FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`FILED: KINGS COUNTY CLERK 11m2017 05:27 PM
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`NYSCEF DOC. NO. 227
`NYSCEF DOC. NO. 227
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`INDEX NO. 518007/2016
`INDEX NO~ 518007/2016
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`RECEIVED NYSCEF: 11/06/2017
`R«.C«.IV«.D \IYSCEF: 11/06/2017:
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`' EXHIBIT A
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`

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`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
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`n I mm INDEX NO 518007/2016
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`.Wm
`I._'-__'-..£._‘l'i‘I-.'I 1.5.1}. m?%_‘C.-l
`LA-[311'.-‘r_..mr-:\fl. 1-1.qu
`IIN‘DEX NO 513007/2016
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`N
`w
`C uYSCEF: 11 06/2017
`NYSCEF DOC. NO. 227
`RECEIVED NYSCEF: 11/06/2017
`NYSCEF' DOC. NO 191
`RECEIVEDV NYSCEF: 07/10 2017
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`SUPREME COURT OF THE STATE OF NEW YORK
`
`COUNTY OF KINGS: COMMERCIAL DIVISION
`——————————————————————————————— x
`
`Index No. 51800772016
`
`MENACHEM FARRO, individually and derivatively as a :
`shareholder in the right of LM INTERNATIONAL, INC., :
`SELLERIONI INCORPORATED, WML
`COMMUNICATIONS, INC., and as a member in the
`right of LMEG WIRELESS, LLC,
`
`: Hon. Sylvia G. Ash
`
`: Motion Sequence No. 008
`
`-against-
`
`Plaintiff,
`
`: NOTICE OF MOTION
`
`: TO QUASH AND FOR
`: PROTECTIVE ORDER
`
`ZALMAN SCHOCHET a/k/a SCHNEUR ZALMAN
`
`SCHOCHET, LEVI WILHELM, LM
`INTERNATIONAL, INC, SELLER] 0N1
`
`.
`
`:
`INCORPORATED, WML COMMUNICATIONS, INC.,
`:
`LMEG WIRELESS, LLC, SELLER WIRELESS, LLC,
`LM WIRELESS INTERNATIONAL, LLC, LMZT, LLC :
`and LMEG ACQUISITION LLC,
`'
`
`Defendants.
`——————————————————————————————— x
`
`PLEASE TAKE NOTICE, that upon the Affirmation of Peter A. Mahler, dated July 10,
`
`2017, the exhibits annexed thereto, theaccompanying Memorandum of Law, and upon all of the
`
`pleadings and prior proceedings, Defendants, by their attorney, Farrell Fritz, P.C., will move this
`
`Court before the Hon. Sylvia G. Ash, Commercial Part 11, Courtroom 541, Kings County
`
`Supreme Court, 360 Adams Street, Brooklyn, New York 11201, on August 9, 2017, at 9:30 am,
`
`or as soon thereafter as counsel may be heard, for an Order: (i) pursuant to CPLR § 2304,
`
`quashing the Subpoenas served on Citibank NA. (“Citibank”) and JP. Morgan Chase N.A.
`
`(“Chase”) dated June 20, 2017 (the “Subpoenas”); (ii) pursuant to CPLR § 3103,
`
`issuing a
`
`protective order relieving Citibank and Chase of any obligation to comply with the Subpoenas;
`
`and (iii) awarding such other and further relief as the Court deems just and proper.
`
`lof2
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`

`

`A I
`- m I
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`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`1:2.‘w:m1:::‘: r. mum-4;.“ : r-z: : c.7515 an; In“; an? ,a
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`NYSCEF DOC. NO. 227
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`INDEX NO. 518007/2016
`INDEX NO. 518007/2016
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`INDEX NO. 518007/2016
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`RaCaIVaD VYSCEF: 11/06/2017
`RECEIVED NYSCEF: 11/06/2017
`RECEIVED NYSCEF: 07/10/2017
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`PLEASE TAKE FURTHER NOTICE that, pursuant to CPLR 2214(b) and 2215,
`
`answering papers and any notice of cross-motion, with supporting papers, if any, must be served
`
`so as to be received at least seven days before the return date of this motion.
`
`Dated: July 10, 2017
`
`FARRELL FRITZ, P.C.
`
`BYIALLMW“
`Peter A. Mahler
`
`Franklin C. McRoberts
`
`Attorneyfor Defla'ndants
`622 Third Avenue, Suite 37200
`New York, New York 10017
`(212) 687—1230
`
`TO:
`
`All Counsel of Record (By NYSCEF)
`
`FF\6658675,2
`
`2 of 2
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`

