Travellers Int'l AG v. Trans World Airlines

722 F. Supp. 1087 (S.D.N.Y. 1989)

 

RULE:

Permanent injunctive relief is appropriate if a plaintiff is successful on the merits of its claim, there is no available remedy at law, and the balance of equities favors granting such relief. Irreparable harm is one basis for showing the inadequacy of any legal remedy.

FACTS:

The obligee, which was in the vacation tour business, sought a permanent injunction against the obligor, an airline, to prevent the obligor from terminating a contract between the parties. This action was filed by plaintiffs in the Circuit Court for the City of St. Louis on November 4, 1987. TWA removed the lawsuit to the United States District Court for the Eastern District of Missouri on November 30, 1987. On February 29, 1988, a motion to transfer the case to the United States District Court for the Southern District of New York was granted and on March 4, 1988, the action was transferred to this Court. The court held (1) the obligor was equitably estopped from asserting the departure of certain members of the obligee's key management team as a reason for terminating the contract, (2) the obligor's approval of the sale of the obligee's company with knowledge of certain specific changes in personnel constituted a waiver of its right to invoke the key management team clause as applied to those employees, (3) because the obligee cured a claimed breach of an exclusivity clause in the contract, the claimed breach was not grounds for terminating the contract, (4) the competitive pricing clause did not afford the obligor a right to terminate the contract because the clause was satisfied by the obligee's continued offer of prices to the obligor in accordance with the parties' longstanding course of dealings.

ISSUE:

Should  permanent injunction be granted in order to prevent the a contracting party from terminating the contract between the parties if termination would essentially end any going concern of the other parties business?

ANSWER:

Yes.

CONCLUSION:

The evidence established that the Contract was valid and that Travellers had substantially performed its obligations. Travellers demonstrated that it will not be able  [**52]  to continue as a going concern at this time if the Contract, representing 90-95% of its business, is terminated. The destruction of a business has long been held to constitute the type of irreparable injury for which there is no adequate monetary remedy. Plaintiffs have demonstrated that they adequately performed their obligations under the Contract and therefore that TWA's termination was unjustified. They have also proven that they will be irreparably harmed absent TWA's continued performance under the Contract. Accordingly, plaintiffs' request for a permanent injunction preventing TWA from terminating the Contract is granted. The parties are directed to continue to perform the Contract as provided for in Judge Sweet's preliminary injunction. In view of the foregoing, the Court is of the opinion that the remaining damage claims are premature and can only be determined following the completion of the Contract. Therefore, the damage claims are dismissed without prejudice.

Click here to view the full text case and earn your Daily Research Points.