The following papers were filed to New York State Courts Electronic Filing (“NYSCEF”) and read on the limited issue of setting forth an undertaking amount in accordance with CPLR §6312(b) as previously directed in the Decision and Order dated January 13, 2023 [Hon. Zugibe, J.S.C.]: NYSCEF Doc. No. 108-120 DECISION AND ORDER Background Facts: Plaintiffs commenced this action to challenge the Defendants Rockland Cider Works, LLC (“RCW”) and Van Houten Farm Market Benefit Trust (“the Trust”) from continued operation of a cidery business. It is alleged that RCW and the Trust are unlawfully operating the cidery business, which includes both a manufacturing facility and entertainment venue, on a residentially zoned property (“the Property”) in the Town of Orangetown, Rockland County. In the interest of judicial economy, the facts and procedural history set forth in the prior Decision and Order dated January 13, 2023 issued by the Honorable Justice Zugibe, J.S.C. (“Zugibe Order”) are incorporated herein by reference. As pertinent to the instant application. Plaintiffs previously moved for a preliminary injunction to enjoin RCW and the Trust from operating the cidery business at the Property. The Zugibe Order, in pertinent part, granted a preliminary injunction enjoining RCW and the Trust from operating the cidery business pending final disposition of this action, conditioned upon the posting of an undertaking by Plaintiffs in an amount to be fixed by this Court at a hearing pursuant to CPLR §6312(b). (See, NYSCEF Doc. No. 86). This matter was scheduled for an undertaking hearing on January 25, 2023 before the undersigned justice. A transcript of the hearing has been filed as NYSCEF Doc. No. 116. At the conclusion of the hearing, the Court issued a post-hearing motion briefing schedule which directed Defendants to file any written opposition to Plaintiff’s pre-hearing affirmation and exhibits by February 10, 2023 and directed Plaintiffs to file any written reply thereto by February 17, 2023. Plaintiffs’ Contentions: It is Plaintiffs’ contention that the Court should not impose any undertaking obligation on the Petitioners, or, in the alternative, any such undertaking should be a nominal amount set by the Court. Counsel contends that pursuant to CPLR §2512, no bond is applicable for any municipality or governmental entity seeking to enforce the town zoning code. Counsel argues that the Petitioners commenced this action pursuant to Town Law §268(2) and, as such, Petitioners are essentially ‘standing in the shoes’ of the Town of Orangetown by seeking to enforce town zoning laws and should not be subject to setting an undertaking amount during the pendency of this matter. Alternatively, counsel contends that the Court should impose a nominal bond, given the illegal nature of the RCW activity at the residentially zoned site. Counsel claims Defendants submitted unavailing evidence which includes “illegal alterations, revenue, or the profits derived from a variety of corporate entities, mismatched estimates, and after the fact letters, to ‘support’ an assertion that RCW may sustain damages” as a result of the injunction. (See, Plaintiffs’ Post-Hearing Memorandum of Law with exhibits filed as NYSCEF Doc. 113-116 respectively). Defendants’ Contentions: It is Defendants’ contention that the Court should impose an undertaking obligation upon the Petitioners in the amount of $3,314,000.00. Counsel proffered certain documentary evidence (in the form of estimates, projected loss spreadsheets, and the like) as well as testimony of Darin Van Houten, the owner of Van Houten Farms and RCW. Defendants contend that the imposition of the preliminary injunction will result in a complete halt of operations, loss of income and jobs, and the site owned by the Van Houten family for nearly two hundred years will have to be sold to the highest bidder. As to the projected loss, Van Houten testified that he prepared a computation list itemizing $3,314,000 in projected losses to arise from the closing of the cidery pursuant to the injunction imposed by the Zugibe Order. He testified at the hearing and also prepared a spreadsheet which reflects, amongst other losses, more than $250,000 in revenue losses each year for the next two years and anticipated expenses of over $400,000 to relocate the cidery business