Roul v. George et al
Filing
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ORDER Granting 10 Motion for District Judge to Reconsider Order. IT IS FURTHER ORDERED that this Order shall go into effect upon Plaintiffs' posting of a bond in the amount of $100.00. IT IS FURTHER ORDERED that a hearing re 7 EX PARTE MOTION for Preliminary Injunction filed by Eric Roul set for 11/6/2013 08:30 AM in LV Courtroom 7D before Judge Gloria M. Navarro. IT IS FURTHER ORDERED that Plaintiffs shall serve a copy of 7 Motion for Preliminary Injunction, 10 Motion f or Reconsideration, and this order on all Defendants by 10/30/13. Defendants shall file and serve a Response to 7 Plaintiffs' Motion for Preliminary Injunction, if any, by 5:00 pm 11/4/13. Plaintiffs shall file and serve Reply no later than 3:00 pm on 11/5/13. Signed by Judge Gloria M. Navarro on 10/25/2013. (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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ERIC ROUL, an individual, and ERIC ROUL,
Trustee of the ERIC ROUL TRUST,
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) Case No.: 2:13-cv-01686-GMN-CWH
Plaintiffs,
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vs.
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ORDER
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GEORGE C. GEORGE, an individual, MICHAEL )
MATHIAS, an individual, and DUAL DYNAMICS, )
LLC, a Nevada Limited Liability Corporation, DOE )
INDIVIDUALS 1 through 10; and ROE
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CORPORATIONS 1 through 10,
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Defendants.
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Pending before the Court is the Motion to Reconsider the Court’s Order Denying
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Plaintiff’s Ex Parte Motion for Temporary Restraining Order (ECF No. 10) filed by Plaintiffs
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Eric Roul and Eric Roul, Trustee of the Eric Roul Trust (collectively, “Plaintiffs”).
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I.
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BACKGROUND
This case arises from a series of investments that Plaintiffs made in Defendants’
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allegedly fraudulent schemes. Specifically, beginning in March 2013 and culminating in
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August 2013, Plaintiffs made a series of investments totaling $860,000 (“Deposited Funds”)
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with Defendants. On August 29, 2013, Plaintiffs learned that Defendant George “had been
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arrested for fraud and was in custody in Reno, Nevada.” (Compl. ¶ 47, ECF No. 1.) Upon
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learning of Defendant George’s incarceration, Plaintiffs informed Defendant George that
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Plaintiffs “needed all [the] money back immediately and that all deals were cancelled.” (Compl.
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¶ 51, ECF No. 1.) In response, Plaintiffs were told only that Defendant George “could get out
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of jail on bail if Plaintiff would put up another $75,000 for the bail.” (Id.)
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After Defendants failed to return Plaintiffs’ money, Plaintiffs filed the instant lawsuit
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alleging fourteen causes of action: (1) Fraud and Deceit by Intentional Misrepresentation
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(Against Defendant George); (2) Fraud and Deceit by Negligent Misrepresentation (Against
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Defendants George, Mathias and Dual Dynamics LLC); (3) Fraud and Deceit by Suppression
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of Facts (Against All Defendants); (4) Constructive Fraud (Against All Defendants);
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(5) Involuntary and Constructive Trust (Against All Defendants); (6) Unjust Enrichment
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(Against All Defendants); (7) Money Had and Received (Indebitus Assumpsit) (Against All
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Defendants); (8) Conversion (Against Defendant George); (9) Accounting (Against All
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Defendants); (10) Claim and Delivery/Replevin (Against All Defendants); (11) Breach of Oral
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Contract (Against Defendant George); (12) Breach of Implied Contract (Against All
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Defendants); (13) Breach of Written Contract (Against Defendants George and Mathias); and
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(14) Injunctive Relief (Against Defendant George and his agents). (Compl. ¶¶ 53-116.) In
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addition, Plaintiffs filed the instant Ex Parte Motion for Temporary Restraining Order and
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Preliminary Injunction. (ECF Nos. 6, 7.)
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In its Motion, Plaintiffs request an injunction “[r]estraining Defendants and any of
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Defendants’ agents, affiliates, attorneys, managers, officers, employees, from any transfer, use,
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distribution, or other disposition of Plaintiffs Deposited Funds.” (Mot. for TRO and Prelim. Inj.
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16:4-6, ECF No. 6.) However, because Plaintiffs failed to carry their burden of establishing a
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likelihood of success on the merits, the Court subsequently denied Plaintiffs’ Motion. (Order,
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ECF No. 8.) Thereafter, Plaintiffs filed the instant Motion for Reconsideration providing
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additional factual basis in support of Plaintiffs’ assertion that they were likely to succeed on the
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underlying merits of this action. (Mot. to Reconsider, ECF No. 10.)
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II.
MOTION TO RECONSIDER
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“[A] motion for reconsideration should not be granted, absent highly unusual
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circumstances.” Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (citation omitted).
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Reconsideration is appropriate where: (1) the court is presented with newly discovered
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evidence, (2) the court committed clear error or the initial decision was manifestly unjust, or
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(3) if there is an intervening change in controlling law. School Dist. No. 1J, Multnomah Cnty v.
