Gretchen Walsh, J.
The following e-filed documents, listed in NYSCEF by document numbers 6-11, 14-16, 22-29 were read on this motion by Plaintiff William M. Costello ("Plaintiff" or "Costello"), individually and as a member of and suing in the right of Curis Partners, LLC ("Curis") for an order granting Plaintiff a preliminary injunction:
(1) restoring Plaintiff to his position as a fully vested 25.1 member;
(2) directing Defendants to fully restore any voting and other rights associated with Plaintiff's interest as a member;
(3) directing Defendants to grant and facilitate Plaintiff's access to Curis LLC's books and records;
(4) prohibiting Defendants from taking any actions or amending the Operating Agreement in any way that diminishes, marginalizes, reduces or otherwise affects Plaintiff's rights or interest in Curis LLC;
(5) directing Curis LLC to continue to make distributions to Plaintiff as required by Curis LLC's Operating Agreement; and
(6) directing Curis LLC to maintain Plaintiff on Curis LLC's healthcare plan.
Plaintiff advised the Court that he has obtained separate health coverage (Tr. at 62). As such, the Court deems this aspect of Plaintiff's motion withdrawn without prejudice.
Upon the foregoing papers and for the reasons set forth herein, Plaintiff's motion is granted in part to the extent set forth herein.
RELEVANT FACTS
This action was initiated with Plaintiff's filing of a Summons and Complaint on February 17, 2021. It arises from Defendants’ attempt to divest him of his membership interest in Curis effective December 31, 2020. On February 18, 2021, Plaintiff filed this motion by Order to show Cause. The Court held a conference regarding the interim relief requested and granted a temporary restraining order enjoining Defendants from passing any amendment or other resolution that diminishes or otherwise adversely affects Plaintiff's rights or interest in Curis (NYSCEF Doc. No. 16).
The Court further ordered that the parties engage in mediation since the action is subject to the mandatory mediation rules of the Ninth Judicial District. However, the case did not settle. On April 20, 2021, the Court held a Preliminary Conference and issued a Preliminary Conference Order setting October 14, 2021 as the date for the completion of discovery and scheduling a trial readiness conference for October 20, 2021. The Court subsequently scheduled a hearing on the motion, which was held on June 29, 2021 and July 7, 2021. On July 29, 2021, the Court received the transcripts of the hearing and the Court was also advised by Plaintiff's and Defendants’ counsel that neither was requesting the right to file post-hearing briefs.
Based on the hearing held and the evidence presented, there are very few disputed facts. The parties agree that on May 15, 2015, Curis was formed when Costello, Molloy, George Stivala ("Stivala"), and Scott Petersen ("Petersen") entered into the Operating Agreement of Curis, a New York limited liability company (Plf's Ex. 1). The Operating Agreement was drafted by Molloy (Tr. at 174), and Costello, Stivala, and Petersen all had an opportunity to review it prior to signing it, although there is a dispute over whether the terms of Section 11.3 (the section at issue) were discussed prior to signing. Molloy, Stivala and Petersen testified that Section 11.3 was discussed and that all three understood it to mean that if one of them ceased being a working and contributing member of Curis, his membership could be terminated (Tr. at 112, 118-119, 120, 174, 218-219, 222-223, 236-37, 243-44). By contrast, Costello testified that Section 11.3 was not discussed (Tr. at 72). He further testified that the language is inapplicable to him since it is limited to employees and not Curis’ Members (Tr. at 69). The membership interests, at least with regard to Costello, Petersen, Molloy and Stivala, were given in exchange for their agreement to be working members of Curis (Tr. at 109, 218, 236).
Unless otherwise specified, the exhibits reference the exhibits received in evidence during the hearing held on this motion.
Despite Costello's position, there is evidence that even Costello understood that continued membership was predicated on the member working for Curis (see Def's Ex. H [Costello's draft email to Stivala that his equity was meant for Stivala in his role of Chief Medical Officer and if Stivala was unwilling to fulfill that role, they needed to discuss other options]; see also Tr. at 123-25).
Pursuant to the Operating Agreement, Costello and Molloy were each vested with a 25.1% membership interest, and Petersen and Stivala were each vested with a 24.9% membership interest (Plf's Ex. 1 at § 3.1.1 and Schedule A). On November 10, 2015, a new member, John Foster, was admitted and Molloy gave Foster 10% of his 25.1% membership interest in exchange for Foster's payment of $50,000 leaving Molloy with a 15.1% membership interest (Plf's Ex. 2; Tr. at 206-08). Foster has never worked for Curis (Tr. at 127); instead, Molloy determined that he should be given a 10% membership interest based on Foster's substantial wealth that could be tapped into if Curis ever needed working capital (Tr. at 128). However, Molloy admitted that Foster had no commitment to provide further funding to Curis (Tr. at 161). Further, since Foster is not a working member, the provision under which Molloy purportedly terminated Costello and forfeited Costello's membership interest based on Costello's alleged failure or inability to work is inapplicable to Foster's membership.
Since its formation, Molloy has been Curis’ Chief Executive Office and Manager. As reflected in the Operating Agreement, the Manager has numerous powers assigned to him (Def's Ex. C). Costello, prior to his termination in December 2020 was Curis’ Chief Operating Officer, Stivala is Curis’ Chief Medical Officer (id.; see also Tr. at 216; Plf's Ex. 8 at ¶¶ 4-5) and Petersen is its Chief Information (Technology) Officer (Def's Ex. C; Tr. at 231-232). At some point after the parties entered into the Operating Agreement (August 2015), Costello contributed $40,000 in capital, but this amount was subsequently reimbursed to him by Curis in early 2016 (Tr. at 34, 122, 162). Curis is in the business of providing home health care services to health plan members (Tr. at 107). Costello and Molloy have been friends and business associates for some 30 years prior to the dispute giving rise to this action (Tr. at 13-14, 112-14), and the company that they both worked at prior to forming Curis was Medical House Calls (Tr. at 13), a company that was in the same business as Curis (Tr. at 107). Indeed, Curis’ only client is Health First, which was Medical House Calls’ client prior to it leaving Medical House Calls for Curis (Tr. at 16, 21-22, 170). It is undisputed that the COVID-19 pandemic caused Curis to shutdown in March 2020 since it could not have the doctors perform house calls (Tr. at 130), and the last time any member received a distribution was in July 2020 (Tr. at 127, 204). Despite Curis being shutdown, according to Molloy, Curis spent this time developing another line of business (Tr. at 131-32). In addition, during the shutdown, Curis obtained $430,000 in PPP loans (Tr. at 155). Beginning in September 2020, Curis was able to resume its house call business (Tr. at 155).
