Jared A. Fiore
Updated: June 8, 2020
Know how
How prejudgment attachments impact your leverage
By Jared A. Fiore
This is the third part in Jared A Fiore's three-part series on Dispute Resolution. The first two parts were Seeking meaningful results in lawsuits and Failure to respond can be costly for your business.
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You may have heard people say lawsuits drag on for years. Sometimes, a particular case does take years to reach a resolution. But in many cases, leverage can be gained at the outset of a case, which might push the parties to a resolution.
The rules of civil procedure permit a plaintiff to seek prejudgment security through an attachment of the defendant’s assets (the defendant can utilize the same rule if it asserts a claim against a party). The purpose of the rule is to preserve assets to satisfy a judgment if the plaintiff wins the case.
To obtain an attachment, the plaintiff needs to file a motion and convince a judge of three key elements:
1) the plaintiff has a reasonable likelihood of winning its case;
2) the plaintiff has a reasonable likelihood of obtaining an award equal to or greater than the amount of the attachment; and
3) the attachment is over and bove any liability insurance shown by the defendant to be available to satisfy a judgment.
Typically, the plaintiff files the motion at the outset of the case. The court will then hold a hearing on the motion, which is a very condensed presentation of argument and evidence. Usually, plaintiffs seek to attach defendants’ bank accounts and real estate.
Whether you are pursuing or defending against a motion for attachment, you should evaluate it with an appropriate level of seriousness because it can result in leverage for the winning party.
Normally, the plaintiff stands to gain the most leverage by tying up the defendant's assets during the case, but it can be risky. If the court finds the plaintiff failed to show a reasonable likelihood of winning at trial, the defendant may gain the leverage.
Consider the following facts as a general example. Assume a plaintiff sues your business and alleges $75,000 in damages. When the plaintiff files the lawsuit, it also seeks a $75,000 attachment of your company’s bank account. You do not have any insurance to cover the alleged damages.
If the plaintiff wins the motion, the attachment will freeze $75,000 in your bank account during the case, which could continue for a number of years. This might have severe consequences on your business operations. Thus, if the plaintiff wins, it has likely obtained leverage over you. To free up your cash and to prevent disruption to your business operations, you might be willing to put more money on the table to quickly resolve the matter than you otherwise would have.
Conversely, if you win the motion, the plaintiff might need to reassess the strength of its case. The court’s decision is made at the infancy of the case and thus, the plaintiff could still win at trial when the two sides present their full case before a judge or jury, but what if the plaintiff put forth what it expects to be its best evidence? The judge’s decision might be an indication of a future verdict. If that is the case, the plaintiff might be interested in cutting a deal before rolling the dice.
Each case involves different considerations, goals, leverage points, etc. Plaintiffs should consider the risk, reward, and cost before bringing a motion for an attachment and defendants should consider the importance of a strong opposition.
Jared A. Fiore is an attorney at Worcester law firm Bowditch & Dewey, LLP.
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