The opinion of the court was delivered by: LAWRENCE M. MCKENNA
Plaintiff Julius Seide, in his various fiduciary capacities as Trustee and/or Chairman and Trustee of the above-captioned employee benefit plans (the "Funds"), commenced this action on May 21, 1993. The Complaint alleges failure to make required contributions and reports to the Funds in violation of Section 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1145, and states claims arising under ERISA Section 502(a)(3) and (e)(1), 29 U.S.C. § 1132(a)(3) and (e)(1); Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185; and Section 630 of the New York Business Corporation Law of 1961, N.Y. Bus. Corp. Law § 630 (McKinney 1986). Plaintiff applied to this Court on May 28, 1993, for an Order pursuant to Rule 65 of the Federal Rules of Civil Procedure enjoining Defendants Crest Color, Inc. ("Crest" or the "Company"), Daron Printing Corporation ("Daron"), John Bifone, Jr., and John Bifone, Sr., from selling, transferring, or disposing of assets whose value might be applied toward the Funds' deficiencies. On June 3, 1993, by Order to Show Cause, and again on July 21, 1993, this Court heard arguments from counsel on whether such an injunction should issue. At the latter hearing, the parties agreed that Defendants would not sell Crest and/or Daron and/or substantially all of the assets of these entities without five days written notice to Plaintiff pending this Court's decision on the Plaintiff's application for temporary injunctive relief.
For the reasons stated below, Plaintiff's motion is granted, and a preliminary injunction will issue.
The case at bar is the most recent in a series of actions arising out of collective bargaining and statutory relationships between Crest and the Funds. Crest is a New York corporation, with its principal place of business at 180 Varick Street in New York City, and is engaged in the printing business. Daron, also incorporated in New York, is located at the same address and is also in the printing business. Defendants claim that Crest is primarily a printer, while Daron is primarily a printing brokerage company. The parties agree that John Bifone, Jr., is the president and a director of both companies; that he also serves as the Treasurer of Daron; and that his father, John Bifone, Sr., serves as Vice President and Secretary of Daron. There is a discrepancy between the parties' contentions as to whether John Bifone, Sr., is or was at one time an officer and director of Crest. At least as of June 16, 1993, according to his sworn affidavit, Defendant Bifone, Jr., was the only officer and director of Crest. Defendant Bifone, Jr., is the majority shareholder of Daron, and his father, John Bifone, Sr., and brother, Pat Bifone, are the minority shareholders. Crest is owned by West Shore Superette, Ltd. ("West Shore"), a New York corporation. Plaintiff alleges, without any support in the record, that West Shore is another interest of the Bifones. Defendants have not responded to Plaintiff's discovery requests seeking to identify the owners of West Shore.
On September 18, 1992, February 24, 1993, and April 8, 1993, judgments were obtained in Federal court against Crest for failure to make required contributions and related payroll reports to the Funds. Crest did not oppose any of these actions. An Affidavit of Judgment by Confession sworn to by John Bifone, Jr., was entered as a judgment against Crest in New York State Supreme Court on September 10, 1992. Upon obtaining these judgments, Plaintiff Funds attached several Crest bank accounts and thereby obtained approximately $ 18,000 in partial satisfaction of amounts owed.
When Plaintiff attempted to satisfy the outstanding judgments by executing on all printing presses located at the Crest facility, it discovered that they were leased in the name of Daron. Plaintiff also claims that other equipment located at the Crest facility is owned and/or leased by Daron. The Company claims to have made periodic payments to the Funds over the past year.
Notwithstanding the attachments and alleged payments, Defendant Crest remains liable for outstanding amounts owed to the Funds. Both Plaintiff and Defendants are in agreement that the judgments obtained against Crest to date total $ 176,062.43, exclusive of interest.
In addition, Plaintiff asserts that since obtaining the judgments, additional sums, amounting to $ 52,000, have accrued to the Funds (as of May 21, 1993).
After Crest notified Plaintiff, in his capacity as President of Local 51 of the Graphic Communications Union, of its intent to sell its remaining assets (which apparently include only the Company's name and good will), Plaintiff, alleging that Daron is the alter ego of Crest and is therefore jointly and severally liable for Crest's obligations to the Funds, applied to this Court seeking to enjoin the sale of Crest, Daron and all or substantially all of the assets of both companies.
Legal Standard Governing Preliminary Injunctive Relief
The Second Circuit has recently reiterated the well known rule that a party is entitled to a preliminary injunction only if it establishes "(1) irreparable harm and (2) either (a) likelihood of success on the merits, or (b) sufficiently serious questions going to the merits to make them fair ground for litigation, plus a balance of hardships tipping decidedly toward the party requesting preliminary relief." ICN Pharmaceuticals, Inc. v. Khan, 2 F.3d 484, (quoting Plaza Health Lab., Inc. v. Perales, 878 F.2d 577, 580 (2d Cir. 1989)); see also Tucker Anthony Realty Corp. v. Schlesinger, 888 F.2d 969, 972 (2d Cir. 1989); Citibank, N.A. v. Nyland (CF8) Ltd., 839 F.2d 93, 97 (2d Cir. 1988); American Cyanamid v. Campagna Per La Farmacie, 847 F.2d 53, 54-55 (2d Cir. 1988); Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (1979).
Whether an irreparable injury may be prevented thereby is the "linchpin" in judicial determinations concerning the issuance of preliminary injunctive relief. Emons Industries, Inc. v. Liberty Mut. Ins. Co., 749 F. Supp. 1289, 1291 (S.D.N.Y. 1990) (quoting Buckingham Corp. v. Karp, 762 F.2d 257, 262 (2d Cir. 1985)). "Perhaps the single most important prerequisite for the issuance of a preliminary injunction is a demonstration that if it is not granted the applicant is likely to suffer irreparable harm before a decision on the merits can be rendered." Citibank, N.A. v. Citytrust, 756 F.2d 273, 275 (2d Cir. 1985) (quotations and citations omitted). "To establish irreparable harm, plaintiffs must demonstrate 'an injury that is neither remote nor speculative, but actual and imminent.'" Tucker, 888 F.2d at 975 (quoting Consolidated Brands, Inc. v. Mondi, 638 F. Supp. 152, 155 (E.D.N.Y. 1986)). In ...