Huntington Village Dental v. Rathbauer

SUFFOLK COUNTY
Contracts

New York Law Journal

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Justice Thomas Whelan

In this action arising from the purchase of a dental practice by Huntington Village Dental from seller Rathbauer, Huntington sued for recovery of damages alleging breaches by defendants of the sales documents, among other things. Huntington also sought injunctive relief enjoining and restraining defendants from taking any action to enforce paragraph 7 of the promissory note providing for the ownership of the practice and assets to revert back to seller if the loan was in default after 90 days. Defendants moved for the appointment of a receiver of the dental practice, and contended the terms inserted into paragraph 7 created a valid and binding reverter, not a security interest, as Huntington suggested. The court found Huntington failed to sufficiently show entitlement to injunctive relief, noting all claims listed in the notice were compensable by a monetary award, which has not been shown to provide inadequate relief. Yet, it also found there was no legal or factual support for defendants' claims that paragraph 7 of the note created an enforceable reverter interest in the seller or that the practice automatically reverted to defendant upon Huntington's failure to pay amounts due. Hence, both plaintiff and defendants' motions were denied.

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