Modular Management Group, Inc. v. Adamo Construction, Inc.

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 MODULAR MANAGEMENT GROUP, Case No. 25-cv-01419-BAS-SBC INC., [12] ORDER: Plaintiff, [13] v. (1) DENYING PLAINTIFF’S EX [14] PARTE MOTION FOR 15 ADAMO CONSTRUCTION, INC., et. al, TEMPORARY RESTRAINING ORDER AND PRELIMINARY 16 Defendants. INJUNCTION (ECF No. 19); 17 AND [18] (2) REFERRING PLAINTIFF’S EX [19] PARTE APPLICATION FOR 20 AN ORDER SHORTENING TIME TO RESPOND TO [21] DISCOVERY AND COMPEL 22 DEFENDANTS TO ATTEND DEPOSITIONS (ECF No. 21) [23] TO THE MAGISTRATE 24 JUDGE [25] 26 Presently before the Court are Plaintiff’s Ex Parte Motion for Temporary Restraining 27 Order and Preliminary Injunction (“Ex Parte Motion for TRO and PI”) (ECF No. 19) and 28 Ex Parte Application for an Order Shortening Time to Respond to Discovery and Compel 1 Defendants to Attend Depositions (“Application to Shorten Discovery”) (ECF No. 21). 2 For the following reasons, the Court DENIES WITHOUT PREJUDICE Plaintiff’s Ex 3 Parte Motion for TRO and PI (ECF No. 19) and REFERS Plaintiff’s Application to 4 Shorten Discovery (ECF No. 21) to Magistrate Judge Steve B. Chu. [5] 6 BACKGROUND 7 Plaintiff filed its Complaint on June 4, 2025. (ECF No. 1.) Per the Complaint, 8 Defendants Adamo Construction, Inc. and Joshua Godknecht allegedly violated a series of 9 construction subcontracts by withholding a total of $2,586,349.70 owed to Plaintiff. (Id. ¶ 10 16.) Defendant Godknecht also allegedly distributed funds from Adamo in the 2024 fiscal 11 year to himself and to John Doe Companies’ accounts for his personal gain, rendering 12 Defendant Adamo insolvent and unable to fulfill its payment obligations to Plaintiff. (Id. 13 ¶¶ 18–19, 44.) Defendant Adamo allegedly made the distribution transfers without 14 receiving reasonably equivalent value in exchange for such transfers. (Id. ¶¶ 39, 44.) In 15 the Complaint, Plaintiff asserts causes of action for breach of contract, actual fraudulent 16 transfer, constructive fraudulent transfer, and civil conspiracy. (Id. ¶¶ 23–25.) 17 Almost four months later, Plaintiff submitted its Ex Parte Motion for TRO and PI on 18 September 23, 2025—the night before the parties’ first case management conference on 19 September 24, 2025, with Judge Chu. (ECF Nos. 19, 23.) Plaintiff alleges, inter alia, that 20 Defendants are causing immediate and irreparable harm through selling valuable real estate 21 and transferring assets to shell entities, rendering Plaintiff likely unable to recover 22 $2,586,349.70. (Id. at 10–11.) None of the documents associated with this request were 23 previously filed on the docket, and Defendants were not provided adequate notice before 24 Plaintiff filed the Ex Parte Motion for TRO and PI. Defendants filed an opposition to 25 Plaintiff’s motion on September 26, 2025. (ECF No. 25.) [28] 1 EX PARTE MOTION FOR TRO AND PI 2 I. Legal Standard 3 A temporary restraining order (“TRO”) is generally considered to be “an 4 extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is 5 entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). A 6 TRO’s “underlying purpose [is to] preserv[e] the status quo and prevent[] irreparable 7 harm” until a preliminary injunction hearing can be held. Granny Goose Foods, Inc. v. 8 Bhd. of Teamsters & Auto Truck Drivers, 415 U.S. 423, 439 (1974). 9 Furthermore, when a plaintiff seeks a TRO without providing notice to the 10 defendant, Federal Rule of Civil Procedure 65(b)(1) imposes additional requirements. The 11 court may issue a temporary restraining order without written or oral notice to the adverse 12 party or its attorney only if: (A) specific facts in an affidavit or a verified complaint clearly 13 show that immediate and irreparable injury, loss, or damage will result to the movant before 14 the adverse party can be heard in opposition; and (B) the movant’s attorney certifies in 15 writing any efforts made to give notice and the reasons why it should not be required. Fed. 16 R. Civ. P. 65(b)(1). “The stringent restrictions imposed . . . by Rule 65[] on the availability 17 of ex parte temporary restraining orders reflect the fact that our entire jurisprudence runs 18 counter to the notion of court action taken before reasonable notice and an opportunity to 19 be heard has been granted both sides of a dispute.” Granny Goose Foods, 415 U.S. at 438– 20 39. 