Edgefield Holdings, LLC v. Mason et al
Filing
16
OPINION AND ORDER DENYING 4 MOTION for Temporary Restraining Order. Signed by Judge William S. Duffey, Jr on 7/15/2015. (adg) Modified on 7/16/2015 (adg).
claims that these transfers were made in violation of the Georgia Uniform
Voidable Transfers Act and are fraudulent transfers under Georgia common law.
(Id.). Plaintiff seeks to recover these alleged fraudulent transfers so the Property is
available to satisfy two judgments against W. Mason, that Plaintiff purchased in
2015.2
Concurrent with the filing of its Complaint, Plaintiff filed the Motion,
requesting the Court to issue a temporary restraining order (“TRO”) against the
Defendants “to prevent the transfer of millions of dollars in corporate interests, real
estate holdings, securities, and cash . . . .” (Motion at 2).3 In support of its Motion,
Plaintiff submitted the Declarations of Ronald S. Leventhal and Mark R. King.4
Lone Pine, Inc. and a member of Defendant Mason Capital, LLC, and that the
Mason Family Trust is a trust benefiting W. Mason’s family. (Complaint ¶ 1).
2
Plaintiff asserts that, on June 11, 2014, Great Oak Pool I, LLC (“Great
Oak”) obtained a judgment against W. Mason in the amount of $1,009,617.12, and
that Plaintiff purchased this judgment from Great Oak on or about April 17, 2015.
(Complaint ¶ 30). Plaintiff asserts further that, on September 25, 2009, the Federal
Deposit Insurance Corporation (“FDIC”) took over Georgian Bank, the original
holder of one of W. Mason’s guaranties. (Id. ¶ 31). Plaintiff asserts further that,
the FDIC transferred the guaranty to First Citizens Bank and Trust Company
(“First Citizens”). (Id.). Plaintiff asserts further that on October 16, 2014, First
Citizens obtained a judgment against W. Mason in the amount of $5,000,000, and
that Plaintiff purchased this judgment from First Citizens on or about
April 30, 2015. (Id.).
3
Plaintiff essentially seeks to enjoin the Defendants from further transferring
or encumbering the Property.
4
Attached as Exhibits 1 and 2 of the Motion.
2
On July 13, 2015, the Court held an ex parte hearing with counsel for
Plaintiff to address Plaintiff’s request for an ex parte TRO. After reviewing the
submissions and considering the arguments of counsel for Plaintiff, the Court
denied Plaintiff’s application for an ex parte TRO, but ordered counsel for Plaintiff
to provide notice of the pending Motion to the Defendants and advise them of the
hearing on the TRO which the Court scheduled for July 15, 2015.
On July 15, 2015, the Court held a hearing on the Motion. Plaintiff, in
addition to the Declarations submitted with its Motion, presented testimony from
Mark R. King at the hearing.
II.
DISCUSSION
A.
Legal Standard for a Temporary Restraining Order
To be eligible for a temporary restraining order or preliminary injunctive
relief under Rule 65, a movant must establish each of the following elements: (1) a
substantial likelihood of success on the merits; (2) that irreparable injury will be
suffered if the relief is not granted; (3) that the threatened injury outweighs the
harm the relief would inflict on the non-movant; and (4) that entry of the relief
would serve the public interest. See Schiavo ex rel. Schindler v. Schiavo, 403 F.3d
1223, 1225-26 (11th Cir. 2005); Parker v. State Bd. of Pardons and Paroles, 275
F.3d 1032, 1034-35 (11th Cir. 2001). Preliminary injunctive relief is a drastic and
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extraordinary remedy which should not be granted unless the movant can clearly
establish each of the four elements. Four Seasons Hotels and Resorts v. Consorcio
Barr, S.A., 320 F.3d 1205, 1210 (11th Cir. 2003).5
B.
Fraudulent Transfer Claims
Plaintiff raises four claims under Georgia’s Uniform Voidable Transfers
Act, O.C.G.A. § 18-2-70 et seq. (the “UVTA”). Count One of Plaintiff’s
Complaint is brought pursuant to O.C.G.A. § 18-2-74(a)(1), which provides that:
a transfer . . . made by a debtor is voidable as to a creditor, whether
the creditor's claim arose before or after the transfer was made . . . if
the debtor made the transfer . . . [w]ith actual intent to hinder, delay,
or defraud any creditor of the debtor.
O.C.G.A. § 18-2-74(a)(1). Count Two of Plaintiff’s Complaint is brought pursuant
to O.C.G.A. § 18-2-74(a)(2), which provides that:
a transfer . . . made by a debtor is voidable as to a creditor, whether
the creditor’s claim arose before or after the transfer was made . . . if
5
The elements for a temporary restraining order are essentially the same as
for a preliminary injunction, except that “[t]he motion must be supported by
allegations . . . that such [irreparable] injury is so imminent that notice and hearing
would be impractical if not impossible.” Hernandez v. Board of Regents, 1997
WL 391800, *1 (M.D. Fla. 1997) (quoting Chase Manhattan Bank v. Dime
Savings Bank of New York, 961 F. Supp. 275, 276 (M.D. Fla. 1997)). Temporary
restraining orders are “designed to preserve the status quo until there is an
opportunity to hold a hearing on the application for a preliminary injunction.” 11A
Wright & Miller, Federal Practice & Procedure: Civ.2d § 2951. In this case,
Plaintiff is not required to establish that irreparable injury is “imminent,” because
Defendants had notice, albeit very short, of the request for injunctive relief and had
the opportunity to respond.
