Mohebbi v. Khazen et al

Filing 130

ORDER DENYING 112 DEFENDANTS' EX PARTE APPLICATION FOR TRO AND ORDER TO SHOW CAUSE. Signed by Judge Beth Labson Freeman on 10/10/2018. (blflc3S, COURT STAFF) (Filed on 10/10/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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SAEID MOHEBBI,
Plaintiff,

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v.

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MAHNAZ KHAZEN, et al.,
Defendants.

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United States District Court
Northern District of California

Case No. 13-cv-03044-BLF
ORDER DENYING DEFENDANTS’ EX
PARTE APPLICATION FOR TRO AND
ORDER TO SHOW CAUSE
[Re: ECF 112]

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Before the Court is Defendants’ Ex Parte Application for Temporary Restraining Order

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and Order to Show Cause Re: Preliminary Injunction (“Application for TRO”). ECF 112 (filed on

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the evening of October 3, 2018). On the morning of October 4, 2018, Plaintiff filed an initial

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Opposition to Defendants’ Application for TRO (“Initial Opposition”). ECF 120-2. The Court

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subsequently granted Plaintiff leave to file an updated opposition to Defendants’ Application for

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TRO no later than Tuesday, October 9, 2018 at 10:00 a.m. See ECF 123. Plaintiff submitted his

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Updated Opposition to Defendants’ Application for TRO (“Updated Opposition”) on October 5,

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2018. ECF 128-1. The Court finds the Application for TRO suitable for submission without oral

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argument. For the reasons that follow, Defendants’ Application for TRO is DENIED.

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I.

BACKGROUND
On March 28, 2018, Plaintiff Saeid Mohebbi (“Plaintiff”) and Defendants reached a

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Comprehensive Settlement, Release, and Security Agreement (“Settlement Agreement”). See

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Application for TRO at 2. The Settlement Agreement provides that the Court may “enter the

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Stipulated Judgment attached as Exhibit F [to the Settlement Agreement]” if the “full Settlement

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Amount, and all accrued interest, if any, is not paid with[in] the [] period specified.” See

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Settlement Agreement § 5.1(b), ECF 120-1 (Ex. 2). The Settlement Agreement also provides that

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“[Plaintiff] may immediately foreclose on the security referred to [in the Settlement Agreement],

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which Defendants shall not oppose, directly or indirectly,” if the full Settlement Amount is not

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paid within the period specified. See Settlement Agreement § 5.2.
The parties agree that Defendants did not make timely payment as required under the

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Settlement Agreement, but dispute who is at fault and thus what actions should result from

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Defendants’ failure to pay. See Application for TRO at 3; Initial Opposition at 1–3. Defendants’

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Application for TRO arises from this dispute.

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II.

LEGAL STANDARD
The substantive standard for issuing a temporary restraining order is identical to the

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standard for issuing a preliminary injunction. See Stuhlbarg Int’l Sales Co., Inc. v. John D. Brush

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United States District Court
Northern District of California

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& Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001); Lockheed Missile & Space Co. v. Hughes Aircraft,

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887 F. Supp. 1320, 1323 (N.D. Cal. 1995). An injunction is a matter of equitable discretion and is

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“an extraordinary remedy that may only be awarded upon a clear showing that the [moving party]

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is entitled to such relief.” Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 22

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(2008).

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A party seeking preliminary injunctive relief must establish “[1] that he is likely to succeed

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on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief,

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[3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.”

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Id. at 20. Alternatively, an injunction can issue where “the likelihood of success is such that

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serious questions going to the merits were raised and the balance of hardships tips sharply in [the

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moving party’s] favor,” provided that the moving party can also demonstrate the other Winter

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factors. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citation

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and internal quotation marks omitted). Showing “serious questions going to the merits” requires

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more than establishing that “success is more likely than not;” rather, it requires the moving party

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to demonstrate a “substantial case for relief on the merits.” Leiva–Perez v. Holder, 640 F.3d 962,

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967 (9th Cir. 2011). Under either standard, the moving party bears the burden of making a clear

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showing on these elements and on entitlement to this extraordinary remedy. Earth Island Inst. v.

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Carlton, 626 F.3d 462, 469 (9th Cir. 2010).
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III.

DISCUSSION
Defendants request the following relief:

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(1) A temporary restraining order (“TRO”) restraining and enjoining Plaintiff from filing

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for Stipulated Judgment under the terms of the Settlement Agreement, or in the
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alternative, requiring Plaintiff to make such filing under seal;
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(2) A TRO restraining and enjoining Plaintiff from foreclosing on the properties1 located

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at 143 Bay Place and 2332 & 2336 Harrison Street, Oakland, California (“The

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Properties”);
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(3) An Order to Show Cause why a Preliminary Injunction identical to the requested TRO
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should not issue; and
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(4) A finding of damages for breach of contract and breach of the implied covenant of
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United States District Court
Northern District of California

good faith and fair dealing; and judicial declaration that § 5.1 of the Settlement
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Agreement is void and unenforceable.
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Application for TRO at 1–2.
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For the reasons that follow, Defendants’ requested relief is DENIED. The Court discusses

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each request in turn.
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A.

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TRO requesting to enjoin filing for Stipulated Judgment

Defendants have failed to demonstrate that a filing for Stipulated Judgment is “likely to
[result in] irreparable harm in the absence of preliminary relief.” Winter, 555 U.S. at 20.

