Holmes v. Scan-Shipping Inc
Filing
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ORDER AND OPINION granting 1 Plaintiffs' Request for Injunctive Relief. Defendant Scan-Shipping, Inc., its officers, agents, servants, employees and attorneys, and all persons acting in concert with them are restrained from disposing, destro ying, or otherwise causing harm to Plaintiffs' personal property until a ruling at the conclusion of a trial on the merits, scheduled for October 4, 2016 at 9:00 a.m. It is also ORDERED that Plaintiffs'bond of $23,809.53 will remain in the Courts Registry until the resolution of this matter.(Signed by Judge Melinda Harmon) Parties notified.(rhawkins)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
GREG HOLMES, et al,
Plaintiffs,
VS.
SCAN-SHIPPING INC,
Defendant.
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July 14, 2016
David J. Bradley, Clerk
CIVIL ACTION NO. 4:16-CV-1945
ORDER AND OPINION
Pending before the Court is Plaintiffs’ Original Complaint and Application for Injunctive
Relief. (Document No. 1). Defendant has not filed a response. The Court held an injunction
hearing on July 13, 2016 at 10:00am. Having considered Plaintiffs’ filing, the facts in the record,
the arguments made at the hearing, and the applicable law, the Court concludes Plaintiffs’
Request for a Preliminary Injunction (Document No. 1) should be granted.
Background
The Plaintiffs in this case arranged to have their “unique household goods” shipped from
the Port of Poti in the country of Georgia to the Port of Houston, Texas, to be off-loaded and sent
overland to Edmund, Oklahoma, the Plaintiffs’ residence. (Document No. 1 at 2-3).
Mediterranean Shipping Company S.A. (“MSC”) transported a shipping container with
Plaintiffs’ items (“the cargo”) from the Port of Poti to the Port of Houston. Id. at 3. Then,
Defendant “was to deliver the container overland from Houston, Texas to the final destination in
Oklahoma.” Id.
The items arrived at the Port of Houston on January 7, 2016. Upon arrival, the shipping
container containing Plaintiffs’ items were randomly chosen for inspection and therefore placed
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“on hold” until January 12, 2016, when the hold was lifted and the cargo were transferred to
customs for clearance. Customs did not clear the cargo until January 28, 2016, due to issues with
documentation. During this time demurrage charges and other fees were accruing for container.
Id. at 4. At some point after customs cleared the container, Defendant moved the cargo from the
port site to a storage site in Harris County, Texas, and “demanded Plaintiffs to pay the excess
fees and demurrage charges before Defendant Scan-Shipping would complete the delivery to the
final destination in the State of Oklahoma.” Id. Once the items were moved to the storage
facility, Plaintiffs allege that Defendant “began to charge the Plaintiffs $500.00 USD per diem”
for storing the goods, and notified Plaintiffs that disposal of their property would occur if
Plaintiffs did not produce payment. Id. at 5-6. Plaintiffs have had several discussions with
Defendant regarding the charges, but the parties have failed to come to an agreement. The items
remain in Defendant’s storage facility, storage charges, the actual amount in dispute, continue to
accrue, and Defendants have notified the Plaintiffs that they intend to dispose of the stored items.
On June 21, 2016 Defendant sent Plaintiffs a demand for payment of $23,809.53, and
threatened to take legal action against Plaintiffs if they failed to pay within five days. (Document
No. 1-2, Exhibit 11). In response, Plaintiffs filed their Complaint and Application for Injunctive
Relief. (Document No. 1). In the Complaint, Plaintiffs have asserted a charge of conversion
against Defendants, alleging that Defendant “wrongfully exercised dominion and control over
the property by using it in a way that departed from the conditions under which it was received.”
Id. at 7. Plaintiffs sole request at this juncture is injunctive relief to prevent Defendant from
destroying their property, until a trial on the merits.
After the filing of Plaintiffs’ Complaint and Application for Injunctive Relief, the Court
entered a Temporary Restraining Order (Document No. 2, the “TRO”) on July 1, 2016, ordering
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that Defendant be restrained from disposing of Plaintiffs’ property. Pursuant to the TRO,
Plaintiffs filed a bond of $23,809.53. Id. The TRO was originally drafted to last until the hearing
on July 6, 2016, but the parties postponed that hearing one week, to July 13, 2016, and agreed to
continue the TRO until that time. (Document No. 7).
Legal Standard
To warrant a preliminary injunction under Fed. R. Civ. P. 65, a party must show four
elements: (1) a substantial likelihood of success on the merits of its claims; (2) a substantial
threat of irreparable injury if the injunction is not issued; (3) that the threatened injury if the
injunction is denied will outweigh any harm that will result if the injunction is granted; and (4)
that the granting of an injunction will not disserve the public interest. Byrum v. Landreth, 566
F.3d 442, 445 (5th Cir. 2009). The movant must “clearly carr[y] the burden of persuasion on all
four requirements.” PCI Transp. Inc. v. Fort Worth & W.R.R. Co., 418 F.3d 535, 545 (5th Cir.
