FILED: NEW YORK COUNTY CLERK 12/06/2012
NYSCEF DOC. NO. 6
INDEX NO. 654143/2012
RECEIVED NYSCEF: 12/06/2012
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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EDWARD J. SAJOVIC DESIGN LLC, by JOSEPH CUOZZO,
and JOSEPH CUOZZO, individually
Plaintiffs,
Index No.
654143/2012
Motion Seq.:#1
MEMORANDUM
OF LAW
-­‐
against –
EDWARD J. SAJOVIC
Defendant.
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DEFENDANT’S MEMORANDUM OF LAW IS SUPPORT OF DEFENDANT’S
ORDER TO SHOW CAUSE FOR PRELIMINARY INJUNCTIVE RELIEF
Imke Ratschko, Esq.
Attorney for Defendant
30 Broad Street, 14th Floor
New York, NY 10004
Phone: 212-253-1027
TABLE OF CONTENTS
TABLE OF AUTHORITIES
2
PRELIMINARY STATEMENT
4
ARGUMENT
4
I.
Sajovic is likely to succeed on the Merits of his Counterclaims
Against Plaintiff
5
II.
Defendant is threatened with irreparable Harm
6
III.
The Equities tilt in Sajovic’s Favor
7
IV.
Conclusion
8
2 TABLE OF AUTHORITIES
Cases
Andejo Corp. v South Street Seaport Ltd. Partnership, 40 AD3d 407 (1st Dept 2007). ...... 6 Clayton v Whitton, 233 AD2d 828 (3d Dept 1996) ......................................................................... 8 Coinmach Corp. v Fordham Hill Owners Corp., 3 AD3d 312, 314 (1st Dept 2004) ............ 5 Konishi v Por Kung Lin, 88 AD2d 905 (2d Dept 1982) ................................................................. 7 Matter of J.O.M. Corp. v Department of Health of State of N.Y., 173 AD2d 153, 154 (1st
Dept 1991) ................................................................................................................................................. 8 McLaughlin, Piven, Vogel, Inc. v W.J. Nolan & Co., 114 AD2d 165, 172-73 (2d Dept
1986) ........................................................................................................................................................... 5 Nassau Roofing & Sheet Metal Co. v Facilities Dev. Corp., 70 AD2d 1021, 1022 (3d
Dept 1979). ................................................................................................................................................ 7 OraSure Technologies, Inc. v Prestige Brands Holdings, Inc., 42 AD3d 348 (1st Dept
2007) ........................................................................................................................................................... 8 Props for Today, Inc. v Kaplan, 163 AD2d 177, 178 (1st Dept 1990) ...................................... 6 Tzolis v Wolff, 39 AD3d 138, 139 (1st Dept 2007) ......................................................................... 6 W.T. Grant Co. v Srogi, 52 NY2d 496, 517 (1981) ......................................................................... 5 STATUTES
CPLR § 6301
MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S ORDER TO
SHOW CAUSE FOR PRELIMINARY INJUNCTIVE RELIEF
Defendant Edward Sajovic (“Defendant” or “Sajovic”) respectfully submits this
Memorandum of Law, in support of his Order to Show Cause for preliminary injunctive
relief pursuant to Civil Practice Law & Rules (CPLR) 6301 et seq.
PRELIMINARY STATEMENT
This motion stems from Plaintiff Joseph Cuozzo’s (“Plaintiff” or “Cuozzo”)
unauthorized removal of business records and intellectual property from the offices of
Edward J. Sajovic Design, LLC (“EJS”), Cuozzo’s destruction of EJS’ electronic records
and placement of a hold on EJS’ bank accounts, preventing Sajovic from proceeding with
an important EJS design project.
Given the history of the Cuozzo’s high-handed dealings, Sajovic believes the
filing of this action by Cuozzo was a preemptive strike, in support of a plan to force him
out as CEO and majority shareholder of EJS. Defendant accordingly asks this Court to
preserve the status quo and allow Sajovic to fulfill his role as majority shareholder and
CEO, and EJS to continue in the ordinary course of its business, pending the trial of this
case.
The facts material to this motion are set forth in detail in Sajovic’s Affidavit
(“Sajovic Affidavit”) , dated December 5, 2012 and submitted herewith.
