Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-00392/USCOURTS-caed-1_06-cv-00392-3/pdf.json

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

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1.

ORDER GRANTING GREAT AMERICAN INSURANCE CASE NO. 1:06-CV-00392-AWI-DLB

COMPANY’S MOTION FOR PRELIMINARY INJUNCTION

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

FRESNO DIVISION

GREAT AMERICAN INSURANCE COMPANY,

 Plaintiff,

 v.

M.J. MENEFEE CONSTRUCTION, INC., a

California corporation; MICHAEL J. MENEFEE,

an individual; and DEBORAH MENEFEE, an

individual,

 Defendants.

Case No. 1:06-CV-00392-AWI-DLB

ORDER GRANTING GREAT

AMERICAN INSURANCE

COMPANY'S MOTION FOR

PRELIMINARY INJUNCTION 

(Documents #33 & #45)

ORDER

TO DEFENDANTS M.J. MENEFEE CONSTRUCTION, INC., MICHAEL J. 

MENEFEE and DEBORAH MENEFEE (collectively "Defendants") AND TO EACH OF 

THEIR OFFICERS, AGENTS, SERVANTS, EMPLOYEES, ATTORNEYS, OR ANY 

OTHER PERSONS IN ACTIVE CONCERT OR PARTICIPATION WITH THEM:

WHEREAS, on June 26, 2006, this Motion for Preliminary Injunction (the 

"Motion") brought by Plaintiff GREAT AMERICAN INSURANCE COMPANY 

(hereinafter "Great American"), came on regularly for hearing at 1:30 p.m., in Department 

Two. 

In the motion, Great American seeks a Preliminary Injunction restraining and 

enjoining Defendants from dissipating assets, and requiring them to post collateral, provide 

Case 1:06-cv-00392-LJO-DLB Document 46 Filed 06/28/06 Page 1 of 6
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2.

ORDER GRANTING GREAT AMERICAN INSURANCE CASE NO. 1:06-CV-00392-AWI-DLB

COMPANY’S MOTION FOR PRELIMINARY INJUNCTION

access to personal and corporate books and records, and open a trust funds account with Great

American pending an adjudication of Great American's rights and Defendants' obligations

under the terms of an Agreement of Indemnity dated October 25, 2001 ("Indemnity 

Agreement") executed by each of the Defendants in favor of Great American. The Motion was

supported by Great American's Complaint and the attached exhibit, the notice of motion and

motion, the memorandum of points and authorities, the Declarations of Thomas Pettygrove and

James D. Curran, and on oral argument presented during the hearing.

WHEREAS, on April 6, 2006, Great American filed suit against Defendants in this

Court for Breach of Contract, Specific Performance of Written Indemnity Agreement, Quia 

Timet, and Injunctive Relief. On June 7, 2006, the Clerk of the United States District Court for 

the Eastern District of California entered a default as to each of the three Defendants.

WHEREAS, this Court finds that Great American will probably succeed on the 

merits of its Complaint against Defendants.

WHEREAS, this Court finds that Great American will be subjected to immediate and

irreparable injury should Defendants be allowed to dissipate their assets and continue to refuse 

to post collateral, provide access to books and records, and open a trust funds account with 

Great American. Defendants are deeply in debt and unable to meet their financial obligations

to Great American. As each day passes, additional claims are made on the payment and

performance bonds issued by Great American at the request of Defendants ("the Bonds"), and 

Great American's damages are increasing dramatically. Great American is unable to 

effectively evaluate each claim, as Defendants refuse to provide access to their corporate books 

and records. Additionally, if Defendants are not required to immediately deposit project funds

in a trust account, there is a distinct possibility that Defendants will further encumber their 

personal and corporate assets, and spend bonded contract funds which should be managed by 

Great American to pay for the claims made against the Bonds.

WHEREAS, this Court further finds that Great American's legal remedies are 

inadequate in that only in equity can Great American obtain specific performance of the terms 

of the Indemnity Agreement pursuant to which Defendants agreed to post collateral upon 

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3.

ORDER GRANTING GREAT AMERICAN INSURANCE CASE NO. 1:06-CV-00392-AWI-DLB

COMPANY’S MOTION FOR PRELIMINARY INJUNCTION

demand by plaintiff, provide complete access to personal and corporate books and records, 

open a trust funds account and joint check with Great American. In the absence of this Order

requiring Defendants to open a trust funds account and joint check with Great American, Great

American's indemnification rights will be irreparably damaged because Defendants' assets 

may be dissipated decreasing Great American's likelihood of recovery from Defendants. 

WHEREAS, this Court finds that Defendants had adequate notice of Great American’s

motion and an opportunity to oppose it.

After consideration of the papers and oral argument presented at the hearing, and 

good cause appearing therefore,

IT IS HEREBY ORDERED that Great American's motion for a preliminary injunction 

is GRANTED.

IT IS HEREBY FURTHER ORDERED that, 

(1) Defendants M.J. MENEFEE CONSTRUCTION, INC., MICHAEL J. 

MENEFEE and DEBORAH MENEFEE, and each of them, and each of their officers, agents,

servants, employees and attorneys and those in active concert or participation with Defendants

or such persons, or any of them, are restrained and enjoined from dissipating, spending, or 

otherwise disposing of or encumbering any of their personal or corporate assets or property.

