Opinion
6474/2011
09-01-2011
Mohammed Motiur Rahman and FAROUKH UDDIN, both suing as Shareholders of BENGAL POULTRY INC., Plaintiffs, v. Bengal Poultry Inc., MOHAMMED HALIM UDDIN AHMED, and ASAB UDDIN, Defendants.
Appearances of Counsel: For the Plaintiffs:Richard G. Johnson, Esq. For the Defendants: Michael F. Mongelli II, P.C., by Martin C. Chow, Esq.
Appearances of Counsel:
For the Plaintiffs:Richard G. Johnson, Esq.
For the Defendants: Michael F. Mongelli II, P.C., by Martin C. Chow, Esq.
Charles J. Markey, J.
The following papers numbered 1 to 14 read on this motion by plaintiffs for an order:
(1) enjoining, compelling, and directing defendants to permit plaintiffs and shareholders Mohammed Motiur Rahman and Mohammed Farouk Uddin to commence immediately employment in Bengal Poultry Inc.;Papers Numbered
(2) enjoining, compelling, and directing defendants to provide an accounting of all business of Bengal Poultry Inc., from December 8, 2005;
(3) enjoining, compelling, and directing defendants to commence immediately keeping, recording, and maintaining written records of sales of Bengal Poultry Inc.;
(4) enjoining, compelling, and directing defendants to immediately produce for inspection all books and records of the corporation;
(5) enjoining, compelling, and directing defendants to commence immediately shareholder meetings at which directors and officers shall be elected, issue share certificates, and adopt bylaws;
(6) enjoining and restraining defendant Mohammed Halim Uddin Ahmed from operating a certain motor vehicle in the name of and for the work of Bengal Poultry Inc., on the grounds that he does not have a valid New York State driver's license nor is so licensed in any other state;
(7) enjoining and barring Hussain Uddin from current and all future employment by Bengal Poultry Inc.;
(8) appointing a receiver to take over the management of Bengal Poultry Inc., and/or to have the authority to cast tie-breaking votes; and
(9) in the alternative, for an order dissolving the corporation.
Order to Show Cause-Affidavits-Affirmation-Exhibits(A-C) .................................1-5
Opposing Affidavits-Affirmation-Exhibits(1-10)....................................................6-9
Reply Affidavits-Exhibits(A-B)...............................................................................10-14
Plaintiffs Mohammed Motiur Rahman and Mohammed Farouk Uddin and defendants Mohammed Halim Uddin Ahmed and Asab Uddin are each 25 percent shareholders of Bengal Poultry Inc. The corporation owns a live poultry market located in a building known as 134 Watkins Street, in Brooklyn, New York. The real property is jointly owned by all of the individual plaintiffs and defendants.
Plaintiffs commenced this action on March 16, 2011, and allege, in their complaint, that, since Bengal Poultry Inc. commenced doing business in December 2005, defendant Mohammed Halim Uddin Ahmed has exercised complete control over the management and operation of the corporation and its finances and has excluded the plaintiffs from the management of the business and from working in the business and drawing a salary. It is alleged that no corporate formalities are being observed in that no officers have been elected, no shares of stock have been issued, and the books and records of the corporation have not been properly maintained. Plaintiffs further assert that: the defendants have received and or converted money and property belonging to the corporation and have refused to account for said money and property; plaintiffs have not been paid their share of the corporate profits; and Hussain Uddin, son of defendant Asab Uddin, has been permitted to work in the business and has converted sums belonging to the corporation.
Plaintiffs, in their complaint, seek an order granting injunctive relief and, in the alternative, seek an order dissolving the corporation. In this motion, plaintiffs seek the identical and ultimate relief sought in their complaint.
A permanent injunction is not a provisional remedy and may not be obtained in a motion prior to the joinder of issue (see, Durkin v Durkin Fuel Acquisition Corp., 224 AD2d 574, 575 [2nd Dept. 1996]). Here, plaintiffs commenced their action on March 16, 2011, and moved for a permanent injunction by way of an order to show cause on April 4, 2011, and were required to personally serve the motion papers on the defendants no later than April 14, 2011. At the time the Court signed the order to show cause, it was not aware of the fact that issue had not yet been joined. Defendants did not serve their answer until May 27, 2011. Although issue was joined prior to the motion being fully submitted, the motion was improperly made in the first instance.
