NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

No. 10-4545

____________

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

v.

THE ESTATE OF JOSEPH A. CERNIGLIA;

CWB1, LLC; COMPANIA HOLDINGS CORPORATION;

MELISSA CERNIGLIA; VALLEY NATIONAL BANK;

RICCARDO BOTTI; KEVIN WYNN

CWB1, LLC.,

 Appellant

____________

On Appeal from the United States District Court

for the District of New Jersey

(D.C. No. 2-10-cv-05597)

District Judge: Honorable William H. Walls

____________

Argued July 12, 2011

Before: RENDELL, SMITH and FISHER, Circuit Judges.

(Filed: July 28, 2011 )

Edward Griffith (Argued)

Bolatti & Griffith

45 Broadway, Suite 2200

New York, NY 10006

Counsel for Appellant, CWB1, LLC
2

Anthony J. Fusco, Jr.1

Fusco & Macaluso

150 Passaic Avenue

P.O. Box 838

Passaic, NJ 07055

Counsel for Appellees, Riccardo Botti

and Kevin Wynn

Steven P. Del Mauro

McElroy, Deutsch, Mulvaney & Carpenter

100 Mulberry Street

Three Gateway Center

Newark, NJ 07102

Counsel for Guardian Life Insurance

Company of America

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OPINION OF THE COURT

____________

FISHER, Circuit Judge.

CWB1, LLC (“CWB1”) appeals from an order of the District Court denying its 

request for a preliminary injunction. For the reasons stated herein, we will reverse the 

District Court‟s order and direct that the injunction be issued in CWB1‟s favor.

I.

 

1

The Court notes that Counsel for Botti and Wynn, Anthony J. Fusco, Jr., failed to 

appear for the scheduled oral argument in this matter, despite his acknowledged receipt of 

the notification of oral argument. Although we decline to take further action in this 

regard, his absence and subsequent correspondence with the Court demonstrates a lack of 

professionalism rarely seen and hopefully not repeated before the Court. We also note 

that Mr. Fusco‟s absence had no bearing on the outcome of this appeal.
3

We write exclusively for the parties, who are familiar with the factual context and 

legal history of this case. Therefore, we will set forth only those facts necessary to our 

analysis.

Joseph A. Cerniglia was a renowned chef and partial owner of Campania, a 

restaurant in Fairlawn, New Jersey. CWB1, a New Jersey limited liability company, 

owned Campania. Riccardo Botti, Kevin Wynn, and Cerniglia held ownership interests 

in CWB1 as members. On October 25, 2005, CWB1 purchased a life insurance policy 

(the “Policy”) from The Guardian Life Insurance Company of America (“Guardian”). 

The Policy named Cerniglia as the insured, and listed CWB1 as the owner and 

beneficiary. On September 16, 2010, Cerniglia, Botti, and Wynn sold their interests in 

CWB1 to Campania Holdings Corporation (“CHC”) pursuant to a transfer agreement. 

Philip Neuman is the managing director of CHC. On September 24, 2010, Cerniglia 

died. In the months following, Campania‟s business declined significantly, and it was 

eventually closed.

After Cerniglia‟s death, Guardian faced competing claims to the Policy death 

benefit, and filed an interpleader complaint against CWB1, CHC, Cerniglia‟s estate, 

Melissa Cerniglia (Cerniglia‟s widow), Botti, Wynn, and Valley National Bank.2 CWB1 

and CHC filed an answer and a cross-claim against the estate, Melissa Cerniglia, Botti, 

and Wynn seeking a declaratory judgment that those parties had no rights under the 

 

2 Guardian subsequently released Valley National Bank from the lawsuit.
4

Policy and moved for a preliminary injunction directing payment of the Policy death 

benefit. Neuman submitted a declaration describing the negative impact of Cerniglia‟s 

death on Campania‟s business. In response, Botti and Wynn disputed payment of the 

Policy death benefit to CWB1 based on their belief that ownership of CWB1 had reverted 

to them because Neuman breached the transfer agreement. Botti and Wynn suggested 

that a breach of contract action would be filed, but no such claims were before the 

District Court.3 In the meantime, the estate and Melissa Cerniglia withdrew their claims 

to the Policy death benefit.

At the preliminary injunction hearing before the District Court, CWB1 argued that 

all parties agreed that CWB1 was the beneficiary of the policy and, notwithstanding any

breach of contract litigation, the Policy death benefit should be paid to the company. 

Counsel for Botti and Wynn stated that “[o]bviously we all agree that the money is to be 

paid to the corporation,” meaning, to CWB1. (App. at 199.) But, Botti and Wynn argued 

that it should not be paid because of the uncertainty as to the proper ownership of CWB1. 

