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Opposing An Order to Show Cause Involving Your NY Partnership or Corporation

Date: 03/04/2013 | Category: Partnership Disputes | No comments

What Is Your Legal Strategy for Opposing An Order to Show Cause Seeking Injunctive Relief?  I have written many articles about the benefits of injunctive relief when faced with a parnership dispute.  Typically‚ the party seeking injunctive relief is a "weaker partner" or a "minority shareholder" and the lawsuit seeking injunctive relief is designed to pressure the majority or controlling shareholders and partners. However‚ many times we represent the controlling partner or shareholder in opposing an order to show cause.  This afternoon‚ we successfully opposed a motion where a 50% partner sought an injunction related to "access to books and records"‚ "injunctive regarding separate and distinct business opportunities" and an "accounting".  During the hearing a couple of interesting points came up:

  • The Need for Evidence – You would think that attorneys fully understand the significance of "evidence"‚ but many times they overlook some of the basics.  In this case the attorney seeking injunctive relief was attempting to rely on his own affidavit – as opposed to the affidavit of his 50% partner client.  Naturally‚ an attorneys affidavit is insufficient to demonstrate the need for an injunction.

STRATEGY POINT:  If you are opposing a partnership or shareholder injunction and order to show cause‚ you must recognize that your own "affidavit" will be critical.  So‚ both you and your attorney must focus on submitting a detailed affidavit explaining why an injunction is improper and why a court should not interfere with the operations of your buisness.

  • Irreparable Harm – To obtain an injunction‚ the minority or non-controlling partner must demonstrate "irreparable harm" – that is a type of harm that cannot be calculated or compensated by way of money / monetary damages.   The fact that a party alleges that another partner stole "money"‚ does not rise to the level of "irreparable harm".  However‚ irreparable harm may be established in certain instances of a theft or misappropriation of "business opportunities" belonging to the business.

STRATEGY POINT:  Irreparable harm is difficult to establish and to properly defend against an injunction both you and your attorney must focus on this factor.  Your argument (without admitting or acknowledging liability) may bvery well focus on the fact that even if the plaintiff proves his or her case then he or she may be compensated / made whole by monetary damages at a later date.

When it comes to partnership and shareholder disputes and injunctions‚ many times‚ a good defense may be focused on the procedures that your partners attorney has overlooked.  Many times these "procedural defenses" are no small thing and may translate into a significant success in your case. 

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