Opinion
No. 500153/2011.
05-21-2015
ZAHARATOS, Alimos Corp. and Chrysa Corp., Plaintiffs, v. John ZAHARATOS, Defendants.
Adam Kauff, Esq., Kauff Laton Miller, L.L.P., New York, Attorneys for Plaintiff. Michael Coscia, Esq., Cantor Coscia & Shustal, L.L.P., Brooklyn, Attorney for Defendant.
Adam Kauff, Esq., Kauff Laton Miller, L.L.P., New York, Attorneys for Plaintiff.
Michael Coscia, Esq., Cantor Coscia & Shustal, L.L.P., Brooklyn, Attorney for Defendant.
Opinion
CAROLYN E. DEMAREST, J.
| The following papers numbered read on this motion: | Papers Numbered |
| Notice of Motion/Order to Show Cause/Petition/Cross Motion and Affidavits(Affirmations)Annexed | 25–40, 42–57, 58–70, 93–111 |
| Opposing Affidavits (Affirmations) | 71–73, 112 |
| Reply Affidavits(Affirmations) | 74–92 |
| Affidavits(Affirmations) | |
| Other Papers (Memoranda of Law) |
Plaintiffs Marina Zaharatos (“Plaintiff”), Alimos Corp. (“Alimos”), and Chrysa Corp. (“Chrysa”) move, by order to show cause, dated March 26, 2014, for a preliminary injunction enjoining defendant John Zaharatos (“Defendant”) from (i) holding himself out as an agent or authorized representative of the properties that are the subject of this dispute (the “Properties”), which include:
1. 257 60th Street, Block 861, Lot 55, Brooklyn, New York (“257 60th Street”);
2. 73 Harry Wells Road, Section 8.3, Block 5, Lot 24, Saugerties, Ulster County, New York (“73 Harry Wells Road”);
3. 94 Dawn Road, Rocky Point, Section 045.00, Block 06.00, Lot 043.001, Suffolk County, New York (“94 Dawn Road”);
4. Town of Hunter, Section 216, Block 3, Lot 16, Hunter, New York, Greene County (“Hunter”);
5. 6001 Fifth Avenue, Block 5783, Lot 9, Brooklyn, New York (“6001 Fifth Avenue”);
6. 416 Senator Street, Block 5885, Lot 13, Brooklyn, New York (“416 Senator Street”);
7. 7011 17th Avenue, Block 6171, Lot 4, Brooklyn, New York (“7011 17th Avenue”);
8. 267 53rd Street, Block 805, Lot 55, Brooklyn, New York (“267 53rd Street”);
9. 269 53rd Street, Block 805, Lot 54, Brooklyn, New York (“269 53rd Street”);
10. 271 53rd Street, Block 805, Lot 53, Brooklyn, New York (“271 53rd Street”);
11. 1679 62nd Street, Block 5524, Lot 53, Brooklyn, New York (“1679 62nd Street”);
12. Beach 68th Street, Block 15916, Lot 70, Queens, New York (“Beach 68th Street”);
13. 96 Thollen Street, Block 5026, Lot 69, Staten Island, New York (“96 Thollen Street”);
(ii) collecting rent from the Properties; (iii) taking any actions as a purported representative, owner, shareholder, or authorized agent of Alimos or Chrysa, including, without limitation, with regard to Chase Bank accounts XXXX1685, XXXXXX9873, XXXXX1692, and XXXXXX9881; (iv) compelling defendant to provide a detailed accounting of the finances of the Properties in accordance with this Court's March 27, 2013 order; (v) finding Defendant in contempt for his failure to comply with this Court's March 27, 2013 order; (vi) declaring that Plaintiff is the sole owner of the Properties, as well as the sole owner of Alimos and Chrysa, (vii) vacating this Court's January 18, 2012 order or, in the alternative, appointing a temporary receiver to manage the Properties, with the receiver's cost borne by Defendant. Plaintiff also moves, pursuant to CPLR 5104, by a separate order to show cause, under motion sequence 5, for an order finding Defendant in contempt for failure to comply with this Court's orders of January 18, 2012 and March 27, 2013, assessing against the Defendant a fine, costs of this motion, and attorneys' fees for efforts at compelling compliance with this Court's prior orders.
