Universal Truck & Equipment Company, Inc. et al v. Caterpillar, Inc. et al
Filing
93
ORDER denying #38 Second Motion for Preliminary Injunction; adopting in part #80 Report and Recommendations. So Ordered by Judge William E. Smith on 7/17/12. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
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)
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v.
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CATERPILLAR, INC., et al.,
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Defendants,
)
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and
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CATERPILLAR FINANCIAL SERVICES
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CORPORATION and
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SOUTHWORTH-MILTON, INC.,
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Defendants and
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Plaintiffs-in)
Counterclaim.
)
___________________________________)
UNIVERSAL TRUCK & EQUIPMENT
COMPANY, INC.; NEW LONDON MINING,
MANUFACTURING & PROCESSING, LLC;
NICHOLAS E. CAMBIO; VINCENT A.
CAMBIO; and NICHOLAS E. CAMBIO,
as Trustee of THE NICHOLAS E.
CAMBIO, RODNEY A. MALAFRONTE AND
VINCENT A. CAMBIO TRUST,
Plaintiffs,
C.A. No. 10-466 S
ORDER
WILLIAM E. SMITH, United States District Judge.
Caterpillar
Financial
Services
Corporation
(“Cat
Financial”) filed a Second Motion for a Preliminary Injunction
(“Second Mot. for PI”) (ECF No. 38), seeking an order enjoining
Plaintiffs
Universal
Truck
&
Equipment
Company,
Inc.
(“Universal”), New London Mining, Manufacturing & Processing,
LLC (“New London”), Nicholas E. Cambio (“Nicholas”), Vincent A.
Cambio (“Vincent”), and Nicholas, as Trustee of the Nicholas E.
Cambio, Rodney A. Malafronte and Vincent A. Cambio Trust (the
“Trust”),
from
conditions.
transferring
their
assets,
subject
to
certain
Magistrate Judge David L. Martin issued a Report
and Recommendation (“R&R”) dated April 27, 2012 (ECF No. 80),
recommending that the motion be denied.
Before the Court is Cat
Financial’s Objection to the R&R (ECF No. 83), which is in fact
a partial objection (hereinafter “Partial Objection”).
At
the
clarified
hearing
that
it
on
is
its
now
Partial
seeking
Objection,
a
Cat
preliminary
Financial
injunction
enjoining New London from transferring, encumbering, or selling
any assets in which Cat Financial has a security interest and
that it does not object to the Magistrate Judge’s recommendation
that
its
motion
be
denied
with
respect
to
the
assets
of
Plaintiffs Universal, Nicholas, Vincent, and the Trust, or with
respect to the assets of New London in which Cat Financial does
not have a security interest.
What Cat Financial does challenge
is the Magistrate Judge’s finding that Cat Financial does not
have a security interest in any of New London’s assets.
asserts
London’s
that
it
has
equipment
a
security
pursuant
to
a
interest
in
collateral
certain
pledge
of
It
New
agreement
entered into by the parties in 2009 as part of the refinancing
between Cat Financial and New London (hereinafter referred to as
the
“Pledged
Collateral”).
(See
2
Mem.
in
Supp.
of
Cat
Financial’s Obj. to Mag.’s R&R 2, ECF No. 84 (citing Ex. G to
Aff.
of
Marion
Covell,
ECF
No.
11-7).)
According
to
Cat
Financial, this fact entitles it to an “asset freeze of that
equipment.”
Financial
(Id.)
New
maintains
a
London
security
does
not
interest
dispute
in
that
this
Cat
Pledged
Collateral.
Having determined that Cat Financial does have a security
interest
in
the
Pledged
Collateral,
the
Court
turns
to
the
familiar four-part test for issuing a preliminary injunction.
The oft-recited inquiry requires weighing the following factors
to
determine
the
appropriateness,
vel
non,
of
the
Court
exercising its equitable powers in the preliminary stages of
litigation:
(1) the plaintiff’s likelihood of success on the
merits, (2) the likelihood of irreparable harm, (3)
the balance of relevant equities, and (4) the effect
of the court’s action on the public interest.
Peoples Fed. Sav. Bank v. People’s United Bank, 672 F.3d 1, 5
(1st Cir. 2012).
Moreover, it is firmly established that “the
basis for injunctive relief in the federal courts has always
been irreparable injury and the inadequacy of legal remedies.”
Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645
F.3d
26,
32
(1st
Cir.
2011)
(quoting
Weinberger
v.
Romero–
Barceló, 456 U.S. 305, 312 (1982)); see also 11A Charles Alan
Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and
3
Procedure,
§
2948.1,
“[p]erhaps
the
at
single
139
most
(2d
ed.
important
1995)
(noting
prerequisite
for
that
the
issuance of a preliminary injunction is a demonstration that if
it is not granted the applicant is likely to suffer irreparable
harm before a decision on the merits can be rendered”).
