Stover, Inc. v. DTREDS, LLC

Filing 36

ORDER denying 8 Motion for Preliminary Injunction. The Temporary Restraining Order (ECF Nos. 10, 15, 27, & 33) issued by this Court is hereby dissolved. (See Order for specifics.) Signed by Honorable Susan O. Hickey on September 26, 2014. (mll)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
TEXARKANA DIVISION

STOVER, INC.

VS.

PLAINTIFF

CASE NO. 4:14-CV-4105

DTREDS, LLC

DEFENDANT
ORDER

Before the Court is Plaintiff Stover, Inc.’s Motion for Preliminary Injunction. (ECF No.
9). Defendant DTREDS, LLC has filed a response to the motion. (ECF No. 34). On August 20,
2014, the Court granted Plaintiff’s Motion for Temporary Restraining Order and set this matter
for hearing on September 3, 2014. (ECF No. 10). The TRO was conditioned on a $10,000.00
bond filed by Plaintiff. (ECF No. 13). On September 3, 2014, Plaintiff appeared before the
Court for a hearing on the Motion for Preliminary Injunction (ECF No. 8). Defendant was not
present at the hearing.

After reviewing the evidence and testimony submitted at the hearing, the

Court found that an extension to the TRO was needed in order for the Court to fully consider
Plaintiff’s preliminary injunction arguments. The TRO was extended to September 17, 2014.
(ECF No. 27). Thereafter, Defendant appeared in this action and requested an extension of time
to respond to Plaintiff’s Motion for Preliminary Injunction. Defendant also gave its consent to
the TRO being extended to September 26, 2014. (ECF No. 32). The Court granted Defendant’s
request for additional time and extended the TRO to September 26, 2014. (ECF No. 33). The
preliminary injunction issue has now been briefed by all parties, and the Court finds this matter
ripe for consideration.
Plaintiff filed a Complaint against Defendant alleging breach of contract, promissory
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estoppel, and fraud. Plaintiff’s claims arise out of an agreement between Plaintiff and Defendant
for subcontracting work to be performed on Red River Army Depot Project No.
W911RQ12F0112. More specifically, Harris IT enlisted Defendant to perform certain work on
the project, and Defendant then subcontracted with Plaintiff to perform the boring work on the
project. Plaintiff alleges that Defendant consistently failed to make timely payments to Plaintiff
for its work on the project. Plaintiff claims that it is currently owed $194,515.00 for work
completed on the project. This alleged failure to pay is the sole basis for this lawsuit.
The substance of Plaintiff’s Motion for Preliminary Injunction Motion is essentially the
same as its Motion for Temporary Restraining Order that the Court granted on August 20, 2014.
Plaintiff claims that Defendant will soon be paid a substantial sum by Harris IT for work
completed on the project. Plaintiff asks the Court to prohibit Defendant from possessing or
transferring to any person or entity other than Plaintiff any proceeds that are paid to Defendant
by Harris IT.

Plaintiff argues that this extraordinary intervention is necessary because they

believe Defendant will not willingly pay Plaintiff from the forthcoming proceeds. Plaintiff also
claims that Defendant might shut down their company operations to avoid making payments to
their subcontractors and employees. According to Plaintiff, if Defendant is allowed to freely
possess or transfer project proceeds, irreparable harm will result.
The determination of whether a preliminary injunction is warranted involves
consideration of “(1) the threat of irreparable harm to the movant; (2) the state of balance
between this harm and the injury that granting the injunction will inflict on other parties … ; (3)
the probability that movant will succeed on the merits; and (4) the public interest.” Dataphase
Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981). “The party seeking injunctive
relief bears the burden of proving all the Dataphase factors.” Watkins Inc. v. Lewis, 346 F.3d

