Court Opinion

ID: 2667535
Source: CourtListenerOpinion
Date Created: 2014-04-04 13:57:57.478271+00
Date Added: 2024-06-11T13:03:14.015522
License: Public Domain

UNITED STATES DISTRICT COURT
                           FOR THE DISTRICT OF COLUMBIA

TD INTERNATIONAL, LLC,                    )
                                          )
              Plaintiff,                  )
                                          )
              v.                          )
                                          )       Civil Case No. 09cv867 (RJL)
STEVEN K. FLEISCHMANN                     )
                                          )
&                                         )
                                          )
TERTIUM DATUR                             )
INTERNATIONAL, LLC a/k/a                  )
TERTIUM DATUR, LLC,                       )
                                          )
              Defendants.                 )
--------------------------)

                              MEMORANDUt!;;INION
                                (August ~, 2009)

       TD International, LLC ("TDI") seeks a preliminary injunction! to freeze one of

defendants' bank accounts pending a judgment on TDI's claims for roughly $1.2 million

in damages ("PI. Mot." [Dkt. # 2]). After consideration of both parties' pleadings and

       1 Plaintiff also sought an ex parte temporary restraining order to freeze defendants'
bank account while the motion for a preliminary injunction was pending. That request
was denied on May 19, 2009 because it did not comply with Federal Rule of Civil
Procedure 65(b)(I)(A), which requires TRO requests be accompanied by an affidavit or a
verified complaint containing specific facts to "clearly show that immediate and
irreparable injury, loss, or damage will result ... before the adverse party can be heard in
opposition." Rule 65 must be strictly applied because ex parte relief runs counter to core
values of notice and opportunity to be heard. See Granny Goose Foods, Inc. v. Bhd. of
Teamsters and Auto Truck Drivers Local No. 70 ofAlameda County, 415 U.S. 423, 438
(1974).
their oral arguments before the Court, TDI's motion for a preliminary injunction is

DENIED.

                                      BACKGROUND

       The focus of the parties' dispute is the terms of a partnership agreement between

Fleischmann and TO!. TDI is a Washington, D.C.-based business consulting firm formed

in 1999. (CompI.   ~   9.) According to TDI's complaint, Fleischmann entered into a

Members Agreement in January of2004 with two principals ofTDI, William Green and

Ronald Slimp. Pursuant to the agreement, each of the three members held a one-third

ownership interest in the company in furtherance of the company's business. (Id.   ~    10.)

       Additionally, as a supplement to the obligations imposed by the Members

Agreement, TDI claims Fleischmann was bound by a second agreement-the Third

Amended and Restated Operating Agreement, dated May 1, 2004-to "devote his best

efforts and substantially all of his productive working time to TOrs business." (Id.) An

unsigned copy of this agreement is attached to TDI's pleadings. (ld. Exh. 2.) However,

the terms of this second agreement contradict the purported terms of the first Members

Agreement as it is described in plaintiffs complaint. In particular, according to the

second agreement, there were five members of TDI who held varying ownership interests,

not three members with a one-third interest each. (ld. Exh. 2 at Exh. A.)

       Based on this limited set of facts, TDI seeks a preliminary injunction to freeze one

of Fleischmann's bank accounts on the grounds that, contrary to the terms of his

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agreements, he misappropriated some $626,401.42 in accounts receivable owed to TDI.

(Id.   ~   15.) Fleischmann allegedly accomplished the misappropriation by incorporating a

shell company with a name nearly identical to TDI-Fleischmann's company is named

Tertium Datur, International, which could also be abbreviated "TDI"-and instructing a

client to direct its payments to this newly created company. (Id.     ~   11-18). According to

TDI, it, and not Fleischmann, held the engagement contract with the client in question,

and the client unwittingly sent payments to Fleischmann's similar-sounding shell

company on the mistaken belief it was settling up with TDI. (Id.)

