2018-00245075-CU-BC

Ken Le vs. Ming Le

Nature of Proceeding: Motion for Mandatory Injunction

Filed By: McLaughlin, H. Vincent

Plaintiffs Oshima Sushi, Inc. (“OSI”) and Ming Le’s motion for a mandatory injunction against Defendant Kenny Le (“Kenny”) is denied.

The parties’ requests for judicial notice are granted.

This action arises from a dispute between brothers relating to the control of a restaurant owned by OSI on Natomas Crossing Drive. Kenny filed his complaint in case no. 34-2018-00245075 alleging individual and derivative causes of action against Ming Le. OSI and Ming Le filed their complaint against Kenny Le in case no. 34-2018-00246072. The cases were consolidated on June 11, 2019, and Kenny’s action was designated as the lead case.

Prior to the matters being consolidated, OSI and Ming Le prevailed on their motion for preliminary injunction which was granted by Judge Krueger in January 2019. By virtue of that order, Kenny was prohibited from representing himself as OSI’s officer, shareholder, etc., from entering OSI or preventing Ming Le from doing so, controlling or transferring any OSI assets, and withholding OSI financial or operational information. Judge Krueger issued a final ruling on January 15, 2019 which stated that the injunction would not go into effect until the bond was posted. The bond was posted on January 16, 2019.

Plaintiffs here contend that Kenny withdrew $117,000 from OSI’s bank account on January 14 and 15, 2019 with knowledge that Judge Krueger had issued a tentative ruling and minute order regarding the preliminary injunction. They indicate that the withdrawals caused OSI payroll checks to bounce. They indicate that they have learned through discovery that Kenny took a total of $173,500 out of OSI between October 9, 2018 and January 16, 2019. They now seek a mandatory injunction ordering Kenny to return the $173,500. They assert that OSI may not be able to pay taxes and other obligations if the money is not returned.

Plaintiffs previously sought a mandatory injunction but the motion was dropped by this Court on August 20, 2019 due to a lack of proper notice. Plaintiffs also sought to hold Kenny in contempt for violating Judge Krueger’s order on the preliminary injunction but that motion was dropped by Judge Krueger on August 20, 2019 for insufficient service. Judge Krueger also stated that the conduct alleged to violate the order (e.g. taking the money from OSI) took place prior to the effective date of the order and thus Kenny could not be held in contempt for violating the order.

Kenny also sought to dissolve the preliminary injunction on the basis that he discovered new evidence showing that his signature on a 2008 stock sale agreement (which was a basis on which Judge Krueger found Plaintiffs were likely to prevail at trial because it purported to show Kenny was no longer a shareholder) was forged and that numerous other documents indicate that Kenny is still a shareholder and officer of OSI. Judge Krueger denied the motion to dissolve the preliminary injunction on the basis that Kenny failed to mention the forgery in opposing the original preliminary injunction motion and that the other purported newly discovered evidence showing he remains a shareholder was not a basis to dissolve the injunction under CCP § 526 because the statute does not mention newly discovered evidence. Judge Krueger did note, however, that the evidence provided by Kenny in the motion to dissolve may make it more difficult for Plaintiffs to prevail at trial because it may tend show that he still remains a shareholder and officer of OSI.

“To obtain a preliminary injunction, a plaintiff ordinarily is required to present evidence of the irreparable injury or interim harm that it will suffer if an injunction is not issued pending an adjudication of the merits. Past California decisions further establish that, as a general matter, the question whether a preliminary injunction should be granted involves two interrelated factors: (1) the likelihood that the plaintiff will prevail on the merits, and (2) the relative balance of harms that is likely to result from the granting or denial of interim injunctive relief.” (White v. Davis (2003) 30 Cal.4th 528, 554.) The greater the showing on one factor, the lesser the showing must be on the other. (Butt v. State of California (1992) 4 Cal.4th 668, 678.) “[T]he party seeking the injunction must present sufficient evidentiary facts to establish a likelihood that it will prevail.” ( Tahoe Keys Property Owners’ Assn. v. State Water Resources Control Board (1994) 23 Cal.App.4th 1459, 1478.)

Here, it must be remembered that Plaintiffs are here requesting a mandatory injunction compelling Kenny to return $173,000 before there has been any final adjudication as to the ultimate ownership status of OSI. “[J]udicial resistance to injunctive relief increases when the attempt is made to compel the doing of affirmative acts.” (Shoemaker v. City of Los Angeles (1995) 37 Cal.App.4th 618, 625.) Such relief is not “permitted except in extreme cases where the right thereto is clearly established.” (Id. [citations omitted].)

