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Counsel Financial Services, LLC v. Leibowitz

March 18, 2010

COUNSEL FINANCIAL SERVICES, LLC, PLAINTIFF,
v.
DAVID MCQUADE LEIBOWITZ AND DAVID MCQUADE LEIBOWTZ, P.C., DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

Plaintiff Counsel Financial Services ("CFS") commenced this action on November 25, 2009, seeking an order (1) granting it costs and attorneys fees expended in attempting to collect on a judgment obtained in New York State Supreme Court, County of Erie, and (2) enjoining Defendants from litigating in Texas claims or defenses relating to various loan documents appended to the Complaint. (Docket No. 1.) CFS contemporaneously filed a Motion for Preliminary Injunction, seeking to enjoin litigation in the 370th Judicial District Court of Hidalgo County, Texas (the Hidalgo Court). (Docket No. 2.)

At the time this action and preliminary injunction motion were filed, there was no litigation pending in Hidalgo County, Texas, as CFS had removed that case to the United States District Court, Southern District of Texas (McAllen) several weeks prior. 09-cv-00263, Docket No. 1. The Texas Southern District remanded the matter to the Hidalgo Court on March 8, 2010. Id. Docket No. 26.

On March 17, 2010, CFS filed the instant Motion for Temporary Restraining Order to prevent Defendants from pursuing an injunction in the Hidalgo Court (Docket No. 17), and a related Motion for Expedited Treatment (Docket No. 20). Defendants have filed a memorandum in opposition. (Docket No. 24.) CFS's Motion for Expedited Treatment is granted. For the following reasons, its Motion for a Temporary Restraining Order is denied.

II. FACTUAL ALLEGATIONS

The following facts are alleged in the Complaint and drawn from documents appended to or referenced in the Complaint.

CFS provides loans to law firms and lawyers handling contingent fee cases. (Docket No. 1 ¶ 1.) CFS extended credit to the Leibowitz law firm, from which it drew an amount in excess of Five Million Dollars. (¶ 4.) Mr. Leibowitz personally guaranteed that debt. (¶ 5.) Alleging default and failure to pay, CFS filed a lawsuit against Defendants in the Supreme Court of the State of New York, Erie County. (¶ 5.) On or about November 25, 2008, CFS obtained a judgment against Defendants in the amount of $5,506,180.96. (¶5, Ex. E.) Defendants appealed, and the New York Appellate Division, Fourth Department, affirmed the order and judgment on November 20, 2009. (¶ 24, Ex. F.)

While Defendants' appeal was pending, in or about August 2009, CFS moved to intervene in a personal injury action pending in the Hidalgo Court in which Defendants were representing the plaintiff. (¶ 27; Docket No. 7, Ex. C.) CFS sought intervention to assert its entitlement-as secured creditor, judgment creditor, and lienholder-to costs and attorneys fees it anticipated Defendants would receive as part of the settlement of the personal injury matter. (Id.) Defendants, in response, sought to intervene in the personal injury action to oppose CFS's proposed intervention. (Docket No. 1 ¶ 28, Ex. G.) Among other things, Defendants alleged that it was CFS who breached the security agreement, and sought various declaratory and injunctive relief. (Ex. G.) Defendants ultimately seek a temporary injunction restraining CFS from attempting to collect on the New York judgment until that judgment is domesticated by an order of a Texas Court and all appeals are exhausted. (Id.)

As already noted, CFS removed the Hidalgo Court action to the United States District Court, Southern District of Texas, where it remained until March 8, 2010. On March 16, 2010, the Hidalgo Court set a hearing on Defendants' request for a temporary injunction for 8:00 a.m. on March 19, 2010. (Docket No. 18 ¶ 5, Ex. D.) CFS's expedited motion for a temporary restraining order followed, and seeks to stay proceedings in the Hidalgo Court.

III. DISCUSSION

Injunctive relief "is an extraordinary and drastic remedy which should not be routinely granted." Med. Soc'y of New York v. Toia, 560 F.2d 535, 538 (2d Cir. 1977); see also Borey v. Nat'l Union Fire Ins. Co. of Pittsburgh, 934 F.2d 30, 33 (2d Cir. 1991). "The legal standards for granting a temporary restraining order and a preliminary injunction are the same." Young-Flynn v. Wright, No. 05 Civ. 1488, 2007 WL 241332, at *7 (S.D.N.Y. Jan. 26, 2007) (quoting Gund, Inc. v. SKM Enters., Inc., No. 01 Civ. 0882, 2001 WL 125366, at *1 (S.D.N.Y. Feb. 14, 2001)). The movant must demonstrate

(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 ...


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