Lack of Irreparable Harm Sinks Surety’s Injunctive Rights to Collateral
The Fountain court was faced with a motion for preliminary injunction filed by a surety, seeking enforcement of the collateral security provision of an agreement of indemnity provided by its individual indemnitors. Recognizing that its decision was based upon Florida law under diversity jurisdiction, the court acknowledged the standard to obtain a preliminary injunction required the plaintiff to demonstrate: (1) a substantial likelihood of success on the merits; (2) that irreparable injury will be suffered if the relief is not granted; (3) that the threatened injury outweighs the harm the relief would inflict on the non-movant; and (4) that the entry of relief would serve the public interest.
In denying the requested injunction, the Fountain court found that the surety had failed to establish a substantial likelihood of success on the merits – due to its failure to refute the indemnitors’ affirmative defenses. More importantly, however, the court found that the ultimate availability of a money judgment by the surety vitiated its claims of “irreparable injury”. Specifically, the Fountain court held that “[t]he fact that plaintiff may, in the interim, be marginally less secure with respect to the availability of a final money judgment [or decree], does not constitute ‘irreparable harm’ so as to warrant the extraordinary remedy of a preliminary injunction.”