Harkins v Stern

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Harkins v Stern 2021 NY Slip Op 32445(U) November 16, 2021 Supreme Court, Kings County Docket Number: Index No. 507004/21 Judge: Leon Ruchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] KINGS COUNTY CLERK 11/24/2021 04:19 PM INDEX NO. 507004/2021 NYSCEF DOC. NO. 385 RECEIVED NYSCEF: 11/24/2021 SUPREME COURT OF "THE STATE OF t:?EW"Y_ORK: COUNTY OF KINGS· : CIVIL TERM: COMMERCIAL 8 ---- -----. ---- --------- - ------- ----g individually- and derivat:Lveiy On behalf of LB INT.ERtIATIONAL INC. and STEVEN HARKINS_, GOLDEN HILL COMPA~Y MARKETING INC., Plaintiffs-, -againstIndex No. 5-07004/2"1 JOSEPH STERN Def endarit., and November i-6, 20'21 LB INTERNATIONAL ING. and GOLDEN HlL:L COMPANY MARKETING I.NC. , Nominal Defendants, ----------- .------ :- .---. -· ---·------------- · ---x P:RESENT : HON . LEON "RUCHELSMAN ·irhe de:f:enq.q.nt Jo_s-e_ph St~rn pas·. moved. essentia_lly seekihg· ·to v-acate, ~n injunction i;mp_osed_pu rsuantto CPLR §6301 in Nassau County. The plaintiff opposes the motion. by the . pa;r-ti~s and arguments held. Papers we.re submitte_d After rev-;i.ewing all the argµments thi.s court now makes the following determinatio n. 0-n No"vember 18, 20-19, Justice Vito· De'Stefano of Supreme _Coµrt Nassc1.·µ County granted a:h ex pa.rte'· tempo..tar'y restraining order preventing the defendant frotnmaking any transfers, debits -or withdraw_al-s from any bank aGcounts of _LB Int.erriat.iona l. :or G:9ld,en Hill, from op~ri.ing or closing any accounts. of those entities. or incurring any debt related, to those companies. On May 11, 2..0·20 t_he cou;r-t in :Nas.!:>au County is_13ued another· 6..rder wh,ich further prohibited the defendant from-transac ting any bus.i"ness :on behalf o-f the. two compani·es and "from dire.cting -ahy 1 of 6 [*FILED: 2] KINGS COUNTY CLERK 11/24/2021 04:19 PM NYSCEF DOC. NO. 385 INDEX NO. 507004/2021 RECEIVED NYSCEF: 11/24/2021 aspect of ther business" ( ~ , Order dated May 11, 2020) . Numerous requests to vacate the injunction were denied. The case was ultimately transferred to Kings County and now, once again, the defendant has moved seeking to vac·ate the injunction and for other reliefs. Conclusions of Law The question whether to vacate the injunction necessarily requires a determination whether an injunction th,at was imposed should continue to be imposed. Thus, the question that must be addressed is whether an injunction is proper. CPLR §6301, as it pertains to this case, permits the court to issue a preliminary injunction "in any action ..• where the plaintiff has demanded and would be entitled to a judgement restraining defendant from the commission or the continuance. of an act, which, if committed or continued during the pendency of the action, wotild produce injury to the plaintiff" (id). A party seeking a preliminary injunction ''must demonstrate a prObabili ty of success on the merits, danger of irreparable injury in the absence of the injunction and a balance of the equities in its favor;, {Nobu Next Door. LLC v. Fine Arts Hosing, Inc., 4 NY3d 839, 800 NYS2d 48 [2005], .see also, Alexandru v. Pap'R;as, 690, B90 NY2d 593 [2d Qept .., 2Gb 9]) . Further, ea.ch of 68 the above ielemepts must be. proven: by the rrioving party with ".clear a:nd 2 2 of 6 Act3d [*FILED: 3] KINGS COUNTY CLERK 11/24/2021 04:19 PM INDEX NO. 507004/2021 NYSCEF DOC. NO. 385 RECEIVED NYSCEF: 11/24/2021 .conv in.cing ~v-idenc~ ;, (Li at ta v. Matt one,. 71 AD Jd 7 41,. 9 OO NY s 2d -Q-2 [,2.q Dept ~ ;_ 2 01_0] ) . Considering the first pr6h\;f, estab"lishing a likelihood of :success on the merits, -the?: mov.ant rm.1st .pi::ima "f.-a.cie establi·sh a reasonable probability of success (Barbe's Restaurant Inc., v. Seuzerr 218 LLC, i4:0 ADJd. 430, 33 NYS3d ·43 [2d ··oept .. , 20161) . It .has a.lr-eady been ·determined the pla.i-ntiff main,t.c:lin~ a liJ{~.lihood of success On the merits. The pl~intif.f bas presented evidence the defendant corrtrnitted fraud., fot_(Jery .and misapprop.;ri ation of The defendant coµnte.rs that it i.s the plaint_iff wh_o lie¢ .funds. about the financia.l prospects of the company and misled -the Of course, defendant. the defericta·nt denies he committed. =~ny improprietie s. Clearly, th.ere r.esolution. are· factual questions that require However, even .if issue·s of fact ex--ist -:tt is_ s:till apparent the. moving pa,r:ty has a likeliho_od of success on the IJ1.erits, (see.,. Borenste•in v. Rochel ·,Properties, 176 AD2d 171, 574 NYS2d 192 [Pt Dept., 19.9.1 J) • Thi_q_ is ~sp~cially tr.ue whiere the denial of an injunction would disturb the statu·s quo arid render the c·ontinµat"ion .of the lawsuit ine.f.fectual (Ma·sjid