UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Resource Management Company

v. Civil No. 06-cv-366-JD

Frank Gregory

REPORT AND RECOMMENDATION

Plaintiff Resource Management Company (“RMC”) brought this

breach of contract, fraud, and theft by conversion action in the

New Hampshire Superior Court against Frank Gregory (“Gregory”). 

Defendant removed the matter to this Court (document no. 1). RMC

has filed a motion for a preliminary injunction seeking to enjoin

Gregory from spending any money paid to Gregory to which RMC

claims entitlement (document no. 10). An evidentiary hearing was

held on November 30, 2006. After careful consideration of the

arguments and evidence presented, I recommend that plaintiff’s

motion for a preliminary injunction be denied.

Background

At the November 30 evidentiary hearing, most of the facts

relevant to my findings and recommendation in this matter were

undisputed. I will recite those facts as established for

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1Although it was not presented in evidence, the Court is

aware that Fen-Phen, the nickname of a drug touted for promoting

weight loss, which was later alleged to cause cardiac problems or

death in its users, has been the subject of numerous class action

and other lawsuits against the pharmaceutical companies that

produced it in various courts of this country.

2Riggs testified that the Purchase Agreement he entered into

with Gregory, which was introduced into evidence at the hearing,

established the following terms: If Gregory was able to make

payment to Riggs within 12 months of the $100,000 advance, he

would repay the original $100,000 plus a flat fee of $100,000,

for a total of $200,000. The Purchase Agreement further spells

out that if the repayment did not occur within twelve months of

the advance being paid, Gregory will accrue fees in the amount of

$10,000 per month in addition to the $200,000 owed. Ex. 1 at ¶4. 

2

purposes of preliminary injunction, and identify where my

findings resolve a dispute in the facts asserted by each of the

parties. 

On January 23, 2003, Benjamin C. Riggs, Jr., (“Riggs”) a

Rhode Island resident and sole proprietor doing business as RMC,

a New Hampshire company, entered into a written “Purchase

Agreement with Frank Gregory (“Gregory”), an attorney practicing

in Oklahoma. Ex. 1. The Purchase Agreement called for RMC to

“advance” Gregory $100,000 to cover his living, overhead, and

litigation expenses for 67 cases in which he was representing

plaintiffs in “Fen-Phen” litigation.1 Ex. 1 at ¶1. In exchange

for advancing Gregory $100,000, RMC was to receive the money

advanced, and at least an additional $100,0002 when and if the

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While defendant did not present evidence to the contrary

regarding the intentions or understandings of the parties, he

argued at the hearing that the contract does not explicitly

mention a payment of $200,000 as an amount due if payment is made

within the first twelve months after the advance, but calls for

only a $100,000 total payment if payment is made within the first

twelve months. I find that the Purchase Agreement, while not

spelling out the total due explicitly, does provide for a “flat

fee” equal to %100 of the advance amount. Ex. 1 at ¶4. I find

that the Purchase Agreement distinguishes between the $100,000

advance and the $100,000 flat fee, which is “100% of the amount

advanced,” for a total of $200,000 owed if repayment is made

during the first twelve months after the advance is made. Ex. 1

at ¶4. To find otherwise would mean that any time payment is

rendered within one year of the original advance, RMC would make

no money at all on the transaction and would, in fact, lose money

on the interest it could have earned by not making the advance at

all. This reading of the contract, therefore, does not make

sense and I will construe the Purchase Agreement’s language, to

the extent it may be unclear, to be consistent with common sense

results.

3In fact, the Purchase Agreement specifically states that

Gregory “acknowledges that RMC may make a substantial fee on this

3

Fen-Phen litigation resulted in payment of attorney’s fees to

Gregory, for a total of $200,000. Ex. 1 at ¶4. In addition, RMC

was to receive an additional $10,000 per month for every month

beyond the first twelve months that passed until RMC was paid the

entire amount owed. Ex. 1 at ¶4. While, according to the

plaintiff, the amount due to RMC has increased quickly, following

the formula outlined in the Purchase Agreement, to more than

$500,000, Riggs pointed out at the hearing that he took a

substantial risk in entering into the arrangement.3 If the

Case 1:06-cv-00366-JD Document 19 Filed 12/05/06 Page 3 of 18
purchase of an assignment of a portion of the claim(s) due to the

costs and risks involved.” Ex. 1 at ¶2.

4

litigation were to prove unsuccessful, resulting in no monetary

award, RMC would not be owed any money by Gregory. If the

litigation were to produce an amount of money less than the

maximum amount authorized to be paid to RMC by the Purchase

Agreement, RMC’s return would be the lesser figure of what was

paid, rather than what would have been due under the formula in

the Purchase Agreement. Ex. 1 at ¶1.

