Bayit Care Corp. v. Tender Loving Care Health Care Services of Nassau Suffolk, LLC.
ORDER denying 23 : For the reasons set forth in the attached Memorandum & Order, the injunctive relief requested in the March 8, 2012 Order to Show Cause is denied. Ordered by Senior Judge Denis R. Hurley on 3/30/2012. (Monaco, Laura)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
BAYIT CARE CORP.,
MEMORANDUM AND DECISION
-againstTENDER LOVING CARE HEALTH CARE
SERVICES OF NASSAU SUFFOLK,
LLC, Successor in Interest to
STAFF BUILDERS INTERNATIONAL,
A P P E A R A N C E S:
Einbinder & Dunn
104 West 40th Street
New York, New York 11556
By: Michael Einbinder, Esq.
1320 RXR Plaza
Uniondale, New York 11556
By: James M. Wicks, Esq.
Aaron E. Zerykier, Esq.
HURLEY, District Judge
By Order to Show Cause filed on March 8, 2012, Bayit
Care Corp. ("plaintiff" or "Bayit") seeks the following items of
injunctive relief against Tender Loving Care Health Care Services
of Nassau Suffolk, LLC ("defendant" or "Tender Loving"):
(1) [an order p]reliminarily enjoin[ing]
Tender Loving during the pendency of this
action from deeming as ineffective Bayit's
extension of the franchise relationship for
an additional five years, commencing on April
(2) [an order p]reliminarily enjoin[ing]
Tender Loving during the pendency of this
action from deeming the franchise
relationship as expired on April 1, 2012, and
(3) [an order p]reliminarily enjoin[ing]
Tender Loving during the pendency of this
action from discontinuing its performance
under the Franchise Agreement based on the
position that the term of the franchise
agreement will expire on April 1, 2012.
Mar. 8, 2008 O/T/S/C at 2.
Plaintiff's application for a preliminary injunction
was returnable before me on March 26, 2012.
At that time, oral
argument was had on plaintiff's request as to that application,
as well as its concomitant request that a "temporary restraining
order be put in place pending [my] decision [on the preliminary
Mar. 26, 2012 Tr. Mot. Hr'g ("Tr.") at 35.
Consistent with plaintiff's request, and given (1) that
the standard for the issuance of a temporary restraining order
and for a preliminary injunction are the same in this Circuit,
Andino v. Fischer, 555 F. Supp. 2d 418, 419 (S.D.N.Y. 2008), and
(2) that a perusal of the unambiguous, relevant franchise
agreement provisions indicates that no evidence beyond the four
corners of those provisions is required to decide the instant
motion, the Court in this Memorandum and Order will provide its
decision regarding both items of injunctive relief sought in the
Order to Show Cause.
Relationship Between Bayit and Tender Loving
The relationship between Bayit and Tender Loving is
well snyopized by defendant thusly:
Tender Loving is a subsidiary of Amedisys,
Inc. ("Amedisys") a national provider of home
health and hospice care . . . . Tender
Loving is the local [Amedisys] subsidiary
which franchises the Nassau and Suffolk
County, New York operations to Bayit. In
1992 Bayit entered into a Franchise Agreement
(the "1992 Franchise Agreement") with
Amedisys's predecessor in interest Staff
Builders International, Inc. ("Staff
Builders"). In 2005 Amedisys acquired Staff
Builders and all of its subsidiaries,
including Tender Loving.
Def.'s Mem. in Opp'n at 1.
The 1992 Franchise Agreement
Under the 1992 Franchise Agreement between Staff
Builders, a predecessor in interest to Tender Loving, and Bayit,
Bayit was granted a franchise "to operate [a] Staff Builders
Health Care Center [in a defined territory] . . . utilizing
Franchisor's Propriety Marks and Health Care System."
Franchise Agreement at 2 (attached as Ex. A to Mar. 8, 2012
The "Initial Term" under the 1992 Franchise Agreement
was for "ten (10) years," i.e. until 2002, id., § 3.01 at 4, with
Bayit having the option, under § 3.02, to extend the initial term
by "enter[ing] into a renewal Franchise Agreement for an
additional five (5) year term (the 'Renewal Term')."
Id., § 3.02
Section 3.03 provided, however, that Bayit's "right to
enter into a renewal Franchise Agreement [under § 3.02, was]
contingent upon [its] fulfillment" of a number of conditions
precedent including "hav[ing] fully performed all of its
obligations under the Agreement."
