Applied Partners, Inc. v. Liquasol, LLC et al

Filing 8

MEMORANDUM OPINION AND ORDER denying 5 APPLICATION by Applied Partners, Inc. for Preliminary Injunction. Signed by Judge Joseph R. Goodwin on 1/29/2018. (cc: counsel of record; any unrepresented party) (taq)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
APPLIED PARTNERS, INC.,
v.

CIVIL ACTION NO. 2:18-cv-00048

LIQUASOL, LLC, et al.,
MEMORANDUM OPINION AND ORDER
Pending before the court is Plaintiff’s Application for a Preliminary Injunction
[ECF No. 5]. The defendants filed a response [ECF No. 7]. This matter is now ripe for
adjudication. For the following reasons, the Motion is DENIED.
I.

Background
On January 12, 2018, the plaintiff filed this action pursuant to a contract it

entered into with the defendants. See Compl. [ECF No. 1]. According to the plaintiff,
the defendants are currently harvesting and selling timber, and the plaintiff is
entitled to receive 50% of the profits from this enterprise pursuant to their contract.

Id. ¶¶ 9–11. On January 19, 2018, the plaintiff filed an application for an attachment
and preliminary injunction against the defendants. Pl.’s Appl. for Prelim. Inj. 1–5
[ECF No. 5]. The plaintiff requests that the court enter an order restraining and
enjoining the defendants from spending or dissipating any of the proceeds from the
sale of the timber, and require the remission of all proceeds from the sale of the timber
to a receiver appointed by the court until the resolution of this matter. Id. at 5–6.

II.

Discussion
In its motion, the plaintiff argues that it is entitled to: (1) an attachment

pursuant to West Virginia Code § 38-7-1, and (2) a preliminary injunction pursuant
to Federal Rule of Civil Procedure 65. Id. 1–5.
a. West Virginia Code § 38-7-1
Under Federal Rule of Civil Procedure 64, “every remedy is available that,
under the law of the state where the court is located, provides for seizing a person or
property to secure satisfaction of the potential judgment.” West Virginia Code § 387-1 allows plaintiffs to receive an order of attachment against defendants before a
judgment in certain circumstances. The section provides that to have any property
seized, the plaintiff must file
with the clerk of the court in which such action . . . is
brought, his own affidavit or that of some credible person,
stating the nature of the plaintiff’s claim and the amount,
at the least, which the affiant believes the plaintiff is justly
entitled to recover . . . and also that the affiant believes the
plaintiff is justly entitled to recover in the action . . . and
also that the affiant believes that some or more of the
grounds mentioned in the next following section of this
article exist for such attachment.
W. V. Code § 38-7-1. The plaintiff did not submit an affidavit with his motion.
Therefore, he is not eligible to receive an attachment pursuant to West Virginia Code
§ 38-7-1.

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b. Federal Rule of Civil Procedure 65
Federal Rule of Civil Procedure 65 governs preliminary injunctions. A
preliminary injunction is an extraordinary remedy intended to protect the status quo
and prevent irreparable harm during the pendency of a lawsuit.” Di Biase v. SPX

Corp., 872 F.3d 224, 230 (4th Cir. 2017). Plaintiffs “must overcome the presumption
that a preliminary injunction will not issue when the harm suffered can be remedied
by money damages at the time of judgment.” Id. “The reluctance to award preliminary
injunctions where the harm at issue can be remedied by an award of money damages
at judgment arises out of the concerns raised by the preliminary injunction remedy.”

Hughes Network Sys., Inc., v. InterDigital Commc’n Corp., 17 F.3d 691, 693 (4th Cir.
1994). “[G]ranting a preliminary injunction requires that a district court, acting on
an incomplete record, order a party to act, or refrain from acting, in a certain way.
The danger of a mistake in this setting is substantial.” Id. (quoting Am. Hosp. Supply

Corp. v. Hosp. Prods., Ltd., 780 F.2d 589, 593 (7th Cir.1986)) (internal quotation
marks omitted).
The United States Supreme Court and the United States Court of Appeals for
the Fourth Circuit have provided district courts with a precise analytical framework
for determining whether to grant preliminary relief. Winter v. Natural Res. Def.

