USA Law and Practice Contributed by: Steven Molo, Robert Kry, Megan Cunniff Church and Walter Hawes, MoloLamken LLP
• there was a benefit conferred on the defendant; • the defendant was aware of the benefit; and • acceptance or retention by the defendant of the benefit would be inequitable under the circum - stances. A claim for unjust enrichment sounds in equity. An essential question is whether it is against equity to allow the defendant to retain what is sought to be recovered. Conversion Where a fraudster has intentionally and without authority taken personal property belonging to some - one else, the owner may allege a claim for conversion to have the property returned. The plaintiff must allege that: • the property taken is a specific, identifiable thing; • the plaintiff owned, possessed or had control over the property before it was taken; and • the defendant now has unauthorised control over the property. Although exceptions exist, generally an action for con - version can only proceed where the property taken is tangible – for example, a bond, promissory note, check, deed or manuscript. In some instances, an action for conversion of money may be brought where No specific rules of pre-action conduct apply in rela - tion to fraud claims. Certain related claims, such as conversion, require the plaintiff to make a demand on the defendant for the return of the property. In general, however, there are no set requirements of pre-action conduct prior to the filing of a claim for fraud. 1.7 Prevention of Defendants Dissipating or Secreting Assets A victim of fraud has several options to prevent a defendant from dissipating or secreting assets prior to a judgment. Depending on the underlying cause of action, a fraud victim may be able to obtain a prelimi - nary injunction or restraining order preventing the pre- judgment dissipation of assets. A plaintiff may also it relates to specifically identified funds. 1.6 Rules of Pre-Action Conduct
be able to obtain a pre-judgment attachment order under state law. Fees for filing such motions vary from jurisdiction to jurisdiction. In addition, the plaintiff must often post security when seeking to restrain assets prior to judg - ment. The amount of security is typically within the discretion of the court and may vary with the amount restrained. Federal Relief Under Rule 65 of the Federal Rules of Civil Procedure, a plaintiff may move for a preliminary injunction or temporary restraining order to restrain a fraudster from dissipating assets. These are in personam remedies that operate against the defendant and, in some cir - cumstances, third parties acting in concert with the defendant. Where the plaintiff seeks only a general award of money damages, neither a preliminary injunction nor a temporary restraining order is available. The US Supreme Court has held that a federal court may not issue a preliminary injunction preventing defendants from disposing of their assets pending adjudication of a claim for money damages. By contrast, where a plaintiff seeks equitable relief such as the return of specifically identified property, those pre-judgment restraints may be available. A plaintiff seeking a preliminary injunction or tempo - rary restraining order may make a motion ex parte against the defendant, but faces a high bar in doing so. A party seeking a preliminary injunction or tempo - rary restraining order must show: • the likelihood of success on the merits of the underlying action; • that there would be irreparable harm without the injunction; and • a balance of interests that favours the movant. Federal courts have found preliminary injunctions appropriate where the defendant intends to frustrate the judgment by transferring assets out of the juris - diction.
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