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`- m I
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`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
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`.:\.T:1::-:C.-E:(A?I-TJEE‘SWJF-ZLI.‘i-fiu'J-Iflyu
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`NYSCEF DOC. NO. 227
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`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF KINGS: COMMERCIAL DIVISION
`——————————————————————————————— x
`
`INDEX NO.
`18
`INDEX NO. 518007/2016
`INDEX NO.
`518050
`7/
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`F:
`11
`VYSCE
`MC
`RECEIVED NYSCEF: 11/06/2017
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`”07/1
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`/M\I\JO
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`Index No. 518007/2016
`
`MENACHEM FARRO, individually and derivatively as a :
`shareholder in the right of LM INTERNATIONAL, INC.,
`SELLERIONI INCORPORATED, WML
`'
`COMMUNICATIONS, INC., and as a member in the
`right of LMEG WIRELESS, LLC,
`
`: Hon. Sylvia G. Ash
`
`: Motion Sequence No. 008
`
`Plaintiff,
`
`-against-
`
`ZALMAN SCHOCHET a/k/a SCHNEUR ZALMAN
`
`SCHOCHET, LEVI WILHELM, LM
`INTERNATIONAL, INC., SELLER10N1
`INCORPORATED, WML COMMUNICATIONS, INC.,
`LMEG WIRELESS, LLC, SELLER WIRELESS, LLC,
`LM WIRELESS INTERNATIONAL, LLC, LMZT, LLC
`and LMEG ACQUISITION LLC,
`
`: AFFIRMATION OF
`: PETER A. MAHLER
`
`:
`
`IN SUPPORT OF MOTION
`
`: TO QUASH AND FOR
`: PROTECTIVE ORDER
`
`: WITH CERTIFICATION
`: OF COMPLIANCE WITH
`: UNIFORM RULE SECTION
`: 202.7 AND KINGS COUNTY
`: COMMERCIAL DIVISION
`: RULE 18
`
`.
`Defendants.
`_______________________________ x
`
`PETER A. MAHLER, an attorney licensed to practice law in the State of New York,
`
`affirms the following to be true under penalty of perjury:
`
`1.
`
`2.
`
`3.
`
`I am a partner with the law firm of Farrell Fritz, P.C., attorney for Defendants.
`
`I have personal knowledge of the facts set forth in this Affirmation.
`
`I respectfully submit this Affirmation in support of Defendants’ motion for an
`
`Order:
`
`(i) pursuant
`
`to CPLR § 2304, quashing the Subpoenas served on Citibank, NA.
`
`(“Citibank”) and J.P. Morgan Chase, N.A. (“Chase”), dated June 20, 2017 (the “Subpoenas”)'
`
`(ii) pursuant to CPLR § 3103, issuing a protective order relieving Citibank and Chase of any
`
`obligation to comply with the Subpoenas; and (iii) awarding such other and further relief as the
`
`Court deems just and proper.
`
`lof3
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`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
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`INDEX NO. 518/007/2016
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`_
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`7
`..
`_,-_
`1.73,.
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`INDEX NO. 518007 2016
`[TLJEdjfl-di£1tfimfrfit_\1_nx'-.'Ld_£:\il-:Jm.‘m.tl_mu_I.-Il—;f§.
`
`
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`'
`RECEIVED \IYSCEF: 11 06/2017
`NYSCEF DOC. NO. 227
`RECEIVED NYSCEF: 11/06/2017
`NYSCEF DOC. NO. 192
`RECEIVED NYSCEF: 07/10 2017
`_
`
`4.
`
`Exhibit “1” annexed hereto is. a true copy of the Subpoena to Citibank, dated
`
`June 10, 2017, and returnable July 10, 2017.
`
`5.
`
`Exhibit “2” annexed hereto is a true copy of the Subpoena to Chase, dated June
`
`10, 2017, and returnable July 10, 2017.
`
`6.
`
`Exhibit “3” annexed hereto is a true copy of the Hon. Sylvia G. Ash’s Decision
`
`and Order, dated May 19, 2017, and entered May 24, 2017 (NYSCEF Doc. No. 158).
`
`7.
`
`Exhibit “4” annexed hereto is a true copy of Menachem'Farro’s Affidavit, sworn
`
`to on October 13, 2016, and the pertinent exhibits attached thereto.
`
`8.
`
`Exhibit “5” annexed hereto is a true copy of the Defendants’ Answer, dated June
`
`16, 2017, and Verified by Levi Wilhelm on June 15, 2017.
`
`9.
`
`Exhibit “6” annexed hereto is a true and accurate c0py of the December 2011
`
`Amended Loan Agreement.
`
`10.
`
`Exhibit “7” annexed hereto is a true and accurate copy of Menachem Farro’s
`
`Notice of Dissent, dated May 25, 2017.
`
`Certification of Compliance with Uniform Rule 202.7
`and Kings County Commercial Division Rule 18
`
`11.
`
`Exhibit “8” annexed hereto is a true copy of the letter I sent to the Court, dated
`
`June 21, 2017, wherein it is represented prior to submitting the letter and in compliance with
`
`Kings County Commercial Division Rule 18 and Uniform Rule 202.7, I spoke by telephone on
`
`June 20, 2017, with opposing counsel in the persons of Sheldon Eisenberger and Elliot Hahn,
`
`Esqs., in a good faith but unsuccessful effort to resolve the diSpute.
`
`12.
`
`The within disclosure disPute was conferenced with the Court Attorney and
`
`opposing'counsel on July 6, 2017, at which time I was directed to make the present motion.
`
`20f3
`
`

