Our Coastal Village, Inc. v. WNC & Associates, Inc.

Filing 19

ORDER: Denying Motion for a Preliminary Injunction 5 . Signed on 4/20/2017 by Judge Michael J. McShane. (cp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

OUR COASTAL VILLAGE, INC., an
Oregon public benefit corporation,

Plaintiff,

v.

Civ. No. 6:17-cv-000385-MC
ORDER

WNC & ASSOCIATES, INC., a
California corporation,

Defendant.

MCSHANE, Judge:

Plaintiff moves for a preliminary injunction to require defendant to perform on a Letter of
Understanding (LOU) (ECF No. 5). Defendant argues that a preliminary injunction is not
appropriate. This Court agrees with defendant and plaintiffs motion for a preliminary injunction
(ECF No. 5) is DENIED.

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BACKGROUND
Plaintiff, Our Coastal Village, Inc. (OCV), is a non-profit corporation whose mission is to
provide affordable housing to low income workers in Yachats, Oregon. OCV began developing
an affordable housing community known as Fisterra Gardens Townhomes (the Project). OCV
sought financing from defendant, WNC & Associates, Inc. (WNC), through the purchase of Low
Income Housing Tax Credits (LIHTCs). On September 16, 2016, OCV and WNC entered into a
LOU under which WNC retained the exclusive rights to consider a $1.7 million dollar equity
financing deal for forty-five days. The equity financing was calculated at $0.92 of each dollar of
available LIHTCs.
On October 3, 2016, WNC's Investment Committee (the Committee) approved the
Project to proceed to the Introduction phase, the first of a four-stage review process. On
November 22, 2016, the Committee conducted Stage I review of the Project and noted concerns
about operating expenses and the pricing structure of the apartments. Due to these concerns, the
Committee voted to reject the project unless OCV agreed to pay for a market study.
On January 16, 2017, OCV and WNC had a conference call during which WNC notified
OCV that it had concerns about the financial viability of the Project. WNC indicated that it felt
the Project was no longer feasible, and it terminated the LOU.
OCV states that, since January 16, 2017, it has continued to keep WNC updated about
project developments for the due diligence review of the project and OCV has continued to work
to fulfill the conditions precedent to WNC's capital investment as detailed in the LOU. They
believe the LOU is binding, and seek a preliminary injunction from this Court to enforce it.

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STANDARD OF REVIEW
A preliminary injunction under FRCP 65 is '"an extraordinary and drastic remedy, one
that should not be granted unless the movant, by a clear showing, carries the burden of
persuasion."' Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012). The party seeking
injunctive relief must show that (1) it "is likely to succeed on the merits;" (2) it "is likely to
suffer irreparable harm in the absence of preliminary relief;" (3) the equities are balanced in its
favor; and (4) "an injunction is in the public interest." Winter v. NRDC, Inc., 555 U.S. 7, 20
(2008). Under the alternative "'serious questions"' articulation of this standard, the movant must
establish (1) a likelihood of irreparable harm, (2) that the injunction is in the public interest, (3)
serious questions going to the merits that cannot be preliminarily resolved at the motion hearing,
and (4) that the balance of hardships tips sharply in the plaintiffs favor. Alliance for the Wild
Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011). While a stronger showing of
irreparable harm may offset a weaker showing of likelihood of success on the merits, a
preliminary injunction is never appropriate upon a showing of a mere possibility of irreparable
harm. Id at 22. The burden on plaintiff is more demanding for a mandatory injunction, such as
the one plaintiff requests here, because "the facts and law [must] clearly favor the moving party."
Dahl v. HEM Pharmaceuticals Corp., 7 F.3d 1399, 1403 (9th Cir. 1993).

DISCUSSION
Plaintiff has not met its burden of clearly showing likelihood of success on the merits, nor
has it clearly shown a likelihood of irreparable harm. As a result, plaintiff is not entitled to a
preliminary injunction.

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First, plaintiff has not established that it is likely to succeed on the merits because the
facts on the record here do not clearly favor plaintiffs assertion that the LOU is legally binding.
Even ifthe LOU has some binding effect, there is not enough in the record for the Court to
determine whether defendant breached any duties that may have arisen under the LOU.
Second, plaintiff has not established that it will suffer irreparable harm absent an
injunction because all of the harm that plaintiff has asserted is speculative. Plaintiff has only
asserted that it will possibly lose the ability to purchase the plot of land at issue. Plaintiff also
asserts that the reputation and goodwill of OCV will be negatively impacted if the deal falls
through and that it might be obligated to pay back third party grants already spent on project
costs. All of these assertions of harm are speculative and are not enough to clearly establish a
likelihood of irreparable harm.
Finally, a mandatory injunction, such as the one plaintiff requests here, is not granted
"unless extreme or very serious" harm that is not capable of compensation in damages will result
absent the injunction. Marilyn Nutraceuticals v. Mucos Pharma GmbH & Co., 571F.3d873,
878-79 (9th Cir.2009). Plaintiff has not established whether or not the claim can be adequately
compensated in damages, which further supports the denial of the mandatory injunction OCV
seeks.

CONCLUSION
Because the evidence on the record does not clearly demonstrate that plaintiffs are likely
to succeed on the merits, that irreparable harm is likely, or that its harm cannot be compensated
in damages, the plaintiffs motion for a preliminary injunction (ECF No. 5) is DENIED.

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IT IS SO ORDERED.
Dated this ~th day of April, 2017.

Michael McShane
United States District Judge

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