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Although the option of filing for Stipulated Judgment is available only to Plaintiff under the terms
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of the Settlement Agreement, the Settlement Agreement explicitly outlines the “Procedure for

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Entering [Stipulated] Judgment,” which includes a mandatory fourteen-day time period in which
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Defendants may file an Opposition/Response. See Ex. F to Settlement Agreement at ¶¶ A–C.
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Therefore, a filing for Stipulated Judgment alone is not likely to cause irreparable harm, as
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Defendants would have adequate opportunity to respond.
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In the alternative, Defendants request to enjoin Plaintiff from filing for Stipulated
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Judgment unless under seal. Application for TRO at 1. The Court notes that Defendants have not
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These properties were listed as “security” under § 3 of the Settlement Agreement.
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demonstrated likelihood of success on the merits for this requested relief, because the Settlement

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Agreement provides for “permissible disclosure,” including “(c) in any action or proceeding to

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enforce this Agreement.” See Settlement Agreement § 4.1, ECF 120-1 (Ex. 2). Further, the

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Settlement Agreement provides that “a Party objecting to disclosure may take all available steps to

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file any confidential material, or pleadings referring to confidential material, under seal.” Id. The

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Court construes this provision as allowing the objecting party, here Defendants, to request sealing

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of documents under Civil Local Rule 7-11. Insofar as the Court has previously ordered that the

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documents be provisionally filed under seal so that Defendants could submit declarations

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supporting sealing and Plaintiff has done so, see, e.g., ECF 129, there is no likelihood of
irreparable harm. Further, the Settlement Agreement provides liquidated damages in the event “a

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United States District Court
Northern District of California

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Party breaches th[e] confidentiality provision,” and provides for no other damages or relief. See

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Settlement Agreement at § 4.2; Winter, 555 U.S. at 20.

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Accordingly, although Defendants’ Application for TRO enjoining Plaintiff’s filing for

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Stipulated Judgment is DENIED in its entirety, Plaintiff’s Application for Entry of Stipulated

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Judgment (ECF 129-1) shall remain conditionally under seal pending the Court’s ruling on

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Plaintiff’s administrative motion to file that application under seal (ECF 129). Pursuant to Civil

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Local Rule 7-11, any opposition to Plaintiff’s administrative motion at ECF 129 shall be filed by

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Defendants “no later than 4 days after the motion has been filed.” Civ. L.R. 7-11(b).

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B.

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The Court acknowledges that irreparable harm to Defendants may exist if the subject

TRO requesting to enjoin foreclosure proceedings

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properties in Oakland are improperly foreclosed on by Plaintiff. However, at present, any such

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harm is purely speculative. For one, Defendants offer no evidence that foreclosure action(s) have

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been commenced, but merely that foreclosure is available to Plaintiff under § 5.2 of the Settlement

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Agreement. See Settlement Agreement § 5.2, ECF 120-1 (Ex. 2). This does not amount to a

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showing that Defendants are “likely to suffer irreparable harm in the absence of preliminary

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relief.” Winter, 555 U.S. at 20. Second, Plaintiff has stated that “there are no pending foreclosure

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proceedings,” and has further indicated that Plaintiff will not file foreclosure action(s) during the

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pendency of Plaintiff’s Application for Entry of Stipulated Judgment (ECF 129-1). See Initial
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Opposition at 7–8, ECF 120-2. Furthermore, per the Settlement Agreement—and as Plaintiff

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acknowledges—Defendants are provided with fourteen days to file an Opposition/Response to

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Plaintiff’s Application for Entry of Stipulated Judgment. See Initial Opposition at 5; see also

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Ex. F to Settlement Agreement at ¶ B.
Accordingly, Defendants’ Application for TRO to enjoin foreclosure proceedings as to The

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Properties is DENIED WITHOUT PREJUDICE. This element of the TRO may be refiled with

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the Court in the event foreclosure proceedings are commenced prior to the Court ruling on

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Plaintiff’s Application for Entry of Stipulated Judgment (ECF 129-1).

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C.

Order to Show Cause re Preliminary Injunction

As Defendants’ Application for TRO is denied, Defendants’ Order to Show Cause why a

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United States District Court
Northern District of California

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Preliminary Injunction identical to the TRO should not issue is likewise DENIED. Defendants’

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Application for TRO is denied without prejudice to Defendants filing a motion for preliminary

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injunction.

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D.

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Defendants’ requested relief in the form of damages for breach of contract and breach of

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the implied covenant of good faith and fair dealing, and for judicial declaration as to purportedly

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void and enforceable contract terms, is not appropriate relief under a TRO. Accordingly,

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Defendants’ request for a finding of damages and judicial declaration is DENIED. Such

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arguments may be appropriate in response to the pending Application for Stipulated Judgment

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(ECF 129-1).

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IV.

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Finding of Damages and Judicial Declaration

CONCLUSION
For the foregoing reasons, Defendants’ Ex Parte Application for Temporary Restraining

Order and Order to Show Cause Re: Preliminary Injunction at ECF 112 is DENIED.

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IT IS SO ORDERED.
Dated: October 10, 2018
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BETH LABSON FREEMAN
United States District Judge
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