Council, Inc., 555 U.S. 7, 20 (2008); The Real Truth About Obama, Inc. v. FEC, 575
F.3d 342, 346–47 (4th Cir. 2009), vacated on other grounds, 130 S. Ct. 2371 (2010).
First, the plaintiffs must make a clear showing that they are likely to succeed on the
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merits. The Real Truth About Obama, Inc., 575 F.3d at 346. Second, the plaintiffs
must make a clear showing that they are likely to be irreparably harmed absent
preliminary relief. Id. Third, the plaintiffs must show that the balance of equities tips
in their favor. Id. Finally, the plaintiffs must show that an injunction is in the public
interest. Id. All four requirements must be satisfied. Id.
As to the second element, that the movant is likely to suffer irreparable harm,
“[t]he key word . . . is irreparable. Mere injuries, however substantial, in terms of
money, time and energy necessarily expended in the absence of a stay, are not
enough.” Hughes Network Sys., Inc., 17 F.3d at 694 (quoting Sampson v. Murray, 415
U.S. 61, 90 (1974)). The Supreme Court has explained that the injury must be more
than speculative—it must be real and actual. Henderson v. Bluefield Hosp. Co., LLC,
208 F. Supp. 3d 763, 770 (S.D. W. Va. 2016) (citing Winter, 555 U.S. at 22). “Bare
allegations of what is likely to occur are of no value since the court must decide
whether the harm will in fact occur.” Id. (quoting Wisconsin Gas Co. v. Fed. Energy

Regulatory Comm’n, 758 F.2d 669, 758 (D.C. Cir. 1985)). Therefore, “[t]he movant
must provide proof that the harm has occurred in the past and is likely to occur again,
or proof indicating that the harm is certain to occur in the near future.” Id.
“Where the harm suffered by the moving party may be compensated by an
award of money damages at judgment, courts generally have refused to find that
harm irreparable.” Hughes Network Sys., Inc., 17 F.3d at 694. This is because
“[m]onetary relief typically may be granted as easily at judgment as at a preliminary
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injunction hearing, and a party does not normally suffer irreparable harm simply
because it has to win a final judgment on the merits to obtain monetary relief.” Id.
“Even if a loss can be compensated by money damages at judgment, however,
extraordinary circumstances may give rise to the irreparable harm required for a
preliminary injunction.” Id. Extraordinary circumstances include “where the moving
party’s business cannot survive absent a preliminary injunction or where damages
may be unobtainable from the defendant because he may become insolvent before a
final judgment can be entered and collected.” Id. (citations omitted).
Here, the plaintiff is suing the defendants to recover proceeds from the sale of
timber which it believes it is entitled to. Compl. 4. According to the plaintiff, it will
suffer irreparable harm without a preliminary injunction for two reasons. Id. ¶¶ 4–5.
First, the defendants are “likely to dissipate the proceeds to be received from the ongoing cutting and sale of timber in which [the] [p]laintiff has a fifty percent interest.”

Id. ¶ 5. Second, “[u]pon information and belief” the defendants are not “sufficiently
solvent to be able to respond in damages should all timber be harvested and sold
pending” this lawsuit. Id. ¶ 4. The plaintiff did not provide a single piece of evidence
to support the conclusion that the defendants are likely to dissipate the proceeds or
are not sufficiently solvent to pay damages at the end of this lawsuit, should they be
ordered to. At this stage, the plaintiff’s accusations against the defendants are
nothing more than speculation.

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On the other hand, the defendants submitted an affidavit by Tim Lyon, a
managing member and authorized representative of each of the defendants, which
directly contradicts the plaintiff’s assertions. Defs.’ Resp. Ex. 1, at 1–4 [ECF No. 7-1].
According to Mr. Lyon’s affidavit, were the court to determine that the defendants
owe the plaintiff the money it seeks, they “can and will” pay. Id. at ¶ 9. Further, the
defendants maintain that they “have not and are not absconding with timber sale
proceeds.” Id. ¶ 10. Lastly, the defendants maintain that the plaintiff will soon owe
the defendants money for profits obtained from scrapping an aluminum plant, and
that the money from this endeavor will far exceed that which the plaintiff seeks for
the sale of timber. Id. ¶¶ 14, 18. According to the defendants, these “proceeds
provide[] more than adequate resources to compensate [the] plaintiff if [the] plaintiff
were entitled to monetary damages.” Defs.’ Resp. ¶ 4 [ECF No. 7].
Based on the plaintiff’s lack of evidence and the defendant’s evidence to the
contrary, the court FINDS that the plaintiff will not suffer irreparable harm without
a preliminary injunction. Since all four requirements must be satisfied and the
plaintiff has failed to demonstrate that it will suffer irreparable harm, the court’s
inquiry is over.
III.

Conclusion

Preliminary injunctions are reserved for the most compelling, extraordinary
cases and this not one of them. The Plaintiff’s Application for a Preliminary

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Injunction is DENIED [ECF No. 5]. The court DIRECTS the Clerk to send a copy of
this Order to counsel of record and any unrepresented party.

ENTER:

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January 29, 2018