Casual Water E., LLC v Casual Water, Ltd.
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Casual Water E., LLC v Casual Water, Ltd. 2016 NY Slip Op 32142(U) August 22, 2016 Supreme Court, Suffolk County Docket Number: 12/14037 Judge: Jerry Garguilo Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] . OPY C llORT FORM OllDF.:R INDEX NO. 12/14037 SUPREME COURT -STATE OF NEW YORK COMMERCIAL DIVISION IAS PART 48 - SUFFOLK COUNTY PRESENT: HON. JERRY GARGUILO SUPREME COURT JUSTICE CASUAL WATER EAST, LLC, and CASUAL WATER BRIDGEHAMPTON, LLC, ORIG. RETURN DATE: 5/18/16 FINAL SUBMISSION DATE: 6/15/16 MOTION SEQ#OlO MOTION: 010-MD Plaintiff, -against- CASUAL WATER, LTD., GREGORYP. KIRWAN, and MICHAEL HARTMAN Defendants. PLAINTIFF'S ATTORNEY: PHILLIPS LYTLE, LLP 620 EIGHTH AVENUE, 23RD FLOOR NEW YORK, NY 10018-1405 DEFENDANTS' ATTORNEY: LEWIS .JOHS A VALLONE A VILES, LLP ONE CA PLAZA, SUITE 225 ISLANDIA, NY 11749 Upon the following Papers numbered I toj_L read on this morion for summary judgment granting a permanent injunction. for attornev fees. and to dismiss the first through fourth counterclaims~ Notice of Motion/Order to Show Cause and supporting papers1-.:1l_; Notice of Cross Motion and s upporting papers_ _ ;Answering Affidavits and supporting papers 33 - 54 ; Replying Affidavits and supporti ng papers 55 - 58 ; Other ; and upon due deliberation; it is, In this breach of contract action, plaintiff Casual Water Bridgehampton. LLC ("plaintiff') alleges that defendants breached two agreements not to compete in certain zip codes in which defendants sold confidential customer lists to plaintiff and also agreed to refer any new customers in the subject ~ip codes to plaintiff. The record reveals that the parties executed two agreements [* 2] Casual W:itcr Bridgehampton. LLC v Casual Water Ltd. Index 1 o. 1211 4037 Page No. 2 executed on February 6, 2008. and May21, 2008 which provided that plaintiff would pay defendants a service fee which was pro rated to the number of new customers referred to it by defendants. and in return, plaintiff would refer all pool construction requests to defendants. Sometime in 20 l 2. defendants allegedly b<.:gan competing with plaintiff for service and maintenance jobs, and refused to refer their new construction customers to plaintiff as agreed in the specified zip codes. Shortly thereafter. this action was commenced. The complaint contains one cause of action alleging breach of the sale and noncompete agreements. The answer contains general denials, five affirmative defenses, and four counterclaims. The first counterclaim alleges that plaintiff failed to perform the service and maintenance in a professional manner. resulting in damages to defendants. The second counterclaim alleges that plaintiff failed to refer all construction related business to defendants in the specified zip codes, causing defondants to sustain damages. The third counterclaim alleges that plaintiff has refused to engage in meetings to resolve the conflicts between the parties, causing damage to defendants. The fotuih counterclaim alleges that due to consumer complaints rr garding plaintiffs unprofessional e performance of the service and maintenance contracts, the brand name "Casual Water" and its reputation has hccn damaged, causing defendants to suffer monetary damages. The fifth counterclaim al leges that plaintiff has failed to pay the Support Fee in accordance with the sales agreements, and has caused defendants to suffcr damages. Procedurally, a temporary restraining order was entered against defendants on June I, 2012 by order dated June 1, 2012 (Whalen, J.).The court granted p!aintiffs motion for a prel iminary injunction by order dated July 31, 2012 (Whalen, J .). By order dated December 21, 2012, the cow·t held defendants in contempt. The history of this matter is relayed in detail in a decision and order, dated August 5, 2013 (Whalen, .J. ), and will not be repeated herein. In that order, the com1 denied plaintiff Casual Water East, LLC 's motion for partial summary judgment. Plaintiff now moves for summary judgment in its favor to permanently enjoin defendants from competing against plaintiff in accordance with the parties' agreement, for attorney fees. and lo dismiss defendants· first, second. third. and fourth counterclaims. In support, plaintiff submits. inter alia, the pt:rsonal affidavit or Matthew Garry r·Garry"}, and portions of the deposition transcripts of i\fotthi.!