The Manager was elected by a majority of the membership units to manage and control the business affairs of Curis (Plf's Ex. 1 at § 6.1.1). Molloy's powers as Manager are vast. They include the right to "make all decisions and take all actions for the Company including without limitation": (1) the right to issue additional membership units to new members (id. at § 3.4.1); (2) other than the mandatory "true-up" distributions concerning the Members’ tax liability arising from Curis, the sole discretion to make distributions to the Members ("discretionary distributions") (id. at §§ 5.1 and 5.2); (3) the right to dispose of Curis’ assets (id. at § 6.1.2 [vi]); and (4) the right to hire and employ executives, officers and supervisors (id. at § 6.1.2 [viii]). There are several actions that required approval of two-thirds of the membership units. Those actions include: (1) mergers with another company if it would result in a sale in excess of 49% of Curis; (2) disposing of more than 49% of Curis’ assets (computed on the basis of book value or fair market value); (3) liquidating, dissolving or effecting a recapitalization or reorganization; and (4) settling litigation. Pursuant to the First Amendment to the Operating Agreement (Plf's Ex. 2), the Manager's sole discretion to make discretionary distributions pursuant to Section 5.2.2 was curtailed and Molloy was required to obtain approval of all discretionary distributions by a vote of 50.1% of the membership units. Molloy violated this provision when he gave a distribution of $100,000 to John Foster in August 2019 and an extra $10,000 distribution to himself in July 2020 without membership approval (Tr. at 36; Plf's Exs. 6, 7 and 8 at ¶ 17), although Molloy contends none of the distributions he authorized were made with formal membership approval of 50.1% of the membership interests (Tr. at 36-37, 211). The evidence supports that it was the Members’ understanding that Foster would only get distributions in the event he incurred tax liability arising from Curis, but his membership interest did entitle him to 10% of the proceeds of any sale of Curis (Tr. at 38; see also Plf's Ex. 5).
The evidence at the hearing makes clear that Costello was not an employee of Curis; instead, he was providing services as a working member of Curis (Tr. at 8, 64-65, 67-69, 73, 167, 177 [K-1s not W-2s], 179-181, 183, 214, 218). It is Costello's position that he could continue to be a member even if he was not working for Curis (Tr. at 69).
Although it took a while for Curis to get off the ground, Curis turned into a very profitable company and Costello, Molloy and Petersen each earned distributions totaling approximately $240,000 in 2018 and $305,000 in 2019 (Tr. at 76; Plf's Ex. 8 at ¶¶ 10-14).
The Court understands that because Stivala only worked part-time for Curis until October 2020 when he began working full-time, during the period he worked part-time, he received substantially less in distributions (Tr. at 23-24, 76, 216).
This action was initiated based on the Termination Letter Costello received in December 2020. The Termination Letter dated December 8, 2020 and authored by Molloy states:
This notice of termination and release from Curis Partners LLC will be effective December 31, 2020 ("Effective Date").
Pursuant to the terms of the Operating Agreement dated May 15, 2015 and amended November 10, 2015 ("Agreement"), you will be paid the outstanding balance of your Capital Account as of December 31, 2020 no later than February 15, 2021.
After the receipt of the attached Release, and in addition to the above-mentioned payment and any distributions made to you on or before December 31, 2020, you will be entitled to be paid the following:
• If there is a Company Sale ("Company Sale") as defined in 1.1.13 of the Agreement, within twelve months of the Effective Date, you will receive 10% of the net proceeds from the Company Sale at closing of the transaction.
Please acknowledge your acceptance of the above by signing below (Plf's Ex, 4).
A review of the Termination Letter, as well as Section 11.3 of the Operating Agreement, makes clear that the Termination Letter and attached proposed release was more akin to a settlement proposal since rather than simply offering Costello what Defendants contend he was entitled under Section 11.3 (i.e. , no payout as there was a negative balance in his Capital Account [Plf's Ex. 8 at ¶ 25; Tr. at 143-144]), Defendants also offered Costello a right to receive 10% of the proceeds from any sale of Curis occurring within 12 months of December 31, 2020. Further evidence of its settlement proposal characteristics is the fact that Molloy was requesting that Costello sign not only the Termination Letter, but also the attached proposed general release, which was not required pursuant to Section 11.3. It is undisputed that Costello did not receive any payout because, according to Molloy, Costello's Capital Account had a negative balance. Molloy explained that Costello's Capital Account had a negative balance "because of how [Curis] account for the business. we had revenue that comes into the company and we pay our expenses. And those include guaranteed payment to members and then we expense any other items that we have" (Tr. at 144). Costello did not sign the Termination Letter or the general release; instead, he instituted this action.
On January 1, 2021, viewing Costello's membership interest divested as of December 31, 2021 based on the December 8, 2020 Termination Letter, the remaining Curis members entered into a Second Amendment to the Operating Agreement wherein Costello was "removed as a Member pursuant to 6.3.1 of the Agreement" (Plf's Ex. 3 at ¶ 2). Costello's 25.1% membership interest was divvied up among the remaining members such that the membership interests of Molloy, Stivala, and Petersen were all increased to 28.88% and Foster's membership interest was increased to 13.36% (id. , Schedule A). In addition, Section 6.1.1 of the Operating Agreement was replaced with a new provision whereby Molloy could only be ousted as Manager based on an affirmative vote of 66.67% of the membership units rather than the previous 50.1%. Based on this new provision, as long as Foster sided with Molloy, Molloy could not be ousted as Manager.
It is Molloy's contention that he validly terminated Costello pursuant to Section 11.3 of the Operating Agreement, which gave Molloy the authority to expel a member who was no longer willing or able to perform work on Curis’ behalf (Plf's Ex. 8 at ¶ 6). Molloy contends that he properly invoked this power because "[b]y at least early 2020, it appeared Mr. Costello was no longer interested in contributing to Curis Partners’ success because he did not show up at the office and did no work for the Company between March and September of that year. Curis Partners was forced to hire another person to handle the work Mr. Costello declined to do" (id. at ¶ 16, Tr. at 129).
