Cannabis Science, Inc. v. Afaneh
Filing
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ORDER Denying 4 Plaintiff's Emergency Ex Parte Motion for Temporary Restraining Order. Signed by Judge Gloria M. Navarro on 1/23/13. (Copies have been distributed pursuant to the NEF - EDS)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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CANNABIS SCIENCE, INC.,
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Plaintiff,
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vs.
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MOHAMMAD ISAM AFANEH, RPH,
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Defendant.
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Case No.: 2:13-cv-00114-GMN-CWH
ORDER
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Before the Court is Plaintiff Cannabis Science, Inc.’s Ex Parte Emergency Motion for
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Temporary Restraining Order (ECF No. 4), filed contemporaneously with its Complaint (ECF
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No. 1) on January 22, 2013.
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I.
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BACKGROUND
Plaintiff is a Nevada Corporation with its principal offices in Colorado Springs,
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Colorado, and is “in the business of manufacturing, marketing and distributing legal
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cannabis/hemp products worldwide.” (See Compl., ECF No. 1; Management Agreement, Ex. B
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to Mot. TRO, ECF No. 4.) Plaintiff alleges that Defendant Mohammad Isam Afaneh, RPh, “is
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a United States citizen who was domiciled in the State of Florida,” and has directed its
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Summons to Defendant’s Florida address. (Compl., ECF No. 1.)
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Plaintiff’s six causes of action arise out of a business arrangement between the parties in
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which Defendant was contracted to serve as Plaintiff’s Chief Operating Officer (“COO”) and to
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receive shares of Plaintiff’s common stock: (1) breach of contract; (2) breach of the implied
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covenant of good faith and fair dealing; (3) unjust enrichment; (4) common law fraud; (5)
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constructive fraud; and (6) replevin. (Compl., ECF No. 1; Management Agreement, Ex. B &
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Management Bonus Agreement, Ex. E to Mot. TRO, ECF No. 4.)
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With the instant motion, Plaintiff requests that the Court issue a temporary restraining
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order prohibiting Defendant from transferring or registering the shares of Plaintiff’s common
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stock previously issued to Defendant pursuant to the parties’ Management Bonus Agreement
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(Ex. E to Mot. TRO, ECF No. 4-1).
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II.
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LEGAL STANDARD
Federal Rule of Civil Procedure 65 governs preliminary injunctions and temporary
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restraining orders, and requires that a motion for temporary restraining order include “specific
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facts in an affidavit or a verified complaint [that] clearly show that immediate and irreparable
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injury, loss, or damage will result to the movant before the adverse party can be heard in
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opposition,” as well as written certification from the movant’s attorney stating “any efforts
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made to give notice and the reasons why it should not be required.” Fed. R. Civ. P. 65(b).
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Temporary restraining orders are governed by the same standard applicable to
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preliminary injunctions. See Cal. Indep. Sys. Operator Corp. v. Reliant Energy Servs., Inc., 181
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F.Supp. 2d 1111, 1126 (E.D. Cal. 2001). Furthermore, a temporary restraining order “should
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be restricted to serving [its] underlying purpose of preserving the status quo and preventing
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irreparable harm just so long as is necessary to hold a hearing, and no longer.” Granny Goose
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Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70, 415 U.S. 423, 439 (1974).
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A preliminary injunction may be issued if a plaintiff establishes: (1) likelihood of
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success on the merits; (2) likelihood of irreparable harm in the absence of preliminary relief; (3)
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that the balance of equities tips in his favor; and (4) that an injunction is in the public interest.
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Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). “Injunctive relief [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.” Id. at 22.
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The Ninth Circuit has held that “‘serious questions going to the merits’ and a hardship
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balance that tips sharply toward the plaintiff can support issuance of an injunction, assuming
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the other two elements of the Winter test are also met.” Alliance for the Wild Rockies v.
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Cottrell, 632 F.3d 1127, 1132 (9th Cir. 2011).
“In deciding a motion for a preliminary injunction, the district court ‘is not bound to
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decide doubtful and difficult questions of law or disputed questions of fact.’” Int’l. Molders’ &
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Allied Workers’ Local Union No. 164, 799 F.2d 547, 551 (9th Cir. 1986) (quoting Dymo Indus.,
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Inc. v. Tapeprinter, Inc., 326 F.2d 141, 143 (9th Cir. 1964)).
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III.
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DISCUSSION
In an eleven-line paragraph, Plaintiff argues that “Plaintiff has a significant chance of
success on the merits.” (Mot. TRO, 8:3-13, ECF No. 4.) However, Plaintiff provides no legal
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support for this argument, and merely summarizes the allegations from the Complaint. The
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Complaint itself is vague as to the circumstances from which the causes of action arise, and
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appears to refer to documents that have only been provided to the Court as exhibits to the
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instant motion.
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As discussed below, Plaintiff has failed to show a strong likelihood of success on the
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merits or serious questions going to the merits. Accordingly, Plaintiff has not shown that it is
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entitled to the requested relief, and the motion must be denied.
