Shokin v Geller

[*1] Shokin v Geller 2007 NY Slip Op 51371(U) [16 Misc 3d 1110(A)] Decided on July 11, 2007 Supreme Court, New York County Ling-Cohan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 11, 2007
Supreme Court, New York County

Gary Shokin, individually and derivatively on behalf of Blue Sky Broadband, LLC & EZ Tell USA, Inc. and EZ Telecommunications Group Inc., Plaintiffs, Maksim Geller & JMA Group, Inc., Defendants.



600738/07



Appearances of Counsel are as follow:

Plaintiff:Robinson Brog Leinwand Greene Genovese & Gluck, P.C.

1345 Ave of the Americas

NY, NY 10105

Defendants:Yevgeny Tsyngauz, Esq

1635 Bath Ave

Bklyn, NY 11214

718-621-6600

Doris Ling-Cohan, J.

In or about 2001, plaintiff Gary Shokin ("Shokin") and defendant Maksim Geller ("Geller") formed EZ Tell USA ("EZT") in order to gain access to software and broadband technology markets. [Plaintiffs' Affidavit in Support of Order to Show Cause dated March 6, 2007 ("Plaintiffs' Affidavit"), ¶ 2]. In 2004, Shokin and Geller formed a new company, Blue Sky Broadband LLC ("Blue Sky"), that provided voice-over-internet-protocal services targeting the domestic and international markets. [Defendants' Affidavit, March 19, 2007, ¶ 5]. In 2006 Shokin and Geller formed another company called EZ Telecommunications Group Inc. ("Telecommunications"). [Plaintiffs' Affidavit, ¶ 4]. According to plaintiffs, since Blue Sky was operating at a "large loss and could not get any credit," Shokin and Geller in forming Telecommunications sought to obtain new sources of credit worthiness in order to fund the operations of Blue Sky and its retail customers. [Id.].

Beginning a number of months prior to March 2007, Geller as well as Shokin, have not been compensated for the services they have provided for all three companies (Id. at ¶ 5). Plaintiffs maintain that when Geller stopped being paid, he "went ballistic" and demanded that Shokin leave the company and permit Geller to take over the company. [Id. at ¶ 6]. Plaintiffs further assert that on March 6, 2007, when Shokin and Geller were to meet to discuss how to resolve Geller's demands, Shokin learned that Geller, "had taken some outrageous, unauthorized and possibly illegal action to virtually take over...the Company, to loot the remaining funds in its bank account(s) and to change access numbers as well as broadband access so that [the plaintiff] was effectively completely excluded from the business". [Id. at ¶ 8].

According to plaintiffs, Geller, without authorization: (1) withdrew $33,900 from EZT's credit line and transferred such funds to the checking account of JMA Group, a company owned and controlled by Geller; (2) changed the access codes for EZT's online accounts; (3) changed the password to Blue Sky's broadband technology; (4) changed the password to Blue Sky's on-line banking accounts; (5) made an on-line transfer of $1,000 from Blue Sky's account to American Express in order to pay for Geller's credit card bills; (6) transferred $29,000 from Telecommunications to the accounts of JMA Group; (7) changed the passwords required to access the online accounts of Telecommunications; and (8) shut down Blue Sky's website. [Id. at ¶ 8]. [*2]

Plaintiffs commenced the within action seeking monetary damages for the alleged losses caused by defendants' actions, as well as a mandatory permanent injunction ordering defendants to restore all passwords and access codes and to prohibit defendants from having any direct or indirect contact with EZT and Blue Sky.

Before the Court is plaintiffs' motion seeking a preliminary injunction pursuant to CPLR §6301 enjoining defendants from: (1) making use of or having access to any credit line, bank account or on-line account belonging to plaintiffs; (2) communicating directly or indirectly with any customer, supplier or internet or broadband vendor of Blue Sky; (3) taking any other steps or engaging in any transaction which relates to the business income or assets of plaintiffs; and (4) directly or indirectly engaging in the transaction of any business or affairs of plaintiffs' entities. Plaintiffs' further seek a mandatory preliminary injunction ordering that defendants promptly restore: (1) all banking or access codes used in connection with the broadband technology of Blue Sky; (2) the website hosted by Blue Sky; and (3) the sum of $33,900 transferred from the checking account of EZT and the sum of $29,000 transferred from the account of Telecommunications.