to the Gilboa location to enable continue operations. He also stated that Van Houten Farms would suffer significant revenue loss from the closing of RCW, since the cidery foot traffic resulted in business to the farm. (See, January 26, 2023 Hearing Transcript and Defendants’ Post-Hearing Memorandum of Law with exhibits filed as NYSCEF Doc. 116 and 118-120 respectively). All other arguments raised on the instant application and evidence submitted by the parties in connection thereto have been considered by this court, notwithstanding the specific absence of reference thereto. Decision: As a preliminary matter, it is noteworthy that the limited issue before this Court at this juncture is setting forth an undertaking amount in accordance with CPLR §6312(b) as previously directed in the Zugibe Order. As such, any arguments related to the underlying Zugibe Order including, without limitation, any challenges to the propriety of the preliminary injunction issued in such court order are not properly before this court. As it relates to the undertaking issue, CPLR §6312(b) provides, in relevant part, that “prior to the granting of a preliminary injunction, the plaintiff shall give an undertaking in an amount to be fixed by the court [and] the plaintiff, if it is finally determined that he or she was not entitled to an injunction, will pay to the defendant all damages and costs which may be sustained by reason of the injunction.” (Id.) The purpose of the undertaking is to “compensate the defendant for damages incurred by reason of an injunction in the event it is determined that the plaintiff was not entitled to the injunction.” (91-54 Gold Rd., LLC v. Cross-Deegan Realty Corp., 93 AD3d 649, 650 [2012]). “The amount of the undertaking must not be based upon speculation and must be rationally related to the amount of potential damages which the defendant might suffer if it is later determined that the injunction was unwarranted.” (Hofstra Univ. v. Nassau County, N.Y., 166 AD3d 863, 865 [2d Dept. 2018] [internal quotation marks and brackets omitted]; see Congregation Erech Shai Bais Yosef, Inc. v. Werzberger, 189 AD3d 1165, 1168 [2020]). “The fixing of the amount of an undertaking is a matter within the sound discretion of the Supreme Court, and its determination will not be disturbed absent an improvident exercise of that discretion.” [Hofstra Univ. v. Nassau County, N.Y., 166 AD3d at 865 [2d Dept. 2018]. In applying the aforementioned legal principles to the case at bar, this Court, in an exercise of its discretion, hereby sets the undertaking amount in the amount of one hundred ($100.00) dollars. In so holding, the Court adopts the prior factual findings set forth in the Zugibe Order including, without limitation, “the [Town of Orangetown Office of Building, Zoning, Planning, Administration and Enforcement] OBZPAE’s denial of RCW’s building permit application, the issuance of the Stop Work Orders and Notice, RCW’s guilty plea of failing to obtain appropriate certificates of occupancy, and the proceedings commenced by the [New York State Liquor Authority] SLA seeking to cancel and revoke RCW’s farm winery license on the grounds, inter alia, that RCW failed to conform with all applicable codes and regulations” (NYSCEF Doc. 86 at pg. 9). Based on those prior factual findings that the RCW was operating the cidery business without proper permits or authority, this Court finds that the nominal undertaking obligation is sufficient under the circumstances presented in this case. Based on the foregoing, it is hereby ORDERED that an undertaking is fixed in the amount of one hundred ($100.00) dollars, which shall be posted by Plaintiffs within fifteen (15) days of this Decision and Order. In the event that it is ultimately determined that the Plaintiffs were not entitled to an injunction as previously directed in the Zugibe Order, then Plaintiffs will pay such undertaking amount to Defendants as and for any damages and costs that may be sustained by reason of said injunction. It is further ORDERED that this matter is scheduled for a compliance conference on April 5, 2023 at 9:30a.m. in Courtroom 479 to confirm the posting of the undertaking and to set a discovery schedule for any outstanding discovery. The foregoing constitutes the Decision and Order of this Court. Dated: March 6, 2023
