Ocean Garden Products Incorporated v. Blessings Incorporated

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Ocean Garden Products Incorporated, No. CV-18-00322-TUC-RM 10 Plaintiff, Consolidated with: No. CV-19-00284-TUC-RM 11 v. ORDER 12 Blessings Incorporated, et al., 13 Defendants. [14] 15 On July 2, 2018, Plaintiff Ocean Garden Products Inc. (“Plaintiff” or “OG”) 16 initiated a lawsuit against Defendants Blessings, Inc. (“Blessings”) and David Mayorquin 17 (“David”), alleging breach of contract and other claims (Doc. 1 in case number CV-1818 322)1 (the “Contract Action”). The operative pleadings in the Contract Action are 19 Plaintiff’s First Amended Complaint (Doc. 86), which adds Abraham Mayorquin and 20 ADAB Ocean Harvest, S. De R.L. De C.V. (“ADAB Mexico”) as defendants; 21 Defendants’ Answer to First Amended Complaint and Counterclaims (Doc. 92); and 22 Plaintiff’s Answer to the Counterclaims (Doc. 109). 23 On May 22, 2019, Plaintiff initiated a separate lawsuit against Defendants David, 24 David’s wife Amanda Lopez Vergara, Abraham, Abraham’s wife Viviana Lopez, ADAB 25 Mexico, ADAB Ocean Harvest LLC (“ADAB Tucson”), and Pacific Ocean Harvest S. 26 De R.L. De C.V. (“Pacific Ocean Harvest”), alleging claims under Arizona’s Uniform 27 Fraudulent Transfer Act (“UFTA”), A.R.S. 44-1004, et seq. (Doc. 1 in case number CV- 28 1 All record citations herein refer to the page numbers generated by the Court’s electronic filing system and, unless otherwise noted, to the docket in CV-18-322. 1 19-284) (the “UFTA Action”). The parties jointly moved to consolidate the Contract 2 Action and UFTA Action (Doc. 144), and the Court granted consolidation on June 24, 3 2019 (Doc. 146). The operative pleadings in the UFTA Action are Plaintiff’s Amended 4 Complaint (Doc. 154), which adds Blessings as a defendant, and Defendants’ Answer to 5 the Amended Complaint (Doc. 206). 6 Currently pending before the Court is Plaintiff’s Motion for Preliminary 7 Injunction. (Doc. 149.)2 Defendants filed a Response (Doc. 150) and a Supplemental 8 Response (Doc. 158), and Plaintiff filed a Reply (Doc. 167). The Court held an 9 evidentiary hearing on July 23, 2019 and August 22-23, 2019. (Docs. 177, 194, 202.) 10 Based upon an oral stipulation of the parties at the July 23, 2019 hearing, the Court 11 entered temporary injunctive relief pending resolution of Plaintiff’s Motion for 12 Preliminary Injunction. (Doc. 180.) 13 I. Background 14 Blessings is an Arizona corporation located in Tucson. It is wholly owned by 15 brothers David and Abraham, and David serves as its President and Chief Executive 16 Officer (“CEO”). Blessings began as a seafood distributor for local restaurants in 17 Tucson. In 2006, it purchased a processing facility located on Highland Avenue. In 18 approximately 2008, Blessings began selling processed shrimp to national chains such as 19 Costco and Trader Joe’s. 20 In or around 2011 or 2012, Blessings set up ADAB Mexico to process shrimp for 21 Blessings as a maquiladora. ADAB Mexico is a Mexican company located in Nogales, 22 Mexico. Like Blessings, it is wholly owned by David and Abraham. A maquiladora 23 agreement dated May 31, 2012 is signed by David on behalf of both Blessings and 24 ADAB Mexico. According to David, in 2012 and 2013, Blessings paid ADAB Mexico 25 processing fees calculated pursuant to the maquiladora agreement as ADAB Mexico’s 26 total operating expenses plus a 6.5% markup. Starting in 2014, Blessings began paying 27 ADAB Mexico processing fees calculated as 80 cents per pound of shrimp processed by 28 2 Also pending are numerous Motions to Dismiss (Docs. 99, 110, 156, 157), which will be resolved separately. 1 ADAB Mexico. Defendants have not introduced an addendum to the original 2 maquiladora agreement or any subsequent maquiladora agreements. 3 In 2012, David learned that Blessings was the subject of a criminal investigation 4 involving sea cucumber exportation, and he retained criminal defense counsel. 5 According to Blessings’ audited 2012 financial statements, the company’s net income in 6 2012 was $1,038,162 and it paid processing fees totaling $674,699 to ADAB Mexico. 7 The financial statements reflect a shareholder loan receivable of $84,394. 