### Arena Ltd. SPV v Chalets LLC 2024 NY Slip Op 31952(U) June 4, 2024 Supreme Court, New York County Docket Number: Index No. 655311/2023 Judge: Suzanne J. Adams Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York State and local government sources, including the New

York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

### [FILED: NEW YORK COUNTY CLERK 06/05/2024 03:33 P~ NYSCEF DOC. NO. 336 · INDEX NO. 655311/20231 RECEIVED NYSCEF: 06/05/2024

PRESENT: 

### SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY HON.SUZANNEJ.ADAMS PART Justice 39M

---------------------------------------------------X INDEX NO. MOTION DATE 655311/2023 ARENA LIMITED SPV, LLC,SPARKS CHALETS FUNDING, LLC, Plaintiff,

- V - THE CHALETS LLC,FACTORY HOUSING GROUP, LLC,INTERNATIONAL HOUSING CONCEPTS, INC.,TIMOTHY A WILKENS, THE WILKENS 2019 IRREVOCABLE TRUST Defendant. ----------------------------X N/A MOTION SEQ. NO.
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DECISION + ORDER ON MOTION

The following e-filed documents, listed by NYSCEF document number (Motion 001) 176, 177, 178, 179, 180,181,182,183,184,185,186,187,188,189,190,191,192,193, 194, 195,196,197,198,199,200, 201,202,203,204,205,206,207,208,209,210,211,212,213,214,215,216,217,218,219,226,227, 228,229,230,231,232,233,234,235,242,243,244,245,246,247,248,249,250,251,264 were read on this motion to/for INJUNCTION/RESTRAINING ORDER


### Uponthe foregoing documents, and oral argumentbefore the courtonNovember 29, 2023, it is ordered thatplaintiffs' motionis granted. In October 2021 and June 2022, plaintiffs, as lender andjuniorlender, agreed to loanmoniestoward the development ofaresidential real estateproject in Nevada, and advanced approximately $2.3 million sums to be used for the construction of manufactured houses which, inter alia, were to serve as collateral for plaintiffs' loans. Defendant The Chalets LLC (the "Borrower") is allegedto own the real property that is the site ofthe project. Defendant The Wilkens 2019 Irrevocable Trust (the "Trust") owns the Borrower, together with several non-parties. Defendant Timothy A. Wilkens ("Wilkens") is a trustee ofthe Trust and is alleged to manage and control the Borrower as well as defendants Factory Housing Group, LLC (the "Dealer") and International Housing Concepts, Inc. (the "Manufacturer"). Plaintiff

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commencedthis action in October 2023 asserting causes ofaction for, 

### interalia, fraud and breach ofcontract, and alleging in sum that Wilkens induced plaintiffs to make loans to the Borrowerby
means ofvarious lies and misrepresentations, and that even ifthe loans are not void, the Borrower has breached certain ofthe loan documents. In November 2023, plaintiffs brought the instant motion by orderto show cause for a preliminary injunctionenjoining Borrower and anyone acting
on Borrower's behalffrom using, distributing, etc., plaintiffs collateral, including any building materials and the like held by the Manufacturer, and ordering that plaintiffs collateral be made available for plaintiffstomoveto a secure locationandthe cashorcashequivalentsofthe collateral be transferred to a bank account directed by plaintiffs. Defendants Borrower and Wilkens oppose the motion. The order ofthis court dated November 9, 2023, granted a TRO ordering said relief, which has remained in effect pending a determination ofthe instant motion. Entitlementto a preliminary injunctionunder CPLR § 6301 isestablishedby a showing of: "(l) a likelihood ofultimate success on the merits; (2) the prospect of irreparable injury if the provisional reliefis withheld; and (3) a balance ofequities tipping in the moving party's favor." 

