The individual Plaintiff, Patrick Scomello ("Plaintiff" or "Scomello") and the Defendant, Anthony Pascarella ("Defendant" or "Pascarella"), two members of Perfect Body Image, LLC ("PBI") , each seek relief against the other based on allegations of improper conduct, mismanagement of funds and various breaches of PBI's Operating Agreement ("Agreement"). The Court is, indeed, in possession of four separate motions filed between June and August 2011.

Plaintiff commenced this action for injunctive relief both individually and derivatively on behalf of PBI, seeking to maintain and preserve the assets of PBI, which both parties describe as a full service, non-medical "appearance enhancement center" providing clients with procedures designed to care for the skin and enhance physical appearance. According to Plaintiff, and in support of his first two motions for Preliminary Injunctive relief, the Defendant has committed certain wrongful acts, including: 1) abandoning his role as management member; 2) transferring business plans and proprietary information to a competing business venture; 3) filing false disability benefit applications; 4) causing delivery of illegal prescription drugs to PBI's facilities; 5)withdrawing PBI funds, thereby impairing PBI's ability to maintain its operations; and 6) engaging in reckless behavior towards clients and employees while under the influence of drugs.

Based on the above, Plaintiff sought and received two Temporary Restraining Orders. The first, on June 22, 2011, from this Court, temporarily enjoined the Defendant from transferring or diverting the proprietary assets of PBI (including customer lists, client information, advertising materials, business plans, and financial data) other than in the ordinary course of PBI's business. Two days later, based on the allegation that Defendant had removed $150,000 from PBI's account, Plaintiff sought and received a further TRO (Pastoressa, J) temporarily enjoining the Defendant from accessing PBI's accounts, and issuing or transferring funds therefrom. On August, 9, 2011, Plaintiff sought to hold the Defendant in contempt for violation of the two TROs based on the allegation that the Defendant had removed $3,647.21 from PBI's business checking account on July 11, 2011.

Defendant asserts that in 2007 he created the idea for the full service non-[*2]medical company that would provide clients with high quality appearance enhancement procedures. The individual Plaintiff and Defendant then entered into an LLC Agreement which provided, inter alia, that the two director/members would remain in managerial positions and could only be removed by their unanimous vote, causing a buy out based on a valuation of shares based upon the prior 12 months. Defendant asserts that Plaintiff has wrongfully ousted him from the management of PBI and that the Operating Agreement permits him to seek injunctive relief in the event of a breach. Defendant avers further that he has been seriously ill and under several doctors' care for several years but that he has continued to give his advice to the benefit of PBI and that Plaintiff, rather than he, has been misappropriating company funds. Defendant opposes the Plaintiffs' request for injunctive relief on the additional ground that the Agreement contains no applicable restrictive covenant and claims that the way to preserve company assets at this stage is to dissolve PBI and appoint a Receiver to preserve the goods, income and profits thereof. Finally Defendant asserts that he was never properly served under CPLR § 308 with Plaintiffs' papers.

Defendant, therefore, cross- moved, in August, 2011 seeking the following relief: 1) dissolution of PBI; 2)the appointment of a Receiver to manage the business pendente lite; 3) an immediate accounting of the income, profits, expenses and costs of PBI for the twelve months from August 2010 through July 2011; and to pay Defendant as the managing member of PBI, the compensation and distributions to which he is entitled under the Agreement.

Plaintiffs submitted the Affidavit of its process server, demonstrating service upon a person of suitable age and discretion at the home where Defendant's automobile was located followed by the necessary mailing and an e-mail two days later from Defendant to the individual Plaintiff that he got the papers and would respond accordingly.