Of course, Costello's view of his expulsion is diametrically opposed to Molloy's. According to Costello, he had always worked from home except for a day or two that he would come to the office to work when Petersen was in town (Tr. at 8, 9-11, 46-47) and, therefore, Molloy's contention that he was disengaged based on a failure to return to the office during the COVID-19 pandemic was a mere ruse to justify the real reason for his termination, which was the disintegration of Molloy's and Costello's friendship and business partnership. Based on Molloy's testimony, Costello's working from home had always been the arrangement until Molloy took issue with it in September 2020 and viewed it, as well as other things, as evidence of Costello having "checked out" (Tr. at 152; 1899). It is Costello's position that their relationship began to deteriorate in the middle of 2018 when, over Costello's objection, Molloy hired another company (Taaza) to develop a new system for Curis (Tr. at 41). Costello testified and Molloy confirmed that Molloy ultimately cut Costello out of the discussions with Taaza concerning the development of the new system (Tr. at 42-44, 183-185). According to Costello, after Molloy hired Grant Louis in 2019, in mid-2019 Molloy transferred all of Costello's work to Louis and eventually cut off Costello's access to Curis’ systems (Tr. at 44-46). Costello further testified that his relationship with Molloy worsened when Costello, during the period 2019-2020, attempted to have Stivala and Petersen join forces with him to have Molloy removed as Manager (Tr. at 48-49). Molloy disputes that Costello's attempt to have him ousted as Manager had anything to do with Costello's termination (Tr. at 144). Costello testified that his conversations with Petersen concerning Molloy's removal as Manager started when Molloy made the distribution to Foster in August 2019 without the required membership approval (Tr. at 49). During a conference call on September 25, 2020, Molloy told Costello that he had checked out and that his failure to come into the office was a problem. Costello reminded Molloy that he had always worked from home, but Costello nevertheless agreed to come into the office the following week. On that day, Molloy filled Costello in on the new projects occurring in the office and gave him log-in credentials. Costello spent the whole day in the office, but when he attempted to log in from home, he was unable to gain access. Despite Costello's email to Molloy requesting the password so he could log in, Molloy never responded; instead, Costello got an email from Molloy on October 7, 2020 stating that it was clear Costello was not interested in working, that he had "checked out" as he hadn't worked for the bulk of 2020, and that the parties needed to separate (Tr. at 52, 56, 151). When Costello came into the office to discuss things further with Molloy on October 12, 2020, Molloy informed Costello that he was "out" (Tr. at 56). According to Costello, because Curis had been shutdown during the pandemic and because Molloy had cut him out from the discussions with Taaza, there was little for him to do during this March to September 2020 timeframe (Tr. at 53).
According to Molloy, Louis was hired in January 2020 (Tr. at 154).
Molloy acknowledged transferring some of Costello's work to Louis upon his hire in January 2020 (Tr. at 157-158).
Molloy's rationale for the sudden change in the requirement to come into the office was that Curis had significant staff in the office (Tr. at 152). While Stivala came into the office, Molloy did not require Petersen to come into the office during this timeframe (Tr. at 153).
PLAINTIFF'S COMPLAINT
In his Complaint, Plaintiff alleges many of the facts recited above and asserts that in breach of the Operating Agreement and his fiduciary duty to Plaintiff, Molloy mistakenly categorized Plaintiff as an employee of Curis terminable at will with or without cause, but Plaintiff is a fully vested equity member of Curis (Complaint at ¶¶ 35-36). Plaintiff alleges that given the lack of any of the telltale indicia of employment (id. at ¶ 41), and all the facts showing that he is a fully vested member of Curis including Curis’ issuance of tax returns and K-1 reflecting Plaintiff's status as a member (id. at ¶ 42), contrary to Defendants’ position, Section 11.3 has no applicability and that Section 6.3.1 supports Plaintiff's continued rights as a fully vested Member of Curis (id. at ¶ 46).
Regarding Molloy's failure to get approval from the members holding a 50.1% interest of Curis as required by Section 5.2.2 of the First Amendment to the Operating Agreement in connection with the $100,000 distribution to Foster and the extra $10,000 distribution to Molloy, Plaintiff contends that these acts were in breach of Molloy's fiduciary duty (id. at ¶ 48). Plaintiff further asserts that in violation of New York's Limited Liability Company Law ("LLCL") § 1102(b), Defendants have blocked Plaintiff's access to Curis’ books and records (id. at ¶ 55).
Costello's testimony that his demands to receive Curis’ tax returns and K1s issued for years 2018 and later were denied by Defendants (Tr. at 35, 62) was left unrefuted by Defendants at the hearing.
Plaintiff asserts a First Cause of Action for breach of contract based on Defendants’ alleged breach of their obligations under the Amended Operating Agreement arising from their attempt to terminate Plaintiff's 25.1% membership interest. Plaintiff seeks damages in excess of $1 million together with punitive damages, interest, costs and attorneys’ fees. Plaintiff's Second Cause of Action for breach of the implied covenant of good faith and fair dealing alleges that Defendant breached this covenant by unfairly discriminating against Plaintiff as compared to the other members. The Third Cause of Action alleges a breach of fiduciary duty against Molloy arising from his fiduciary positions as member, Manager and CEO of Curis. The breach is predicated on his alleged unlawful attempt to terminate Plaintiff as a member without justification and for less than fair value. Plaintiff's Sixth Cause of Action is for a judgment declaring that: (1) the Notice of Termination purporting to remove Plaintiff as an equity member of Curis is of no force and effect and that it be declared null and void; (2) Plaintiff is and was a 25.1% member of Curis; and (3) Plaintiff is entitled to all of the rights, powers and compensation associated with being a 25.1% member of Curis. Plaintiff's Fifth and Seventh Causes of Action for damages and a declaratory judgment, respectively, is brought derivatively on behalf of Curis based on Molloy's alleged ultra vires distributions to Foster and Molloy. The Sixth Cause of Action is brought directly and asserts a breach of fiduciary duty claim based on those same distributions. Plaintiff's Eighth Cause of Action asserts that Defendants breached Section 10.2 of the Operating Agreement by denying Plaintiff access to Curis’ books and records. Plaintiff's Ninth Cause of Action asserts that Defendants violated LLCL § 1102(b) by denying Plaintiff access to Curis’ books and records. Plaintiff's Tenth Cause of Action seeks a mandatory injunction requiring Defendants to provide Plaintiff with access to Curis’ books and records. Plaintiff's Eleventh Cause of Action seeks an accounting based on Molloy's alleged breach of fiduciary duty. Plaintiff's Twelfth Cause of Action requests an order from the Court declaring that because of Molloy's acts of fraud, bad faith, gross negligence or willful misconduct: (1) Defendant is not entitled to indemnification from Curis for his acts and omissions; and (2) to the extent any such amounts have been paid on Molloy's behalf, he is obligated to immediately reimburse Curis for such indemnity payment.
