Hershewe v. Givens et al
OPINION AND ORDER directing that: (1) plf Hershewe's 17 MOTION for Preliminary Injunction is DENIED; (2) plf Hershewe's 17 motion for attachment of Eagle Investments' bank account--Midsouth account number 100088686--is GRANTED; (3) plf Hershewe's 17 motion for seizure of assets is DENIED, as further set out in order. Signed by Honorable Judge Myron H. Thompson on 9/29/15. (Attachments: # 1 civil appeals checklist)(djy, )
IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, SOUTHERN DIVISION
KEITH GIVENS, et al.,
CIVIL ACTION NO.
OPINION AND ORDER
claims of fraud, breach of fiduciary duty, piercing the
corporate veil, and corporate dissolution as well as a
U.S.C. § 1961 et seq.
The defendants are Keith Givens
(K. Givens), John Givens (J. Givens), Chase Givens (C.
Group, LLP, VLO Management, LLC, and Jacoby & Meyers,
The court has federal-question jurisdiction over
the federal claim pursuant to under 28 U.S.C. § 1331
and supplemental jurisdiction over the state-law claims
pursuant to 28 U.S.C. § 1367.
The case is now before this court on the Hershewe’s
motion for attachment and will deny the motions for
seizure and a preliminary injunction.
This case arises out of a joint venture between
lawyer from Alabama.1
1. Unlike a motion to dismiss, the court must weigh
the facts in a motion for preliminary injunction.
Therefore, the background description in this opinion
differs from that of the opinion on the motions to
Several years ago, Hershewe and K. Givens began
establish a nationwide set of physical and virtual law
offices across the country under the auspices of Jacoby
& Meyers, a law firm where K. Givens worked and had an
In order to roll out this business
plan, Hershewe and K. Givens sought out a company that
understanding with them.
However, Lexis-Nexis dropped
out of the deal, leaving the remaining parties to look
for either another partner or for an acquisition.
Hershewe and K. Givens finalized an agreement for a
joint venture in 2012.
The nature of this agreement is
at the heart of the dispute.
Both parties agree that
Hershewe agreed to pay $ 3.5 million and that part of
the $ 3.5 million would be used to pay for an 80 %
equity stake in USLegal, a company that could provide
the pre-made legal forms central to the joint venture.
Additionally, Jacoby & Meyers agreed to contribute its
brand and expertise.
As part of the agreement to form
VLO, Hershewe obtained a 46.25 % interest in VLO; Keith
Givens, 20%; Chase Givens, 15 %; John Givens, 15 %; and
two other investors, 1.875 % each.
Every member of the
LLC except for Hershewe was a lawyer at the same law
K. Givens and Hershewe were co-managers of VLO,
while K. Givens, along with C. Givens, controlled the
The dispute is whether a portion of
Hershewe’s investment was a capital contribution to be
used on behalf of VLO or a direct payment to K. Givens
as a buy-in to VLO.
Soon after the formation, Hershewe transferred the
first $ 1.5 million of the $ 3.5 million investment to
million out of VLO’s bank account to a bank account of
10088686), a company owned by K. Givens, J. Givens, and
credit line it had taken out for operating expenses.
Several other transactions occurred in the following
months from the VLO account, including expenditures of
Jacoby & Meyers, several thousand dollars for repairs
to “the Grand,” a property owned by K. Givens, and over
In July 2012, Hershewe was scheduled to transfer
the remaining $ 2 million to VLO in order to purchase
the stake in USLegal.
A month beforehand, K. Givens
2. Eagle Investments, LLP (Eagle I) ceased to be a
company in 2013-2014. Hershewe alleges that Eagle
Investments Group, LLP (Eagle II), also registered by
K. Givens, is its successor.
The court will refer to
them collectively as Eagle Investments.
came to Hershewe, warning that USLegal was running out
Hershewe agreed to co-sign a bank loan for $ 1 million
for VLO so that VLO could help USLegal with its cash
$ 1 million was for USLegal’s cash-flow problems or
whether it actually was used as part of the purchase
price for USLegal because K. Givens had spent the money
intended for that purpose for his own benefit.
also dispute whether K. Givens and others have since
doctored VLO’s taxes to cover up the alleged fraud.