8 On August 28, 2013, Blessings executed an unsecured promissory note in favor of 9 OG for the principal sum of $1,500,000. According to Celso Lopez, the Chief Financial 10 Officer of OG, Blessings was supposed to use the loan to purchase domestic shrimp to be 11 processed by Blessings and sold to OG at a discounted price, with the discount credited 12 against the balance of the loan. According to David, the loan was used not only to 13 purchase domestic shrimp but to purchase equipment and supplies, and to hire and train 14 personnel, in service of the domestic shrimp program. Blessings delivered $470,000 15 worth of shrimp pursuant to the loan agreement, but $240,000 worth was returned to 16 Blessings due to quality issues. After accounting for the returned shrimp, the unpaid 17 balance owed under the 2013 note was $1,273,633.40. According to Blessings’ audited 18 2013 financial statements, the company suffered net losses of $980,822 in 2013 and paid 19 processing fees of $1,924,367 to ADAB Mexico. It had $7,490,535 in total assets and 20 $6,856,667 in total liabilities. The financial statements reflect a shareholder loan 21 receivable of $740,968. 22 The unpaid balance of the 2013 promissory note was subsumed into a June 1, 23 2014 unsecured promissory note executed by Blessings in favor of OG. Blessings did not 24 pay the amount due under the 2014 note. Blessings also began defaulting on invoices for 25 shrimp delivered to Blessings by OG during the 2014-2016 time frame.3 According to 26 Blessings’ audited 2014 financial statements, the company’s net income in 2014 was 27 $236,541, and it paid processing fees of $1,156,874 to ADAB Mexico. It had $9,942,012 28 3 Plaintiff has presented evidence of 18 unpaid invoices, along with proof of deliveries. 1 in total assets and $9,179,497 in total liabilities. The financial statements reflect a 2 shareholder loan receivable of $823,417. For the first time, the financial statements also 3 reflect a note receivable from ADAB Mexico in the amount of $1,312,270, of which 4 $480,997 was classified as a current asset based on management’s averment that this 5 portion of the note was expected to be repaid in the near future.4 6 In approximately 2015, Blessings lost Trader Joe’s as a customer after Trader 7 Joe’s rejected shrimp delivered by Blessings due to high sodium levels. The shrimp 8 rejected by Trader Joe’s had been processed by Blessings after being purchased from OG. 9 OG took possession of the shrimp for a period of time before asking Blessings to attempt 10 to resell it. The parties dispute responsibility for the quality issues that caused Trader 11 Joe’s to reject the shrimp. 12 On November 18, 2015, Blessings sent OG a proposed repayment plan containing 13 provisions for the repayment of Blessings’ debt to OG. Blessings alleges that the 14 proposal resulted in a modification agreement which OG later breached; OG denies 15 entering into any modification agreement. The record does not contain a written 16 modification agreement signed by Blessings and OG, although it contains some 17 conflicting evidence regarding whether the parties operated for a time pursuant to the 18 provisions of Blessings’ November 18, 2015 proposal. According to Blessings’ draft 19 2015 financial statements, the company’s net income in 2015 was $15,392, and it paid 20 processing fees of $480,997 to ADAB Mexico. It had total assets of $7,767,322 and total 21 liabilities of $7,033,030. The financial statements reflect a loan receivable from ADAB 22 Mexico of $2,677,683, classified entirely as a current asset, and a shareholder loan 23 receivable of $838,417. 24 In January 2016, Lance Leonard replaced Javier Corella as the CEO of OG. Later 25 that year, OG sued Blessings in Arizona state court. OG obtained a default judgment in [26] 4 Blessings’ 2012 and 2013 audited financial statements reflect a loan receivable 27 from a related party of $49,700, without specifying the identity of the related party. That same loan receivable is reflected in the 2014 audited financial statements, but the 2014 28 audited financial statements also reflect a note receivable from ADAB that does not appear in the earlier financial statements. 1 that lawsuit, but the judgment was later overturned on the grounds of insufficient service 2 and OG voluntarily dismissed the case. Also in the year 2016, Trader Joe’s sued 3 Blessings in arbitration for delivering contaminated shrimp.5 By the end of 2016, the 4 loan receivable from ADAB Mexico had increased to approximately $2.99 million. 5 In 2017, David and Blessings were publicly indicted on charges arising from the 6 sea-cucumber investigation. Costco, Blessings’ largest customer, stopped doing business 7 with Blessings after the criminal indictment was publicly reported. Plaintiff and 8 Defendants dispute whether OG was aware of the criminal investigation prior to the 9 indictment becoming public. Ultimately, David pled guilty to a misdemeanor and 10 Blessings pled guilty to a felony, and they were ordered to pay a criminal fine of nearly 11 $1 million. In order to separate himself from David after the indictment, Abraham 12 founded ADAB Tucson, which resells shrimp, and Pacific Ocean Harvest, which 13 processes shrimp for ADAB Tucson. 