The undisputed evidence at the hearing was that, prior to

the date the parties entered into the Purchase Agreement, Gregory

had referred his 67 Fen-Phen cases to a law firm, Petroff &

Associates (“Petroff”), for trial. Gregory remained involved in

the litigation. For the referral, and for his efforts, Gregory

was to receive one third of the 40% portion of the recovery that

was to be paid toward attorneys’ fees. Accordingly, in

acknowledgment of that arrangement, the Purchase Agreement called

for one third of 40%, or 13 1/3%, to be paid to Gregory or, under

the terms of the Purchase Agreement, to RMC until RMC was paid in

full. Petroff signed a document acknowledging RMC’s interest in

Gregory’s portion of the attorneys’ fees. See Acknowledgment of

Lien & Assignment, Ex. 2.

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4Riggs testified that he does not know how much money

Petroff is holding in trust at this time.

5

During the course of the Fen-Phen litigation, a trust

account for settlement was established, called the “Matrix.” The

plaintiffs who were willing to participate in the Matrix

settlement continued to be handled by Petroff. Twenty-four of

the original 67 Fen-Phen plaintiffs referred by Gregory opted out

of the Matrix settlement, against Petroff’s advice, and ceased to

be represented by Petroff at all. Those cases returned to

Gregory for representation. Petroff notified RMC in writing that

it would no longer be receiving any funds from those twenty-four

cases, or have any control over or knowledge of the status of

those cases. Ex. 6. 

Riggs testified at the hearing, and was not contravened,

that the cases that had gone the Matrix route were resulting in

very small payouts, often producing a recovery of 10% or less of

what had been originally expected to accrue from those cases. In

any event, Petroff, aware of RMC’s interest in the fees, has

placed all of the attorney’s fees earned by Gregory, which equal

13 1/3% of the recovered amount, less the costs of litigation,

into its trust account.4 While Riggs asserts that Petroff is not

legally bound to keep those monies in trust absent an injunction

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issued by a court, he concedes that Petroff has been voluntarily

keeping the money in question in the trust and has expressed its

intention not to release the money to Gregory until RMC’s

interest in it has been resolved. 

Riggs testified that the “real money” in the Fen-Phen

litigation is turning out to be the monies paid or expected to be

paid to the twenty-four opt-out plaintiffs, now represented

solely by Gregory. The parties disagree as to whether or not

Gregory is obliged to forward his entire fee, less costs of

litigation, or whether RMC is only entitled to receive 13 1/3% of

the total recovery, less costs of litigation - the percentage of

total recovery anticipated by the Purchase Agreement which was

entered into when the twenty-four “opt out” cases were still

Petroff cases. While the parties dispute what percentage of

monies recovered in the opt-out cases must be paid to RMC rather

than to Gregory, the parties do agree that, at a minimum, the

first 13 1/3% should go to RMC. 

Plaintiff claims that the Purchase Agreement grants RMC a

secured interest “on a portion of the proceeds of the lawsuits

based at least in part on valid and binding contingency fee

agreements with the [Fen-Phen plaintiffs] and a referral

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5Defendant’s counsel relies on language in the Purchase

Agreement for the proposition that RMC is due only a “portion” of

attorney’s fees to support its position that only 13 1/3% need be

paid, which states: “[Gregory] shall assign a portion of [his]

claim to the proceeds of the lawsuits as listed and described

below . . ..” The defendant further asserts that RMC’s interest

in the fees is limited to the third of total attorneys’ fees

originally bargained for by the parties. The ultimate resolution

of this disputed interpretation of the Purchase Agreement is not

germaine to my determination of this matter.

6Riggs claims that although he accepted the representation

of defendant’s counsel regarding the creation of a trust as true,

as of the time of the hearing, he had not received any

documentation that the trust exists or has had money in any

amount deposited thereto. During the hearing, I orally granted

plaintiff the right to immediately proceed with discovery

interrogatories. I presume that the defendant’s answers to

7

agreement with the attorney of record, Petroff & Associates.” 

The Purchase Agreement makes clear that the agreement is “for an

interest in [Gregory]’s contingency fees or other fees or

reimbursements due or paid to [Gregory] in connection with [FenPhen Plaintiffs’] lawsuits and not a loan.” Ex. 1 at ¶1. 

