The opinion
Matter of Mojtahedi v Craddock
2024 NY Slip Op 34320(U)
December 5, 2024
Supreme Court, New York County
Docket Number: Index No. 157677/2024
Judge: Lyle E. Frank
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INDEX NO. 157677/2024
NYSCEF DOC. NO. 120 RECEIVED NYSCEF: 12/06/2024
SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY
PRESENT: HON. LYLE E. FRANK PART 11M
Justice
---------------------------------------------------------------------------------X INDEX NO. 157677/2024
IN THE MATTER OF THE APPLICATION OF MICHAEL
MOJTAHEDI MOTION DATE 11/05/2024
Petitioner, MOTION SEQ. NO. 004
-v-
DECISION + ORDER ON
CHRISTOPHER CRADDOCK,
MOTION
Respondent.
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The following e-filed documents, listed by NYSCEF document number (Motion 004) 74, 75, 76, 77, 78,
79, 80, 81, 82, 83, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111,
112, 113, 114, 115, 116, 117, 118, 119
were read on this motion to/for CONTEMPT .
Upon the foregoing documents, Petitioner’s motion to hold respondent in contempt is
granted and Respondent’s cross-motion is denied.
Background
This case arises out of a dispute between members of the Delaware corporation
RocketStar, Inc. (“RocketStar”) over control of the company. Petitioner Michael Mojtahedi
(“Mojtahedi”) brought the underlying Article 78 petition seeking to have Respondent
Christopher Craddock (“Craddock”) turn over the RocketStar books and records, claiming to be
operating as the new CEO of RocketStar. The parties disputed, among other things, what role the
other played in the corporation and the makeup of RocketStar’s board of directors. Both also
purported to have removed the other from the board of directors. This Court held an evidentiary
hearing on October 25, 2024, to determine the matter of who was a valid member of the Board
and whether either party’s purported firing of the other party from the board of directors was
valid.
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At this hearing, Craddock testified that there were just two personal credit cards, both in
his wife’s name, that he used to make payments on behalf of RocketStar. Craddock then offered
into evidence two Amex Statements. One was allegedly a mix of Craddock’s personal
transactions and payments made on behalf of RocketStar (the “Delta Sky Miles Card”) and the
other was used just for company purposes (the “Morgan Stanley Platinum Card”). Relevant to
this motion, Craddock also specifically testified that he would be willing to produce the
following books and records: RocketStar records contained on the QuickBooks portal if
Petitioner paid for an expert to segregate out Craddock’s personal information; statements for the
Chase bank account for RocketStar up to the period in which he had access; and the RocketStar
insurance policies. At this point, the Court stopped that line of questioning and pointed out that
Craddock’s willingness to turn over company records would be irrelevant should an order be
issued commanding him to do so.
The Court ruled from the bench that Craddock had been removed from the board of
directors by majority vote and that it appeared that Mojtahedi was the CEO. The Court also
ordered that Craddock turn over the company’s books and records, and that the order would be
crafted in order to protect Craddock’s privacy. On October 28, 2024, an order was issued by the
Court (the “October 28 Order”) granting the petition and requiring Craddock to, within 7 days of
date of service of the order:
(i) provide access to Petitioner Mojtahedi, RocketStar (“the Company”),
the directors and the other shareholders of all the books and records of the
Company, including, without limitation, [a list of specific examples]; (ii)
Respondent Craddock shall return all Company property in his possession,
including, without limitation, all computers, monitors, phones and other personal
devices, with all Company information maintained thereon; (iii) Respondent
Craddock provide the Company, its directors and shareholders with all passwords
to all of the email accounts, computer, phone and other Company websites or sites
on which Respondent Craddock performed Company business, and (iv)
Respondent Craddock shall return to the Company, its directors and shareholders
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any other Company property or books and records of the Company in his
possession not included in the foregoing subsections of this Order
The order then continued to direct Petitioner to use best efforts to segregate any potential
personal information that had been mingled with company information in order to protect
Craddock’s privacy. Craddock has made a pending appeal of the order, without seeking a stay of
the Order.
Events Since the Order
The deadline for handing over the corporate books and records was November 4, 2024.
