V. Real Estate Group, Inc. et al v. United States Citizenship & Immigration Services et al

Filing 35

ORDER that 5 Motion for Preliminary Injunction is DENIED. Signed by Judge Robert C. Jones on 10/15/14. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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V REAL ESTATE GROUP, INC., a
Nevada corporation, et al.

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Plaintiff,

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vs.

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UNITED STATES CITIZENSHIP &
IMMIGRATION SERVICES, et al.,

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Defendant.

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2:14-cv-01096-RCJ-CWH
ORDER

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Before the Court is Plaintiffs’ Motion for Preliminary Injunction (ECF No. 5),

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Defendants’ Response to the motion (ECF No. 23), and Plaintiffs’ Reply to Defendants’

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Response (ECF No. 24). For the reasons contained herein, Plaintiffs’ motion is DENIED.

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I.

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PROCEDURAL HISTORY AND FACTS
This case arises from the United States Citizenship & Immigration Service’s (“USCIS”)

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revocation of various I-526 petitions. The EB-5 immigrant visa category allocates a certain

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number of visas each year to “qualified special immigrants” who commit a threshold amount of

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capital to a United States business that either employs or will employ at least ten United States

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citizens. 8 U.S.C. § 1153(b)(5)(A). An alien entrepreneur seeking a visa under this program

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prepares and files “on his or her own behalf” an I-526 petition to the USCIS. 8 C.F.R. § 204.6(c).

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To qualify, the alien entrepreneur must invest at least $1,000,000 into a new commercial

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enterprise (“NCE”), or a minimum of $500,000 if the location of the NCE is considered a Target

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Employment Area (“TEA”). Id.§ 204.6(f). An investor organizing an original business to satisfy

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the NCE requirement must submit a “comprehensive business plan” detailing the nature and

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projected size of the NCE so that no fewer than ten jobs will be created. Id. § 204.6(j)(4). The

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signed I-526 petition along with the accompanying documentation is submitted to the USCIS for

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review. Id. § 204.6(j). If after the initial review, the USCIS determines that the petition lacks

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sufficient supporting evidence, it sends a request for additional evidence (“RFE”) to the

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petitioner indicating the need for supplemental documentation. Once this process is complete,

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the USCIS makes its determination.

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If the USCIS approves the I-526 petition, then the immigrant investor may apply for

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conditional permanent resident status at the United States consular post in the investor’s own

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country. 8 U.S.C. §§ 1201–02, 1186b(a)(1). The Secretary of Homeland Security retains the

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right to revoke an approved I-526 petition “at any time, for what he deems to be good and

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sufficient cause.” 8 U.S.C. § 1155. A revocation of the approval, however, may occur only after

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notice is given to the self-petitioner and the self-petitioner is provided with “the opportunity to

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offer evidence in support of the . . . self-petition and in opposition to the grounds alleged for

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revocation of the approval.” 8 C.F.R. § 205.2(b). The Notice of Intent to Revoke (“NOIR”) must

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explain “the specific reasons” why the approval is being revoked.

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Steven Lee, a former immigrant investor who received an EB-5 visa years ago and who is

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now a United States citizen, formed Plaintiff V Real Estate Group, Inc. (“VREG”) as a

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franchising enterprise that would “attract foreign investment and immigrant investors from China

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who desired to follow [his] example and obtain permanent residence and/or citizenship in the

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US.” (Lee Decl. ¶¶ 4–7, ECF No. 11). Lee created a business model with the advice of counsel

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that he believed satisfied the criteria of the EB-5 program. (Id. ¶ 8). Lee chose Clark County,

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Nevada for his operations because parts of Clark County are TEAs, requiring an investment of

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$500,000 rather than $1,000,000. (Id. ¶ 9). Liang Shao, Yongming Hu, Yanzhao Zou, Xiaolong

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Li, and Haixiang Li (collectively “the alien investors”) each used Lee’s business plan to establish

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franchised real estate companies. (Id.¶ 10). They then each personally filed I-526 petitions with

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the USCIS at the end of 2012 or near the beginning of 2013. (Voigtmann Decl. ¶¶ 5, 11, 17, 23,

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29, ECF No. 6). Subsequently, the USCIS sent a RFE to each investor seeking supplemental

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evidence that an NCE had been established in a TEA, that the investment capital was in the

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process of being invested, and that the capital had been placed “at risk.” (RFE 2–4, ECF No.