LEGAL DISCUSSION
The standard for preliminary injunctive relief is well settled. The movant must establish:(1) a likelihood of success on the merits, (2) irreparable injury absent the granting of the injunction, and (3) a balance of equities in the movant's favor ( Brach v Harmony Servs., Inc. , 93 AD3d 748 [2d Dept 2012] ; Apa Sec., Inc. v Apa , 37 AD3d 502 [2d Dept 2007] ; Nobu Next Door, LLC v Fine Arts Hous., Inc. , 4 NY3d 839 [2005] ). Each of these elements must be proven by the moving party with "clear and convincing evidence" ( Liotta v Mattone , 71 AD3d 741 [2d Dept 2010] ). "A party seeking the drastic remedy of a preliminary injunction must establish a clear right to the relief under the law and the undisputed facts" ( Omakaze Sushi Rest., Inc. v Ngan Kam Lee , 57 AD3d 497 [2d Dept 2008] ). While the existence of an issue of fact will not defeat a motion for injunctive relief which demonstrates the required elements ( CPLR 6312[c] ), the movant must show a clear right to relief which is plain from the undisputed facts ( Matter of Related Prop., Inc. v Town Bd. of Town/Vil. of Harrison , 22 AD3d 587 [2d Dept 2005] ; Stockley v Gorelik , 24 AD3d 535 [2d Dept 2005] ). When "key facts" are in dispute and the basis for the injunction rests upon "speculation and conjecture" the injunction must be denied ( Faberge Intl., Inc. v Di Pino , 109 AD2d 235 [1st Dept 1985] ; Radiology Assocs. of Poughkeepsie, PLLC v Drocea , 87 AD3d 1121 [2d Dept 2011] ; Omakaze Sushi Rest., Inc. , 57 AD3d at 497 ). Here, Plaintiff not only seeks a preliminary injunction, Plaintiff also seeks a mandatory injunction requiring that he be reinstated as a member of Curis and that he be afforded all the rights applicable to a member. A mandatory preliminary injunction is one mandating specific conduct by which the movant receives some form of the ultimate relief sought as a final judgment ( Jones v Park Front Apts., LLC , 73 AD3d 612 [1st Dept 2010] ). The drastic relief afforded by a mandatory injunction is sparingly granted since it requires affirmative action on the part of the non-moving party and confers upon the movant some form of the ultimate relief sought. Mandatory injunctive relief is thus available only in "unusual" or "extraordinary" situations where the right thereto is clearly established ( Board of Mgrs. of Wharfside Condominium v Nehrich , 73 AD3d 822 [2d Dept 2010] ; Roberts v Paterson , 84 AD3d 655 [1st Dept 2011]affd 19 NY3d 524 [2012] ; Second on Second Cafe, Inc. v Hing Sing Trading, Inc. , 66 AD3d 255 [1st Dept 2009] ; SHS Baisley. LLC v Res Land, Inc. , 18 AD3d 727 [2d Dept 2005] ; St. Paul Fire & Mar. Ins. Co. v York Claims, Serv. , 308 AD2d 347 [1st Dept 2003] ).
Contrary to Defendants’ position, there are circumstances under which the loss of a minority voice in terms of voting rights and other membership rights may constitute irreparable injury (Spivak v Bertrand , 2016 WL 469639 [Sup Ct, NY County 2016], affd in part, modified on other grounds 147 AD3d 650 [1st Dept 2017] ; Matter of Madelone v Whitten , 2008 NY Slip Op 50258[U], 18 Misc 3d 1131[A] [Sup Ct, Albany County 2008] ).
To prevail on this prong, a plaintiff must show that the irreparable injury it will sustain absent the preliminary injunction is more burdensome than the harm that would be caused to the defendant if the injunction is granted (Dong-Pyo Yang v 75 Rockefeller Café Corp. , 50 AD3d 320 [1st Dept 2008] ).
The threshold inquiry in a motion involving a contract dispute is whether the contract is free from ambiguity such that its provisions may be enforced without resort to extrinsic evidence. "[T]he aim is a practical interpretation of the expressions of the parties to the end that there be a ‘realization of [their] reasonable expectations’ " ( Brown Bros. Elec. Contr., Inc. v Beam Constr. Corp. , 41 NY2d 397, 400 [1977] ; see also South Rd. Assoc., LLC v International Bus. Machines Corp. , 2 AD3d 829, 833 [2003], affd 4 NY3d 272 [2005] ["[t]he language of a contract must be interpreted ‘to reach a practical interpretation of the expressions of the parties so that their reasonable expectations will be realized’ "]). Thus, "[t]he rules of construction of contracts require [the court] to adopt an interpretation which gives meaning to every provision of a contract or, in the negative, no provision of a contract should be left without force and effect" ( Muzak Corp. v Hotel Taft Corp. , 1 NY2d 42, 46 [1956] ; see also Excess Ins. Co. Ltd. v Factory Mut. Ins., 3 NY3d 577, 582 [2004] [a contract is to be interpreted so that no portion of the contract is rendered meaningless]; Columbus Park Corp. v Department of Hous. Preserv. & Dev. of City of NY , 80 NY2d 19, 31 [1992] ; Two Guys from Harrison-N.Y., Inc. v S.F.R. Realty Assoc. , 63 NY2d 396, 403 [1984]; Singh v Atakhanian, 31 AD3d 425, 427 [2d Dept 2006] ["A contract should not be interpreted in such a way as would leave one of its provisions substantially without force or effect"]). "Where consideration of a contract as a whole resolves the ambiguity created by one clause, there is no occasion to consider extrinsic evidence of the parties’ intent" ( Hudson-Port Ewen Assoc., L.P. v Kuo , 78 NY2d 944, 945 [1992] ). Where there is an inconsistency between a specific provision and a general provision of a contract, the specific provision controls ( Aguirre v City of New York , 214 AD2d 692, 693 [2d Dept 1995] ). Likewise "a contract which confers certain rights or benefits in one clause will not be construed in other provisions completely to undermine those rights or benefits" ( Ronnen v Ajax Elec. Motor Corp. , 88 NY2d 582, 590 [1996] ).
