UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

Jeffrey Bennett, et al.

v. NH Civil No. 04-ds-401-PB

ME Civil No. 04-212-GNZ

St. Paul Fire and Marine 

Insurance Company, et al.

MEMORANDUM AND ORDER

In this action, Attorney Jeffrey Bennett and his law firm,

The Bennett Law Firm, P.A. (collectively “Bennett”), claim that

St. Paul Fire and Marine Insurance Company (“St Paul”) breached

its contractual duty to fund Bennett’s counterclaim against

third-party Scott Liberty in a bankruptcy proceeding before the

United States Bankruptcy Court in the District of Maine. Bennett

now moves for a preliminary injunction (Doc. No. 8) asking that

the court require St. Paul to perform under the contract. (Doc.

No. 8). For the following reasons, this motion is denied.

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 1 of 13
 A “protected person” includes “shareholder[s] in the law 1

firm” of which Bennett is one.

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I. BACKGROUND

In early 2002, Bennett purchased a professional liability

insurance policy from St. Paul for the period of February 12,

2002 through February 12, 2003. In pertinent part, the policy

provides that St. Paul “will have the right and duty to defend

any protected person against a claim or suit for loss covered by 1

this agreement,” but has no “duty to perform any other acts or

services.”

“Loss covered by this agreement” includes that which (1)

“results from the performance of legal services by or for [the

insured],” and (2) “is caused by a wrongful act.” A “wrongful

act” is defined as any “error, omission, or negligent act.”

The alleged “wrongful act” in this case arose out of a

contentious divorce suit brought by Attorney Bennett on behalf of

his client, Darlene Copp, against her ex-husband, Scott Liberty. 

The divorce suit was tried aggressively by both sides and has

spawned a multiplicity of collateral actions. 

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 2 of 13
 The bankruptcy proceeding has been characterized by the 2

plaintiffs as part of Liberty’s effort to avoid the impositions

of an unfavorable outcome in his divorce. I express no opinion

on the merit of this characterization.

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The first that is relevant to this case began on April 9,

2002, when Liberty filed a Chapter 13 petition in the United

States Bankruptcy Court in the District of Maine. As part of 2

this action, Liberty commenced an Adversary Proceeding against

Attorney Bennett, claiming that Bennett violated the Automatic

Stay provisions of the United States Bankruptcy Code by pursuing

matters related to Copp’s divorce after the bankruptcy action was

filed. See 11 U.S.C. § 362(a)(2) (2005) (stating that the filing

of a petition for bankruptcy “operates as a stay . . . of . . .

the enforcement, against the debtor . . . of a judgment obtained

before the commencement of the case under this title”). 

Acknowledging that this suit arguably triggered its duty to

defend, St. Paul quickly authorized Attorney Leonard M. Gulino of

Bernstein, Shur, Sawyer & Nelson to handle the case on Bennett’s

behalf. On June 29, 2002, after Gulino succeeded in having the

adversary proceeding dismissed, Liberty moved to abandon his

bankruptcy action altogether. The Bankruptcy Court granted

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 3 of 13
 Mike, LLC is owned by Liberty’s uncle, Mike Liberty, a 3

real estate broker who had, at one point, funded Copp’s attempts

to divorce Liberty, but now serves as Liberty’s benefactor.

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Liberty the right to do so, but then reversed jurisdiction on

March 19, 2003 to consider, among other things, whether the Court

should find that Liberty abused the bankruptcy process and

therefore whether claims that Bennett and Copp had made against

Liberty should be deemed non-dischargeable in a subsequent

filing.

Gulino gave St. Paul’s senior adjuster, Michael Spinelli,

notice of the voluntary dismissal, the reversal of jurisdiction,

and the new issues raised by the Bankruptcy Court in a March 19,

2003 e-mail. The e-mail states as follows:

Mike,

We did well today in Court:

1. The court dismissed the chapter 13

petition but reversed jurisdiction to:

A) Hear our motion for sanctions against

Mike, LLC. The court also indicated that 3

he believed there was a violation of the

Court’s discovery order against Mike, LLC and

seemed to be saying he will be entering

sanctions in some amount. This has

tentatively been set for hearing on 4/16. 

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 4 of 13
 Spinelli “granted approval” in the face of warnings 4

issued by outside counsel to Bennett on June 4, 2002, and

September 12, 2003 stating that, “If you or your law firm wish to

bring third-party claims, counterclaims, or separate lawsuits

against Scott Liberty or other parties, you will need to retain

counsel at your own expense to prosecute such claims.”

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Believe it or not, you may be getting some of

your fees back.

B) Determine whether the claims of Jeff

Bennett should be found to be non

dischargeable [sic] in any subsequent

bankruptcy case filed by or against Scott. 

