Favorite Healthcare Staffing, Inc. v. Absolut Center for Nursing and Rehabilitation at Aurora Park, LLC
1:18-cv-01501
| W.D.N.Y. | Mar 12, 2019Background
- Favorite Healthcare Staffing, Inc. (plaintiff) supplied temporary health-care staff to three New York skilled nursing facilities (defendants) under a staffing agreement and amendments.
- Plaintiff alleges defendants failed to pay invoices for services between May 11, 2018 and October 19, 2018, totaling roughly $424,198 across the three facilities.
- Plaintiff filed suit and moved for a preliminary injunction to enjoin defendants from transferring, selling, or otherwise disposing of personal property and accounts receivable pending resolution of the case.
- An evidentiary hearing was held; plaintiff produced testimony and documentary evidence of nonpayment and asserted defendants were insolvent or near-insolvent.
- Defendants did not answer but counsel entered an appearance; plaintiff later amended its complaint to allege quantum meruit in addition to contract claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a preliminary injunction freezing defendants' assets is proper to preserve funds to satisfy a potential money judgment | Plaintiff argued insolvency exception: without equitable relief, judgment-proof defendants may dissipate assets, making legal relief inadequate | Defendants (and court) relied on limits on equity authority and concerns about pre-judgment interference with debtor's property | Denied — federal courts lack authority to grant such a pre-judgment asset freeze for money claims under controlling precedent |
Key Cases Cited
- Winter v. Nat. Res. Def. Council, 555 U.S. 7 (establishes preliminary injunction factors)
- Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531 (courts must balance harms when granting equitable relief)
- American Civil Liberties Union v. Clapper, 804 F.3d 617 (articulates four-part preliminary injunction test in Second Circuit)
- New York ex rel. Spitzer v. Operation Rescue Nat'l, 273 F.3d 184 (Second Circuit preliminary injunction standards)
- Brenntag Int'l Chems., Inc. v. Bank of India, 175 F.3d 245 (discusses insolvency exception to monetary-injury rule)
- Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (holds courts may not issue pre-judgment asset freezes for general creditors claiming money damages)