My Brother's Keeper; Court Grants Motion for Temporary Receiver for Properties Co-Owned by Deceased's Brother and Widow: Clark v Clark
In a December 20, 2011 decision by Justice Warshawsky, the court granted in part the plaintiff’s motion, pursuant to CPLR 6401 for the appointment of a temporary receiver. The plaintiff, Winifred Clark, the widow of William Clark, brought the action against William’s brother, James Clark. In the instant motion, Winifred moved for the appointment of a temporary receiver for 32 properties, 28 of which she, through William, and James owned as tenants in common; as to the others, the ownership was disputed. Winifred’s brought the motion in an attempt to protect her rights to 50% of the net rental income from the properties, which James managed. The appointment of a temporary receiver is an extreme remedy; the statute requires the movant to prove, by clear and convincing evidence that “there is a danger that the property will be removed from the state, or lost, materially injured or destroyed.” The court explained that while it is “loathe to appoint a receiver in most cases,” and notwithstanding the significant cost required to do so, it found that all of James’ actions taken together, including: defaulting on tax payments; under reporting income; maintaining double books; failing to pay Winifred her fair share of income; and misuse of joint income for personal needs, provided clear and convincing evidence that the CPLR 6401 standard was met. Therefore, the court granted the motion with respect to the 28 properties for which Winifred and James’ co-ownership was undisputed.
Clark v Clark, Sup Ct, Nassau County, December 20, 2011, Warshawsky, J., Index No. 5514/2008
Deadlocked Shareholders Lose Bid for Dissolution and Appointment of Temporary Receiver: Babaew v Shteyman
In a May 18, 2011 decision by Justice Bucaria, the court considered various motions brought by shareholders a nurse staffing company in a derivative action who claimed that the defendants breached fiduciary duties and misappropriated trade secrets by starting a competing business and diverting the corporation’s business. The court found that the corporation’s shareholders were deadlocked and dissolution would be beneficial to the shareholders, but denied the motion brought by order to show cause for dissolution pursuant to BCL § 1104(a) because the plaintiffs did not comply with the publication requirement of BCL § 1106(c). The court also denied the plaintiffs’ motion to impose a constructive trust on all of the defendants’ assets upon determining that where a shareholder of a close corporation breaches his fiduciary duties, the other shareholders are injured only to the extent they are entitled to share in the profits earned by the corporation. The court denied the plaintiffs’ motion for the appointment of a temporary receiver, an extreme remedy which results in the taking and withholding of personal property before there has been an adjudication on the merits, because the previously imposed temporary restraining order preventing the defendants from disposing of the corporation’s records or transferring assets except in the ordinary course would provide adequate relief. Finally, the court denied the plaintiffs’ motion for an order restraining defendants from utilizing the corporation’s list of nurses as trade secrets on the grounds that the plaintiffs failed to establish that the nurse list was entitled to trade secret protection.
Babaew v Shteyman, Sup Ct, Nassau County, May 18, 2011, Bucaria, J, Index No. 003691/11
