Vis Vires Group, Inc. v. Endonovo Therapeutics, Inc.
149 F. Supp. 3d 376
E.D.N.Y2016Background
- Vis Vires sues Endonovo and Collier for refusing to convert $15,000 of the July 2015 Note into 95,663 Endonovo shares when noticed.
- Three loans were made in 2015 with corresponding securities agreements and convertible notes; only the second and third loan documents are fully documented.
- Plaintiff provided a Notice of Conversion on January 21, 2016; defendants did not issue shares.
- Plaintiff seeks monetary damages and injunctive relief directing conversion and share issuance.
- Defendants contend lack of jurisdiction, absence of irreparable harm, and that claims are primarily contractual; court ultimately denies the injunction and dismisses without prejudice.
- Court allows a 30-day window to amend the complaint to cure jurisdictional deficiencies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject matter jurisdiction for the injunction | Federal question and diversity asserted | No basis for federal or diverse jurisdiction | Lack of jurisdiction; injunction denied and complaint dismissed without prejudice |
| Irreparable harm in preliminary relief | Insolvency risk and contractual urgency create irreparable harm | Insolvency not shown and no irreparable harm | Irreparable harm not shown; injunction denied |
| Colorable federal claim under Exchange Act | 10b-5 claim exists in market manipulation theory | Claim not colorable; no manipulation or causal link | 10b-5 claim not colorable; court declines to exercise jurisdiction on that basis |
Key Cases Cited
- Brenntag Int’l Chemicals, Inc. v. Bank of India, 239 F.3d 231 (2d Cir. 1999) (insolvency exception discussed; irreparable harm often hinges on ability to pay damages)
- Grupo Mexicano de Desarrollo, S.A. v. All. Bond Fund, Inc., 527 U.S. 308 ((U.S. 1999)) (preliminary injunction not available to secure monetary contracts; equity limits)
- Savoie v. Merchants Bank, 84 F.3d 52 (2d Cir. 1996) (plaintiff must show colorable federal claim for jurisdiction on injunction motion)
- ATSI Communications, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007) (to state a market manipulation claim, must plead specifics; misrepresentation and impact required)