When a Money Judgment Later Is Not Enough
Most business disputes are about money, and money can usually be awarded at the end of a case. Some disputes are different. A co-owner is locked out of the company’s accounts. A buyer of a business learns that the seller is moving customers to a new entity. A commercial tenant faces termination of a lease that houses its entire operation.
In those situations, waiting for a judgment may leave nothing worth winning. New York’s answer is the provisional remedy of injunction under CPLR Article 63. It allows the Supreme Court to restrain conduct while the lawsuit proceeds.
Injunctive relief is powerful, and courts treat it that way. A party seeking it should understand the statutory grounds, the evidence required, and the financial exposure that comes with an undertaking.
The Statutory Grounds Under CPLR 6301
CPLR 6301 authorizes a preliminary injunction in two general situations. The first is where the defendant threatens or is doing an act in violation of the plaintiff’s rights concerning the subject of the action, in a way that tends to render the judgment ineffectual. The second is where the plaintiff demands, and would be entitled to, a judgment restraining conduct that would produce injury if continued during the action.
The same section authorizes a temporary restraining order pending the hearing on the injunction, where immediate and irreparable injury, loss, or damage would otherwise result.
The statute assumes an underlying action. An injunction is not a free-standing claim. The complaint must state a cause of action that the injunction protects.
The Three Elements Courts Apply
The Court of Appeals has stated the standard directly. In Nobu Next Door, LLC v Fine Arts Housing, Inc., 4 NY3d 839 (2005), the Court explained that the movant must demonstrate a probability of success on the merits, danger of irreparable injury in the absence of an injunction, and a balance of equities in its favor.
Probability of Success
The movant does not have to win the case on the motion. It does have to show, with admissible proof, that its claim is likely to succeed. A complaint that is conclusory, or a contract that does not say what the movant says it does, will undermine the application from the start.
Irreparable Injury
This element defeats many business applications. New York courts generally treat harm that can be fully compensated by money damages as not irreparable. A party claiming lost profits or an unpaid balance usually has an adequate remedy at law.
Irreparable harm is more often found where the injury is difficult to measure or cannot be undone: loss of a unique property interest, destruction of a going business, dissipation of a specific asset at the center of the case, or loss of control over a company the movant owns.
Balance of the Equities
The court weighs the harm to the movant if relief is denied against the harm to the opponent if relief is granted. An order that would shut down a defendant’s business to protect a modest claim may fail this test even when the first two elements are present.
What the Motion Must Contain: CPLR 6312
CPLR 6312(a) requires that the grounds be shown by affidavit and other evidence. Attorney argument is not evidence. The papers should include an affidavit from someone with personal knowledge, the operative agreement, and the documents showing the threatened conduct.
CPLR 6312(c) addresses a common defense tactic. If the movant’s papers establish the elements, evidence raising an issue of fact is not, by itself, grounds to deny the motion. The court is directed to determine the disputed elements, by hearing or otherwise.
The Undertaking Is Real Money
Under CPLR 6312(b), before a preliminary injunction is granted, the plaintiff must give an undertaking in an amount fixed by the court. The undertaking secures the defendant’s damages and costs if it is finally determined that the plaintiff was not entitled to the injunction.
The amount matters to both sides. In Hofstra University v Nassau County, 166 AD3d 863 (2d Dept 2018), the Second Department described the undertaking’s purpose as compensating the defendant for damages caused by the injunction and required that the amount be rationally related to potential damages rather than speculation.
A business considering an injunction should budget for the bond. A defendant should come to the hearing prepared to show what the restraint will actually cost.
Temporary Restraining Orders and Notice
A preliminary injunction is decided after the opponent has had a chance to respond. A temporary restraining order fills the gap.
CPLR 6313(a) permits a TRO without notice where the plaintiff shows that immediate and irreparable injury will occur before a hearing can be held. When a TRO is granted, the hearing on the preliminary injunction must be set at the earliest possible time. Under CPLR 6313(c), the court may also require an undertaking for the TRO.
The court rules add a notice requirement. Uniform Rule 202.7(f), 22 NYCRR 202.7(f), requires that an application for temporary injunctive relief include an affirmation showing either significant prejudice from giving notice or a good-faith effort to notify the opposing party of the time, date, and place of the application. Ex parte relief is the exception, not the default.