Defendant cross-moves for an order denying Plaintiff's March 26, 2014 order to show cause in its entirety and for summary judgment, pursuant to CPLR 3212, declaring the Defendant the sole owner of Alimos and Chrysa, or, in the alternative, declaring Defendant the sole owner of ten of the thirteen properties at issue, including 7011 17th Avenue, 6001 Fifth Avenue, Hunter, 267 53rd Street, Beach 68th Street, 96 Thollen Street, 94 Dawn Road, 416 Senator Street, 1670 62nd Street, and 269 53rd Street (collectively, the “Ten Properties”), and vacating and setting aside the deeds to these Ten Properties that were issued to Plaintiff in 2011 from either Chrysa or Alimos.
Plaintiff also moves, under motion sequence 7, for leave to file a sur-reply in further opposition to defendant's motion for summary judgment.
BACKGROUND
Plaintiff and Defendant were first married on May 5, 1989. They were divorced for the first time by a Judgment of Divorce entered by the County Clerk of Kings County on July 2, 2001. The terms of this divorce were governed by a separation agreement, dated September 30, 2000 (the “Separation Agreement”). Plaintiff and Defendant were then remarried on March 19, 2003. The parties were divorced for a second time by Judgment of Divorce dated November 2, 2006 , which was also governed by the Separation Agreement. The Separation Agreement provides, in pertinent part, that “[a]ll other items of personal property not specifically enumerated herein shall be the sole property of the party who purchased or received said property as a gift.” The Separation Agreement further provided that Defendant would transfer 200 shares of Ares Corporation (“Ares”), representing one hundred percent ownership thereof, to the Plaintiff. There is no representation by either party whether this transfer has taken place and no documentation has been provided demonstrating the current ownership of Ares.
In the matrimonial proceeding between the parties, under index number 8117/2006, Defendant moved to vacate the November 2, 2006 Judgment of Divorce based on lack of personal jurisdiction and forgery. A hearing was held before a court-appointed special referee on various dates between December 2012 and April 2013. The referee's report, dated January 17, 2014, found that Plaintiff had obtained personal jurisdiction over the Defendant and that the Defendant failed to prove forgery. The referee's report and recommendations were confirmed by decision and order of Justice Delores J. Thomas, dated November 5, 2014. This action was held in abeyance pending Justice Thomas' decision.
The Properties
The thirteen Properties at issue have a long history of transfers between the parties and various corporations owned by either Plaintiff or Defendant. Plaintiff and Defendant have provided deeds that allow the Court to trace the chain of title to these Properties.
7011 17th Avenue was purchased by Defendant on July 7, 1975 and then transferred by Defendant to Marios Zaharatos (“Marios”), who Defendant states is his brother, on May 19, 1987. Marios then transferred 7011 17th Avenue to Klio Corporation (“Klio”) on October 18, 1999. Klio transferred this property to Chrysa on May 30, 2001, which then transferred ownership to Plaintiff individually on February 10, 2011. Plaintiff claims that she is the sole owner of both Klio and Chrysa and Defendant claims that he is the one hundred percent owner of both of these entities.
6001 5th Avenue was purchased by Defendant on June 24, 1977, who then transferred the property to his brother Marios on July 21, 1987. Marios transferred 6001 5th Avenue to Chrysa on December 30, 1999 and Chrysa transferred this property to Plaintiff on February 10, 2011.
Hunter was purchased by Defendant and his brother-in-law, Harry Lambrakis (“Lambrakis”), on November 11, 1978. Defendant transferred his interest in the property to Marios on January 29, 1987 and Lambrakis transferred his interest to Arun Corporation (“Arun”) on October 18, 1999. On December 30, 1999, Marios transferred his interest in the property to Arun as well. Arun transferred Hunter to Alimos on May 30, 2001 and Alimos transferred it to Plaintiff on February 10, 2011. Plaintiff claims that she is the sole owner of both Arun and Alimos and Defendant claims that he is the owner of both of these entities.
267 53rd Street was purchased by Defendant on March 24, 1982, who then transferred it to Marios on February 4, 1987. Marios transferred the property to Elina Corporation (“Elina”) on December 30, 1999, which then transferred it to Chrysa on May 30, 2001. Chrysa then transferred the property to Plaintiff on February 10, 2011. Plaintiff claims that she is also the sole owner of Elina but Defendant claims that he is the sole owner of Elina.
