Robinson Brog Leinwand Greene Genovese & Gluck, P.C., New
York, NY (Sheldon Eisenberger of counsel), for appellants.
Richard A. Kraslow, P.C., Melville, NY, for respondent.
REINALDO E. RIVERA, J.P., JOHN M. LEVENTHAL, LEONARD B.
AUSTIN, JEFFREY A. COHEN, JJ.
DECISION & ORDER
action for a judgment declaring, inter alia, that the
defendant was required to comply with the demand of the
plaintiff Olympic Ice Cream Co., Inc., that each shareholder
contribute $815, 003 to its capital account, the plaintiffs
appeal, as limited by their notice of appeal and brief, from
so much of an order of the Supreme Court, Queens County
(Ritholtz, J.), entered January 15, 2016, as fixed the amount
of an undertaking pursuant to CPLR 6312 at $2, 500, 000.
that the order is reversed insofar as appealed from, on the
facts and in the exercise of discretion, with costs, and the
matter is remitted to the Supreme Court, Queens County, for a
new determination as to the amount of the undertaking to be
posted by the plaintiffs in accordance herewith.
October 2002, the plaintiffs Michael Barone and Frank Barone
entered into a shareholders agreement (hereinafter the
agreement) with Marinos D. Vourderis concerning the ownership
of the plaintiff Olympic Ice Cream Co., Inc. (hereinafter
Olympic). According to the agreement, Vourderis owned 50
shares of Olympic valued at $50, 000 per share. The agreement
provided that, within one year of Vourderis's death,
Vourderis's personal representative would sell
Vourderis's shares to Olympic, and that each shareholder
and the personal representative of any deceased shareholder
would take all necessary steps to enable Olympic to pay for
passed away on July 2, 2013, and the defendant Martin S.
Sussman was appointed as the executor of Vourderis's
estate (hereinafter the estate). Olympic sent a demand to all
shareholders, including one to Sussman, as executor of the
estate, that each shareholder had to contribute capital in
the sum of $815, 003 to enable Olympic to purchase the 50
shares held by the estate, since Olympic did not have
sufficient equity to do so without such contributions.
Sussman rejected Olympic's demand and stated that it was
anticipated that the purchase of the estate's shares
would occur prior to July 2, 2014, or else the estate would
pursue all remedies available under the agreement, which
included the ability to sell the estate's shares to a
third party, to sell all of the shares or assets of Olympic
to a third party, or to dissolve Olympic.
plaintiffs commenced this action against Sussman, as executor
of the estate, for a judgment declaring, among other things,
that Sussman was required to comply with Olympic's demand
for a capital contribution from the estate. At the same time,
the plaintiffs sought, by order to show cause, to
preliminarily enjoin Sussman from, inter alia, selling the
estate's shares pending resolution of this action. The
Supreme Court granted the plaintiffs' motion for a
preliminary injunction conditioned upon the plaintiffs'
filing of an undertaking in the sum of $2, 500, 000. The
plaintiffs appeal from so much of the order as fixed the
amount of the undertaking at $2, 500, 000.
fixing of the amount of an undertaking is a matter within the
sound discretion of the Supreme Court, and its determination
will not be disturbed absent an improvident exercise of that
discretion" (Ujueta v Euro-Quest Corp., 29
A.D.3d 895, 896; see S.P.Q.R. Co., Inc. v United Rockland
Stairs, Inc., 57 A.D.3d 642, 643). "The amount of
the undertaking, however, must not be based upon speculation
and must be rationally related to the damages the nonmoving
party might suffer if the court later determines that the
relief to which the undertaking relates should not have been
granted" (Access Med. Group, P.C. v Straus Family
Capital Group, LLC, 44 A.D.3d 975, 975; see 91-54
Gold Road, LLC v Cross-Degan Realty Corp., 93 A.D.3d
649, 650; Ujueta v Euro-Quest Corp., 29 A.D.3d at
896; Lelekakis v Kamamis, 303 A.D.2d 380).
the Supreme Court improvidently exercised its discretion in
fixing the amount of the undertaking at $2, 500, 000, the
amount equal to the value of the estate's shares as set
by the agreement, which was not rationally related to the
potential damages the estate might suffer if it is later
determined that the preliminary injunction should not have
been granted. Since the estate did not submit any evidence as
to the amount of damages which it might sustain in that
event, and the plaintiffs suggested an amount which was not
rationally related to the potential damages the estate might
sustain if the preliminary injunction was improvidently
granted, we remit the matter to the Supreme Court, Queens
County, for a new determination as to the amount of the