The following papers and the attachments and exhibits thereto have been read on this motion:

Notice of Motion 1

Memorandum of Law in Support 2

Affidavit in Support 3

Affirmation in Support 4

Memorandum of Law in Opposition 5

Affidavit in Opposition (Weinstock) 6

Affirmation in Opposition (Ward) 7

Memorandum of Law in Opposition 8

Affidavit in Opposition (Vogler) 9

Affidavit in Opposition (Del Rosso) 10

Affidavit in Opposition (Stolle) 11

Affidavit in Opposition (Meyer) 12

Affidavit in Opposition (Tolerico) 13

Memorandum of Law in Reply 14

Affirmation in Reply 15

JJM Sunrise Automotive, LLC d/b/a Lynbrook Audi ("JJM") moves for an order pursuant to CPLR 6301 preliminarily enjoining Defendants Volkswagen Group of America, Inc. d/b/a Audi of America, Inc ("Audi"), Biener Auto Group, Inc. ("Biener Auto") and Stanley Weinstock (collectively referred to as "Biener") from entering into a dealer agreement and establishing an Audi dealership add-point in Westbury, New York until a final judgment has been entered in this action ("Westbury site").

JJM was founded in April 2013 for the purpose of acquiring the assets of Anchor South Shore, Inc. d/b/a Anchor Audi ("Anchor Audi") and obtaining the rights to an Audi dealership in Lynbrook, New York.

On May 28, 2013, JJM and Audi entered into a Dealer Agreement pursuant to which JJM became an authorized Audi dealer. The Dealer Agreement incorporated the Standard Provisions Agreement ("Standard Provisions") which stated that Audi does "not give Dealer any exclusive right to sell or service Authorized Products in any area or territory".

Audi and JJM also entered into a Facility Construction Agreement pursuant to which JJM agreed to relocate the "Dealer Premises to a Corporate Identity-compliant Audi Sales Facility" and be bound by the terms of the Facility Construction Agreement. In the Facility Construction Agreement, JJM acknowledged that Audi "made no representations, promises or warranties that Dealer's Operations will be financially successful in either the short or long term" (Facility Construction Agreement at ¶¶ 1, 8).

At the time JJM acquired the assets of Anchor Audi and became obligated to construct a new Audi dealership, there was only one other Audi dealership in Nassau County, Defendant Biener Auto. Defendant Stanley Weinstock is the President of Biener Auto. JJM's claims against all of the Defendants arise out of the disclosure by Audi in a letter dated December 19, 2013 that Biener Auto, with the approval of Audi, intends to establish a new Audi dealership at 1038 Brush Hollow Road in Westbury, New York (the "Westbury site").

On April 15, 2014, JJM commenced the instant action against Audi and the Biener Defendants advancing seventeen causes of action.

Audi thereafter moved for an order pursuant to CPLR 3211(a)(1) and (7) dismissing the complaint insofar as asserted against it. Biener also moved for an order pursuant to CPLR 3211(a)(1) and (7) dismissing the seventh, twelfth, thirteenth and fourteenth causes of action asserted against them.

On November 6, 2014, this court granted Biener's motion and dismissed the complaint, insofar as asserted against them. Audi's motion was granted to the extent that all of the causes of action were dismissed with the exception of the ninth cause of action, a claim for breach of the implied covenant of good faith and fair dealing wherein JJM alleged that as a result of Audi's "bad faith conduct and wrongful acts", Audi has breached the covenant of good faith and fair dealing implied in the Dealer Agreement and Facility Construction Agreement.

JJM now moves for an order pursuant to CPLR 6301 preliminary enjoining Audi and Biener from entering into a Dealer Agreement and establishing an Audi dealership at the Westbury site.

For the reasons that follow, JJM's motion is denied.