The interpretation of an unambiguous contract is a question of law for the court ( Kass v Kass, 91 NY2d 554, 566 [1998] ); Taussig v Clipper Group, L.P. , 13 AD3d 166, 167 [2004], lv denied 4 NY3d 707 [2005] ; 1550 Fifth Ave. Bay Shore, LLC v 1550 Fifth Ave., LLC , 297 AD2d 781, 783 [2002], lv denied 99 NY2d 505 [2003] ). " ‘[W]hen parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms’ " (Spivak, 147 AD4d at 651 [citation omitted]). In construing an unambiguous contract, "the intention may be gathered from the four corners of the instrument and should be enforced according to its terms" ( Beal Sav. Bank v Sommer, 8 NY3d 318, 324 [2007] ). A contract is unambiguous if "on its face [it] is reasonably susceptible of only one meaning ...." ( Greenfield v Philles Records, Inc. , 98 NY2d 562, 570 [2002] ). Parol evidence cannot be used to create an ambiguity where the words of the parties’ agreement are otherwise clear and unambiguous ( Innophos, Inc. v Rhodia, S.A. , 38 AD3d 368, 369 [1st Dept 2007], affd 10 NY3d 25 [2008] ). By contrast, when a contract is reasonably susceptible to more than one interpretation, the agreement will be considered ambiguous requiring a trial on the parties’ intent ( JPMorgan Chase Bank, N.A. v Luxor Capital Realty, LLC , 101 AD3d 575, 576 [1st Dept 2012] ; New York University v Pfizer, Inc. , 151 AD3d 42 [1st Dept 2017] ; Telerep, LLC v U.S. Intl. Media, LLC , 74 AD3d 401 [1st Dept 2010] ; Hambrecht & Quist Guaranty Fin., LLC v El-Coronado Holdings, LLC , 27 AD3d 204 [1st Dept 2006] ). Contract terms are ambiguous if they are " ‘capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business’ " ( Sayers v Rochester Tel. Corp. Supplemental Mgt. Pension Plan , 7 F3d 1091, 1095 [2d Cir 1993], quoting Walk-In Med. Ctr., Inc. v Breuer Cap. Corp. , 818 F2d 260 [2d Cir 1987] ; see also Computer Assoc. Intl. Inc. v U.S. Balloon Mfg. Co. , 10 AD3d 699, 699 [2d Dept 2004] ["[a] contract is unambiguous if the language it uses has a ‘definite and precise meaning, unattended by danger of misconception in the purpose of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion’ "]). An agreement will not be interpreted by a court in a manner that produces an absurd or unreasonable result at variance with the parties’ intent, which is a paramount consideration when construing a contact ( Reape v New York News, Inc., 122 AD2d 29 [2d Dept 1986], lv denied 68 NY2d 610 [1986] ). If a court finds a contract ambiguous, it may consult extrinsic evidence to resolve the ambiguity ( Hambrecht v Quist Guar. Fin., LLC v El Coronado Holdings, LLC , 27 AD3d 204 [1st Dept 2006] ). "However, where ‘the determination of the parties’ intent depends upon the credibility of extrinsic evidence or a choice among inferences to be drawn from extrinsic evidence, then the issue is one of fact’ " ( Chen v Yan , 109 AD3d 727, 729 [1st Dept 2014], quoting Amusement Bus. Underwriters v American Intl. Group. , 66 NY2d 878, 880 [1985] ). Ambiguities in a limited liability company's operating agreement are construed against its drafter ( KSI Rockville, LLC v Eichengrun , 305 AD2d 681 [2d Dept 2003] ).
RELEVANT PROVISIONS OF THE OPERATING AGREEMENT
Pursuant to section 1.1.5, "Book Value" shall mean, with respect to any asset of the Company, such asset's adjusted basis for federal income tax purposes, except that:
(b) The Book Values of all assets of the Company shall be adjusted to equal their respective fair market values, as determined by the Manager ....
Section 1.1.7 defines "Capital Account" as
a capital account maintained and adjusted in accordance with the Code and the Regulations, including the treasury regulations under Section 704(b) and (c) of the Code. The Capital Account of each Member shall be:
(a) Credited with all payments made to the Company by such Member on account of Capital Contributions and by such Member's allocable share of Profits and items in the nature of income and gains of the Company;
(b) Charged with the amount of any distributions to such Member and by such Member's allocable share of Losses and items in the nature of losses and deductions of the Company;
(c) Adjusted simultaneously with the making of any adjustment to the Book Value of the Company's assets pursuant to the definition thereof, to reflect the aggregate net adjustments to such Book Value as if the Company recognized Profit or Loss equal to the respective amount of such aggregate net adjustments immediately before the event causing such adjustments; and
(d) Otherwise appropriately adjusted to reflect transactions of the Company and the Members.
6.3. Officers.
6.3.1. Designation and Appointment. The Manager may, from time to time, designate and appoint one or more persons as an Officer of the Company. No Officer need be a resident of the State of New York or a Member. Any Officers so designated shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. Each Officer shall hold office until his successor shall have been duly designated and shall qualify or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Any Officer may be removed as such, either with or without cause, by the Manager whenever in their judgment and best interests of the Company shall be served thereby; provided , however , that such removal shall be without prejudice to the contract rights, if any, of the individual so removed. Designation of an Officer shall not of itself create contract rights. The Officers of the Company may include, but not be limited to, a Chief Executive Officer, a Chief Financial Officer, Vice President(s), and a Secretary.
Pursuant to Section 4.1, Curis was required to establish and maintain a capital account for each member.
ARTICLE XI
TRANSFERS OF UNITS; INCAPACITY AND TERMINATION OF EMPLOYMENT
11.1. Void Assignment . Any Transfer by any Member of any Units or other interests in the Company in contravention of this Agreement shall be void and ineffectual and shall not bind or be recognized by the Company or any other party. No purported transferee shall have any right to any Profits, Losses or distributions of the Company.
