Case Number: SC122852    Hearing Date: August 12, 2014    Dept: O

SC122852
BANHART v. POPARIC

The OSC re: Preliminary Injunction is discharged. The request for preliminary injunction is DENIED. Plaintiff fails to demonstrate that inadequate legal remedies exist to compensate him for his loss. Plaintiff does not submit sufficient evidence establishing that the Defendants’ are insolvent and that any monetary judgment would be meaningless. The Court also notes that the $95,000 in escrow is completely unrelated to Plaintiff and his claims. They are merely funds indistinguishable from any other of Defendants’ assets from which Plaintiff can satisfy any judgment he obtains.

ANALYSIS: The decision to grant a preliminary injunction rests in the sound discretion of the trial Court and will not be reversed unless the trial Court exceeded the bounds of reason or contravened the uncontradicted evidence. The trial Court must consider three interrelated factors when deciding whether to issue preliminary injunctions:(1) balancing of hardships the interim harm the applicant is likely to sustain if the injunction is denied as compared to the harm to the defendant if it issues;(2) likelihood of prevailing on the merits the likelihood the applicant will prevail on the merits at trial; and(3)irreparable harm/inadequacy of legal remedies a real threat of immediate and irreparable injury due to the inadequacy of legal remedies. See CCP § 526(a)(2); see also Choice In Education League v. L.A. School District (1993) 17 Cal.App.4th 415, 422.

In deciding whether to issue a preliminary injunction, a court must weigh two interrelated factors: (1) the likelihood that the moving party will ultimately prevail on the merits, and (2) the relative interim harm to the parties from issuance or non-issuance of the injunction. Butt v. State of California, 4 Cal. 4th 668, 677-78 (1992); Alliant Ins. Services, Inc. v. Gaddy, 159 Cal. App. 4th 1292, 1299 (2008). “The trial court’s determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other to support an injunction.” Butt, 4 Cal. 4th at 678.

The general objective in issuing a preliminary injunction is to preserve the status quo. See Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528. In addition, it is rarely appropriate to grant a preliminary injunction that not only does not preserve the status quo but also grants the ultimate relief sought in the action, before trial. See Paramount Pictures Corp. v. Davis (1965) 228 Cal.App.2d 827. A preliminary injunction must not issue unless the plaintiff can demonstrate reasonable probability that he will prevail on the merits, regardless of the balancing of the hardships or the irreparable nature of the harm. See San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442.

Plaintiff’s claim is one for monetary damages based on a straightforward breach of contract/fraud claim. Plaintiff paid Defendant $95,000 based on his fraudulent representations and Plaintiff now seeks to recover that money. Plaintiff seeks an injunction enjoining disbursement of $95,000 currently in escrow pending the sale of the club. The escrow was opened in connection with Defendant Aqua’s sale to a third party. There is no claim that the specific $95,000 in escrow are the same specific funds paid by Plaintiff to Defendant. Plaintiff in fact admits that his $95,000 was paid to Defendant in installments before the sale at issue was initiated. Plaintiff also does not provide any evidence regarding Defendant’s current sale to a third party buyer.

Plaintiff fails to establish entitlement to an injunction based on these facts. The well-established rule is that an injunction must not issue where there are adequate legal remedies, i.e. the injury is compensable by an award of monetary damages. CCP §526(a)(4) and (5). Here, the only injury is monetary loss of $95,000.

Plaintiff fails to establish any exception to this general rule. Plaintiff argues Defendants’ insolvency makes any judgment obtained in this action ineffectual. “It was declared in an early case that mere monetary loss is not irreparable in contemplation of the remedy of injunction unless there is an averment or a showing that parties causing the loss are insolvent or in any manner unable to respond in damages. Subsequent decisions adhere to the foregoing rule that the asserted insolvency of the defendant is a proper matter for the court’s consideration.” West Coast Constr. Co. v. Oceano Sanitary Dist. (1971) 17 Cal.App.3d 693, 700. However, Plaintiff makes an ineffectual evidentiary showing regarding Defendants’ insolvency. The mere statement that Aqua has $700,000 in debt and that Poparic may flee the country is insufficient. In West Coast, for example, the insolvency was undisputed. A clear evidentiary showing of insolvency is particularly necessary given the admission that Defendant Aqua is being sold, which means there will be proceeds from the sale. Here, Plaintiffs provide only a declaration that they believe Defendants are insolvent without providing the source of that information or any supporting evidence.

Plaintiffs also argue that specific funds are in danger of being dissipated. Injunctions are appropriate where plaintiff seeks to enjoin dissipation of specific funds or assets and there is a claim for constructive trust asserted. See Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 136 (trial court properly issued injunction over specific profits generated from sale of stock where complaint sought constructive trust over those funds and loss of specific funds would leave plaintiff with inadequate monetary damages). There is no prayer for constructive trust, nor does Plaintiff have any legal claim to the specific funds in escrow except as potential funds from which to satisfy any judgment obtained in this case. Plaintiff’s request is distinguishable from both West Coast and Heckmann because Plaintiff is seeking to enjoin use or distribution of funds that are not traceable to him or the underlying transaction between him and Defendant.

In fact, Plaintiff is essentially asking the Court to attach the $95,000 in escrow. While the Court cannot deny the injunction purely on grounds that attachment is an available remedy, the Court cannot issue an injunction that amounts to an attachment without fulfilling the statutory requirements of an attachment. Here, Plaintiff does not satisfy the requirements for an injunction and no request for attachment has been made.

The OSC re: Preliminary Injunction is discharged. The request for preliminary injunction is DENIED. Plaintiff fails to demonstrate that inadequate legal remedies exist to compensate him for his loss. Plaintiff does not submit sufficient evidence establishing that the Defendants’ are insolvent and that any monetary judgment would be meaningless. The Court also notes that the $95,000 in escrow is completely unrelated to Plaintiff and his claims. They are merely funds indistinguishable from any other of Defendants’ assets from which Plaintiff can satisfy any judgment he obtains.