Young at Heart LLC v. Atlatl Group LLC

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Young at Heart LLC, No. CV-20-00918-PHX-MTL 10 Plaintiff, TEMPORARY RESTRAINING ORDER 11 v. 12 Atlatl Group LLC, et al., 13 Defendants. [14] 15 The Court has considered Plaintiff’s Verified Complaint, Motion for Temporary 16 Restraining Order, the supporting exhibits, and the arguments of Plaintiff’s counsel at the 17 June 2, 2020 status conference. The Court will enter a temporary restraining order for the 18 reasons described herein. 19 I. LEGAL STANDARD 20 The standard for issuing a temporary restraining order is identical to the standard 21 for issuing a preliminary injunction. Whitman v. Hawaiian Tug & Barge Corp./Young 22 Bros., Ltd. Salaried Pension Plan, 27 F. Supp. 2d 1225, 1228 (D. Haw. 1998). A plaintiff 23 seeking a temporary restraining order must establish that it is likely to succeed on the 24 merits, likely to suffer irreparable harm in the absence of temporary relief, that the balance 25 of equities tips in its favor, and that an injunction is in the public interest. See Winter v. 26 Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); Am. Trucking Ass'n, Inc. v. City of 27 L.A., 559 F.3d 1046, 1052 (9th Cir. 2009). These elements are balanced on a sliding scale. 28 See Alliance for the Wild Rockies v. Cottrell, 632 F. 3d 1127, 1131, 1134-35 (9th Cir. 1 2011). The movant bears the burden of proof on each element of the test. See Envtl. Council 2 of Sacramento v. Slater, 184 F. Supp. 2d 1016, 1027 (E.D. Cal. 2000). 3 II. FINDINGS OF FACT AND CONCLUSIONS OF LAW 4 The Court makes the following findings of fact and law. 5 1. YAH is likely to succeed on the merits. 6 The Court finds that YAH is likely to succeed on the merits of its breach of contract 7 claim against Defendant The Atlatl Group, LLC dba Bravada Yachts (“Bravada”), as set 8 forth in the Verified Complaint (Doc. 1), because Bravada failed to deliver the houseboat 9 that it agreed to construct for YAH (the “Houseboat”) by April 1, 2020, pursuant to the 10 parties’ Houseboat Construction Agreement dated October 23, 2018, and as amended by 11 the Amendment to Houseboat Construction Agreement dated August 1, 2019 (the 12 “Agreement”). While the correspondence attached to YAH’s Verified Complaint indicates 13 Bravada believes a $155,000 change order payment is due and owing, no evidence has 14 been provided to the Court that YAH certified the progress to which the change order 15 pertains, and there appears to be at least an argument from the Agreement that such 16 certification is required. Nevertheless, the Court finds that the sum of $155,000 constitutes 17 a proper amount of security for this Order, as required by Rule 65(c). 18 2. YAH will likely suffer irreparable harm without this relief. 19 Furthermore, a review of the Agreement attached to the Verified Complaint reveals 20 that the parties clearly intended for the Houseboat to be unique and one-of-a-kind. Indeed, 21 in one of the letters attached to the Verified Complaint, Bravada’s attorney describes the 22 Houseboat construction process as “a long, collaborative process of customization and 23 accommodation.” (Doc. 1-5 at 1.) 24 Courts have found irreparable harm to exist in the face of threatened disposal of 25 unique and rare items. See, e.g., Mellen Inc. v. Loan, No. 2:16-CV-00648-DLR, 2016 WL 26 3144165, *6 (D. Ariz., June 6, 2016) (finding irreparable harm sufficient to enjoin a 27 defendant from selling a unique and rare diamond in the face of competing claims of rights 28 to the diamond); FTC v. Kutzner, No. 8:16-CV-00999-DOC-AFM, 2017 WL 5188334 , *9 1 (C. D. Cal., Mar. 10, 2017) (enjoining receiver from selling a men’s Rolex watch, two 2 Chanel watches, and a Boucheron necklace valued at a total of $119,633, because they 3 were “valuable and unique pieces of jewelry” and their sale would constitute irreparable 4 harm). Furthermore, the nearly $1 million in IRS tax liens against Bravada and the 5 existence of another lawsuit alleging Bravada has yet to begin construction of a houseboat 6 for that plaintiff, despite substantial payment,1 together suggest that Bravada may not be 7 able to collect any monetary judgment that it might secure against Bravada. 8 Therefore, because the Houseboat is unique and one-of-a-kind, and because any 9 monetary judgment that YAH may secure against Bravada may very well by pyrrhic, this 10 Court finds that YAH would suffer irreparable harm if the requested temporary restraining 11 order were not granted. 