ARGUMENT
THE LEGAL STANDARD
Under CPLR § 6301, a preliminary injunction may be granted:
in any action where it appears that the defendant threatens or is about to do, or
is doing or procuring or suffering to be done, an act in violation of the
plaintiff's rights respecting the subject of the action, and tending to render the
judgment ineffectual, or in any action where the plaintiff has demanded and
would be entitled to a judgment restraining the defendant from the commission or
4 continuance of an act, which, if committed or continued during the pendency of
the action, would produce injury to the plaintiff.
To obtain a preliminary injunction, the movant must show: (1) a likelihood of
success on the merits; (2) irreparable harm in the absence of an injunction; and (3) a
balance of the equities in favor of the movant. See Coinmach Corp. v Fordham Hill
Owners Corp., 3 AD3d 312, 314 (1st Dept 2004); W.T. Grant Co. v Srogi, 52 NY2d 496,
517 (1981); Nobu Next Door, LLC v Fine Arts Housing, Inc., 4 NY3d 839, 840 [2005];
Aetna Ins. Co. v Capasso, 75 NY2d 860, 862 [1990]; Weinreb Mgt., LLC v KBD Mgt.,
Inc., 22 AD3d 571, 572 [2005]. Importantly, subdivision (c) of CPLR § 6312 states,
“(p)rovided 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 of such elements shall not in itself be grounds
for denial of the motion.” CPLR § 6312(c). Irreparable injury is considered to be an
injury that cannot be addressed through a monetary award. (Walsh v Design Concepts,
Ltd., 221 AD2d 454, 455 [1995].
SAJOVIC IS LIKELY TO SUCEED ON THE MERITS OF HIS
COUNTERCLAIMS AGAINST PLAINTIFF
In demonstrating a “likelihood of success on the merits, a prima facie showing of
a right to relief is sufficient; actual proof of the case should be left to further court
proceedings.” McLaughlin, Piven, Vogel, Inc. v W.J. Nolan & Co., 114 AD2d 165, 17273 (2d Dept 1986). The movant does not have to show that success is certain; rather, the
burden is to show merely that a “likelihood of success” exists. See Props for Today, Inc.
v Kaplan, 163 AD2d 177, 178 (1st Dept 1990) (moving party is not obliged to show that
his success is certain). Defendant counter-claimant has more than satisfied his burden.
5 Sajovic seeks injunctive relief on behalf of himself and EJS. As a member of
EJS, a limited liability company, he has standing to sue derivatively on EJS’s behalf.
See Tzolis v Wolff, 39 AD3d 138, 139 (1st Dept 2007).
Plaintiff’s allegations in the complaint are mainly of the mud-slinging, subjective
and unprovable variety, such as claims that Sajovic is too tired to do his job or does not
answer emails, none of which add up to anything near a breach of fiduciary duty.
Sajovic acknowledges (Sajovic Affidavit, paragraph 10) that at one point he over-reacted
to plaintiff’s attempted seizure of the company’s operations by blocking his access to the
office temporarily—an error he regrets and rectified rapidly. Plaintiff, by contrast, will be
unable to muster any legal explanation for freezing bank accounts and removing
company files. Plaintiff has ignored all demands that he return the files or restore the
accounts, without justification.
Plaintiff’s unjustifiable actions in blocking accounts and removing files appears
to be a prima facie breach of fiduciary duty under New York law, see Andejo Corp. v
South Street Seaport Ltd. Partnership, 40 AD3d 407 (1st Dept 2007).
Accordingly, Sajovic has demonstrated likelihood of success on the merits.
DEFENDANT IS THREATENED WITH IRREPARABLE HARM
Sajovic and EJS will be irreparably harmed in the absence of injunctive relief
pending the outcome of this litigation. As a result of plaintiff’s blocking of the
company’s bank accounts, Sajovic is in danger of missing deadlines necessary to fulfill
commitments he made to a company client, Tommy Hilfiger (Sajovic affidavit,
paragraphs 11-12). The only conceivable explanation of Plaintiff’s action in blocking
these accounts is that he is mounting a coup d’etat, attempting to drive Sajovic out of the
6 company he founded, by preventing him from fulfilling the promises the company made
to clients and ruining his reputation in the industry.
The removable of company files in paper form from the offices and electronic
format from the company servers (Sajovic affidavit, paragraph 13) also appears intended
to ensure that Sajovic is unable to perform his role as CEO and meet commitments made
by him to company clients.