A preliminary injunction is a drastic remedy which should only be granted where the movant has demonstrated in the moving papers a clear legal right to the relief demanded based upon the undisputed facts. See Cohen v Department of Social Servs., 37 AD2d 626, affd 30 NY2d 571 (1972); Scott v Mei, 219 AD2d 181 (1st Dept 1996); William M. Blake Agency, Inc. v Leon, 283 AD2d 423, 424 (2nd Dept 2001). Being a provisional remedy, its function is not to determine the ultimate rights of the parties, but to maintain the status quo until there can be a full hearing on the merits. Hightower v Reid, 5 AD3d 440 (2nd Dept 2004); Olympic Tower Condominium v Cocoziello, 306 AD2d 159 (1st Dept 2003); Residential Board of Managers of the Columbia Condominium v Alden, 178 AD2d 121 (1st Dept 1991).

To be entitled to a preliminary injunction, the plaintiff must clearly demonstrate: (1) a likelihood of success on the merits; (2) irreparable injury absent granting the preliminary injunction; and (3) a balancing of the equities in their favor. See Nobu Next Door v. Fine Arts Housing, 4 NY3d 839, 840 (2005); Aetna Ins. Co. v Capasso, 75 NY2d 860 (1990); Borenstein v Rochel Props., Ins., 176 AD2d 171, 172 (1st Dep't 1991). Here, plaintiffs have failed in the moving papers to sufficiently demonstrate such requirements. Thus, as detailed below, plaintiffs' motion for a preliminary injunction is denied.

Specifically, plaintiffs failed to establish a likelihood of success on the merits. While plaintiffs allege that Geller unlawfully withdrew $33,900 from EZT, withdrew $29,000 from Telecommunications, changed the passwords and access codes to the various companies, and shut down the Blue Sky website, in opposition, Geller denies all such allegations. According to Geller, he and Shokin formed a compensation agreement in February of 2007 which authorized Geller to withdraw $33,899 from the EZT account in exchange for Geller's continuation of work at Blue Sky. [Defendant's Affidavit, March 19, 2007, ¶ 16 - 18]. Moreover, with respect to the funds transferred from Telecommunications, Geller asserts that Shokin " froze' the [*3]Telecommunications' account with HSBC and denied [Geller] access to the promised funds" (Id., ¶ 21). Defendants further allege that Geller had to provide web-server support to the Blue Sky website after the SSL security of the website broke on March 4, 2007 and also that Blue Sky's passwords were changed "as part of a routine security procedure performed every two months". [Id., ¶ 29]. Finally, Geller denies that he changed the access codes for the online accounts of EZT, Blue Sky, or Telecommunications. [Id., ¶ 31, 32, 34].

"A party is not entitled to a temporary injunction, unless the right is plain from the undisputed facts. If the right depends upon an issue which can only be decided upon a trial, the injunction cannot be granted.". Family Affair Haircutters v. Detling, 110 AD2d 745, 747 (2nd Dept 1985). Here, as the facts which form the basis of plaintiffs' motion for injunctive relief are clearly in dispute, plaintiff has failed to establish a likelihood of success on the merits. A hearing need not be conducted on such disputed facts, since plaintiffs failed to demonstrate all of the elements for the issuance of a preliminary injunction. See CPLR § 6312(c).[FN1]

Moreover, plaintiffs have failed to establish that, absent a preliminary injunction, plaintiffs will suffer irreparable injury. "Damages compensable in money and capable of calculation, albeit with some difficulty, are not irreparable." SportsChannel American Associates v National Hockey League, 186 AD2d 417, 418 (1st Dept 1992); see also Putter v City of New York, 27 AD3d 250, 253 (1st Dept 2006); Klein, Wagner & Morris v. Klein, 186 AD2d 631, 633 (2nd Dept 1992). Plaintiffs' alleged irreparable injury is that without a preliminary injunction Geller "will start paying many of his personal bills" from the companies' bank accounts and Blue Sky cannot continue to operate. [Plaintiff's Affidavit, ¶13-14]. Nevertheless, plaintiffs have failed to establish that such allegations constitute irreparable injury; nor do plaintiffs even allege that the claimed injuries are incalculable. Here, plaintiffs have an adequate remedy at law with respect to the claimed damages, which need not warrant the equitable relief sought herein. See Hoppmann v. Sargent Stein, Inc., 141 AD2d 332, 334 (1st Dept 1988); Pinnacle Equities New York, Inc. v. Zapco 1500 Investment, L.P., NYLJ, September 3, 1997, at 22, col 4 (Sup Ct, New York County). Consequently, plaintiffs have failed to satisfy the second requirement necessary for this Court to grant a preliminary injunction.