\\' Carry and Circgory P. Kir\\'an (''Kin.van"). In his affidavit, Garry ~l\'crs that he is the sole member or plaintiff f le states that he purchased one hundred twenty ( I 20) pool and spa service accounts in spcci fie zip codes from defendants. l le states that the parties used a rctcrrnl system which worked seamlessly until defondants stopped referring their pool construction customers to plaintiff. Garry states that defendants have been competing with plaintiff in violation of the preliminary injunction. Clarry notes three customers which were not rcfl!rn.:d after their pools \Verc constrm;tcd by dckndants on unknown dates. Garry also cxpbins certain invoices which dispute ddi::ndams· counterclaims that plaintiff performed construction jobs in violation or the agreements. [* 3] Casual Water Bridgehampton. LLC v Casual Water Ltd. lnc.lcx o. I ~II -W37 Page . o. 3 /\t his deposition, Garry states that the reason that plaintiff began pcrfom1ing certain mai111enam:c jobs was because defendants lacked the manpower to perform the jobs, were loo busy to perform the jobs in a timely manner, or were unable to pay the subcontractors lo pcrfom1 the tasks. Therefore, plaintifl with defendants· knowledge and consent, called the subcontractors itself lo perform the minor rnaintenancl.! jobs and billed the client. Garry states that in the earlier years, he called dl.!ten<lanls to refor these jobs or asked for their advice regarding how lo perform the jobs. However, as lime passed, he became more familiar with the required work and also found that defendants did not perform the work themselves, but subcontracted the work to other companies and billed plaintiff. Garry states that these types of jobs were relatively fow over the life of the agreements, and, al times, defendants directed him to do the job himscl f Garry always referred new customers who wanted pools constructed and major renovations to defendants. /\t his deposition, Kirwan states that the builders who originally sought out defendants to build pools at their new construction sites stopped calling defendants after having problems with plaintiff's service. In addition, he states that defendants lost bids on new construction of pools with local residential builders. He states that he estimates he lost twelve to fifteen pool construction jobs per year. Kirwan states that defendants arc not honoring the non compete agreement because plain ti ff was caught renovating pools in violation of their agreements. Kirwan stated he noticed that the company's income levels had dropped. which led him to believe that plaintiff was keeping the construction projects. Kirwan states that sometime in April 2012, his new service company, Service 4.0, began to service new clients from their new pool construction projects, who were not yet plaintiffs customers. /\fter that time, Kirwan considered the non cornpcte agreements to be dead. Kirwan states that he told plaintiff that going forward, defendants would not give plaintiff any more service accounts, but that Kirwan would keep them. Kirwan states that he wanted to service the big money pools, and leave the small projects to plaintiff. Subsequently, Kirwan states that there was a verbal agn!l.!rnent that the pa11ics would dissolve the agreements. Kirwan states shortly thereafter, he was served with this lawsuit. Kirwan states that Garry was unresponsive to clients, did not answc.:r phone <:alls, he was la7,y. and missed all his deadlines. I lowevcr. Kirwan could not recall any speci lie.: instances of these problems. It is well established that summary judgment may be granted only when it is clear that no <riabk i...s <i~ fo.;t exi sts (Alvar.:z ~ Prospect llosp., 63 NY2d 320. 