Global Delivery Sys., L.L.C. v Benvenuti

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Global Delivery Sys., L.L.C. v Benvenuti 2011 NY Slip Op 33356(U) December 5, 2011 Supreme Court, Nassau County Docket Number: 15600-11 Judge: Timothy S. Driscoll Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT- STATE OF NEW YORK SHORT FORM ORDER Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court ------------------------------------------------------------------- J( TRIL/IAS PART: GLOBAL DELIVERY SYSTEMS, L.L. C., IndeJ( No: 15600Motion Seq. No. Plaintiff, Submission Date: 11/18/11 -against- BRUCE P. BENVENUTI and LASER DELIVERY, INC., Defendants. -------------------------------------------------------------------- J( The following papers have been read on this Order to Show Cause: Order to Show Cause, Affidavit in Support and EJ(hibits..................... Memorandum of Law in Support...........................................................n... Affirmation in Opposition, Affidavit in Opposition and EJ(hibits........... This matter is before the cour on the Order to Show Cause fied by Plaintiff Global Delivery Systems , L.L.C. (" GDS" or " Plaintiff' ) on November 2 2011 and submitted on November 18 , 2011. For the reasons set forth below , the Cour denies Plaintiff's Order to Show Cause in its entirety but directs that the Order issued by the Cour on the record on November 2 , 2011 , related to the production of certain documentation, remains in effect. BACKGROUND A. Relief Sought Plaintiff moves for an Order , pursuant to CPLR 6301 , granting Plaintiff a preliminar injunction enjoining and restraining Defendants Bruce P. Benvenuti (" Benvenuti" ) and Laser Deliver , Inc. (" Laser ) (collectively " Defendants ), their employees , representatives , affiliates subsidiaries , successors , assigns , and all those acting in concert with and on behalf of them pending final judgment in this matter , from using GDS' FexEx National Account and its related [* 2] sub-accounts , or receiving proceeds of revenues generated from the National Account and its related sub-accounts. Defendants oppose Plaintiff's application. B. The Paries ' Background The Verified Complaint (" Complaint" ) (Ex. 1 to Beaury Aff. in Supp. ) alleges that GDS is an Indirect Air Carier that has been in the freight forwarding business since 1998. James R. Galante (" Galante ), Wiliam Beaur (" Beaur ), Scott J. Haris (" Hars ) and Benvenuti are members ofGDS with varing ownership interests. Galante owns 79. 5% ofGDS , and Galante and Beaur have been the managing members of GDS since March of 200 Effective June 1 2011 Galante and Beaur were the only individuals authorized by GDS to have communication with FedEx regarding GDS' operations. GDS owns a FedEx National Account ("National Account" ), which it has owned since 1999 , which Plaintiff describes extremely valuable " (Compl. at 11). as GDS creates sub-accounts (" Sub- Accounts ) to its National Account to help manage its shipping under the National Account. Plaintiff alleges that in August of2011 it leared that Benvenuti and Laser had created Sub-Accounts for curent and former GDS clients , without Plaintiff's authorization. Plaintiff fuher alleges that Defendants improperly diverted fees ("Fees ) charged to and paid by GDS' clients , to themselves. Plaintiff demanded that Laser cease using the National Account and provide an accounting of the Fees , but Laser continues to use the National Account. Plaintiff also alleges that Benvenuti has refused to provide GDS with the master log in and password to the National Account. GDS is responsible to pay FedEx in the event that any customers do not pay on the Sub- Accounts , and alleges that through Defendants ' alleged conversion of the Fees , Benvenuti has put GDS " in a precarious position " (Compl. at'i 32). The Complaint contains seven causes of action: 1) failure by Benvenuti to remit and account for the Fees , 2) Benvenuti' s interference with GDS' contractual relationship with FedEx 3) unjust enrichment by Benvenuti , 4) a request for injunctive relief prohibiting Benvenuti and his agents from using the National Account and Sub-Accounts , and communcating with FedEx on behalf of GDS , 5) conversion of the Fees by Laser , 6) unjust enrichment by Laser , and 7) injunctive relief against Laser. [* 3] In support of Plaintiff's application , Beaur affrms the truth of the allegations in the irreparable Complaint. He alleges that , without the requested injunctive relief, GDS wil suffer har. In opposition , Benvenuti affirms that in 2007 , Plaintiff transferred its rights to the GDS , LLC assets , including its contract rights, to a company known as Axis Global Delivery Systems which has the same members as GDS. Benvenuti avers that , to his knowledge , GpS has not actively engaged in business activities using the Fed Ex master account since that transfer. Rather , business use of the FedEx master account was accomplished though subordinate accounts established by Axis , or members of Axis. Benvenuti also affrms that the managing parners refused to pay a GDS FedEx bil of a major client in 2007 , which resulted in adefault that nearly resulted in the loss ofthe master account due to non- payment. Benvenuti paid that bil in the sum of $14 725. 