Blackmon et al v. Tobias

Filing 12

ORDER by Judge Saundra Brown Armstrong DENYING WITHOUT PREJUDICE 4 Ex Parte Motion for Writ of Attachment and Temporary Restraining Order. (lrc, COURT STAFF) (Filed on 6/16/2011) Modified on 6/17/2011 (jlm, COURT STAFF).

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UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION

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JAMES BLACKMON, et al.,

Case No: C 11-2853 SBA

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Plaintiffs,
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vs.
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GLENN TOBIAS, et al.,

ORDER DENYING PLAINTIFFS’
EX PARTE APPLICATION FOR
WRIT OF ATTACHMENT AND
TEMPORARY RESTRAINING
ORDER

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Defendants.

Docket 4

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On June 13, 2011, Plaintiffs James Blackmon (“Blackmon”) and John Gray

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(“Gray”) filed the instant action alleging claims, inter alia, pursuant to the Racketeer

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Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961, et seq., against

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Defendants Jane Andreae (“Andreae”) and Glenn Tobias (“Tobias”), among others. The

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parties are presently before the Court on Plaintiffs’ ex parte application for a writ of

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attachment and temporary restraining order (“TRO”). Dkt. 4. Having read and considered

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the papers filed in connection with this matter and being fully informed, the Court hereby

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DENIES the ex parte application for the reasons set forth below. The Court, in its

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discretion, finds this matter suitable for resolution without oral argument. See Fed. R. Civ.

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P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).

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I.

BACKGROUND

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A.

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This action arises from an allegedly fraudulent scheme perpetrated principally by

FACTUAL SUMMARY

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Andreae and Tobias (collectively “Defendants,” unless noted otherwise). On separate

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occasions, Defendants told Plaintiffs that they would receive millions of dollars in

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exchange for helping Andreae pay her legal expenses in a Swiss court proceeding.

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Specifically, Plaintiffs were told that Andreae stood to receive a $1 billion inheritance once

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a Swiss court confirmed that she was an heir to the estate of her deceased husband, Peter

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Andreae, who was a member of a wealthy European family. Andreae’s case was

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supposedly being handled by her advisor, Tobias, who had a power of attorney and lived in

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Los Angeles. Defendants claimed that Andreae needed to borrow money for legal fees

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incurred in connection with the Swiss court proceedings, and that if Plaintiffs were willing

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to loan Defendants money for their legal expenses, Plaintiffs would receive a portion of the

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estate once the legal proceedings were concluded. See Blackmon Decl. ¶ 6, Dkt. 8; Gray

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Decl. ¶ 6, Dkt. 6.

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Gray fell victim to the above-described scheme, and during 2008 and 2009, loaned

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monies totaling over $4,654,175 to Defendants. Gray Decl. ¶ 3. Gray made his first

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payment of $115,000 to Defendants on January 15, 2008, with the understanding that said

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amount would be repaid by February 1, 2008. Id. ¶ 9. Defendants did not repay Gray, but

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asked for an additional $45,000, which he wired to them in February 2008. Id. ¶ 10. Once

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again, Defendants failed to timely repay their debt to Gray, and instead, began offering him

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a series of excuses for their nonpayment. Id. ¶ 13. Among other things, Defendants told

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Gray that Peter Andreae’s illegitimate daughter was claiming a portion of his estate, and

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that his body would have to be exhumed and undergo DNA testing in a different country.

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Id. Thereafter, Gray loaned Defendants an additional $1,105,000 during the time-period

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from March 10, 2008 to November 2008. Id. ¶ 14.

