Entertainment, Inc., 60 F.3d 27, 34-35 (2d Cir. 1995). It may
be difficult to draw a distinction between the typical
preliminary injunction, which is directed at maintaining the
status quo pending a trial on the merits, and a mandatory
injunction, which commands a positive act. See id. at 34. This
is especially so in the case of contract disputes, where the
meaning of "status quo" may be uncertain. See id. The
plaintiff is likely to view the status quo as "the situation
that would prevail if its version of the contract were
performed. A defendant's view of the status quo is its continued
failure to perform as the plaintiff desires." Id.
The Second Circuit has observed that a preliminary injunction
that requires the parties to do more than is required by their
contract agreement "arguably alters the status quo." Tom
Doherty Assocs., 60 F.3d at 35. However, an order that seeks to
restore the parties as best as possible to their positions prior
to injury already inflicted by the defendant may be deemed an
order directed at preserving the status quo. See Unicon
Management Corp. v. Koppers Co., 366 F.2d 199, 204 (2d Cir.
1966); see generally 11A Charles A. Wright, Arthur R. Miller &
Mary Kay Kane, § 2948 (1995).
Whether a preliminary injunction must be deemed to grant
"substantially all the relief sought" is also potentially
fraught with ambiguity. The Second Circuit has clarified,
however, that this scenario occurs only when an injunction "will
render a trial on the merits largely or partly meaningless,
either because of temporal concerns, say, a case involving the
live televising of an event . . . or because of the nature of
the subject of the litigation, say . . . involving the
disclosure of confidential information." Tom Doherty Assocs.,
60 F.3d at 35. If, on the other hand, a defendant who prevails
at trial will be able to obtain a meaningful remedy then no
heightened showing is required to grant a preliminary injunction
to the plaintiff. See id.
A. The Varsames Have Shown Irreparable Injury
Irreparable harm is injury for which a monetary award cannot
compensate. See JSG Trading Corp. v. Tray-Wrap, Inc.,
917 F.2d 75, 79 (2d Cir. 1990). Moreover, the movant must show that
irreparable damages are not only possible but likely. See
Tucker Anthony Realty Corp. v. Schlesinger, 888 F.2d 969, 975
(2d Cir. 1989).
Deprivation of an interest in real property constitutes
irreparable harm. See, e.g., Carpenter Technology Corp. v. City
of Bridgeport, 180 F.3d 93, 97 (2d Cir. 1999) (condemnation of
plaintiffs real property constitutes irreparable injury); The
Southland Corp. v. Froelich, 41 F. Supp.2d 227, 242 (E.D.N.Y.
1999) (irreparable harm stems from inability to make productive
use of and exercise control over property); Persaud v. Exxon
Corp., 867 F. Supp. 128, 141 (E.D.N.Y. 1994) (irreparable harm
"flows from the owner's inability to make better use of the
site, or the owner's lack of control").
The Varsames, by being denied title to the Townsend shares and
ownership and control of the Manida Street Property, are
deprived of the ability to make productive use of their own
property. This deprivation rises to the level of irreparable
injury. See Southland Corp., 41 F. Supp.2d at 242.
B. The Varsames Have Shown A Sufficient Likelihood Of
Success On The Merits
Determining the appropriate standard as to the requisite
showing of the likelihood of success is complicated at least
superficially by the fact that the relief sought requires the
Mangi Defendants to take affirmative action, i.e., to transfer
title of the Townsend stock to the Varsames. However, upon
further examination it is apparent that the ordinary standard —
"likelihood of success" — applies because
granting such relief is directed at restoring the status quo
ante rather than altering it.
As discussed above, the Mangi Defendants have conceded the
Varsames' property right to the Townsend stock even as they have
refused to turn the stock over.*fn3 An order that title be
transferred "reflect[s] [the Varsames'] right of ultimate
control" and "best approximate[s] past positions in the light of
the basic rights of the parties." Unicon Management, 366 F.2d
at 204 (order enjoining plaintiff management company from
participating in management and operation of corporation's
department served to maintain rather than disturb status quo).
Nor is a heightened showing required on the theory that the
order would render a trial on the merits largely or in part
meaningless, even though the injunctive relief granted might in
theory be a substantial part of any final relief granted in this
case. An interim order granting the Varsames' title to the
Townsend stock and, with it, the right to manage and control the
Manida Street Property, serves merely to protect their rights
pending a final determination of the merits. See Eng, 849 F.2d
at 82; cf. Abdul Wali, 754 F.2d at 1016 (preliminary
injunction with effect of granting disclosure of report would
moot trial on the merits concerning entitlement to same report).
If the Mangi Defendants ultimately prevail they will not be
prevented from obtaining a meaningful remedy.
The Varsames have shown a more than fifty percent likelihood
of success on the merits of their claim to be entitled to the
Townsend stock, and are thus entitled to preliminary injunctive
relief. Moreover, even if the standard of "substantial
likelihood of success" were deemed to apply, that heightened
standard is also satisfied. The Mangi Defendants have conceded
the essential fact with respect to the issue of entitlement to
the stock, namely, the Varsames' property interest therein.
Although the Mangi Defendants have at other points in this
litigation also claimed that they and not the Varsames are
entitled to the stock, such contentions do not obviate the
significance of this recent concession. The Court does not here
reach the merit of those other claims, nor attempt to resolve
what are arguably inconsistencies in the Mangi Defendants'
pleadings. The only conclusion reached here is that this
critical concession by the Mangis, along with the other record
evidence, makes a sufficient showing of the Varsames' likelihood
of success under either standard.
C. Hardship To The Mangi Defendants
Although it is not necessary that the balance of hardships tip
decidedly in the Varsames' favor because it has been established
that they are sufficiently likely to succeed on the merits, the
Court makes the following observation as to the possibility of
hardship to Mangi. See Lichtenberg v. Besicorp Group Inc.,
43 F. Supp.2d 376 (S.D.N.Y. 1999). Mangi insists that he must retain
control over Townsend and the Manida Street Property to protect
his interest as the guarantor for $2.7 million, and prevent the
harm of being called upon to pay that sum. As explained above,
Mangi has a contingent liability. Thus, it must first be noted
that Townsend is the primary obligor. Any obligation Mangi has
will become enforceable only if the loans are defaulted upon and
if there is an entry of judgment against the primary obligor.
Moreover, in the event that the guaranty is enforced, Mangi may
then pursue his remedies against Townsend and the Varsames for
the amount to be paid. See, e.g., Fredericks v. Shapiro,
160 F.R.D. 26, 28 (S.D.N.Y. 1995). The harm which Mangi alleges will
befall him is both contingent upon a series of other events
which may or may not occur and is not without possibility of
redress. The irreparable injury of deprivation of the Varsames'
interest in real property, weighed against the
speculative possibility of harm alleged by Mangi, tips the
balance of hardships in the Varsames' favor.
For the reasons set forth above, the motion for appointment of
a receiver is denied and the motion for a preliminary injunction
granting the Varsames possession of the Townsend stock and,
therefore, the right to manage and control Townsend and the
Manida Street Property, is granted. The Varsames are directed to
settle the injunctive order on notice.
It is so ordered.