When the Law of Equity Isn’t Always Equitable

In the recent case of SunTrust Banks, Inc. v. Cauthon & McGuigan, PLC, 37 Fla. L. Weekly D311 (Fla. 1st DCA February 2, 2012), the First District strictly applied the law of injunction to reverse a trial court order granting a temporary injunction against SunTrust Bank.  This case illustrates how the law of equity can sometimes operate to create inequitable results.  In essence, the Appellee, a Gainesville law firm, fell victim to a “Nigerian scam.”  The firm received a six-figure check from someone purporting to the ex-husband of a firm client in connection with a marital settlement agreement.  The firm deposited the check into its client trust account held by SunTrust.  After confirming with two SunTrust employees that the funds had cleared, the firm wired the funds to the purported client.  Thereafter, the parties learned that the check was fraudulent, and SunTrust seized the balance of the firm’s trust account.  The law firm sued SunTrust for fraudulent misrepresentation and negligence, and sought the injunction to force SunTrust to return the seized funds.  The trial court, persuaded by the fact that the trust funds belonged to innocent clients of the law firm, granted the injunction.

The appellate opinion, which clearly resonated as inequitable to dissenting Judge Thomas, relied on the well-settled case law which requires that a party seeking a temporary injunction to establish by competent, substantial evidence: (1) the likelihood of irreparable harm; (2) an inadequate remedy at law; (3) a substantial likelihood of success on the merits; and (4) that the requested injunction would serve the public interest.  Because the bank had a statutory and contractual right to make charge backs to its depositor’s account, because the law firm had accepted the bank’s policy regarding unpaid checks, and because the law firm’s clients had the ability to bring a negligence action against SunTrust, the majority ultimately determined that the law firm failed to prove the first three of the four requisite elements.

While the strict construction of the law of injunction sometimes yields unfair results, as in this case where innocent third parties were the ultimate victims of a scam, the necessity for a petitioner to demonstrate each of the requisite elements is well-settled and cannot be ignored for the sake of fairness.

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