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Apparently becoming suspicious of Defendants, Gray began demanding
documentation regarding the Swiss court proceedings and the litigation expenses incurred
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by Defendants. Id. ¶ 17. Andreae responded by stating that all details of the case had to be

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kept secret. Id. Later in 2009, Andreae called Gray and told him that she had found a key

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along with a note from her deceased husband stating that the key opened a vault in

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Liechtenstein which contained cash and gold bars that Andreae suggested could be used to

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repay him. Id. ¶ 18. At Andreae’s request, Gray wired her $10,000 to cover the expense of

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accessing the vault. Id. Defendants subsequently informed Gray that there was no cash in

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the vault, but that there was gold and about a half billion dollars worth of bearer bonds

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found inside. Id. ¶ 19. However, the bonds allegedly were expired and could not be

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redeemed unless they were included as part of the estate. Id. Gray then wired Defendants

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an additional $1,090,000 in 2009 to pay for legal fees associated with the supposed bond

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dispute. Id. ¶¶ 21-22.

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Gray continued to complain to Defendants regarding the delays and lack of

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documentation. Id. ¶ 23. In response, Defendants advised Gray that they had located $300

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million in gold bars in India that belonged to the estate. Id. ¶ 23. They further stated that a

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“forensic” team needed to go to India to appraise the gold so that it could be included as

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part of the estate in the Swiss proceedings. Id. ¶ 24. To fund these additional activities,

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Gray wired $2,357,000 to Defendants. Id. Thus, as of October 1, 2009, Gray had

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transferred over $4.6 million to Defendants. Id. Eventually, Gray hired a private

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investigator “in or about 2010” to investigate Defendants. Id. ¶ 38. The investigator

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debuked the version of events conveyed by Defendants to Plaintiffs. Torgerson Decl. ¶¶ 1-

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11, Dkt. 7. He retained legal counsel in July 2010. Given Decl. ¶ 3, Dkt. 9.

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Like Gray, Blackmon loaned Defendants substantial sums of money. From July

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2007 to December 2009, Blackmon paid Defendants the sum of $802,793.49 in exchange

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for promises of payment in excess of $30 million once the Swiss estate dispute was

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resolved. Blackmon Decl. ¶¶ 7, 11, 17. By the end of 2009, however, Blackmon “was out

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of money” and “was being hounded by creditors who had loaned [him] money to pay some

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of the approximately $802,000 in payments [to Defendants].” Id. ¶ 20. Defendants made

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the same excuses to Blackmon that they made to Gray; i.e., that the illegitimate daughter of
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Andreae’s deceased husband was challenging her inheritance, that $500 million in bearer

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bonds had been discovered in a Lichtenstein vault, and that $300 million in gold was found

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in India. Id. ¶ 18. By late 2009, Blackmon began to “have doubts” regarding the veracity

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of Defendants’ representations. Id. ¶ 21. Blackmon eventually retained counsel in May

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2011. Given Decl. ¶ 3.

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B.

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On June 13, 2011, Plaintiffs filed their complaint in this Court which alleges

PROCEDURAL HISTORY

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fourteen claims for: (1) fraud-intentional misrepresentation; (2) fraud-false promise;

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(3) fraud in the inducement; (4) conversion; (5) breach of oral, written and implied-in-fact

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contract; (6) breach of written contract-promissory note; (7) breach of oral, written and

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implied in fact contract; (8) violation of RICO; (9) conspiracy to violate RICO;

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(10) violation of unfair competition law; (11) imposition of constructive and/or resulting

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trust; (12) unjust enrichment; (13) injunctive relief; and (14) an accounting. Plaintiffs seek

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general and punitive damages and other relief.

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On June 13, 2011, Plaintiffs filed the instant action and ex parte application for a

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writ of attachment and TRO, without notice to Defendants. Pursuant to California Code of

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Civil Procedure § 485.220, they seek an attachment in the amount of $6,111,834, which

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represents the loans made by Gray and Blackmon to Defendants. Pls.’ Mem. at 13-18. In

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addition, Plaintiffs seek a TRO under Federal Rule of Civil Procedure 65 to “freeze”

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Defendants assets and to order them to produce records evidencing their holdings within

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and outside of California. Id. at 18-19.

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II.

LEGAL STANDARD

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A.

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Federal Rule of Civil Procedure 64 provides, in relevant part, that “all remedies

EX PARTE WRIT OF ATTACHMENT

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providing for seizure of person or property for the purpose of securing satisfaction of the

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judgment ultimately to be entered in the action are available under the circumstances and in

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the manner provided by the law of the state in which the district court is held....” Fed. R.