Beach 68th Street was purchased by Defendant on December 11, 1984, who then transferred it to Ares on December 30, 1999. Ares transferred the property to Plaintiff on March 23, 2001. Plaintiff provides conflicting deeds that show a transfer of Beach 68th Street on June 30, 2001 from Plaintiff to Chrysa, and another deed showing a transfer from Chrysa to Plaintiff on June 20, 2001. Another deed shows a transfer of Beach 68th Street from Plaintiff to Alimos on June 26, 2001, and then from Alimos to Plaintiff on February 10, 2011. Plaintiff claims that she actually purchased this property and put it in her husband's name as a gift.
96 Thollen Street was purchased by Defendant on December 11, 1984, who transferred it to Ares on October 18, 1999. Ares transferred the property to Plaintiff on March 23, 2001. Once again, there are conflicting deeds that show a transfer from Plaintiff to Chrysa on June 30, 2001 but another deed showing a transfer from Chrysa to Plaintiff on June 20, 2001. There is another deed provided by Plaintiff that shows a transfer from Plaintiff to Alimos on June 26, 2001. Alimos then transferred the property to Plaintiff on February 10, 2011. Plaintiff claims that she actually purchased 96 Thollen Street and put it in Defendant's name as a gift.
94 Dawn Road was purchased by Defendant on February 11, 1985 and subsequently transferred to Tourlos Corporation (“Tourlos”) on December 30, 1999. Tourlos transferred the property to Alimos on April 30, 2001, which then transferred it to Plaintiff on February 10, 2011. Plaintiff claims that she is the sole owner of Tourlos and Defendant claims that he is the owner of Tourlos.
416 Senator Street was purchased by Defendant on February 5, 1986 and then transferred to Marios on April 24, 1987. Marios then transferred it to Ioannis Corporation (“Ioannis”) on December 30, 1999. Ioannos then transferred 416 Senator Street to Chrysa on May 30, 2001, which then transferred the property to Plaintiff on February 10, 2011. Plaintiff claims she is the sole owner of Ioannis while Defendant asserts that he is the owner of Ioannis.
1679 62nd Street was purchased in the name of Peter Zaharotos (“Peter”), who Defendant states is his nephew, on November 5, 1986. Defendant claims that he purchased this property with his own funds in the name of his nephew. Peter then transferred it to Alimos on December 30, 1999, which then transferred the property to Plaintiff on February 10, 2011.
269 53rd Street was purchased by Defendant on August 20, 1990, who then transferred it to Peter on December 28, 1990. Peter then transferred it to Elina on December 30, 1999, which then transferred it to Chrysa on May 30, 2001. Chrysa transferred the property to Plaintiff on February 10, 2011.
271 53rd Street was purchased in the name of Peter Zaharatos on November 2, 1994. Defendant claims that he purchased this property with this own funds in the name of his nephew. Peter then transferred this property to Elina on December 30, 1999, which then transferred it to Chrysa on May 30, 2001. Chrysa then transferred it to Plaintiff on February 10, 2011.
There is significant dispute between the parties relating to the history of 73 Harry Wells Road. Plaintiff claims that she acquired this property by deed recorded on May 29, 1996 from Michael Klimvakis and that she granted it to Alimos on July 10, 2007 and that Alimos granted it back to Plaintiff on March 1, 2011. Defendant claims that he held a mortgage against 73 Harry Wells Road, evidenced by a note from Michael Klimvakis to John Zaharatos, dated April 18, 1995, and that he then purchased this property using the mortgage, in the name of Plaintiff, on May 13, 1996.
257 60th Street was purchased by Plaintiff on February 7, 2001, although Defendant claims that the purchase was made with his money. Plaintiff then transferred it to Chrysa on February 1, 2007, which then transferred it back to Plaintiff on February 10, 2011.