Hershewe brought this lawsuit and originally moved
for a temporary restraining order as well as seizure
The court denied the motion for a
temporary restraining order and asked for additional
preliminary injunction and the motion for prejudgment
seizure or attachment.
These motions are now before
Hershewe moves for a preliminary injunction under
prejudgment attachment under Rule 64.
success on the merits; (2) that irreparable injury will
result unless the injunction is issued; (3) that the
proposed injunction may cause the opposing party; and
Delta Air Lines, Inc. v. Air Line Pilots
Ass’n, Intern., 238 F.3d 1300, 1308 n.18 (11th Cir.
Because the court does not find a substantial
likelihood of success on the merits, the court denies
the preliminary injunction.
The central factual dispute in this case is the
entered when forming VLO.
Hershewe alleges that he
agreed to contribute $ 3.5 million to VLO, with $ 1.5
million of the total as a capital contribution, and
that K. Givens fraudulently used this money for his own
K. Givens disagrees, contending that the
$ 1.5 million was a payment for Jacoby & Meyers’s brand
name and personnel and that he could use the $ 1.5
million for his own benefit.
The facts of this case are truly puzzling.
sides agree that there was an agreement regarding $ 3.5
million, but that no one documented any part of the
contract in writing.
Hershewe argues that the $ 1.5
contribution meant to come back to him--i.e., that it
was start-up capital to be used for VLO and eventually
regarding a memorandum of understanding that was never
proposed deal with Lexis-Nexis that fell through.3
million was a direct payment to him for contributing
$ 10 million in non-cash assets to VLO and could be
used for his personal benefit.
He claims he could have
bought a house with the money or given it to charity
rather than his personal bank account.
The court finds that the evidence is in equipoise.
It is certainly plausible that K. Givens fraudulently
induced Hershewe into investing in VLO with the purpose
Hershewe maintains that he would have been
taking the place of Lexis-Nexis in this deal and that
is why the email referenced the old memorandum.
However, even if this is true, it does not mean that K.
Givens agreed to this condition or that it was part of
the final contract.
direct transfer to VLO’s account bolsters this theory.
However, given that Hershewe made a $ 3.5 million deal
without a written contract, it is also plausible he
paid K. Givens $ 1.5 million to use how he saw fit in
exchange for non-cash assets.
K. Givens may have had
the obligation to spend as much money as necessary to
transfer assets, turn over intellectual property, open
new offices, etc.--but the $ 1.5 million might not have
meant as a general payment that K. Givens could use as
he saw fit.
The court cannot grant preliminary relief
where there is no written contract and a reasonable
reading of the evidence suggests that Hershewe simply
made a bad business deal.
Given that each theory is
equally plausible, Hershewe has not met his burden to
The court denies the motion for a preliminary
Attachment and Seizure
million and seizure of furniture bought with VLO funds
under Federal Rule of Civil Procedure 64.
When addressing a motion for a writ of attachment
or seizure, Federal Rule of Civil Procedure 64 directs
courts to look to state substantive and procedural law.
Both attachment and seizure are
Rule of Civil Procedure 64.
governed by Alabama
Universal Safety Response,
Inc. v. Gov’t Technical Serv., LLC, 767 F. Supp. 2d
1252, 1253 (M.D. Ala. 2011) (Thompson, J.).
requires an affidavit containing a description of the
property, how the defendant has unlawfully detained the
concealed, transferred, or damaged.
Ala. R. Civ. Proc.
Where the court has already had a hearing on the
issue, as in this case, the plaintiff also has the
burden of showing “good cause.”
“Implicit in good
cause for prejudgment seizure would be some showing of
Assoc., Inc. v. Engerson, 2000 WL 1848135, at *3 (S.D.
plaintiff can claim an injury, such as the inability to
difficult or impossible--before the end of the case.4
The defendants argue that Hershewe did not properly
4. A plaintiff moving for an attachment must meet
additional statutory requirements.
767 F. Supp. 2d at 1253 (M.D. Ala. 2011) (Thompson, J.)
(quoting Ex Parte Boykin, 568 So. 2d 1243, 1244 (Ala.
