Plaintiffs brought this action requesting a Declaratory Judgment. Plaintiffs, by order to show cause dated June 9, 2014, have moved for a preliminary injunction. The defendant has moved for the appointment of a temporary receiver.

On October 15, 2002, the plaintiffs, Olympic Ice Cream Co., Inc. ("Olympic" or "the Corporation"), Michael Barone and Frank Barone, entered into a Shareholders Agreement with Marinos D. Vourderis ("Vouderis"). Under the agreement Frank Barone, Michael Barone, and Vourderis each owned fifty shares of common stock of Olympic Ice Cream. Vourderis died on July 2, 2013, and defendant Martin D. Sussman was appointed Executor of the Estate of Marinos D. Vourderis. The Shareholder Agreement sets forth the rights and obligations of the parties to purchase the shares owned by Vourderis upon his death. Under the Fourth Article of the Agreement, within one year of Vourderis's death, Olympic is required to purchase the common stock owned by Vourderis. The purchase price set forth in the Fifth Article is $50,000 per share for a total price for the shares of $2,500,000.

Plaintiffs argue that, under the Eighth Article of the Shareholders Agreement, should Olympic not have sufficient surplus funds to permit it to purchase the shares, Marinos or his personal representative and other Shareholders shall take necessary measures to enable the Corporation to lawfully do so. The plaintiffs argue that Olympic had equity in the amount of only $54,992.00, and, thus, as it did not have sufficient surplus to lawfully purchase the shares, Article Eight applies. Pursuant to this Article of the Agreement, Olympic then transmitted a formal notice to each shareholder requiring that each shareholder contribute $815,003.00 to the Corporation, enabling Olympic to attain sufficient capital to purchase Vourderis's shares.

The defendant Martin S. Sussman ("Sussman" or "the defendant"), as Executor of the Estate of Marinos D. Vourderis, rejected the demand. Sussman argues that nothing in the Eighth Article can be construed to require a shareholder's estate to make a capital contribution or to meet a capital call following the death of the shareholder. Plaintiffs offered to credit the defendant the amount of the required capital contribution against the purchase price reducing the net purchase price. Sussman rejected the offer. Sussman then notified the plaintiffs that if they did not purchase the shares at the full price within the one-year deadline, he would pursue all remedies available to him, including the sale of the Estate's shares to any third party, the sale of all shares of assets of the Corporation to any third party, or Olympic's dissolution.

Plaintiffs then brought this action seeking a declaration as to the applicability of the Eighth Article of the Shareholders Agreement and the actions to be taken by plaintiffs pursuant thereto. Plaintiffs further seek a declaration that the remedies provided to defendant in the Agreement, in the event Olympic does not purchase shares, are unlawful, unconscionable, and unenforceable.

Plaintiffs have now brought this motion for a preliminary injunction, enjoining and restraining Olympic from proceeding with any sale or disposition of the shares of the Corporation, or any remedies set forth in the Agreement, or from acting under a power of attorney provided by the Agreement, pending the final determination of the controversy.

On a motion for a preliminary injunction, the movant must establish the likelihood of success on the merits, irreparable injury, and the balancing of the equities in its favor (see, Aetna Ins. Co. v Capasso, 75 NY2d 860 [1990]; Washington Deluxe Bus, Inc. v. Sharmash Bus Corp., 47 AD3d 806 [2d Dept 2008]).

It is not for the Court to determine finally the merits of an action upon a motion for preliminary injunction; rather, the purpose of the interlocutory relief is to preserve the status quo until a decision is reached on the merits. (see, Incorporated Vil. of Babylon v. John Anthony's Water Café, 137 AD2d 791 [2d Dept 1988]). A showing of likelihood of success on the merits required before a preliminary injunction may be properly issued must not be equated with the showing of a certainty of success (Id.). Furthermore, provided that the elements required for the issuance of a preliminary injunction are demonstrated in the plaintiff's papers, the presentation by the defendant of evidence sufficient to raise an issue of fact as to any such elements shall not in itself be grounds for denial of the motion (CPLR 6312[c]).

Here, the plaintiffs have established the likelihood of success on the merits. The plaintiffs have made a sufficient showing that the Corporation lacks the funds necessary to proceed with the sale and that it acted properly by proceeding under the Eighth Article.

Although Sussman has raised issues of fact on whether the Eighth Article is applicable and whether the capital call was a proper procedure under the Eighth Article, this does not warrant the [*2]denial of a temporary restraining order. These issues will be determined when a decision on the merits is reached. Furthermore, failure to grant the order would cause greater injuries to the plaintiff than any injury that might conceivably be suffered by Sussman in granting the order for a preliminary injunction preserving the status quo (see, Clarion Assocs. Inc. v. Colby Co., Inc., 276 AD2d 461 [2d Dept 2000]). Specifically, if Sussman were to proceed with selling all of Olympic's assets or dissolving the Corporation, the plaintiffs would be irreparably harmed.

Additionally, the Nineteenth Article of the Shareholders Agreement provides that "should any dispute concerning the sale or disposition of any shares of the Shareholders occur, a temporary restraining order or injunction may be obtained from a court of appropriate jurisdiction, restraining any sale or disposition of said shares, pending determination of such controversy." Thus, a temporary injunction in this case is proper. The plaintiffs, however, are incorrect that no undertaking should be required. In order to grant such an injunction, an undertaking is required under CPLR 6312(b),

The defendant has moved for the appointment of a temporary receiver. A party moving for the appointment of a temporary receiver must submit clear and convincing evidence of irreparable loss or waste to the subject property and that a temporary receiver is necessary to protect its interest in the property (Magee v. Magee, 120 AD3d 637 [2d Dept 2014]). The defendant alleges that plaintiffs Michael Barone and Frank Barone do not have the ability to effectively maintain Olympic's operations. Sussman has submitted proof that Olympic's gross receipts have decreased from $6,061,330 in 2011 to $4,511,203 in 2013, or 25.57% less. Sussman continues that, despite a marked decline in gross receipts, the compensation of plaintiffs Frank Barone and Michael Barone paid by the Corporation has increased during this period. Here, Sussman has not met this evidentiary burden and has offered nothing but conclusory statements that the decline in profits of Olympic Ice Cream is attributable to any alleged, claimed, or perceived misconduct on the part of the individual plaintiffs (Hoffman v. Hoffman, 81 AD3d 600 [2d Dept 2011]; Vardaris Tech, Inc. v. Paleros Inc., 49 AD3d 631 [2d Dept 2008]).

Accordingly, the motion for a preliminary injunction is granted to the extent that Sussman, as executor of Vourderis's Estate, is enjoined and restrained from proceeding with any sale or disposition of the shares of Olympic, or any remedies set forth in the Agreement, or from acting under a power of attorney provided by the Agreement pending a final determination of this action. The foregoing is conditioned upon the filing by plaintiffs of an undertaking pursuant to CPLR 6312, in an amount to be fixed by the Court, in the order to be entered hereon. Upon settlement of the order, the parties may submit proof and recommendations as to the amount of the undertaking.

The motion by the defendant for the appointment of a temporary receiver is, in all respects, denied.

Settle one order on notice.

______________________________Hon. Martin E. Ritholtz

Justice, Supreme Court, Queens County