Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_19-cv-04789/USCOURTS-cand-4_19-cv-04789-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ABOVEGEM, INC.,

Plaintiff,

v.

ORGANO GOLD MANAGEMENT, 

LIMITED, et al.,

Defendants.

Case No. 19-cv-04789-PJH 

ORDER DENYING MOTION FOR 

TEMPORARY RESTRAINING ORDER

Re: Dkt. No. 2

Plaintiff AboveGEM, Inc.’s (“AboveGEM”) motion for a temporary restraining order 

(“TRO”) came on for hearing before this court on August 16, 2019. Plaintiff appeared 

through its counsel, Gautam Dutta. Defendant Organo Gold Int'l, Inc. (“OG Int’l”)

appeared through its counsel, Lawrence Bruce Steinberg. Defendants Organo Gold 

Management, Limited (“OG Management”) and Organo Gold Holdings, Limited (“OG 

Holdings”) (together, the “Hong Kong Defendants”) did not appear. Having read the 

papers filed by the parties and carefully considered their arguments and the relevant 

legal authority, and good cause appearing, the court hereby DENIES the motion, for the 

following reasons.

BACKGROUND

Plaintiff filed the complaint originating this action on August 14, 2019. Dkt. 1. 

Plaintiff has not yet served any defendant with the complaint, summons, or any of the 

other required materials.

Plaintiff’s complaint alleges three “counts.” First, plaintiff alleges that the Hong 

Kong Defendants breached a contract they had entered into with plaintiff by failing to 

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make timely payments to plaintiff in accordance with the schedule specified in the

contract. Second, plaintiff alleges that the Hong Kong Defendants violated the California 

Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq. Plaintiff does not raise 

the UCL violation as a justification for a TRO. Third, plaintiff alleges a “constructive trust”

against all defendants. The constructive trust count alleges that “AboveGEM has a right 

to the res at issue: the entirety of the remaining amount due ($319,028) under the 

Agreement.” Dkt. 1 at 6 ¶ 48. In support of that count, plaintiff alleges only that the Hong 

Kong Defendants owe it money damages for their breach of contract, and that “OG Int’l –

an American subsidiary of OG Management – actively participated in and financially 

benefited from OG Management’s and OG Holdings’ wrongful detention of the res.” Id. at 

7 ¶ 49.

On August 14, 2019, plaintiff moved for a temporary restraining order, seeking an 

order from this court freezing “all bank accounts controlled by” each of the defendants as 

well as “all inventory currently stored at a warehouse, controlled by OG Management and 

used by OG Int’l, located at 5505 Hovander Road, Ferndale, Washington[.]” Dkt. 2 at 1. 

In its motion, plaintiff argues that good cause exists to issue a TRO without notice to any 

defendant. On the same day, this court issued an order requiring plaintiff to deliver notice 

of the motion to defendants and setting a briefing schedule and hearing. Defendant OG 

Int’l filed an opposition and made an appearance at the hearing.

DISCUSSION

A. Legal Standard

Federal Rule of Civil Procedure 65 provides federal courts with the authority to 

issue temporary restraining orders and preliminary injunctions. Fed. R. Civ. P. 65(a)–(b). 

Generally, the purpose of a preliminary injunction is to preserve the status quo and the 

rights of the parties until a final judgment on the merits can be rendered (see U.S. Philips 

Corp. v. KBC Bank N.V., 590 F.3d 1091, 1094 (9th Cir. 2010)), while the purpose of a 

temporary restraining order is to preserve the status quo before a preliminary injunction 

hearing may be held (see Granny Goose Foods, Inc. v. Bhd. of Teamsters and Auto 

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Truck Drivers, 415 U.S. 423, 439 (1974)).

Requests for temporary restraining orders are governed by the same general legal 

standards that govern the issuance of a preliminary injunction. See New Motor Vehicle 

Bd. v. Orrin W. Fox Co., 434 U.S. 1345, 1347 n.2 (1977); Stuhlbarg Int'l Sales Co., Inc. v. 

John D. Brush & Co., Inc., 240 F.3d 832, 839 n.7 (9th Cir. 2001).