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Breach of Contract
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In Nevada, to succeed on a claim for breach of contract a plaintiff must show: (1) the
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existence of a valid contract; (2) that plaintiff performed or was excused from performance; (3)
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that the defendant breached the terms of the contract; and (4) that the plaintiff was damaged as
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a result of the breach. See Restatement (Second) of Contracts § 203 (2007); Calloway v. City of
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Reno, 993 P.2d 1259, 1263 (Nev. 2000) (“A breach of contract may be said to be a material
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failure of performance of a duty arising under or imposed by agreement”). Here, Plaintiff has
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provided only an excerpt of the Management Agreement, and a copy of the Management Bonus
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Agreement that is unsigned by Defendant. (See Management Agreement, Ex. B, Management
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Bonus Agreement, Ex. E to Mot. TRO, ECF No. 4.) Accordingly, it is unclear whether
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Plaintiff has a likelihood of success on the merits of this claim, and whether recovery of the
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shares is a remedy to which Plaintiff is entitled upon success on the merits.
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Breach of the Implied Covenant of Good Faith and Fair Dealing
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To succeed on a claim for breach of the covenant of good faith and fair dealing, Plaintiff
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must show that: (1) Plaintiff and Defendant were parties to an agreement; (2) Defendant owed a
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duty of good faith to the Plaintiff; (3) Defendant breached that duty by performing in a manner
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that was unfaithful to the purpose of the contract; and (4) Plaintiff’s justified expectations were
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denied. Perry v. Jordan, 900 P.2d 335, 338 (Nev. 1995) (per curiam). In Nevada, an implied
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covenant of good faith and fair dealing exists in every contract, Consol. Generator–Nevada,
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Inc. v. Cummins Engine Co., Inc., 971 P.2d 1251, 1256 (Nev. 1998) (per curiam), and a
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plaintiff may assert a claim for its breach if the defendant “deliberately countervenes the
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intention and spirit of the contract,” Morris v. Bank of Am. Nev., 886 P.2d 454, 457 (Nev. 1994)
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(internal quotation marks omitted). Here, as discussed above, Plaintiff has provided
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insufficient basis for the Court to find a likelihood of success on the merits of this claim,
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particularly where the validity and the terms of the contracts are unclear.
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Unjust Enrichment
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“An action based on a theory of unjust enrichment is not available when there is an
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express, written contract, because no agreement can be implied when there is an express
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agreement.” Leasepartners Corp. v. Robert L. Brooks Trust, 942 P.2d 182, 187 (Nev. 1997)
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(per curiam). Thus the doctrine of unjust enrichment only “applies to situations where there is
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no legal contract but where the person sought to be charged is in possession of money or
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property which in good conscience and justice he should not retain but should deliver to
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another [or should pay for].” Id. Here, since Plaintiff appears to base the claims on two written
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contracts, the Court cannot find that Plaintiff has shown a likelihood of success on the merits of
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this cause of action.
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Fraud
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To succeed on a claim for fraud or intentional misrepresentation, a plaintiff must show:
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(1) a false representation by the defendant that is made with either knowledge or belief that it is
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false or without sufficient foundation; (2) an intent to induce another’s reliance; and (3)
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damages that result from this reliance. See Nelson v. Heer, 163 P.3d 420, 426 (Nev. 2007).
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Furthermore, a claim of “fraud or mistake” must be alleged “with particularity.” Fed. R. Civ. P.
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9(b). A complaint alleging fraud or mistake must include allegations of the time, place, and
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specific content of the alleged false representations and the identities of the parties involved.
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See Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (per curiam). Here, the Court
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cannot find that Plaintiff has shown a likelihood of success on this cause of action since the
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circumstances of Defendant’s alleged fraud are incompletely and vaguely alleged in the
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Complaint.
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Replevin
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“Replevin” is “[a]n action for the repossession of personal property wrongfully taken or
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detained by the defendant, whereby the plaintiff gives security for and holds the property until
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the court decides who owns it.” Black’s Law Dictionary 1413 (9th ed. 2009). In Nevada,
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replevin is governed by Section 17.120 of Nevada Revised Statutes. Plaintiff states no other
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legal basis for his claim for replevin. Accordingly, and as discussed above, the Court cannot
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find that Plaintiff has shown a likelihood of success on the merits of this cause of action.
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Here, Plaintiff has not demonstrated a likelihood of success or serious questions going to
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the merits on these causes of action. Furthermore, Plaintiff’s attorney has not submitted written
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certification stating “any efforts made to give notice and the reasons why it should not be
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required” pursuant to Federal Rule of Civil Procedure 65(b)(1)(B). Plaintiff has also failed to
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provide “specific facts in an affidavit or a verified complaint [that] clearly show that immediate
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and irreparable injury, loss, or damage will result to the movant before the adverse party can be
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heard in opposition.” See Fed. R. Civ. P. 65(b)(1)(A). Accordingly, this Court may not issue a
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temporary restraining order without written or oral notice to Defendant. For these reasons and
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because Plaintiff has failed to make a clear showing of entitlement to the requested relief, the
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motion will be denied.
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IV.
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CONCLUSION
IT IS HEREBY ORDERED that Plaintiff’s Ex Parte Emergency Motion for
Temporary Restraining Order (ECF No. 4) is DENIED.
DATED this 23rd day of January, 2013.
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Gloria M. Navarro
United States District Judge
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