Classic Business Group v. Preim

Filing 8

ORDER: Denying Motion for a Temporary Restraining Order 2 . Signed on 10/31/2017 by Judge Marco A. Hernandez. (jp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
CLASSIC BUSINESS GROUP, a New York
Limited Liability Company, dba, OMNI
MOTOR,

No. 3:17-cv-01710-SI

Plaintiff,
v.
DAVID LAWRENCE PREIM, an
individual,

ORDER

Defendant.
HERNANDEZ, District Judge:
Plaintiff Classic Business Group, LLC brings this diversity action1 against Defendant
1

Plaintiff alleges that it is a citizen of New York and that Defendant is a citizen of
Oregon. Compl. ¶¶ 3, 4. Plaintiff alleges its citizenship based on its state of incorporation and
principal place of business. 28 U.S.C. § 1332(c)(1); Compl. ¶ 3. However, because Plaintiff is a
limited liability company, it is required to establish citizenship for diversity purposes with the
citizenship of each of its members, not its place of incorporation or its principal place of
business. Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006)
("like a partnership, an LLC is a citizen of every state of which its owners/members/partners are
citizens."). I assume for the purposes of this Order that Plaintiff is a citizen of New York.
Plaintiff is directed to promptly file the appropriate Disclosure pursuant to Local Rule 7.1.
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David Lawrence Preim, alleging that Defendant has breached the parties' contract and converted
funds belonging to Plaintiff. Compl. ¶¶ 3-43, ECF 1. Plaintiff alleges that the parties entered
into a written agreement in June 2017 in which Plaintiff would identify vehicles it wished
Defendant to purchase, Defendant would then purchase the vehicle with money provided by
Plaintiff, and then once the vehicle was titled in Defendant's name, Defendant would sign the
title over to Plaintiff. Id. ¶¶ 5-8. Defendant was paid a fee for each vehicle with the amount
depending on the type of vehicle purchased and the purchase structure. Id. ¶ 8. In the event the
vehicle purchase became impossible, Defendant was to return the funds to Plaintiff. Id. ¶ 9.
Defendant agreed that Plaintiff was to provide all the funds to purchase the vehicles and that the
funds were to be used solely to purchase and transfer the vehicles. Id. ¶ 10.
Plaintiff further alleges that about the time the parties entered into this agreement,
Defendant agreed to purchase a particular 2017 Range Rover on Plaintiff's behalf from Desert
European Motorcars. Id. ¶ 12. Plaintiff wrote a cashier's check drawn on its account in the
amount of $105,570, paid to the order of Desert European Motorcars. Id. ¶ 31.2 Such funds were
paid as intended. Id. However, Defendant was unable to purchase the vehicle on behalf of
Plaintiff's. Id. ¶ 14. Defendant obtained a refund of the $105,570 from Desert European
Motorcars but has failed to return the money to Plaintiff. Id. ¶¶ 15, 16. Plaintiff alleges that
Defendant has failed to respond to Plaintiff's "at least five" efforts to communicate with
Defendant by telephone and written demand for the funds. Id. He has avoided contact with

2

In its Memorandum in Support of the Motion, Plaintiff recites slightly different facts
regarding the purchase. There, Plaintiff alleges that on September 28, 2017, Plaintiff transferred
$105,570 to Defendant to facilitate the purchase of the vehicle and that Defendant then converted
those funds into a cashier's check. Pl.'s Mem. at 2, ECF 3.
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Plaintiff and refused to return the funds. Id. ¶ 17. Based on these facts, Plaintiff brings claims
for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment,
conversion, and constructive trust. Plaintiff seeks damages in the amount of $105,570 on the
first three claims and on the fifth claim. Compl. § III. On the conversion claim, Plaintiff seeks
an order directing Defendant, or any other person in possession of the funds, to return them to
Plaintiff. Id.
STANDARDS
The standard for a temporary restraining order (TRO) is "essentially identical" to the
standard for a preliminary injunction. Chandler v. Williams, No. CV 08-962-ST, 2010 WL
3394675, at *1 (D. Or. Aug. 26, 2010) (citing Stuhlbarg Int'l Sales Co, v. John D. Brushy & Co.,
240 F.3d 832, 839 n. 7 (9th Cir. 2001)); see also Daritech, Inc. v. Ward, No. CV–11-570–BR,
2011 WL 2150137, at * 1 (D. Or. May 26, 2011) (applying preliminary injunction standard to
motion for TRO).
"A plaintiff seeking a preliminary injunction must establish that he is likely to
succeed on the merits, that he is likely to suffer irreparable harm in the absence of
preliminary relief, that the balance of equities tips in his favor, and that an
injunction is in the public interest."
Am. Trucking Ass'ns Inc. v. City of L. A., 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting Winter v.
Nat. Res. Defense Council, Inc., 555 U.S. 7, 21 (2008)).
DISCUSSION
For the purposes of this Order, I assume Plaintiff is likely to succeed on the merits on at
least one of its claims. The parties' agreement contemplates that the "Purchaser," meaning
Defendant here, is obligated to promptly return all funds related to the purchase and transfer of a

