Obtaining Security Pending Litigation

Introduction

​         A plaintiff should always be mindful of the defendant transferring or hiding assets during litigation to avoid having to pay a future judgment. Massachusetts offers plaintiffs a variety of prejudgment security remedies to mitigate this risk. All of these remedies involve the plaintiff filing a motion with the court requesting that the court issue an order “freezing” (also known as “attaching”) one or more assets of the defendant. This has the effect of preventing the defendant, or a third-party holding funds of the defendant like a bank, from transferring assets while the litigation is taking place. If the plaintiff then wins the case by getting a judgment against the defendant, then the plaintiff can seek a further order transferring those assets to the plaintiff to be applied towards the balance of the judgment. Specific examples of prejudgment security remedies will be discussed below.

Required Showing 

         To obtain most forms of prejudgment security, a plaintiff must show the judge that they have a likelihood of success on the merits. See, e.g. Mass. R. Civ. P. 4.2(c). In a breach of loan agreement case, for example, the plaintiff will usually submit a copy of the loan agreement or promissory note as an exhibit to a motion to attach real estate or a motion to attach a bank account. The plaintiff will also file an affidavit as an exhibit to their motion indicating what the balance is and any other facts showing that they have a likelihood of success. In order to obtain prejudgment security, the plaintiff does not need to present all the evidence that they would need to present to win a case at trial, but will need to present some preliminary evidence in support of their case. A defendant has the right to submit their own evidence in defense to a motion for prejudgment security.

Ex-Parte Relief  

          If the plaintiff can show that there is a strong likelihood that the defendant, if notified in advance of plaintiff’s motion, will transfer funds in order to circumvent an order of the court attaching those funds, the plaintiff can obtain an order of attachment without advanced notice to the defendant. See, e.g. Mass. R. Civ. P. 4.1(f). If, for example, the defendant has committed fraud against the plaintiff, or there are previous instances where the defendant transferred assets out of their name to avoid an attachment, the court is more likely to grant a motion for prejudgment security on an ex-parte basis. If the plaintiff succeeds in getting an order of attachment ex-parte, the defendant can, upon two days notice, file a motion with the court to dissolve the attachment. The defendant, in seeking to dissolve an attachment, should argue their reasons as to why the plaintiff is not likely to succeed in the case. 

Specific Kinds of Prejudgment Security Remedies 

         The examples here are some, but not all, of the prejudgment security remedies available to a plaintiff. All of the above remedies are also available in federal court in Massachusetts under Fed. R. Civ. P. 64, 65. As discussed above, a plaintiff can file a motion to place an attachment on the defendant’s real estate, or to place an attachment on the defendant's bank or investment accounts (known as a “motion for attachment by trustee process”). See Mass. R. Civ. P. 4.1, 4.2.

           A plaintiff can also seek a preliminary injunction under Mass. R. Civ. P. 65. An example of where a preliminary injunction could become useful is where the plaintiff knows of a client of the defendant or knows of some third party that owes the defendant money (like a distributor, tenant, or insurance company). In this case the plaintiff can seek an order directed at the third party that the third party no pay the defendant pending further order of the court. The court can also order that any funds that would otherwise be paid to the defendant be held by the court or in an escrow account.
Filing a motion for prejudgment security, and letting the defendant know early on about the intent to do so (unless ex-parte relief is warranted) is usually a good idea because it can encourage settlement discussions and lead to a fast case resolution saving the plaintiff time and money.
​