14 ADAB Mexico no longer does any business with Blessings; however, it continues 15 to operate and process food products for other customers. According to David, ADAB 16 Mexico’s profits in 2018 were approximately $600,000. Although David and Blessings’ 17 controller Erin McGinnis at one point concluded that the ADAB Mexico loan was 18 uncollectable, ADAB Mexico has recently made irregular payments on the loan. 19 Blessings no longer processes shrimp but continues to operate as a seafood 20 distributor for local restaurants in Tucson. Although Blessings’ current finances are not 21 clear from the record presently before the Court, it appears that the company is insolvent 22 and has been since at least 2017. David testified at the preliminary injunction hearing 23 that, if Ocean Garden were to obtain a judgment for $2.4 million in this case, neither 24 David, Blessings, nor ADAB Mexico would be able to pay the judgment. OG seeks 25 damages of over $5 million in these consolidated actions. (See Docs. 86, 154.) 26 Blessings owns the processing facility on Highland Avenue, subject to a mortgage. 27 It also owns a vacant lot on Thornydale Road, free and clear of a mortgage. The 28 5 The Trader Joe’s lawsuit was apparently instigated by an email sent to Trader Joe’s by an anonymous whistleblower purporting to be a former Blessings employee. 1 Highland Avenue and Thornydale properties are encumbered by a National Bank of 2 Arizona loan and by the criminal fine owed to the United States government. David and 3 Abraham each own a residential property in Tucson, subject to mortgages. Defendants 4 have not disclosed or presented evidence showing how much equity exists in these four 5 properties. 6 II. Discussion 7 Plaintiff seeks preliminary injunctive relief with respect to the UFTA Action. As 8 an initial matter, Defendants argue that Plaintiff should have sought a writ of attachment 9 under A.R.S. § 12-1521 rather than a preliminary injunction. However, Defendants 10 concede that Arizona’s UFTA expressly provides for the remedy of injunctive relief. 11 Furthermore, the Court finds that the determination of whether to grant preliminary 12 injunctive relief in this matter is governed by federal, rather than state, law. 13 The court may issue a preliminary injunction on notice to the adverse party 14 pursuant to Federal Rule of Civil Procedure 65. In determining whether to grant 15 preliminary injunctive relief, the Court considers: (1) whether the movant is likely to 16 succeed on the merits; (2) whether the movant is likely to suffer irreparable harm in the 17 absence of preliminary injunctive relief; (3) the balance of equities between the parties; 18 and (4) the public interest. Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). 19 The Ninth Circuit follows a “sliding scale” approach to preliminary injunctions. Alliance 20 for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-32 (9th Cir. 2011). Under this 21 approach, a weaker showing as to the likelihood of success on the merits may be offset 22 by a stronger showing with respect to the balance of equities. Id. 23 A. Likelihood of Success on Merits 24 In the UFTA Action, Plaintiff asserts claims under A.R.S. § 44-1004 and A.R.S. § 25 44-1005, in addition to conspiracy. Section 44-1004 provides: 26 A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was 27 made or the obligation was incurred, if the debtor made the transfer or incurred the obligation under any of the following: 28 1. With actual intent to hinder, delay or defraud any creditor of the debtor. 1 2. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either: 2 (a) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the 3 debtor were unreasonably small in relation to the business or transaction. 4 (b) Intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his 5 ability to pay as they became due. 6 A.R.S. § 44-1004(A). In determining actual intent, the Court may consider, among other 7 factors, whether: 1. The transfer or obligation was to an insider. 8 2. The debtor retained possession or control of the property transferred after the transfer. 9 3. The transfer or obligation was disclosed or concealed. 4. Before the transfer was made or obligation was incurred, the debtor had 10 been sued or threatened with suit. 5. The transfer was of substantially all of the debtor’s assets. 11 6. The debtor absconded. 