21 Next, regarding preliminary injunctions, Rule 65(a)(1) states: “The court may issue 22 a preliminary injunction only on notice to the adverse party.” When the moving party 23 fails to show that it has provided adequate notice to its adversary, courts will generally 24 deny the request for a preliminary injunction. Premier Produce Co., Inc. v. Ervey, No. 2325 CV-362 DMS (DEB), 2023 WL 2702596 , at *2 (S.D. Cal. Mar. 29, 2023). [28] 1 II. Analysis 2 A. Failure to Provide Notice for TRO 3 Plaintiff’s Ex Parte Motion for TRO and PI fails to provide notice to Defendants, 4 and thus, does not meet the procedural requirements of filing a TRO in this Court. As 5 discussed, Rule 65(b)(1)(B) requires that the party moving for a TRO “certif[y] in writing 6 any efforts made to give notice and the reasons why it should not be required.” Fed. R. 7 Civ. P. 65(b)(1)(B). Civil Local Rule 83.3(g)(2) likewise prohibits ex parte motions unless 8 supported by a declaration explaining why notice should not be required. The Rule 9 provides: “A motion for an order must not be made ex parte unless it appears by affidavit 10 or declaration . . . that for reasons specified the party should not be required to inform the 11 opposing party or the opposing party’s attorney.” CivLR 83.3(g)(2). 12 Plaintiff does not indicate in its Ex Parte Motion for TRO and PI or accompanying 13 Declaration that it attempted to provide notice to Defendants about filing the Ex Parte 14 Motion for TRO and PI. (See ECF Nos. 19, 19-1, 19-2.) Plaintiff has also failed to 15 previously file the exhibits accompanying its Ex Parte Motion for TRO and PI in this action 16 or to attest that it has otherwise shared those exhibits with Defendants. 17 Plaintiff does document a few instances of outreach to Defendants regarding 18 discovery to prepare for a possible TRO and PI hearing in its Declaration accompanying 19 the Application to Shorten Discovery. (See ECF No. 21-1.) However, even if these events 20 were detailed in the Declaration accompanying Plaintiff’s Ex Parte Motion for TRO and 21 PI, neither attempts to contact counsel for Defendants mere hours before filing the motion 22 (ECF No. 21-1 ¶ 3) nor discovery requests on the same date as the TRO filing (ECF No. 23 21-1 ¶ 1) provide opposing counsel reasonable notice and opportunity to be heard. See 24 Granny Goose Foods, 415 U.S. at 438–39 (noting courts need to weigh granting ex parte 25 TROs against “reasonable notice and an opportunity to be heard has been granted both 26 sides of a dispute”). For the reasons above, Plaintiff has failed to meet the requirements 27 set out in Rule 65(b)(1)(B) to provide notice to Defendants prior to filing a TRO. [28] 1 B. Failure to Demonstrate Extraordinary Circumstances Warranting Ex 2 Parte TRO 3 Unlike a preliminary injunction, Rule 65(b)(1) allows a TRO to be issued without 4 written or oral notice to the adverse party or its attorney in limited circumstances. This 5 Court’s Standing Order for Civil Cases states in Section 9 that: 6 All motions for temporary restraining orders must be briefed. While temporary restraining orders may be heard in true ex parte fashion (i.e., [7] without notice to an opposing party), the Court will do so only in extraordinary 8 circumstances. The Court’s strong preference is for the opposing party to be served and afforded a reasonable opportunity to file an opposition. [9] 10 For example, an ex parte TRO may be appropriate “where notice to the adverse party 11 is impossible either because the identity of the adverse party is unknown or because a 12 known party cannot be located in time for a hearing.” Reno Air Racing Ass’n, Inc. v. 13 McCord, 452 F.3d 1126, 1131 (9th Cir. 2006). This exception is inapplicable here because 14 Defendants’ identity is known, and because Defendants can be located in time for a 15 hearing. Indeed, Plaintiff’s and Defendants’ counsel convened the very day after Plaintiff 16 filed the TRO motion for a case management conference with Judge Chu. (ECF No. 23.) 17 Alternatively, “[i]n cases where notice could have been given to the adverse party, 18 courts have recognized ‘a very narrow band of cases in which ex parte orders are proper 19 because notice to the defendant would render fruitless the further prosecution of the 20 action.’” Reno Air Racing Ass’n, 452 F.3d at 1131 (citing Am. Can Co. v. Mansukhani, [21] 742 F.2d 314, 322 (7th Cir. 1984)). Generally speaking, this “narrow band” includes only 22 situations wherein an ex parte order is necessary “to preserve evidence or the court’s 23 jurisdiction.” Am. Can Co., 742 F.2d at 323 n.11. 24 This current instance does not qualify as an “extraordinary circumstance” in which 25 a TRO may be granted because Plaintiff has not demonstrated that Defendants have a 26 history of disposing of relevant evidence or disregarding court orders. Defendants have 27 instead demonstrated cooperative behavior in answering Plaintiff’s Complaint and 28 participating in case management conferences. (ECF Nos. 16, 23.) 