Id., § 3.03 at 4-5.
Paragraph 3.04 of the 1992 Agreement, entitled "Form
and Manner of Renewal," reads in pertinent part:
If Franchisee wishes to exercise its right
to enter into a renewal Franchise Agreement,
it shall do so by executing Franchisor's
then-current form of Franchise Agreement,
which agreement shall supersede this
Agreement and be modified to provide that
Franchisee shall have no right to renew the
franchise upon expiration of the Renewal
Term. If upon the expiration of the Renewal
Term, the Franchisee wishes to continue to
operate the Franchised Business for an
additional term (the "Additional Term"),1
then, subject to Franchisor's absolute
discretion, and in the manner prescribed by
Franchisor, Franchisee may be permitted to
enter into Franchisor's then-current form of
Franchise Agreement, provided that, at a
minimum, Franchisee shall have fulfilled the
conditions set forth in Paragraph 3.03 (a)(h) hereof.
The terms of the Renewal Agreement may
differ from the terms of this Agreement,
except that: (i) the boundaries of the
Territory conferred upon Franchisee hereunder
shall remain the same; [and] (ii) the right
There is no claim that plaintiff's efforts to exercise
its option under paragraph 1 of the 2002 agreement for an
additional 5 years constitute an "Additional Term." Tr. at 15
(Mr. Einbinder stating that "it is not an additional term. There
is a thing called an additional term which was only at their
discretion. So we are not [talking about] an additional term.")
to renew the Renewal Agreement and any
applicable Renewal Management Agreement(s) at
the expiration of the Renewal Term shall be
identical to that set forth herein.
. . . .
Franchisee shall exercise its right to
renew for a Renewal Term in the following
(a) Not less than one hundred eighty (180)
days but not more than two hundred forty
(240) days prior to the expiration of the
Initial Term (or the Renewal Term),
Franchisee shall, by written notice, inform
Franchisor of his intention to exercise its
renewal right. . . .
(b) Within sixty (60) days after receipt
of Franchisee's request, if Franchisee has
complied with all conditions precedent to
renewal set forth above, Franchisor shall
deliver to Franchisee a copy of its thencurrent Offering Circular (including its
then-current form of Franchise Agreement),
and within fifteen (15) business days from
the receipt of same Franchisee shall, in
writing, acknowledge the receipt thereof.
(c) No sooner than ten (10) business days
but no more then twenty (20) business days
after Franchisee receives the then-current
Offering Circular (including the then-current
Franchise Agreement), Franchisee shall, by
written notice, notify Franchisor as to
whether or not he elects to execute
Franchisor's then-current form of Franchise
(d) Promptly upon receipt of Franchisee's
notice of its election to execute
Franchisor's then-current Franchise
Agreement, Franchisor shall deliver to
Franchisee three (3) copies of said
agreement. Within fifteen (15) business days
of receipt thereof Franchisee shall execute
three (3) copies of said agreement and return
same to Franchisor.
(e) If Franchisee shall fail to perform
any of the acts or fail to deliver any of the
notices required pursuant to the provisions
of subsections (a), (b), (c) or (d) of this
Paragraph 3.04 in a timely fashion, such
failure shall be deemed an election by
Franchisee not to renew, and such failure
shall cause Franchisee's renewal right to
expire without further notice or action by
(f) If Franchisee exercises its renewal
right in the manner described above, and if
on the date the Initial Term (or a Renewal
term) expires Franchisee has complied with
all of the conditions set forth in Paragraph
3.03 hereof, Franchisor shall execute the
renewal Franchise Agreement previously
executed by Franchisee and shall, promptly
after expiration of the Initial or Renewal
term, deliver one (1) fully executed copy of
the renewal Franchise Agreement to
Id., § 3.04 at 6-7 (emphases added).
It warrants mention that Section 3.02(a)'s 180 day
prior notice provision pertains not only to efforts to extend the
initial 10 year franchise term, but also to an extension of a
"the Renewal Term."
That provision demonstrates that the
parties envisioned as far back as 1992 that if Bayit exercised
the additional five year option set forth in § 3.02 by extending
the franchise agreement until 2007, that extension, in turn,
might be extended further as a result of a later agreement
between the parties.
Significantly, the parties provided in §
3.04(a) that should that latter scenario subsequently materialize
(as plaintiff maintains it did), the 180 day minimum prior notice
provision would be fully applicable to such an extension.
