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TRIALIIAS PART: 15 NASSAU COUNTY Indej( No: 004058-12 Motion Seq. No.: 14 Submission Date: 2/5/14


In the Matter of the Application of John M. Ferolito, the Holder of More Than 20 Percent of All Outstanding Shares of Beverage Marketing, USA, Inc., Petitioner, For the Dissolution of Beverage Marketing, USA, Inc.

JOHN M. FEROLITO and the JOHN FEROLITO, JR. GRANTOR TRUST (John M. Ferolito and Carolyn --~-Ferolito as Co-Trustees), both individually arid derivatively on behalf of Beverage Marketing USA, Inc., Plaintiffs, -againstDOMENICK J. VULTAGGIO and DAVID MENASHI, Defendants.



Papers Read on this Motion: Notice of Motion, Memorandum in Support, Affirmation in h'b't s Suppor t an d E XII : : . Memorandum in Opposition, Affirmation and ExhlbltS Reply Memorandum, Affirmation and Exhibits


This matter is before the Court on the application by plaintiffs (the "Ferolito Parties") for an Order directing defendants (the "Vultaggio Parties) to make an interim payment to the Ferolito Parties of $200 million towards any eventual buyout by the Vultaggio Parties of the Ferolito Parties' interest in the AriZona Entities. - --appoint The Ferolito Parties also ask the Court to

a-temporary receiver for the AriZona Entities and grant the Ferolito Parties a security For the reasons set forth below, the Court denies

interest in the assets of the AriZona Entities. the application in its entirety.

The dispute between the parties is legion in every respect, including (but not limited to) the number of lawsuits filed by and between the parties, the various venues of those lawsuits, the scope of discovery, the extensive motion practice, and the resources that counsel and the parties have devoted at the trial and appellate level in both the state and federal courts. Perhaps overly

simplified for purposes of this application, the Ferolito Parties own 50% of the AriZona Entities, which consist of various companies that produce and distribute beverages. AriZona has elected

to purchase the Ferolito Parties' interests in the AriZona Entities pursuant to the Business Corporation Law ("BCL"). The issues involving that matter itself have been pending in both

the Supreme Court of New York County and this Court, and ultimately all disputes between the parties regarding the purchase have been consolidated for trial in this Court. Trial, which has


already been adjourned once, will commence on May 21,2014.


There appears to be little question that the AriZona entities are worth a not-insignificant
sum of money, although there is not surprisingly substantial disagreement among the parties as to the value of those entities. Simplified again for purposes of this application, estimates of the

value have, in the course of the nearly five years that this Court has presided over some of the parties' disputes, ranged from as low as approximately $400 million (on the part of the Vultaggio Parties) to $4 billion (on the part of the Ferolito Parties). There is also disagreement

about the amount of any payout to the Ferolito Parties, as the Vultaggio Parties have asserted that various setoffs may reduce to zero the amount due to Ferolito. Finally, there is

disagreement about the ability of the AriZona entities to operate successfully if such a large

interim payment is ordered. The Ferolito Parties correctly assert that the BCL gives the Court discretion to order interim payments to a petitioning shareholder during a buyout proceeding pursuant to, among other things, the Court's power to set the terms and conditions of any buyout, and to make "all such orders as it may deem proper" in a BCL proceeding. BCL


1008(a), 1117(b), 1118.

The Court also recognizes the general principle that delay in a buyout proceeding can have a disproportionate effect on the petitioning shareholder. A.D.2d 139,144 (2d Dept. 1985). See Blake v. Blake Agency, Inc., 107

Finally, the Court recognizes the analogy to matrimonial

actions, whereby temporary maintenance payments are often made to ensure the economic --.-.survival of the dependent spouse and any children as the case is readied for trial.

Nevertheless, the circumstances of this case do not warrant any interim award. At the outset, the Ferolito Parties have not cited, and the Court has not located, any precedent upholding such an enormous pre-trial award, whether in a BCL dissolution case or a matrimonial case. Nevertheless, the Court concludes that there is not a factual predicate to justify such an award. Indeed, the Ferolito Parties have not cited to sufficient evidence, much Such evidence

less permitted discovery on, those parties' professed need for such an award.

could, of course, be surprising at least at first blush, as the Ferolito Parties have received hundreds of millions of dollars from the AriZona entities during the years in which the company has been in business, and have used those funds to finance a lifestyle that includes multiple houses as well as boats, gambling, and ownership of a golf course. While the Court

understands that the Ferolito Parties claim that they merely wish to receive the funds that they believe are undoubtedly coming to them, the Court cannot even surmise how to divine, at this juncture, the amount of those funds nor the effect that payment of any amount of funds . - ~pproxi;;ating th; ~ount sought by the Ferolito Parties would have on the AriZona Entities. It is well.

The application for a receiver is also without a sufficient factual predicate.

settled that the appointment of a temporary receiver is an "extreme remedy" which should only be done when "there is a clear evidentiary showing of the necessity for the conservation of the property at issue and the need to protect a party's interest in that property." A.DJd 828, 829 (2d Dept. 2010). Quick v. Quick, 69 To the

There is no such evidentiary showing at this time.

contrary, the issues regarding the AriZona Entities' value and ability to serve as a going conero are among the myriad matters on which the parties fervently disagree. Similarly, there is no basis for the Court to award, prior to trial, some sort of security



interest to the Ferolito Parties.

The gravamen of the Ferolito Parties' application appears to be That does not

the disparity in the parties' assessment of the value of the AriZona entities. warrant any security interest to the Ferolito Parties. All matters not decided herein are hereby denied. This constitutes the decision and order of the Court.

ENTER DATED: Mineola, NY March 31, 2014 HaN. TIMOTHY S. DRISC l.S.C.

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