`

`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`
`
`NYSCEF DOC. NO. 227
`RECEIVED NYSCEF: 11/06/2017
`
`WHEREFORE, for the reasons set forth in the accompanying Memorandum of Law,
`
`Defendants respectfully request that the Court: (i) quash the Subpoenas; (ii) issue a protective
`
`order-relieving Citibank and Chase of any obligation to comply with the Subpoenas; and (iii)
`
`award such other and further relief as the Court deems just and proper.
`
`Dated: New York, New York
`July 10, 2017
`
`Is!
`
`an ,4. m
`
`Peter A. Mahler
`
`FF\6658674.2
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`3 of 3
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`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`INDEX NO.
`RECEIVED NYSCEF: 11/06/2017
`NYSCEF DOC. NO. 227
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`INDEX NO.
`5
`INDEX NO. 518007/2016
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`Exhibit 1
`
`

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`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
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`NYSCEF DOC. NO. 227
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`INDEX NO. 518007/2016
`INDEX NO. 518007/2016
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`INDEX No.51BOOH7/2016
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`C \IYSCLF:
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`RECEIVED NYSCEF: 11/06/2017
`RECFEIVEIDVNYSCEF: 07/1101201/7 0
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`
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF KINGS
`MENACHEM FARRO, individually and derivatively .as a
`shareholder in the right of LM INTERNATIONAL, INC.,
`SELLER] 0N1 INCORPORATED, WML.
`COMMUNICATIONS, INC., and as a member in theright
`of LMEG WIRELESS, LLC,
`
`Plaintiff,
`
`— against -
`
`Index No.: 518007116
`
`SUBPOEN-A DUCES
`TECUM
`
`
`
`
`
`
`ZALMAN SCHOCI-IET elk/a SCI-INEUR ZALMAN
`SCHOCHET, LEVI WILHELM, LM INTERNATIONAL,
`INC., SELLERI ONI INCORPORATED, WML
`COMMUNICATIONS, INC., LMEG WIRELESS, LLC,
`SELLER WIRELESS LLC, LM‘ WIRELESS
`INTERNATIONAL LLC, LMZT LLC and LMEG
`ACQUISITION LLC,
`
`
`
`
`
`
`Defendants.
`
`THE PEOPLE OF THE STATE OF NEW YORK
`
`TO: CITIBANK, NA.
`1 Court Square 31‘h Floor
`Long Island City, New York 11120
`
`GREETINGS:
`
`WE COMMAND YOU that all business and excuses being laid aside, you produce for
`
`examination and copying, at the offices of Robinson Brog Leinwand Greene Genovese &.Gluck
`
`P.C., 875 Third Avenue, 9'h Floor, New York, New York 10022, all books, papers, records and
`
`documents in your possession, custody and/or contra} that are described in the Dooumcnt
`
`Request attached as Schedule A hereto, on or. before July 10, 2017. Disclosure is being sought from
`
`{unanrssnocu I
`
`

`

`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`RECEIVED NYSCEF: 11/06/2017
`NYSCEF DOC. NO. 227
`
`INDEX NO.18007/2016
`INDEX NO. 518007/2016
`INDEX NO. 513050 7/2016
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`
`
`
`C NYSCE F: 11/06/2017
`RECEIVEDvNYSCEF. Nov/1 /2017
`
`you because, upon information and belief,.you possess documents, information and things material and
`
`necessary in the prosecution of this action.
`
`TAKE NOTICE that failure to comply with this Subpoena is punishable as a contempt
`
`of Court and shall make you liable to the person on whose. behalf this Subpoena was-issued for a
`
`penalty not to exceed $50 plus all damages sustained by reason of your. failure to comply.
`
`Dated: New York, New York
`June 20, 2017'
`
`Robinson Brog Leinwand Greene Genovese
`& Gluck P.C.
`
` Sheldon Eisen' erger
`
`875 Third Avenue, 9th Floor
`New York, New York 10022
`(212) 603-6300
`
`Attorneys for Plaintiff
`
`{commenced }
`
`2
`
`

`

`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`____
`A
`1_ _'
`--V'*-
`____._A
`T m J
`.
`-
`
`
`CL‘LJ.J_t';-J.T..J.V::'_(_:t_‘r;\.£.'\:..TEE-_‘L'.-E_..'_\.fi-E--Jnivsr:-;‘_l-_itu'_l.‘lgfgi
`
`NYSCEF DOC. NO. 227
`N 1 '
`'
`I
`V'
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`SCEF I I C .
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`|_\
`INDEX NO. 518007/2016
`INDEX NO.
`
`INDEX NO. 518007/
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`RECEIVED NYSCEF: 11/06/2017
`R*.C*.IV*.D \IYSCE :
`/1lol/
`RECEIVEDREWTEJE
`
`
`
`M\NO
`
`SCHEDULE A
`
`DOCUMENT RE UEST
`
`SCHEDULE A
`
`Ali documents concernfing Citibank Account Number Redacted , believed. to be
`held in ”the name of Zalman Sch‘ochet aJk/a Schneur Zalman Schochct andfor
`Altman Schochet LLP, including, but not limited to, all bank statements, deposit
`slips with check images thereof, 'copies of cancelled checks, wire transfers, ACH
`transfers and other funds transfer documents for the years 2013 through the
`present date‘
`
`{00817766.DOCfl }
`
`

