Pacific Rollforming, LLC. v. Trakloc International, LLC. et al

Filing 131

ORDER Granting 94 Motion to Dissolve Preliminary Injunction and Exonerate Bond: The preliminary injunction issued on November 21, 2007 is DISSOLVED and the related bond is EXONERATED. Signed by Judge M. James Lorenz on 11/9/2009. (All non-registered users served via U.S. Mail Service)(copy to financial)(mjj) (jrl).

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA PACIFIC ROLLFORMING, LLC et al., ) ) ) Plaintiffs, ) ) v. ) TRAKLOC NORTH AMERICA, LLC, et ) ) al., ) ) Defendants. _________________________________ ) ) ) AND RELATED COUNTERCLAIMS. ) Civil No. 07cv1897-L(JMA) ORDER GRANTING MOTION TO DISSOLVE PRELIMINARY INJUNCTION AND EXONERATE BOND

On November 21, 2007 the court issued a preliminary injunction prohibiting Defendants

19 Trakloc North America LLC ("TLNA"), its officers, including David Jablow ("Jablow"), and 20 other Defendants from taking acts which interfered with Plaintiff Pacific Rollforming, LLC's 21 ("Pacific") business. The preliminary injunction required a $25,000 bond. Pacific obtained the 22 bond by making a $25,000 cash deposit as collateral. Before the court is Pacific's motion to 23 dissolve the preliminary injunction because it has ceased operations and seeks exoneration of the 24 bond to obtain release of the cash security. TLNA and Jablow ("Defendants") oppose the 25 motion but only to the extent it requests bond exoneration. For the reasons which follow, 26 Plaintiff's motion is GRANTED. 27 Defendants agree that Pacific no longer conducts the business which the preliminary

28 injunction was intended to protect and that the injunction is no longer needed. The court has
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1 authority to modify its orders prior to final judgment. Fed. R. Civ. P. 54(b) ("any order . . . that 2 adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does 3 not end the action as to any of the claims or parties and may be revised at any time before the 4 entry of a judgment adjudicating all the claims and all the parties' rights and liabilities"). The 5 court construes Pacific's motion as a motion pursuant to Federal Rule of Civil Procedure 60(b), 6 seeking relief from a prior order. The motion presents sufficient facts to trigger consideration 7 under Rule 60(b)(2) or (5). 8 Defendants argue that even if the injunction is dissolved, the bond funds should not be

9 returned to Pacific. According to Defendants, due to an involuntary Chapter 7 bankruptcy any 10 bond funds belong to the bankruptcy estate and not Pacific. This argument is rejected as moot 11 because the Chapter 7 Petition was dismissed. (See Order Dismissing Contested Involuntary 12 Petition, signed Sep. 29, 2009, U.S. Bankr. Ct. N. Dist. Cal. case no. 09-43135.) 13 Defendants also argue that even if the preliminary injunction is dissolved, the bond

14 should remain in place until trial when it could be finally determined whether they were 15 wrongfully enjoined. If they were, then they maintain they can execute on the bond and use it to 16 compensate themselves for any damages caused by the preliminary injunction. 17 "Before a court may execute a bond, it must find the enjoined or restrained party was

18 `wrongfully enjoined or restrained.'" Nintendo Am., Inc. v. Lewis Galoob Toys, Inc., 16 F.3d 19 1032, 1036 (9th Cir. 1994); see also Matek v. Murat, 862 F.2d 720, 733 (9th Cir. 1988), 20 abrogated on other grounds, Holden v. Hagopian, 978 F.2d 1115 (9th Cir. 1992). "[T]here is a 21 rebuttable presumption that a wrongfully enjoined party is entitled to have the bond executed 22 and recover provable damages up to the amount of the bond." Nintendo, 16 F.3d at 1036. 23 However, even if wrongfully enjoined or restrained, the "party may not demand damages on the 24 bond simply because the injunction was improperly granted. He must demonstrate injury as a 25 consequence of the injunction." Matek, 862 F.2d at 733; see also Nintendo, 16 F.3d at 1038 26 (damages compensatory of the injury suffered because of the injunction). "[T]his standard 27 provides an equitable means by which courts can decline to impose damages on the rare party 28 / / / / /
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1 who has lost a case on the merits but nevertheless should not suffer the execution of the 2 preliminary injunction bond." Nintendo, 16 f.3d at 1037. 3 Defendants stipulated to the injunction based on the admissions they made in affidavits

4 and open court. They therefore cannot argue that they were wrongfully enjoined. Furthermore, 5 assuming arguendo that Pacific lost on the merits of its interference claim against Defendants, it 6 would be inequitable to saddle it with the execution of a bond securing a preliminary injunction 7 to which Defendants stipulated. 8 Based on the foregoing, Pacific's motion is GRANTED. The preliminary injunction

9 issued on November 21, 2007 is DISSOLVED and the related bond is EXONERATED. 10 11 IT IS SO ORDERED.

12 DATED: November 9, 2009 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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M. James Lorenz United States District Court Judge