Procedural History
Prior to the instant application, Plaintiff initially applied for a temporary restraining order and preliminary injunction, by order to show cause (Motion Sequence No. 1), dated July 5, 2011, seeking to enjoin Defendant from holding himself out as an agent or authorized representative of the Properties, from collecting rent from the Properties, and directing Defendant to provide an accounting of the books and records of Chrysa and Alimos. By Order dated January 18, 2012, upon consent of the parties, this Court permitted Defendant to continue to manage the Properties and to take any action necessary to maintain the Properties, including maintaining insurance and prosecuting or defending any litigation relating to the tenants of the Properties, and ordered that neither party sell or otherwise encumber the Properties (the “January 18, 2012 Order”). By Order dated September 5, 2012, this Court ordered that the lis pendens filed against the Properties remain in full force and effect until further order of this Court, and that the prior order of January 18, 2012 remain in full force and effect pending further order of this Court.
On February 19, 2013, Plaintiff moved, by order to show cause (Motion Sequence No. 3), for an order declaring Defendant in contempt for his willful violation of the Court's January 18, 2012 order, ordering Defendant to pay outstanding property taxes for the Properties, directing the appointment of a receiver for the Properties, directing Defendant to provide an accounting for the Properties, and transferring title to the Properties to Plaintiff. By Order dated March 27, 2013, this order to show cause was withdrawn and the Court ordered that Defendant provide Plaintiff with an accounting of the Properties for the period July 1, 2012 through December 31, 2012, as well as periodic accountings of the Properties every six months thereafter (the “March 27, 2013 Order”). The March 27, 2013 Order further required Defendant to pay the property taxes and to obtain insurance for the Properties within fifteen days of the date of the Order.
DISCUSSION
Summary Judgment
Defendant moves for summary judgment and an order declaring him the sole owner of the corporate entities Chrysa and Alimos, or in the alternative, declaring Defendant the sole owner of the Ten Properties based on deeds indicating that Defendant originally purchased these properties before his first marriage to the Plaintiff. It is well settled that “[t]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case” (Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985] ). Once the movant makes such a prima facie showing, the burden shifts to the opposing party to produce evidentiary proof in admissible form sufficient to establish the existence of genuine triable issues of fact (see Zuckerman v. New York City Transit Authority, 49 N.Y.2d 557, 562 [1980] ).
Defendant has failed to make out a prima facie showing of entitlement to summary judgment as a matter of law. Defendant argues that there are no triable issues of fact regarding the Ten Properties because the deeds show that he is the original purchaser of these properties. Defendant argues that, because the Separation Agreement provides that “[a]ll other items of personal property not specifically enumerated herein shall be the sole property of the party who purchased or received said property as a gift”, he is entitled to ownership of the Ten Properties originally purchased in his name or on his behalf. Although Plaintiff also maintains that the Separation Agreement governs the disposition of the Properties, Plaintiff's position is that the term “purchased” refers to the most recent purchaser during the marriage. Plaintiff claims that the deeds annexed to her March 26, 2014 order to show cause demonstrate that she was the most recent purchaser during the marriage as all of the Properties were at some point transferred to corporate entities owned by her and later transferred to Plaintiff personally in 2011. In his reply, Defendant argues that Plaintiff is not a true purchaser because no consideration was given in exchange for the transfers of the Properties. Defendant also annexes affidavits from Marios and Peter stating that any transfers of the Ten Properties from Defendant to either of them were done only as an accommodation to Defendant and without any consideration paid. The affidavits of Marios, Peter, and Lambrakis also state that, to their knowledge, all of the Properties and the corporate entities are owned by Defendant.
The Court notes, however, that the Separation Agreement uses the term “personal property”, which does not encompass real property. Therefore, the parties may not rely on the Separation Agreement to govern the disposition of the Properties. Moreover, there are myriad triable issues of fact regarding the ownership and transfer of the Properties, as well as the ownership of various corporate entities involved in the transfers of the Properties. Many of the Properties were transferred in 1999 to various corporate entities, including Klio, Arun, Elina, Ares, Tourlos, and Ioannis. Defendant claims that he is the sole owner of all of these entities, while Plaintiff claims that she formed them and was the sole owner at the time of the transfers in 1999, and that these corporations were all merged into either Chrysa or Alimos. However, neither party provides any documentation in support of their contentions relating to these entities, ownership interests in which would be personalty governed by the Separation Agreement (see Kissin v. Good, 2008 N.Y. Slip Op 31154[U] *5 [Sup Ct N.Y. Co 2008] ) . The parties also fail to provide any documentation relating to whether there was consideration paid for the many transfers of the Properties. This lapse creates an additional issue of fact as Defendant contends that the transfers to Plaintiff in 2011 were fraudulent.