`

`IND
`EX N
`O. 518007/2016
`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`INDEX
`RECEIVED NYSCEF: 11/06/2017
`NO.
`
`
`5180071/2016
`
` R4C *IV
`VYSC.
`3F:
`06/2017
`NYSCEF DOC. NO. 227
`07/101201?
`RECEIVED NYSCEF:
`
`Exhibit 2
`
`

`

`
`
`
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`nee-4;:Brim-i=5.“5112,993531'mr-n=::3‘.m:::£mlz:~:.\gLEI-emm‘;
`
`
`N'fiunl
`I
`Vl‘. I
`-
`I
`'
`I
`'
`|
`NYSCEF DOC. NO. 227
`
`.
`o.
`- 4
`
`INDEX NO. 518007/2016
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`IND§§D§§ N913 0501-7?
`
`
`
`
`*IVdD \IYSC"F' ll
`R4
`RECEIVED NYSCEF: 11/06/2017
`RECE‘QI‘ED FIYSCEF :
`'407'/1o/
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF KINGS
`
`MENACI-IEM FARRO, individually and derivatively as a
`shareholder in the right of LM INTERNATIONAL, INC.,
`SELLERIONI INCORPORATED, WML
`COMMUNICATIONS, INC., and as a member in the right
`of LMEG WIRELESS, LLC,
`
`Plaintiff,
`
`» against -—
`
`ZALMAN SCHOCHET aflo’a SCHNEUR ZALMAN
`SCHOCHET, LEVI WILI—IELM, LM INTERNATIONAL,
`INC, SELLERIONI INCORPORATED, WML
`COMMUNICATIONS, INC., LMEG WIRELESS, LLC,
`SELLER WIRELESS LLC, LM WIRELESS
`INTERNATIONAL LLC, LMZT LLC and LMEG
`ACQUISITION-LLC,
`
`Index No.: 518007106
`
`SUBPOENA DUCES
`TECUM
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Defendants.
`
`THE PEOPLE OF THE STATE OF NEW YORK
`
`T0:
`
`JP Morgan Chase, NA.
`P.O. Box 133164
`
`Columbus, Ohio 43218
`
`GREETINGS:
`
`WE COMMAND YOU that all business and excuses being laid aside, you produce for
`
`examination and copying, at the offices of Robinson Brog Leinwand Greene Genovese & Gluck
`
`P.C., 875 Third Avenue, 9"' Floor, New York, New York 10022, all books, papers, records and
`
`documents in your possession, custody and/or control
`
`that are described in the Document
`
`Request attached as Schedule A hereto, on or before July 10,2017. Disclosure is being sought from
`
`{OUEITTTBDOCR }
`
`

`

`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`NYSCEF DOC. NO. 227
`
`INDEX NO. 518007/2016
`INDEX NO. 518007/2016
`
`INDEX NO 5180017/2016
`
`
`
`C \IYSCE
`ll 06 2017
`RECEIVED NYSCEF: 11/06/2017
`RECBEIVEIDV NYSCEF: 0F'7/100/2011?
`
`you because, upon information and beiief, you possess documents, information and things material and
`
`necessary in the prosecution of this action.
`
`TAKE NOTICE that failure to comply with this Subpoena is punishable as a contempt
`
`of Court and shall; make you liable to the person on whose behalf this Subpoena was issued for a
`
`penalty not to exceed $50 plus all damages sustained by reason of your failure to comply.
`
`Dated: New York, New York
`June 20, 2017
`
`Robinson Brog Leinwand Greene Genovese
`& Gluck P.C.
`
` Sheldon Eiseriberger
`
`875 Third Avenue, 9th Floor
`New York, New York 10022
`
`(212) 603-6300
`
`Attorneys for Plaintiff
`
`{00817766.DDC21 }
`
`2
`
`

`

`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`NYSCEF DOC. NO. 227
`
`INDEX NO. 518007/2016
`INDEXDLTg. N lao5ol78/gg7/2016
`
`RECEIVED NYSCEF: 11/06/2017
`messengwmt5%42017
`
`SCHEDULE A
`
`DOCUMENT RE UESTV
`
`scum
`
`1.
`
`All documents concerning Citibank Account Number- Redacted . believed to be
`held in the name of Zalman Schochet afk/a SchneUr Zalman Schochet andlor
`Altman Schochet LLP-, including, but not limited to, all bank statements, deposit
`slips with check images thereof, copies of canceiied checks, wire transfers, ACH
`transfers and other funds transfer documents for the years 2013 through the
`
`present date.
`
`{00817766.DOCLI }
`
`3
`
`

`

`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`NYSCEF DOC. NO. 227
`
`INDEX NO. 518007/2016
`INDEX NO.
`8007/2016
`INDEX NO. 5130%0 /2016
`RECEIVED NYSCEF: 11/06/2017
`RE&E%BVE?s饧9-fifv‘1jmJ01/2916142017
`
`Exhibit 3
`
`