Cat Financial’s irreparable harm argument is not the model
of clarity.
harm
if
It argues variably that it will endure irreparable
Plaintiffs
are
“free
to
transfer
their
assets
and
prevent Cat Financial from collecting on its expected judgment”
(Reply of Cat Financial to Pl.’s Opp. to Second Mot. for PI 4,
ECF
No.
assets,
51),
and
without
interest
because
payment,
“meaningless”
Financial’s
Second
New
renders
(Mem.
Mot.
London’s
for
use
of
the
Cat
Financial’s
security
Law
of
PI
continued
in
Support
of
Cat
39.)
But
Cat
9,
ECF
No.
Financial cites no authority suggesting that these arguments are
sufficient
to
demonstrate
irreparable
harm.
Rather,
in
the
cases that Cat Financial cites, the likelihood of irreparable
harm is established by the looming insolvency of the non-moving
party or the veritable risk that the moving party would not be
able to collect a judgment because the non-moving party had
expressed its intention to transfer secured assets.1
1
(See Reply
In its briefing, Cat Financial suggests that New London
may be insolvent by stating that New London has failed to pay
for its financed equipment and has failed to respond to Cat
Financial’s Second Request for Production of Documents, which
4
6 (citing Fairview Mach. & Tool Co. v. Oakbrook Int’l, Inc., 77
F.
Supp.
2d
199,
201,
205
(D.
Mass.
1999)
(entering
a
preliminary injunction where the court found that there was “a
substantial likelihood that defendant will be unable to pay any
ultimate judgment,” because it intended to sell most of its
assets)); Mem. of Law in Support of Cat Financial’s Second Mot.
for PI 9 (citing Teradyne, Inc. v. Mostek Corp., 797 F.2d 43, 52
(1st Cir. 1986) (finding support for a preliminary injunction
where the issue before the court was “whether injunctive relief
restraining
the
transfer
of
assets
can
be
granted
when
the
district court finds that the defendant may be insolvent before
a
final
judgment
is
entered
.
.
.”
(emphasis
added))).)
Moreover, the First Circuit has noted that a security interest,
in
the
absence
troublesome
creditor,
of
a
indicator,
because
the
showing
may
of
insolvency
actually
security
work
interest
or
against
some
a
other
secured
constitutes
“an
alternative means for ensuring payment of any judgment that [the
creditor] eventually might obtain.”
Charlesbank Equity Fund II
v. Blinds To Go, Inc., 370 F.3d 151, 163 (1st Cir. 2004) (noting
that “[t]he existence of this anchor to windward [i.e., the
perfected security interest] further undermines [the creditor’s]
sought documents concerning the assets and financial condition
of Plaintiffs.
This argument, however, does not satisfy the
Court that New London is insolvent.
If Cat Financial were to
obtain more concrete record support for this argument, it could
file a new motion for a preliminary injunction.
5
argument that it is facing an intolerable risk of irreparable
harm”).
Here, there is no record support underlying Cat Financial’s
worry that New London may transfer the Pledged Collateral or
showing
that
irreparable
Pledged
the
harm
claimed
Collateral
contrast
to
Cat
requested
may
injunction
by
Cat
Financial,
deteriorate
Financial’s
would
first
from
prevent
i.e.,
that
continued
motion
for
a
use.
the
the
In
preliminary
injunction and writ of replevin, which facilitated the return of
assets to Cat Financial, freezing the Pledged Collateral would
do nothing to guard against the purported irreparable harm of
depreciation; indeed, Cat Financial made clear at oral argument
that it did not seek to enjoin New London from operating the
equipment.
Without more, Cat Financial has plainly failed to establish
irreparable harm in the absence of an injunction, and so, its
Partial
Objection
argument.
must
be
rejected
with
respect
to
that
Accordingly, the Court hereby ADOPTS the R&R insofar
as it concludes that a preliminary injunction should not be
issued as to Universal, Nicholas, Vincent, and the Trust.
The
Court hereby REJECTS the R&R insofar as it concludes that Cat
Financial is not entitled to a preliminary injunction as to New
London
assets.
because
Cat
it
does
not
Financial’s
have
Partial
6
a
security
Objection
interest
in
its
to
R&R
is
the
ACCEPTED
IN
PART
AND
REJECTED
IN
PART;
and
Cat
Second Motion for a Preliminary Injunction is DENIED.
IT IS SO ORDERED.
/s/ William E. Smith
William E. Smith
United States District Judge
Date: July 17, 2012
7
Financial’s
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