Alsheimer v. Evarts

Order unanimously affirmed without costs. Memorandum: Plaintiffs commenced this action seeking a declaration of their rights and obligations following the sale of their tax preparation business to defendants, and defendants asserted a counterclaim seeking rescission of the sale. Supreme Court properly denied plaintiffs’ motion for summary judgment on the complaint. “When a viable counterclaim arises from the same underlying transaction as is involved in the main action and is inseparable from or inextricably intertwined with that transaction, summary judgment should be denied” (Yoi-Lee Realty Corp. v 177th St. Realty Assocs., 208 AD2d 185, 189; see also, Milligan Contr. v Mancini Assocs., 174 AD2d 136, 138). We note, however, that the court erred in finding that there is a triable issue of fact whether the sale of the business included its good will. “Implicit in the sale of a business, unless expressly reserved, is the sale of its ‘good will’ ” (Borne Chem. Co. v Dictrow, 85 AD2d 646, 647; see, Meteor Indus. v Metalloy Indus., 149 AD2d 483, 486), and it is undisputed that good will was not expressly reserved from the sale of the business. Thus, good will was included in the sale as a matter of law. In addition, we note that the court erred in indicating in its decision that it would consider issuing a preliminary injunction preventing plaintiffs from operating a tax preparation business in direct competition with defendants. In the absence of a covenant not to compete, plaintiffs are not barred from engaging in a competing business (see, Mohawk Maintenance Co. v Kessler, 52 NY2d 276, 283). (Appeals from Order of Supreme Court, Steuben County, Latham, J. — Summary Judgment.) Present— Pigott, Jr., P. J., Hayes, Wisner, Scudder and Burns, JJ.