### Doe v. Axelrod, 73 N.Y.2d748, 750 (1988). Thepurpose ofa preliminaryinjunctionis to maintain the 

### status quo pending a trial. 

### See Terrell v. Terrell, 279 A.D.2d 301,304 (1 st Dep't 2001); 

### Sau Thi Ma v. Xuan 

### T. Lien, 198 A.D.2d 186, 187 (1 st Dep't 1993). The record before this court contains ample evidence that justifies the issuance of a preliminary injunction. First, plaintiffs are likelyto succeedonthe merits oftheir claims. In short, they have proffered documentation that, at the very least, they advanced approximately $2.3 million to the Borrower; that they relied on documentation that purported to show that the $2.3 million, considered a down payment, was paid to the Dealer, who credited the monies to the Manufacturer for the purpose ofmanufacturinghomes for the development and whichwas to also

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constitute a form ofcollateral on plaintiffs' loans; and that the purported forwarding ofmonies and/or credit to the Manufacturer was contradicted by further communication from the Manufacturer that itreceived only $66,000. The balance ofthe monies appears to be unaccounted for. Defendants in opposing the motion fail to persuasively refute these contentions and do not documentthewhereabouts ofthe balance ofthe disputed funds otherthanby a screen shotattached to defendants' counsel's opposing affirmation, written in Spanish, thatis intendedto showthatthe monies are in an account controlled by the Dealer at a bank in Panama. Second, the prospect of irreparable injury to plaintiffs is apparent from the fact that the monies at issue were to be used to purchase materials, etc., to construct manufactured houses, which were to serve as collateral and I, security for plaintiffs under the loan agreements. As such, a finding of irreparable harm is warranted. 

### Genger v. Genger, 2010 NY Slip Op. 33929 (Sup. Ct. N.Y. County July 2, 2010). Finally, the balance ofthe equities lies with plaintiffs; defendants have not statedthe nature ofany harm they would suffer ifan injunction was put in place. Accordingly, it is hereby ORDERED that plaintiffs motion is granted; and it is further ORDERED that defendants The Chalets LLC ("Borrower)", Factory Housing Group, LLC ("Dealer"), and Timothy A. Wilkens ("Guarantor", and collectively the "Borrower Defendants")
are enjoined from using, distributing, dissipating, removing, transferring, pledging, or otherwise disposing of any of Plaintiffs' collateral, including any materials, components, and parts of manufactured homes being held by International Housing Concepts, Inc. ("Manufacturer") for the benefit ofplaintiffs and all remaining amounts ofthe down payment of$2,333,396.00 transferred
orrepresented to have beentransferredby Borrowerto Dealerto Manufacturer in accordance with the Amended and Restated Construction Loan Agreement dated June 30, 2022 (the "Loan

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### Agreement") and related assignments of interests for the benefit of Plaintiffs (collectively, "Plaintiffs' Collateral"); and it is further ORDERED that anyone acting or purporting to act on behalfofBorrower Defendants or anyone who has notice ofthis Order are enjoined from using, distributing, dissipating, removing, transferring, pledging, or otherwise disposing ofany ofPlaintiffs' Collateral; and it is further ORDERED that all ofPlaintiffs' Collateral shall be made available for plaintiffs to move to a secure location and, to the extent that any portion ofPlaintiffs' Collateral remains in cash or cash equivalents, such funds are to be transferred to a bank account directed by plaintiffs; and it is further ORDEREDthattheundertaking is fixed inthe sumof$5,000.00 conditionedthatplaintiffs, ifit is finally determined that they were not entitled to an injunction, will pay to the defendants all damages and costs which may be sustained by reason ofthis injunction. This constitutes the decision and order ofthe court.

6/4/2024

DATE SUZANNE J. ADAMS, J.S.C. CHECK ONE:
APPLICATION: CHECK IF APPROPRIATE: CASE DISPOSED GRANTED**□** DENIED SETTLE ORDER INCLUDES TRANSFER/REASSIGN

# 8 NON-FINAL DISPOSITION GRANTED IN PART SUBMIT ORDER FIDUCIARY APPOINTMENT

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