In this regard, the Court seemed to be saying

that Scott’s Chapter 13 was an abuse of the

system. This is very good news because if

any obligations owed to Jeff are found to be

non dischargeable [sic], it would seem to

make it much less likely that an attorney

would take a contingency case against Jeff

because his claims would offset any claims

Scott allegedly has against him.

Spinelli responded to this e-mail the same day by merely stating,

“Thanks Len.” Gulino then sent another e-mail, dated March 27,

2003, attaching the March 19 e-mail conversation and stating, “I

write to confirm that your message is an approval of the action

plan sent to you in my e-mail of the [sic] March 19 . . . Please

confirm.” Spinelli replied the same day, writing, “Len, Approval

was granted. Thank you.”4

Believing this to be an endorsement, Gulino filed a 

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 5 of 13
 Notably, without waiving its position, St. Paul 5

subsequently paid Gulino for services rendered in December 2004

and during the first week of January 2004.

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counterclaim on Bennett’s behalf against Liberty in United States

Bankruptcy Court in January 2004. The trial began on January 4,

2004, was continued on December 10, and December 13, and was

briefly adjourned until January 4, 2005 after which it was

adjourned again. It was during this delay that St. Paul reviewed

the history of the case and concluded that it had mistakenly

funded Bennett’s counterclaim. Thus, on January 7, 2005, St.

Paul advised Gulino that it would cease payment to his firm.5

Gulino disputed this decision, and, on January 18, 2005, filed a

motion requesting that the Bankruptcy Court either continue the

counterclaim action to January 31, or allow Gulino to withdraw as

Bennett’s counsel. Gulino’s motion was denied on January 24,

2005, and the trial continued on January 31, February 11, and

February 16, 2005, with Gulino representing his client through

the close of evidence. The parties are now in the process of

preparing post-trial briefs.

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 6 of 13
 Bennett claims it does. 6

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In the meantime, Liberty has assembled a team of litigators

to bring a multi-claim tort action against Bennett in Maine

Superior Court. The complaint, which Bennett became aware of

during the bankruptcy proceeding, was ultimately filed in

Cumberland County on July 25, 2003, and has subsequently been

stayed.

This suit was commenced on September 1, 2004, and was

referred to the District of New Hampshire, which now sits by

designation. Bennett claims that the action brought in the

United States Bankruptcy Court and the tort action in Maine

Superior Court are inextricably intertwined. According to

Bennett, this is true because (1) they are based on the same

general transactions and occurrences, and (2) the bankruptcy

proceeding is necessary to preserve a number of potential

counterclaims and defenses that may arise in the tort action. 

Bennett therefore argues that if St. Paul has a duty to defend

him in the tort action, it also has a duty to defend him through 6

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 7 of 13
 Bennett additionally claims that his reliance on what he 7

considers to be St. Paul’s initial approval should estop St. Paul

from now disclaiming liability. Because I deny Bennett’s motion

on other grounds, I do not reach the merits of this or any other

substantive claim about the existence and scope of promises made

by the parties during the course of their relationship. 

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the remainder of the bankruptcy proceeding.7

The matter is before me on Bennett’s motion for a

preliminary injunction. 

II. STANDARD OF REVIEW

“The purpose of a preliminary injunction is to preserve the

status quo, freezing an existing situation so as to permit the

trial court, upon full adjudication of the case’s merits, more

effectively to remedy discerned wrongs.” CMM Cable Rep. v. Ocean

Coast Prop., 48 F.3d 618, 620 (1st Cir. 1995) (citing Chalk v.

U.S. Dist. Ct. Cent. Dist., 840 F.2d 701, 704 (9th Cir. 1988);

Am. Hosp. Ass’n v. Harris, 625 F.2d 1328, 1330 (7th Cir. 1980)). 

Thus, if the court ultimately finds for the movant, a preliminary

injunction provides the court with a method for preventing or

minimizing any current or future wrongs caused by the defendant. 

CMM Cable Rep., 48 F.3d at 620. 

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 8 of 13
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A district court may grant a plaintiff’s request for a

preliminary injunction if the plaintiff establishes: (1) that the

plaintiff is likely to succeed on the merits; (2) that the

plaintiff will suffer irreparable harm if the injunction is not

granted; (3) that the injury to the plaintiff outweighs any harm

which granting the injunction would inflict on the defendant; and

(4) that the public interest will not be adversely affected by

the granting of the injunction. Langlois v. Abington Hous.

Auth., 207 F.3d 43, 47 (1st Cir. 2000); Public Serv. Co. v.

Patch, 167 F.3d 15, 25 (1st Cir. 1998). A party seeking a

preliminary injunction must independently satisfy each of the

four factors in order to be granted relief. Auburn News Co. v.

