Crisp Holdings, LLC v. K & A Produce, Inc. et al

Filing 28

ORDER re 7 Order on Motion for Preliminary Injunction, Order to Show Cause: For the reasons stated on the record at today's hearing and as set forth in the attached Order, Plaintiff's motion for a preliminary injunction is granted, in p art. Defendants' motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) is denied in its entirety. The Court reserves decision as to Plaintiff's motion to hold Defendants in contempt of Court. Ordered by Judge Pamela K. Chen on 9/22/2014. (Doerr, Mark)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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CRISP HOLDINGS, LLC, a Delaware limited
liability company,
Plaintiff,
ORDER
14-CV-5200 (PKC)

v.
K&A PRODUCE, INC., a New York Corporation,
KEVIN DIAZ, an individual; RODIN DIAZ, an
individual; and DOES 1 through 50 inclusive,
Defendants.
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PAMELA K. CHEN, United States District Judge:

On September 5, 2014, Plaintiff initiated this action and simultaneously moved the Court,
ex parte, for a Temporary Restraining Order (“TRO”) and Order to Show Cause re Preliminary
Injunction, seeking to enjoin Defendants from dissipating assets and/or requiring Defendants to
produce an accounting of current assets and liabilities for their business, K&A Produce, Inc.
(“K&A”). (Dkts. 1–3.) That same day, based on Plaintiff’s submissions, the Court granted the
TRO, and issued the requested show cause order with a hearing date of September 22, 2014.
(Dkt. 7.) The TRO, inter alia, enjoined Defendants from “alienating, dissipating, paying over,
assigning or transferring any assets of Defendant K&A or its subsidiaries or related companies”
with the exception of using its assets to pay Plaintiff. (Dkt. 7.) In the event Defendants failed to
pay Plaintiff the sum of $79,699.84 within two business days of the order, the TRO directed
Defendants to “file with this Court, with a copy to Plaintiff’s counsel, an accounting which
identifies the assets and liabilities and accounts receivable reports of Defendant K&A signed
under penalty of perjury; and that [D]efendants shall also supply to Plaintiff’s attorney, within

five (5) days of the date of the Order, any and all documents in their possession, custody, or
control related to the assets and liabilities of Defendant K&A . . . .” (Dkt. 7 at 2–3.)
On September 17, 2014, Plaintiff moved by Order to Show Cause for a finding of
contempt of the Court’s TRO, citing Defendants’ failure to pay Plaintiff the required sum or to
provide the accounting set forth in the TRO. (Dkt. 9.) The same day, Defendants filed their
opposition to Plaintiff’s preliminary injunction motion and motion for contempt (Dkts. 16–21),
and cross-moved to dismiss Plaintiff’s complaint pursuant to Federal Rule of Civil Procedure
(“FRCP”) 12(b)(6). (Dkt. 15.) 1 The Court issued an Order to Show Cause with respect to
Plaintiff’s contempt motion, and set the hearing on the contempt motion for the same day as the
preliminary injunction hearing. (Dkt. 22.)
On September 19, 2014, Plaintiff replied in further support of the preliminary injunction
motion (Dkt. 23), and Defendants replied in further support of the motion to dismiss the
complaint. (Dkt. 24.) Today, Plaintiff submitted an additional affidavit of Amber Lawson, one
of Plaintiff’s account managers, in further support of a preliminary injunction. The Court today
heard oral argument with respect to the parties’ respective motions. The Court ruled on the
motions on the record at the hearing, and hereby issues this order in accordance with those
rulings.
Based upon the submissions of the parties and the arguments made at today’s hearing,
and upon due consideration thereof, it hereby is ORDERED AND ADJUDGED THAT:
1)

The TRO issued by the Court is VACATED;

1

Plaintiff’s motion to dismiss was procedurally improper in that it violated the Court’s
Individual Practices and Rules 3(D), which requires a request for a premotion conference prior to
dispositive motion practice. See https://www.nyed.uscourts.gov/pub/rules/PKC-MLR.pdf.
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2)

Plaintiff’s motion for a Preliminary Injunction is GRANTED, in part. Defendants

are enjoined from alienating, transferring, dissipating, or in any way using K&A’s assets, except
for the purposes of: a) establishing a trust in the amount of $40,000 for the benefit of Plaintiff;
and b) posting a bond in the amount of $40,000 for the benefit of Plaintiff. Defendants also may
use K&A assets in order to pay to Plaintiff $79,699.84 in satisfaction of Plaintiff’s claims, or in
such other amount as agreed to by the parties;
3)

As soon as Defendants have complied with subsection 2 above, Defendants shall

apprise the Court, via ECF, with appropriate accompanying documentation, of their compliance.
If the Court is satisfied as to Defendants’ compliance, it will issue an order vacating the
restrictions currently imposed on K&A’s Chase Bank account ending in 7361 (“K&A Chase
Account”); and
4)

On or before September 30, 2014, Defendants shall provide to Plaintiff and the

Court: a) the September 2014 bank statement for the K&A Chase Account; b) copies of all
checks issued from the K&A Chase Account in August 2014 and September 2014; c) monthly
statements for July 2014 through September 2014 for any other bank accounts used by
Defendants to conduct K&A business; d) monthly statements for July 2014 through September
2014 for all personal bank accounts of Defendants Kevin Diaz and Rodin Diaz; and e) any
documentary evidence relating to the use or disposition of the $9,000 cash withdrawn from the
K&A Chase Account in September 2014.
For the reasons stated on the record, Defendants’ motion to dismiss the complaint is
denied in its entirety, without prejudice to renew, provided that Plaintiff complies with the
Court’s Individual Practices and Rules regarding such motions.

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Lastly, the Court reserves decision with respect to Plaintiff’s motion for contempt, with
leave for Plaintiff to renew and submit supplemental materials in connection with the motion at a
later date. In addition, Plaintiff is ordered to produce to Defendants, on or before October 14,
2014, all emails from Plaintiff transmitting to K&A invoices relevant to this action, including
any attachments.

SO ORDERED:

/s/ Pamela K. Chen
PAMELA K. CHEN
United States District Judge
Dated: September 22, 2014
Brooklyn, New York

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