Additionally, plaintiffs fail to demonstrate that in balancing the equities, a grant of a preliminary injunction is clearly in plaintiffs' favor. See Nobu Next Door v. Fine Arts Housing, 4 NY3d at 840; Hoppmann v. Sargent Stein, Inc., 141 AD2d 332 (1st Dept 1988). Plaintiffs make no assertions in the moving papers to support that the equities are in their favor with respect to the granting of a preliminary injunction. Furthermore, defendants argue that plaintiffs have come to [*4]court with unclean hands. A grant of a preliminary injunction will not be ordered if the plaintiff comes to the court with "unclean hands". Amarant v D'Antonio, 197 AD2d 432, 434 (1st Dep't 1993); see United for Peace and Justice v Bloomberg, 5 Misc 3d 845, 849 (NY Sup.Ct., NY County 2004). Defendants argue that Shokin violated the February 2007 agreement with Geller to compensate Geller for his services and Shokin shut-down Geller's access to the companies' office and all books and records located at 160 Leroy Street, NY, NY [Defendant's Affirmation in Opposition ¶ 61-62]. While plaintiff Shokin denies defendants' allegations that the parties made an agreement in February 2007 for Geller's compensation, Shokin fails to deny that he shut down Geller's access to all books and records located at 160 Leroy Street. Instead, Shokin merely responds to the defendants' allegations by denying that he had any "sinister" motive in moving the company from 142 West 36th Street to 160 Leroy Street (Plaintiff's Reply Affidavit ¶ 3). Glaringly absent from Shokin's reply, is a response to defendants' allegations regarding Geller's access to the books and records.

Finally, a "mandatory injunction should not be granted, absent extraordinary circumstances, where the status quo would be disturbed and the plaintiff would receive the ultimate relief sought, pendente lite." St. Paul Fire and Marine Ins. Co. v. York Claims Service, Inc., 308 AD2d 347, 349 (1st Dept 2003)(citations omitted). Here, plaintiffs request that this court grant a preliminary injunction directing defendants to pay $33,900 to EZT's checking account and $29,000 to Telecommunications' checking account. Such relief if awarded at this juncture, would in fact fulfill plaintiffs' first, second, third, fourth, and seventh causes of action of the complaint. Granting such relief would go, "far beyond the ordinary purpose of preliminary injunctive relief, which is to maintain the status quo and to prevent any conduct which might impair the ability of the court to render final judgment" Id.

Preliminary injunctions are drastic remedies which should be used sparingly. See 67A NY Jur2d, Injunctions §47. Thus, this Court declines to issue a preliminary injunction based upon thesubmitted papers and the disputed facts contained therein.

Accordingly, it is

ORDERED that plaintiffs' motion for a preliminary injunction is denied; it is further

ORDERED that any and all stays issued by the signing of plaintiff's order to show cause dated March 12, 2007, are hereby vacated forthwith; and it is further

ORDERED that, within thirty days of entry of this decision/order, defendants shall serve upon plaintiffs a copy with notice of entry; and it is further

ORDERED that all sides shall complete discovery expeditiously, so that this case can proceed to trial.

This constitutes the decision and order of the Court.

Dated: July 11, 2007/s/

Doris Ling-Cohan, JSC

Check One: [ ] FINAL DISPOSITION[ X ] NON-FINAL DISPOSITION C:\htformat\f5137170.txt Footnotes

Footnote 1: CPLR § 6312 ( c) indicates as follows: "Issues of fact. Provided that the elements required for the issuance of a preliminary injunction are demonstrated in the plaintiff's papers, the presentation by the defendant of evidence sufficient to raise an issue of fact as to any of such elements shall not in itself be grounds for denial of the motion. In such event the court shall make a determination by hearing or otherwise whether each of the elements required for issuance of a preliminary injunction exists.