Counsel for the defendant represented at the hearing that Gregory

has, in the last two weeks, established a trust account and is

depositing a “portion” of what he receives as fees in the FenPhen cases, in an amount equal to the 13 1/3% of total recovery

after costs.5 Thus far, counsel represents that Gregory has

placed $54,000 into the trust, and anticipates adding another

$100,000 in the near future.6 

Case 1:06-cv-00366-JD Document 19 Filed 12/05/06 Page 7 of 18
interrogatories, combined with the defendant’s obligation to

continue to apprise Riggs of any change in circumstances

regarding matters that were the subject of interrogatories served

by plaintiff will satisfy any questions Riggs may have regarding

the existence of the funded trust.

8

 While this was going on, Gregory was also involved in casesharing, and ultimately, a dispute, with another firm, Bonham &

Hudson (“B&H”). Gregory ultimately settled with B&H by paying

them approximately $160,000, using funds that he had received as

part of his attorneys’ fees in several of the opt-out Fen-Phen

cases. None of the proceeds from those cases were forwarded to

RMC. The matter with B&H has apparently been fully resolved.

RMC requests that this Court grant a preliminary injunction

prohibiting Gregory from spending or otherwise disbursing any of

the funds he receives from any of the Fen-Phen cases, in order to

protect its asserted “secured interest” in all of Gregory’s

receipts from the Fen-Phen litigation. In essence, RMC is

requesting that this Court enter a “freeze order” directing the

defendant not to dispose of or convert any of the money he

receives from the Fen-Phen litigation. In support of the

granting of this injunction, Riggs testified that Gregory had

intentionally and knowingly deprived RMC of money to which it was

entitled by averting monies owed to RMC to the settlement with

Case 1:06-cv-00366-JD Document 19 Filed 12/05/06 Page 8 of 18
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B&H. Further, Riggs alleged that Gregory attempted to convince

Petroff to pay Gregory directly rather than to deposit Gregory’s

fees into a trust in acknowledgment of RMC’s interest in the

money. Riggs testified that Gregory’s alleged efforts to evade

repayment of the money, Gregory’s repeated unfulfilled promises

to account for the status of and the monies received in the FenPhen cases, and retention of owed monies for his own use

demonstrate that allowing the case to proceed without an

injunction freezing Gregory’s Fen-Phen income will result in

severe and irreparable damage to the security interest held by

RMC in that money. Further, Riggs asserts that as the 67 FenPhen cases are only about 20% of Gregory’s approximately 300

cases, the injunction will not cripple Gregory’s business or

ability to support himself. 

Standard of Review

Preliminary injunctive relief is available to protect the

movant from irreparable harm, so that it may obtain a meaningful

resolution of the dispute after full adjudication of the matter. 

Such a situation arises when some harm from the challenged

conduct could not be adequately redressed with traditional legal

or equitable remedies following a trial. See Ross-Simons of

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Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 18 (1st Cir. 1996)

(finding irreparable harm where legal remedies are inadequate);

see also Acierno v. New Castle County, 40 F.3d 645, 653 (3rd Cir.

1994) (“Mere injuries, however substantial, in terms of money,

time and energy necessarily expended in the absence of a stay,

are not enough. The possibility that adequate compensatory or

other corrective relief will be available at a later date, in the

ordinary course of litigation, weighs heavily against a claim of

irreparable harm.”). Absent irreparable harm, there is no need

for a preliminary injunction.

Raising the specter of a defendant who might not be able to

ultimately satisfy a judgment because he may not then have assets

is not sufficient to demonstrate irreparable injury for

preliminary injunction purposes. See Micro Signal Research, Inc.

v. Otus, 417 F.3d 28, 31 (1st Cir. 2005). However, “where there

is a strong indication that the defendant may dissipate or

conceal assets,” preliminary injunctive relief may be warranted. 

Id.

The purpose of preventing irreparable harm is to enable the

court to render a meaningful disposition on the underlying

dispute. See CMM Cable Rep. v. Ocean Coast Props., 48 F.3d 618,

Case 1:06-cv-00366-JD Document 19 Filed 12/05/06 Page 10 of 18
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620 (1st Cir. 1995) (explaining the purpose of enjoining certain

conduct as being to “preserve the ‘status quo’ . . . to permit

the court, upon full adjudication of the case’s merits, more

effectively to remedy discerned wrongs.”); see also Becton v.

Thomas, 48 F. Supp. 2d 747, 753 (W.D. Tenn. 1999) (“‘The purpose

of a preliminary injunction is always to prevent irreparable

injury so as to preserve the court’s ability to render a

meaningful decision on the merits.’”) (quoting Stenberg v. Cheker

Oil Co., 573 F.2d 921, 925 (6th Cir. 1978)). The court’s focus,

therefore, must always be on the underlying merits of the case,

and what needs to be done to ensure that the dispute can be

meaningfully resolved.

