Israel Discount Bank of New York v. First State Depository Company LLC, C.A. No. 7237-VCP (Del. Ch. March 19, 2012).

Issue Addressed

The issue addressed in this short letter opinion was whether the defendants should be held in contempt for violation of the terms of a preliminary injunction order.

Short Answer: Yes

Brief Overview

The Court determined in this short letter ruling that the motion for contempt should be granted based on violations of the terms of a stipulated preliminary injunction that followed the earlier grant by the Court of a TRO.  The Court determined that the standard under Court of Chancery Rule 70(b) for contempt, based on a failure to comply with a Court order, was satisfied.  The Court determined that the terms of the preliminary injunction order were not complied with based on:  (1) Failure to provide a report regarding the property used as collateral; and (2) The failure to allow the plaintiff to inspect and appraise the collateral.

At footnote 6, the Court cited authority for the broad discretion it has to fashion a remedy for violation of its orders, including fines to encourage the ceasing of violative conduct.  At footnotes 10 and 11, the Court cited authority that it relied on for an exception to the American Rule as a basis to award attorneys fees in this case.  Based on the determination by the Court that the violation of the terms of the preliminary injunction were done in bad faith, and the defendant never intended to comply with the preliminary injunction, the Court awarded attorneys’ fees.  The Court also reaffirmed the requirement that the preliminary injunction be complied with and also fined the defendants $5,000 for each day that they fail to comply with the order – – starting as of the date of the letter opinion.