Posted in Business Litigation, Litigation Strategies, Partnership Law
Legal actions can result in one party paying the other for damages, but a judge can also order a party to do, or not do, something to protect the plaintiff’s rights and interests. This can be accomplished through an injunction or restraining order, which can be temporary or permanent.
A judge can issue an injunction pursuant to a statute of through his or her equitable powers when not specifically authorized by statute. Equitable powers of a judge allow a decision based on the overall fairness of the situation. Given how broad this could be and the potential for abuse, judges are normally not eager to exercise equitable powers.
A party wanting a temporary restraining order or preliminary injunction must show that the relief sought in an underlying lawsuit depends on preventing the occurrence or continuance of an act that would result in waste or irreparable injury.
An injunction can be granted on a showing of,
- An inadequate remedy at law, meaning compensation would be insufficient,
- A serious risk of irreparable harm without injunctive relief,
- A likelihood the plaintiff will prevail on the merits of the underlying lawsuit, and
- When balancing the harm to the defendant in issuing an injunction against the harm to the plaintiff without the injunction, fairness shows it should be issued.
There are several steps in the process.
- A temporary restraining order is granted to maintain the current situation pending a decision on a preliminary injunction. It could be granted without input from the defendant if the applicant can show great or irreparable injury if the order isn’t granted.
- A preliminary injunction cannot be granted without a full evidentiary hearing allowing all parties the ability to present arguments and evidence.
- A ruling on a final injunction entails a final adjudication of the rights at issue, following a hearing on the merits of the case.
A final injunction can be issued to prevent the breach of an obligation when,
- Monetary compensation would be inadequate,
- Determining an amount of compensation that would be adequate would be extremely difficult,
- The requested restraint is needed to prevent a number of judicial proceedings, or
- The obligation arises from a trust, including a public trust.
An example of when an injunction could be appropriate is when partners in a business agree to part ways, share assets of the former partnerships and start their own businesses. If part of the agreement is that intellectual property of the original partnership can only be used by one partner but is actually used by others, an injunction could cease use of the intellectual property by the offending ex-partner. Whether that party should pay damages, and how much, could be determined at a future trial.
Under the law, it’s not always about money. It can also be about requiring an action take place or preventing one from happening. If you’re in a situation where you think this may be needed, or have already been served with legal papers concerning a restraining order or injunction, contact our office so we can talk about what’s going on and your legal options moving forward.