Renewal Franchise Agreement Effective April 1, 2002
Presumably on or before March 31, 2002, i.e. when the
ten year term under the 1992 Franchise Agreement had just about
run its course, the Franchisor and Bayit entered into a "Renewal
Franchise Agreement . . . effective as of April 1, 2002."
2002 Renewal Franchise Agreement between Staff Builders and Bayit
at 1 (attached as Ex. C to Mar. 8, 2012 O/T/S/C.)
Under the 2002
Agreement, the Franchisor and Bayit agreed in pertinent part:
Franchisor hereby grants to Franchisee a
Renewal Franchise Agreement for
additional consecutive terms of ten (10)
years, commencing April 1, 2002, and at
the election of Franchisee, an option to
renew for an additional consecutive term
of five (5) years.
Except as provided herein, the Franchise
Agreement and all provisions contained
therein shall remain in full force and
Id. at the third unnumbered page of the Agreement (emphasis
Bayit Notified Tender Loving of its Intention to Renew the
Franchise Agreement by Letter Dated January 10, 2012
Bayit advised Tender Loving in its January 10, 2012
letter that "we hereby exercise our option to renew our franchise
agreement for an additional five year term pursuant to Paragraph
1 of the Renewal Franchise Agreement made effective as of April
Dolan Decl. in Opp'n, Ex. C; see also Tr. at 5 (Mr.
Einbinder indicates to the Court that "[t]here is no dispute that
my client exercised that option on January 10.").
As noted by
Thomas J. Dolan in his Declaration submitted in opposition to the
relief requested, that notice was sent "over three months . . .
beyond the exercise date [provided in § 3.04 of the 1992
Dolan Decl. in Opp'n, ¶ 10.
Do the notice provisions set forth in § 3.04(a) of the
1992 Franchise Agreement pertain to the April 2002 "Renewal
Franchise Agreement"; more particularly, to Bayit's effort to
exercise the five year extension of the Franchise Agreement which
otherwise would have expired by its terms, see § 3.04(e), on
March 31, 2012.
A related question concerns whether the April
2002 agreement is ambiguous as to the notice issue, thus
rendering extrinsic evidence admissible in an effort to resolve
the purported ambiguity.
Standard for Issuance of a Temporary Restraining
Order and/or a Preliminary Injunction
As noted earlier, "[i]t is well established that in
this Circuit the standard for entry of a TRO is the same as for a
Andino, 555 F. Supp. 2d at 419; see
also Pl.'s Mem. in Supp. at 10 ("[t]he standard for obtaining a
TRO or a preliminary injunction is the same.").
To meet that
shared standard the movant must demonstrate "(1) irreparable harm
in the absence of the injunction and (2) either (a) a likelihood
of success on the merits or (b) sufficiently serious questions
going to the merits to make them a fair ground for litigation and
a balance of hardships tipping decidedly in the movant's favor."
Merkos L'Inyonei Chinuch, Inc. v. Otsar Sifrei Lubavitch, Inc.,
312 F.3d 94, 96 (2d Cir. 2002)(internal citations and quotation
There is, as defendant correctly notes, a "heightened
standard . . . [if] the injunction [sought] is mandatary in
See Def.'s Mem. in Opp'n at 7 (citing Pankos Diner
Corp. v. Nassau Cnty. Legislature, 321 F. Supp. 2d 520, 523
In those instances in which injunction sought,
if granted, would "alter the status quo by commanding some
positive act . . .
a more rigorous showing of a clear or
substantial likelihood of success on the merits" is required.
Id. at 8 (citing Forest City Daly Hous., Inc. v. Town of North
Hempstead, 175 F. 3d 144, 150 (2d Cir. 1999)).
argument, there was considerable discussion as to which standard
should apply, i.e. the one articulated in Merkos or the elevated
standard enunciated in such cases as Pankos Diner Corp.
needless to say, defendant urges that the heightened standard is
applicable, while plaintiff takes the contrary view, although
each side was of the opinion that it would prevail under either
Plaintiff maintains that the lower standard should be
applied because Bayit had appropriately exercised its option to
extend the Franchise Agreement for another five years and,
accordingly, an injunction would maintain, rather than disrupt
the status quo.