`

`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`FILED: KINGS COUNTY CLERK 11m2017 05:27 PM
`NYSCEF DOC. NO. 227
`NIHEEDQCJGSIINGSWCOUNTY CLERK OSHJ201'7 03:55 P I
`-‘i
`NYSCEF 130;. NO. 195
`.
`
`
`INDEX NO. 518007/2016
`
`INDEX NO~ 518007/2016
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`
`
`RECEIVED NYSCEF: 11/06/2017
`Rilciim NQScfimWJ/MQON
`RECEIVED NYSCEF: 03/29/2017
`
`l I g
`
`!
`i
`
`.
`
`I i
`
`;
`
`'g
`'
`
`i
`
`_
`i
`
`*
`
`At an IAS Term, Com 11 of the Supreme
`Court of the State of New York, held in and
`for the County of Kings, at the Courthouse,
`at Civic Center, Brooklyn, New York, on the
`19th ofMay 2017.
`
`-
`
`Justice.
`
`P R E s E N T:
`HON. SYLVIA G. ASH,
`........................................x .
`
`MENACHEM FARRO, individually and derivatively as a
`shareholder in the right of LM INTERNATIONAL, INC.,
`SELLERlONl INCORPORATED, WML
`
`COMMUNICATIONS, INC., and as a member in the right
`
`of LMEG WIRELESS, LLC,
`
`-
`
`Plaintiff,
`
`.
`
`'
`
`‘
`
`Decision / Order
`
`- against -
`
`_
`
`'
`
`Index No. 518007/2016
`
`ZALMAN SCHOCHET allda SCI-[EUR ZALMAN
`
`SCI-IOCHET, LEVI WILI-IELM, LM INTERNATIONAL,
`INC., SELLERIONl INCORPORATED, WML
`COMMUNICATIONS, INC., LMEG WIRELESS, LLC,
`INTERNATIONAL LLC and LMZT LLC,
`’
`
`Defendants.
`
`I
`
`—---------------------~~-—~-_ ------------ X
`.
`The following papers numbered 1 to 4 read herein:
`
`Papers Numbered
`
`‘
`
`Notice of Motion/Order to Show Cause!
`Petition/Cross Motion and
`
`'
`
`Affidavits (Affirmations) Annexed
`Opposing Affidavits (Affirmations)
`Reply Affidavits (Affirmations)
`
`'
`
`'
`
`1 - 3
`4
`
`Defendants, Zalman Schochet-(“Schochet”), Levi Wilhelm (“Wilhelm”), LM International,
`Inc. (“LMI”), Sellerlonl Incorporated (“Sellerlon1” , WML Communications, Inc. (“WML"),
`LMEG Wireless, LLC (“LMEG”), Seller Wireless LLC, LM Wireless International LLC and
`LMZT LLC, move pursuant to CPLR §§3211(a)(1), (a)(3) and (a)(7),
`to dismiss Plaintiff,
`Menachem Farro’s amended complaint. Plaintiff opposes and moves for a preliminary injunction
`and to file a second amended complaint. For the reasons set forth below, Defendants’ motion to
`
`1
`
`16f4
`
`

`

`
`
`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`INDEX NO~ 518007/2016
`FILED: KINGS COUNTY CLERK 11m2017 05:27 PM
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`
`RECEIVED NYSCEF: 11/06/2017
`NYSCEF DOC. NO. 227
`mammmcsncoumr CLERK 05W -‘
`:.-. 17
`
`NYSCfiF DOLL: NO. 195
`RECEIVED NYSCEF: 05/20/2017
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`dismiss is DENIED. Plaintiffs cross-motion to file a second amended complaint is GRANTED.
`Plaintiff‘s request for a preliminary injunction is DENIED as moot.
`
`Background
`
`Disputes arising out of loan transactions spurred the instant action. In 2003, Plaintiff and
`Wilhelm formed LMEG, as equal members, to manufacture, sell, and distribute aftermarket
`accessories for cellular phones. In order to facilitate LMEG'S business, Plaintiff and Wilhelm
`formed three additional companies, LMI, WML and Sellerlonl
`(together with LMEG the
`“Businesses”). In the ensuing years, the Businesses are said to have generated millions of dollars
`in sales. However, the Businesses needed additional capital in 2008 to remain viable. To that end,
`Plaintiff and Wilhelm approached and obtained loans from Schochet, a licensed attorney. The
`loans, according to Plaintiff, ranged from $300,000 to over a million dollars.
`
`Plaintiff and Wilhelm accepted the loans with the knowledge that the loans originated from
`Schochet’s attorney trust account. Plaintiff claims to have been troubled by the loans’ origin
`because he did not want the Businesses to be subjected to potential claims from unknown third
`parties. In order to allay Plaintiff’s concerns, Schochet allegedly represented to Plaintiff that the
`funds belonged to him personally.
`
`In 2011, Plaintifi‘ and Wilhelm obtained additional loans from Schochet to prop-up the
`- Businesses. In exchange for making the additional loans, Schochet allegedly required that Plaintiff
`and Wilhelm provide him a one-third interest in the Businesses. Plaintiff, purportedly relying on
`Schochet’s assurances that the loan funds belonged to him personally, acquiesced and along with
`Wilhelm transferred one-third interest in the Businesses to Schochet.
`
`In May of 2016, Schochet became a director and manager of the Businesses. On October
`3, 2016, Schochet sent a notice of a special meeting of shareholders to be held on October 14,
`2016. The purpose of the meeting was to obtain shareholder approval to sell the assets of WML,
`LMI and Sellerlonl . Plaintiff objected and commenced this action on October 12, 2016. Plaintiff
`sought to obtain a temporary restraining order (TRO) to stay the October 14th meeting, but the
`Court denied Plaintiff’s application. The meeting was held on November 1, 2016. Plaintiff
`attended the meeting and registered his objection to the proceedings.
`
`On November 18, 2016, Plaintiff filed an amended complaint seeking, among other reliefs,
`to rescind Schochet’s interest in the Businesses due to Schochet alleged fraud in obtaining same.
`On November 21, 2016, Schochet and Wilhelm served upon Plaintiff a Notice of Merger and
`Dissenters’ Rights. The Notice of Merger indicated that Schochet and Wilhelm had merged LMEG
`into LMEG Acquisition (the “Merger”) on November 16, 2016. The Notice of Merger informed
`Plaintiff that he would not receive membership interest in LMEG Acquisition. Further, the Notice
`of Merger informed Plaintiff that the market value of his interest in LMEG was $7,225,500 and
`provided Plaintiff 20 days to dissent to the merger.
`
`20f4
`
`

