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L.I.G. Pet Goods Trading, LLC v. Goldfarb

January 15, 2009

L.I.G. PET GOODS TRADING, LLC D/B/A UNITED K9S AND UNITED K9S.COM; SNIFF 'N FETCH LLC D/B/A SNIFF 'N FETCH AND SNIFF 'N FETCH.COM; SONIC & LUCY ASSOCIATES LLC D/B/A DOGGIE STYLE; DS MARKET STREET LLC D/B/A DOGGIE STYLE; DOGGIE STYLE 2 HOLDING COMPANY LLC D/B/A DOGGIE STYLE; LUCY & SONIC LLC D/B/A DOGGIE STYLE; IRA GOLDFARB; PLAINTIFFS
v.
LEEHE F. GOLDFARB; CORY FRISCO; EMPIRE DATA TECHNOLOGIES, INC. DEFENDANTS.



The opinion of the court was delivered by: Jan E. Dubois, J.

ORDER & MEMORANDUM

ORDER

AND NOW, this 15th day of January, 2009, upon consideration of Leehe Goldfarb's Supplemental Motion for Appointment of Receiver (Document No. 18, filed December 12, 2008); and Plaintiffs' Brief in Opposition to Defendant Leehe F. Goldfarb's Supplemental Motion for Appointment of a Receiver (Document No. 24, filed December 24, 2008), for the reasons set forth in the attached Memorandum, IT IS ORDERED that Leehe Goldfarb's Supplemental Motion for Appointment of Receiver is DENIED.

MEMORANDUM

I. Introduction

Plaintiffs, Ira Goldfarb and various companies allegedly owned or controlled by him ("pet supply companies"), initiated this action on November 12, 2008 against Leehe F. Goldfarb, Mr. Goldfarb's estranged spouse, Cory Frisco ("Frisco"), an employee of the pet supply companies, and Empire Data Technologies, Inc., an eCommerce website host. (Pls.' Mot. TRO Prelim. Inj. 3.) On October 18, 2008, defendant Mrs. Goldfarb responded to plaintiffs' motion and cross-moved for injunctive relief and indemnification. (See Br. Opp. Pls.' Mot., Cross-mot. Inj. Relief, Cross-mot. Indemnification.)

This case arises out of what is in essence a domestic relations dispute between an estranged couple in the midst of bitter and protracted divorce proceedings. The key assets at the core of this dispute are several companies selling high-end products for pets. Both Mr. and Mrs. Goldfarb claim an ownership interest in these entities.

Presently before the Court is defendant Mrs. Goldfarb's Supplemental Motion for Appointment of a Receiver ("Receivership Motion"). For the reasons set forth below, the Court denies the Receivership Motion.

II. Background

Mrs. Goldfarb asserts that during their marriage, Mr. and Mrs. Goldfarb opened and operated several businesses as joint owners. (Br. Opp. Pls.' Mot., Cross-mot. Inj. Relief, Crossmot. Indemnification 4.) According to Mrs. Goldfarb, plaintiff pet supply companies are subsidiaries of L.I.G. Retail Holdings, L.L.C., a holding company in which Mrs. Goldfarb has a fifty percent ownership interest. (Id.) Indeed, Mrs. Goldfarb claims that "L.I.G." in the title of the holding company stands for "Leehe and Ira Goldfarb." (Id.)

Mrs. Goldfarb alleges that beginning in September 2007, Mr. Goldfarb altered various corporate records to divest Mrs. Goldfarb of her ownership interest. (Id. at 6.) Mrs. Goldfarb further alleges that Mr. Goldfarb engaged in such actions because he was having extramarital relations with Claudia Gutierrez ("Gutierrez"), a part-time financial consultant to the businesses. (Id. at 6, 8.) On September 18, 2008, Mrs. Goldfarb filed for a divorce. (Id. at 9, Ex. F.)

Mrs. Goldfarb accuses Mr. Goldfarb of extensive wrongdoing, resulting in the waste of corporate assets, mismanagement, and fraud. Specifically, Mrs. Goldfarb contends that Mr. Goldfarb used funds from their jointly owned businesses to pay for Gutierrez's children's private school tuition, to pay for Gutierrez's rent, and to provide Gutierrez with $10,000 per month. (Id. at 8--9.) She alleges that Mr. Goldfarb refused to pay the credit card bills for their businesses and removed Mrs. Goldfarb's name from business and personal bank accounts to preclude her from accessing company funds. (Def.'s Supplemental Mot. Appt. Receiver 5.) According to Mrs. Goldfarb, these actions disrupted business operations, such as the purchase of inventory. (Id.) Mrs. Goldfarb also contends that in 2006 and 2007, Mr. Goldfarb failed to pay taxes for the companies. (Id. at 9.) Based on an "Affidavit by Email" written and signed electronically by Andy Burr ("Burr"), an employee of the pet supply companies, Mrs. Goldfarb claims that Mr. Goldfarb falsified one of Gutierrez's employment contracts and moved or destroyed company records. (Id. at 6, Ex. B.) Since then, Mrs. Goldfarb asserts that Mr. Goldfarb has threatened employees with retaliation. (Id. at 7.)

In response to Mrs. Goldfarb's allegations, Mr. Goldfarb argues that Mrs. Goldfarb has failed to produce any evidence that she has a fifty percent ownership interest in any of the entities involved in this case. (Pls.' Br. Opp. Def.'s Supplemental Mot. Appt. Receiver 4.) In support of his position, Mr. Goldfarb attaches the operating agreements for all of the pet supply companies named as plaintiffs in this case, seeking to demonstrate that he "is the sole owner of each" of them. (Id. at 6, Exs. A--G.) Mr. Goldfarb claims that L.I.G. Retail Holdings, L.L.C. (the holding company in which Mrs. Goldfarb claims a fifty percent ownership interest) does not own or control any of the plaintiff pet supply companies, thus precluding Mrs. Goldfarb from demonstrating that she was "forced out or frozen out" of the pet supply companies. (Id. at 6--7.) Mr. Goldfarb also ...


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