Common Business Uses
The Business Litigation practice sees injunction questions arise in several recurring settings:
- Business-owner disputes, where one owner diverts funds, excludes another owner from records, or transfers company assets.
- Purchase-and-sale disputes, where the value of what was bought depends on customer relationships or goodwill.
- Commercial lease disputes, where a tenant seeks to stop a cure period from expiring while it challenges a claimed default. New York recognizes this “Yellowstone” injunction, from First National Stores v Yellowstone Shopping Center, 21 NY2d 630 (1968).
- Asset preservation, where a specific fund or property is at the heart of the claim.
Real property disputes may call for a different remedy. A notice of pendency, discussed in our post on when a lis pendens is proper, protects a claim to land without restraining anyone’s conduct. A creditor concerned only about collecting money may look instead to attachment under CPLR Article 62, which has its own grounds.
Practical Points for Moving and Opposing
Speed is part of the proof. A party that waits months after learning of the conduct invites the argument that the harm is not urgent.
Request only what is needed. Courts are more receptive to narrow relief that preserves the status quo than to broad orders that compel a party to take affirmative action.
For a defendant, the first response is often the most important. A prompt, factual affidavit can narrow or defeat a TRO before it hardens into a preliminary injunction. Opposition papers should address each element and the appropriate undertaking amount.
Either side should remember that the injunction motion is an early preview of the merits. Positions taken in those affidavits will follow the parties through discovery and trial.
After the Court Rules
A preliminary injunction is not a final judgment. The court decides the motion on a preliminary record, and the merits are resolved later on a full record. A party that wins the motion still has to prove its case.
Either side may seek appellate review. CPLR 5701(a)(2) permits an appeal as of right to the Appellate Division from an order, made on a motion on notice, that grants, refuses, continues, or modifies a provisional remedy. For Suffolk County cases, that court is the Appellate Division, Second Department.
An injunction must be obeyed while it stands. A party that believes the order is wrong should move to modify or vacate it, or seek a stay, rather than disregard it. Disobeying a court order can expose a party to contempt proceedings.
If it is later determined that the plaintiff was not entitled to the injunction, the undertaking is generally the defendant’s principal source of recovery for damages the restraint caused. That is one more reason the amount fixed at the outset deserves careful attention from both sides.
Getting Advice Early
Injunction practice moves on days, not months. If a business dispute involves conduct that cannot be undone, the time to evaluate provisional relief is before the conduct is complete.
The Law Office of William G. Goode, P.C. represents businesses and owners in Suffolk County and throughout New York in contract and business disputes. Review William G. Goode’s attorney profile or contact the office to discuss the facts.
Five Frequently Asked Questions
What must I prove to get a preliminary injunction in New York?
A probability of success on the merits, danger of irreparable injury without relief, and a balance of equities in your favor.
Is losing money enough to show irreparable harm?
Usually not. Courts generally treat losses that money damages can fully compensate as not irreparable.
Do I have to post a bond?
Yes. CPLR 6312(b) requires an undertaking before a preliminary injunction is granted, in an amount the court fixes.
Can a court issue a TRO without telling the other side?
CPLR 6313(a) permits it on a proper showing, but Rule 202.7(f) requires notice or a showing of significant prejudice.
Does a factual dispute automatically defeat the motion?
No. Under CPLR 6312(c), issues of fact alone are not grounds for denial; the court resolves the disputed elements.
Authorities
CPLR 6301 — Grounds for preliminary injunction and temporary restraining order
CPLR 6312 — Motion papers; undertaking; issues of fact
CPLR 6313 — Temporary restraining order
CPLR 5701(a)(2) — Appeals as of right from provisional-remedy orders
22 NYCRR 202.7(f) — Notice of applications for temporary injunctive relief
Nobu Next Door, LLC v Fine Arts Housing, Inc., 4 NY3d 839 (2005)
Hofstra University v Nassau County, 166 AD3d 863 (2d Dept 2018)
First National Stores v Yellowstone Shopping Center, 21 NY2d 630 (1968)
Disclaimer
Attorney Advertising — General Information: This article provides general information, not legal advice, and does not create an attorney-client relationship. Whether injunctive relief is available depends on the specific facts, claims, and court. Prior results do not guarantee a similar outcome. The Law Office of William G. Goode, P.C. is responsible for this content.
