United States District Court, Southern District of New York
February 22, 2002
AIM INTERNATIONAL TRADING, LLC, MOSHE AVIV, AIM DANIA, INC. AND AIM INTERNATIONAL TRADING, INC., PLAINTIFFS,
VALCUCINE SPA., IBI LLC, KITCHENS OF VENETO, INC., BRIAN JEVREMOV, RUBEN BRAHA, AND JEFFREY MCDUFFEE, DEFENDANTS.
The opinion of the court was delivered by: Leisure, District Judge.
Plaintiffs AIM International Trading, LLC ("AIM"), Moshe Aviv,
AIM Dania, Inc. ("AIM Dania"), and AIM International Trading,
Inc. ("AIM, Inc.") apply pursuant to Rule 65 of the Federal
Rules of Civil Procedure for a temporary restraining order
("TRO") against defendants Valcucine SpA ("Valcucine"), IBI LLC
("IBI"), Kitchens of Veneto, Inc. ("Veneto"), Brian Jevremov,
Ruben Braha, and Jeffrey McDuffee, enjoining Valcucine, its
agents, attorneys, and all those acting on their behalf from (1)
selling products offered for sale by Valcucine under the
trademarks "Valcucine" and "New Art" dealerships which were
established by AIM pursuant to a March 31, 1999 Exclusive
Distributorship Agreement ("Distributorship Agreement"); (2)
selling Products to any person within the United States other
than AIM; and (3) directing Valcucine to continue to fulfill and
ship on a C.O.D. basis orders for Products forwarded to it by
AIM in accordance with the Distributorship Agreement. For the
following reasons, plaintiffs' application is granted.
Plaintiffs bring this action for inter alia: (1) breach of
contract; (2) breach of implied covenant of good faith; (3)
fraud; (4) tortious interference with contractual and business
relationships; (5) disparagement and injurious falsehood; and
(6) unjust enrichment.*fn1 The case was removed by defendants
on February 21, 2002, one day before the state court was to have
a hearing regarding the TRO.
Valcucine is an Italian company engaged in the manufacture of
high-end kitchen cabinetry and furniture components sold in
Europe and elsewhere. See Complaint at ¶ 5. The plaintiffs
allege that AIM and Valcucine entered into the Distributorship
Agreement on March 31, 1999, whereby AIM was appointed by
Valcucine as the exclusive distributor of Valcucine Products in
the United States. See Complaint at ¶ 6. AIM's business is
based solely on its role as exclusive distributor of Valcucine
products. See Affirmation of May Orenstein, Esq., February 21,
2002 ("Orenstein Aff."), at ¶ 15.*fn2 Further, plaintiffs
claim that they have spent hundreds of thousands of dollars in
start-up costs in connection with creating a distribution
network in the United States for Valcucine's products. See
Complaint at ¶ 24. Plaintiffs claim that their efforts in
marketing Valcucine have proven fruitiful, having secured
agreements with five dealers to sell, through AIM, Valcucine's
products in the United States.*fn3
However, by a letter dated October 24, 2001, Valcucine
purported to terminate its Distributorship with plaintiffs, as
of February 28, 2002, expressing dissatisfaction with the
plaintiffs efforts. Plaintiffs allege, however, that the
Distributorship agreement was terminable only for cause, and
that defendants had no cause in order to terminate the
agreement. See Orenstein Aff. at ¶ 6.
On January 10, 2002, plaintiffs filed the instant case,
alleging a scheme by which the defendants seek to misappropriate
the good will, and the network of five dealerships built by
plaintiffs pursuant to the Distributorship. See Orenstein Aff.
at ¶ 7. Following commencement of the action, by letter dated
January 17, 2002, Valcucine purported to terminate the
Distributorship immediately. See Orenstein Aff. at ¶ 8. On
February 7, 2002, pursuant to an arbitration clause in the
Distributorship, Valcucine filed a request for arbitration to
the Secretariat of the International Court of Arbitration,
seeking, among other things, declaration that Valcucine validly
terminated the Distributorship. See Orenstein Aff. at ¶ 10.
Plaintiffs now seek the above described temporary restraining
order during the pendency of the arbitration proceedings.
The standard for granting a temporary restraining order and a
preliminary injunction pursuant to Rule 65 of the Federal Rules
of Procedure are identical.*fn4 It
is well established that in order to obtain such relief, the
movant must show: "(a) irreparable harm and (b) either (1)
likelihood of success on the merits or (2) sufficiently serious
questions going to the merits to make them a fair ground for
litigation and a balance of hardships tipping decidedly toward
the party requesting the preliminary relief." See Jackson
Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.