`

`
`INDEX NO.
`518007/2016
`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`Wzon 05:27 PM
`
`NYSCEF DOC. NO. 227
`RECEIVED NYSCEF: 11/06/2017
`IirEBocmE—NGBNCOUNTY CLERK 05mm
`
`
`NYSQEF D09; NO. 193
`RECEIVED NYSCEF: 03/10/2017
`
`On December 5, 2016, Plaintiff filed the instant Order to Show Cause to, among other
`.
`things, en) om Defendants from consummating the Merger and interfere with his rights in LMEG.
`Defendants oppose Plaintiff‘s request for a TRO as moot, on the ground that the Merger has long
`smce been consummated.
`
`Additionally, Defendants move to dismiss Plaintiffs amended complaint. Defendants
`maintain that Schochet did not mislead Plaintiff about the ownership and origin of the loan fimds.
`Further, Defendants argue that the origin or ownership of the loan funds is immaterial in this case
`because the Businesses, and by extension Plaintiff, have benefited from the loans. Further, and in
`addition to other arguments, Defendants maintain that Plaintifi cannot assert derivative claims on
`behalf of the Businesses because Plaintiff is no longer an interest holder in the Businesses due to
`the consummated Merger.
`
`Plaintiffopposes Defendant’s motion and cross-moves to file a second amended complaint.
`Plaintiff’s second amended complaint seeks to nullify the Merger on the grounds that: (1)
`Defendants failed to comply with Limited Liability Company Law §1002 in effectuating the
`LMEG Merger; (2) the LMEG Merger was undertaken for the sole purpose of depriving Plaintiff
`standing to assert derivative claims on behalf of LMEG; and (3) the LMEG Merger is a
`continuation of the fraud perpetuated by Schochet in obtaining equity in LMEG. Defendants
`oppose, arguing that Plaintiff‘s second amended complaint lacks merit.
`
`Discussion
`
`"On a motion to dismiss the complaint pursuant to CPLR 3211 (a) (7) for failure to state a
`cause of action, the court must afford the pleading a. liberal construction, accept all facts as alleged
`in the pleading to be true, accord the plaintiff the benefit ofevery possible inference, and determine
`only whether the facts as alleged fit within any cognizable legal theory" (Breytman 1; Olinville
`Realty, LLC, 54 AD3d 703, 703-704 [2d Dept 2008]; see Lean v Martinez, 84 NY2d 83, 87
`[1994]). Here, the crux of Plaintiff’s amended complaint is Plaintiff’s allegation that he was
`defrauded by Schochet into transferring a one-third interest in the Businesses. Thus, in deciding
`Defendant’s motion to dismiss, the Court must determine whether Plaintiff has validly asserted a
`fraud claim.
`
`"The elements of a cause of action sounding in fraud are a material misrepresentation of
`an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable
`reliance upon the misrepresentation, and damages" (Introna v Huntington Learning Ctrs., Inc., 78
`AD3d 896, 898 [2d Dept 2010]; see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d
`553, 559 [2009]). Here, Plaintiff alleges material misrepresentation of fact because Plaintiff claims
`that Schochet informed him that the funds from his attorney trust account belonged to him
`
`personally, when in fact they did not.
`
`Further, Plaintiff sufficiently alleges intent on the part of Schochet to induce reliance
`because Plaintiff claims that he would not have consented to transferring one-third interest to
`Schochet if he knew that the loan funds did not belong to Schochet personally. Lastly, Plaintiff
`
`3
`
`3 of 4
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`