Providence Journal Co., 659 F.2d 273, 277 (1st Cir. 1981); Mass.

Coalition of Citizens with Disabilities v. Civil Def. Agency &

Off. of Emergency Preparedness, 649 F.2d 71, 74 (1st Cir. 1981). 

III. DISCUSSION

St. Paul’s strongest argument is that Bennett has failed to

demonstrate that the denial of a preliminary injunction will lead

to irreparable harm. Only a viable threat of serious harm which

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 9 of 13
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cannot be undone authorizes a court to enjoin a party before the

merits are fully determined. Mass. Coalition of Citizens with

Disabilities, 649 F.2d at 74. Thus, equity ordinarily does not

supply relief where legal remedies suffice. Ocean Spray

Cranberries, Inc. v. Pepsico, Inc., 160 F.3d 58, 61 (1st Cir.

1998). The availability of damages in the enforcement of a

contract has therefore rendered injunctive relief “the exception

rather than the rule.” Id. This is especially the case when

the requested preliminary injunction has “mandatory aspects.” 

See Dept. of Env. Prot. v. Emerson, 563 A.2d 762, 768 (Me. 1989).

Such is the case here. Bennett seeks a mandatory

preliminary injunction to enforce his interpretation of the

contractual agreement with St. Paul. He claims that he will

suffer both “representational harm” and harm to his reputation if

a preliminary injunction is not issued. These injuries, he

argues, would render money damages in the form of coverage for

the cost of litigation an inadequate remedy.

I do not share Bennett’s view. As to his claim that

withholding a preliminary injunction would result in irreparable

representational harm, it is undisputed that Gulino has been his

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 10 of 13
 Indeed, Gulino appears to have acknowledged his 8

continuing duty in a January 7, 2005 letter he drafted to St.

Paul’s outside counsel, Attorney John Whitman, in which he stated

that despite St. Paul’s position on the matter, Gulino

“continue[s] to have representational obligations to the

insured.”

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lawyer throughout this litigation, and that any attempts by

Gulino to withdraw have been rejected by the Bankruptcy Court. 

Gulino therefore continues to be bound by his duty to diligently

prosecute Bennett’s claims, regardless of the source of his

remuneration or the risk that it may not be forthcoming. Bd. of

Overseers of the Bar v. Mangan, 2000 Me. Lexis 223, *5 (Me. 2000)

(disbarring a lawyer for breaching his duty of diligence). There

is no indication that Gulino understands otherwise. Bennett’s 8

claim that his representation will somehow be marred by St.

Paul’s failure to provide funding up-front therefore has no

merit.

The same holds true with respect to Bennett’s claim that

denying him an injunction at this stage will somehow harm his

reputation. As an initial matter, Bennett provides no

explanation as to how this harm will come to pass. Indeed, it is

difficult to understand how losing a dispute with an insurance

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 11 of 13
 Even these have been mitigated by St. Paul, who has agreed 9

to pay Gulino for services rendered in December 2004 and during

the first week of January 2004.

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company over professional liability coverage could effect

Bennett’s reputation at all. It may be that Bennett has assumed

that Gulino will not put his best efforts forward without some

assurance in advance that he will be paid either by his client or

by St. Paul. Bennett may thus also believe that any resulting

loss could damage his standing in the community. As I have

discussed, however, these fears are built upon assumptions about

Gulino’s likely performance that are unwarranted. 

In the absence of any credible argument stating otherwise, 

the only injuries Bennett could claim he suffers from stem from

the litigation costs that his lawyers have generated, and

continue to generate in post-trial activity. These he may 9

recoup as money damages if he ultimately prevails on the merits

of his breach of contract claim.

That he may do so forecloses the possibility of preliminary

injunctive relief in this case. “If money damages will fully

alleviate harm, then the harm cannot be said to be irreparable.” 

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 12 of 13
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K-Mart Corp. v. Oriental Plaza, Inc., 875 F.2d 907, 914 (1st Cir.

1989). In this case, “money damages” will fully alleviate any

harm asserted by Bennett. His preliminary injunction must

therefore be denied.

III. CONCLUSION

Plaintiffs’ motion for a preliminary injunction is denied

(Doc. No. 8). 

SO ORDERED.

 /s/Paul Barbadoro 

Paul Barbadoro

United States District Judge, DNH

Sitting by designation

June 28, 2005

cc: Jens-Peter Bergen, Esq.

Anne Cressey, Esq.

Paul Douglass, Esq.

John Whitman, Esq.

Clerk-USDC, ME

Case 1:04-ds-00401-PB Document 30 Filed 06/28/05 Page 13 of 13