Plaintiffs’ motion is premised on the argument that they are likely to prevail on the merits not in this action, but “in seeking this mandatory injunction” because Kenny has admitted that he had knowledge of Judge Krueger’s tentative ruling and January 15, 2019 minute order when he withdrew the money from OSI’s account and has rendered the ultimate final order prohibiting the transfer of OSI assets meaningless. They argue that the likelihood of prevailing must be evaluated in the context of when Kenny withdrew the funds from OSI’s account. At its essence, Plaintiffs’ argument is essentially that Kenny violated Judge Krueger’s preliminary injunction order. Apparently they believe that since Judge Krueger ruled that they were likely to prevail on the claims when he granted their motion for preliminary injunction that they need not address that issue. Properly framed, however, the motion must be evaluated in the context of whether Plaintiffs are likely to succeed on their causes of action in their complaint which they do not address in any manner whatsoever in their moving papers. Their attempts to do so for the first time in reply are rejected.

Kenny counters that Plaintiffs cannot satisfy the high burden for a mandatory injunction. He points out that the money at issue was used to pay OSI employee back wages and his own profit share.

Here, the Court finds that Plaintiffs have failed to demonstrate their entitlement to a mandatory injunction requiring Kenny to return the $173,000. To that end, there is no question that the withdrawals from OSI took place before the preliminary injunction order was effective. As set forth above, Judge Krueger found that such conduct could not support a finding of contempt against Kenny because it took place prior to the effective date of the order. Moreover as recognized by Judge Krueger when he denied Kenny’s motion to dissolve the injunction, the evidence that Kenny presented in connection with that motion, and again presented in opposition to Plaintiffs’ motion here, may indeed make it harder for Plaintiffs to show that Kenny is no longer a shareholder and/or officer of OSI. Specifically, Kenny presents evidence that OSI’s corporate procedures were not followed in connection with any sale of Kenny’s stock to Ming Le, financial records obtained from third parties indicate Kenny remains a 50% owner of OSI; records from California’ Alcoholic Beverage Control also show that Kenny is currently a shareholder and officer of OSI; and a 2011 statement by Ming which refers to Kenny as “co-owner.” (Kenny Le Decl. ¶¶ 5-6; Kenny Le RJN 9.) Certainly if it was recognized by Judge Krueger on the motion to dissolve that this evidence may make it more difficult for Plaintiffs to prevail on their claims that Kenny is no longer a shareholder/officer, than it cannot be said that this is an extreme case where Plaintiffs’ right to relief is clearly established such that a mandatory injunction can be issued.

Also, according to Kenny, the money at issue was used to pay $135,000 in back wages owed to an OSI employee and his own profit share. (Kenny Le Decl. ¶¶ 16, 17.) Requiring Kenny to return the money which he withdrew before the preliminary

injunction was effective would essentially effect a final conclusion that Kenny is not a shareholder or officer. Simply put, Plaintiffs have failed to demonstrate that this is an extreme case where there right to relief is clear such that a mandatory injunction can issue. The motion is denied on this basis alone.

The Court is aware of the declarations submitted by Plaintiffs in reply, specifically by the employee whom Kenny declared he paid $135,000 in back wages. Le Than Le, Ming Le and Kenny’s father, declares that he never had a back wage claim against OSI and that he did not receive $135,000 from Kenny. (Le Than Le Decl. ¶¶ 5, 6.) Ming and Kenny’s sister translated Kenny’s declaration for Le Than Le. Le Than Le declares that although there is a document dated January 15, 2019 purportedly signed by him stating that he had a wage claim and that he was paid $135,000 by Kenny, he did not sign that document. (Le Than Le Decl. ¶ 7, Exh. A.) While Plaintiffs argue that this shows Kenny is lying to the Court, the Court instead finds that these highly factual disputes regarding who signed what and when highlight the lack of clarity in any particular party’s entitlement to relief in this action. At a minimum, it cannot be said that Plaintiffs’ right to relief is clear. Further even if Kenny never paid the money to Le Than Le, the fact remains that the preliminary injunction was not in effect at the time the money was withdrawn from OSI and again the other evidence provided by Kenny, as noted by Judge Krueger, may in fact make it more difficult for Plaintiffs to prevail on their claims that Kenny was not a shareholder/owner.

In any event, Plaintiffs have failed to demonstrate that they will be irreparably harmed if the motion is denied. To that end, Plaintiffs simply argue that OSI “may not be able to fund its year end income tax liability if the money is not returned to the business. If [OSI] cannot pay its taxes and other obligations due to its depleted cash flow, the business could be liened and a substantial risk of going out of business would be presented.” (Mot. 6:16-19.) While it is true that the threat of going out of business could present irreparable harm, the threat here is speculative.

In short, Plaintiffs have entirely failed to demonstrate their entitlement to a mandatory injunction requiring Kenny to return $173,000. Again, such relief is not “permitted except in extreme cases where the right thereto is clearly established.” (Shoemaker, supra, 37 Cal.App.4th at 625.) This is not such a case.

The Court notes that Plaintiffs assert that they believe Kenny also took a Point of Sale system which manages OSI restaurant finances and transactions, DVRs for the restaurant’s security system and other financial documentation. However, they indicate that these items are not part of the request for mandatory injunction and therefore the Court will not address these items in any manner.

The motion is denied.

Given the above, the Court need not rule on Kenny’s evidentiary objections.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.