2011-00104236-CU-FR

Richard E Crow vs. The Crow Law Firm

Nature of Proceeding: Motion for Injunctive Relief

Filed By: Kirkman, Douglas E.

Plaintiffs Richard E. Crow, II and Joseph J. Weninger’s (collectively “Plaintiffs”) motion
for injunctive relief is ruled upon as follows.

Plaintiffs seek a preliminary injunction restraining Defendants Donald Britt and John
Gilbert, individually and in their capacities as trustees and beneficiaries of their
respective trusts (the Donald S. Britt Revocable Trust and the John D. Gilbert
Revocable Trust) from further dissipating, liquidating, transferring, hypothecating, or
otherwise disposing of, or disposition of any annuity, annuity proceeds, or remaining
funds, monies, or assets which are traceable to annuities or annuity proceeds which
were purchased or funded by attorney’s fees obtained from the Eric Doi case against
the Union Pacific Railroad.

A TRO was issued on August 27, 2013. Trial is scheduled for January 28, 2014.

This is an action for: (1) Fraud – Intentional Misrepresentation, (2) Fraud – Suppression
of Facts, (3) Breach of Duty of Loyalty, (4) Failure to Provide Access to Corporate
Records, (5) Imposition of Constructive Trust and (6) Accounting. Plaintiffs allege that
Defendants (as trial counsel and direct contact with Doi) negotiated a settlement
agreement in the Doi action and used a disproportionate share of the firm’s fee award
from the Doi Settlement to purchase annuities which made sizeable distributions to the two Defendants’ personal trusts and that the trusts thereafter made distributions to pay
a variety of Defendants’ personal expenses. Plaintiffs allege that Defendants refused
to disclose the Doi Settlement terms to them because the settlement agreement was
“confidential”, which restricted disclosure only to Defendants.

Both Britt and Gilbert oppose the motion.

CCP Section 527 generally authorizes a court to enter a preliminary injunction. “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.)

Notwithstanding whether Plaintiffs have demonstrated a likelihood of prevailing on the
merits Plaintiffs have not presented evidence of irreparable injury or interim harm that
it will suffer if an injunction is not issued pending trial which is approximately three
months away. Here, Plaintiffs filed their complaint on May 31, 2011. Plaintiff alleged a
cause of action for injunctive relief and stated that they were entitled to injunctive relief,
“restraining Britt and the Crow Law Firm from transferring or disposing of Firm funds or
the Doe (sic) settlement proceeds.” (Paragraph 25, May 31, 2011 Complaint.) They
further alleged that Britt should be enjoined from “continued depletion of Firm funds
and accounts.” (Id. ¶ 68.) Thus, by at least May 31, 2011, Plaintiffs were concerned
with the possibility that Defendants’ would “transfer” or “dispose” of the Doi settlement
proceeds. Moreover, on November 7, 2011, in response to interrogatories, Plaintiffs
became advised that Defendants received annuities from the Doi settlement.
Plaintiffs, however, delayed filing the instant motion for nearly two years. Delay in
moving for a preliminary injunction may be considered in determining whether the
claimed injury is “irreparable.” (O’Connell v Sup. Ct. (2006) 141 Cal.App.4th 1452,
1481.)

In Plaintiffs’ counsel’s declaration filed on August 26, 2013 in support of their
opposition to Britt’s ex-parte application to continue the hearing on the motion for
preliminary injunction, he explains that “some of the delay” in filing the instant motion
was due to the completion of current discovery. (Declaration of Douglas E. Kirkman in
opposition to ex-parte application, ¶ 6.) He states that delay was caused because Britt
refused to testify about what he was doing with the annuity proceeds and he was
forced to file a motion to compel. (Id.) Britt’s further deposition was not taken until
approximately mid-March of this year. (Id.) He further states that further delay
occurred because they needed to obtain information from Gilbert about what he was
doing with the annuity funds. (Id. ¶ 7.) It was not until mid-July 2013 that Plaintiffs
obtained the information.

The Court is not convinced that the additional discovery as to what Defendants did
with the annuity proceeds was necessary for Plaintiffs to file a motion for preliminary
injunction. Indeed, Plaintiffs could have moved for the requested preliminary injunction
much earlier.

The Court also finds that granting the requested relief would cause far greater injury to
Defendants than denying the requested relief would cause injury to Plaintiffs. (See Robbins v. Superior Court (1985) 38 Cal.3d 199, 205.) The injury that Plaintiffs
contend they will suffer is that Defendants “will continue dissipating the funds” and that
there is a “distinct risk that one or both of the defendants will attempt to liquidate or
hypothecate the annuities and run.” (Plaintiffs’ P&As, 14:25-16.) On the other hand,
Britt explains that he will lose access to income that he depends on for his living
expenses. (Declaration of Donald Britt, ¶24.) Further, the annuities are reported as
self-employment income and all taxes applicable to such income must be paid,
injunction or not. (Id.) He uses the annuity funds to pay those taxes. (Id.) Gilbert
explains that the monthly annuity payments are necessary for his personal living
expenses (including mortgage payments, significant taxes related to the annuities,
other taxes, insurance premiums, food, and clothing, operation of his law practice, and
payment of attorneys’ fees and expenses related to this litigation. (Declaration of John
D. Gilbert, ¶ 9.) Because he operates a FELA plaintiffs’ law practice, he is often
required to contribute personal funds for operation of the practice. (Id.) Without the
annuity payments, he will be unable to pay his living expenses, operate his law firm
and maintain a defense in this litigation. (Id.)

Given the above, the Court finds that the relative balance of harms that is likely to
result from the granting or denial of interim injunctive relief tips overwhelmingly in
Defendants’ favor. Additionally, Plaintiffs have failed present evidence of irreparable
injury or interim harm that it will suffer if an injunction is not issued pending trial which
is approximately three months away. Moreover, Plaintiffs have not made any showing
regarding the Defendants’ ability to pay a judgment if a judgment were entered against
them.

Accordingly, Plaintiffs’ motion is DENIED. The TRO is VACATED.

The Court declines to formally rule on the parties’ objections to evidence. The Court
relied only on admissible evidence.

Gilbert’s motion to strike portion of Plaintiffs’ motion is DENIED.

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