On a motion for a preliminary injunction, the moving party must demonstrate by clear and convincing evidence, a likelihood of ultimate success on the merits, irreparable injury if the injunction were not granted, and a balancing of equities in favor of granting the injunction (Family-Friendly Media, Inc. v Recorder Television Network, 74 AD3d 738 [2d Dept 2010]). [*2]An injunction is a provisional remedy to maintain the status quo and prevent the dissipation of property that could render a judgment ineffectual, not to determine the ultimate rights of the parties. As such, absent extraordinary circumstances, a preliminary injunction will not issue where to do so would grant the movant the ultimate relief sought in the complaint (Reichman v Reichman, 88 AD3d 680 [2d Dept 2011]; SHS Baisley, LLC v Res Land, Inc., 18 AD3d 727 [2d Dept 2005]). In addition, mandatory preliminary injunctions should not be granted absent extraordinary or unique circumstances or where the final judgment may otherwise fail to afford complete relief (SHS Baisley, LLC v Res Land, Inc., 18 AD3d at 727, supra). The decision whether to grant or deny a preliminary injunction is within the sound discretion of the court (Family-Friendly Media, Inc. v Recorder Television Network, 74 AD3d at 738, supra; Masjid Usman, Inc. v Beech 140, LLC, 68 AD3d 942 [2d Dept 2009]).

" Implicit in all contracts is a covenant of good faith and fair dealing in the course of contract performance . . . . This embraces a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract . . . .'" (Lonner v Simon Property Group, Inc., 57 AD3d 100, 108 [2d Dept 2008], quoting Dalton v Educational Testing Serv., 87 NY2d 384, 389 [1995]). The covenant of good faith and fair dealing is breached when a party acts in a manner that deprives the other party of the right to receive benefits under their agreement (511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144 [2002]). In order to establish a breach of the covenant, a plaintiff must prove facts that tend to show that the defendant sought to prevent performance of the contract or to withhold its benefit from the plaintiff (Aventine Inv. Mgt., Inc. v Canadian Imperial Bank of Commerce, 265 AD2d 513 [2d Dept 1999]). "The duty of good faith and fair dealing, however, is not without limits, and no obligation can be implied that would be inconsistent with other terms of the contractual relationship" (Dalton v Educational Testing Serv., 87 NY2d at 389, supra [internal quotation marks and citation omitted]). "Where the contract contemplates the exercise of discretion, this pledge includes a promise not to act arbitrarily or irrationally in exercising that discretion" (Dalton v Educational Testing Serv., 87 NY2d 384, 389 (1995). Thus, "even an explicitly discretionary contractual right may not be exercised in bad faith so as to frustrate the other party's right to benefit under the agreement" (Legend Autorama, Ltd. v Audi of America, Inc., 100 AD3d 714 [2d Dept 2012] quoting Richbell Information Services. Inc v Jupiter Partners, LP, 309 AD2d 288, 302 [1st Dept 2003]). In other words, "even where one has an apparently unlimited right under a contract, that right may not be exercised solely for personal gain in such a way as to deprive the other party of the fruits of the contract" (Richbell Information Services. Inc v Jupiter Partners, LP, 309 AD2d at 302, supra).

In support of its motion, JJM argues^[FN1] : that by the Dealer Agreement, the Dealer [*3]"assume[d] the responsibility in Dealer's Area for the promotion and sale of Authorized [Audi] products and for the supply of Genuine Parts and customer service for Authorized Products". In furtherance of this provision, JJM "acquired the Anchor Audi dealership and agreed to expand its sales and service facilities to serve its PAI^[FN2] ; hired sales and service personnel to serve the customers in its assigned market area; and trained its personnel, all at significant expense and effort", and that the creation of the Westbury site will reduce JJM's market area and, as such, "will frustrate, destroy and injure [JJM's] right to receive the fruits of the Dealer Agreement" and JJM's investment (JJM Memorandum of Law in Support at pp 10-14; Brown Affidavit in Support at ¶¶ 26-27).

With respect to the Facility Agreement, JJM argues that it relied on Audi's representation regarding JJM's need for new facilities based on JJM's contractual market area, and that JJM "acted pursuant to that understanding, and now is being stripped of the fruits of that promise by Audi's modification of [JJM's] PAI" (JJM Memorandum of Law in Support at pp 10-14). The Facility Construction Agreement provides, in relevant part:

Adequacy of Market. Dealer and its legal counsel have reviewed the laws applying to dealer/manufacturer relations, Dealer agrees that the Facility requirements as expressed in this Agreement are reasonable and necessary in view of the need to service the public and further that the economic condition in the industry and specifically in the Dealer's relevant market area support this action (Ex. "A" to Brown Affidavit in Support at ¶ 5[g] [emphasis added]).