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ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993).
In this case, Plaintiffs have provided additional evidence that warrant the Court’s
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reconsideration of its earlier Order denying Plaintiffs’ Motion for a Temporary Restraining
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Order.
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III.
MOTION FOR TEMPORARY RESTRAINING ORDER
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A.
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Federal Rule of Civil Procedure 65 governs preliminary injunctions and temporary
Legal Standard
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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;
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(3) that the balance of equities tips in his favor; and (4) that an injunction is in the public
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interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). “Injunctive relief [is]
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an 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).
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“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 v. Nelson, 799 F.2d 547, 551 (9th Cir. 1986) (quoting
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Dymo Indus., Inc. v. Tapeprinter, Inc., 326 F.2d 141, 143 (9th Cir. 1964)).
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B.
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Plaintiffs request a temporary restraining order enjoining Defendants from executing
Discussion
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“any unauthorized transfer or other movement of the Deposited Funds by any of the
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Defendants.” (Mot. for TRO 5:7-10, ECF No. 6.)
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“[A] preliminary injunction barring asset transfer is available where the suit seeks
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equitable relief.” Johnson v. Couturier, 572 F.3d 1067, 1083-84 (9th Cir. 2009) (construing
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Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 324-25 (1999)
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and citing Rubin v. Pringle (In re Focus Media Inc.), 387 F.3d 1077, 1085 (9th Cir. 2004)).
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Here, in addition to alleging numerous causes of action seeking money damages, Plaintiffs’
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Complaint also alleges several types of equitable relief, including constructive trust.
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Accordingly, an injunction barring asset transfer is available. See Locken v. Locken, 650 P.2d
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803, 804-05 (Nev. 1982) (describing the circumstances under which a constructive trust “will
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arise and affect property acquisitions” and indicating that Nevada courts acknowledge that a
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constructive trust, while also a remedy, may be evaluated as an independent cause of action);
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see also Hester v. Vision Airlines, Inc., No. 2:09-cv-00117-RLH-RJJ, 2010 WL 3724182, at *5
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(D. Nev. Sept. 15, 2010) (“[T]he Court does not dispute the Class’ claim that a constructive
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trust may be an independent cause of action given the proper circumstances.”). Therefore, the
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Court will consider Plaintiffs’ request for a temporary restraining order based on the need to
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preserve the equitable remedies available pursuant to Plaintiffs’ causes of action for, among
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other things, a constructive trust.
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1.
Likelihood of Success on the Merits
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“A constructive trust is a remedial device by which the holder of legal title to property is
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held to be a trustee of that property for the benefit of another who in good conscience is entitled
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to it.” Locken v. Locken, 650 P.2d 803, 804-805 (Nev. 1982). “A constructive trust will arise
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and affect property acquisitions under circumstances where: (1) a confidential relationship
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exists between the parties; (2) retention of legal title by the holder thereof against another
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would be inequitable; and (3) the existence of such a trust is essential to the effectuation of
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justice.” Id. In Nevada, a constructive trust “‘redresses unjust enrichment, not wrongdoing,’”
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and therefore its imposition as a remedy does not require fraud or misconduct, but at least
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unjust enrichment. Waldman v. Maini, 195 P.3d 850, 857 (Nev. 2008) (quoting Bemis v. Estate
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of Bemis, 967 P.2d 437, 441 (Nev. 1998)).
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Here, Plaintiffs allege that, Defendants perpetrated a scheme in which they allegedly
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defrauded Plaintiffs out of $860,000.00, and that Defendants now refuse to return that money.
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(Mot. for TRO 5:3-6, ECF No. 6.) In their Motion for Reconsideration, Plaintiffs also allege
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that they had a confidential relationship with the Defendants based on the correspondences and
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contracts between the parties. (Mot. for Reconsideration 18:1-5, ECF No. 10.) Specifically,
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Plaintiffs allege that the Plaintiff Eric Roul “placed his confidence and trust in [Defendant]
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George in the amount of nearly $1 million.” (Id.) In Plaintiffs’ Motion to Reconsider, Plaintiffs
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further assert, and the Court agrees, that if Plaintiffs allegations relating to fraud and unjust
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enrichment are determined to be true, then Defendants’ retention of legal title to these funds
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would be inequitable and a constructive trust would be “essential to the effectuation of justice.”
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(Mot. for Reconsideration 18:6-11.)
Given the additional factual support in Plaintiffs’ Motion for Reconsideration, the Court
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now finds that Plaintiffs have carried their burden of establishing that they will likely succeed
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on the merits of their Constructive Trust Cause of Action.
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2.
Likelihood of Irreparable Harm Absent the Relief Sought
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To carry their burden, Plaintiffs must also establish that they will likely suffer
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irreparable harm without the issuance of injunctive relief. Winter, 555 U.S. at 21. To carry
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this burden, Plaintiffs must “demonstrate a likelihood of irreparable injury—not just a
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possibility—in order to obtain preliminary relief.” Id. At bottom, Plaintiff must show that
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“remedies available at law, such as monetary damages, are inadequate to compensate for th[e]
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injury.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
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Typically, monetary harm alone will not support injunctive relief. Am. Trucking Ass’ns,
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Inc. v. City of Los Angeles, 559 F.3d 1046, 1057 (9th Cir. 2009); see also Cal. Pharmacists
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Ass’n v. Maxwell-Jolly, 563 F.3d 847, 852 (9th Cir. 2009) vacated on other grounds, 132 S. Ct.