                                          ANALYSIS

           A preliminary injunction is an "extraordinary remedy that is never awarded as of

right." Winter v. Natural Res. Defense Council, Inc., --- U.S. ---, 129 S. Ct. 365,376, 127

L.Ed.2d 249 (2008). A movant may obtain a preliminary injunction only if it is able to

demonstrate: (1) that it is likely to succeed on the merits; (2) that it is likely to suffer

irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips

in its favor; and (4) that an injunction is in the public interest. Id. At 374. "If the plaintiff

makes a particularly weak showing on one factor ... the other factors may not be enough

to compensate." Dodd v. Fleming, 223 F.Supp.2d 15, 20 (D.D.C. 2002) (citing Taylor v.

Resolution Trust Corp., 56 F.3d 1497, 1507 (D.C. Cir. 1995), amended on other grounds

on reh 'g, 66 F.3d 1226 (D.C. Cir. 1995)). In particular, a movant must show at the very

least that irreparable harm is likely to occur should an injunction not issue. See Winter,

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129 S.Ct. at 375. The mere possibility of irreparable harm is not enough, see id., and a

court may deny a motion for preliminary relief without considering any other factors

when irreparable harm is not established, see CityFed Financial Corp v. DTS, 58 F.3d.

738, 747 (D.C. Cir. 1995). Unfortunately for TDI, it has failed to make the requisite

showing of irreparable harm. How so?

       While the concept of irreparable harm may be difficult to define, it is abundantly

clear that the impending harm must be "certain and great," and it must be "actual and not

theoretical." Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985).

Additionally, the harm must be imminent. Injunctive relief "will not be granted against

something merely feared as liable to occur at some indefinite time." Id. (citing

Connecticut v. Massachusetts, 282 U.S. 660, 674 (1931 )). Finally, it is "well settled that

economic loss does not, in and of itself, constitute irreparable harm." Id. The only

instance where economic loss can give rise to irreparable harm, and thus a preliminary

injunction, is when such loss "threatens the very existence of the movant's business."

Isong v. Apex Petroleum Corp., 273 F. Supp. 2d 1,2 (D.D.C. 2002) (citing Washington

Metropolitan Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d 841,843 n. 2

(D.C.Cir.1977)).

       TDI's sole argument with respect to irreparable harm is that it holds an "equitable

interest" in the funds it seeks to freeze. (PI. Mot. at 5-6.) Putting aside TDI's failure to

advance any legal or factual basis to support its claim to an "equitable" interest in the

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funds, it does not establish what irreparable harm will befall it if the Court does not grant

the injunction it seeks. Indeed, the mere existence of an equitable interest in the funds is

not enough on its own to warrant injunctive relief. To the contrary, TDI must

demonstrate that the likely loss of these funds threatens its business's very existence. See

/song, 273 F. Supp. 2d at 2. In that regard, TDI's reliance on Ellipso v. Mann 2 is, at best,

misplaced. While an equitable interest is necessary under Ellipso to obtain an injunction

to freeze assets, it is not a sufficient basis, alone, to warrant an injunction that does so.

Accordingly, whether TDI's interest in the funds in Fleischmann's bank account is

equitable or not, it cannot obtain injunctive relief absent the necessary showing of

irreparable harm required in this Circuit. 3

       2   480 F.3d 1153 (D.C. Cir. 2007)

       3 TDI fails to even argue, let alone establish, that the damages it has allegedly
suffered on account of Fleischmann pose a threat to its business. Assuming arguendo
TDI's allegations to be true, Fleischmann diverted approximately $626,401.42 in funds
owed to TDI. (CompI. ~ 15.) In addition, TDI claims it sunk roughly $600,000 in
unrecouped costs to service T AQA, the client whose payment Fleischmann allegedly
misappropriated. (Jd. ~ 18.) This alleged loss, however, is never placed in the context of
the financial condition ofTDI's business. Moreover, TDI's acknowledgment at the
preliminary injunction hearing that Fleischmann had not moved any funds out of the
account since paying taxes in April, despite his awareness ofTDI's suit against him,
raises additional doubts as to whether any potential harm is "imminent." (H'rg Tf. at 5.)

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                                   CONCLUSION

      Thus, for all of the reasons stated above, the Court DENIES TDI's Motion for a

Preliminary Injunction. An appropriate order will issue with this Memorandum Opinion.

                                                      ~
                                                     RICHARD. E N
                                                     United States District Judge

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