In order to be entitled to preliminary injunctive relief, the proponent must demonstrate 1) a likelihood of success on the underlying merits of the action; 2) danger of irreparable harm in the absence of injunctive relief; and 3) a balancing of the equities in favor of the proponent. Nobu Next Door LLC v Fine Arts Housing, Inc, 4 NY3d 839, 800 NYS 2d 48, 833 NE 2d 191 (2005); Aetna Ins Co v Capasso, 75 NY2d 860, 552 NYS 2d 918, 552 NE2d 166 ( 1990); W. T. Grant Co v Sgroi, 52 NY2d 496, 438 NYS 2d 761, 420 NE 2d 923 (1985). The determination rests in the [*3]sound discretion of the trial court. Nobu Next Door, LLC v Fine Housing, Inc, supra; Doe v Axelrod, 73 NY2d 748, 536 NYS 2d 44, 532 NE 2d 1272 (1988).

With regard to closely held corporations or limited liability companies, the purpose of a preliminary injunction is often to maintain the status quo pendente lite and to preserve assets and prevent dissipation of the property at issue. Reichman v Reichman, 930 NYS2d 262 ( 2d Dep't 2011).

In a proceeding for a judicial dissolution of an LLC, the court must first examine the members' operating agreement to determine in light of the circumstances presented, whether it is or is not reasonably practicable for the LLC to continue to carry on its business in conformity with the operating agreement; thus, dissolution is initially based on a contract-based analysis. Limited Liability Company Law § 702; 1545 Ocean Ace LLC v Ocean Suffolk Properties LLC, 72 AD3d 121, 893 NYS 2d 590 (2d Dep't 2010). A court, at any stage of a judicial proceeding for judicial dissolution, may, in its discretion, grant an injunction, effective during the pendency of the proceeding or such shorter period as it may specific, for, inter alia, prohibiting officers and directors from transacting any unauthorized business as well as transferring or delivering property of the corporation absent court permission. Rust v Turgeon, 295 AD2d 962, 746 NYS 2d 233 (4th Dep't 2002).

In the case at bar, the two members of a profitable LLC have set forth diametrically opposed allegations of what has occurred in their business relationship. They do have a fairly explicit Operating Agreement, which does permit each party to seek injunctive relief, when the member believes such is necessary. It does appear that the two managing members are in a serious dispute and that the continued operation of the LLC may depend on an equitable accounting in accordance with the Agreement's provisions. Such would take into consideration all withdrawals by the members in recent history as well as the income received by the LLC and its value. In the interim, it will inure to the benefit of both members to preserve the assets of the LLC and to keep it at least temporarily in operation. Thus a limited preliminary injunction should remain in effect along with the appointment of a temporary receiver with limited powers to receive monthly statements and back up documents, setting forth all income received and expenses paid the by the LLC as well as all member withdrawals and payments of any kind. As the individual Plaintiff is currently managing the LLC, the Court will allow that to continue for a limited period, with an injunction in place, prohibiting both parties from removing and/or transferring any [*4]funds of the LLC, except in the ordinary course of business. In addition, although salaries of employees and normal operating expenses as well as purchases may be paid out of corporate funds, no withdrawals of funds for members shall be made without consent of both members or further Order of the Court pending the next conference of these matters before the Court. The reason for the relief granted both parties rests in their hotly disputed allegations regarding each member withdrawing funds over $100,000 without the other's involvement. In this vein, counsel for all parties are required to appear for a Conference with the Court and the Temporary Receiver on December 6, 2011 at 11 a.m., to begin the process of accounting in accordance with the parties' operating Agreement. As per the Order of this Court, Howard Bergsen, Esq, fiduciary number 528163, with offices at 194 Main Street, Setauket, New York 11733, is appointed as temporary receiver for the LLC with limited powers as set forth to be compensated at the rate of $350 per hour paid by the LLC, subject to reallocation, after the Court determines the facts of these actions.

Accordingly, it is hereby

ORDERED that the Plaintiffs' motions (motion sequence No.s 001, 002 and 003) and Defendant's cross-motion (motion sequence # 004) are granted to the extent indicated above and are otherwise denied.

This constitutes the DECISION and ORDER of the Court.

Dated: November 2, 2011

Riverhead, New York

EMILY PINES

J. S. C.