Plaintiff brought this action on February 25, 1994, alleging that Amalgamated made the loans pursuant to a September 24, 1986 agreement (the "Guarantee") whereby defendants guaranteed the loans, and that upon the borrowers' default, defendants failed to honor the Guarantee. Plaintiff also claimed that defendants, aware that Amalgamated had liens upon the collateral, refused to honor plaintiff's sale of the collateral.
Defendants answered on April 21, 1994 alleging that they did not enter into the Guarantee, that they were not aware of Amalgmated's liens, and that plaintiff's auction of the collateral was ineffective without their consent.
On December 15, 1994 plaintiff moved for and this court denied a temporary restraining order restraining defendants from transferring any of their assets pending decision of plaintiff's motion for a preliminary injunction placing defendants' assets in the control of a trustee. Plaintiff also filed and served a proposed amended complaint.
The court held a hearing on the preliminary injunction motion on December 20, 1994. Plaintiff said that defendants had fraudulently conveyed the collateral securing the loans, and that this effort to defraud plaintiff demonstrated the need for the injunction. Defendants admitted that they had sold the franchises, but alleged that they had done so because their franchisees had failed to make monthly fee payments to them. Defendants also offered to set aside the same number of franchises as security for plaintiff's claims.
Federal Rule of Civil Procedure 15 provides that after a responsive pleading is served, "a party may amend the party's pleading only by leave of court . . . and leave shall be freely given when justice so requires."
In the original complaint, plaintiff set out five causes of action: (1) for damages arising from defendants' failure to honor the Guarantee upon eight loan defaults, (2) for specific performance of the Guarantee, (3) for damages arising from defendants' failure to acknowledge plaintiff's sale of the collateral, (4) for treble damages arising from defendants' fraudulent inducement of Amalgamated's agreement to the loans, and (5) for declaratory judgment of the validity of its liens upon any of defendants' franchises pledged to it as collateral.
In the proposed amended complaint, plaintiff makes different factual allegations than it did in the original complaint. As to the first three causes of action, plaintiff alleges three additional loan defaults. As to the fourth cause of action, plaintiff now alleges that defendants fraudulently conveyed the collateral, not that defendants fraudulently induced Amalgamated to make the loans. Plaintiff also adds a sixth cause of action, alleging that defendants violated state law by fraudulently conveying the collateral.
The court grants plaintiff leave to amend the complaint. 7lthough plaintiff makes no showing of cause, defendants do not oppose the motion, and there is no apparent reason why leave to amend should not be "'freely given'". See Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d 222 (1962).
But in deciding plaintiff's motion for a preliminary injunction, the court refers to the causes of action set out in the original complaint. Until plaintiff serves defendants with the amended complaint, it does not supersede the original complaint. See International Controls Corp. v. Vesco, 556 F.2d 665, 669 (2d Cir. 1977), cert. denied, 434 U.S. 1014, 98 S. Ct. 730, 54 L. Ed. 2d 758 (1978).
The standards for issuing a preliminary injunction in this circuit are clear. A party seeking a preliminary injunction must show:
"(1) irreparable harm should the injunction not be granted, and (2) either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits and a balance of hardships tipping decidedly toward the party seeking injunctive relief."