CMB Export Infrastructure Investment Group 48, LP v Motcomb Estates, Ltd., et al.
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Attorneys and Parties
Brief Summary
Commercial real estate and injunction-bond litigation concerning what damages, attorneys' fees, discovery costs, and interest may be recovered after a preliminary injunction is vacated.
The lower court granted Motcomb Estates, Ltd. and Reuben Brothers, Ltd. relief under CPLR 6312 [governing damages against an undertaking for a preliminary injunction] and CPLR 6315 [governing recovery on an injunction undertaking], awarding attorneys' fees and costs incurred in seeking to vacate the injunction and referring for determination the amount of fees and costs tied to reargument, renewal, and certain appeals.
The Appellate Division modified the order by expanding the reference to include additional recoverable counsel fees and discovery costs, plus any lost interest from February 28, 2023 through April 9, 2023; it otherwise affirmed.
The additional fees and costs were sufficiently inseparable from the effort to vacate the preliminary injunction because they arose from discovery and motion practice showing there was no basis for plaintiff's claims or the injunction, and the defendants were also entitled to seek damages caused by lost interest during the period the injunction was in effect.
Background
Plaintiff obtained a preliminary injunction against Motcomb Estates, Ltd. and Reuben Brothers, Ltd. After further discovery and related motion and appellate practice, the injunction was vacated. The defendants then sought recovery against the injunction undertaking for attorneys' fees, costs, and related damages caused by the wrongful injunction.
Lower Court Decision
Supreme Court, New York County, granted the defendants' motion for the full amount of the undertaking to the extent of allowing recovery of attorneys' fees and costs incurred in seeking vacatur of the injunction. It referred to a judicial hearing officer or special referee the issue of the amount of fees and costs incurred in connection with the motion to reargue and renew the preliminary injunction motion and the appeals from the orders granting the injunction and denying renewal.
Appellate Division Reversal
The Appellate Division modified the order to broaden the reference. In addition to the items already referred, it held that the defendants may seek recovery for counsel fees and discovery costs relating to the renewed motion to dismiss, the appeal from denial of that motion, the appeal from denial of the original motion to dismiss, the discovery that led to vacatur of the injunction, and the motion to recover on the bond, including opposition to plaintiff's argument that the bond filing was untimely. The court also allowed the defendants to attempt to prove lost-interest damages, if any, from February 28, 2023 until April 9, 2023, when the parties entered a forbearance agreement.
Legal Significance
The decision confirms that recovery on a preliminary-injunction undertaking may extend beyond the narrow motion formally labeled as the motion to vacate. Where later discovery, dismissal motion practice, appellate work, and bond-recovery efforts are intertwined with proving that the injunction lacked a basis, those fees and costs may be treated as recoverable damages. The ruling also recognizes that lost interest during the injunction period may be compensable if proven.
When a preliminary injunction is later undone, a defendant may recover not only direct vacatur costs but also closely related litigation expenses and provable financial losses, including interest, if those damages are inseparable from showing the injunction should not have been issued.