It is noted that paragraph 5 of the Separation Agreement does provide:
Neither party shall have any interest in any and all tangible or intangible property of any kind, nature, or description, in the name of the other, jointly, individually, in trust, or in any other manner, whenever or however acquired and regardless of the manner in which title or ownership is held or reflected, including, but not limited to, the Husband's or Wife's interest in stocks, bonds, or other financial instruments, general or limited partnership interests, real estate, mortgages ... all of which shall be solely the property of the Husband or Wife respectively.
While this provision is expressly applicable to real estate, regardless of the form in which it is held, because the interests in the various corporate ownership of the Properties is disputed, the rights of the parties cannot be determined.
Plaintiff and Defendant also dispute the ownership of Chrysa and Alimos. Plaintiff provides stock certificates, dated September 17, 1999, showing that Plaintiff owns one hundred percent of the shares of both Chrysa and Alimos. Plaintiff also provides copies of the Biennial Statements filed with the New York State Secretary of State for both Chrysa and Alimos, dated June 2011, showing that the name “Marina Zaharatos” is crossed out and replaced by “John Zaharatos” as the Chief Executive Officer and Principal Executive Officer. Plaintiff claims that Defendant falsified these records. In response, Defendant provides copies of two hold-over Petitions that he brought against tenants as evidence that he was the owner of the Properties and Chrysa and Alimos. The first, relating to 6001 5th Avenue, is dated April 8, 1999 (the “1999 Holdover Petition”), at which time this property was held in the name of Marios Zaharatos. The second, dated April 12, 2000, involves a premises with the address 506 60th Street, 3rd Floor, not one of the Properties in dispute, in which Defendant is identified as the president of Chrysa (the “2000 Holdover Petition”). Defendant argues that, because Plaintiff was his attorney and prepared both the 1999 and 2000 Holdover Petitions, the Holdover Petitions evidence Plaintiff's acknowledgment that Defendant owns 6001 5th Avenue and is the owner of Chrysa. However, this Petition was brought before 6001 5th Avenue was transferred to Chrysa, and later to Plaintiff individually, and therefore, does not clarify the dispute regarding the true ownership of this property. However, the 2000 Holdover Petition was brought after the date of the stock certificates provided by Plaintiff, which gives rise to a question of fact regarding the true ownership of Chrysa.
There are also multiple issues of fact relating to the particular circumstances of specific properties. For example, while Defendant claims he purchased Beach 68th Street and 96 Thollen Street, Plaintiff claims that she was the true purchaser and purchased these two properties in her husband's name as a gift. There are also discrepancies in the deeds provided by the parties relating to Beach 68th Street and 96 Thollen Street. Both properties were owned by Ares at the time of the Separation Agreement was entered and the Separation Agreement expressly provides that defendant was to transfer 100% of the ownership of Ares Corporation (200 shares) to Plaintiff. Clearly, further discovery is required, rendering this motion for summary judgment premature. Defendant's motion for summary judgment is therefore denied in its entirety. Plaintiff's motion for leave to file a sur-reply in further opposition to Defendant's motion for summary judgment is also denied as the Court finds no need for additional argument on this issue.
Plaintiff's Orders to Show Cause
In Plaintiff's order to show cause, dated March 26, 2014, Plaintiff seeks an order enjoining Defendant from holding himself out as an authorized representative of the Properties, collecting rent from the Properties, or taking any action with respect to Chrysa and Alimos, specifically with regard to certain bank accounts associated with these entities. Plaintiff also seeks an order declaring herself the sole owner of the Properties and Chrysa and Alimos. Plaintiff further seeks an order compelling Defendant to provide an accounting in accordance with this Court's March 27, 2013 order, and finding Defendant in contempt for his failure to comply with this Order. Plaintiff's March 26, 2014 order to show cause also seeks an order vacating this Court's January 18, 2012 Order and appointing a temporary receiver to manage the Properties. In Plaintiff's December 3, 2014 order to show cause, Plaintiff seeks an order finding Defendant in contempt for his refusal to comply with the Court's January 18, 2012 and March 27, 2013 Orders, assessing a fine against Defendant, and granting Plaintiff attorneys' fees and costs for efforts in compelling compliance with this Court's prior Orders.