In support of these contentions, JJM submits, inter alia, the affidavit of Michael Brown, a member of JJM, who states the following:

During the negotiations, Audi made repeated demands to Lynbrook that it commit to investing the funds necessary to enhance and expand the dealership into a larger and more modern facility.

Moreover, Audi informed Lynbrook that to qualify for certain monetary incentive programs, without which Lynbrook could not remain competitive, Lynbrook would have to renovate and expand its sales and service facilities.

Audi based its demands on its projections of future sales and service business in Lynbrook's PAI, or Dealer's Area, over which Lynbrook assumed responsibility in the Dealer Agreement.

Audi did not disclose during the negotiations, however, that Audi already had an existing plan to open a new Audi dealership in Nassau County, which would compete directly with Lynbrook and would be given a critical portion of Lynbrook's PAI.

Unaware of Audi's then-secret plan, and relying on Audi's representations, promises and inducements, [JJM] entered into the [asset purchase agreement] and Lynbrook closed on the [asset purchase agreement] and entered into an Audi Dealer Agreement and assumed the Facility Agreement.

[P]ursuant to the Facility Agreement, in addition to spending $13 million to purchase the dealership rights, Lynbrook embarked on a $12 million dollar expansion and renovation of its sales and service facilities to comply with Audi's projected increased capacity needs in Lynbrook's existing PAI. Audi's unilateral attempt to reduce Lynbrook's market area will deprive Lynbrook of its ability to realize the fruits of its dealership investment. Lynbrook relied on Audi's representations regarding Lynbrook's need for new facilities based on Lynbrook's contractual market area, acted pursuant to that understanding, and now is being stripped of the fruits of that promise by Audi's modification of Lynbrook's PAI. Lynbrook's reduced PAI due to the Westbury Add-Point would render Lynbrook's investment for naught and would substantially increase the likelihood that Lynbrook would go out of business (Brown Affidavit in Support at ¶¶ 9-10, 15-17, 50).

In opposition to JJM's motion, Audi argues, inter alia, that the implied covenant "only encompasses promises that a reasonable person would understand to be included in the agreement" and, because the parties entered into the Dealer Agreement and the Facility Construction Agreement after the enactment of Vehicle and Traffic Law ("VTL") § 463(2)(cc) - the relevant market area provision - JJM could not reasonably believe at that time that it had any implied contractual right to challenge a new dealership outside of its relevant market area of six miles.^[FN3]

Initially, the court notes the express language of the Facility Construction Agreement wherein JJM acknowledged that it and its "legal counsel have reviewed the laws applying to dealer/manufacturer relations" and, further, that JJM agreed that JJM's facility requirements as expressed in the Facility Construction Agreement are reasonable and necessary in view of the economic condition in JJM's "relevant market area". In this vein, JJM has failed to demonstrate, by clear and convincing evidence, that Audi breached the implied covenant of good faith and fair [*4]dealing associated with the Facility Construction Agreement by allowing the establishment of the Westbury dealership outside JJM's relevant market area.

Further, in the Dealer Agreement, "[JJM] assume[d] the responsibility in [JJM's] Area for the promotion and sale of Authorized Products and for the supply of Genuine Parts and customer service for Authorized Products. This Agreement does not give [JJM] any exclusive right to sell or service Authorized Products in any area or territory (Standard Provisions article 2) [emphasis added]). Given such language, JJM has failed to establish, by clear and convincing evidence, that the establishment of a new Audi dealership - outside JJM's relevant market area - was impermissible, especially given VTL 463(2)(cc), which affords a dealer certain protections only in the event of the opening of a dealership within that dealer's relevant market area.

Audi further argues that it had contractual discretion to establish a new dealership and that its decision to establish the Westbury dealership was neither arbitrary nor irrational. In this regard, the affidavits submitted by Jeremy Meyer and Mark Del Rosso indicate that a new dealership in Westbury was warranted "in view of the representation gap in northern Nassau County, the growth of the Audi brand, and the need to serve customers through a dealer network structured to compete effectively with Audi's key competitors" (Audi Memorandum of Law in Opposition at p 20). Given the testimony before the court, JJM has failed to satisfy its burden by showing that Audi acted arbitrarily or irrationally in establishing the Westbury site.

The Biener Defendants similarly argue that there was no bad faith on the part of Audi toward JJM in approving the Westbury site, as evidenced by market studies and "extensive internal analyses" (Biener Memorandum of Law in Opposition at p 6).

