USA Law and Practice Contributed by: Steven Molo, Robert Kry, Megan Cunniff Church and Walter Hawes, MoloLamken
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 judgment. The amount of security is typi - cally 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 prelimi - nary 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 circum - stances, 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 fed - eral court may not issue a preliminary injunc - tion 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 spe - cifically identified property, those pre-judgment restraints may be available. A plaintiff seeking a preliminary injunction or temporary 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 temporary 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 injunc - tions appropriate where the defendant intends to frustrate the judgment by transferring assets out of the jurisdiction. State Relief Different states provide different mechanisms to prevent the dissipation of assets. Most states provide procedures for pre-judgment attach - ment. Under New York law, for example, an order of attachment may be granted in certain circum - stances where the plaintiff shows it is entitled to a money judgment and the defendant has taken steps to dispose of or secrete property to frustrate the judgment. Attachment orders may operate either in personam or in rem, depending on the circumstances. Mere allegations of fraud do not justify pre-judg - ment attachment. Instead, the plaintiff must pre - sent evidence of intent to defraud. Failure to Abide by Injunction or Attachment If a defendant fails to abide by a preliminary injunction, temporary restraining order or pre- judgment attachment, the plaintiff may move for an order holding the defendant in contempt. A contempt order may include a requirement for the defendant to pay a fine for failing to abide by the court’s prior order. 2. Procedures and Trials 2.1 Disclosure of Defendants’ Assets Federal Rule of Civil Procedure 26 allows par - ties to obtain discovery “regarding any nonprivi - leged matter that is relevant to any party’s claim or defense and proportional to the needs of the case” . The US Supreme Court has liberally con - strued this standard to encompass any matter that could reasonably bear on any issue that is or
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