A preliminary injunction cannot issue unless the moving

party satisfies four factors which establish its need for such

relief. See Esso Standard Oil Co. v. Monroig-Zavas, 445 F.3d 13,

17-18 (1st Cir. 2006) (discussing the requisite showing to obtain

a preliminary injunction); see also Ross-Simons, 102 F.3d at 18-

19 (explaining the burden of proof for a preliminary injunction). 

Those factors are: “(1) the likelihood of success on the merits;

(2) the potential for irreparable harm [to the movant] if the

injunction is denied; (3) the balance of relevant impositions,

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i.e., the hardship to the nonmovant if enjoined as contrasted

with the hardship to the movant if no injunction issues; and (4)

the effect (if any) of the court’s ruling on the public

interest.” Esso Standard, 445 F.3d at 18. This four factor test

applies where, as here, the movant seeks a prejudgment “freeze

order.” Charlesbank Equity Fund II v. Blinds To Go, Inc., 370

F.3d 151, 157 (1st Cir. 2004) (“[F]reeze orders directed at

unspecified assets typically are in the nature of preliminary

injunctions.”). If the plaintiff is not able to show a

likelihood of success on the merits, the remaining factors

“become matters of idle curiosity,” Esso Standard, 445 F.3d at

18, insufficient to carry the weight of this extraordinary relief

on their own. See id. (the “sine qua non of this four-part

inquiry is likelihood of success on the merits”) (internal

quotation omitted). Yet, “the predicted harm and the likelihood

of success on the merits must be juxtaposed and weighed in

tandem.” Ross-Simons, 102 F.3d at 19. A “strong showing of

likely success on the merits reduces, but does not eliminate, the

showing of irreparable harm that plaintiffs must make to obtain

preliminary injunctive relief.” Biogen Idec MA Inc. v. Trs. of

Columbia Univ. in N.Y. 332 F. Supp. 2d 286, 289 (D. Mass. 2004).

Case 1:06-cv-00366-JD Document 19 Filed 12/05/06 Page 12 of 18
7RMC’s complaint includes, in addition to two breach of

contract claims, three fraud claims and an allegation of theft by

conversion. Defendant has moved for a “more definite statement”

of the claims (document no. 7). While that motion has not yet

been ruled on, I find that, at this time, RMC has at least

clearly stated its claim for breach of contract and that the

other claims arise out of the same series of events and

transactions. As I find that, at least, RMC is likely to succeed

on its claims based on breach of contract, I need not address the

likelihood of success on the claims in controversy.

13

The Four Preliminary Injunction Factors

1. Likelihood of Success on the Merits

Although the exact contours of the claims raised by RMC in

its initial complaint have yet to be clearly identified, it has

sued for money damages alleging a breach of contract, fraud, and

theft by conversion against Gregory.7 During the hearing in this

matter, counsel for the defendant acknowledged that RMC is

entitled to recovery of at least some of the monies claimed

pursuant to the contract entered into between RMC and Gregory. 

“[A]n admission by counsel of his clients’ personal liability in

open court is ample basis for determining that the other side is

likely to prevail on the merits.” Micro Signal, 417 F.3d at 32-

33. And, while the admission was not evidence at the hearing,

and may not therefore have very much significance in future

proceedings before this Court, “it is enough to support the

preliminary injunction.” Id. at 33. Accordingly, I find that

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RMC has met its burden of demonstrating a likelihood of success

on the merits of at least its breach of contract claims.

2. Irreparable Harm

The Supreme Court has held that, ordinarily, injunctive

relief interfering with a debtor’s use of his own property cannot

be granted to a non-judgment creditor seeking money damages. 

Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc.,

527 U.S. 308, 321 (1999). The Court in Grupo Mexicano, however,

also noted that this rule might not apply where a creditor holds

or asserts an “equitable lien” on the defendant’s property. Id.

at 326. 

Here, RMC claims that it has a secured interest in Gregory’s

Fen-Phen fees, and has provided a Purchase Agreement

acknowledging that interest. Accordingly, it is arguable that

the reasoning of Grupo Mexicano might not apply in this situation

if RMC has a secured interest in the property that is the subject

of the motion for injunctive relief, even if that property is

money. See Charlesbank Equity, 370 F.3d at 159 (finding that

under Grupo Mexicano, a District Court has “no authority to issue

a preliminary injunction preventing petitioners from disposing of

their assets pending adjudication of respondents’ contract claim

Case 1:06-cv-00366-JD Document 19 Filed 12/05/06 Page 14 of 18
8The Purchase Agreement introduced in evidence by the

plaintiff in this matter establishes a security interest only in

13 1/3% of the cases, the portion foreseen at the time the

Agreement was signed, when Petroff was representing all of the 67

Fen-Phen plaintiffs. What, if anything, is ultimately owed to

RMC from the opt-out cases is not before this Court at this time,

15

for money damages where no preexisting lien or equitable interest

[has] been claimed” and finding that “it is at least arguable

that the existence of a security interest . . . is a salient

distinction.” (emphasis added)). 

