SUTTONGATE HOLDINGS LIMITED v. LACONM MANAGEMENT (2018)

Order, Supreme Court, New York County (Charles E. Ramos, J.), entered on or about April 27, 2017, which granted plaintiff's motion for a preliminary injunction, inter alia, requiring defendants to take all actions that are necessary to establish and register a mortgage in plaintiff's name on certain designated properties located in St. Maarten, and ordered that a prior undertaking shall apply, unanimously modified, on the law, to the extent of ordering plaintiff to post an additional undertaking in the amount of $50,000, and otherwise affirmed, without costs.

It is undisputed that defendants have failed to deliver mortgages on 18 of the 23 properties that are the subject of a 2014 transaction entered into with plaintiff (see generally Ficus Invs., Inc. v. Private Capital Mgt., LLC, 61 A.D.3d 1, 11–12, 872 N.Y.S.2d 93 [1st Dept. 2009] ).  Contrary to defendants' contention, the individual and corporate defendants who executed the March 7, 2014 purchase agreement and the July 15, 2014 loan agreement are the sole necessary parties to this action.  The alleged irreparable harm to plaintiff absent an injunction is not speculative, given that defendants have already failed to deliver the mortgages, which were “a unique, bargained-for contractual remedy” (see Oracle Real Estate Holdings I LLC v. Adrian Holdings Co. I, LLC, 582 F.Supp.2d 616, 625 [S.D.N.Y.2008] ).  For this reason, the “balancing of the equities,” which requires the court “to look to the relative prejudice to each party accruing from a grant or a denial of the requested relief” (Sau Thi Ma v. Xuan T. Lien, 198 A.D.2d 186, 186–187, 604 N.Y.S.2d 84 [1st Dept. 1993], lv dismissed 83 N.Y.2d 847, 612 N.Y.S.2d 110, 634 N.E.2d 606 [1994] ), favors plaintiff.  Defendants complain that they have no assets to pay off existing mortgages in order to deliver these mortgages to plaintiff.  However, these are contractually bargained-for rights guaranteed by both the individual and the corporate defendants.

The motion court should, however, have ordered plaintiff to post an additional undertaking, rather than applying the undertaking posted in connection with the prior preliminary injunction order.  CPLR 6312(b) requires that “prior to the granting of a preliminary injunction, the plaintiff shall give an undertaking in an amount to be fixed by the court.”  Moreover, the undertaking must be “rationally related to defendants' potential damages should the preliminary injunction later prove to have been unwarranted” (Peyton v. PWV Acquisition LLC, 101 A.D.3d 446, 447, 955 N.Y.S.2d 41 [1st Dept. 2012] ).  According to defendants' own affidavit, the cost of obtaining mortgages on the 18 properties would be $31,000.  Thus, an additional undertaking in the amount of $50,000 is appropriate.