Surety Entitled to Mandatory Injunction Requiring Indemnitors to Provide Collateral

On March 14, 2023, the First Department issued a decision in Atlantic Specialty Ins. Co. v. Landmark Unlimited, Inc., 2023 NY Slip Op. 01253, holding that a surety was entitled to a mandatory injunction requiring indemnitors to provide collateral, explaining:

In order to prevail on a motion for a preliminary injunction, the movant must establish a probability of success on the merits, danger of irreparable injury in the absence of an injunction and a balance of equities in its favor. As to the likelihood of plaintiff’s success on the merits, there are notarized signatures on the indemnity agreement apparently from all defendants. It is well settled that notarization carries a presumption of due execution. All defendants assert in their affidavits that the signatures were forged. Some defendants also submitted copies of their driver’s licenses for signature comparison. However, without more, defendants do not overcome the presumption of due notarization, especially considering that checks for the bonds were issued and signed by defendants Lynn Calvano and Joseph Calvano as representatives of the business.

Additionally, we have held that a surety will sustain irreparable harm when its indemnitors default on their obligation to deposit collateral security. We noted in BIB Constr. Co. that the damage resulting from the failure to give security is not ascertainable, and the legal remedy is therefore inadequate. Moreover, although defendants assert that their signatures are forged, the indemnity contract specifically states that a failure to deposit collateral as requested by plaintiff shall cause irreparable harm to plaintiff for which it has no adequate remedy at law, and plaintiff shall be entitled to injunctive relief for specific performance of such obligation.

(Internal quotations and citations omitted).

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