In a January 12, 2012 decision by Justice Bucaria, the court granted the plaintiffs’ (“Ceppos’”) motion for a preliminary injunction restraining the defendants (“Szlednaks”) from enforcing three agreements; denied Ceppos’ motion for a preliminary injunction restraining the Szlendaks from using any of Ceppos’ confidential business information; and denied the Szlendak’s cross-motion to dismiss the complaint. The three contracts between Ceppos and Marisuz Szlendak, the CFO of plaintiff company Sarut, were entered after Ceppos discovered that Marisuz embezzled approximately $500,000 from Sarut. The contracts were: 1) a severance agreement in favor of Marisuz, in which Marisuz agreed not to compete with Sarut or to use any of its confidential information; 2) an agreement through which Ceppos pledged Marisuz‘s 30% stock in Sarut back to him to secure the severance agreement payments; and 3) an escrow agreement appointing Blank Rome LLP as escrow agent to hold the stock. Ceppos moved for a preliminary injunction declaring all three agreements void due to allegedly false representation made by the Szlednaks that they would “restore the ‘familial and emotional’ relationship” that Ceppos enjoyed with the Szlendaks’ children. Additionally, Ceppos sought to restrain the Szlednaks from using Ceppos’ confidential business information. The Szlendaks’ cross-moved to dismiss for failure to state a cause of action for fraud in the inducement and based on a general release in the severance agreement.
The court granted Ceppos’ motion with respect to the enforcement of the agreements, finding that there was a danger of irreparable injury if the stock was sold to a third party, and that although a promise to foster a relationship might be too vague for enforcement, Ceppos established a likelihood of success on the merits because the circumstances suggested that the Szlendaks intended to sever any relationship between their children and Ceppos. The court also found that overarching public policy could mandate voiding the agreements to the extent that the purpose of the severance agreement was to avoid criminal prosecution of Mariusz. Because Ceppos established a likelihood of success on the fraud claim, the court denied the Szlendak’s cross-motion to dismiss in its entirety. Finally, the court held that because the severance agreement was void due to fraud, Ceppos surrendered every right under it, including the benefits of the non-compete provision.
Ceppos v. Szlendak, Sup Ct, Nassau County, January 13, 2012, Bucaria, J, Index No. 013788/11