An injunction is a matter of equitable discretion and is “an extraordinary remedy 

that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” 

Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22 (2008); see also Munaf v. Geren, 

553 U.S. 674, 689–90 (2008). A preliminary injunction “should not be granted unless the 

movant, by a clear showing, carries the burden of persuasion.” Mazurek v. Armstrong, 

520 U.S. 968, 972 (1997) (per curiam).

“A plaintiff seeking a preliminary injunction must establish that [1] he is likely to 

succeed on the merits, that [2] he is likely to suffer irreparable harm in the absence of 

preliminary relief, that [3] the balance of equities tips in his favor, and that [4] an 

injunction is in the public interest.” Winter, 555 U.S. at 20.

Alternatively, “‘serious questions going to the merits’ and a hardship balance that 

tips sharply toward the plaintiff can support issuance of an injunction, assuming the other 

two elements of the Winter test are also met.” All. for the Wild Rockies v. Cottrell, 632 

F.3d 1127, 1132 (9th Cir. 2011). “That is, ‘serious questions going to the merits’ and a 

balance of hardships that tips sharply towards the plaintiff can support issuance of a 

preliminary injunction, so long as the plaintiff also shows that there is a likelihood of 

irreparable injury and that the injunction is in the public interest.” Id. at 1135; see also

Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848, 856 (9th Cir. 2017).

B. Analysis

Plaintiff argues that its motion satisfies both the Winter and the alternate “serious 

questions” standards for issuing a temporary restraining order.

1. The Hong Kong Defendants Have Not Been Served 

As an initial matter, the court notes that the Hong Kong Defendants have not been 

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served with a summons, the complaint, the required supplemental materials, or the 

pending TRO motion. Plaintiff’s counsel avers that he “served” some of those materials 

“by electronic mail pursuant to FRCP 5” on Patrick Miranda, Awie Kardiman, and Paul 

Caldwell on August 14, 2019. Dkt. 12. Even assuming that those three individuals are 

competent to accept service on behalf of the Hong Kong Defendants, plaintiff’s counsel 

explained at the hearing that the Hong Kong Defendants had not consented in writing to 

accept service by email or other electronic means. As such, plaintiff has not effected

service on the Hong Kong Defendants. See Fed. R. Civ. P. 5(b)(2)(E).

This court declines to award the drastic relief plaintiff seeks—freezing “all bank 

accounts” and all inventory at a warehouse—against defendants who have not been 

served with any case materials and have not made an appearance.

2. Whether Plaintiff Satisfies the Winter Inquiry

A plaintiff seeking a TRO must establish that “[1] he is likely to succeed on the 

merits, that [2] he is likely to suffer irreparable harm in the absence of preliminary relief, 

that [3] the balance of equities tips in his favor, and that [4] an injunction is in the public 

interest.” Winter, 555 U.S. at 20.

a. Whether Plaintiff Is Likely to Succeed On the Merits

Plaintiff argues that it is likely to prevail on its claim for breach of contract (count 1, 

alleged against the Hong Kong Defendants) because they have failed to make 

contractually-required payments. Plaintiff next appears to argue that after prevailing on 

its breach of contract claim against the Hong Kong Defendants, it will prevail on its 

attempt to seek relief against OG Int’l in the form of imposing a constructive trust.

“[T]he elements of a cause of action for breach of contract are (1) the existence of 

the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's 

breach, and (4) the resulting damages to the plaintiff.” Oasis W. Realty, LLC v. Goldman, 

51 Cal. 4th 811, 821 (2011). 

Plaintiff has submitted a copy of the alleged contract, which appears to have been 

entered into by OG Management, OG Holdings, and AboveGEM in November 2018. The 

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contract calls for OG Management to make payments to plaintiff and for OG Holdings to 

serve as guarantor for those payments. Plaintiff has demonstrated that OG 

Management, and later OG Holdings, missed contractually-required payments. Given 

plaintiff’s allegations and submitted materials, plaintiff has demonstrated that it is likely to 

succeed on the merits of its breach of contract claim.

Plaintiff next argues that it is likely to succeed on the merits for its “claim for 

Constructive Trust.” Dkt. 2 at 13. As an initial matter, the court notes that 

“a constructive trust is a remedial device, not a substantive claim on which to base 

recovery[.]” Lund v. Albrecht, 936 F.2d 459, 464 (9th Cir. 1991); see also Stansfield v.

Starkey, 220 Cal. App. 3d 59, 76 (1990) (“[A]ppellants alleged, as causes of action, a 

resulting trust and a constructive trust. But neither is a cause of action, only a remedy.”) 