7. The debtor removed or concealed assets. 12 8. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the 13 obligation incurred. 9. The debtor was insolvent or became insolvent shortly after the transfer 14 was made or the obligation was incurred. 10. The transfer occurred shortly before or shortly after a substantial debt 15 was incurred. 11. The debtor transferred the essential assets of the business to a lienor 16 who transferred the assets to an insider of the debtor. 17 A.R.S. § 44-1004(B). 18 Under A.R.S. § 44-1005, a transfer made by a debtor “is fraudulent as to a creditor 19 whose claim arose before the transfer was made or the obligation was incurred if the 20 debtor made the transfer . . . without receiving a reasonably equivalent value in exchange 21 for the transfer . . . and the debtor was insolvent at that time or the debtor became 22 insolvent as a result of the transfer or obligation.” 23 If a transfer is voidable under the UFTA, a creditor “may recover judgment for the 24 value of the asset transferred . . . or the amount necessary to satisfy the creditor’s claim, 25 whichever is less.” A.R.S. § 44-1008(B). The judgment may be entered against the 26 “transferee of the asset or the person for whose benefit the transfer was made.” Id. at § 27 44-1008(B)(1). 28 Plaintiff has established a likelihood of success in proving that it is a creditor for 1 purposes of the UFTA. Although Blessings disputes responsibility for shrimp quality 2 problems related to some of its debt to OG, and alleges that OG caused it damages by 3 breaching a modification agreement, Plaintiff’s evidence indicates that Blessings failed to 4 pay the balance due under the 2014 promissory note executed in favor of OG and failed 5 to pay 18 invoices for shrimp delivered by OG. 6 Plaintiff has also established a likelihood of success in proving that assets 7 transferred from Blessings to ADAB Mexico were intentionally or constructively 8 fraudulent. Although Defendants may ultimately prove that the asset transfers were 9 lawful, Defendants’ explanations for the asset transfers from Blessings to ADAB Mexico 10 are difficult to reconcile with the current record. Defendants argue that Blessings 11 provided money, equipment, training, and personnel services to ADAB Mexico in order 12 to help establish ADAB Mexico as a maquiladora in the 2011-2012 time period. 13 However, Blessings’ financial statements indicate that in the 2014-2015 time period— 14 after ADAB Mexico had already been established as a maquiladora—Blessings 15 transferred over $2.5 million to ADAB Mexico in the form of a “note receivable.” The 16 “note receivable” is unsecured and non-interest-bearing. Defendants have not identified 17 any evidence that Blessings received a promissory note or other loan documents from 18 ADAB Mexico in exchange for the loan, nor evidence showing that Blessings received 19 other consideration in exchange for the loan. Although there is evidence that ADAB 20 Mexico has recently made payments on the loan, those payments are irregular. They are 21 not made pursuant to any formal loan repayment terms; instead, David simply directs 22 ADAB Mexico to wire money to Blessings when Blessings needs cash to pay expenses. 23 Blessings’ financial statements reflect a shareholder loan receivable that increased 24 by over half a million dollars in 2013 and continued to increase, though by smaller 25 amounts, in 2014 and 2015. Defendants aver that the shareholder loan constituted money 26 taken from Blessings and provided to ADAB Mexico for equipment purchases, and that 27 the transfer was classified as a shareholder loan based on the suggestion of an accountant. 28 Defendants have not presented evidence showing how the shareholder loan was 1 accounted for by ADAB Mexico, nor evidence showing that ADAB Mexico intends to 2 repay David and Abraham or that David and Abraham intend to repay Blessings. In 3 addition to transferring money for equipment purchases, it appears that Blessings also 4 transferred some of its own equipment to ADAB Mexico, although it is not clear when 5 those equipment transfers occurred. Defendants aver that title to the transferred 6 equipment remains in Blessings’ name, but they have not presented any evidence 7 showing that ADAB Mexico has made lease payments or provided other consideration in 8 exchange for its use of the equipment. 