Fortified Holistic LLC v Lucic
Annotate this CaseDecided on November 13, 2017
Supreme Court, Queens County
Fortified Holistic LLC, Plaintiff,
against
Anthony Lucic, Defendant.
ANTHONY LUCIC, individually and derivatively on behalf of FORTIFIED HOLISTIC LLC,Third-Party Plaintiff,
against
PHILIP FORTINO and DOMINICK FORTINO,Third-Party Defendants and FORTIFIED HOLISTIC, LLC, Nominal Defendant.
711627/2017
Robert J. McDonald, J.
The following electronically filed documents read on this Order to Show Cause by plaintiff FORTIFIED HOLISTIC LLC for an order pursuant to CPLR 6301 and 7101 directing defendant to restore access to each of the Internet and Digital Assets to plaintiff and to return to plaintiff any content removed from any of the Internet and Digital Assets and preliminarily enjoining defendant and each of his employees, members, representatives, affiliates, successors, assigns, agents, executors, administrators, attorneys and all those acting in concert with and on his behalf from modifying or deleting any of the Internet and Digital Assets; and on this cross-motion by defendant ANTHONY LUCIC for an Order directing plaintiff to grant defendant access to Fortified Holistic, LLC's books and records, including but not limited to, all general [*2]legers, bank statements, tax returns, cash disbursement records, tax returns, a list of all coaches and trainers who teach classes for Fortified Holistic LLC, whether employed or independent contractors, and Fortified Holistic LLC's lease for 37-40 31st Street, Long Island City, New York 11101, and directing Fortified Holistic LLC to provide defendant with an affidavit itemizing each and every document or category or documents provided to defendant and further stating that none of Fortified Holistic LLC's books and records were withheld from defendant:
Papers/Numbered
Order to Show Cause-Affirmation-Exhibits-Memo. of Law EF 6 - 10
Notice of Cross-Motion-Affirmation-Exhibits-Memo. of Law EF 13 - 25
Memo. of Law in Opposition to Cross-Motion EF 26
Plaintiff Fortified Holistic LLC (Fortified) seeks an order of seizure and a preliminary injunction on the grounds that defendant Anthony Lucic (Lucic) is unilaterally converting various internet and social media assets of Fortified, interfering in Fortified's relationships with its clients, and destroying or deleting several of Fortified's assets.
In support of the application, Philip Fortino submits an affidavit dated August 23, 2017. He affirms that Fortified is managed by its members, which include Dominick Fortino, Lucic, and himself. No member owns a majority of Fortified. Two members need to approve any actions of Fortified. Fortified is governed by an operating agreement. A copy of the Operating Agreement is annexed to the moving papers. In early June 2017, Lucic voluntarily stepped away from any involvement in the day-to-day operation of Fortified. He and Dominick Fortino continued to run the business. Lucic asked for a buyout and negotiations began. Contemporaneously with requesting a buyout, Lucic began to revoke the other members' access to Fortified's various website and social media accounts (hereinafter the Internet Assets). Fortified has paid all fees and costs associated with the Internet Assets. The Internet Assets are Fortified's primary channels for marketing its business and for receiving payment from its customers. Mr. Fortino affirms that Lucic has: advertised alternate corporate contact information to the public, diverting communications from the other members; prevented the other members from receiving communications from current and prospective customers through the messaging feature of its social media accounts; removed all content in some of the Internet Assets from the public view, preventing new customers from doing business with Fortified; disseminated inaccurate information about the fitness classes, causing confusion among staff and membership; and deactivated the payment features on the Internet Assets, impairing Fortified's ability to receive payments from its clients. Lucic's actions have resulted in the other members needing to monitor the accounts constantly. Lucic also, without giving notice to the other members, removed the company computer, and deleted logos and other intellectual property from Fortified's DropBox account. Lastly, it appears that Lucic has been soliciting Fortified's customers.
Based on Philip Fortino's affidavit and a copy of Fortified's Operating Agreement, counsel for Fortified contends that Fortified is entitled to an order of replevin as it paid all of the costs and fees associated with the development and maintenance of th Internet and Digital Assets. Counsel further contends that plaintiff is entitled to a preliminary injunction.
Lucic opposes the application and cross-moves for access to Fortified's books and records.