Biener and Audi's "justification" is disputed by JJM which states that Audi's decision to open the Westbury site and induce JJM to acquire the Anchor Audi franchise and make facilities' upgrades was "unjustified" inasmuch as Audi failed to properly analyze the impact that the loss of high income customers would have on JJM if the Westbury site opens, and "wrongfully concluded without any supporting analysis that a new dealership in Westbury would help the Audi brand . . . despite Audi's inability to satisfy the existing needs of its dealers" (JJM Reply Memorandum of Law at pp 2, 14).

While the "mere existence of an issue of fact will not itself be grounds for the denial of the motion" (Arcamone—Makinano v Britton Prop., Inc., 83 AD3d 623, 625 [2d Dept 2011]), where, as here, "central facts are in dispute, it is more difficult to ascertain whether the movant has shown likelihood of success on the merits" and, thus, where the "facts are in sharp dispute, a temporary injunction will not be granted" (County of Westchester v United Waste New Rochelle, 32 AD3d 979 [2d Dept 2006]; Pearlgreen Corp. v Yau Chi Chu (8 AD3d 460 [2d Dept 2004] [given the sharply disputed issues of fact, plaintiff was not entitled to a preliminary injunction]; Blueberries Gourmet v Aris Realty Corp., 255 AD2d 348 [2d Dept 1998] [in demonstrating its success on the merits, movant must show a "clear right to relief which is plain from the undisputed facts'"]).

The court notes that the cases relied upon by JJM to support a preliminary injunction are inapposite inasmuch as those cases involved motions to dismiss and analyses that turned on a more lenient standard than the clear and convincing standard relevant to a preliminary injunction motion (e.g., Legend Autorama, Ltd. v Audi of America, Inc. (100 AD3d 714 [2d Dept 2012]), Manhattan Motorcars, Inc. v Automobili Lamborghini, S.p.A. (244 FRD 204 [SDNY 2007]), Franklin Park Lincoln-Mercury, Inc. v Ford Motor Co. (530 FedAppx 542 [6th Cir 2013]), Aston Martin Lagonda of North America, Inc. v Lotus Motorsports, Inc. (2014 WL 1092864 [D. Mass 2014]).

Michael Brown, a member of JJM, states in his affidavit that the opening of the Westbury dealership will decrease JJM's business, render JJM "unviable" and "unprofitable", and result in a "devastating loss of revenue" that will likely put JJM "out of business" because JJM would be left with a lower allocation of vehicles, reduced sales and service of Audi vehicles, and a loss of employees (Brown Affidavit in Support at ¶¶ 55-59, 61). Specifically, JJM aruges that without the injunctive relief requested, the Westbury dealership would "obliterate [JJM's] profits", and will "devastate [JJM's] business and render its $13 million acquisition of Anchor Audi and its additional ongoing $12 million facilities expansion for naught" because the Westbury location "directly impacts [JJM's] main sales area" inasmuch as 12 zip codes, including those of high income households, currently assigned to JJM's PAI would be closer to the new Westbury location, thus having "substantial adverse economic effects on [JJM]" (JJM Memorandum of Law in Support at pp 16-17).

Where the movant can be fully compensated by a monetary award, an injunction will not be granted because no irreparable harm will be sustained in the absence of injunctive relief (306 Rutledge, LLC v City of New York, 90 AD3d 1026 [2d Dept 2011]). Here, Brown acknowledged in a deposition that his claim can be compensated by monetary damages. Specifically, in his deposition, Brown was asked, and answered, the following questions:

Q. In terms of the harm that you're envisioning from the Westbury point opening, what harm would the Lynbrook store suffer, Mr. Brown, that couldn't be compensated for with money?

* * * *

A. I'm confused by the question because I don't understand. Of course it can be compensated for with money. Money can solve the problem. I don't understand.

Q. That's - - my question was simply, is there any harm, in your mind, that you're envisioning that Lynbrook would suffer that money couldn't fix?

A. Oh, okay. Now I understand. Yeah. The value of the franchise is suffering. Now, money could fix that, but you're not just talking about profitability; you're talking about the value of the [*5]business.

Q. And I understand that. But my question is a bit broader than that and really getting to the question of is there any harm that money, some sum of money, couldn't fix that you can think of?

