Engineering/Remediation Resources Group, Inc. v. Performance Systems, Inc.

Filing 10

MEMORANDUM DECISION AND ORDER. NOW THEREFORE IT IS HEREBY ORDERED that the Plaintiff's Application for Writ of Attachment and TRO 3 is GRANTED IN PART and DENIED IN PART. The Application for Writ of Attachment is GRANTED to the extent the C ourt will hold a show cause hearing on the writ of attachment issue. The Application is denied in all other respects. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
ENGINEERING/REMEDIATION
RESOURCES GROUP, INC.
Case No. 1:17-cv-316-EJL
Plaintiff,
MEMORANDUM DECISION AND
ORDER

v.

PERFORMANCE SYSTEMS, INC.,
Defendant.

Pending before the Court in the above-entitled matter is Plaintiff’s Application for
Prejudgment Writ of Attachment and Temporary Restraining Order (“Application for Writ
and TRO”). (Dkt. 3.) As further discussed below, the Court grants in part Plaintiff’s
Application for Writ of Attachment and will hold a show cause hearing on that
Application. The Court denies Plaintiff’s Motion for Temporary Restraining Order.
PROCEDURAL HISTORY
On August 2, 2017, the Plaintiff filed a Complaint with a single breach of contract
claim. (Dkt. 1.) Plaintiff seek economic damages, including compensatory damages,
incidental damages, attorneys fees and costs, pre- and post- judgment, and any “such
further relief as the Court deems just and proper.” Id. Also on August 2, 2017, Plaintiff
filed the instant Application for Writ and TRO. (Dkt. 3).
On August 14, 2017, Plaintiff filed an Affidavit of Service indicating that the
Summons, Complaint, and Application for Writ and TRO, among other documents, were
served upon the Defendant’s Registered Agent. (Dkt. 8). Although the Defendant had not

MEMORANDUM DECISION AND ORDER- 1

yet appeared, the Court issued an expedited briefing schedule on the Application for Writ
and TRO in the event Defendant was otherwise following the docket in this case.
Defendant has still not appeared.
BACKGROUND
The instant background comes exclusively from the Plaintiff’s Complaint and the
Affidavit of David Cavagnol (“Cavagnol Aff.”). (Dkts. 1, 3-2.) Plaintiff is a California
corporation with its principal place of business in Martinez, California. Defendant is an
Idaho corporation with its principal place of business in Meridian, Idaho.
Plaintiff has a separate, primary contract with non-party, American Samoa Power
Authority. On or about July 14, 2016, Plaintiff and Defendant entered into a written
Subcontract Agreement. Pursuant to the Subcontract Agreement, Defendant agreed to
supply and install two 200,000 gallon welded water storage tanks in Malaemi, American
Samoa. In return, Plaintiff agreed to pay Defendant a total of $1,178,388.00, including a
progress payment of $357,062.40.
Plaintiff represents that it fully performed its contractual obligations to date. In
contrast, Defendant breached the contract by: (1) failing to pay its subcontractor for
fabrication of the two welded storage tanks; (2) failing to complete fabrication of the tank
accessories; and (3) by confirming verbally to Defendant on April 4, 2017 that it was
unable to perform any further work on the Subcontract Agreement.
Due to Defendant’s nonperformance under the Subcontract Agreement, Plaintiff is
now required to pay other suppliers to fulfill its contractual requirements under its Prime

MEMORANDUM DECISION AND ORDER- 2

Contract with American Samoa Power Authority. In addition, it has not enjoyed any
benefits resulting from the $357,062.40 payment.
As further set forth in the Application for Writ and TRO and supporting affidavit,
Defendant’s performance under the contract was “not secured by a mortgage, deed of
trust, security interest, or lien upon real or personal property.” (Dkt. 3-2). Further, Plaintiff
represents that the “attachment is not sought and the action is not prosecuted to hinder,
delay, or defraud any creditor of PSI.” Id.
DISCUSSION
1.

Application for Writ of Attachment
Under federal procedural law, a motion for writ of attachment is governed by the

laws of the state where the district court in which the motion is filed is located, except that
a federal statute will govern if one otherwise exists and applies. See Fed. R. Civ. P. 64. In
this case, state law applies exclusively.
Federal Rule of Civil Procedure 64(a) generally provides that “every remedy is
available that, under the law of the state where the court is located, provides for seizing ...
property to secure satisfaction of the potential judgment.” Fed. R. Civ. P. 64(a). This
specifically includes writs of attachment. Fed. R. Civ. P. 64(b).
Under Idaho law, attachment is a remedy by which a plaintiff with a contractual
claim to money, and not a claim to a specific item of property, may have various items of
a defendant’s property seized before judgment and held for potential execution after
judgment. Idaho Code § 8-501 states a plaintiff “may make application to have the
property of the defendant attached … as security for the satisfaction of any judgment that
MEMORANDUM DECISION AND ORDER- 3

