## Facts

- Universal Settlements International, Inc. (USI) previously sued National Viatical, Inc. (NVI), James Torchia, and their attorney for misappropriation of escrow funds tied to USI’s purchase of viatical settlement assets.
- While that litigation was pending, USI was involved in a Canadian Companies’ Creditors Arrangement Act (CCAA) proceeding.
- The parties settled the federal case on the record: NVI and Torchia agreed to pay $1,242,000 in installments, with a $5 million default amount if a missed payment was not cured within ten days.
- After the settlement terms were stated on the record, NVI and Torchia requested a “standard” mutual confidentiality agreement, but expressly permitted USI to disclose the settlement to the Canadian court and certain other recipients (including taxing authorities and professional advisors).
- NVI and Torchia defaulted, and a federal money judgment was entered for USI in the default amount.
- NVI and Torchia then filed a new action seeking to enjoin USI from enforcing the judgment, alleging USI breached the settlement’s confidentiality understanding by disclosing settlement information in the CCAA proceedings.
- The district court initially issued a preliminary injunction preventing collection, but later dissolved it after finding the preliminary-injunction requirements were not satisfied.

## Issues

1. Whether the district court abused its discretion in dissolving the preliminary injunction that barred USI from enforcing its federal money judgment.
2. Whether NVI and Torchia showed a likelihood of success on the merits that USI’s CCAA disclosures breached the settlement’s confidentiality terms.
3. Whether NVI and Torchia established irreparable harm, and whether the balance of harms and public interest favored enjoining enforcement of the judgment.

## Decision

- The Sixth Circuit affirmed the order dissolving the preliminary injunction.
- The court held the district court did not abuse its discretion in concluding that NVI and Torchia failed to satisfy the four-factor test for preliminary injunctive relief.
- USI was permitted to proceed with enforcement of its federal money judgment.

## Legal Principles

- A preliminary injunction requires consideration of: (1) likelihood of success on the merits, (2) irreparable harm absent relief, (3) substantial harm to others, and (4) the public interest.
- Appellate review of a preliminary-injunction decision is for abuse of discretion, with legal conclusions reviewed de novo.
- Economic harm from payment or collection of money is ordinarily not irreparable because later compensatory relief is generally available.
- Where settlement confidentiality discussions on the record include an express disclosure exception, alleged disclosures within or arguably within that exception weaken a claim of breach supporting injunctive relief.
- Courts weigh heavily the interest in enforcing valid federal judgments and the public interest in finality and predictability of settlements.

## Conclusion

The Sixth Circuit upheld dissolution of an injunction that had blocked collection of a federal judgment, finding NVI and Torchia did not show a strong likelihood of success that USI’s CCAA disclosures violated the settlement’s confidentiality terms and did not establish irreparable harm sufficient to justify restraining enforcement of the judgment.


Nat'l Viatical, Inc. v. Universal Settlements Int'l, Inc., 716 F.3d 952 (6th Cir. 2013)