“On a motion for preliminary injunction, the applicant must prove three things, namely: (1) the likelihood of success on the merits, (2) irreparable injury absent the granting of the preliminary injunction, and (3) that the equities are balanced in his favor” (McLaughlin, Piven, Vogel, Inc. v. W.J. Nolan & Co., 114 A.D.2d 165, 172 [2d Dept 1986] ). “As to the likelihood of success on the merits, a prima facie showing of a right to relief is sufficient; actual proof of the case should be left to further court proceedings” (id. ) Plaintiff argues that there is a likelihood of success on the merits on her conversion claim.
A conversion occurs when a party “intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession” (Colavito v. New York Organ Donor Network, Inc., 8 NY3d 43, 49–50 [2006] ). However, the subject matter of a conversion cause of action cannot include real property (see Volodarsky v. Moonlight Ambulette Service, Inc., 122 AD3d 619 [2d Dept 2014] ). Although Plaintiff's cause of action for conversion of the Properties must fail, there is a viable cause of action for conversion of the rents collected by Defendant. A cause of action for conversion of funds must allege legal ownership of specifically identifiable funds and that the defendant exercised an unauthorized dominion over such funds to the exclusion of plaintiff's rights (see Zendler Construction Co. v. First Adjustment Group, Inc., 59 AD3d 439, 440 [2d Dept 2009] ). Plaintiff does allege that she is the owner of the Properties and that Defendant continued to collect rent and enter into lease agreements after Plaintiff revoked any permission or implied authority by Notices of Termination dated February 18, 2009, December 2, 2009, February 24, 2010, and December 12, 2010. In fact, Defendant admits that he has applied rent receipts to his personal use, claiming they are his to use as he wishes as he owns the Properties. Although there are still many facts in dispute regarding the ownership of the Properties, as well as the ownership of Alimos and Chrysa, Plaintiff has established a likelihood of success on the merits of her conversion of rent, as well as her unjust enrichment, claims (see Four Times Square Assoc. v. Durst 14 Investors, LLC, 306 A.D.2d 4 [1st Dept 2003] ).
CPLR 6401 provides for the appointment of a temporary receiver “where there is danger that the property will be removed from the state, or lost, materially injured or destroyed.” “[A] temporary receiver should only be appointed where there is a clear evidentiary showing of the necessity for the conservation of the property at issue and the need to protect a party's interest in that property” (Quick v. Quick, 69 AD3d 828, 829 [2d Dept 2010] ). Plaintiff has demonstrated an apparent interest in the Properties and Defendant has essentially acknowledged his diversion of the income to his personal use. The need for a temporary receiver, pending the resolution of competing ownership claims, in order to preserve the property in dispute, has been established.
Plaintiff has alleged that she, as well as Alimos and Chrysa, would suffer irreparable harm without the preliminary injunction. Plaintiff claims that Defendant has mismanaged the Properties, has failed to maintain adequate insurance, and has failed to pay taxes on the Properties. Further, accountings provided by the Defendant show that a large number of the Properties are not generating any rents. Plaintiff argues that Defendant's alleged poor management of the Properties constitutes irreparable harm such that a preliminary injunction must be granted because the loss of rental income jeopardizes Plaintiff's ability to provide adequate services for the Properties (see Fairfield Presidential Assoc. v. Pollins, 85 A.D.2d 653 [2d Dept 1981] ). Further, Plaintiff alleges that Defendant has opened bank accounts in the name of Alimos and Chrysa and has fraudulently purported to act on behalf of these entities. A threat to goodwill and creditworthiness is sufficient to establish irreparable injury warranting the granting of injunctive relief (see Four Times Square Assoc., 30 A.D.2d at 6).