may be recovered, unless the defendant gives security to pay such judgment.” I.C. §8-501.
Such a remedy applies in limited circumstances including “an action … upon contract …
for the direct payment of money, where the contract is not secured by any mortgage, deed
of trust, security interest or lien upon real or personal property.” I.C. § 8-501.1.
Idaho Code § 8-502 sets forth three elements Plaintiff must establish by affidavit
before a writ of attachment may issue. This specifically includes:
1. That the defendant is indebted to the plaintiff (specifying
the amount of such indebtedness over and above all legal
setoffs or counterclaims) and whether upon a judgment or
upon a contract for the direct payment of money, and that the
payment of the same has not been secured by any mortgage,
deed of trust, security interest or lien upon real or personal
property, or if originally secured, that such security has,
without an act of the plaintiff, or the person to whom the
security was given, become valueless.
2. When the defendant is a nonresident of this state, that such
defendant is indebted to the plaintiff (specifying the amount
of such indebtedness over and above all legal setoffs or
counterclaims), and that defendant is a nonresident of the
state.
3. That the attachment is not sought and the action is not
prosecuted to hinder, delay or defraud any creditor of the
defendant.
I.C. § 8-502(a).
If the Court is satisfied that the complaint and affidavit meet these three
requirements, then it may issue an order directing the Defendant to show cause why a writ
of attachment should not issue. I.C. § 8-502(b). Moreover, under certain circumstances,
the Court may also issue a writ of attachment before a show cause hearing if it finds
probable cause that “the property specifically sought to be attached is a bank account
MEMORANDUM DECISION AND ORDER- 4

subject to the threat of imminent withdrawal, or is perishable, and will perish before any
noticed hearing can be had . . . .” I.C. § 8-502(c)(3).
A.

Plaintiff Has Made a Prima Facie Showing that a Writ of Attachment
Should Issue.

Plaintiff has shown that a writ should issue pursuant to Idaho Code § 8-502(a). This
finding is supported primarily by the Affidavit of David Caragnol. (Dkt. 3-2.)
First, Plaintiff has demonstrated that Defendant is indebted to it “upon a contract
for the payment of money” in the amount of $357,062.40 over and above all legal set-offs
as required by Idaho Code § 8-502(a)(1). Under Idaho law, “[w]here money is advanced
on the purchase price of goods, and the seller fails or refuses to deliver, a suit to recover
the money advanced is an implied contract for the direct payment of money permitting the
issuance of an attachment.” B.J. Carney & Co. v. Murphy, 195 P.2d 339, 383 (Idaho 1948);
see also Wallace v. Perry, 257 P.2d 231, 233-235 (Idaho 1953). In this case, Defendant
made a progress payment of $357,062.40 to PSI for the fabrication and installation of two
200,000 gallon welded water storage tanks. (Dkt. 3-2, ¶ 4.) PSI materially breached the
contract by failing to perform the contracted goods and services also confirming verbally
that it was unable to perform any further work under the parties’ contract. (Id. at ¶ 5.)
Second, Defendant’s contractual obligations are not secured by a mortgage, deed
of trust, security interest, or lien upon real or personal property also as required by Idaho
Code § 8-502(a)(1). See Caragnol Aff., ¶ 9 (Dkt. 3-2). Third, Defendant is a resident of
Idaho. Accordingly, Idaho Code Section 8-502(a)(2) does not apply. Fourth, Plaintiff has
submitted a sworn affidavit indicating that the attachment is not sought and the action is

MEMORANDUM DECISION AND ORDER- 5

not prosecuted to hinder, delay or defraud any creditor of the Defendant, thus satisfying
Idaho Code §§ 8-502(a)(2)-(3). (Dkt. 302, ¶ 12.)
Thus, the Court finds that the Plaintiff has made the showing necessary to
demonstrate that a writ of attachment is appropriate pursuant to Idaho Code § 8-502(a).
Therefore, the Court will issue an order to show cause and notice of hearing consistent
with the procedure set forth in Idaho Code § 8-502(b).
B.

Plaintiff Has Not Shown Probable Cause that a Writ of Attachment
Should Issue Before the Time Set for Hearing.