2005). A preliminary injunction is an “extraordinary remedy” that should not be granted unless
the movant has “clearly carried the burden of persuasion on all four requirements.” Nicols v.
Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008). The court has the discretion whether to
grant or deny an injunction. eBay, Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006).
Discussion
a. Substantial likelihood of success
The Court believes that Plaintiffs have sufficiently demonstrated a substantial likelihood
of success on their conversion claim to warrant a preliminary injunction under the circumstances
of this case. “Conversion is the unauthorized and unlawful assumption and exercise of dominion
and control over the personal property of another to the exclusion of, or inconsistent with, the
owner's rights.” Freezia v. IS Storage Venture, LLC, 474 S.W.3d 379, 386-87 (Tex. App. 2015)
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(citation omitted). “The elements of conversion are: (1) the plaintiff owned, had legal possession
of, or was entitled to possession of the property; (2) the defendant assumed and exercised
dominion and control over the property in an unlawful and unauthorized manner, to the
exclusion of and inconsistent with the plaintiff's rights; and (3) the defendant refused the
plaintiff's demand for return of the property.” Id.
The first element is not disputed. Regarding the second element, Plaintiffs allege that
Defendant did not have authority or permission to move Plaintiffs’ items to the storage facility in
Houston.1 (Document No. 1 at 7). The hearing revealed that the ultimate dispute between the
parties is over the timeliness of the paperwork necessary for the cargo container to clear customs.
The sole witness, Plaintiff Mrs. Holmes, who had made the arrangements with Defendant to
clear the cargo through customs and then transport it to Oklahoma, testified that she had timely
provided the paperwork, and the delay between January 12, when the cargo was “on hold,” and
January 28, when the cargo cleared customs, was the fault of the Defendant. Plaintiffs argue that
for that reason, they should not be responsible for the resulting demurrage charges.
Regarding the third element, Plaintiffs state that “a demand for the return of the property
would have been useless because Defendant Scan-Shipping sent notice to the Plaintiffs that the
Plaintiffs’ property will be disposed of at the Defendant’s discretion. This created a concern that
any such demand for return of the property would cause the Defendant Scan-Shipping to dispose
of the personal property post haste before any court injunction could be granted and enforced.”
Id. A demand for return of the property may not be necessary, if the party in possession of the
items “has unequivocally exercised acts of dominion over the property inconsistent with the
claims of the owner or the person entitled to possession.” Sharpe v. Roman Catholic Diocese of
Dallas, 97 S.W.3d 791, 796 (Tex. App.—Dallas 2003, pet. struck) (citation omitted). By
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Defendant does not dispute that the items were moved to the storage facility.
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removing the items to the storage facility, it is arguable that Defendant exercised dominion over
the items, such that a demand by Plaintiffs was not required.
b. Irreparable injury
Mrs. Holmes testified that the personal items included the Plaintiffs’ clothing and other
personal effects, including their wedding photos. Plaintiffs argue that they will suffer irreparable
injury if these items are destroyed by Defendant, because of the unique, personal nature of the
items. (Document No. 1 at 8). Furthermore, the nature of the items precludes Plaintiffs from
being compensated fully by monetary damages if their items are destroyed. Id. Defendant did not
dispute this argument during the hearing.
The Court agrees that destruction of Plaintiffs’ personal items would cause them
irreparable harm, because the items are largely irreplaceable and contain great personal value to
the Plaintiffs. See Parks v. Dunlop, 517 F.2d 785, 787 (5th Cir. 1975) (“It is the threat of harm
that cannot be undone which authorizes exercise of this equitable power to enjoin before the
merits are fully determined.”) (emphasis added). Plaintiffs have met their burden on this factor.
c. Weighing of harm
In this case the balance of the harm weighs in favor of Plaintiffs, who will suffer
irreparable loss if their items are destroyed. Furthermore, Defendant’s potential financial harm is
greatly mitigated by the bond currently in place, and Defendant has not alleged any additional
harm it will suffer upon issuance of the injunction.
d. Public interest
Issuance of an injunction will not harm the public interest; this dispute is between two
private parties and will not affect the public in any way.
Conclusion
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For the foregoing reasons, it is hereby
ORDERED that Plaintiffs’ Request for Injunctive Relief (Document No. 1) is
GRANTED. Defendant Scan-Shipping, Inc., its officers, agents, servants, employees and
attorneys, and all persons acting in concert with them are restrained from disposing, destroying,
or otherwise causing harm to Plaintiffs’ personal property until a ruling at the conclusion of a
trial on the merits, scheduled for October 4, 2014.
It is also ORDERED that Plaintiffs’ bond of $23,809.53 will remain in the Court’s
Registry until the resolution of this matter.
SIGNED at Houston, Texas, this 13th day of July, 2016.
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MELINDA HARMON
UNITED STATES DISTRICT JUDGE
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