Plaintiff's motion for preliminary injunction is granted to the extent that Defendant is enjoined from collecting rents from the Properties or taking any action as a purported representative or owner of Chrysa or Alimos, including as regards any bank accounts related to Alimos and Chrysa. Accordingly, this Court's January 18, 2012 Order allowing Defendant to collect rents and otherwise manage the Properties is vacated and a temporary receiver will be appointed. However, the portion of Plaintiff's order to show cause seeking a declaration that Plaintiff is the sole owner of Chrysa and Alimos is denied as further inquiry is required to ascertain the owner of these entities.
Upon the granting of the preliminary injunction, Plaintiff is required to post an undertaking, pursuant to CPLR 6312(b), the amount of which is within the sound discretion of the Court (see Cooperstown Capital, LLC v. Patton, 60 AD3d 1251, 1253 [3d Dept 2009] ). The bond must be rationally related to the potential damages that Defendant would incur if the preliminary injunction proves to be unwarranted (see Ithilean Realty Corp. v. 180 Ludlow Dev. LLC, 80 AD3d 455 [1st Dept 2011] ). Based on the most recent accounting provided by Defendant for the period January 1, 2014 to June 30, 2014, the rent generated from the Properties for this period was $91,535. If the preliminary injunction proves to be unwarranted, the potential damages that Defendant would incur would include lost rental income, as well as reasonable attorneys' fees. Therefore, Plaintiff is directed to post an undertaking in the amount of $100,000.
Plaintiff also seeks an order finding Defendant in contempt for failure to comply with the Court's January 18, 2012 and March 27, 2013 Orders. Plaintiff claims that Defendant has violated the January 18, 2012 Order by converting the income generated from the Properties to his own personal use, as well as using several of the Properties for his own personal enjoyment. Plaintiff argues that Defendant has violated the March 27, 2013 Order by failing to provide a sufficient accounting. The accountings provided by Defendant are handwritten ledgers consisting of notations for rents collected and expenses for each of the Properties. According to Plaintiff, Defendant has not provided any records regarding the tenants, leases, or the amount of rent charged. Plaintiff further claims that the bank records that were produced by Defendant indicate that Defendant is under-reporting the income from the Properties.
“In order to prevail on a motion to punish a party for civil contempt, the movant must demonstrate that the party charged with contempt violated a clear and unequivocal mandate of the court, thereby prejudicing the movant's rights” (Galanos v. Galanos, 46 AD3d 507, 508 [2d Dept 2007] ). The violation of such an order must be established with reasonable certainty (see Perazone v. Perazone, 188 A.D.2d 750 [3d Dept 1992] ). The January 18, 2012 Order permitted Defendant to collect rents and manage the Properties and prohibited either party from selling or otherwise encumbering the Properties. The Court finds that there has been no violation of this Order as Defendant has indeed collected rents and managed the Properties by paying the expenses. Defendant has not sold or encumbered any of the Properties. Whether Defendant has mismanaged the Properties or diverted income from the Properties is a separate matter that goes to the merits of the underlying causes of action and is not the subject of the January 18, 2012 Order.
Although the accountings provided by Defendant are handwritten and lack detail, Defendant is not in direct contravention of the March 27, 2013 Order. The accountings clearly show the rent collected for each six month period and the expenses paid in relation to the management of the Properties. The March 27, 2013 Order does not expressly require that Defendant provide information relating to the tenants, leases, or rent charged per each tenant. Whether Defendant has under-reported the income from the Properties or failed to account for undisclosed tenants is not established by Plaintiff with reasonable certainty as she provides no documentation supporting the existence of additional leases. Accordingly, Plaintiff's motion for contempt is denied.
CONCLUSION
Defendant's motion for summary judgment is denied. Plaintiff's motion for leave to file a sur-reply to Defendant's motion for summary judgment is denied.
Plaintiff's motion for preliminary injunction is granted to the extent that the January 18, 2012 Order is vacated and Defendant is enjoined from collecting rent from the Properties or holding himself out as an owner or authorized agent of Chrysa Corp. and Alimos Corp. A temporary receiver will be appointed and Plaintiff is directed to submit a proposed order for the appointment of a temporary receiver within 20 days. Both parties are directed to submit three names of proposed receivers within 20 days. Plaintiff is directed to post an undertaking, pursuant to CPLR 6312(b), in the amount of $100,000, prior to the appointment of a receiver.
Plaintiff's motion for contempt is denied.
This constitutes the decision and order of the Court.