Defendant, on the other hand, contends that
plaintiff's efforts to exercise the option were not forthcoming
in a timely fashion; as a result, issuing the requested relief
would alter the status quo by resurrecting what is about to
become a defunct franchise arrangement between the parties.
Court need not determine which party has the better side of the
argument because, even under the lesser injunction standard,
plaintiff has failed to establish that it is entitled to
Before moving on to the next portion of this opinion,
which summarizes the arguments on the merits being advanced by
the parties, it is worthwhile to note that plaintiff has
established that, unless injunctive relief is granted, its
present business would essentially cease to exist, thereby
satisfying the irreparable injury prong of the Merkos analysis.
See RxUSA Wholesale, Inc. v. Dep't of Health & Human Servs., 467
F. Supp. 2d 285, 301-302 (E.D.N.Y. 2006)("It is well settled in
this Circuit that the loss of a business constitutes irreparable
harm.")(internal quotation marks omitted).
What remains to be
determined is whether plaintiff has also established a likelihood
of success, or the existence of a sufficiently serious question
going to the merits to make the issue a fair ground for trial
with a balance of hardship tipping decidedly in Bayit's favor.
Positions of the Parties
Plaintiff maintains that the notice provisions in the
1992 Franchise Agreement are irrelevant for present purposes.
Simply put, in Bayit's view "[t]o take the position that
paragraph one refers back to paragraph 3.04 doesn't make any
sense because 3.04 doesn't refer at all to what we are talking
about right now.
This is an additional or new term."
Tr. at 9-
And, the argument continues, "the renewal provisions [of §§
3.03 and 3.04] are clearly intended and clearly are geared toward
the renewal term, the things that just happened over the last ten
years and not the next five years."
Id. at 12.
plaintiff maintains that the language in paragraph 2 of the 2002
Renewal Franchise Agreement, to wit that " . . . the Franchise
Agreement and all provisions contained therein shall remain in
full force and effect," does not include the 1992 Franchise
Agreement's renewal notice provisions.
From that, the argument
is made that since the 2002 agreement lacks a specific notice
provision, notice must simply be given within a reasonable time
prior to the otherwise scheduled termination date.
And, in that
regard, plaintiff posits that the notice of January 10th clearly
falls within that ambit.
As a fallback position, plaintiff maintains that should
the Court reject its position that it is entitled to injunctive
relief simply based on the face of the implicated agreements, at
the very least the Court should find the Renewal Franchise
Agreement ambiguous, i.e. in that "a reasonably intelligent
person viewing the contract objectively could interpret the
language in more than one way."
Topps Co., Inc. v. Cadbury Stani
S.A.I.C., 526 F.3d 63, 68 (2d Cir. 2008).
notes that the 2002 Renewal Franchise Agreement was prepared by
Defendant's position is relatively straightforward.
Tender Loving points out that the April 2002 Renewal Franchise
Agreement has within its title the word "Renewal" rather than
"Amended," thus eviscerating the notion that the 2002 agreement
should somehow be divorced from the 1992 Franchise Agreement.
Along similar lines, defendant argues that plaintiff's position
that the 1992 Franchise Agreement's notice provisions are
inapplicable cannot be squared with the second paragraph on the
last page of the 2002 Renewal Franchise Agreement, which
unequivocally provides precisely to the contrary.
judgment, the term "all provisions" in the "Franchise Agreement"
means just that.
Initially, plaintiff maintained that "[e]ven if the
Court finds that Section Three of the Franchise Agreement is
binding, Bayit provided sufficient written notice to comply with
See Pl.'s Mem. of Law in Supp., TABLE OF
CONTENTS (this excerpt from the Table of Contents is modified to
delete some of the upper case letters that appear in the
That position was seemingly abandoned during oral
In any event, it is clear that the January 10, 2012
letter represents the first notice provided by Bayit, and that
such notice was not provided more than 180 days before March 31,
As a result, if it is clear that § 3.04's notice
provisions are applicable to plaintiff's efforts to extend the
franchise agreement between the parties for an additional five
years, plaintiff's proof falls far short the mark.
The distinction that plaintiff has endeavored to
fashion between the "execution of a renewal agreement" which
would be subject to § 3.04 on the one hand, tr. at 9, and "an
additional or new term," which purportedly would not on the other
hand is not persuasive.
Id. at 10.
