## Facts

- Destiny USA Holdings, LLC developed a large Syracuse, New York retail/tourist project financed by Destiny funds, municipal bonds, and a construction loan administered by Citigroup Global Markets Realty Corp.
- Under an amended loan and security agreement, Citigroup acted as both a lender and the administrative agent responsible for approving all project advances, including advances sourced from Destiny and the municipal issuer.
- Citigroup claimed the project had a “deficiency” exceeding required equity contributions and demanded a cure; the parties disputed whether tenant-improvement costs could be included in the deficiency calculation.
- After issuing a later deficiency notice (exceeding $15 million) that included tenant-improvement items, Citigroup declared a default and stopped funding draw requests.
- Destiny sued for breach of contract and sought a preliminary injunction compelling Citigroup to fund specified pending draw requests and to exclude tenant-improvement costs from the deficiency calculation.
- The trial court granted a preliminary injunction compelling funding of pending draws, vacated Citigroup’s deficiency and default notices, concluded tenant-improvement costs should be excluded, and ordered Citigroup to fund all future draws as they came due; it did not set an undertaking.

## Issues

1. Whether a developer established irreparable harm and entitlement to a preliminary injunction compelling funding of pending draw requests under a construction loan.
2. Whether the trial court improperly granted relief beyond maintaining the status quo by vacating deficiency/default notices and ordering funding of all future draws.
3. Whether the trial court erred by failing to require an undertaking as a condition of the preliminary injunction.

## Decision

- The Appellate Division modified the order.
- It affirmed the preliminary injunction to the extent it compelled Citigroup to fund the identified pending draw requests.
- It vacated the portions of the order that (a) required Citigroup to fund all future draws and advances and (b) vacated the deficiency and default notices at the preliminary stage.
- It directed that an appropriate undertaking be set in connection with the injunction.

## Legal Principles

- A preliminary injunction requires: (1) likelihood of success on the merits, (2) irreparable injury absent injunctive relief, and (3) a balance of equities in the movant’s favor.
- Although breach-of-contract claims usually are remedied by money damages, injunctive relief may be available where the subject matter is unique or damages are difficult to quantify and non-monetary harms (including reputational and public-interest harms) are shown.
- A preliminary injunction is designed to preserve the status quo pending litigation; it should not award broad forward-looking specific performance or resolve core contractual disputes on an interim record.
- An undertaking is generally required to secure the enjoined party against damages if the injunction is later determined to have been improvidently granted.

## Conclusion

The court permitted limited interim relief compelling funding of pending construction-loan draws based on a showing of likely contractual merit and non-quantifiable harm, but narrowed the injunction to avoid premature adjudication and compelled ongoing performance, and required that an undertaking be set.


Destiny USA Holdings, LLC v. Citigroup Glob. Mkts. Realty Corp., 69 A.D.3d 212, 889 N.Y.S.2d 793 (N.Y. App. Div. 4th Dep’t 2009)