* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-40200

ANIMALE GROUP INC; ANIMALE GROUP SA

Plaintiffs - Appellees

v.

SUNNY’S PERFUME INC; SUNIL KUMAR TYAGI

Defendants - Appellants

Appeal from the United States District Court 

for the Southern District of Texas, Laredo

No. 5:07-CV-13

Before KING, BARKSDALE and DENNIS, Circuit Judges.

PER CURIAM:*

Sunny’s Perfume, Inc. (“Sunny’s Perfume”) and Sunil Kumar Tyagi

(collectively “Defendants”) appeal the district court’s February 8, 2007,

preliminary injunction restraining them from transferring certain assets.

Defendants’ sole argument on appeal is that the district court lacked the

authority to enter a pre-judgment asset freeze under any circumstance. We

AFFIRM.

United States Court of Appeals

Fifth Circuit

F I L E D

December 5, 2007

Charles R. Fulbruge III

Clerk
No. 07-40200

2

I. FACTUAL AND PROCEDURAL BACKGROUND

Animale Group, Inc. and Animale Group, S.A. (“Plaintiffs”) are the owners

of the federally-registered trademark “Animale.” Plaintiffs design, distribute

and market perfume under the Animale trade name. Sunny’s Perfume runs a

storefront and wholesale warehouse in Laredo, Texas. Tyagi is the owner and

operator of Sunny’s Perfume.

On January 25, 2007, Plaintiffs filed a six count complaint against

Defendants for violations of the Lanham Act and various state torts. Plaintiffs

alleged that Defendants were selling counterfeit perfume labeled with the

Animale trademark. On the same day, Plaintiffs moved for a temporary

restraining order freezing Defendants’ assets. The district court granted the

application, pending a February 6, 2007, hearing on Plaintiffs’ motion for

preliminary injunction. During the hearing, the district court granted the

motion for a preliminary injunction, and enjoined Defendants from transferring

approximately $600,000 in real property and cash. The district court stated that

it had authority to enter the injunction because Plaintiffs’ suit sought equitable

relief, and a freeze was necessary to prevent Defendants from dissipating their

assets.

On March 6, 2007, Defendants filed this interlocutory appeal pursuant to

28 U.S.C. § 1292(a)(1).

II. DISCUSSION

A. Standard of Review

“A district court’s grant of preliminary injunction is reviewed for abuse of

discretion.” Women’s Med. Ctr. of Nw. Houston v. Bell, 248 F.3d 411, 418-19 (5th

Cir. 2001) (citations omitted). Findings of fact are reviewed for clear error, and

legal determinations are reviewed de novo. Hoover v. Morales, 164F.3d 221, 224

(5th Cir. 1998). Because Defendants challenge only the district court’s power to
No. 07-40200

3

enter an asset restraint altogether, and not its factual findings, our review is de

novo.

B. Analysis

Defendants argue that the district court lacked the authority to freeze

their assets based on Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund,

Inc., 527 U.S. 308 (1999). In Grupo Mexicano, the Supreme Court held that

federal courts do not have equitable authority to preliminarily freeze assets in

legal actions. Id. at 324-33. It reasoned that a federal court’s equitable power

is limited to the jurisdiction exercised by the High Court of Chancery in England

at the time ofthe enactment ofthe Judiciary Act of 1789. Id. at 318-19 (citations

omitted). Traditionally, remedies of law had to be exhausted before equitable

remedies could be pursued. Id. at 319-20. A general creditor without a

judgment “had no cognizable interest, either at law or in equity, in the property

of his debtor, and therefore could not interfere with the debtor’s use of that

property.” Id. at 320-21.

As Plaintiffs note, however, Defendants fail to address prior Supreme

Court precedent authorizing pre-judgment asset restraints. In particular, in

Deckert v. Independence Shares Corp., 311 U.S. 282, 289-91 (1940), the Court

held that a district court had sufficient equitable powers to preliminarily freeze

a defendant’s assets in suits sounding in equity. The Court concluded that

where a legal action is inadequate and an asset freeze is narrowly drawn to

sequester only those funds necessary to satisfy the potential judgment, “‘[i]t is

well settled that the granting of a temporary injunction . . . is within the sound

discretion of the trial court . . . .’” Id. at 290 (quoting Prendergast v. N.Y. Tel.

Co., 262 U.S. 43, 50 (1923)); see also United States v. First Nat’l City Bank, 379

U.S. 378, 385 (1965) (stating that defendants might dissipate their assets if the

district court could not freeze their bank accounts).
No. 07-40200

4

The issue before us, then, is whether Grupo Mexicano governs equitable

as well as legal actions. Other circuits have determined that the case is limited

to actions at law. See, e.g., United States ex rel Rahman v. Oncology Assocs.,

P.C., 198 F.3d 489, 496-97 (4th Cir. 1999) (holding that Deckert still authorizes

a district court to preliminarily freeze assets in a case involving equitable

claims); CSC Holdings, Inc. v. Redisi, 309 F.3d 988, 996 (7th Cir. 2002) (“[T]he

[C]ourt specifically noted that a restraint on assets was still proper if a suit

sought equitable relief.”); Kennedy Bldg. Assocs. v. CBS Corp., 476 F.3d 530, 535

(8th Cir. 2007) (“Here, the underlying relief sought is equitable, rather than

legal, so our case involves the use of equity in support of equity, rather than

equity in support of a legal remedy.”); In re Focus Media Inc., 387 F.3d 1077,

1085 (9th Cir. 2004) (“Grupo Mexicano . . . exempts from its proscription . . .

cases in which equitable relief is sought.”); SEC v. ETS Payphones, Inc., 408

F.3d 727, 734 (11th Cir. 2005) (“Grupo Mexicano does not control the outcome of

this case, because the SEC seeks equitable relief (disgorgement), not just money

damages.”).

We agree. In Grupo Mexicano,the Supreme Court explicitly distinguished

Deckert. See 527 U.S. at 324-25 (stating that Deckert was not on point because

the underlying cause of action there was for equitable relief). It also noted that

“[t]he preliminary relief available in a suit seeking equitable relief has nothing

to do with the preliminary relief available in a creditor’s bill seeking equitable

assistance in the collection of a legal debt.” Id. at 325. Until the Court instructs

us otherwise, we must continue to follow Deckert. See Medellin v. Dretke, 371

F.3d 270, 280 (5th Cir. 2004).

Defendants do not contest that Plaintiffs seek equitable relief, nor could

they. Plaintiffs seek an accounting of lost profits under the Lanham Act, which

is “subject to the principles of equity.” See 15 U.S.C. § 1117(a). This court
No. 07-40200

5

previously recognized that such an accounting is an equitable remedy. Maltina

Corp. v. Cawy Bottling Co., 613 F.2d 582, 584-85 (5th Cir. 1980) (holding that an

accounting remedies unjust enrichment). As have other circuits. See, e.g., Levi

Strauss & Co. v. Sunrise Int’l Trading Inc., 51 F.3d 982, 986-87 (11th Cir. 1995);

Reebok Int’l, Ltd. v. Marnatech Enters., Inc., 970 F.2d 552, 559 (9th Cir. 1992).

Because Defendants seek equitable relief, the district court was authorized to

preserve the status quo by entering a limited asset freeze.

III. CONCLUSION

For the reasons stated above, we AFFIRM the district court’s

preliminary injunction.