641 N.Y.S.2d 732 | N.Y. App. Div. | 1996
(1) Cross appeals from an order of the Supreme Court (Viscardi, J.), entered March 8, 1995 in Washington County, which granted plaintiffs’ motion for a preliminary injunction and partially granted defendants’ cross motion to dismiss the complaint, and (2) appeal from an order of said court, entered August 8, 1995 in Washington County, which, upon renewal, adhered to its prior decision.
On September 26,1988, plaintiff Henry J.W. Vanderminden, III (hereinafter plaintiff) and his brother, defendant Robert D. Vanderminden, Sr. (hereinafter defendant), executed an agreement consisting, inter alia, of an understanding that they, together with their respective families, owned an equal amount of voting stock in the family business, Telescope Casual Furniture, Inc. (hereinafter the company). The brothers, who had.been at odds over the control and management of the company, essentially agreed to preserve the status quo of equal ownership and control. The agreement was also executed by Henry J.W. Vanderminden, Jr., their father, who agreed not to transfer "by gift, [w]ill, sale or in any respect any voting stock of [the company] to either of my sons or any member of their
At that point in time, Cecile Vanderminden, the father’s wife and mother of plaintiff and defendant, owned 52 shares of voting stock. Shortly thereafter, another agreement was drawn allegedly to supplement the original agreement, which recognized that the mother was not a party to the original agreement and which provided that, if the mother transferred, by will or otherwise during her lifetime, more voting stock to one side of the family than to the other, appropriate action would he taken so that neither side of the family would own more voting stock than the other. Although defendant signed this proposed supplemental agreement, plaintiff did not sign it. Notably, in April 1987, a durable power of attorney was executed by the mother, appointing the father as her attorney-in-fact, which permitted the father, inter alia, to conduct share and commodity transactions.
Thereafter, in July 1989, all of the shareholders of the company executed an irrevocable voting trust and pooling agreement, providing that all the shares of stock be pooled together for a period of five years and that plaintiff and defendant be covoting trustees who must agree in order to cast a vote. In September 1989, the father, as the mother’s attorney-in-fact via the power of attorney, transferred the mother’s 52 shares of voting stock to defendant Katherine V. Rathbun, defendant’s daughter; the transfer was made subject to the July 1989 voting trust agreement.
In July 1994, at the time the voting trust agreement was about to expire, plaintiffs commenced this action by order to show cause and, having been granted a temporary restraining order, sought a preliminary injunction enjoining defendants from acting inconsistent with the voting trust agreement during the pendency of the action. The underlying action, in pertinent part, alleged that defendants breached the September 1988 agreement by inducing the father, as attorney-in-fact, to turn over the mother’s stock to Rathbun, thereby giving defendant’s family controlling interest in the company, and further, that if defendants were not enjoined during the pendency of the litigation from voting their shares to plaintiffs’ detriment, plaintiffs will be irreparably injured.
Defendants, by cross motion, sought an order pursuant to CPLR 3211 (a) (1) dismissing plaintiffs’ second cause of action, an order pursuant to CPLR 3211 (a) (5) dismissing the seventh cause of action, and an order pursuant to CPLR 3211 (a) (7)
Initially, with respect to the first, second and third causes of action, we reject defendants’ contention that they should have been dismissed based on the documentary evidence submitted (see, CPLR 3211 [a] [l]).
If the transfer is considered to have been made by the father, it is likely that the agreement was violated, but if the transfer is considered to have been made by the mother, it is likely that the agreement was not violated. This factual issue is key to determining whether defendants violated the September 1988 agreement as alleged in the first cause of action, or whether the father breached the contract, as alleged in the second cause
It is alleged in plaintiffs’ fifth cause of action that defendants did not comply with a July 1989 letter agreement by, inter alia, failing to provide raises and causing certain plaintiffs to leave the employment of the company. We reject defendants’ argument that this cause of action should be dismissed because it should be addressed to the company and not to the individual defendants, since it was ultimately the company which was responsible for the actions about which plaintiffs are complaining. As plaintiffs point out, the company was not a party to the agreement; rather, it was plaintiffs and defendants, as shareholders, who made the agreement. Accordingly, since the shareholders of the closely held corporation signed the agreement, the terms of the agreement will be enforced despite the fact that the corporation is not a named party (see, Matter of Lane [Abel-Bey], 70 AD2d 838, 839, affd 50 NY2d 864; Siegel v Ribak, 43 Misc 2d 7, 13).
Moving next to defendants’ contention that Supreme Court improperly granted a preliminary injunction to plaintiffs, it is well settled that in order to be granted preliminary injunctive relief, plaintiffs must show "a probability of success, danger of irreparable injury in the absence of an injunction, and a balance of the equities in their favor” (Aetna Ins. Co. v Capasso, 75 NY2d 860, 862; see, Doe v Axelrod, 73 NY2d 748, 750; Kensington Ct. Assocs. v Gullo, 180 AD2d 888, 889). Furthermore, the granting of a preliminary injunction will not be disturbed on review absent an abuse of discretion (see, Jarvis Assocs. v Stotler, 216 AD2d 649, 651; GTE Spacenet Corp. v New York State Dept. of Taxation & Fin., 201 AD2d 429, 430). In applying the three-pronged test, we conclude that Supreme Court properly granted a preliminary injunction.