11.2. Restrictions of Transfer of Units.
11.2.1. Transfer of Units. No Member shall directly or indirectly Dispose of any interest in his or its Units without the express written consent of the Manager, which consent may be withheld in the absolute discretion of the Manager for whatever reason, except pursuant to (i) a Company Sale (and "Exempt Disposition"), (ii) the provisions of Section 11.3 , or (iii) the provisions of this Section 11.2. Prior to making any Disposition other than an Exempt Disposition, or a Section 11.3 Disposition, the Disposing Member (the "Disposing Member ") shall deliver a written notice (the "Sale Notice") to the Company and the other Members. The Sale Notice shall disclose in reasonable detail the identity of the prospective transferee(s), the number and class of Units to be transferred and the terms and conditions of the proposed Transfer.
11.2.2. First Offer Rights . The Company may elect to purchase or any portion of a Disposing Member's Units to be Disposed upon the same terms and conditions as those set forth in the Sale Notice by delivering a written notice of such election to such Disposing Member within thirty (30) days after the Sale Notice has been delivered to the Company (the "Company Option Period "). If the Company has not elected to purchase all of such Disposing Member's Units, the other Members may elect to purchase all or any portion of such Disposing Member's Units not elected to be purchased by the Company (the "Available Units") upon the same terms and conditions as those set forth in the Sale Notice by delivering written notice of such election to such Disposing Member within thirty (30) days after the expiration of the Company Option Period (the "Member Option Period") If the Company and the other Members do not elect to purchase all of the Units specified in the Sale Notice, the Disposing Member may Dispose of the Units specified in the Sale Notice at a price and on terms no more favorable to the transferee(s) thereof than specified in the Sale Notice during the 60-day period immediately following the expiration of the Member Option Period If the Company or the other Members have elected to purchase Units hereunder, the Disposition of such Units shall be consummated as soon as practical after the delivery of the election notice(s) to the Disposing Member.
11.3. Incapacity and Termination of Employment. Upon termination of employment (with or without cause) or Incapacity (a "Withdrawal Event") of a Member ("Withdrawn Member"), the Withdrawn Member shall be deemed to offer for sale (the "Withdrawal Offer") to the Company, all of the Withdrawn Member's Units whether owned of record or beneficially by the Withdrawn Member (the "Withdrawn Interest") and the Company shall be deemed to accept the Withdrawal Offer. The Company shall fix a closing date (the "Withdrawal Closing Date") for the purchase which shall not be earlier than ten (10) or later than forty-five days (45) after the Withdrawal Event. In exchange for the Withdrawn Interest the Company shall pay to the Withdrawn Member or its representative, in cash or pursuant to a promissory note with a maturity date of not more than five (5) years and with an interest rate equal to the applicable federal rate in effect when the Withdrawal Event occurred, an amount equal to the outstanding balance in the Withdrawn Member's Capital Account on the Withdrawal Closing Date.
A. Plaintiff Has Established a Likelihood of Success, Irreparable Injury and a Balance of the Equities in His Favor
To begin with, Plaintiff has established a likelihood of success with regard to his Ninth Cause of Action that Defendants violated LLCL § 1102(b) by denying Plaintiff access to Curis’ books and records (i.e., Curis’ 2018, 2019 and 2020 tax returns and K1's). LLCL § 1102(a) provides that a limited liability company must maintain the following records for inspection by a member:
(1) If an LLC is managed by a manager or managers, a current alphabetical list of the names and addresses of the managers,
(2) A current list in alphabetical order of the full names and addresses of the members together with the contribution and the share of profits and losses of each member or information from which such share can be derived.
(3) A copy of the articles of organization, including any amendments to or restatements thereof, and any executed copies of powers of attorney pursuant to which any certificate has been executed.
(4) A copy of the operating agreement and any amendments thereto any amendment and restated operating agreement.
(5) A copy of the LLC's federal, state and local income tax or information returns and reports, if any, for the three most recent fiscal years ( LLCL § 1102[a] ).
LLCL § 1102(b) provides that "[a]ny member may, subject to reasonable standards as may be set forth in, or pursuant to, the operating agreement, inspect and copy at his or her own expense, for any purpose reasonably related to the member's interest as a member, the records referred to in subdivision (a) of this section, any financial statements maintained by the limited liability company for the three most recent fiscal years and other information regarding the affairs of the limited liability company as is just and reasonable." Because Defendants have not opposed this branch of Plaintiff's motion and because Plaintiff has established a likelihood of success, the Court shall grant this branch of Plaintiff's motion and order Defendants’ production of Curis’ tax returns and K-1's for the three most recent fiscal years.
Turning to Plaintiff's request that he be reinstated as a member of Curis with all the attendant rights and obligations, the Court agrees that the Operating Agreement is not a model of clarity on whether Molloy had the right to set into motion an involuntary transfer of Costello's membership interest based on his termination. The section of the Operating Agreement upon which Defendants rely, Section 11.3, provides that "upon termination of employment (with or without cause) of a Member." The term employment is not defined in the agreement and based on the evidence at the hearing, none of the indicia of employment (i.e., being a W-2 salaried employee, control over the employee's work, need to obtain consent of employer to take time off) was present regarding Costello's work for Curis. Instead, Costello was a member holding a 25.1% interest who performed work for Curis as its Chief Operating Officer. Based on the evidence at the hearing, all members understood that they were required to work for Curis in order to make it a success, which appears to have been achieved given that Curis made sufficient income in 2018 to provide its members with distributions totaling approximately $925,000 and sufficient income in 2019 to provide its members with distributions totaling approximately $1,107,000. Although 2020 was a tough year because house calls were shutdown from March to September, Curis nevertheless received at least $430,000 in PPP loans and further expanded its business to include new services.
An employee-employer "relationship will be found to exist where the employer exercises control over the results produced or the means used to achieve those results, with the latter being more important However, ‘where the details of the work performed are difficult to control because of considerations such as professional and ethical responsibilities,’ the courts have applied the ‘overall control’ test, which requires that the employer exercise control over important aspects of the services performed other than the results or means" (Matter of Columbia Artists Mgt. LLC , 109 AD3d 1055, 1056-57 [3d Dept 2013] ).