77 from his personal accounts to preserve the master account for GDS/ Axis , thereby preserving the master account. Benvenuti affirms , fuher , that prior to the 2007 asset transfer , the members of GDS agreed to " spin off' (Benvenuti Aff. in Opp. at p. 2) a portion of its business in a management agreement with SDS Global Logistics , Inc. (" SDS" ). As par of this management agreement Benvenuti was to be employed by SDS. Although he worked for SDS from 2008- 2010 , he continued to perform duties for Axis and handled its dealings with FedEx sales representatives. He was the contact person in GDS/ Axis for any problems with the master account, and worked to preserve the master account and all subsidiar account. Benvenuti also avers that the managers of GDS and Axis have repeatedly refused his requests for financial information regarding those entities , in which he has an interest. Benvenuti affrms that he has acted in the best interest of GDS and protected the FedEx account which is highly valuable , for the benefit of that entity and its members. C. The Paries ' Positions Plaintiff submits that it has demonstrated its right to the requested injunctive reliefby 1) establishing a likelihood of success on the merits by establishing that Defendants improperly converted the National and Sub- Accounts , and the related Fees; 2) demonstrating that it wil suffer irreparable harm by virtue of the fact that , without the requested relief, GDS wil be unable to monitor its Account and Sub- Accounts , for which it is ultimately responsible , and wil [* 4] be unable to manage its business properly; and 3) the equities favor Plaintiff in light of the fact Accounts , or to retain the Fees. that Defendants have no right to use the National Account or SubDefendants oppose Plaintiff's application , submitting that Plaintiff's application , fuher , that Benvenuti' constitutes an effort to freeze out Benvenuti from GDS. They submit puroses unelated affdavit establishes that the GDS managers have used the master account for GDS. to GDS business , and thereby breached their fiduciar duty to RULING OF THE COURT Preliminar In;unction Standards A preliminar injunction is a drastic remedy and will only be granted if the movant establishes a clear right to it under the law and upon the relevant facts set forth in the moving Peterson 2d 423, 424 (2d Dept. 2001); v. Leon 283 A. Wiliam M Blake Agency, Inc. papers. Corbin 275 AD. 2d 35, 36 (2d Dept. 2000). Injunctive relief will lie where a movant har uness the demonstrates a likelihood of success on the merits , a danger of irreparable Capasso v. Aetna Ins. Co. injunction is granted and a balance of the equities in his or her favor. Merscorp, Inc. WT Grant Co. v. Srogi 52 N. 2d 496, 517 (1981); 75 N. Y.2d 860 (1990); v. Romaine 295 AD.2d 431 (2d Dept. 2002); Neos v. Lacey, 291 A.D.2d 434 (2d Dept. 2002). The decision whether to grant a preliminar injunction rests in the sound discretion of the Automated Waste Disposal, Inc. v. Axelrod 73 N. Y.2d 748, 750 (1988); Doe Supreme Cour. v. Sterling City of Long Beach Mid-Hudson Waste, Inc. 50 AD.3d 1073 (2d Dept. 2008); 26 AD.3d 485 v. Meloney, Ruiz 40 AD.3d 902 , 903 (2d Dept. 2007); American Capital, LLC, (2d Dept. 2006). Proof of a likelihood of success on the merits requires the movant to demonstrate a clear Town Bd. of Related Properties, Inc. right to relief which is plain from the undisputed facts. Pascale 41 AD.3d 395, Abinanti Town/Vilage of Harrison 22 A. D.3d 587 (2d Dept. 2005); Vallo Transp. Ltd. 13 AD. 3d 334 335 (2d Dept. Gagnon Bus Co., Inc. 396 (2d Dept. 2007); justify denial of a motion for a 2004). Thus , while the existence of issues of fact alone wil not preliminary injunction , the motion should not be granted where there are issues that subvert the plaintiff's likelihood of success on the merits to such a degree that it canot be said that the Samsung Advanced Digital Sec. Solutions, Inc. plaintiff established a clear right to relief. Techwin Co., Ltd., 327 328 (2d Dept. 2003); 53 AD. 3d 612 (2d Dept. 2008), quoting see also CPLR ~ 6312(c). Milbrandt Co. Grifn 1 AD.3d [* 5] A plaintiff has not suffered irreparable har waranting injunctive relief where its v. Newsday, See White Bay Enterprises alleged injuries are compensable by money damages. 258 AD. 2d 520 (2d Dept. 1999) (lower cour' s order granting preliminar injunction reversed Schrager where record demonstrated that alleged injuries compensable by money damages); Klein 267 A. D.2d 296 (2d Dept. 1999) (lower cour' s order granting preliminar injunction reversed where record failed to demonstrate likelihood of success on merits or that injuries were not compensable by money damages). B. Application of these Principles to the Instant Action The Cour denies Plaintiffs Order to Show Cause based on its conclusion that, even that Plaintiff has established a likelihood of success on the merits , any injury suffered by Plaintiff is compensable by money damages. Moreover , Plaintiff's claim that its assuming arguendo inability to monitor its account may result in its liability for unpaid fees is undermined by Benvenuti' s affirmation that he provided personal fuds in the past to ensure that GDS/Axis retained its F edEx account , and the absence of any evidence that a paricular account or accounts is curently delinquent. In light of the foregoing, the Cour denies Plaintiff's Order to Show Cause in its entirety. The Cour directs that the Order issued by the Court on the record on November 2 2011 , related to the production of certain documentation, remains in effect. All matters not decided herein are hereby denied. This constitutes the decision and order of the Cour. The Cour reminds counsel of their required appearance before the Court on Januar 13 , 2012 at 10:00 a. m. for a Preliminar Conference. ENTER DATED: Mineola , NY December 5 , 2011 HON. TIMOTHY S. DRISC lS. ENTERED DEC 0 9 2011 NASSAU COUNTY CO""TY CLltt' OFFtCE

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