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Oseff v Scotti 2009 NY Slip Op 30415(U) February 17, 2009 Supreme Court, Nassau County Docket Number: 5821-08 Judge: Stephen A. Bucaria Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

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SHORT FORM ORDER
SUPREME COURT - STATE OF NEW YORK
Present:

HON. STEPHEN A. BUCARIA Justice
TRIAL/lAS , PART 3 NASSAU COUNTY

LANCE OSEFF, JENNIFER OSEFF BALCO SECURTY SERVICES , INC. and SECURTY CENTRAL ALARM SERVICES , INC. Plaintiffs
-against-

MOTION D TE: Jan. 28 , 2009
Motion Sequence # 001

:J

FRANK SCOTTI , BALCO ALARM SERVICES CORP. and ELECTRONIC SECURTY SYSTEMS OF NEW YORK, Defendants.

The following papers read on this motion:
Order to Show Cause.. :.... ........... ........ ....... X Affirmation in Opposition.................. ....... X Reply Affidavit.... ..................................... X Memorandum of Law................................ X
This motion , by the attorneys for the plaintiffs , for a preliminary injunction is determined as hereinafter set forth.
On or about January 2 2007 , defendant Balco Alarm Services Corp. (BAS) entered into an Agreement of Sale (the Agreement) to sell certain assets to plaintiff Balco Security Services , Inc. (BSS) a company formed by plaintiff Lance Oseff (Oseff) and his wife Jennifer Oseff. Plaintiff Security Central Alanl1 Services , Inc. (SCAS) is another to cease the use of the corporation organized by Oseff. The plaintiffBSS is required

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OSEFF, et al v SCOTTI, et al

Index no, 00582/08

Balco " name on the third anniversary of the date of the Agreement. Defendant Frank Scotti (Scotti) is the sole shareholder of defendant BAS. Oseff alleges that defendant Electronic Security Systems of New York (ESS) is a sole proprietorship set up by Scotti for the purpose of interfering with the contractual relationship of the parties to the Agreement. Throughout his affidavit in opposition Scotti contends neither he nor BAS has any connection to ESS. Defendant BAS was and continues to be in the business of installng, servicing and monitoring electronic security systems. Oseff worked for BAS
for 17 years.

quipment and $649 , 000 for the goodwil), $25 000 was paid when the Agreement waS signed and $300 000 on the closing date. A further $15 000 was satisfied by the The cancellation , at the closing, of BAS' s pre-existing debt to Oseffin that amount. amount balance was paid by delivery of a promissory note atthe closing in the principal ' of$310 000payable with interest in 60 monthly installments of$6,435. 09 secured by a security interest in the transferred assets and a personalguara tee from Mr. and Mrs. Oseff.
for the

000 was . The purchase price under the Agreement was $650 000. 00 (of which $1

The plaintiff alleges eight separate causes of action against the defendant; first for fraud and misrepresentation; second for interference with contractual relations; third for wrongful inducement of breach of contract; fourth for prima facie tort; fifth for breach of contract; sixth for defamation; seventh cause of action , for a permanent injunctiqn; and the eighth cause of action , for attorneys fees.

In the seventh cause of action the plaintiff requests the issuance of a permanent . injunction restraining the defendants from " any acts in violation of the terms of the Agreement , and specifically prohibiting the Defendants. . . from taking any action whatsoever in violation of the restrictive covenants by which the defendants are bound. 51 st of the complaint).
Paragraph 14

Restrictive Covenant of the Agreement provides that:
For Five (5) years following the closing (the " Restricted Period" Seller shall not solicit , perform installations , service , provide central station monitoring, or otherwise contact customers listed in Schedule B" of this Agreement for Central Station Based Alarm Services subject to the following exceptions:

(a)

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OSEFF, et al v SCOTTI, et al
(i)

Index no.

00582/08

Seller shall be permitted to make one mailing within a one year period from the Closing Date , wherein Seller shall be , except for permitted to inform Schedule " B" customers that , Seller those items listed in subdivision (a) in this paragraph wil be available to those customers in providing them with electronic security, entertainment , communication and automation systems. Seller s mailngs wil not solicit any client to engage Seller to provide Central Station Based Alarm Services or in any manner directly or indirectly dissuade Schedule " B" customers from continuing to use Purchaser to provide Central Station Based Alarm Services.

Jii)

Seller may sell goods or provide services to Schedule " customers other than Central Station Based Alarm Services. (emphasis added).

(iii)

Seller shall be unrestricted in the services it perfonns for a Schedule " B" customer at a location not listed on Schedule B.

(b)

Seller covenants that should any Schedule " B" customers contact

him during the Restricted Period for Central Station Based Alarm
Services at a location listed on Schedule B he shall direct them to

Purchaser except as provided in subdivisions (a)(ii) and (a)(iii) herein.
(c)

Schedule " B" wil only include customers at locations that were fully , 2006. installed and online with central station by June 30
Seller agrees to provide Purchaser during the Restricted Period with the right of first refusal to perform installation work as Seller contractor for any services that Seller is pennitted herein to perform for Schedule " B" customers at locations listed on Schedule B unless Seller has its own employees perform the installation.