Usman., Inc .. , v, Beech 140, LLC, 68 A03d 9:42, 892NYS2d, 430 [2d Dept., 20091), Thus·, the· moving_ party is ·not r.eq;uired to pres'eht 'conclusive proo·f' of its entitlement to art injunction ~pd ' 1t_hE: mere fact that there indeed may be questions of fact for trial does not 3 3 of 6 [*FILED: 4] KINGS COUNTY CLERK 11/24/2021 04:19 PM NYSCEF DOC. NO. 385 INDEX NO. 507004/2021 RECEIVED NYSCEF: 11/24/2021 preclude a Court from exercising its discretion in granting an injunction/' (Ying Fung MoV v. Hohi Umeki, 10 Ao3·d 604, 781 NYS2d 684 [2d Dept., 2004]). The plaintiff alleges the defendant "committed identity theft, forgery and fraud to raise the money for the joint acquisition of LB; fraudulently used Harkins' name and social security number to obtain multiple loans; diverted millions of dollars from.the Companies' bank accounts to personally enrich himself and repay those fraudulent loans; and fraudult,mtly used HarJ:cins' name to acquire a Telsa" {see, Memorandum of Law in Opposition, page 7). The plaintiff offers partial answers to explain some of those allegations, leaving some of them, including the acquisition of a Tesla; unrebutted. Moreover, concerning the alleged fraud, the plaintiff presented evidence that defendant forged plaintiff's signature for a merchant cash advance that was dated June 13, 2Q19 and then doctored the date to June 19, 2019 which is after the agreement of June 17, 2019. In disputing that allegation the def'endant asserts that ''there are, in fact, two separate BES Merchant Agreements. The first, dated June 13, 2·019, signed by Harkins and Stern, was for $500,000. This agreement was uploaded by BFS in its separate action filed in Suffolk County Supreme Court. The second agreement, dated June 19, 2019, and also signed by Harkins and Stern, was for $800r000. After the acqui:sition of LBT, the 4 4 of 6 [*FILED: 5] KINGS COUNTY CLERK 11/24/2021 04:19 PM INDEX NO. 507004/2021 NYSCEF DOC. NO. 385 RECEIVED NYSCEF: 11/24/2021 loan was reformed to re·f.lect· the irtcrea-sed :amoilnt of· the loan'~ (see, Memorandum in Reply, page 9). However, -bhe contrac;t. dated June 13·, 2019 was for .$8.00, 000 not $"500, o·oo. Thus, the ut1date:d notic-e :corine.cted with the Jun·e. 19, 2019 merchant ca·sh advance for $800,000 which states that both the p1aintiff and def.endant agi;'ee to tran.sfer the ;r:-.emainir.ig balance of $525,000 -due on the June 13 contract to be included_wit hin the second contract is difficult to comprehend since it is highly unlikely the company already Moreover, that paid _al;most $:30Q,.OQ0 in :l;:.he span of. a week. notice is not executed_ by t:h,e funder, Building Funding Source. Thus, the notic'e ma:y v.io late Sect ion 3 . 1 ( j) of the me_rchant any. -act ·_agreement wh-:i-ch states- that merchant may not '\perform . that reduces the value of a:hy Collateral granted under this ·-agreement" (id). Thus, a unilateral transfer- of 9-mounts ·.b.orrow-ed c.ould _poten.t;Lally violate that_ provlsio_n. Ih any event( there is evidence that only once agreement was executed which raises serious issues about the defenctantfs conduc:t. Therefore_, the;c-e is a suff_icient basis to ma.intain the injunction a·nct th.e motion seeking to vacate such inj·unct-ior1 is. denied.. However, the d~J-endant is hereby petmi tted to review the Companies' books arid records and the plaintiff must make those records available. "Further, the. plaintiff is h~·r$"by ordered to provide a full and complete accounting, of the Companies' finances in accol;'dance with Justice Vito Destefano' s prior _order of May 5 5 of 6 [*FILED: 6] KINGS COUNTY CLERK 11/24/2021 04:19 PM NYSCEF DOC. NO. 385 15; 2020. INDEX NO. 507004/2021 RECEIVED NYSCEF: 11/24/2021 Thus, the plaintiff shall produce all bank statement s, tax return·s, QUickBook s reports, financial statement s, balance sheets, expense reports, payroll informatio n, loan applicatio ns and documents , factor bills and invoices, and cash.rece ipts etc. for the Companies from January 1, 2016 to the present. Turning to other issues, the request for a temporary receiver is granted. Mr. Jeffrey Miller Esq., of Miller, Leiby & Associate s, PC; 32 Broadway, 13 th Floor, New York, NY 10004 (212) 227-4200 is hereby appointed pursuant to CPLR §6401 in order to prevent irreparab le loss, damage, mismanage ment and/ or depletion of company assets. Further, the defendant 's applicatio n for leave to serve and file• the Proposed Verified Amended Answer with Countercla ims annexed to its moving papers is hereby granted pursuant to CPLR §3025 Ch) . So ordered. ENTER: DATED: November 16, 2021 Brooklyn N. Y. Hon. Leon J>;uchelsill'! n JSC 6 6 of 6 ~

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