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Current Developments in the Commercial Divisions of the
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Posted: October 14, 2015

Rescission Unavailable When Status Quo Cannot be Restored

On October 5, 2015, Justice Scarpulla of the New York County Commercial Division issued a decision in Winston Plywood & Veneer LLC v. Dunollie Resources, Inc., 2015 NY Slip Op. 31862(U), denying a preliminary injunction because, among other reasons, the plaintiff was unlikely to obtain the rescission it sought.

In Winston Plywood & Veneer, the parties were involved in redeveloping a plywood manufacturing facility. The defendants sought to enjoin the plaintiff from, among other things, “engaging in any and all construction activities at the” facility. Among the reasons the court denied the defendants’ motion was that it concluded that the defendants were unlikely to succeed on the merits of their breach of contract claim seeking rescission, explaining:

Under New York law, rescission should be denied where damages afford an adequate remedy at law and where it is impracticable to restore the status quo. Here, defendants have readily ascribed quantifiable money damages to their injury. Moreover, it appears that the restoration of the status quo ante is made impractical by a substantial change of, as the Facility, the subject of the original transaction, has been destroyed and [the plaintiff] and the City have moved ahead with the construction of a new, state-of-the-art plywood manufacturing plant.

(Internal quotations and citations omitted).

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