9 Defendants aver that wire transfers from Blessings to ADAB Mexico reflect 10 payments of processing fees, but the current record does not support the conclusion that 11 all wire transfers were made for the purpose of paying processing fees. Although 12 Blessings’ financial statements reflect the payment of significant processing fees to 13 ADAB Mexico, those processing fees are accounted for separately from the “note 14 receivable” from ADAB Mexico, and testimony at the evidentiary hearing indicated that 15 processing fees were credited against ADAB Mexico’s outstanding loan rather than paid 16 in cash by Blessings. Although a portion of the ADAB Mexico loan appears to constitute 17 salaries paid by Blessings but attributed to ADAB Mexico—and thus does not reflect 18 direct cash transfers—the current record indicates that a significant portion of the loan 19 does reflect direct cash transfers from Blessings to ADAB Mexico. 20 With respect to actual intent under A.R.S. § 44-1004(A)(1), the current record 21 contains evidence of numerous badges of fraud. Blessings transferred cash and 22 equipment to an insider; both Blessings and ADAB Mexico are wholly owned by David 23 and Abraham. See A.R.S. § 44-1004(B)(1). Blessings apparently retained title to at least 24 some of the equipment sent to ADAB Mexico, but it does not appear to have received 25 any consideration, such as lease payments, in exchange for ADAB Mexico’s use of the 26 equipment. See id. at § 44-1004(B)(2), (B)(8). Furthermore, David retained control over 27 the cash transferred from Blessings to ADAB, dictating whether and when ADAB 28 Mexico makes repayments to Blessings. See id. at § 44-1004(B)(2). Although some 1 assets may have been transferred as early as 2011, the record indicates that the majority 2 of asset transfers occurred in the 2013-2015 time period, when Blessings was under 3 criminal investigation, had incurred substantial debt to OG, and had been threatened with 4 collection efforts by OG. See id. at § 44-1004(B)(4), (B)(10). Transfers occurred shortly 5 before and after Blessings was sued in arbitration by Trader Joe’s, sued in state court by 6 OG, publicly indicted, and sentenced to a significant criminal fine. See id. at § 447 1004(B)(4). The assets transferred from Blessings to ADAB Mexico were removed from 8 the jurisdiction of courts in the United States and thus shielded from creditors such as 9 OG. See id. at § 44-1004(B)(7). There is no evidence that Blessings received 10 consideration of reasonably equivalent value in exchange for the unsecured, non-interest11 bearing loan provided to ADAB Mexico. See id. at § 44-1004(B)(8). Blessings was 12 arguably insolvent before, and likely insolvent shortly after, the transfers. See id. at § 4413 1004(B)(9). 14 With respect to A.R.S. § 44-1004(A)(1), Plaintiff has established a likelihood of 15 success in proving that Blessings did not receive a reasonably equivalent value in 16 exchange for the equipment and cash transferred to ADAB Mexico, and that Blessings 17 transferred assets at a time when it believed or reasonably should have believed it would 18 incur—and, indeed, had already incurred—debts beyond its ability to pay as they became 19 due. 20 Plaintiff has also established serious questions going to the merits of its claim 21 under A.R.S. § 44-1005. The evidence indicates that Blessings transferred cash to 22 ADAB Mexico after it had incurred debts to OG, and the evidence is sufficient to raise 23 serious questions as to whether Blessings was insolvent at the time of the transfers or 24 became insolvent as a result of them. See id. 25 Plaintiff has established a reasonable likelihood of success in obtaining judgments 26 in the UFTA Action against David and Abraham because, as co-owners of Blessings and 27 ADAB Mexico, they are “person[s] for whose benefit” the transfers from Blessings to 28 ADAB Mexico were made. A.R.S. § 44-1008(B)(1). 1 B. Irreparable Harm 2 “[A] district court has authority to issue a preliminary injunction where the 3 plaintiffs can establish that money damages will be an inadequate remedy due to 4 impending insolvency of the defendant or that defendant has engaged in a pattern of 5 secreting or dissipating assets to avoid judgment.” In re Est. of Ferdinand Marcos, 6 Human Rights Litig., 25 F.3d 1467, 1480 (9th Cir. 1994). If Plaintiff were to obtain a 7 judgment in the full amount that it seeks in its operative Complaints, or even half that 8 amount, the evidence indicates that Defendants would be unable to pay the judgment. 9 Furthermore, as discussed above, Plaintiff has established a likelihood of success in 10 proving that Blessings and David have engaged in a pattern of secreting assets to Mexico. 11 Accordingly, the Court finds that Plaintiff has shown that it would suffer irreparable harm 12 in the absence of preliminary injunctive relief. 