Civ. App. 1990)). Specifically, a plaintiff must swear
to the amount he is due, certifying that he meets one
of the categories in Alabama law where an attachment
may be used, and that the purpose of the suit is not
“vexing or harassing the defendant.”
1975 Ala. Code
§ 6-6-44. Because “Rule 64 provisions were promulgated
to assure that the constitutional guarantees of due
process are not violated[,] . . . these rules are to be
strictly complied with.” Ex Parte Boykin, 568 So.2d at
1244; see also Universal Safety, 767 F. Supp. 2d at
1254 (dismissing attachment claim where the defendant
did not fulfill the statutory oath requirements).
Although the defendants originally argued that Hershewe
did not include the oath that he was not vexing or
harassing the defendants, he has rectified this with a
supplemental affidavit (doc. no. 85-1).
finds that Hershewe meets the statutory requirements.
They cite Norman v. Occupational Safety
Ass'n of Alabama Workmen's Comp. Fund, 811 So. 2d 492
(Ala. 2001), for the proposition that a court cannot
ownership interest ever existed.
Norman, however, is distinguishable from this case.
In Norman, an investment fund hired a separate company
to manage the fund and named the president of that
company as the administrator of the fund.
Id. at 493.
The administrator from this separate management company
then advised the fund to transfer some of its workerscompensation insurance contracts to a third business,
which he and his company happened to merge with less
than a month later.
Id. at 493-94.
fund then moved to seize5 the proceeds of the merger,
The plaintiff in Norman moved for seizure
rather than an attachment.
Because the requirements
are the same under Alabama Rule of Civil Procedure 64
for both attachment and seizure, the analysis in Norman
even though the fund did not have legal title or stock
in the management company or the business with which
the management company merged.
Despite the potential
administrator, the court rejected the Rule 64 motion
because the fund never had any legal interest in the
stock of either the management company or the third
business with which the management company merged.
at 502; see also Ala. R. Civ. P. 64(b)(1)(B).
Unlike Norman, Hershewe has a clear claim of right
to the money that he invested in VLO.
owned the money and then claims that he was defrauded
into transferring it to K. Givens and his sons.
contrast with the investment fund that was claiming
interest (the stocks of two companies of which it had
would be applicable
not bought stock in), Hershewe is asserting a right to
money that was his and--he claims--was wrongfully taken
The court also finds that Hershewe has shown good
cause to believe the defendants will dispose of the
money in Eagle Investments’ bank account.
transferred $ 1 million to Eagle Investments the day
Hershewe transferred money to VLO, and $ 930,000 of
approximately $ 65,000 has since been used.
pattern, Hershewe has alleged good cause that the money
in the Eagle Investments bank account will be spent.
Because Hershewe meets the statutory and procedural
6. The defendants also argue that the money in the
bank account is not capable of identification.
standard, however, is applicable in the context of a
seizure of property rather than for attachment.
Universal Safety, 767 F. Supp. 2d at 1254.
granted, provided that Eagle can petition the court to
use the money for ordinary business expenses.
Hershewe’s claim of right to these assets.
would this violate Alabama Rule 64, but also, as a
without knowing which specific bank accounts or money
Hershewe believes should be frozen.
identified in his pleadings (doc. no. 138-3).7
Hershewe originally requested seizure of both
the bank account as well as the furniture, but seems to
have abandoned that argument in his supplemental
pleadings on the issue.
See Doc. No. 85-1 at 5
(requesting seizure of furniture, but only mentioning
attachment of money); doc. no. 138-3 (identifying
offense expenses as the object of seizure).
The court denies the motion for lack of good cause.
defendants would spend the money in Eagle Investments’
bank account, there is no comparable imminent risk that
the defendants are going to sell or dispose of the
furniture identified in Hershewe’s exhibits.
extent that the furniture is evidence of fraud, the
defendants already have been cautioned by the court not
to destroy or conceal it.
Accordingly, it is ORDERED that:
preliminary injunction (doc. no. 17) is denied.
(2) Plaintiff Hershewe’s motion for attachment of
number 100088686--(doc. no. 17) is granted;
assets (doc. no. 17) is denied.
DONE, this the 29th day of September, 2015.
/s/ Myron H. Thompson___
UNITED STATES DISTRICT JUDGE
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