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841, 844 (8th Cir. 2003).
“The basis of injunctive relief in the federal courts has always been irreparable harm and
inadequacy of legal remedies.” Id. (quoting Bandag, Inc. v. Jack's Tire & Oil, Inc., 190 F.3d 924,
926 (8th Cir. 1999)). “Failure to show irreparable harm is an independently sufficient ground
upon which to deny a preliminary injunction.” Id. Irreparable harm typically does not exist in
cases where a party is pursing monetary damages that they will be entitled to if they prevail in
the action. Adam-Mellang v. Apartment Search, Inc., 96 F.3d 297, 300 (8th Cir. 1996). See
Jameson v. State Farm Mut. Auto. Ins. Co., 871 F. Supp. 2d 862, 871 (W.D. Mo. 2012)
([P]laintiff has failed to demonstrate that there is not an adequate remedy at law. Plaintiff would
be fully compensated for her alleged injuries through damages on her claims for breach of
contract….”); Welsco, Inc. v. Brace, 4:12-CV-00394, 2012 WL 4087224 at *10 (E.D. Ark. Sept.
17, 2012) (“[Plaintiff] does not face irreparable harm because there is an adequate remedy at law.
Money damages [for breach of contract] will serve as an adequate remedy here[.]”)
In this case, the Court finds that Plaintiff has failed to show irreparable harm and
inadequacy of legal remedies. The basis of this lawsuit is Defendant’s alleged failure to pay
Plaintiff for work completed on the project. If Plaintiff prevails on its breach of contract claim, it
will be entitled to the monetary damages that will fully compensate Plaintiff for Defendant’s lack
of payment. Plaintiff acknowledges that it is entitled to these damages but argues nonetheless
that irreparable harm is imminent because Defendant might shut down its operations to avoid
paying its employees and subcontractors.

Plaintiff argues, without supporting law, that if

Defendant shuts down its operations, Plaintiff will never be able to recover the payments owed.
The Court finds this argument without merit for two reasons. First, Plaintiff has failed to
produce any credible evidence that Defendant is planning on shutting down its operations to

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avoid payments. The only evidence offered on this point was the testimony of Phillip Stover
who testified that he heard third hand that Defendant planned to shut down its operations and
reopen under a new company name. 1 These statements do not provide a sufficient basis for this
Court to issue a preliminary injunction. Second, even if Defendant were to shut down its
operations and reopen under a different name, Plaintiff has not shown that it will be unable to
pursue this action against the newly formed entity.
Because Plaintiff has failed to show that it lacks an adequate remedy at law, the Court
will not issue a preliminary injunction. 2

Accordingly, Plaintiff’s Motion for Preliminary

Injunction should be and hereby is DENIED. The Temporary Restraining Order (ECF Nos. 10,
15, 27, & 33) issued by this Court is hereby dissolved.
IT IS SO ORDERED, this 26th day of September, 2014.
/s/ Susan O. Hickey
Susan O. Hickey
United States District Judge

1

The original source of the information was an employee of DTREDS who “overheard” a conversation
between the president of DTREDS and another individual. The employee who overheard this told another
individual who told Phillip Stover.

2

While the existence of an adequate remedy at law is a sufficient basis on which to deny Plaintiff’s motion, the
Court finds that the balance between the harm to Plaintiff and the injury that the injunction will inflict on other
parties counsels against issuing a preliminary injunction. Plaintiff admits that it is one of many subcontractors
who have allegedly not been paid by Defendant. Additionally, one of Defendant’s creditors, Action Capital
Corporation, appeared at the TRO hearing and informed the Court of their alleged security interest in payments
made to Defendant. Action Capital Corporation argues that their interest is superior to the interests of
Defendant’s subcontractors on the project, including Plaintiff. In sum, there are numerous parties who are
owed money by Defendant, and the Court cannot say with any confidence that Plaintiff’s interests are superior
to these other parties. Accordingly, the Court finds that the risk of injury to these other parties warrants a denial
of Plaintiff’s Motion for Preliminary Injunction.

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