Court Properly Granted "Extreme" Remedy of Appointing Temporary Receiver

On January 24, 2018, the Second Department issued a decision in Meagher v. Doscher, 2018 NY Slip Op. 00420, approving the appointment of a temporary receiver, explaining:

[T]he Supreme Court properly granted the plaintiffs' motion in Action No. 2 to appoint a temporary receiver for Emerson Associates. The appointment of a temporary receiver is an extreme remedy resulting in the taking and withholding of possession of property from a party without an adjudication on the merits, and should be granted only where the moving party has made a clear evidentiary showing of the necessity for the conservation of the property at issue and the need to protect the moving party's interests. Here, the plaintiffs made a clear evidentiary showing that the appointment of a receiver was necessary to protect the parties' interests, given the state of affairs between them, and that Doscher's unilateral actions presented a danger of material injury to Emerson Associates' property. Most significantly, the plaintiffs submitted evidence: that there was litigation between Emerson Associates and a corporation owned by Doscher concerning which entity owned certain trademarks, including the name "The Sloppy Tuna"; that Doscher executed a license agreement on behalf of Emerson Associates, pursuant to which Emerson Associates was obligated to pay licensing fees to Doscher's corporation to use the trademarks in connection with the operation of The Sloppy Tuna; and that Doscher was using Emerson Associates' funds to pay his legal bills in Action No. 1 and Action No. 2. Accordingly, under these circumstances, the court properly granted the plaintiffs' motion to appoint a temporary receiver.

The Supreme Court properly denied those branches of Doscher's cross motions in Action No. 2 which were to direct the plaintiffs to pay the interim compensation sought by the court-appointed temporary receiver, as Doscher did not offer any valid basis on which to direct such payment.

(Internal citations and quotations omitted).

It is common in commercial litigation that parties seek equitable relief such as injunctions, attachments or the appointment of a temporary receiver in order to preserve assets or maintain the status quo when money damages will not make them whole at the end of a litigation. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding seeking--or opposing--such relief.