1 C. Failure to Demonstrate Irreparable Harm Warranting an Ex Parte TRO 2 Even if Plaintiff satisfied the procedural requirements for the Court to issue a TRO, 3 Plaintiff fails to clearly show that immediate and irreparable injury, loss, or damage will 4 result to it before the adverse party can be heard in opposition, as required for the Court to 5 issue a TRO under Rule 65(b)(1)(A). 6 Plaintiff alleges that Defendants’ conduct, including “issuing insider distributions 7 while insolvent, forming multiple shell entities sharing the same address and officers, and 8 actively selling valuable real estate assets,” amounts to irreparable harm because it 9 dissipates assets that Plaintiff would be entitled to if it prevails on a later judgment. (ECF 10 No. 19-1 at 10–11.) Plaintiff further cites discussions with Defendants about Defendants’ 11 contracts with third parties, spreadsheets of Adamo’s financials, and public records of 12 recently formed entities as proof of Defendants’ allegedly “fraudulent” and “deceitful 13 actions to move assets and create entities coincid[ing] directly with Adamo’s disrepair.” 14 (ECF No. 19-1 at 3, 6; see also ECF No. 19-2 at ¶¶ 6, 10–11, Exs. A-9 to A-16.) Absent a 15 more particularized showing that Defendants’ financial activity was fraudulent and/or will 16 render Adamo unable to fulfill its possible payment obligations, these allegations are not 17 presently enough to show that the complained-of injury is imminent or irreparable. 18 Relatedly, Plaintiff does not have any current legal claim to the disputed assets, as it 19 has not yet secured a monetary judgment for the alleged claims. The cases cited by Plaintiff 20 grant preliminary injunctions—not temporary restraining orders—for prospective 21 monetary loss. (See ECF No. 19-1 at 10 (citing In re Est. of Ferdinand Marcos, Hum. Rts. 22 Litig., 25 F.3d 1467 (9th Cir. 1994), and In re Focus Media Inc., 387 F.3d 1077, 1085 (9th 23 Cir. 2004)).) As discussed, preliminary injunctions require the moving party to provide 24 adequate notice to the opposing party, unlike ex parte TROs. It is unclear from the 25 pleadings how waiting for an additional, short period of time to allow notice and briefing 26 on a noticed TRO or preliminary injunction would impose immediate injury on Plaintiff— 27 especially since Plaintiff waited to file the ex parte TRO application nearly four months 28 after first filing the Complaint. (See ECF Nos. 1, 19.) In sum, prospective loss of funds— 1 which Plaintiff does not yet have legal claim over—does not qualify as irreparable harm 2 sufficient to justify a TRO. 3 D. Failure to Provide Notice for PI 4 Plaintiff’s request for preliminary injunction likewise requires “adequate notice” to 5 the adverse party under Rule 65(a)(1). Plaintiff waiting four months to file its Ex Parte 6 Motion for Temporary Restraining Order and Preliminary Injunction, and only alerting 7 Defendant of their intention to do so on the day of filing, does not constitute adequate 8 notice. (ECF Nos. 19, 21-1 ¶ 3.) Thus, Plaintiff also fails to provide adequate notice to 9 Defendants for purposes of seeking a preliminary injunction pursuant to Rule 65(a)(1). 10 * * * 11 For the reasons above, the Court DENIES WITHOUT PREJUDICE Plaintiff’s Ex 12 Parte Motion for TRO and PI (ECF No. 19). Hence, rather than set a briefing schedule on 13 the request for a preliminary injunction, the Court finds it appropriate to deny this request 14 without prejudice. If Plaintiff wishes to seek injunctive relief, it may bring 15 a noticed motion for a preliminary injunction under Rule 65(a), filed and served in 16 accordance with Civil Local Rule 7.1 and this Court’s Standing Order for Civil Cases. [17] 18 APPLICATION TO SHORTEN DISCOVERY 19 In light of the Court’s decision to deny Plaintiff’s Ex Parte Application for TRO and 20 PI (ECF No. 19), the Court recognizes that Plaintiff may wish to seek expedited discovery 21 to support a noticed request for preliminary injunction. Thus, this Court REFERS 22 Plaintiff’s Application to Shorten Discovery (ECF No. 21) for determination by Judge Chu. 23 See Fed. R. Civ. P. 72(a) and CivLR 72.1(b). [24] 25 CONCLUSION 26 Accordingly, the Court DENIES WITHOUT PREJUDICE Plaintiff’s Ex Parte 27 Motion for TRO and PI (ECF No. 19) and REFERS Plaintiff’s Application to Shorten 28 Discovery (ECF No. 21) to Judge Chu. If Plaintiff wishes to seek injunctive relief, it may 1 || bring a noticed motion for a preliminary injunction under Rule 65(a), filed and served in 2 ||accordance with Civil Local Rule 7.1 and this Court’s Standing Order for Civil Cases. 3 IT IS SO ORDERED. 4 ~ 5 || DATED: September 30, 2025 yatta Bihar 6 H n. Cynthia Bashant, Chief Judge United States District Court [28] _Q_