Monday, April 10, 2006

Second Circuit Holds that District Court Abused Discretion in Denying Request for Attachment Order

Per Capital Ventures Intern. v. Argentina, --- F.3d ----, 2006 WL 759752 (2d Cir. Mar. 23, 2006):

The question . . . is whether the district court erred in denying CVI's application [for attachment order]--despite the fact that all statutory requirements were satisfied-- based on its view that CVI was unlikely to realize any money from attachment and, perhaps, that granting the order could have generated confusion surrounding the Exchange Offer.

. . .

. . . [A] motion court presented with an application for an order of attachment must determine whether a statutory ground for attachment exists, whether the applicant has established a likelihood of success on the merits, and whether the remedy is needed to secure payment or obtain jurisdiction. It has discretion to the extent that these determinations require weighing of evidence and also in balancing competing considerations. It will be held to have abused that discretion only if it "applies legal standards incorrectly or relies upon clearly erroneous findings of fact, or proceed[s] on the basis of an erroneous view of the applicable law." Register.Com, Inc. v. Verio, Inc., 356 F.3d 393, 398 (2d Cir.2004) (internal citation and quotation marks omitted). Where, however, a statutory ground for attachment exists and both need and likelihood of success are established, its discretion does not permit denial of the remedy for some other reason, at least absent extraordinary circumstances and perhaps even then. As one court explained,

"though an attachment is an extraordinary remedy, which may be greatly abused by designing men--a remedy not known to the common law, and one, therefore, which courts should watch with scrupulous jealousy, inasmuch as its effects are so destructive to individual credit, and being one which clothes the creditor with such extraordinary power over his debtor's estate, that it should only be granted upon full and satisfactory evidence that the application is well founded--still, when a creditor fairly brings himself, by his application, within the spirit and intent of the statute authorizing this remedial and provisional." Rowles v. Hoare, 61 Barb. 266 (Sup.Ct.N.Y.Co.1870) (emphasis added).

. . .

In this case, CVI satisfied each of the requirements of Sections 6201 and 6212 and demonstrated a need for attachment as required by Section 6223. That being so, the district court erred to the extent it denied relief because it considered CVI's chances of realizing on the Principal Collateral to be remote.


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