508 NYS:::!d 923j19861). The hurdcn is upon the moving party to make a prima facic showing that he or she is entitled to summary judµmcnt as a matter or law by presenting C\'idcncc in admi ssible form demonstrating the absence or any material facts (Giuffrida I ' Citibank Corp.. I 00 Y2d 72, 760 NYS2d 39712003 j). ,,r preliminary injunction is a pro,·isional remedy and a decision rnm:crning a preliminary injunction does not hccomc the la'" of the case. nor \\'ould it constitute an adjudication on the merits so as w predude reconsideration of that issue at J trial on the merits" (Peterson i• Corbin. 2 75 AD2d 35. -W. 713 YS2d 361 [2000]; sec. }. A . Preston Corp.•' Fabrication E11teqJrises fil e.. 68 Y2d 397. 509 NYS2d 520 [ I 9861: Mo0t(J' v FiUpowski, 146 /\D2d 675, 678, 537 YS2tl 185 [2d Dept "1 \ 1 [* 4] Casual \\'atcr Bri<lgchompton. f.LC ,. Casual Water Ltd. Index No. 12/ 14037 Page No. 4 19891). The purpose of a preliminary injunction is to preserve the status quo until a decision is reached on the merits (see Moody v Filipowski, supra at 678). A permanent injunction is a drastic remedy which may be granted only where the plaintiff demonstrates that it will su ffer irreparable harm absen t the injunction (sec J(a11e v Walsh , 295 'Y 198, 205-206, 1946 NY LEXTS 842 I19.f6]). As stated in the prior order, dated August 5, 2013 (Whalen, J.), ·• ... factors unique to the issuance of permanent injuncti ve relief are often paramount to the court's final determination as to the issuance of permanent injunctive relief.'' Jn this regard the court notes that "although it is permissible to plead a cause of action for a permanent injunction, ... permanent injunctive relief is, at its core. a remedy that is dependent on the merits of the substantive claims asserted" (Webtreb v 37Apts. Corp. , 97 AD3d 54, 943 NYS2d 5 19 [1st Dept2012] quoting Corsello v VerizollN. Y., Inc. , 77 A03d 344, 368, 908 NYS2d 57 [2d Dept 2010 ], mod. on other groundy 18 NY3d 777, 944 NYS2d 732 [201 2]). f !ere, plaintiff has failed to submit sufficient evidence to justify a permanent injunction before a trial on the merits. Plaintiff has failed to provide the court with any new or continuing competing behavior by defendants which violate their agreements not to compete since the prior order granting plainti rr s motion for a preliminary injunction. Plaintiff also fails to name customers which were not rcfe1Tcd by defendants in the specified zip codes. Therefore, the court declines to determine that a permanent injunction is necessary until after trial. Turning to that branch ofthe motion seeking summary judgment dismissing defendants' first, second. third , and f'ourth counterclaims, the court finds that plain ti ff has fai led to demonstrate, prima facic, its entitlement to judgment as a matter of law. Issues o f credibility exist, which cannot be determined in a moti on for summary judgment (Combs v Freeport, 139 A02d 688, 527 YS2d 443 ]2d Dept 1988]; S. J. Cape/in Associates, Jue. v Globe Mfg. Corp.. 34 NY2d 338, 357 NYS2d 478 1197.+J: Z ulferino v State Farm A uto. Ins. Co .. 123 AD2d 43 2, 506 NYS2d 736 l2d Dept 1986j ). Therefore. that branch of the motion to dismiss the first through fourth counterclaims is denied. As a result plaintiff's application for attorney fees is denied as academ ic al this time. Si1w.~ plaintiff faikd tn satisry its burden as th~ party mo,·ing for summary judgment. it is unnecessary to analyze the sufficiency of defendants· opposition (McArthur 11 Multammad, 27 /\l)_id 532. 810 YS2d 35:! 12006 ]: Valrie;. 1 .1rmnark Service.'I, Tue., 23 AD3d ()39. 804 NYS'.2d 811 120051: Natio11ll'ide Proper~11 Ca.ma!~)' 1· Nestor, 6 AD1d 409. 774 NYS2d 357 120041) . . \1.:cordingly. summary judgment is inappropriate and the defendants· motion is denied (see .v.enaal~r. Zuckerman 1• Ci~)' of Ne1i York, rnp/'(/). 1 1 [* 5] Casual Waler nridgchampton. LLC \' Casual Water Ltd. Index No. 11114037 Page o. 5 J\c.:cor<lingly. it is ORDERED that plaintiff's motion (0 I 0) is denied in its entirety; and it is further ORDERED that the parties are directed to appear in Part 48 on Wednesday, September 12, 20 I 6 at 9:45 a.m . with clients for the purpose of trial scheduling. DA TED August 22, 2016
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