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Civ. P. 64 (emphasis added). Rule 64 thus “permits state seizure provisions to be used in
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federal courts ....” Reebok Int’l v. Marnatech Enters., 970 F.2d 552, 558 (9th Cir. 1992).

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California Code of Civil Procedure § 485.220, which provides for the issuance of a

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prejudgment right to attach order on an ex parte basis, states:
(a) The court shall examine the application and supporting
affidavit and, except as provided in Section 486.030, shall issue
a right to attach order, which shall state the amount to be
secured by the attachment, and order a writ of attachment to be
issued upon the filing of an undertaking as provided by Sections
489.210 and 489.220, if it finds all of the following:

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(1) The claim upon which the attachment is based is one upon
which an attachment may be issued.

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(2) The plaintiff has established the probable validity of the
claim upon which the attachment is based.

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(3) The attachment is not sought for a purpose other than the
recovery upon the claim upon which the attachment is based.

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(4) The affidavit accompanying the application shows that the
property sought to be attached, or the portion thereof to be
specified in the writ, is not exempt from attachment.

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(5) The plaintiff will suffer great or irreparable injury (within
the meaning of Section 485.010) if issuance of the order is
delayed until the matter can be heard on notice.

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(6) The amount to be secured by the attachment is greater than
zero.

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Cal. Code. Civ. P. § 485.220(a) (emphasis added). Section 485.010(a) provides that “no

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right to attach order or writ of attachment may be issued pursuant to this chapter unless it

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appears from facts shown by affidavit that great or irreparable injury would result to the

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plaintiff if issuance of the order were delayed until the matter could be heard on notice.

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Cal. Code. Civ. P. § 485.010(a); see also Connecticut v. Doehr, 501 U.S. 1, 16 (1991)

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(recognizing that a prejudgment attachment without notice permissible only upon showing

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of exigent circumstances that would render property unavailable to satisfy a judgment).

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B.

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The standard for a TRO is the same as for a preliminary injunction. See Stuhlbarg

TEMPORARY RESTRAINING ORDER

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Int’l Sales Co., Inc. v. John D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). To

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obtain preliminary injunctive relief, the moving party must show: (1) a likelihood of
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success on the merits; (2) a likelihood of irreparable harm to the moving party in the

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absence of preliminary relief; (3) that the balance of equities tips in the favor of the moving

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party; and (4) that an injunction is in the public interest. Winter v. Natural Res. Def.

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Council, Inc., 555 U.S. 7, ---, 129 S.Ct. 365, 374-76 (2008). The court may apply a sliding

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scale test, under which “the elements of the preliminary injunction test are balanced, so that

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a stronger showing of one element may offset a weaker showing of another.” Alliance for

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the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). A restraining order is an

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“extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is

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entitled to such relief.” Winter, 129 S.Ct at 376.

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A TRO may be issued without notice to the adverse party or its counsel only if

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“(A) specific facts in an affidavit or a verified complaint clearly show that immediate and

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irreparable injury, loss, or damage will result to the movant before the adverse party can be

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heard in opposition; and (B) the movant’s attorney certifies in writing any efforts made to

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give notice and the reasons why it should not be required.” Fed. R. Civ. P. 65(b)(1); N.D.

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Cal. Civ. R. 65-1(b). There are “very few circumstances justifying the issuance of an ex

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parte TRO.” Reno Air Racing Assoc. Inc. v. McCord, 452 F.3d 1126, 1131 (9th Cir. 2006).

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For instance, notice may be excused where it “is impossible either because the identity of

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the adverse party is unknown or because a known party cannot be located in time for a

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hearing.” Id. Or, notice may not be required where providing “notice to the defendant

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would render fruitless the further prosecution of the action” because the adverse party is

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likely to destroy evidence. Id.

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III.