The Court does not find probable cause to issue the writ prior to holding a show
cause hearing pursuant to Idaho Code§ 8-502(c). Specifically, Plaintiff has not shown
what specific property it seeks to attach or that “the property specifically sought to be
attached is a bank account subject to the threat of imminent withdrawal.” See I.C. § 8502(c)(3).
Again, Mr. Caragnol provided a sworn affidavit stating that he believed, based
upon conversations between the Plaintiff and Defendant, that Defendant was nearing
insolvency as of April 2017. Caragnol Aff., ¶ 11 (Dkt. 3-2). Further, on March 6, 2017,
Plaintiff received a letter from D.L. Evans Bank claiming a perfected security interest in
all payments owed to Defendant and demanding that all future payments otherwise due to
Defendant, be made to D.L. Evans Bank. Id.
This sworn testimony may be sufficient for the Court to find that Defendant’s assets
are subject to the threat of imminent withdrawal. Nonetheless, because Plaintiff has not
identified the specific property it seeks to attach, the Court cannot specifically find that

MEMORANDUM DECISION AND ORDER- 6

the property sought to be attached is a bank account subject to imminent withdrawal.
Accordingly, the writ of attachment will not issue prior to the show cause hearing.
2.

Motion for TRO
A temporary restraining order (“TRO”) is not appropriate in this case because

Plaintiff has failed to demonstrate irreparable harm and an injunction is not necessary to
preserve the status quo.
Under Federal Rule of Civil Procedure 65, a court may issue a temporary
restraining order when the moving party provides specific facts showing that immediate
and irreparable injury, loss, or damage will result before the adverse party's opposition to
a motion for preliminary injunction can be heard. Fed. R. Civ. P. 65. “Injunctive relief is
an extraordinary remedy and it will not be granted absent a showing of probable success
on the merits and the possibility of irreparable injury should it not be granted.” Shelton v.
Nat'l Collegiate Athletic Assoc., 539 F.2d 1197, 1199 (9th Cir. 1976).
The purpose of a temporary restraining order is to preserve the status quo before a
preliminary injunction hearing may be held; its provisional remedial nature is designed to
prevent irreparable loss of rights prior to judgment. See Sierra On-Line, Inc. v. Phoenix
Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984). This court must consider the
following elements in determining whether to issue a temporary restraining order and
preliminary injunction: (1) likelihood of success on the merits; (2) likelihood of
irreparable injury if preliminary relief is not granted; (3) balance of hardships; and (4)
advancement of the public interest. Winter v. N.R.D.C., 555 U.S. 7, 20 (2008); Stanley v.

MEMORANDUM DECISION AND ORDER- 7

Univ. of S. California, 13 F.3d 1313, 1319 (9th Cir. 1994); Fed. R. Civ. P. 65 (governing
both temporary restraining orders and preliminary injunctions).
The party seeking the injunction must satisfy each element; however, “the elements
of the preliminary injunction test are balanced, so that a stronger showing of one element
may offset a weaker showing of another.” Alliance for the Wild Rockies v. Cottrell, 632
F.3d 1127, 1131 (9th Cir. 2011). “Serious questions going to the merits and a balance of
hardships that tips sharply towards the plaintiff can support issuance of a preliminary
injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury
and that the injunction is in the public interest.” Id. at 1135 (internal quotations marks
omitted).
In this case, the Plaintiff cannot demonstrate irreparable harm. The Complaint is
clear: Plaintiff seeks to compensated for a monetary loss. While the Defendant may not
have sufficient funds to compensate Plaintiff for that loss, the loss itself by its nature is
compensable and not irreparable. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388,
(2006) (“According to well-established principles of equity,” plaintiff must demonstrate
remedies available at law are inadequate to compensate for injury for injunction to issue);
Los Angeles Mem'l Coliseum Comm'n v. Nat'l Football League, 634 F.2d 1197, 1202 (9th
Cir. 1980) (temporary loss of income is a monetary injury that could be remedied by
damage award and does not constitute irreparable injury).
Furthermore, Plaintiff seeks mandatory injunctive relief requiring Defendant to pay
Plaintiff its full measure of damages as opposed to simply preserving the status quo.
Where the moving party seeks a mandatory preliminary injunction granting relief that goes
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well beyond the status quo as it exists during the litigation, courts should be “extremely
cautious.” Martin v. International Olympic Committee, 740 F.2d 670, 675 (9th Cir.1984);
see also Lockheed Missile & Space Co., Inc. v. Hughes Aircraft Co., 887 F. Supp. 1320
(N.D. Cal. 1995). The Court finds this is a separate basis for denying the requested TRO.
CONCLUSION
Plaintiff has made the requisite showing that a writ of attachment should issue but
not before Defendant has had an opportunity to appear and show cause why the application
should be denied. The Court will issue a separate order to show cause and notice of hearing
consistent with the procedure set forth in Idaho Code § 8-502(b).
ORDER
NOW THEREFORE IT IS HEREBY ORDERED that the Plaintiff’s Application
for Writ of Attachment and TRO is GRANTED IN PART and DENIED IN PART. The
Application for Writ of Attachment is GRANTED to the extent the Court will hold a show
cause hearing on the writ of attachment issue. The Application is denied in all other
respects as stated herein.
DATED: September 7, 2017

_________________________
Edward J. Lodge
United States District Judge

MEMORANDUM DECISION AND ORDER- 9