`

`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`INDEX No. mow/2016
`szon 05 27 PM
`
`
`NED. £13136 ALKEGSZflOUNTY CLERK 05mm
`..
`I17
`
`NYSCEF DOC. NO. 227
`RECEIVED NYSCEF: 11/06/2017
`.4
`NYSCEF DOC. NO.
`1.98
`RECEIVED NYSCEF: 05/29/2017
`u;
`u.
`'3. 5
`.:_.
`
`sufficiently allege damages because, upon becoming a director and member of the Businesses,
`Schochet, along with Wilhelm, initiated transactions in which Plaintiff lost his interest in the
`Businesses. Therefore, Defendants’ motion to dismiss Plaintiffs amended complaint is DENIED.
`
`Turning now to Plaintiff's motion to file a second amended complaint. Applications for
`leave to amend pleadings should be freely granted except when the delay in seeking leave to amend
`would directly cause undue prejudice or surprise to the opposing party, or when the proposed
`amendment is palpably insufficient or patently devoid of merit (see CPLR 3025 [b]; Lucido v
`Mancuso, 49 AD3d 220, 222 [2d Dept 2008]); Here, Plaintiff's proposed second amended
`complaint would not cause undue prejudice nor serve as a'surprise to Defendants. Plaintiff seeks
`to add claims based on the Merger, which was initiated after this action’s commencement. As such,
`Plaintiff’s motion to file the second amended complaint is GRANTED.
`
`Plaintiffs motion to enjoin Defendants ‘fiom consummating the Merger and interfere with
`his rights in the Businesses is DENIED as moot.
`'
`
`This constitutes the Decision and Order of the Court.
`
`.
`i
`
`J
`'
`I
`'
`,
`}
`
` Sylvia
`
`: HON. SYLVIA G. ASH, JSC
`
`"40134
`
`

`

`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`NYSCEF DOC. NO. 227
`
`INDEX NO. 518
`7 2016
`INDEX NO. 518007/2016
`INDEX NO. 516007/g816/5
`RECEIVED NYSCEF: 11/06/2017
`REfi9fifiV§Psééfi=CEonvlwagéézolv
`
`Exhibit 4
`
`

`

`
`
`
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
` 12::m-:a.\'.;'.-‘;A.L!"'t'-'t'_':'\“.‘-“T:Eu:§l.5':.\:l:m:man-.11.
`
`ul14zLJII1z1u_cJIznnuAflIIIzLJ3mAllJJullJIZLllJILLllalllix
`NYSCEF DOC. NO. 227
`N final
`no.
`. 96
`
`
`INDEX NO . 51 8
`INDEX NO. 518007/2016
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`RECEIVED NYSCEF: 11/06/2017
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`
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF KINGS
`
`
`
`MENACHEM FARRO, individually and derivatively
`as a shareholder in the right of LM
`INTERNATIONAL, INC., SELLERlONl
`INCORPORATED, WML COMMUNICATIONS,
`INC., AND LMEG WIRELESS, LLC,
`
`
`
`Plaintiff,
`
`' against —
`
`ZALMAN SCHOCHET, LEVI WILHELM, LM
`INTERNATIONAL, INC., SELLERIONl
`INCORPORATED, WML COlVflVIUNICATIONS,
`INC., AND LMEG WIRELESS, LLC,
`
`
`
`Defendants.
`
`Index No.3 551800712016
`
`AFFIDAVIT OF
`
`MENACHEM FARRO IN
`
`SUPPORT OF ORDER TO
`
`Slim
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`MENACHEM FARRO, being duly sworn, deposes and says:
`
`1.
`
`I am the Plaintiff in this action and am a shareholder and/or a member
`
`of Defendants LM International, Inc.
`
`(“LM”), Sellerlonl Incorporated (“Seller”),
`
`WML Communications, Inc. (“WML”), and LMEG Wireless, LLC (“LMEG”) (the
`
`entity defendants are collectively referred to herein as the “Companies”).
`
`I submit
`
`this Affidavit in support of my Order to Show Cause preliminarily enjoining the
`
`corporate and limited liability defendants fi'om holding any meeting, including the
`
`meetings noticed for October 14, 2016, for the purpose of obtaining approval of the
`
`shareholders andfor members of the Companies to sell substantially all of their
`
`assets andfor fl‘om transferring substantially all of their assets to any person or
`
`10f?
`
`

`

`INDEX NO. 518007/2016
`.
`A
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`_., m .
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`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
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`INDEX NO _
`5 l 8 0 0 7 / 2 0 l 6
`;:;‘_—J.ZT:-JI.1‘J§JIWJI;:E: l_'.'.'.'..11'..".“.L—..'.‘.i?-';T;il./: :1:“fin-inn :l-i1.‘-.:In..-.—:1 ,1
`www ._.
`.
`
`
`
`
`
`
`
`Io . w.
`RaCaIVaD vYSCLF. 11/06/2017
`NYSCEF DOC. NO. 227
`RECEIVED NYSCEF: 11/06/2017
`
`'6
`RECEIVED NYSCEF: 07/10/2017
`
`
`
`entity and a temporary restraining order pending the hearing and determination of
`
`my application.
`
`2.
`
`Defendant Levi Wilhelm (“Wilhelm”) and I formed LMEG as equal
`
`members in or about 2003 for
`
`the purpose of conducting the business of
`
`manufacturing,
`
`selling and distributing after-market accessories for cellular
`
`phones.
`
`3.
`
`Later we formed LM, WML and Seller as equal shareholders in or
`
`about 2010-2011 in furtherance of our business of manufacturing and selling
`
`aftermarket accessories for cellular phones.
`
`4.
`
`Over the years, the business operated through the Companies has
`
`grown into a multimillion dollar business.
`
`5.
`
`For the 2015 taxable year, LMEG alone had gross sales of over $26
`
`million. The combined gross sales of the Companies was in excess of $77 million.
`
`6.
`
`Defendant Zalman Schochet (“Schochet”) is an attorney at law duly
`
`licensed to practice law in the State of New York.
`
`7.
`
`In approximately 2008, our company was in need of funds to operate
`
`the business and secured multiple loans from Schochet ranging from approximately
`
`$300,000 to over a million dollars (the “Initial Loans”).
`
`8.
`
`The Initial Loans bore a usurious interest rate of approximately 48%
`
`per annum and no loan documents were executed at the time that the Initial Loans
`
`were funded. Moreover, Schochet instructed the Companies’ accountants not to
`
`20f?
`
`