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the debtor made the transfer . . . [w]ithout receiving a reasonably
equivalent value in exchange for the transfer[,] and the debtor:
(A) Was engaged or was about to engage in a business or a transaction
for which the remaining assets of the debtor were unreasonably small
in relation to the business or transaction; or (B) Intended to incur, or
believed or reasonably should have believed that he or she would
incur, debts beyond his or her ability to pay as they became due.
O.C.G.A. § 18-2-74(a)(2). Count Three of Plaintiff’s Complaint is brought
pursuant to O.C.G.A. § 18-2-75(a), which provides that a:
transfer made . . . by a debtor is voidable as to a creditor whose claim
arose before the transfer was made . . . if the debtor made the
transfer . . . without receiving a reasonably equivalent value in
exchange for the transfer . . . and the debtor was insolvent at that time
or the debtor became insolvent as a result of the transfer
O.C.G.A. § 18-2-75(a). Count Four of Plaintiff’s Complaint is brought pursuant to
O.C.G.A. § 18-2-75(b), which provides that a:
transfer made by a debtor is voidable as to a creditor whose claim
arose before the transfer was made if the transfer was made to an
insider for an antecedent debt, the debtor was insolvent at that time,
and the insider had reasonable cause to believe that the debtor was
insolvent
O.C.G.A. § 18-2-75(b). Counts Five and Six of Plaintiff’s Complaint are common
law fraudulent transfer claims.
C.
Analysis
The Court, after considering the Declarations submitted by Plaintiff in
support of the Motion and Mr. King’s testimony presented at the July 15, 2015,
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hearing, denies Plaintiff’s application for a TRO. Plaintiff did not present evidence
of the specific Property the transfer or encumbrance of which it seeks to restrain.
The Court notes further that Plaintiff did not present any evidence regarding
W. Mason’s specific intent at the time the Property was transferred, the terms or
circumstances of the transfer, and whether there was consideration for them, and, if
so, in what amount.
The Court notes also that Plaintiff did not present any evidence to justify its
conclusory arguments that, absent a TRO, the Defendants will seek to dissipate or
encumber the Property, or that the Defendants still possess the Property. Absent
such evidence, Plaintiff cannot “clearly establish” that it will suffer irreparable
injury if a TRO is not granted. See Four Seasons Hotels and Resorts, 320 F.3d at
1210; Schiavo, 403 F.3d at 1225-26.
The Court notes next that Plaintiff did not present any evidence to clearly
establish that the threatened, but unproven, injury from disposal of the Property by
the Defendants would outweigh any potential harm to Defendants if the Court were
to enjoin Defendants from utilizing assets these assets. See Four Seasons Hotels
and Resorts, 320 F.3d at 1210; Schiavo, 403 F.3d at 1225-26.
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The Court, accordingly, concludes that Plaintiff has failed to satisfy its
burden to prove that it is entitled to a TRO.6
III.
CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Plaintiff Edgefield Holdings, LLC’s
Motion for Temporary Restraining Order [4] is DENIED.
6
The Court notes that O.C.G.A. § 18-2-79 sets forth the statute of limitations
for actions brought pursuant to the UVTA. Claims brought pursuant to O.C.G.A.
§ 18-2-74(a)(1) must be brought within four years after the transfer was made or
“within one year after the transfer or obligation was or could reasonably have been
discovered by the claimant.” O.C.G.A. § 18-2-79(1). This applies to Count One
of Plaintiff’s Complaint. Claims brought pursuant to O.C.G.A. § 18-2-74(a)(2) or
O.C.G.A. § 18-2-75(a) must be brought within four years after the transfer was
made. O.C.G.A. § 18-2-79(2). This applies to Counts Two and Three of
Plaintiff’s Complaint. Claims brought pursuant to O.C.G.A. § 18-2-75(2) must be
brought within one year after the transfer was made. O.C.G.A. § 18-2-79(3). This
applies to Count Four of Plaintiff’s Complaint. Plaintiff, at the July 15, 2015,
hearing, asserted, with regard to the judgment obtained from First Citizens, that the
“extender statute” of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 applies. The Court does not opine on that argument at this time, and
will address it if, and when, it is raised by the Defendants. The Court notes further
that Mr. King’s testimony at the July 15, 2015, hearing mainly addressed the
statute of limitations issues identified by the Court, and consisted of mixed factual
and legal interpretation testimony of the financial documents Mr. King reviewed
after Plaintiff acquired the two judgments. The Court found Mr. King’s testimony
to be insufficiently reliable to grant Plaintiff a TRO, and notes that Plaintiff did not
call any other witnesses, including creditors of W. Mason, to offer evidence of
W. Mason’s intent at the time of the transfers, or any other information that would
have allowed the Court to conclude that a TRO was warranted.
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SO ORDERED this 15th day of July, 2015.
_______________________________
WILLIAM S. DUFFEY, JR.
UNITED STATES DISTRICT JUDGE
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