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DISCUSSION
The threshold question presented is whether Plaintiffs may properly may obtain a

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writ of attachment and TRO without first providing notice to Defendants. Both Rule

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65(b)(1) and California Code of Civil Procedure § 485.010 require the submission of an

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affidavit which demonstrates that immediate and irreparable injury will occur if notice is

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given. Plaintiffs fail to make such a showing. In his declaration, Blackmon merely offers

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his opinion that Defendants will “hide or dissipate” their assets based on their “numerous
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and repeated false statements,” and prior remarks regarding hiding assets from the Swiss

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court and to avoid the payment of taxes. Blackmon Decl. ¶ 23. In addition, Andreae

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purportedly told Blackmon that if he “pressed [her] on legal matters, she would escape, just

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disappear or commit suicide.” Id. ¶ 24. Gray makes essentially the same observations as

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Blackmon. Gray Decl. ¶¶ 45-47. However, there is no specific evidence presented that

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Defendants are likely to hide or dissipate their assets or records upon notice that Plaintiffs

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are seeking a writ of attachment and TRO. Plaintiffs’ speculation that Defendants will do

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so, based on their prior fraudulent conduct, is insufficient to justify dispensing with notice.

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See Osborno v. Fong, No. C 11-0302 SBA, 2011 WL 250364, at*2 (N.D. Cal., Jan. 26,

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2011) (denying TRO based on “Plaintiff’s conclusory and unsupported allegation that

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notice of the instant TRO application will result in the further dissipation of trust assets”);

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Vaccaro v. Sparks, No. SACV 11-00164 DOC (PLAx), 2011 WL 772394, at *2 (C.D. Cal.

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Feb. 1, 2011) (“The fact that Defendants may have been engaged in some sort of fraud does

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not automatically justify the issuance of an asset freeze.”).

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The Court’s concerns regarding the issuance of a writ of attachment and TRO

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without notice are compounded by what appears to be Plaintiffs’ extraordinary delay in

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seeking the instant relief. See Miller ex rel. NLRB v. Cal. Pac. Med. Ctr., 991 F.2d 536,

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544 (9th Cir. 1993) (noting that delay in seeking injunctive relief “implies a lack of urgency

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and irreparable harm.”) (internal quotation marks and citation omitted); Lydo Enters. v.

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City of Las Vegas, 745 F.2d 1211, 1213 (9th Cir. 1984) (“A delay in seeking a preliminary

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injunction is a factor to be considered in weighing the propriety of relief.”). Here, the

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record shows that by late 2009, Blackmon had not been repaid any of the over $800,000

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loaned to Defendants, and that at that point “[he] began to have serious doubts about the

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veracity of defendants’ representations.” Blackmon Decl. ¶ 21. Likewise, Gray, after

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loaning Defendants over $4.6 million and receiving serial excuses as to why he had not

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been repaid, began to question the validity of Defendants’ representations. Gray Decl.

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¶¶ 38-39. The record shows that beginning in 2008, Gray began complaining to

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Defendants regarding the delays in the Swiss court proceedings and their continuing failure
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to provide documentation requested by Gray. Id. ¶¶ 23-31. As a result, “in or about 2010,”

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Gray hired a private investigator, id. ¶ 39, and in July 2010, retained legal counsel, Givens

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Decl. ¶ 3. Thus, it is evident from the record that both Plaintiffs suspected wrongdoing by

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Defendants years before they filed this suit and the accompanying request for a writ of

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attachment and TRO. Plaintiffs’ delay in seeking legal relief undercuts their claim that they

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will suffer immediate and irreparable harm absent the issuance of a writ of attachment and

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TRO without notice.

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IV.

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CONCLUSION
For the reasons stated above,
IT IS HEREBY ORDERED THAT Plaintiffs’ ex parte application for a writ of

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attachment and temporary restraining order is DENIED without prejudice to seeking

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injunctive relief upon notice to Defendants. This Order terminates Docket No. 4.

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IT IS SO ORDERED.
Dated: June 16, 2011

_______________________________
SAUNDRA BROWN ARMSTRONG
United States District Judge

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