(d)

The defendant seller argues that ~ 14(b)(ii) of the agreement should be interpreted to mean that he could continue to provide other types of services to the customers on Schedule B " such as installng or servicing equipment for alarm systems that activated a s cell local siren or bell , for example; or generated an alarm system to the subscriber

,p

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...

QSEFF, et alv SCOTTI, et al

Index no. 00582/08

, and could provide even the listed phone or directly to the Police or Fire Department year , or at the listed locations after the fiveservices for those customers at other locations restrictive period had elapsed. " (Scott affidavit in opposition~ 4). The, plaintiff purchaser . Covenant being nothing more argues that the latter language is nowhere in the Restrictive , the than an excuse for the seller to violate the terms of the Restrictive Covenant. Rather For Five (5) years following the closing (the buyer argues that the clause stating (14a) " Restricted Period" ) seller shall not icit. perform installations. service. provide central Schedule " station monitoring. or otherwise contact customers listed in (emphasis added) limits the defendant seller from contacting customers on Schedule B.

Plaintiff argues that the defendant contacted customers on Schedule B in violation that defendant wrongfully contacted of the Restrictive Covenant. Plaintiffs contend Ba1co Alarm Services Corp. (see customer Biunno on Schedule B and referred them to , plaintiff submitted ctedible proof that Exhibit A , Reply AffidavitOseff). Further customer Maletta , also on Schedule B , may have been solicited by the defendants in laintiffs have presented credible proof that violation of the Restrictive Covenant. Also the defendants may have wrongfully solicited or contacted customer Jerry Harary. and B was permissibl Defendant asserts that his contacting the customers on Schedule not in violation of the Restrictive Covenant, There are over 600 customers on Schedule B. Defendant further contends that he ent of Sale (BAS' has no shortage of new business since entering into the Agreen , and the total amount of work I performed for revenue was about $450 000 last year

" (Scott affidavit in

Schedule B customers was worth perhaps about one percent of that). opposition~ 19). Two of the contracts on Schedule B were with defendants offered to their federal agencies and pay , contracts were unassignable. After some dispute as to the price for these two customers. The defendant denies contacting any customers on Schedule B in contaCted the customers on violation of the Agreement. Defendant contends that if he Schedule B he was pennitted to do so pursuant to the terms of500.Agreement; and that by the Plaintiffs assert in one 1 % of $450 000. 00 or $4 year they were not worth more than , defendants incrementally and wrongfully chipping away at the customers on Schedule B jeopardize the viability of the are diluting the company s goodwil and threaten to business.
, a movant must clearly In order to be entitled to a preliminary injunction , (2) irreparable injury absent demonstrate (1) a likelihood of success on the merits movant' granting of the preliminary injunction , and (3) a balancing of the equities in the Ru;z v Doe v Axelrod (Aetna Ins. Co. v Capasso
73 NY2d 748; 75 NY2d 860; favor

).

' "

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OSEFF, et al v SCOTTI, et al
Melonev AD3d 936).
26 AD3d 485;

Index no. 00582/08

Stocklev v Gorelik

24 AD3d 535;

Matos v CUv of New York , 21

The purpose of a preliminary injunction is to maintain the status quo Melone Ruiz v and prevent
the dissipation of property that could render a judgment ineffectual

Weinreb 25 AD3d 642; supra; Coinmach Corp. v A lie v Pond Owners Corp 22 AD3d 571). The decision to grant or Management. LLC v KBD Management. Inc Doe v
deny a preliminary injunction rests in the sound discretion of the Supreme Court

Axelrod, supra

at 750;

Management. Inc

supra) It is well settled that absent extraordinary circumstances
not issu

Ruiz v Melonev, supra; Weinreb Management. LLC v KBD , a

preliminary injunction wil
LaIJd. Inc.
18 AD3d 727; 349;

relief to which he or she would be entitled in a final judgment"

AD2d 347 348-

where to do so would grant the movant the ultimate SHS Baislev. LLC v Res Serv. 308 St. Paul Fire and Mar. Ins. Co. v York Claims 221 AD2d 602). MacIntvre v Metropolitan Life Ins. Co.

It is most unfortunate Mr. Oseff and Mr. Scotti who have known each other for over 17 years and have apparently had a good business relationship, enter into a contract , end up in contentious litigation over how to crafted after many hours of negotiation implement the terms of the Agreement.