A. Nothing that I can think of this second that money couldn't fix (Ex. "4" to Vogler Affidavit at pp 66-67).

Moreover, according to Weinstock, the President of Biener, construction of the facility in Westbury, which has not even begun, has an estimated completion date of 2017. "Simultaneous with Biener's completion of construction of the new dealership facility in 2017, Biener anticipates entering into a dealer agreement with [Audi] pursuant to which [Audi] will authorize Biener to sell and service new and used Audi vehicles from the facility" (Weinstock Affidavit in Opposition at ¶¶ 72-73).

Here, given that the new dealership does not have a completion date until 2017, coupled with the fact that the dealer agreement between Biener and Audi will not be executed until the completion of construction, JJM has failed to show that irreparable injury will result if the injunction were not granted as it has not shown that its injury, if any, resulting from the future Westbury site is definite and imminent (Golden v Steam Heat, Inc., 216 AD2d 440 [2d Dept 1995] [injunction denied where record indicated that the plaintiffs' concern was an adverse effect in the future and, thus, plaintiffs failed to demonstrate the threshold showing of imminent, irreparable injury]).

Moreover, JJM has not demonstrated, by clear and convincing evidence, that the irreparable harm, if any, is definite given the conflicting preliminary expert reports (see Ex. "O" to JJM Motion; Ex. "14" to Vogler Affidavit in Opposition). In this regard, the court notes that in 2007 a new Audi dealership was created in West Islip which bordered the market area of Luxury Autos of Huntington, Inc., d/b/a Audi of Huntington ("Huntington Audi") (the West Islip dealership and Huntington Audi were located approximately nine miles away from each other). As such, portions of Huntington Audi's market area were reassigned to the West Islip dealership (Legend Autorama, Ltd. v Audi of America, Inc., 32 Misc 3d 1216(A) [Sup Ct Suffolk County 2011]). Notwithstanding Huntington Audi's decreased PAI and loss of some of its market area to the West Islip dealership in 2007, there was evidence that Huntington Audi nevertheless exceeded Audi's sales expectations, realized high net profits, and continues to have one of Audi's best turn rates in the area.

For an injury to be irreparable and justify the grant of a preliminary injunction, it must at least be threatened and imminent. The irreparable injury required generally means harm that is immediate, specific, nonspeculative and nonconclusory. That is, the conduct sought to be enjoined must be either in progress or threatened and fairly certain to occur, so that actual danger is presently apparent, and not merely a matter of speculation, surmise, or apprehension. A preliminary injunction will issue only upon a showing that the defendant's wrongful acts are [*6]occurring or are threatened and reasonably likely to occur (67A NYJur 2d Injunctions § 19).

When considering the equities, the court must weigh the harm each side will suffer in the absence or in the face of injunctive relief (Washington Deluxe Bus, Inc. v Sharmash Bus Corp., 47 AD3d 806 [2d Dept 2008]). Specifically, to obtain an injunction, the movant is required to show that irreparable injury to be sustained is more burdensome to him than the harm that would be caused to the party opposing the injunction if the injunction were granted (Lombard v Station Square Inn Apartments Corp., 94 AD3d 717 [2d Dept 2012]).

Here, the Biener Defendants have demonstrated that the harm to them is greater if the injunction were granted than the harm, if any, flowing to JJM if the injunction were not granted. As noted, the new dealership will not be completed until 2017. As such, the granting of an injunction, which will enjoin construction and, thus, delay the opening of the Westbury dealership, will be more burdensome to the Biener Defendants, who have expended large resources for the purchase of the property as well as professional fees related to the acquisition and development of the Westbury dealership (Weinstock Affidavit at ¶¶ 65-67, 76-83). According to Weinstock, an "injunction will set us back years and will cost us millions of dollars in additional expenses [including carrying costs of the property, i.e., real estate taxes] and lost business opportunities and revenue" and that if an injunction were in place for two years, "Biener estimates that its total damages during this time period would approximate $9.2 million" (Weinstock Affidavit in Opposition at ¶¶ 77, 83).

Based on the foregoing, it is hereby

Ordered that the motion of the Plaintiff, JJM Sunrise Automotive, LLC d/b/a Lynbrook Audi, for an order pursuant to CPLR 6301 is denied.

This constitutes the decision and order of the court.