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1204 (2012) (“Economic damages are not traditionally considered irreparable because the
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injury can later be remedied by a damage award.”). For this reason, where, as here, a party is
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seeking an asset freeze, that party must carry the additional burden of showing “a likelihood of
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dissipation of the claimed assets, or other inability to recover monetary damages, if relief is not
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granted.” Johnson v. Couturier, 572 F.3d 1067, 1085 (9th Cir. 2009).
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Here, given the additional facts in Plaintiffs’ Motion for Reconsideration, the Court
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finds that Plaintiffs have carried this burden. Specifically, Plaintiffs assert that Defendant
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George has attempted to extort additional sums of money from Plaintiff Roul in exchange for
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guaranteeing the security of Plaintiff Roul’s initial investments. (Mot. for Reconsideration
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9:15-10:7, ECF No. 10 (quoting Defendant George as stating that Plaintiff Roul needed to
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provide money to secure Defendant George’s release from custody or face “risking a million
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dollars”).) Accordingly, the Court concludes that Plaintiffs have carried their burden of
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establishing that Defendants will likely dissipate the Deposited Funds. Therefore, Plaintiffs
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have now demonstrated that they will likely be irreparably harmed without the requested
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temporary restraining order.
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3.
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Balance of Equities
In their Complaint and Motion for Reconsideration, Plaintiffs have provided a
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substantial amount of allegations of serious fraudulent activity amounting to an alleged
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misappropriation of nearly $1 million. Therefore, the Court finds that the balance of equities
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favors the entry of a temporary restraining order enjoining all Defendants from distributing or
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transferring the Deposited Funds.
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4.
The Public Interest
“The public interest analysis for the issuance of [injunctive relief] requires [district
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courts] to consider whether there exists some critical public interest that would be injured by
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the grant of preliminary relief.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1138
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(9th Cir. 2011) (citation omitted). In this case, the Court finds no reason that the public interest
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would be harmed by the issuance of the requested temporary restraining order. Accordingly,
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the lack of harm to the public interest also supports Plaintiffs’ requested relief.
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IV.
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BOND
Rule 65(c) of the Federal Rules of Civil Procedure requires that “[t]he court may issue a
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preliminary injunction . . . only if the movant gives security in an amount that the court
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considers proper to pay the costs and damages sustained by any party found to have been
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wrongfully . . . restrained.” Fed. R. Civ. P. 65(c). Thus, the primary purpose of such a bond is
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to safeguard Defendants from costs and damages incurred as a result of a preliminary
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injunction improvidently issued.
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Here, Plaintiffs provide statements from Defendant George that the Deposited Funds are
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“still secure and ha[ve] not been spent, used or transferred to other persons.” (Mot. for
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Reconsideration 10:6-7.) Because the Court is merely ordering Defendants to continue to
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refrain from spending, using or transferring the Deposited Funds, the Court finds that only a
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nominal bond is necessary in this case. Therefore, this Order shall go into effect upon
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Plaintiffs’ posting of a bond in the amount of $100.00.
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V.
CONCLUSION
IT IS HEREBY ORDERED that Plaintiffs’ Motion for Reconsideration (ECF No. 10)
is GRANTED.
IT IS FURTHER ORDERED that all Defendants are enjoined from spending,
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transferring, or otherwise dissipating or disposing of the $860,000.00 deposited with
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Defendants by Plaintiffs.
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IT IS FURTHER ORDERED that this Order shall go into effect upon Plaintiffs’
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posting of a bond in the amount of ONE HUNDRED ($100.00) DOLLARS and will expire in
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accordance with Rule 65(b) of the Federal Rules of Civil Procedure.
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IT IS FURTHER ORDERED that a hearing on Plaintiff’s Motion for Preliminary
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Injunction (ECF No. 7) is set for Wednesday, November 6, 2013, at 8:30 a.m., in Courtroom
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7D of the Lloyd D. George United States Courthouse, 333 Las Vegas Boulevard, So., Las
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Vegas, Nevada 89101.
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IT IS FURTHER ORDERED that Plaintiffs shall serve a copy of their Motion for
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Preliminary Injunction (ECF No. 7), their Motion for Reconsideration (ECF No. 10) and this
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Order on all Defendants by October 30, 2013. Defendants shall file and serve a Response to
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Plaintiffs’ Motion for Preliminary Injunction, if any, no later than 5:00 p.m. on Monday,
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November 4, 2013. Plaintiffs shall file and serve their Reply Brief, if any, no later than 3:00
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p.m. on Tuesday, November 5, 2013.
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DATED this 25th day of October, 2013.
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_____________________________
Gloria M. Navarro
United States District Judge
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