Parenthetically, I note that
the semantical nuances presently proffered by plaintiff are out
of sync with the language contained in the January 10, 2012
notice submitted by Bayit, as well as with the proposed "Second
Renewal Franchise Agreement" which accompanied that letter.
way of example, in the proposed "Second Renewal Franchise
Agreement" apparently drafted by Bayit and, if not, certainly
approved by Bayit as reflected in the January 10, 2012 letter,2
Indeed, Bayit's approval of the proposed "Second Renewal
Franchise Agreement" is evidenced by the fact that it submitted
the document to Tender Loving for execution.
we see the provision that "[e]xcept as provided herein, the terms
of the  Franchise Agreement and the  Renewal
Franchise Agreement and all provisions contained therein shall
remain in full force and effect."
Dolan Decl. in Opp'n, Ex. C.
That language basically mirrors the language found in the 2002
Renewal Franchise Agreement.
Indeed, the only difference between
the two documents vis-a-vis their paragraphs "2" is the wholesale
inclusion by incorporation in the 2012 proposed Second Renewal
Franchise Agreement of not only the terms of the 1992 Franchise
Agreement but also of the terms of the 2002 Renewal Franchise
However, that is a meaningless distinction for
present purposes because the notice provisions under discussion
are found solely in the 1992 Franchise Agreement.
absent from the proposed 2012 agreement or accompanying letter is
any suggestion that the sought after 5 year extension until 2017
was not a "renewal" of the parties' long standing franchise
agreements but rather was an "additional or new" arrangement
untethered to the existing notice provisions contained in § 3.04.
Tr. at 9-10.
In any event, the portion of the above paragraph
beginning with the word "[p]arenthetically" is merely an
observation as distinct from a ground for denying the requested
The predicate for the Court's decision is to be found
elsewhere, viz. from a literal, common sense reading of
paragraphs "1" and "2" of the 2002 Renewal Franchise Agreement.
Viewed through that prism, it is abundantly clear that §
3.04(a)'s notice provisions in the 1992 Franchise Agreement are
part and parcel of the agreement underlying the present dispute.
I do not doubt that the landscape has changed to some
extent in the relationship between the Franchisor and Franchisee
over the course of the last two decades.
For one thing, it
appears the "Franchisor is not currently offering to sell
franchises and the Franchisee[s'] current Franchise Agreement[s]
. . . contain all of the necessary terms and conditions."
8, 2012 O/T/S/C, Ex. C at 6th "WHEREAS" clause.
That change may
render some of the provisions in the 1992 Agreement surplusage,
such as the requirement in § 3.04(b) that the " . . . Franchisor
shall deliver to the Franchisee a copy of its then-current
Id., Ex. A. at § 3.04(b).
To the extent
that may be true, arguably the parties should have redrafted the
2002 Agreement with respect to the five year extension which is
now in litigation.
However, the parties did not do so and, as a
consequence, the deal they struck in 2002 which is clear on its
See, e.g., Garza v. Marine Transp. Lines, Inc.,
861 F.2d 23, 26-27 (2d Cir. 1988)("The parol evidence rule aims
to ensure some measure of stability in commercial relations . . .
In the absence of ambiguity, the effect of admitting extrinsic
evidence would be to allow one party to substitute his view of
his obligations for those clearly stated.")(internal quotation
marks omitted); W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d
157, 162 (1990)("A familiar and imminently sensible proposition
of law is that, when parties set down their agreement in a clear,
complete document, their writing should as a rule be enforced
according to its terms.
Evidence outside the four corners of the
document as to what was really intended but unstated or misstated
is generally inadmissible to add to or vary the writing.").
finally, to the extent plaintiff's argument, if accepted, would
render paragraph 2 of the 2002 Renewal Franchise Agreement devoid
of meaning, not only is such an interpretation
Garza v. Marine Transport Lines Inc., 861 F.2d at 27, but it is
also irreconcilable with the unmistakable meaning of the subject
Plaintiff has not demonstrated that it is entitled to a
temporary restraining order or preliminary injunction.
Bayit has established that it will suffer an irreparable injury
due to the non-issuance of the relief sought given the resulting
effect on its business, its proof is inadequate to establish
either a likelihood of success on the merits, or a sufficiently
serious question going to the merits calling for a trial together
with a balancing of the hardships tipping decidedly in its favor.
In sum, the injunctive relief requested in the March 8,
2012 O/T/S/C is denied.
Dated: March 30, 2012
Central Islip, New York
DENIS R. HURLEY, U.S.D.J.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?