The District Court rejected CWB1‟s arguments, ruling that the company failed to 

establish a likelihood of success on the merits or irreparable harm. The District Court 

reasoned that ownership of CWB1 would have to be resolved before the company 

received the Policy death benefit. The District Court also concluded that CWB1‟s 

allegations of irreparable harm were insufficient and unsupported. In doing so, the 

 

3

The parties have represented to the Court that a breach of contract claim is

pending in New Jersey state court.
5

District Court refused to allow Neuman to testify regarding the statements set forth in his 

declaration. On November 30, 2010, the District Court granted Guardian interpleader 

relief and released it from any liability. The sum of the Policy death benefit, plus 

interest, was deposited with the clerk of court. CWB1 filed a timely notice of appeal.4

II.

“[W]e use a three-part standard to review a District Court‟s decision to grant or 

deny a preliminary injunction.” Rogers v. Corbett, 468 F.3d 188, 192 (3d Cir. 2006). 

“The District Court‟s findings of fact are reviewed for clear error, the District Court‟s 

conclusions of law are evaluated under a plenary standard, and the ultimate decision to 

grant [or deny a] preliminary injunction is reviewed for abuse of discretion.” Id.

III.

Federal Rule of Civil Procedure 22 provides that “[p]ersons with claims that may 

expose a plaintiff to double or multiple liability may be joined as defendants and required 

to interplead.” Fed. R. Civ. P. 22(a)(1). In an interpleader action, “the court determines 

whether the interpleader complaint was properly brought and whether to discharge the 

stakeholder from further liability to the claimants.” Prudential Ins. Co. of Am. v. Hovis, 

 

4

The District Court had jurisdiction over Guardian‟s interpleader complaint and 

CWB1‟s counterclaim against Guardian pursuant to 28 U.S.C. § 1332 based on diversity 

jurisdiction. The District Court had supplemental jurisdiction over CWB1‟s cross-claim 

against Botti and Wynn pursuant to 28 U.S.C. § 1367(a). Our source of jurisdiction is 28 

U.S.C. § 1292(a)(1).
6

553 F.3d 258, 262 (3d Cir. 2009).5 Then, “the court determines the respective rights of 

the claimants to the interpleaded funds.” Id. In evaluating whether a preliminary 

injunction should issue, we consider “(1) the likelihood that the moving party will 

succeed on the merits; (2) the extent to which the moving party will suffer irreparable 

harm without injunctive relief; (3) the extent to which the nonmoving party will suffer 

irreparable harm if the injunction is issued; and (4) the public interest.” Liberty LincolnMercury, Inc. v. Ford Motor Co., 562 F.3d 553, 556 (3d Cir. 2009).

A. Likelihood of CWB1‟s Success on the Merits

With respect to the likelihood of success on the merits, CWB1 argues that the 

District Court erred in concluding that the litigation regarding ownership of the company 

had to be resolved before the Policy death benefit could be paid. We agree. The 

litigation over ownership of CWB1 is irrelevant to CWB1‟s claim. Indeed, the Policy is 

explicit on this point – CWB1 is the named beneficiary. (App. at 60 (“Guardian will pay 

the death proceeds to the beneficiary[.]”)) Moreover, New Jersey law makes clear that 

members of a limited liability company are distinct from the LLC itself. The New Jersey 

Limited Liability Company Act, 42 N.J.S.A. § 42:2B et seq., describes the limited 

liability company as a distinct legal entity, separate and apart from its member owners. 

New Jersey courts also have emphasized that a life insurance policy is a company asset 

 

5

The threshold requirements for rule interpleader were satisfied. Diversity of 

citizenship was present between Guardian (a citizen of New York) and the Estate, 

Melissa Cerniglia, CWB1, Botti, and Wynn (citizens of New Jersey). The amount in 

controversy exceeded $75,000.
7

where, as here, the policy names an employee as an insured, the policy lists the company 

as the beneficiary, and the company pays for the policy. See, e.g., Equitable Life Assur. 

Soc’y. of U.S. v. New Horizons, Inc., 146 A.2d 466, 467 (N.J. 1959) (“Although the 

employee is the „insured,‟ the employer is the applicant for, and owner and beneficiary 

of, the policy.”); Mitzner v. Lights 18, Inc., 660 A.2d 512, 514 (N.J. Super. Ct. App. Div. 

1994) aff’d 660 A.2d 480 (N.J. 1995) (“[K]ey man insurance, which reimburses an 

employer upon the death of a key employee or principal, is owned by the employer who 

also applies for and is the beneficiary of the policy.”). CWB1, Botti, and Wynn agree 

that the company is, indeed, the lawful beneficiary. The argument advanced by Botti and 

Wynn focuses on their belief that the Policy death benefit should not be paid to CWB1 

because they assert Neuman is no longer the lawful owner. This contention ignores the 

formalities of the limited liability company and incorrectly equates Neuman with CWB1. 