(2) Defendants M.J. MENEFEE CONSTRUCTION, INC., MICHAEL J. 

MENEFEE and DEBORAH MENEFEE, and each of them, specifically perform the Collateral

provisions of the Indemnity Agreement, requiring Defendants to convey to Great American 

funds or property to serve as collateral in the total amount of $1,196,998.11.

(3) Defendants M.J. MENEFEE CONSTRUCTION, INC., MICHAEL J. 

MENEFEE and DEBORAH MENEFEE, and each of them, specifically perform the Books and

Records provisions of the Indemnity Agreement, requiring Defendants to convey to Great 

American for examination and review:

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4.

ORDER GRANTING GREAT AMERICAN INSURANCE CASE NO. 1:06-CV-00392-AWI-DLB

COMPANY’S MOTION FOR PRELIMINARY INJUNCTION

• Complete copies of the Contracts relating to projects bonded by Great American

("the Projects"), including their plans and specifications, along with any modifications

including but not limited to all change orders (approved and pending);

• Copies of all pay requests relating to the Projects and any checks issued by the

obligees for work performed under the Contracts;

• Copies of all pay requests, invoices, purchase orders and the like from

subcontractors and suppliers on the Projects, as well as all payments made to subcontractors 

and suppliers; and a current accounting of any unpaid balances owed by M.J. Menefee 

Construction, Inc. ("Menefee Construction") to them, including retainage;

• Copies of all correspondence between Defendants, the Obligees, and /or others

relating to the performance of the Projects;

• Copies of all reports, meeting minutes, schedules, claim/daily logs, change 

order logs, requests for information and/or other information relevant to the projects;

• A comprehensive listing of all the uncompleted work remaining to be performed 

on the Projects as well as any assessments of deficiencies in the Projects' plans and 

specifications;

• A comprehensive listing of all the suppliers and subcontractors used for

completing any of the Projects. The information should contain the company name, address,

telephone number, fax number, contact person, scope of work, time for completion, value of

the subcontract/purchase order and any presently known areas of contention;

• A comprehensive listing of all unasserted and/or unapproved modifications, 

claims and/or change orders that Menefee Construction has asserted or may assert against the

Obligees in relation to the projects, including Menefee Construction's claims against any 

related bonds;

• Documentation including, but not limited to correspondence between 

Defendants and subcontractors and obligees, memorandums, written agreements, project 

reports, invoices, pay requests, offsets, or backcharges;

///

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5.

ORDER GRANTING GREAT AMERICAN INSURANCE CASE NO. 1:06-CV-00392-AWI-DLB

COMPANY’S MOTION FOR PRELIMINARY INJUNCTION

• Documentation including, but not limited to correspondence between 

Defendants and subcontractors and obligees, memorandums, written agreements, project 

reports, invoices, and pay requests that supports any and all defenses Great American may 

have to the claims made on the Bonds.

• A current balance sheet detailing Defendants' personal and corporate assets and

liabilities;

• Each of Defendants' 2002, 2003, 2004, and 2005 Federal Income Tax Returns;

• Menefee Construction Insurance information; 

• A current work-in-progress report detailing your current accounts receivable;

• Payroll reports detailing all Menefee employees working on the Projects; and

• Any and all corporate or personal information found within Defendants' 

computers, computer disks, hard drives. This also includes computers, computer disks and 

hard drives which are no longer in use by Defendants.

(4) Defendants M.J. MENEFEE CONSTRUCTION, INC., MICHAEL J. 

MENEFEE and DEBORAH MENEFEE, and each of them, to specifically perform the Trust 

Funds provisions of the Indemnity Agreement, requiring Defendants to deposit all funds

received from payments on each of the foregoing projects to designated trust accounts set up 

by Great American at City National Bank, 150 California Street, San Francisco, California 

94111.

(5) Great American is authorized to use the funds deposited in the trust accounts set 

up by Great American at City National Bank, 150 California Street, San Francisco, California 

94111 to pay valid claims made against the Bonds. Great American will provide an accounting 

of all payments made from the trust accounts in satisfaction with the claims made against the 

Bonds.

///

///

///

///

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 At the hearing, Great American requested that the $10,000.00 posted on May 17, 2006, be 1

applied as a security for the preliminary injunction. At the hearing, the court tentatively agreed to

this request. However, a review of the court’s May 30, 2006 order issuing the writ of attachment

on Plaintiffs’ real property reveals that the $10,000.00 previously posted was used as a security on

the writ of attachment. As such, it is unavailable to also secure this preliminary injunction.

6.

ORDER GRANTING GREAT AMERICAN INSURANCE CASE NO. 1:06-CV-00392-AWI-DLB

COMPANY’S MOTION FOR PRELIMINARY INJUNCTION

This Preliminary Injunction is effective immediately upon payment by Great American of a

$5,000.00 security. Great American's undertaking in the amount of $ 5,000.00 must be filed by 4:00

p.m. on June 30, 2006 as provided by Federal Rule of Civil Procedure 65(c).1

IT IS SO ORDERED.

Dated: June 27, 2006 /s/ Anthony W. Ishii 

0m8i78 UNITED STATES DISTRICT JUDGE

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