THE EQUITIES TILT IN SAJOVIC’S FAVOR
Before a court can grant a preliminary injunction it must balance the equities. “(I)t
must be shown that the irreparable injury to be sustained by the Plaintiff is more
burdensome to it than the harm caused to defendant through the imposition of the
injunction.” Nassau Roofing & Sheet Metal Co. v Facilities Dev. Corp., 70 AD2d 1021,
1022 (3d Dept 1979).
The balance of the equities favors injunctive relief where “it is apparent that if
relief is granted, defendant will suffer no prejudice or inconvenience, while denial of
such relief will cause Plaintiff substantial and irreparable harm.” Konishi v Por Kung Lin,
88 AD2d 905 (2d Dept 1982). That is the case here.
Here, a balancing of the equities clearly favors Sajovic. Plaintiff will suffer no
imaginable harm if required to stop his interference with and blocking of company bank
accounts and removal of files (electronic and paper) from the corporate premises, as he
had no legal right to perform these actions in the first place, and did so solely as a means
of forcing Sajovic out of the company. Sajovic for his part has demonstrated that
7 irreparable harm is already occurring, as Plaintiff is maliciously preventing him from
fulfilling a company contract with the Tommy Hilfiger company.
As CEO and 55% shareholder of the company, Sajovic has an obvious right to
commit funds and issue checks as stated in the operating agreement, and to possess and
review all files of company accounts. Plaintiff’s interference with two of the most basic
functions of Sajovic’s role, writing checks and reviewing client information, is legally
and morally unjustifiable. Only by restoring the status quo pending trial can this court
end Plaintiff’s unjustifiable acts of self-help, designed to force Sajovic out of the
company he founded. Plaintiff will not be harmed in any way by an order preventing him
from removing files or blocking bank accounts. Clayton v Whitton, 233 AD2d 828 (3d
Dept 1996) (balance favors injunctive relief where defendant fails to make “a convincing
showing that he will be harmed in any material way” by issuance of preliminary
injunction). See also OraSure Technologies, Inc. v Prestige Brands Holdings, Inc., 42
AD3d 348 (1st Dept 2007); Matter of J.O.M. Corp. v Department of Health of State of
N.Y., 173 AD2d 153, 154 (1st Dept 1991).
Accordingly, the balancing of equities clearly weighs in favor of Sajovic.
CONCLUSION
For the above reasons, the Court should grant Sajovic’s motion for preliminary
injunctive relief.
For the above reasons, the Court should grant Defendant’s motion for injunctive relief,
enjoining Plaintiff directly or indirectly, and whether alone or in concert with others,
from:
8 (i)
closing, placing a hold upon, or otherwise interfering with or
preventing use of any bank accounts of EDWARD J. SAJOVIC
DESIGN LLC(“ EJS”) in the ordinary course of business, or
removing funds from such accounts or failing to deposit EJS receipts
therein or otherwise making use of EJS moneys other than in the
ordinary course of business, or continuing to perform any of these
actions commenced before the issuance of this Order to show Cause;
(ii)
removing from EJS’ office, or deleting or destroying any of EJS’
business records, intellectual property and files, whether in tangible or
electronic format, or continuing to perform any of these actions
commenced before the issuance of this Order to show Cause;
(iii)
withholding or concealing from Defendant any reports, data or
information to which he would ordinarily be entitled as a manager of
EJS or as the CEO thereof in the performance of his duties;
(iv)
ordering Plaintiff, within three days after service of an Order granting
this Order to show Cause, to return to EJS’ main office all of EJS’
business records, intellectual property and files, whether in tangible or
electronic format, which Plaintiff removed prior to the issuance of this
Order to show Cause;
(v)
together with such other and further relief as may be just and proper in
the circumstances.
DATED: New York, New York
December 6, 2012
9 /s/ Imke Ratschko, Esq.
Imke Ratschko, Esq.
30 Broad Street, 14th Floor
New York, New York 10004
Phone: 212 2531027
Email: iratschko@ratschko.com
Attorney for Defendant and Counterclaimant
/s/ Jonathan Wallace, Esq.
Jonathan Wallace, Esq.
4011 23d Avenue #3F
Astoria NY 11105
Phone: 917-359-6234
Email: jonathan.wallace80@gmail.com Attorney for Defendant and Counterclaimant
10