Craddock has admittedly not produced any documents (beyond the already introduced Amex
statements) in compliance with this order. Instead, Craddock called a meeting with several
RocketStar shareholders and on October 30, 2024, they purported to appoint four new members
to the Board of Directors. The next day, Craddock circulated a purported Board Resolution that
directed Mojtahedi to “immediately withdraw the petition filed with the New York County Clerk
under index number 157677/2024” and to “take such other action so that the judgment and order
entered by the Hon. Lyle E. Frank on October 28, 2024, is hereby vacated, satisfied, or
disposed.” The parties dispute the validity of this meeting and the ability of shareholders rather
than directors to appoint members to the Board through a special meeting, as well as the validity
of any resolutions passed by the new purported RocketStar board of directors.
What is not disputed, however, is the fact that Craddock has failed to comply with the
October 28 Order. The November 4 deadline came and went without any document production.
Then on November 6, 2024, Mojtahedi went to the company’s offices and had two company
computers and some stacks of company documents sent to the offices of Petitioner’s counsel so
that an ediscovery vendor could retrieve the information on the computers. Respondent alleges
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that Mojtahedi broke a filing cabinet in order to retrieve the paper documents, and Petitioners
alleges that the cabinet was opened with a key. At this time, Mojtahedi was accompanied by an
individual named Omear Khalid, who is unaffiliated with RocketStar. Respondent alleges that
Mojtahedi shared company information with Mr. Khalid, and Petioner claims that nothing was
shared with him.
Petitioner’s counsel then emailed Craddock informing him of the document retrieval and
reminding him that he had not complied with the October 28 Order and had failed to turn over
any documents or records in his possession. Craddock then reported the entry into the RocketStar
office to the NYPD, who then received a copy of the October 28 Order from Petitioner’s counsel.
Craddock has also raised national security issues surrounding the company’s information on the
computers and reported the removal of the computers to the U.S. Federal Government. An email
was sent to all parties and their counsel from Special Agent Christopher O’Neill with the United
States Department of Commerce, putting them on notice of the regulations surrounding
exporting controlled technical information outside the United States or to parties in the U.S. who
are not a U.S. citizen. Following a phone call with Petitioner’s counsel, Agent O’Neill has
agreed to allow counsel to image the computers and review all documents and emails in-house.
The Present Motions
Petitioner has brought the present motion 004, seeking an order that would 1) hold
Craddock in civil contempt for failing to comply with the October 28 Order, 2) prohibit
Craddock from holding himself out as RocketStar’s CEO or taking any actions as CEO, and 3)
imprisoning and/or imposing daily fines on Craddock of at least $1,000 a day until he purges
himself of the contempt. Respondent opposes and has brought a cross-motion to 1) renew his
previously denied motion to dismiss the petition, 2) directing Petitioner and counsel to return all
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computers and records in their possession to the Corporation, and 3) extending Respondent’s
time to comply with the October 28 Order pending a decision in the renewed motion to dismiss.
Discussion
For the reasons that follow, Petitioner’s contempt motion is granted in part and
Respondent’s cross-motion to renew is denied.
Petitioner’s Contempt Motion Is Granted on a Clear and Convincing Showing
Under Judiciary Law § 753(A)(3), a court may hold a party in contempt for the non-
payment of a sum of money ordered by the court to be paid, or for “any other disobedience to a
lawful mandate of the court.” In order to support a finding of civil contempt, “First, it must be
determined that a lawful order of the court, clearly expressing an unequivocal mandate, was in
effect. Second, it must appear, with reasonable certainty, that the order has been disobeyed.
Third, the party to be held in contempt must have had knowledge of the court’s order, although it
is not necessary that the order actually have been served upon the party. Fourth, prejudice to the
right of a party to the litigation must be demonstrated.” El-Dehdan v. El-Dehdan, 26 N.Y.3d 19,
29 (2015). The elements must be shown by clear and convincing evidence. Id.
All elements of civil contempt are present in this case by clear and convincing evidence.