In opposition, in addition to his contention that Section 11 was not invoked as Plaintiff was not employed by Curis, Plaintiff further points out that there is an inconsistency between Section 11.3 (which Plaintiff contends is limited to Member-Employees) and Section 6.3.1 (which Plaintiff contends is applicable to him as Member-Officer). Section 6.3.1 provides that an Officer may be removed with or without cause by the Manager but that "such removal shall be without prejudice to the contract rights, if any, of the individual so removed." Other sections of the Operating Agreement lend credence to Plaintiff's position as the Operating Agreement clearly makes distinctions between officers and employees (e.g., [1] the differences regarding indemnification of officers and managers in Section 8.2 as compared to indemnification of employees found in Section 8.3, and [2] Section 6.1.2[a][viii] discussing the Manager's authority to hire and employ executives, officers, and supervisors). Costello was not hired or employed by Molloy/Curis and, therefore, if the members wished to make termination of a member from his position as a working member (rather than employment) a withdrawal event, they could have easily made that requirement clear in the Operating Agreement. During the hearing, Stivala and Petersen testified that they understood this provision to mean that if they were no longer working members of Curis based on Molloy's termination of them with or without cause, they were required to sell their membership interests. However, this provision would have no applicability to Foster since he never worked for Curis. Such disparities in treatment of members is frowned upon by courts. The Court also finds troubling Molloy's ability to render meaningless a Member's attempt to invoke his right to obtain a more favorable price than simply the balance of his Capital Account pursuant to Section 11.3 by obtaining an offer to purchase from a third party, thereby invoking the right of first refusal set forth in Sections 11.2.1 and 11.2.2. It is a cardinal rule of contract construction that an agreement must be read as a whole and that no provision should be rendered meaningless. Indeed, Molloy acknowledged his ability to eviscerate the right of a Member to invoke the right of first refusal by terminating that Member under Section 11.3 (Tr. at 176). Nevertheless, the Court need not at this juncture resolve this ambiguity as there is another reason that Plaintiff is likely to prevail on his claim of wrongful termination as a member of Curis.
Molloy could have instead inserted language that would have applied unambiguously to Costello (see, e.g., Matter of Schneck v Schneck (2010 NY Slip Op 51084[U], 24 Misc 3d 1237[A] at *1 [Sup Ct, Nassau County 2010] ["[i]n the event that any Shareholder voluntarily resigns his position or is discharged by the Corporation, the Corporation, or the other Shareholder shall have options to purchase such Shareholders Shares"]).
Here, it is likely that Curis’ unilateral purported buy-out of Costello's membership interest for $0 contravenes the Operating Agreement's requirements. In its December 8, 2020 Termination Letter, Curis stated that Costello's termination will be effective as of December 31, 2020 and that pursuant to the Operating Agreement Costello "will be paid the outstanding balance of [his] Capital Account as of December 31, 2020 no later than February 14, 2021" (Plf's Ex. 4). On January 1, 2021, prior to Curis making any payment to Costello as represented in the December 8, 2020 letter, Molloy, Stivala, Petersen and Foster entered into the Second Amended Operating Agreement, which divested Plaintiff of his 25.1% membership interest and reallocated that interest to the other Members with Molloy getting the lion's share (13.88%), Stivala and Petersen each getting 3.98% and Foster getting 3.36% (Plf's Ex. 3). Curis never made any payment to Plaintiff based on Defendants’ contention that Plaintiff had a negative balance in his Capital Account. However, Molloy's testimony concerning how he determined that Costello's Capital Account had a negative balance (i.e., that Curis is a cash business and the only amounts reflected in the Capital Account were Curis’ revenues deducted by their expenses [Tr. at 144]) does not comport with the Operating Agreement's requirements. Sections 1.1.7(a) and 1.1.7 (c) make clear that a member's Capital Account was to be adjusted from time to time insofar as it was required to be "credited by [the] Member's allocable share of Profits and items in the nature of income and gains of the Company" and "adjusted with the making of any adjustment to the Book Value of the Company's assets." Pursuant to Section 1.1.5, the book value of Curis’ assets was to be adjusted to equal their respective fair market values. Curis has an impressive income history based on its ability to make approximately $1 million in distributions to its members in 2018 and again in 2019, and a total of $3,204,500 distributions since its inception. In addition, it has various assets that must be accounted for on its books in accordance with their fair market value — not book value. Such assets would include the various software platforms developed at great expense by Curis and used to operate Curis’ business. Pursuant to Section 10.2, the Manager was required to provide to each Member "[o]n or before the 90th day following the end of each Fiscal Year during the term of the Company a balance sheet, an income statement and a statement of changes in Members’ capital of the Company." Costello testified that contrary to the requirements of Section 10.2, he was never provided any documentation regarding changes in his capital in Curis (Tr. at 58). The Court does not accept on the present record that Costello's Capital Account properly reflected a negative balance given the aforementioned adjustments that were supposed to have been made. Molloy's testimony on how he calculated Costello's Capital Account appears at odds with the formula for calculating the Members’ Capital Accounts set forth in the Operating Agreement. Moreover, contrary to the requirements of the Operating Agreement, Molloy failed to provide Costello with the periodic statements concerning the balance in his Capital Account. A final determination of the value of Costello's Capital Account would require a review of Curis’ financial records and potentially testimony from Curis’ accountant.
Book value and fair market value are usually not synonymous. Book value is usually established by the value of an asset as set forth on the corporation's books and records. Fair Market Value is the price, expressed in cash, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, each acting at arm's length in an open and unrestricted market, with neither being under any compulsion to buy or sell and with both having reasonable knowledge of the relevant facts.