Here, RMC argues that it holds a security interest in all of

the money Gregory receives as a result of the Fen-Phen

litigation, and that therefore, RMC can demonstrate irreparable

harm to its interests if Gregory is not enjoined from disposing

of or otherwise spending the Fen-Phen fee money he receives prior

to the resolution of this case. In support of this argument,

Riggs alleges that Gregory has improperly converted money due to

RMC to his own use, that he has expressed some intent to continue

to do so, and that he has failed failure to be forthcoming

regarding the status of the Fen-Phen cases, as well as Gregory’s

representations to Riggs that he has no assets.

However, it was established at the hearing that the money in

which RMC asserts a security interest, is equal to only one-third

of the attorneys’ fees in the 67 Fen-Phen cases.8 That money is

Case 1:06-cv-00366-JD Document 19 Filed 12/05/06 Page 15 of 18
but for purposes of preliminary injunction, the evidence

demonstrates that a security interest was only created in the 13

1/3% of the attorneys fees collected. See Ex. 1.

16

already protected by trusts. Gregory’s portion of the proceeds

from the Petroff cases are being held in trust by Petroff in

direct response to their concerns for RMC’s interest in the

money. Further, since the filing of the motion for injunctive

relief, Gregory has begun to deposit the same third of attorney’s

fees received in the opt-out cases into a trust account. 

Accordingly, it appears that all of the property of Gregory in

which RMC can assert an arguable security interest is being held

in trust, and is therefore not in any immediate danger of

disappearing and becoming unavailable should RMC prevail on the

merits in this case. Therefore, any irreparable harm alleged by

RMC is purely speculative, and based on RMC’s concern that either

Petroff or Gregory could fail to follow through with their

current practices regarding the trust accounts. “A finding of

irreparable harm must be grounded on something more than

conjecture, surmise, or a party’s unsubstantiated fears of what

the future may have in store.” Charlesbank Equity, 370 F.3d at

162 (citing Regan v. Vinick & Young (In re Rare Coin Galleries of

Am., Inc.), 862 F.2d 896, 902 (1st Cir. 1988)); see also Matos v.

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Clinton Sch. Dist., 367 F.3d 68, 74 (1st Cir. 2004) (“Absent

something that indicates a need for immediate relief, a

plaintiff’s request for a preliminary injunction ordinarily ought

to be rejected.” (emphasis in original)). Because the money in

question appears to be well-protected, there is no basis, at this

time, upon which I can make a finding that irreparable harm will

ensue if an injunction is not issued. If the situation changes,

and RMC discovers at some point in the future that the money in

question is being disposed of by Gregory or Petroff in a manner

that diminishes RMC’s secured interest in the funds, RMC is free

to renew its request for injunctive relief at a later date.

3&4. The Balance of Relevant Impositions and the Effect of the 

Court’s Ruling on the Public Interest

Because I find that the plaintiff cannot show irreparable

harm based on the facts presented, and a showing of irreparable

harm is a necessary hurdle to obtaining preliminary injunctive

relief, I find that no injunction can issue at this time. A

discussion of the balance of impositions or the public’s interest

in the issuance of an injunction is therefore unnecessary, and I

decline to conduct an analysis of these two factors.

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Conclusion

Because I find that RMC has failed to demonstrate that it

will suffer irreparable harm absent the granting of the requested

injunction, I recommend that the motion for a preliminary

injunction be denied.

Any objections to this Report and Recommendation must be

filed within ten (10) days of receipt of this notice. Failure to

file objections within the specified time waives the right to

appeal the district court’s order. See Unauthorized Practice of

Law Comm. v. Gordon, 979 F.2d 11, 13-14 (1st Cir. 1992); United

States v. Valencia-Copete, 792 F.2d 4, 6 (1st Cir. 1986). 

_________________________________

James R. Muirhead

United States Magistrate Judge

Date: December 5, 2006 

cc: Benjamin C. Riggs, Jr., pro se

Michael D. Ramsdell, Esq.

Mark Howard, Esq.

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