(citation omitted). As such, plaintiff is not likely to succeed on the merits of its “claim” for 

a constructive trust, which is the only “claim” asserted against OG Int’l.

The court next considers whether plaintiff is likely to secure the remedy of a 

constructive trust imposed on property held by OG Int’l, based on plaintiff’s claim for 

breach of contract against the Hong Kong Defendants. “A constructive trust is an 

involuntary equitable trust created by operation of law as a remedy to compel the transfer 

of property from the person wrongfully holding it to the rightful owner.” Burlesci v. 

Peterson, 68 Cal. App. 4th 1062, 1069 (1998).

Assuming without deciding that a constructive trust could be a proper remedy for a 

breach of contract claim, “a constructive trust may only be imposed where the following 

three conditions are satisfied: (1) the existence of a res (property or some interest in 

property); (2) the right of a complaining party to that res; and (3) some wrongful 

acquisition or detention of the res by another party who is not entitled to it.” Id. at 1069. 

Plaintiff must demonstrate “money or property identified as belonging in good conscience 

to the plaintiff which can clearly be traced to particular funds or property in the 

defendant's possession.” Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 

1150 (2003). A constructive trust is available where the specific res or funds can be 

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identified, “but not where the plaintiff seeks to impose general personal liability as a 

remedy for the defendant's monetary obligations.” Honolulu Joint Apprenticeship and 

Training Committee of United Ass'n Local Union No. 675 v. Foster, 332 F.3d 1234, 1238 

(9th Cir. 2003).

With respect to its pending motion, plaintiff has not sufficiently demonstrated that it 

is likely to obtain this equitable remedy because it has not shown that it has a right to any 

particular property wrongfully held by OG Int’l. Plaintiff argues that the Hong Kong 

Defendants owe it money damages for their breach of a contract, and in turn plaintiff

points to money and property it alleges a third party obtained from the Hong Kong 

Defendants in the course of their business dealings.

1

 But identifying a party that received

funds from one who breached a contract is not sufficient to impose a constructive trust.

In short, “the restitution it seeks must be equitable. It is not. . . . There is no indication 

that the funds are specific or identifiable, or that [plaintiff] seeks anything other than 

monetary compensation on a breach of contract claim.” Id.

b. Irreparable Harm

Plaintiff first argues that it will be irreparably harmed because OG Management is 

likely to sell its inventory on August 15, 2019, and the sales proceeds will take only a few 

days to process. Second, plaintiff argues that it is “last in line” as a creditor of OG 

Management—and presumably that OG Management owes more money than it has 

available—so plaintiff is unlikely to be paid. Third, plaintiff argues that if it is not paid 

quickly, it may not be able to continue as a going concern.

First, plaintiff did not seek relief in time to address its concern about sales 

occurring on August 15, 2019. Although it learned of all the relevant facts “last Friday,”

2

it 

 

1 Plaintiff’s complaint asserts a constructive trust should be imposed with respect to the 

res of $319,028. Dkt. 1 at 6 ¶ 48. The motion changes tack and speculates that “it is 

highly likely that OG Management used some, if not all, of the money that it wrongfully 

withheld from AboveGEM in order to purchase inventory (worth at least $800,000) that is 

currently stored at the Ferndale, Wash. warehouse. By the same token, it is highly likely 

that OG Int’l used some of the money that its parent company (OG Management) 

wrongfully withheld from AboveGEM.” Dkt. 2 at 14.

2

It is unclear whether plaintiff is referring to August 2 or August 9. See Dkt. 2 at 2, 4, 9 

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waited until the afternoon of August 14 to file its motion—fewer than 24 hours before it 

would allegedly suffer irreparable harm. See Dkt. 2-5 at 5 (“we respectfully ask the Court 

to issue a ruling by Aug. 15, 2019, 11:30 am”). Therefore, plaintiff’s arguments regarding 

sales on August 15 do not support a finding of irreparable harm absent injunctive relief at 

this time. Moreover, it is unclear how OG Management’s sale of inventory would cause 

plaintiff irreparable harm. Plaintiff’s breach of contract claim at bottom seeks damages. 

OG Management’s sale of inventory would convert goods into currency, but it is unclear 

how it would negatively affect OG Management’s ability to pay damages.