Indeed, it is barely disputed that Respondent is in contempt. The October 28 Order was a clear,
lawful, and unequivocal mandate. Craddock does not deny disobeying the order, despite clearly
having knowledge of it. Finally, it clearly prejudices the rights of Petitioner to have the books
and records turned over pursuant to the order granting the petition if Craddock does not turn over
the books and records. Craddock offers as explanation the resolution purporting to direct
Mojtahedi to drop the already granted petition, but rather than justifying the blatant contempt of
this Court’s order such a fact pattern only bolsters a finding of contempt. This Court is aware of
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no authority vested in a company’s board of directors that can countermand a clear judicial order.
Respondent is in clear contempt of the laws of the state of New York and this Court’s order and
has offered no extenuating or justifying circumstances to countermand a finding of civil
contempt.
Respondent’s Cross-Motion to Renew Fails
A party may bring a motion to renew if it is “based upon new facts not offered on the
prior motion that would change the prior determination” or if it can demonstrate that “there has
been a change in the law that would change the prior determination.” CPLR § 2221(e)(2). When
bringing a motion to renew based upon new facts, the movant must show “reasonable
justification for the failure to present such facts on the prior motion.” CPLR § 2221(e)(3).
Renewal is meant to be “granted sparingly” and the moving party must show that they did not
fail to exercise due diligence. Perretta v. New York City Tr. Auth., 230 A.D.3d 428, 432 (1st
Dept. 2024).
Respondent here offers the subsequent purported appointment of new members to the
RocketStar board of directors and the disputed resolution purporting to order Mojtahedi to
withdraw the granted petition as facts that would justify a motion to renew. Respondent asks the
Court to renew the motion to dismiss the petition and grant it based on “new facts that occurred
subsequent to the trial.” A motion to renew “must be based upon additional material facts which
existed at the time the prior motion was made but were not then known to the party seeking leave
to renew.” Venuti v. Novelli, 179 A.D.2d 477, 478 (1st Dept. 1992). Here, the facts that
Respondent bases their motion to renew on undisputedly occurred after the motion to dismiss
was denied and the petition was granted. Therefore, they cannot serve as a basis to renew.
The Purported Appointment of Four New Board Members is Outside the Purview of this Petition
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Both parties have requested that the Court weigh in on the purported board meeting that
took place after the petition was granted and decide the validity of the four contested board
members. The previous judicial orders in this petition remain in full force and effect, and the
petition was granted. While these motions for contempt and renewal are timely, deciding the
validity of a purported board meeting and resolution after the issuance of the October 28 Order is
beyond the purview of the present petition, and the Court will decline to take a position on the
matter. Accordingly, it is hereby
ADJUDGED that the Petitioner’s motion for an order prohibiting respondent from
holding himself out as RocketStar’s CEO presently is denied; and it is further
ADJUDGED that the Respondent’s cross-motion to renew his application to dismiss the
petition is denied; and it is further
ADJUDGED that the Respondent’s cross-motion for an order directing petitioner and his
counsel to return all computers and records in their possession is denied; and it is further
ADJUDGED that Respondent Christopher Craddock is guilty of a willful contempt in
disobeying this Court’s orders and that the disobedience was calculated to, and did, defeat,
impair, and prejudice the rights and remedies of the petitioner; and it is further
ORDERED that the Respondent must pay to petitioner the reasonable attorneys' fees of
making and prosecuting this motion, not more than 15 days following service of this Order with
notice of entry; and it is further
ORDERED that Respondents may purge themselves of the contempt by complying with
this Order within five (5) days after service of this Order upon the Respondent with notice of
entry; and is further
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ORDERED that Court imposes a penalty of $500 per day as against respondent
Christopher Craddock if Respondent fails to purge himself from contempt within five (5) days
after service of this Order upon the Respondent with notice of entry until compliance with all
orders of this Court; and it is further
ORDERED that in the event Christopher Craddock fails to purge himself as provided in
this Order within fifteen (15) days after service of this Order upon the Respondent with notice of
entry, Petitioner may apply for a warrant of arrest ex parte on proof, by affidavit, of service of a
copy of this Order on Christopher Craddock; and on proof, by affidavit, of the failure of
Christopher Craddock to purge himself as provided in this Order within the deadline set forth
above.
12/5/2024
DATE LYLE E. FRANK, J.S.C.
CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION
GRANTED DENIED X GRANTED IN PART OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER
CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE
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