Furthermore, since there is a prescribed period of time within which Defendants were required to purchase Plaintiff's membership interest based on the balance in Plaintiff's Capital Account, in the event it is ultimately determined that Costello's Capital Account was not without any value, Defendants may well have forfeited their right to enforce the forced buy-out provision of the Operating Agreement even if they were to prevail on their interpretation of Section 11.3 ( Gomes v Gomes , 2012 WL 11978143 [Sup Ct, Suffolk County 2012] ). "The general rule in regard to options is that the provisions of the contract must be complied with strictly, in the manner and within the time specified" ( Ittleson v Barnett , 304 AD2d 526, 528 [2d Dept 2003] ). Thus, an option to purchase stock in a stock purchase agreement "must [be] exercise[d] ‘in accordance with its terms within the time and in the manner specified in the option’ " ( Willis v Ronan , 249 AD2d 299, 300 [2d Dept 1998], lv denied 92 NY2d 816 [1998] [citations omitted]; Amarant v D'Antonio , 197 AD2d 432, 434 [1st Dept 1993] ["the shareholders’ agreement gives the corporation or, upon its failure to purchase the shares, plaintiff only a prescribed period of time in which to consummate the transaction"]). Thus, if it is ultimately determined that Costello had more than a negative balance in his Capital Account, Curis and the other members may have forfeited their rights to cause a forced buy out of Costello's membership interest by failing to make the required payment within the prescribed time limit ( Gomes , 2012 WL 11978143 at * 8 ["plaintiffs tender of the down payment [was not] timely made within the 90 day period following the issuance of the plaintiffs May 25, 2011 notice of his intent to purchase the interests of the defendant pursuant to ¶ 12.12 of the operating agreements’]; Grossberg v Van Bakergem, 2016 NY Slip Op 50081[U], 50 Misc 3d 1211[A] [Sup Ct, NY County 2016] ; cf. Amarant , 197 AD2d at 434 ["the shareholders’ agreement gives the corporation, or upon its failure to purchase the shares, plaintiff only a prescribed period of time in which to consummate the transaction The imposition of a stay by the Supreme Court effectively relieved plaintiff from the time constraints agreed to by the parties in the shareholders’ agreement and frustrated its purpose. The failure of the corporation or plaintiff, on its behalf, to acquire the necessary funds to purchase the tendered shares might well have rendered further judicial proceedings moot"]; Willis , 249 AD2d 299 [plaintiff not entitled to specific performance of purchase right under shareholders’ agreement based on his failure to purchase the shares in accordance with the agreement's terms]).
If the Court were to hold Defendants to their interpretation of Section 11.3 set forth in Molloy's Opposition Affirmation and Defendants’ Opposition Memorandum — namely that Molloy had the authority "to expel a member who was no longer willing or able to perform work on behalf of the company," (Molloy Opp. Att. at ¶ 6; Defs’ Opp. Mem. at 5) — based on the present record, Defendants would lose. It is clear that Costello and Molloy had a parting of the ways over, among other things, Costello's reluctance to allow Taaza to develop a new system for Curis and Costello's taking issue with Molloy's unauthorized distributions. Evidence of strained relations appears as early as September 2019 (about a month after Costello taking Molloy to task over the $100,000 distribution to Foster) when Molloy implies to Costello that he does not know (and/or value) the work Costello does (Defs’ Ex. A). This email is clearly Molloy's way of marginalizing Costello in front of the other members. Molloy then excluded Costello from all Taaza discussions during the pandemic and reassigned many of Costello's responsibilities to Louis. In addition, Molloy cut off Costello's access to Curis’ system. Thus, while Costello admittedly did not perform work for Curis during the March 2020-September 2020 timeframe, the Court cannot attribute his nonperformance to an unwillingness or inability to work and the Court finds Costello's version of the events more credible (i.e., Molloy decided that Costello was no longer his ally and decided to cut him out from his responsibilities by excluding him from the discussions with Taaza, transferring Costello's responsibilities to Louis, and cutting off Costello's access to Curis’ systems). To the extent Costello had "checked out," it was largely attributable to Molloy's treatment of him and the fact that Curis’ operations were shutdown during the COVID-19 pandemic. Contrary to Molloy's position, he did not give Costello an opportunity to reengage and his requirement that Costello appear each day in person in the office during the height of the pandemic in October 2020 before anyone was vaccinated, particularly given the parties’ prior practice of Costello working from home, was imminently unreasonable.
If Plaintiff is ultimately successful on his claim, he will also likely succeed on his claim of breach of fiduciary duty against Molloy based on his wrongful conversion of a large percentage of Plaintiff's membership interest to himself (Bonanni v Horizons Invs., Corp. , 2016 NY Slip Op 50281[U], 50 Misc 3d 1227[A] [Sup Ct., Suffolk County 2016], affd 179 AD3d 995 [2d Dept 2020] ).
Despite the fact that Plaintiff has established a likelihood of success on his claim that Defendants breached the Operating Agreement based on their attempt to terminate Plaintiff's membership and force a buy-out for no consideration, Plaintiff failed to meet his burden to obtain a mandatory injunction in which his membership interest and all of its attendant rights should be reinstated immediately. As stated previously, a mandatory injunction is an extraordinary and drastic remedy that should only be granted where such relief is essential to maintain the status quo pending trial ( Matos v City of NY, 21 AD3d 936, 937 [2d Dept 2005] ; Zoller v HSBC Mtg. Corp. (USA) , 135 AD3d 933 [2d Dept 2016] ). Moreover, "injunctive relief should be prospective and ordinarily should not be granted to operate on acts already performed" ( Allen v Pollack , 289 AD2d 426, 427 [2d Dept 2001], Flaum v Birnbaum, 115 AD2d 1004 [4th Dept 1985] ). "[A]bsent 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] ; Board of Managers of Wharfside Condominium , 73 AD3d 822 ). Accordingly, the Court shall grant Plaintiff's motion to the extent that: (1) Defendants shall provide Plaintiff with Curis’ tax returns and K-1's from 2018 to present within 10 days of this Decision and Order; and (2) the terms and provisions of the temporary restraining order previously issued by this Court (NYSCEF Doc. No. 16) shall be continued until the disposition of this action or further order of this Court.
Finally, because the only restraint effectuated by this preliminary injunction is a restraint preventing Defendants from doing anything further to affect Plaintiff's potential membership interest and since Defendants admitted that they had no plans to sell or transfer Curis or any of its assets, the Court finds the setting of the bond at $1,000 to reasonably assess the damages Defendants may suffer if this injunction is ultimately found to have been improperly issued.
CONCLUSION
Based upon the foregoing papers, and for the reasons set forth above, it is hereby
ORDERED that Plaintiff's motion for a preliminary injunction and the appointment of a temporary receiver is granted in part and denied in part; and it is further
ORDERED that Plaintiff's motion for a preliminary injunction is granted to the extent that: (1) Defendants shall provide Plaintiff with Curis’ tax returns and K-1's from 2018 to present within 10 days of the date of this Decision and Order; and (2) the terms and provisions of the temporary restraining order previously issued by this Court (NYSCEF Doc. No. 16) shall remain in force until the final disposition of this action or further order of this Court; and it is further
ORDERED that Plaintiff shall post an undertaking in the sum of $1,000 pursuant to CPLR 6312(b) within 15 days of the date of this Decision and Order, and if such undertaking is not posted, the motion is denied.
ORDERED that in all other respects, Plaintiff's motion is denied.
The foregoing constitutes the Decision and Order of this Court.