Second, plaintiff’s argument that it is “last in line” as a creditor appears to be no 

more than speculation that defendants might choose to use their funds for purposes other 

than paying plaintiff. In particular, plaintiff identifies certain of defendants’ other alleged 

business debts that it suspects defendants may be more keen on repaying. But that 

does not distinguish this action from any other suit for damages—the defendant may not 

have sufficient liquid assets to fully satisfy a judgment. Plaintiff cites no authority 

indicating that this constitutes irreparable harm supporting freezing assets, and it has not 

satisfied its burden to show that its fears are more than speculative. See generally In re 

Excel Innovations, Inc., 502 F.3d 1086, 1098 (9th Cir. 2007) (“Speculative injury cannot 

be the basis for a finding of irreparable harm.”).

Third, plaintiff argues that its business may dissolve if it cannot recover “speedily.” 

Although “[m]onetary damages are not usually sufficient to establish irreparable harm[,]

. . . . [t]he threat of being driven out of business is sufficient to establish irreparable 

harm.” Am. Passage Media Corp. v. Cass Commc'ns, Inc., 750 F.2d 1470, 1473–74 (9th 

Cir. 1985). However, statements that a company has “sustained large losses” in the past 

and “forecast[s] large losses again” in the future “are insufficient evidence that [plaintiff] is 

threatened with extinction.” Id. at 1474. 

Here, plaintiff’s co-founder avers that the company had been “growing rapidly” until 

 

(referring to “Oct. 9, 2019”), 15, 16.

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November 2018 (Dkt. 2-1 ¶ 4), but following the alleged breach plaintiff has laid off 

portions of its overseas and domestic workforce and “continues to suffer from negative 

cash flow” (id. ¶¶ 33–34). Plaintiff’s clearest statement about its future survival is that it 

“may not be able to continue as a going concern” if it cannot “speedily recover” the 

amount it believes it is owed. Id. This showing is insufficient to establish irreparable 

harm. The co-founder’s statement that plaintiff “may” not be able to continue is inherently

speculative. See In re Excel Innovations, Inc., 502 F.3d at 1098 (“Speculative injury 

cannot be the basis for a finding of irreparable harm.”). Moreover, plaintiff does not offer 

any indication of when it would be driven out of business, or underlying financial

information that would demonstrate imminent, irreparable harm. See Caribbean Marine 

Servs. Co. v. Baldrige, 844 F.2d 668, 674 (9th Cir. 1988) (“A plaintiff must do more than 

merely allege imminent harm sufficient to establish standing; a plaintiff must demonstrate

immediate threatened injury as a prerequisite to preliminary injunctive relief.”); see also

Int'l Medcom, Inc. v. S.E. Int'l, Inc., Case No. 15-cv-03839-HSG, 2015 WL 7753267, at *5 

(N.D. Cal. Dec. 2, 2015) (no irreparable harm where “the record does not contain nonconclusory evidence sufficient to establish that (1) [plaintiff’s] survival is a matter of 

weeks or months, (2) [defendant] caused [plaintiff’s] financial troubles, and (3) if Plaintiff 

is ultimately successful, compensatory damages and injunctive relief would be 

inadequate”).

Because plaintiff fails to demonstrate likelihood of success on the merits against 

OG Int’l and that it would suffer irreparable harm absent injunctive relief, the court does 

not address the remaining Winter factors.

2. Whether Plaintiff Satisfies the Alternate “Serious Questions” Inquiry

a. Serious Questions Going to the Merits

Plaintiff raises serious questions going to the merits with respect to his breach of 

contract claim against the Hong Kong Defendants, but not with respect to the remedy of 

constructive trust against OG Int’l, for the reasons discussed above.

b. Irreparable Harm

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Plaintiff has not demonstrated it is likely to suffer irreparable harm in the absence 

of preliminary relief, for the reasons discussed above.

Because plaintiff fails to demonstrate that there are serious questions going to the 

merits with respect to OG Int’l and that it would suffer irreparable harm absent injunctive 

relief, the court does not address the remaining factors.

CONCLUSION

For the foregoing reasons, plaintiff’s motion for a temporary restraining order is 

DENIED. Plaintiff may file a motion for a preliminary injunction and notice it for hearing 

according to the Civil Local Rules, on a 35-day briefing schedule.

IT IS SO ORDERED.

Dated: August 16, 2019

PHYLLIS J. HAMILTON

United States District Judge

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