Stoneway Capital Corporation v. Siemens Energy Inc.

Background

Stoneway Capital Corporation brought the action against Siemens Energy Inc. seeking injunctive relief in support of arbitration concerning the parties’ rights and obligations under an Amended and Restated Turnkey Construction Contract. Stoneway moved for a preliminary injunction requiring the parties to provide notice to each other when communicating with nonparty Bank of New York Mellon, which served as collateral agent under a series of agreements. Stoneway also sought to stop Siemens from providing additional notices of default to Bank of New York Mellon while arbitration was pending.

Siemens later moved for an order of attachment and a temporary restraining order. It sought to prevent Stoneway from transferring assets while the court considered Siemens’s request for attachment.

Legal standards

The court stated that a temporary restraining order and a preliminary injunction use the same standard. The moving party must show a likelihood of success on the merits, likely irreparable harm without preliminary relief, that the balance of equities favors relief, and that an injunction serves the public interest.

The court also explained that federal law makes attachment available under the law of the state where the court is located. Under New York law, a party seeking attachment before judgment must show a cause of action, a probability of success on the merits, a statutory ground for attachment, and that the amount sought exceeds known counterclaims.

Court’s analysis and ruling

The court held that Stoneway had not met its burden for a preliminary injunction. In particular, it had not shown irreparable harm because arbitration had begun and there was no indication that Siemens intended to communicate further with Bank of New York Mellon about the alleged default notices. The court also noted that, during oral argument, Stoneway appeared to withdraw its motion and stated that it wanted the motion denied because the dispute-resolution process was underway in arbitration.

The court held that Siemens likewise had not met its burden for a temporary restraining order or attachment. Siemens had not sufficiently established Stoneway’s alleged insolvency or bankruptcy, or shown that a potential arbitration award would be ineffective without temporary relief.

Accordingly, the court denied both Stoneway’s and Siemens’s motions. The court also denied Stoneway’s request for permission to file a later reply concerning Siemens’s motion. The clerk was directed to close the motions and the case.