Clarke Contr. LLC v. Promethean Bldrs. LLC

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Clarke Contr. LLC v Promethean Bldrs. LLC 2024 NY Slip Op 33855(U) October 28, 2024 Supreme Court, New York County Docket Number: Index No. 656229/2023 Judge: Lyle E. Frank Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

[FILED: NEW YORK COUNTY CLERK 10/28/2024 04:47 P~ INDEX NO. 656229/2023 NYSCEF DOC. NO. 103 RECEIVED NYSCEF: 10/28/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LYLE E. FRANK PART 11M Justice ----------------------------------------------------------------- ----------------X INDEX NO. 656229/2023 CLARKE CONTRACTING LLC, MOTION DATE 09/26/2024 Plaintiff, MOTION SEQ. NO. 004 - V -

PROMETHEAN BUILDERS LLC,ROBERT J. HUBNER, DECISION + ORDER ON MOTION Defendant. ------------------------------------------------------------------- --------------X

PROMETHEAN BUILDERS LLC, ROBERT HUBNER Third-Party Index No. 595259/2024 Plaintiff,

-against-

MICHAEL CLARKE, JC ELITE CONSTRUCTION SERVICES, LLC

Defendant. -------------------------------------------------------------------------------- X

The following e-filed documents, listed by NYSCEF document number (Motion 004) 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 97, 98, 99,100,101,102 were read on this motion to/for INJUNCTION/RESTRAINING ORDER

Upon the foregoing documents, movant' s motion for a preliminary injunction is denied.

The underlying case for this motion involves disputes over allegedly unpaid promissory

notes. One of the parties is a construction company founded by two childhood friends, the

defendant/counterclaim plaintiff/third-party plaintiff Promethean Builders LLC ("Promethean").

Robert J. Hubner ("Hubner") is the sole Managing Member of Promethean, but there are certain

actions that the company cannot take without the permission of Clarke Contracting LLC

("Clarke Contracting"), a business entity run by Hubner' s childhood friend and the

plaintiff/third-party defendant Michael Clarke ("Clarke"). One of those actions requiring

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[FILED: NEW YORK COUNTY CLERK 10/28/2024 04:47 P~ INDEX NO. 656229/2023 NYSCEF DOC. NO. 103 RECEIVED NYSCEF: 10/28/2024

permission from Clark Contracting, as laid out in the Operating Agreement for Promethean, is

the bonowing of funds. Promethean is cunently attempting to extend an existing line of credit

with Kearny Bank, but Clarke Contracting is not willing to grant permission.

Promethean brings the present motion requesting the Court to enter an order stating that

Hubner is permitted to bonow funds for Promethean without the consent of Clarke Contracting.

Clarke Contracting opposes. For the reasons that follow, the motion is denied.

Standard of Review

A preliminary injunction is an "extraordinary provisional remedy" that will only be

granted when the "proponent demonstrates (1) a likelihood of success on the merits, (2)

ineparable injury absent a preliminary injunction, and (3) a balance of equities tipping in its

favor." Harris v. Patients Med., P.C., 169 A.D.3d 433,434 (1st Dept. 2019).

Discussion

It is not disputed that the Operating Agreement gives Clarke Contracting full discretion to

sign off on the bonowing of funds. Promethean argues that their preliminary injunction request

is nanowly tailored and that Clarke Contracting acted unreasonably in not granting permission

for Promethean to extend the line of credit. Clarke Contracting argues that Promethean has not

met their burden on the three prongs of the preliminary injunction standard. They also argue that

because Promethean is refusing to provide Clarke Contracting with financial disclosure post-

March 31, 2024, Clarke Contracting is not acting unreasonably in declining to assume the risk of

signing onto the credit extension.

Promethean argues that the company needs to extend an operating line of credit, that

failure to sign on the extension is a breach of Clarke's fiduciary duties to Promethean, and that as

a result of the failure to obtain Clarke's signature, "the Company may be unable to continue as a

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going concern." In opposition, Clarke Contracting points out that Michael Clarke is a personal

guarantor on the line of credit in question. Because of this, Clarke is hesitant to sign on the credit

extension so long as Promethean refuses to keep him up to date on the company's financial

situation. Clarke also request a description with particularity of the proposed uses of the

additional funds, a request that is likewise denied.

Because here Promethean cannot show that likelihood of success on the merits nor

balance of the equities. As such, the Court does not need to reach the third prong, that of

irreparable harm. The third prong of the preliminary injunction standard "requires the court to

determine the relative prejudice to each party accruing from a grant or denial of the requested

relief" Barbes Rest. Inc. v. ASRR Suzer 218, LLC, 140 A.D.3d 430,432 (1st Dept. 2016). Here,

the balance clearly does not favor movant Promethean. To require Clarke and Clarke Accounting

to take on personal guaranty for the borrowing of new funds, when Promethean refuses to share

important financial information regarding the company's need for and proposed uses of the new

funds, is unequitable. While there is the potential for prejudice to the smooth running of

Promethean if it is unable to obtain adequate funds, it has not been established to any certainty.

The balance of equities here clearly tips in favor of the non-movant. As to this Court, these

facts, along with the fact that there is a provision in the agreement between the parties that

requires that Clarke needs to sign off on this financing, the Court finds that Promethean has not

established that it is likely to succeed on the merits in this application either. Accordingly, it is

hereby

ADJUDGED that defendants/counterclaim plaintiffs/third-party plaintiffs' motion for a

preliminary injunction is denied.

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!FILED: NEW YORK COUNTY CLERK 10/28/2024 04:47 PM! INDEX NO. 656229/2023 NYSCEF DOC. NO. 103 RECEIVED NYSCEF: 10/28/2024

10/28/2024 DATE LYLE E. FRANK, J.S.C.

~ ~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED 0 DENIED GRANTED IN PART □ OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE

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