`

`INDEX NO.
`518007/2016
`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`RECEIVED NYSCEF: 11/06/2017
`
`
`
`INDEX NO. 518007/2016
`
`R .C4 IV4. VYSC.3F:
`11/06/2017
`NYSCEF DOC. NO. 227
`RECEIVED NYSCEF: 07/10/2017
`
`reflect the interest payments on the usurious loans on the Companies books and
`
`records and not to issue any form 1099’s reflecting interest paid on the Initial loans.
`
`9.
`
`The source of monies Schochet used to fund the Initial Loans was his
`
`attorney trust
`
`account
`
`at
`
`JP ‘ Morgan Chase, bearing account number
`
`XXXXXXXX2467.
`
`The loan funds were wired from Schochet’s attorney trust
`
`account into LMEG’s Citibank account, bearing account number XXXXXX1851.
`
`Copies of examples of wire transfers from and to Schochet’s attorney trust account
`
`are attached hereto as Exhibit A. Upon information and belief, Schochet also
`
`transferred funds from Citibank attorney trust account number XXXXXX7029.
`
`10.
`
`Repayments of the Initial Loans and accrued interest were made to
`
`Schochet by wiring the funds to Schochet’s attorney trust account.
`
`11.
`
`Schochet never disclosed whether he was making the Initial Loans, or
`
`additional loans discussed below, on behalf of himself or one or more of his clients.
`
`12. After making the Initial Loans,
`
`the Companies were in need of
`
`additional funding to pay-off several existing loans to other lenders (the “Lender
`
`Loans”).
`
`13.
`
`In or about 2011, Schochet agreed to make additional loans to the
`
`Companies for the purpose, inter 31129, of paying off the Lender Loans. In exchange
`
`for making the Lender Loans, Schochet demanded a one-third ownership interest in
`
`the Companies and repayment of the Lender Loans with interest. However, no
`
`transfer of any equity interest was agreed to or effectuated at that time.
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`3 of 7
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`INDEX NO. 518007/2016
`INDEX NO. 518007/2016
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`INDEX NO. 5180017/2016
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`RECEIVED NYSCEF: 11/06/2017
`R.:.C{l_.IVYSCI:.F1120(i/2017
`RECEI ED NYSCEF: 07/102
`
`A
`.
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`:7—1’.":LZE—Arr: 3.3.};‘137:
`. . .
`NYSCEF DOC. NO. 227
`
` .
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`14.
`
`As with the Initial Loans, the sources of monies Schochet used to fund
`
`the Lender Loans were his attorney trust accounts at JP Morgan Chase and
`
`Citibank. The Lender loans were repaid by wiring the funds to Schochet’s same
`
`attorney trust account.
`
`15.
`
`In an email dated September 17, 2013, Schochet falsely charged me
`
`with criminal conduct and indicated that he would cause the Companies to file a
`
`formal criminal complaint against me.
`
`16.
`
`On or about September 18, 2014, Schochet prepared a handwritten
`
`document which he pressured me to sign under duress acknowledging Schochet
`
`held a one-third equity interest
`
`in the Companies
`
`(the “Acknowledgment
`
`Document”).
`
`17.
`
`I executed the Acknowledgement Document based upon continued
`
`wrongful threats made against me by Schochet that he would file a fraudulent
`
`criminal complaint against me and that he would demand immediate repayment of
`
`all of the outstanding loans, which prevented the exercise of my free will and
`
`constituted unlawful duress.
`
`18.
`
`Prior
`
`to the creation of the Acknowledgement Document, upon
`
`information and belief, no document existed transferring any equity interest in the
`
`Companies to Schochet and no document appointing him as a director or manager of
`
`the Companies.
`
`19.
`
`Schochet became a director of the corporate defendants LM, WML and
`
`Seller and a manager of LMEG in or about May 2016 and for the purpose and with
`
`40f?
`
`

`

`I
`
`IND'LX NO.
`m n
`INDEX NO. 518007/2016
`FILED: KINGS COUNTY CLERK 11/06/2017 05:27 PM
`
`INDEX NO. 51800
`r:r.=:_':r.—.1.T_-.1.\"1'm?.\':'.\?.7::-:r=::3‘.Z-E:JEL'~IG*.‘L‘:Emmi-“TV.
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`_ F:
`.1.
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`NYSCEF DOC. NO. 227 RECEIVED NYSCEF: 11/06/2017
`REC%I%EDVNYSCEFS:C 07/1
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`the collusion of Wilhelm removed me as a director of the corporate defendants LM,
`
`WML and Seller and manager of LMEG.
`
`20.
`
`The value of the one-third interest Schochet allegedly received in the
`
`Companies as purported consideration for making the Lender Loans is worth
`
`millions of dollars today and, in my opinion, was worth several