12 3. The balance of equities favors YAH. 13 The Court finds that a balance of the equities favors YAH. YAH has, to date, paid 14 $917,500 to Bravada, yet Bravada retains possession both of the Houseboat (in whatever 15 form it now exists) and the $917,500, despite a contractual obligation to deliver the 16 Houseboat on or before April 1, 2020. Bravada has now threatened to sell the Houseboat 17 instead (see Doc. 18, Ex. A, at 2; see also Doc. 1-2 ¶¶ 10.1.2, 10.2), and while Bravada 18 offered to pay $817,500 to YAH over six months, Bravada gave no indication that it has 19 the money on-hand and could pay YAH today. The fact that Bravada appears to have 20 almost $1 million in IRS tax liens levied against it renders dubious any promise of future 21 payment. The balance of equities, to at least preserve the status quo by preventing the 22 threatened sale of the Houseboat, favors YAH. 23 4. This Order is in the public interest. 24 Finally, the public has an interest in upholding enforceable contracts. Ajilon 25 Professional Staffing, LLC v. Griffin, No. 2:09-CV-00561-PHX-DGC, 2009 WL 976522 , 26 *4 (D. Ariz. April 10, 2009) (quoting Universal Engraving, Inc. v. Duarte, 519 F.Supp.2d 27 1140 , (D. Kan. 2007)). Whatever the competing claims of the parties may be, it is clear 28 1 See the First Amended Complaint in Revenant Entm’t, LLC v. The Atlatl Group, LLC, et al., No. 2:20-CV-00578-DWL (D. Ariz.) (Doc. 16) (April 22, 2020). 1 that Bravada has not delivered the Houseboat to YAH on April 1, 2020, as it was obligated 2 to do. Preserving the status quo until the competing claims of the parties can be fully 3 litigated is in the public interest. 4 III. NOTICE 5 Plaintiff has indicated that it provided notice to Defendants, and Defendant 6 Bravada’s known counsel, of the Complaint, Motion for Temporary Restraining Order, and 7 June 2, 2020 status conference. However, the Court has not held a formal hearing on the 8 merits of the Motion for Temporary Restraining Order, nor has it ordered Defendants to 9 respond in writing to the motion. Accordingly, the Court will consider this to be a 10 temporary restraining order without notice. The Court concludes that a temporary 11 restraining order without notice is appropriate in this case because, for the reasons 12 described herein, Plaintiff would suffer irreparable harm if the houseboat at issue is sold, 13 liquidated, transferred, or otherwise disposed of. The Court concludes that swift action is 14 appropriate in this case. 15 IV. CONCLUSION 16 Accordingly, 17 IT IS ORDERED granting in part the Motion for Temporary Restraining Order 18 (part of Doc. 17), as follows, as of 9:00 AM on June 4, 2020: 19 Bravada is HEREBY ENJOINED from selling, liquidating, transferring, or 20 otherwise disposing of: 21 (a) the houseboat that Bravada agreed to build for YAH (the “Houseboat”) 22 pursuant to that certain Houseboat Construction Agreement, dated October 23, 2018, as 23 amended by that certain Amendment to Houseboat Construction Agreement, dated as of 24 August 1, 2019 (the “Agreement”), in whatever form it now exists; or 25 (b) any materials or equipment Bravada purchased for construction of the 26 Houseboat or which have otherwise been identified to the Agreement. 27 IT IS FURTHER ORDERED that Plaintiff shall serve this Temporary Restraining 28 Order, any other orders entered herein, and all supporting papers upon Defendants for this 1 || Order to take effect. 2 IT IS FURTHER ORDERED pursuant to Federal Rule of Civil Procedure 65(c), || the Temporary Restraining Order set forth herein shall be subject to the posting of security 4|| with the Clerk of the Court by Plaintiff, in the form of a bond in the amount of $155,000. 5 || This Order may not be served until this bond is posted. 6 IT IS FURTHER ORDERED that because this Temporary Restraining Order will 7\| expire at 9:00 AM on June 18, 2020, if Plaintiff seeks a Preliminary Injunction for the 8 || duration of this case, a Motion for Preliminary Injunction must be filed no later than June 9|| 9, 2020, and provided to Defendants within 24 hours. If Defendants wish to respond, they 10 || must do so no later than June 12, 2020. Any reply is due by June 15, 2020. 11 IT IS FINALLY ORDERED denying in part, without prejudice, the portion of 12|| Doc. 17 requesting a prejudgment writ of replevin. 13 Dated this 4th day of June, 2020. [14] Wichad T. gibuade Michael T. Liburdi 17 United States District Judge [28] _5-