On March 22, 2017, Justice Ramos of the New York County Commercial Division issued a decision in Suttongate Holdings Ltd. v. Laconm Management N.V., 2017 NY Slip Op. 30568(U), issuing a preliminary injunction requiring a defendant to grant mortgages in the plaintiff’s favor, explaining:
A party seeking preliminary injunctive relief pursuant to CPLR 6301 must demonstrate: (1) a likelihood of success on the merits, (2) irreparable injury if provisional relief is not granted, and (3) a balance of the equities in favor of the moving party.
Suttongate maintains that it is likely to succeed on the merits of its breach of contract claim that Defendants violated the Loan Agreement by failing to provide Suttongate with first mortgages on eighteen of the twenty-three Properties. Suttongate alleges that despite repeated requests and ample opportunity to secure first mortgages, Defendants have consistently failed to do so. Suttongate references this Court’s ruling issued on November 29, 2016, where this Court held that Suttongate was likely to succeed on its breach of contract claim arising out of Defendants’ breach of the Loan Agreement.
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This Court concludes that Defendants breached the terms of the Loan Agreement by failing to secure first mortgages on the Properties. The provisions of the Loan Agreement that require the issuance of first mortgages on the Properties are clear and unambiguous. Suttongate has sufficiently established that Defendants have failed to abide by the relevant portions of the Loan Agreement, despite repeated requests. Thus, Defendants’ refusal to secure mortgages warrants the conclusion that Suttongate is likely to succeed on its breach of contract claim.
Suttongate argues that it will suffer irreparable harm from Defendants’ failure to secure mortgages on the Properties because, without first mortgages, Defendants are able to sell, transfer, or encumber the Properties as they wish. Suttongate further alleges that an injunction is necessary to preserve the status quo until a hearing on the merits. In addition, Suttongate maintains that a preliminary injunction is necessary to protect Suttongate’s bargained-for foreclosure rights. Further, because only a portion of the Properties are secured by mortgages and the Properties contain office space that spans secured and unsecured lots, it is unlikely that any reasonable buyer would purchase the Properties during foreclosure, essentially stripping Plaintiff of its foreclosure rights.
Moreover, Suttongate’s purported delay in bringing the instant motion does not preclude a finding of irreparable harm; despite Defendants’ argument that Suttongate’s failure to bring this motion for over two years negates a finding of irreparable harm, Suttongate continues to be at risk of losing its bargainedfor rights in the “rents, issues, and profits of the Properties” (See Powers Aff., ~13). As such, the Court finds that Suttongate has made sufficient showing of irreparable harm arising from Defendants’ failure to deliver mortgages on the remaining eighteen Properties.
Additionally, Suttongate has demonstrated that money damages are insufficient to compensate for Defendants’ failure to deliver mortgages on the remaining Properties, which was a unique bargained-for contractual remedy. The balance of the equities requires a court to evaluate the prejudice to each party resulting from a grant or denial of the relief sought. . . .
In light of Suttongate’s bargained for rights, Defendants’ mere claim that they have not or do not plan to transfer the Properties is insufficient. Further, an injunction will preserve the status quo by ensuring that Defendants do not sell, transfer, or encumber the Properties prior to a hearing on the merits.
Defendants have failed to establish that they will suffer hardship merely from being bound by their contractual obligations. However, it is evident that Suttongate will be prejudiced absent injunctive relief, as Defendants would be able to encumber or dispose of the Properties as they wish.
(Internal quotations and citations omitted).