Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-04301/USCOURTS-cand-3_07-cv-04301-3/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 28:1441 Petition for Removal- Negotiable Instrument

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CHARLES M BROWN,

Plaintiff,

 v.

WIRELESS NETWORKS INC,

Defendant. /

No. C-07-04301 EDL

ORDER DENYING EX PARTE

APPLICATION FOR ORDER

INCREASING THE AMOUNT OF

DEFENDANT’S BOND AND FOR

TEMPORARY RESTRAINING ORDER

AND ORDER TO SHOW CAUSE

On September 6, 2007, Plaintiff filed an Ex Parte Application for Temporary Restraining

Order and Order to Show Cause re: Retention of Source Code in California and/or for an Order

Increasing the Amount of Defendant’s Bond. In essence, this application requests that the Court

reconsider its previous order requiring Defendant to post a bond in the amount of $51,617.32 to

satisfy a potential judgment, or reconsider its order to requiring a bond in lieu of a writ of attachment

that would prevent Defendant from disposing of certain assets that could be used to satisfy a

judgment. After full consideration of the papers, and for the reasons stated below, the Court denies

Plaintiff’s application.

Plaintiff brought suit against Defendant to recover amounts due to him under past due

promissory notes and for wages not paid under an employment contract. Plaintiff sought no

equitable remedies in his complaint, and sought only damages on his contract claims. In order to

secure a potential judgment, Plaintiff sought to attach Defendant’s sole remaining asset in the United

States: certain DVDs containing source code used by Defendant to operate its business. At the

August 31, 2007 hearing on Plaintiff’s motion, the Court found that Plaintiff had demonstrated that

it was more likely than not that Plaintiff would prevail on his claims on the past due promissory

notes,

Case 3:07-cv-04301-EDL Document 54 Filed 09/12/07 Page 1 of 4
United States District Court

For the Northern District of California

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which were for a sum certain. Plaintiff stated that a bond would be adequate in lieu of attachment of

the source code DVDs to satisfy that potential judgment. Accordingly, the Court ordered Defendant

to post a bond in the amount of $51,267.32, based on the evidence Plaintiff submitted to demonstrate

the amount due on the promissory notes. Plaintiff’s papers did not request security for his attorneys’

fees. When Plaintiff brought up fees orally at the hearing for the first time, Plaintiff did not submit

any evidence as to the amount of attorneys’ fees expended or anticipated.

Plaintiff requests that the Court increase the bond to cover attorneys’ fees in addition to

covering the amount due on the promissory notes. Plaintiff has not complied with Civil Local Rule

7-9, which requires a party to obtain leave to file a motion for reconsideration before noticing a

motion for reconsideration of any interlocutory order made by that Judge. Nor has Plaintiff shown

that reconsideration is warranted by reason of: (1) a material difference in fact or law from that

which existed at the time the issue was presented to the Court before entry of the order; (2) the

emergence of new material fact or a change of law occurring after the time of such order; or (3) a

manifest failure by the Court to consider material facts or dispositive legal arguments which were

presented to the Court before the entry of the order. See Civ. L.R. 7-9. The right to attorneys’ fees,

and the amount of attorneys’ fees expended to date in an amount certain could have been presented

to the Court before the earlier ruling, but was not presented. Accordingly, the Court’s ruling on the

amount of the surety bond will not be reconsidered.

Plaintiff also requests that the Court enter a temporary restraining order to prevent Defendant

from removing the source code from California. Although Plaintiff’s complaint sounds solely in

contract, Plaintiff appears to have additional disputes with an individual who was or is one of

Defendant’s board members. Plaintiff alleges that Mr. Ruy Rothschild de Souza, a current or former

board member of Defendant, who also has management control of Defendant’s Brazilian subsidiary,

engaged in a “carefully orchestrated plan to transfer [Defendant’s] technology, embodied in its

Source Code, to [the subsidiary] without compensating [Defendant] or [Defendant’s] other

shareholders for the technology.” Plaintiff further alleges that de Souza intentionally crippled

Defendant by preventing Defendant from securing new financing, and by halting license and debt

payments from the Brazilian subsidiary to Defendant. Plaintiff alleges that, having nearly shut

Case 3:07-cv-04301-EDL Document 54 Filed 09/12/07 Page 2 of 4
United States District Court

For the Northern District of California

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There is some question as to whether the source code DVDs have any market value. See Brown

Decl., ¶ 4 (stating source code has no value other than to those who, like Plaintiff and other former

employees of Defendant, have knowledge of the environment in which it was created). 

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Defendant’s operations down, de Souza then sought to transfer the Source Code to Brazil for the use

of the Brazilian subsidiary. Plaintiff, however, has not brought any claims founded in these

allegations in any of its amended complaints, and has not named the individual as a Defendant or

alleged that the Defendant company is a corporate fiction. Further, even if Plaintiff had alleged that

de Souza’s actions were attributable to Defendant, “‘a mere statement of belief that the defendant

can easily make away with or transport his money or goods’” is insufficient to support an injunction. 

See Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 327 (1999)

(quoting DeBeers Consol. Mines, Ltd. v. United States, 325 U.S. 212 (1945)). 

“The basis of injunctive relief in the federal courts has always been irreparable harm and

inadequacy of legal remedies.” Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506-07 (1959),

quoted in Owner-Operator Indep. Drivers Ass’n v. Swift Transp. Co., 367 F.3d 1108, 1111 (9th Cir.

2004). Plaintiff argues that there is an immediate threat that Plaintiff would suffer irreparable injury

if Defendant removed the source code DVD from California. But Plaintiff’s anticipated injury is

solely monetary; he argues that Defendant has no other resources from which to pay a judgment,

other than the source code DVDs.1

 Monetary injury is not irreparable and damages are a legal

remedy, not an equitable one. An injunction to compel the payment of money past due under a

contract, or specific performance of a past due monetary obligation, is not typically available in

equity. Great West Life & Ann. Ins. Co. v. Knudson, 534 U.S. 204, 210-11 (2002). “Those rare

cases in which a court of equity would decree specific performance of a contract to transfer funds

were suits that, unlike the present case, sought to prevent future losses that were either incalculable

or would be greater than the sum awarded.” Id. at 212. Here, Plaintiff’s losses are calculable. See

also Grupo Mexicano, 527 U.S. at 333 (1999) (a district court does not have the authority to issue a

preliminary injunction preventing a party from disposing of assets pending adjudication of a

contract claim for money damages); Dateline Exps., Inc. v. Basis Constr., Inc., 306 F.3d 912, 914

(9th Cir. 2002) (denying injunction).

For the reasons stated above, the Court hereby denies Plaintiff’s request to increase the

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United States District Court

For the Northern District of California

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surety bond posted to satisfy a potential judgment and application for a temporary restraining order.

IT IS SO ORDERED.

Dated: September 11, 2007 

ELIZABETH D. LAPORTE

United States Magistrate Judge

Case 3:07-cv-04301-EDL Document 54 Filed 09/12/07 Page 4 of 4