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A Connecticut federal court held that an order to arbitrate under a valid arbitration agreement does not constitute irreparable harm that would permit issuance of a preliminary injunction, and that proceeding with a motion for preliminary injunction justified sanctions under Rule 11.
In Lawrence v. Wilder Richman Securities Corp., No. 3:04cv538 (JBA), 2006 WL 3821086 (D. Conn. Dec. 28, 2006), WRSC sought Rule 11 sanctions against Lawrence after he sought a preliminary injunction and other injunctive relief to prevent WRSC from proceeding with arbitration. WRSC's motion was granted by the magistrate judge and Lawrence moved for reconsideration.
The magistrate judge clarified her original ruling to provide that the sanctions were granted only as to the injunctive relief, including the preliminary injunction. WRSC objected to the reconsideration.
The Court rejected Lawrence's argument that he was justified in moving for preliminary injunction because he had experienced "irreparable harm" as a result of being forced to arbitrate his claims. Lawrence agreed to arbitrate and his argument that he was being forced to arbitrate against his will was "patently frivolous."
Nor could he rely on an equitable estoppel argument to justify his motion for preliminary injunction. Lawrence did not raise this argument "in the context of his irreparable harm claim in his motion for preliminary injunction." Additionally, the arbitrator could have considered the equitable estoppel argument.
However, the Court did find that Lawrence had a "colorable claim for declaratory and/or injunctive relief on the basis of his equitable estoppel argument." (emphasis added). Therefore, the Court held that Rule 11 sanctions were only appropriate in regards to Lawrence's motion for preliminary injunction.
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