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vehicle to Plaintiff should the Purchaser fail to acquire the Vehicle. Compl., Ex. 1, ECF 1-1. At
the very least, Defendant's continued failure to return the $105,570 "promptly" upon learning that
the Range Rover could not be purchased appears to violate the parties' agreement.
However, ordinarily, monetary harm does not constitute irreparable harm. E.g., Idaho v.
Coeur d'Alene Tribe, 794 F.3d 1039, 1046 (9th Cir. 2015) ("Purely economic harms are generally
not irreparable, as money lost may be recovered later, in the ordinary course of litigation") (citing
Sampson v. Murray, 415 U.S. 61, 90, 94 (1974) ("The possibility that adequate compensatory or
other corrective relief will be available at a later date, in the ordinary course of litigation, weighs
heavily against a claim of irreparable harm.") (internal quotation marks omitted)); see also Lydo
Enters., Inc. v. City of Las Vegas, 745 F.2d 1211, 1213 (9th Cir. 1984) ("Purely monetary injuries
are not normally considered irreparable.") (internal quotation marks omitted).
Plaintiff's alleged economic harm (the failure to receive $105,570 allegedly owed it), is
not irreparable. Moreover, even though a "district court has authority to issue a preliminary
injunction where the plaintiffs can establish that money damages will be an inadequate remedy
due to impending insolvency of the defendant or that defendant has engaged in a pattern of
secreting or dissipating assets to avoid judgment," In re Estate of Ferdinand Marcos, Human
Rights Litig., 25 F.3d 1467, 1480 (9th Cir. 1994), Plaintiff has not sufficiently alleged facts
supporting such relief in this case. As the Ninth Circuit noted, its holding is "restricted to only
extraordinary cases in which equitable relief is not sought." Id. Plaintiff argues that Defendant's
failure to return phone calls and cutting off of communication establishes Defendant's bad intent
to take the funds and not return them. But, Plaintiff offers no evidence to support this inference.
There is no evidence of a bankruptcy, the value of Defendant's assets, or any history of Defendant
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secreting assets. Plaintiff offers no explanation of why it could not recover the damages it asserts
are owed with other funds or property of Defendant. Without such facts, Plaintiff does not meet
its burden of demonstrating that this case falls into the "extraordinary" category as required in In
re Estate of Ferdinand Marcos.
As to the balance of hardships, Plaintiff concedes that freezing the funds will work a
hardship on Defendant. But, Plaintiff asserts that because the funds do not and have never
belonged to Defendant, they should be "held in place" during the lawsuit. Pl.'s Mem. at 5. I find
this factor favors Defendant. As Plaintiff notes, Defendant would be burdened by the requested
injunctive relief. Plaintiff's justification for why the hardships balance in its favor, or are neutral,
is a restatement of its argument that the funds should be frozen during the litigation. For the
reasons explained in the previous paragraph, while Plaintiff's legal theory may be viable and
Plaintiff may succeed on the merits, Plaintiff fails to establish that it will suffer irreparable harm
without injunctive relief.
As to the public interest, "[w]hen the reach of an injunction is narrow, limited only to the
parties, and has no impact on non-parties, the public interest will be at most a neutral factor in the
preliminary injunction analysis." Stormans v. Selecky, 586 F.3d 1109, 1138-39 (9th Cir. 2009)
(internal quotation marks omitted). If the impact reaches beyond the parties, potentially affecting
the public, the public interest is relevant to the analysis. Id. Here, Plaintiff seeks an order
directed not only to Defendant but also to Banner Bank and any other bank or financial
institution with which Defendant has deposited all or any part of the $105,570. Pl.'s Mot. at 2,
ECF 2. But, "Rule 65(d) does not empower the Court to enjoin a nonparty[.]" Swanberg v. Tro,
No. 3:14-cv-00882-HZ, 2016 WL 406342, at *3 (D. Or. Jan. 31, 2016). Thus, the proposed
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injunctive relief is broader than contemplated by the rule. If the requested relief is limited to
restraining Defendant's conduct, it is narrow because it is limited to the $105,570 paid by
Plaintiff and does not involve the public. Thus, so limited, the public interest is a non-factor.
Two other points must be mentioned. First, a TRO may issue only if the movant "gives
security in an amount that the court considers proper to pay the costs and damages sustained by
any party found to have been wrongfully enjoined or restrained." Fed. R. Civ. P. 65(c). While
the Court has discretion as to the amount of security, if any, that should be required, Johnson v.
Couturier, 572 F.3d 1067, 1086 (9th Cir. 2009), Plaintiff fails to address the security issue at all.
Second, Plaintiff states that Defendant agreed that preliminary injunctive relief would be
appropriate in the event of a breach. Compl. ¶ 11; see also Compl. Ex. 1 at 3. The provision at
issue states:
Purchaser acknowledges that breach of the Agreement will cause Company to
suffer irrevocable damage, including, but not limited to lost future earnings and
profits and harm to its reputation and goodwill within the community. The Parties
further agree that it would be difficult to measure damages caused by Purchaser's
breach of the Agreement with any degree of certainty, and that in any event,
money damages would likely not serve an adequate remedy for such breach.
Accordingly, Purchaser agrees that in addition to any relief to which Company
may be entitled, Company is hereby entitled to seek and obtain preliminary
injunctive relief from a court of competent jurisdiction.
Compl, Ex. 3 at 3.
The contract language does not justify the imposition of a TRO. The issues here are not
lost future earnings and profits or harm to reputation and goodwill. The damages sought are able
to be measured with precision because only a discrete amount is at stake and thus, there are no
damages that "would be difficult to measure[.]" Finally, Plaintiff fails to show why money
damages would not be adequate. In fact, money damages are exactly what Plaintiff seeks.
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CONCLUSION
Plaintiff's motion for a temporary restraining order [2] is denied.
IT IS SO ORDERED.

Dated this

day of

Marco A. Hernandez
United States District Judge

7 - ORDER

, 2017