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6-2). Each investor responded to the RFE, and the USCIS approved the I-526 petitions.

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(Voigtmann Decl. ¶¶ 7, 13, 19, 25, 31). The USCIS forwarded the approved petitions to the

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National Visa Center for consular processing, but the petitions were returned to the USCIS.

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(Shao NOIR 2, ECF No. 6-4).
The USCIS then notified the alien investors that their petitions were approved in error.

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(See, e.g., id.). The NOIR stated that because the full $500,000.00 investment would be released

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from escrow to VREG rather than to the various entities created by the alien investors, the record

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was insufficient to show that the funds would be made “immediately available to or directly

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transferred to the NCE[s].” (Id. at 3). The NOIR also identified employment creation and the

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overall business model as causes for the revocation. (Id. at 5–7). Plaintiffs seek a preliminary

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injunction to enjoin the USCIS’s revocation of each investor’s I-526 petition. Notably, the

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plaintiffs in the present action consist of the various NCEs created by the alien investors rather

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than the alien investors themselves, who actually filed the I-526 petitions.

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II.

DISCUSSION
“A preliminary injunction is an extraordinary remedy never awarded as of right.”

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Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 997 (9th Cir. 2011) (quoting

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Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008)). Whether to grant an injunction

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is a matter committed to the discretion of the trial judge. Sierra On-Line, Inc. v. Phx. Software,

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Inc., 739 F.2d 1415, 1421 (9th Cir. 1984). Preliminary injunctive relief is proper only when the

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movant shows “(1) a strong likelihood of success on the merits, (2) the possibility of irreparable

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injury to plaintiff if the preliminary relief is not granted, (3) a balance of hardships favoring the

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plaintiff, and (4) advancement of the public interest (in certain cases).” Johnson v. Cal. State Bd.

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of Accountancy, 72 F.3d 1427, 1430 (9th Cir. 1995). “Alternatively, a court may grant the

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injunction if the plaintiff ‘demonstrates either a combination of probable success on the merits

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and the possibility of irreparable injury or that serious questions are raised and the balance of

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hardships tips sharply in his favor.’” Earth Island Inst. v. U.S. Forest Serv., 351 F.3d 1291, 1298

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(9th Cir. 2003) (quoting Johnson, 72 F.3d at 1430). Under either approach, plaintiffs seeking

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preliminary relief must show that irreparable injury is likely in the absence of an injunction, not

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simply that it is possible. Johnson v. Couturier, 572 F.3d 1067, 1081 (9th Cir. 2009) (quoting

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Winter, 555 U.S. at 22) (internal quotations omitted). Here, the Court concludes that Plaintiffs

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failed to allege any harm or injury that would be irreparable without a preliminary injunction.

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Because the Court finds the second prong of the preliminary injunction analysis to be dispositive

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in this case, it does not address the other factors.

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Plaintiffs’ Complaint states that each immigrant investor “capitalized his/her NCE with

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$500,000 of operating capital” and that VREG anticipates “future economic benefit” through

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“receiving franchise fees and service and consulting fees from the NCEs.” (Compl. ¶¶ 59–60,

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ECF No. 1). The Complaint alleges that Defendants’ actions caused Plaintiffs “the loss of a

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central and key component of their business that will seriously compromise their ability to

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continue in their current form.” (Id. ¶ 72). Plaintiffs’ also allege that the revocations at issue here

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“will lead to the destruction of [VREG’s] business plan and business model,” that the newly

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created businesses “have all been placed at risk,” and that the “very purpose of the businesses

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has been frustrated.” (Pls.’s Mot. Prelim. Inj. 7, ECF No. 5). When challenged on the issue of

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irreparable harm by Defendants’ Response, Plaintiffs replied that “[t]here can be no

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disagreement” that Plaintiffs’ business model is “substantially compromised,” and that VREG’s

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business model would have to be “reconstituted to find potential franchisee investment from

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non-immigrant investors” or be out of business. (Id. at 14–15).