As part of their submitted proof, plaintiffs included the September 1988 agreement which established that the father would not favor plaintiff’s family over defendant’s family, or
Defendants further contend that plaintiffs have not shown that they will suffer irreparable harm which would entitle them to a preliminary injunction. They argue that most of plaintiffs’ claims in their complaint seek money damages as relief and that entitlement to money damages is not a harm which is irreparable (see, e.g., Busters Cleaning Corp. v Frati, 180 AD2d 705, 706). Plaintiffs, however, aver in their affidavits that they will suffer more than monetary harm. Their alleged harm, an opportunity for defendants to shift the balance power and assume management and control of the company, may properly be viewed as irreparable injury (see, e.g., Matter of Brenner v Hart Sys., 114 AD2d 363, 366). Moreover, under the circumstances of this case, plaintiffs’ request to maintain the status quo by continuing to enforce the existing voting trust agreement through the pendency of the action is proper even if the injury were purely monetary (see, e.g., Young & Co. v Black, 97 AD2d 369, 370, appeal dismissed 61 NY2d 712). In our view, the irreparable injury prong has been satisfied.
We also reject defendants’ assertion that the balancing of the equities tips in their favor rather than in favor of plaintiffs. They argue that plaintiff, by not signing the supplemental
We also reject defendants’ contention that Supreme Court’s decision is incompatible with the mother’s durable power of attorney, which by its terms authorized the father to transfer the stock in question. Defendants argue that since the September 1988 agreement was not binding on the mother, and since plaintiff did not sign the supplemental agreement, the mother was able to do with the stock what she pleased. Further, they argue that the father, as her attorney-in-fact, was authorized to carry out actions on behalf of the mother and that the father’s transfer was really a transfer on behalf of the mother since, as an agent under the power of attorney he was her alter ego and thus nothing was breached. While it is true that as the mother’s attorney-in-fact the father was authorized to sell the 52 shares of stock at issue, he also had the authority not to sell those shares. Nothing in the power of attorney agreement mandated him to transfer them exclusively to defendant’s family. He merely was given the discretionary authority and, in exercising his discretion in the manner described, may have violated the September 1988 agreement by making a transfer which disturbs the equality of the ownership of the company.
Moving now to plaintiffs’ contentions, their assertion that Supreme Court improperly dismissed their fourth cause of action is without merit. Plaintiffs’ fourth cause of action alleges that "[t]he transfer of shares aforesaid from [the mother] by her attorney-in-fact [the father] to [Rathbun], was a transfer for inadequate consideration”. Supreme Court dismissed this
On the other hand, plaintiffs’ contention that the dismissal of its seventh cause of action was error has merit. The seventh cause of action alleges tortious interference with contractual rights on the part of Rathbun and Supreme Court dismissed this cause of action as untimely. It is well settled that the appropriate period of limitations for causes of action alleging a tortious interference with contractual relations is three years (see, CPLR 214 [4]; Omega Indus. v Chemical Bank, 190 AD2d 843, 844-845). Here, the shares were transferred to Rathbun in September 1989. Although plaintiffs commenced this action in July 1994, more than three years after the transfer, the transfer did not immediately effectuate any actual injury to plaintiffs because the voting trust agreement established that power would be equalized for the years that the voting trust was in effect. Therefore, although shares were transferred to Rathbun disturbing the equalization of the shares, it did not have any effect until the expiration of the voting trust. Accordingly, since plaintiffs did not suffer any actual injury until the expiration of the voting trust,
Cardona, P. J., Mercure, Casey and Yesawich Jr., JJ., concur. Ordered that the order entered March 8, 1995 is modified, on the law, without costs, by reversing so much thereof as granted defendants’ motion to dismiss plaintiffs’ seventh cause of action; motion regarding said cause of action denied; and, as so modified, affirmed. Ordered that the order entered August 8, 1995 is affirmed, without costs.
. We also reject defendants’ assertion that the first cause of action should be dismissed because it failed to allege specific facts of undue influence. Plaintiffs need not prove their factual allegations on a motion to dismiss since they are entitled to "every possible favorable inference * * * that plaintiff[s] * * * will ultimately prevail on the merits” (Rovello v Orofino Realty Co., 40 NY2d 633, 634).
. The voting trust agreement is dated July 12, 1989 and expired in five years. The verified complaint was filed in the County Clerk’s office on July 12, 1994. The following day, July 13, 1994, Supreme Court signed the order to show cause which included the temporary restraining order which evolved into the preliminary injunction.