Even if CHC, with Neuman as managing director, is not the lawful owner of CWB1, that 

does not change the fact that CWB1 is the beneficiary. Because CWB1 demonstrated a 

likelihood of success on the merits in that it is the beneficiary of the Policy death benefit, 

the District Court erred in concluding otherwise.

B. Likelihood of Irreparable Harm to CWB1

“The irreparable harm requirement is met if a plaintiff demonstrates a significant 

risk that he or she will experience harm that cannot adequately be compensated after the 

fact by monetary damages.” Adams v. Freedom Forge Corp., 204 F.3d 475, 484-85 (3d 

Cir. 2000). Mere economic harm is insufficient; rather, “the plaintiff must demonstrate 
8

potential harm which cannot be redressed by a legal or an equitable remedy following a 

trial.” Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 801 (3d Cir. 1989). 

“Grounds for irreparable injury include loss of control of reputation, loss of trade, and 

loss of good will.” Kos Pharm., Inc. v. Andrx Corp., 369 F.3d 700, 726 (3d Cir. 2004) 

(internal quotation marks omitted).

At the preliminary injunction hearing and in its submissions to the District Court, 

CWB1 maintained that it would suffer irreparable harm because Campania would be 

forced to shut down, employees would be laid off, and the restaurant would lose its 

growing customer base. CWB1 argues that the District Court erred in rejecting its 

evidence of impending harm and refusing to allow Neuman to testify regarding the 

company‟s financial status. We agree. Although CWB1 essentially seeks a monetary 

payment, its posture as a claimant to an interpleader stake distinguishes this case from the 

traditional notion of economic harm. CWB1 may recover only the Policy death benefit; 

monetary damages in the traditional sense are not available to it in this instance. 

Moreover, its allegations – amply supported in Neuman‟s declaration – of the impending 

loss of key employees, as well as a decline in its customer base, sufficiently demonstrates 

a likelihood of irreparable harm to CWB1.6 See id. at 726. Without the payment of the 

Policy death benefit, CWB1 cannot be made whole. See Brenntag Int’l. Chems., Inc. v. 

Bank of India, 175 F.3d 245, 249 (2d Cir. 1999) (irreparable harm is found “where, but 

 

6 Because CWB1 properly supported its allegations of irreparable harm, the 

District Court abused its discretion in prohibiting Neuman from testifying to that effect.
9

for the grant of equitable relief, there is a substantial chance that upon final resolution of 

the action the parties cannot be returned to the positions they previously occupied”). This 

is due to the fact that CWB1‟s main asset was Cerniglia‟s talent as a chef, which the 

Policy was designed to protect and allow the company to continue operating upon his 

death. The Policy death benefit is a necessary financial resource that must be paid 

without delay if the company has any possibility of rehabilitating its business. Because 

CWB1 has no other remedy at law, the District Court clearly erred in finding that 

CWB1‟s harm was compensable by monetary damages. Given that the issuance of a 

preliminary injunction is “the only way of protecting [the company] from harm,” Instant 

Air Freight, 882 F.2d at 801, CWB1 established a likelihood of irreparable injury.

C. Potential Harm to Botti and Wynn

Although the District Court did not address the remaining two requirements, we 

may nonetheless evaluate them where, as here, the record provides a sufficient factual 

basis to do so. See Kos Pharm., 369 F.3d at 712. Before the District Court, CWB1 

argued that Botti and Wynn would suffer no harm if the injunction was issued. Botti and 

Wynn did not articulate any allegations of harm on their behalf. Their focus on alleged 

breaches of the transfer agreement was misplaced, as these claims were not before the 

District Court. “We have recognized that [t]he more likely the plaintiff is to win, the less 

heavily need the balance of harms weigh in his favor.” Id. at 729. Considering that 

CWB1 established a strong likelihood of success, any harm Botti and Wynn might suffer 
10

is outweighed by the harm to CWB1 absent an injunction. CWB1 met its burden to 

establish this factor.

D. Public Interest

Finally, CWB1 maintains that the public interest favors the grant of a preliminary 

injunction. “[I]f a plaintiff demonstrates both a likelihood of success on the merits and 

irreparable injury, it almost always will be the case that the public interest will favor the 

plaintiff.” Am. Tel. & Tel. Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421, 

1427 n.8 (3d Cir. 1994). Such is the case here. As CWB1 alleged, directing payment of 

the Policy death benefit to CWB1 furthers the public interest by facilitating the 

company‟s ability to continue operations and enforceing the plain language of the Policy. 

Because CWB1 met its burden to establish each element required to obtain a preliminary 

injunction, the District Court abused its discretion in rejecting its request. Going forward, 

the District Court should order the release of the Policy death benefit to CWB1 without 

delay.

IV.

For the foregoing reasons, we will reverse the order of the District Court and 

remand so that the District Court may direct payment of the Policy death benefit to 

CWB1.