In this accounting proceeding of a testamentary trustee, respondents Bonnie Raffe and Beth Brenner, beneficiaries of the trust, move for an order restraining Carl Stix, the trustee, from transferring or loaning to, or otherwise using any assets, property or funds of the trust for the benefit of O.C. P. Inc., a/k/a Morania Oil ["Morania"] without further order of the court. The motion, made on December 3, 2013, is opposed and decided herewith.

The accounting at issue here was filed by petitioner on or about May 1, 2012 and an application made to judicially settle same.^[FN1] On the return of the citation, respondents appeared and requested a SCPA 2211 examination which was ultimately held on June 28, 2013. Objections to the account were filed on July 26, 2013 and CPLR discovery has been proceeding.

At the heart of this motion is Morania - a home heating oil business owned by the trust.

The business has been operating at a loss for years. Carl has opted to allow the trust to serve as a lender to Morania by making substantial loans to it to keep the entity in business. The outstanding loan balance due from the latter to the former is approximately $5.3 million as of the end date of the accounting.

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 the movant's favor (Aetna Entity Co. v Capasso, 75 NY2d 860 [1990] Family-Friendly Media, Inc. v Recorder Tel. Network, 74 [*2]AD3d 738 [2d Dept 2010]).

Arguments are presented by both sides on the elements of likelihood of success and balancing the equities, in some measure based on conceded facts and in other respects on disputed facts and inferences to be drawn therefrom, as well as supported by considerable documentation, which may be summarized as follows:

Bonnie and Beth contend that Carl egregiously breached his fiduciary duty to them by permitting the continued losses of Moriana without dissolving, liquidating or selling the entity and exacerbating the situation by having the trust make the loans at issue [and presumptively continuing to make such loans] with no reasonable expectation of repayment. Given the foregoing, they advance they have made a sufficient prima facie showing of the probability of success on the merits and that the equities balance heavily in their favor warranting injunctive relief.

Carl counters that the terms of decedent's will "authorize" the very loans undertaken by him, and sought now to be enjoined and that the transactions complained of have not resulted in any diminution whatsoever in the value of the corpus of trust. Further the trustee states his actions have been undertaken with the counsel of investment advisors and are consistent with the requirements of the prudent investor rule and the loans have provided Moriana with the necessary cash flow to continue the business and allow a successful conclusion of the ongoing efforts to sell the company. He urges therefore there is no merit at all to the respondents' claims and given that the granting of the relief requested would quickly reduce the value of Moriana to -$0- and literally leave its customers out in the cold the equities clearly preponderate in his favor.

If it were only these two elements to be considered, on the basis of the submissions, although not mandatory, this court would hold an evidentiary hearing before granting relief (CPLR 6312 [c] DiFabio v Omnipoint Communications, Inc., 66 AD3d 635 [2d Dept 2009]).

However, in the face of Bonnie and Beth's meager and insufficient showing on the element of irreparable harm same is unnecessary.

It has long been recognized that economic loss, compensable by money damages, does not constitute irreparable harm(Rowland v. Dushin, 82 AD3d 738 [2d Dept 2011]; EDCIA Corp. v McCormack, 44 AD3d 991 [2d Dept 2007]). In the "WHEREFORE" clause of the objections filed by Beth and Bonnie they seek to surcharge Carl for any loss to the trust estate by reason of this and other alleged breaches of fiduciary duty by him. Carl argues, and the court agrees, that this fact alone mitigates against a finding of irreparable harm. Although respondents urge that any surcharge would be "ineffectual," there is no indication either way of Carl's financial ability to answer for any damages. Further, while Beth and Bonnie contend that a contested accounting has some equitable aspects to it, and injunctive relief is available in an equitable setting, that does not alter the obvious conclusion that a surcharge would make them whole.

In a similar vein, an inordinate delay in seeking injunctive relief is itself antithetical to irreparable harm in the absence of a preliminary injunction (Mercury Service Systems, Inc. v Schmidt, 50 AD2d 533 [1st Dept 1975]). The mere fact that this motion was not brought on by order to show cause with a temporary restraining order in and of itself weakens the claim of irreparable harm.

The court is unimpressed with Beth and Bonnie' s argument that ". . . they could not bring this motion sooner . . ." by reason of Carl's foot-dragging on discovery issues. The Morania [*3]loans were disclosed within the accounting and there is no bona fide rationale for the passage of a year and a half before this relief was sought.

The motion for a preliminary injunction is therefore denied.

This constitutes the decision and order of the court.

Dated:March 7, 2014

EDWARD W. McCARTY III

Judge of the

Surrogate's Court