Moreover, even if the within motion was properly made, plaintiffs have failed to establish that they are entitled to injunctive relief. A party seeking a preliminary injunction must establish the likelihood of success on the merits, irreparable injury, and the balancing of equities in its favor (see, Aetna Ins. Co. v Capasso, 75 NY2d 860 [1990]; Iron Mtn. Info. Mgt., Inc. v Pullman, 41 AD3d 656 [2nd Dept. 2007]; Gerstner v Katz, 38 AD3d 835 [2nd Dept. 2007]). To the extent that plaintiffs seek mandatory relief, injunctions of this type are granted only in extraordinary circumstances, as the movant would receive the ultimate relief requested (see, Village of Westhampton Beach v Cayea, 38 AD3d 760 [2nd Dept. 2007]; Matos v City of New York, 21 AD3d 936 [2nd Dept. 2005]; SHS Baisley, LLC v Res Land, Inc., 18 AD3d 727 [2nd Dept. 2005]). The plaintiffs have not met the heavy burden of proving a clear right to this remedy (see, MacIntyre v Metropolitan Life Ins. Co., 221 AD2d 602 [2nd Dept. 1995]). In addition, since Hussain Asab is not a party to this action, the Court lacks jurisdiction to issue an injunction against this individual.
With respect to plaintiffs' request to inspect the books and records of Bengal Poultry Inc., it is noted that a shareholder, in accordance with the provisions of BCL section 624, has the right to inspect the corporate books and records. Plaintiffs complain that the corporate books and records either are not being properly maintained by the corporation or that the books and records are inaccurate and unreliable.
Defendants, upon the foregoing papers, assert, in opposition, that (1) the corporation's revenues and expenses are recorded in the "Daily Cash Book,"and (2) all the shareholders, along with the poultry store manager Hussein Uddin, meet every month to review the corporate revenue and expenses, at which time the plaintiffs calculate the amount of the shareholders' profits. It is further asserted that the claims against Hussein Uddin are speculative and are based on assumptions made by the plaintiffs regarding the volume of business and profits during July and August 2009, and that the sums expended by the corporation were for legitimate business expenses.
Finally, the individual defendants state that, in 2007, plaintiffs commenced an action against them for breach of contract, which is pending in this Court (Index Number 4516/2007). The complaint in that action alleges that the defendants prohibited the plaintiffs from participating in the ownership, operation, management, maintenance and control of Bengal Poultry Inc. Plaintiffs and their attorney in that action inspected the books and records of the subject corporation on December 10, 2007 and were provided with certain documents. In depositions held in that action on May 11, 2009, the plaintiffs therein each stated that monthly meetings were held at which time they had access to the corporation's "Daily Cash Book", in which the expenses and profits were recorded, although other cash receipts either were not being retained or did not exist.
Plaintiffs, in their reply affidavits, assert that meetings were not previously held on a monthly basis, although monthly meetings were held in February and March 2011. Plaintiffs reiterate the claim set forth in their complaint that the defendants are illiterate, the entries in the corporate books and records are being made by Hussein Uddin, and Hussein Uddin is misappropriating corporate funds; and, therefore, these entries are unreliable.
Plaintiffs have failed to establish that they made a written demand on the corporation for the inspection of the books and records, and that such a demand was refused. Furthermore, although plaintiffs contest the accuracy of the corporate records, it is apparent that the corporation has maintained records pertaining to its expenses, revenue, and profits, and plaintiffs now have access to said records on a monthly basis. Plaintiffs have also failed to establish that an accounting is necessary at this stage of the action. Plaintiffs' present requests to review and inspect the corporate records and for an accounting, therefore, are denied.
Plaintiffs, in their complaint and moving papers, express some ambivalence with respect to their desire for judicial dissolution of the corporate defendant. Notably, the complaint seeks injunctive relief and seeks judicial dissolution of the corporation only in the event that such injunctive relief is unavailable. Plaintiffs may seek judicial dissolution of the corporation provided that they commence a special proceeding, in conformity with the provisions of either BCL sections 1104 or 1104-a. Counsel's request, asserted in his reply affirmation, that the Court amend the "papers," pursuant to BCL section 1107, to permit judicial dissolution, is denied.
Plaintiffs' request for the appointment of a receiver, pursuant to BCL section 1202, is denied, as such relief is available only in a proceeding for judicial dissolution of a corporation. Accordingly, plaintiffs' motion is denied in its entirety.
The foregoing constitutes the decision, opinion, and order of the Court.
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J.S.C.