1979). Whether injunctive relief should issue or not "rests in
the sound discretion of the district court which, absent abuse
of discretion, will not be disturbed on appeal." Reuters Ltd.
v. United Press Int'l, Inc., 903 F.2d 904, 907 (2d Cir. 1990)
(quoting Thornburgh v. American College of Obstetricians and
Gynecologists, 476 U.S. 747, 755, 106 S.Ct. 2169, 90 L.Ed.2d
A temporary restraining order pursuant to Fed.R.Civ.P.
Rule 65(b) is designed to preserve the status quo. "The purpose of a
temporary restraining order is to preserve an existing situation
in statu quo until the court has an opportunity to pass upon
the merits of the demand for a preliminary injunction." Warner
Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1125 (2d
Cir. 1989) (quoting Pan American World Airways, Inc. v. Flight
Engineers' Int'l Ass'n, 306 F.2d 840, 842-43 (2d Cir. 1962)).
Thus, a temporary restraining order should issue for just so
long as is necessary to hold a hearing. See Granny Goose Foods,
Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 439, 94 S.Ct.
1113, 39 L.Ed.2d 435 (1974).
The Second Circuit has deemed the threshold showing of
"irreparable harm" to be of particular significance under
Rule 65, regardless of the strength of the movant's case on the
merits. See, e.g., Reuters Ltd. v. United Press Int'l, Inc.,
903 F.2d 904, 907 (2d Cir. 1990) ("a showing of probable
irreparable harm is the `single most important prerequisite for
the issuance of a preliminary injunction'") (quoting Bell &
Howell: Mamiya Co. v. Masel Supply Co. Corp., 719 F.2d 42, 45
(2d Cir. 1983)). Accordingly, "[i]rreparable harm must be shown
by the moving party to be imminent, not remote or speculative,
and the alleged injury must be one incapable of being fully
remedied by monetary damages." Reuters, 903 F.2d at 907
(citing Tucker Anthony Realty Corp. v. Schlesinger,
888 F.2d 969, 972 (2d Cir. 1989)). The movant is required to establish
not a mere possibility of irreparable harm, but that it is
"likely to suffer irreparable harm if equitable relief is
denied." JSG Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75, 79
(2d Cir. 1990) (emphasis in original). "Likelihood sets, of
course, a higher standard than `possibility.'" Id.
In Roso-Lino Beverage Distributors, Inc. v. Coca-Cola
Bottling Co., 749 F.2d 124 (2d Cir. 1984), the Second Circuit
preliminarily enjoined Coca-Cola from terminating plaintiff as a
distributor pending arbitration. See id. at 127. The Court
explained the basis of its decision as follows:
The loss of Roso-Lino's distributorship, an ongoing
business representing many years of effort and the
livelihood of its husband and wife owners,
constitutes irreparable harm. What plaintiff stands
to lose cannot be fully compensated by
subsequent monetary damages. . . . It is equally
clear that the equities tip decidedly in favor of
Roso-Lino. It is unlikely that Coca-Cola will suffer
greatly if the eleven-year relationship is continued
for a short while. The two owners of Roso-Lino, on
the other hand, stand to lose their business forever.
Because the equities tip (rather heavily) in favor of
granting a preliminary injunction, Roso-Lino need
demonstrate only "serious questions going to the
merits", rather than "likelihood of success on the
merits". . . .That there are serious questions is
clear from the parties' conflicting stories of the
reasons had for ending Roso-Lino's distributorship;
therefore, the test for a preliminary injunction is
Id. at 125-26 (citations omitted).
In the instant case, the factual circumstances, as well as the
balance of equities, are closely analogous to those described by
the Roso-Lino Court. Plaintiffs' business is based solely on
the distribution of Valcucine products in the United States.
See Orenstein Aff. at ¶ 15. In their three-year relationship
with Valcucine, plaintiffs have created a network of
distributors for the sale of Valcucine products. If the
plaintiffs' application for a temporary restraining order is not
granted, that network of relationships may be destroyed, and
plaintiffs themselves will have no products to sell. Monetary
damages cannot fully compensate the plaintiffs for what they
stand to lose their business. See Roso-Lino, 749 F.2d at
125-26; see also Givenchy S.A. v. William Stuart Indus., No.
85 Civ. 9911, 1986 WL 3358, at *5-6 (S.D.N.Y. 1986) (Leisure,
J.) (enjoining termination of licensee's rights pending
arbitration of dispute as to licensor's right to terminate).
Thus, the Courts finds that plaintiffs have shown irreparable
Further, plaintiffs raise serious questions going to the
merits of the litigation. Plaintiffs claim that defendants
terminated the Distributorship without cause, while defendants
argue that they had cause. Finally, the Court concludes that the
balance of equities tips firmly in plaintiffs' favor if the
status quo is not preserved, their business will be wiped out.
Defendants on the other hand, have not shown how they would
damaged by the continuation of their relationship with
plaintiffs for the short time associated with a temporary
For the foregoing reasons, plaintiffs' application for a
temporary restraining order is hereby granted.