13 C. Balance of Equities 14 With an appropriately crafted injunction, the balance of equities tips sharply in 15 Plaintiff’s favor. The potential harm to Plaintiff—inability to collect on a judgment if it 16 succeeds on the merits of its claims against Defendants—is significant. However, the 17 Court agrees that a preliminary injunction should not have the effect of preventing 18 Defendants from paying legitimate business expenses, personal expenses, legal fees, and 19 existing obligations such as the criminal fine owed to the United States government and 20 the loan owed to National Bank of Arizona. Accordingly, the Court will craft an 21 injunction intended to allow Defendants to continue to make legitimate payments but to 22 enjoin Defendants from secreting assets beyond the reach of creditors. 23 D. Public Interest 24 “When the reach of an injunction is narrow, limited only to the parties, and has no 25 impact on non-parties, the public interest will be at most a neutral factor in the analysis.” 26 Stormans, Inc. v. Selecky, 586 F.3d 1109, 1138-39 (9th Cir. 2009) (internal quotation 27 omitted). However, the Court notes that the secretion of assets beyond the reach of 28 creditors undermines the public interest favoring the payment of commercial debts and 1 civil judgments. Accordingly, the public interest factor is either neutral or in favor of an 2 appropriately crafted preliminary injunction in this case. 3 E. Bond 4 “The court may issue a preliminary injunction . . . only if the movant gives 5 security in an amount that the court considers proper to pay the costs and damages 6 sustained by any party found to have been wrongfully enjoined or restrained.” Fed. R. 7 Civ. P. 65(c). District courts are “afforded wide discretion in setting the amount of the 8 bond.” Connecticut Gen. Life Ins. Co. v. New Images of Beverly Hills, 321 F.3d 878 , 882 9 (9th Cir. 2003). Defendants aver that they would be injured by a preliminary injunction 10 prohibiting them from selling assets in order to pay ordinary expenses, legal fees, and 11 existing obligations. However, the record does not contain sufficient information from 12 which this Court could reasonably estimate Defendants’ potential damages. Furthermore, 13 the Court will craft an injunction intended to minimize the potential harm identified by 14 Defendants. Accordingly, the Court will require a bond of only $5,000. 15 IT IS ORDERED that Plaintiff’s Motion for Preliminary Injunction (Doc. 149) is 16 granted as follows: 17 1. Absent notice and further Order of the Court, David Mayorquin, Abraham 18 Mayorquin, and Blessings, Inc. are restrained from causing (directly or 19 indirectly) or participating in the disposition of any ownership or security 20 interest in (1) Blessings, Inc.’s real property at 1045 S. Highland Ave., 21 Tucson, Arizona; (2) Blessings, Inc.’s real property at 6520 N. Thornydale 22 Rd., Tucson Arizona; (3) David Mayorquin’s real property at 2901 E. Calle 23 Sin Pecado in Tucson, Arizona; (4) Abraham Mayorquin’s real property at 24 7989 W. Ironwood Ct. in Tucson, Arizona. Notwithstanding this 25 preliminary injunction, David Mayorquin, Abraham Mayorquin, and 26 Blessings, Inc. may consummate a transaction involving the four 27 aforementioned properties on satisfaction of the following conditions: (1) 28 the transaction is with a person with whom Defendants have no direct or 1 indirect (past or present) personal, familial, financial, or professional 2 relationship, and (2) the proceeds of the transaction are held in escrow by 3 Defendants’ attorneys, net of closing expenses payable to persons with 4 whom Defendants have no direct or indirect (past or present) personal, 5 familial, financial, or professional relationship. 6 2. Absent notice and further Order of the Court, David Mayorquin, Abraham 7 Mayorquin, Blessings, Inc., and ADAB Ocean Harvest, S. De R.L. De C.V. 8 are restrained from causing or allowing the disposition of any other assets 9 owned by them, except for the payment of ordinary living expenses for 10 David Mayorquin, Abraham Mayorquin, and their dependents; payments 11 made in the ordinary course of business; payments of legal fees; and 12 payments on obligations owed to the United States and National Bank of 13 Arizona, N.A. 14 3. This preliminary injunction shall have no effect on the existing rights of 15 National Bank of Arizona, N.A., or the United States. 16 4. Pursuant to Federal Rule of Civil Procedure 65(c), Plaintiff shall post a 17 bond in the amount of $5,000.00. 18 Dated this 27th day of September, 2019. [20] 21 □□ □ Honoraple Rosemary Mafquez 23 United States District □□□□□ [28] -13-