A contract should be read as awhole to determine its 77 NY2d 157, 162). " (I)n searching for the probable W. W.W. Assocs. v Giancontieri , our goal must be to accord the words of intent of the parties , lest form swallow substance Sutto v East Riv. Sav. Bank , 55 the contract their ' fair and reasonable meaning Heller v Pope 250 NY 132 135). We have long been guided by NY2d 550 , 555 the rule that " every contract contains an implied obligation by each party to deal fruits of part of the fairly with the other and to eschew actions which would deprive the other Vilage Associates v Greenwich Miler v Almquist 241 AD2d 181 Gross v Neuman 53 AD2d2 , 5). " It is axiomatic that a Salle 110 AD2d 111 contract is to be interpreted so as to give effect to the intention of the parties as expressed , 46 Breed v Insurance Co. of North America NY2d 351 , 355). Accordingly, " ( w )hen sophisticated and, counseled business persons be their writing should as a rule set down their agreement in a clear , complete document 97 NY2d 195 enforced according to its terms Reiss v Financial Performance Corp , supra Notably, " courts may not by construction w.w. W. Assocs. v Giancontieri make a new of those used and thereby " add or excise terms , nor distort the meaning Schmidt v Magnetic contract for the parties under the guise of interpreting the writing MorleeSales Corp. v Manufacturers Head Corp. 97 AD2d 151 , 157
, quoting , 184; the agreelJent" , 115; in the unequivocal language employed" 198; , quoting from

purpose and intent

(see

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OSEFF, et al v SCOTTI, et al
Trust Co.
19; see also

Index no. 00582/08

Reiss v Financial Performance Corp supra at 1999 NY2d 16 200). " Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary th writing w. W. W. Associates. Inc. v Giancontieri, supra Rather (e)ffect and meaning must be given to Village of Hamburg v American Ref-Fuel Co. of Niagara, County of Columbia v Continental Ins. Co. 83 NY2d618 L.P. 284 AD2d 85 Two Guvs from
every tenn of the contract" , 89; see 628) and reasonable effort must be made to harmonize all of its terms

Harrison-N.:Y.

Inc. v S.

R. Realtv Associates
primary purpose

63 NY2d 396;

National Conversion

Corp. v Cedar Bldg. Corp. 23 NY2d 621 , 625), The contract must be interpreted so as to Williams Press. Inc. v State give effect to , not nullfy, its general or NY2d 434 435), and " where two seemingly conflcting provisions reasonably can be Biian Designer For Men v reconciled Provecfin de Venezuela v Fireman s Fun Ins. Co. 264 AD2d 48 Banco Indus. de Venezuela 760 F2d 390 395, a court is required to do so and to give both effect , quoting from

396).

While the meaning of a contract is ordinarily a question of law , when a term or clause is ambiguous and the determination of the parties ' intent depends upon the credibility of extrinsic evidence or a choice among inferences to be drawn from extrinsic (Amusement Bus. Underwriters v American Inti. evidence Indem. Co. v Wesolowski 33 NY2d 169 Group 66 NY2d 878 172). In the within action there are issues of fact as to the interpretation of the tenns of the Restrictive Covenant , and the plaintiff may prevail on the merits. The existe ce of an issue of fact on a motion for a preliminary injunction is not , standing alone , sufficient basis for the denial of the motion. CPLR 6312( c).
, then the issue is one of fact , 880; Hartford Acc.

Irreparable injury may be defined as " that which cannot be repaired , restored or compensated in money or where the compensation cannot be measured" (13 WeinsteinKom Miler NY Civ. Prac. Sec. 6301.15). The loss of the tangible asset of goodwil may (see Mohawk Maintenance v Kessler 52 NY2d 276 at p, 287). Balancing of the equities favors the granting of the preliminary injunction. By granting a preliminary injunction the court wil be preserving the tangible asset of goodwil during the pendency of this litigation.
cause irreparable harm and be restrained by the issuance of a preliminary injunction

The plaintiffs I:ranted to the extent that the terms and provisions of the temporary restraining order dated March 28 2008 previously signed by this Court shall be continued during the pendency of this action.
' motion for a preliminary injunction is

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The parties are admonished that an injunction is not a determination on the merits Icv Bonded Concrete Inc. v Town of Saugerties 42 AD3d 852; orthe law of the case Beverage. Inc. v Henckel 19 AD3d 595). Splash Food

Upon granting a preliminary injunction , the Court is required to direct that plaintiffs post an undertaking to assure that the plaintiff wil pay all damages incurred by the defendants if it is ultimately determined that the preliminary injunction was Margolies v Encounter. Inc. 42 NY2d

475). .
improvidently issued. (CPLR 6312(b);

see also

Plaintiffs shall post an undertaking as required by CPLR 6312(b) in the sum of 000. 00 within fifteen (15) days ofthis Order or the motion for a preliminary injunction is denied.

Counsel for plaintiff shall serve a copy of this Order on defendants , by service
. upon their attorneys pursuant to CPLR 2103 b On or before March 6 , 2009.

Preliminary Conference

schedule for the purpose of setting

A Prelimin ry Conference has been scheduled forMarch 30, 2009 at 9:30 a. m. in Chambers of the undersigned. Please be advised that counsel appearing for the shall be fully versed in the factual background and their client' firm deposition dates.

Dated FEB 17 2009

ENTERED
FE8 2. Q Z009
NA:) AV v)uN'fV CONT CLERK' S OFfICE



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