In opposition and in support of the cross-motion, Lucic submits an affidavit dated October 3, 2017. He affirms that he has a 45% membership interest, Dominick Fortino has a 45% membership interest, and Philip Fortino has a 10% membership interest in Fortified. In May 2012, he secured an annual license to personally use the name CrossFit Bell from CrossFit, Inc. through a CrossFit Affiliate Agreement with CrossFit, Inc. Each year thereafter, he secured a CrossFit Affiliate Agreement and is currently a party to a CrossFit Affiliate Agreement effective as of April 20, 2017. A copy of the current Affiliate Agreement is annexed to the papers. He developed and taught CrossFit programs at Fortified's location in Bayside, Queens followed by its location at 37-22 34th Street, Long Island City, New York 11101. CrossFit granted a limited license to him, not Fortified. The Affiliate Agreement granted him a limited, revocable, non-exclusive, non-transferable, non-assignable, non-delegable, and non-sublicenseable license to use the CrossFit name, trademarks, logos, and other items as an element of the affiliate name CrossFit Bell by CrossFit, Inc. The submitted Affiliate Agreement confirms same. In connection with the limited license to use CrossFit Bell, he used the CrossFit Bell name to run Fortified's gym in Long Island City. Also in connection with the Affiliate Agreement, he registered the domain name www.crossfitbell.com and created and built CrossFit Bell's social media presence. He also registered domain names for Fortified including www.citystrongman.com. He, along with the other members of Fortified, received distributions made under the Operating Agreement. Prior to March 2016, he received distributions from Fortified. In March 2016, Fortified began paying him a monthly salary of $1,510.52 plus a distribution in December 2016 of $13,500. He affirms that this salary was to be in addition to Fortified's distributions. However, the only distribution Fortified paid him in 2017 was a single $700 distribution in April 2017. In June 2017, he spoke with Dominick Fortino about teaching in neighboring gyms to supplement his income. Thereafter, he requested that the Fortinos buy him out of Fortified. In August 2017, the Fortinos began shutting him out of Fortified's business. Regarding, Philip Fortino's allegations, he affirms, inter alia, that Fortified spent $0 on advertising on Fortified Instagram accounts in 2017, Fortified's Instagram, Twitter and social media accounts contain zero business inquiries made via direct message, and he personally purchased the computer.
Based on Lucic's affidavit and the submitted Affiliate Agreement, counsel for Lucic contends that Fortified failed to demonstrate a likelihood of success on the merits that Lucic converted or misappropriated the Digital and Internet Assets because Lucic created the asserts pursuant to the exclusive limited license granted to him alone by CrossFit, Inc. Counsel further contends that as Fortified has pled a cause of action for conversion and not replevin, the application to recover its alleged assets must be denied.
On an application for an order of seizure, "a plaintiff must demonstrate a likelihood of success on its cause of action for replevin and the absence os a valid defense to its claim" (Siemens Med. Solutions USA, Inc. v Magnetic Resonance Imaging Assoc. of Queens, P.C., 100 AD3d 620, 621 [2d Dept. 2012]; see CPLR 7102[c][d]).
Here, at the time the Order to Show Cause was signed on August 30, 2017, plaintiff did not plead a cause of action for replevin. Rather, Fortified pled a cause of action for conversion. Fortified cannot move for an order of seizure under CPLR 7102 without first stating a cause of action for replevin under CPLR 7101. Accordingly, Fortified's application for an order of seizure is defective.
Regarding that branch of the application seeking a preliminary injunction enjoining Lucic from destroying or modifying the Internet and Digital Assets, to establish entitlement to a preliminary injunction, a movant must establish (1) a likelihood or probability of success on the merits, (2) irreparable harm in the absence of an injunction, and (3) a balance of the equities in favor of granting the injunction (see Stockley v Gorelik, 24 AD3d 535 [2d Dept. 2005]; Brach v Harmony Servs., Inc., 93 AD3d 748 [2d Dept. 2012]; Matter of Advanced Digital Sec. Solutions, Inc. v Samsung Techwin Co., Ltd., 53 AD3d 612 [2d Dept. 2008]; Montauk-Star Is. Realty Group v Deep Sea Yacht & Racquet Club, 111 AD2d 909 [2d Dept. 1985]).
"[T]o establish a cause of action in conversion, the plaintiff must show legal ownership or an immediate superior right to possession of a specific identifiable thing and must show that the defendant exercised an unauthorized dominion over the thing in question, to the alteration of its condition or to the exclusion of the plaintiff's rights" (Independence Discount Corp. v Bressner, 47 AD2d 756, 757 [2d Dept. 1975]). "Tangible personal property or specific money must be involved" (Independence Discount Corp. v Bressner, 47 AD2d 756, 757 [2d Dept. 1975]).
Here, Fortified failed to establish a likelihood of success on the merits regarding its conversion claim. Although Philip Fortino affirmed that Fortified has paid all fees and costs associated with the Internet Assets, he failed to substantiate such claim. Moreover, based on Lucic's affidavit, issues of material fact remain including whether Lucic owns the Internet and Digital Assets and whether his possession of the assets was unauthorized. Moreover, Fortified failed to specifically identify the Internet and Digital Assets, which this Court notes appear to be intangible property.
Turning to the cross-motion seeking access to specific documents, Lucic failed to demonstrate that he demanded the documents and said demand was denied. Accordingly, the cross-motion is premature (see Kaufman v Cohen, 307 AD2d 113 [1st Dept. 2003]).
Accordingly, for the above stated reasons, it is hereby,
ORDERED, that plaintiff FORTIFIED HOLISTIC LLC's application is denied; and it is further
ORDERED, that defendant ANTHONY LUCIC's cross-motion is denied.
Dated: November 13, 2017
Long Island City, NY
___________________
ROBERT J. MCDONALD
J.S.C.
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