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Nevertheless, Plaintiffs never explain specifically how Defendants revocation of the alien

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investor’s I-526 petitions actually causes them irreparable harm. VREG’s injury at this point can

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only be hypothetical in nature. The alien investors’ petition status does not impact VREG’s

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ability to collect franchise fees from the other Plaintiffs, since it has already done so. (Compl.

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¶ 29, 35, 41, 47, 53). The alien investors’ physical presence, while clearly preferable to VREG

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and its business model, is not essential to VREG’s continuing operations. The fact that VREG

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has additional prospective immigrant investors who are waiting until the resolution of this case to

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proceed with their own I-526 petitions does not justify a preliminary injunction as to the I-526

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petitions at issue here. The independent decision of those third-parties to withhold their

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investments at the present time does not constitute irreparable injury for the purposes of a

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preliminary injunction. See Goldie’s Bookstore, Inc. v. Superior Court of Cal., 739 F.2d 466, 472

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(holding that speculative loss of goodwill and customers was insufficient to establish irreparable

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injury). Even if Defendants’ revocation of the alien investors’ petition does “frustrate” VREG’s

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business plans, Plaintiffs provide no evidence that the denial of these petitions truly will

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“destroy” or “seriously compromise” VREG’s business. Further, if VREG suffered any harm

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from the revocation, there is little support that the harm is irreparable; rather, it appears as if

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VREG needs to review its current business model to ensure that future petitions are not rejected.

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The harm suffered by the other plaintiffs seems even less irreparable. There is no dispute

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that the various NCEs already received funding by the alien investors’ capital and that “the

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franchise relationship between VREG and [the alien investors’ companies] moved forward.”

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(Lee Decl. ¶ 13). There also appears to be no contention that the alien investors remain in

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control of those companies notwithstanding the revocation of their petitions. While it may “defy

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imagination” that any of the investors would attempt to operate a business in Nevada from a

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residence in China, (Pls.’s Mot. Prelim. Inj. 19), it remains possible. Moreover, the fact that the

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investments were “predicated upon conditional residency in the United States” where the alien

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investors could “own, manage, and supervise their real estate businesses” does not represent

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harm to Plaintiffs. Instead, the alien investors’ inability to operate their businesses from Clark

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County and any disruption to their families, (Voigtmann Decl. ¶ 47), appears to be harm felt by

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the investors themselves and not by Plaintiffs.

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The Plaintiffs do not assert that any particular contract or business opportunity has been

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lost or will be lost because the alien investors are not currently present in Clark County or

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because they did not receive visas at this time. As stated, any harm allegedly suffered in this

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case appears to rest squarely with the alien investors, not Plaintiffs. It was the alien investors’

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I-526 petitions that were denied, and it is their capital that paid VREG’s franchise fee even

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though they could not be physically present to manage their NCEs. That same capital is still in

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the accounts of the various companies, being applied towards business expenses. (Compl. ¶ 29,

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35, 41, 47, 53). Plaintiffs thus cannot even contend that Defendants’ actions caused them to lose

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initial funding. Accordingly, there is no irreparable injury to Plaintiffs that warrants a

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preliminary injunction.

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Plaintiffs’ motion is therefore DENIED.

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CONCLUSION
IT IS HEREBY ORDERED that Plaintiffs’ Motion for Preliminary Injunction (ECF
No. 5) is DENIED.
IT IS SO ORDERED.
October 15, 2014
Dated: _______________________

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_____________________________________
ROBERT C. JONES
United States District Judge

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