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Tanners Creek Development, LLC v. Toms

United States District Court, S.D. Indiana, New Albany Division

November 15, 2018

TANNERS CREEK DEVELOPMENT, LLC, ENVIROANALYTICS GROUP, LLC, INDUSTRIAL DEMOLITION, LLC, COMMERCIAL DEVELOPMENT CO., INC., Plaintiffs,
v.
ARTHUR M. TOMS, DORI B. SCHWEITZER, JAMES B. TOMS, III, ANDIS, LLC, ATRC, LLC, STANCO EQUIPMENT CO., INC., SANDOR ENTERPRISES, LLC, Defendants.

          ORDER GRANTING EX PARTE MOTION FOR TEMPORARY RESTRAINING ORDER AND SETTING TELEPHONIC STATUS CONFERENCE

          SARAH EVANS BARKER, JUDGE UNITED STATES DISTRICT COURT.

         Plaintiffs have today, November 15, 2018, filed a verified complaint in this Court charging Defendants with among other things criminal and civil conversion, fraud, breach of fiduciary duty, and conspiracy. Plaintiffs seek an ex parte temporary restraining order (TRO) and a preliminary injunction freezing certain identified assets of Defendants.

         1. The complaint sufficiently invokes our diversity jurisdiction. 28 U.S.C. § 1332; Compl. ¶¶ 6-17.

         2. The complaint sufficiently sets forth a basis for this Court's personal jurisdiction over Defendants. Compl. ¶ 18 and passim.

         3. “The court may issue a [TRO] without . . . notice to the adverse party only if . . . specific facts in . . . a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition . . . and the movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.” Fed.R.Civ.P. 65(b)(1) (internal subdivisions omitted).

         4. “Every [TRO] issued without notice must state the date and hour it was issued; describe the injury and state why it is irreparable; [and] state why the order was issued without notice . . . .” Fed.R.Civ.P. 65(b)(2).

         5. “Every [TRO] must . . . state the reasons why it issued; state its terms specifically; and describe in reasonable detail-and not by referring to the complaint or other document-the act or acts restrained or required.” Fed.R.Civ.P. 65(d) (internal subdivisions omitted).

         6. A TRO freezing assets may be issued to preserve the status quo and Plaintiffs' rights to equitable relief. CSC Holdings, Inc. v. Redisi, 309 F.3d 988, 996 (7th Cir. 2002); Comcast of Ill. X, LLC v. Till, 293 F.Supp.2d 936, 942 (E.D. Wis. 2003). The TRO may be issued without notice if notice would render fruitless the further prosecution of the action. Am. Can Co. v. Mansukhani, 742 F.2d 314, 322 (7th Cir. 1984); Comcast of Ill. X, 293 F.Supp.2d at 939.

         7. The plausible and particularized allegations of Plaintiffs' verified complaint show that, since February 2017, Defendants have converted $4 million worth of Plaintiffs' property, have repeatedly misled Plaintiffs and misrepresented material facts, and have begun to dissipate and otherwise attempt to conceal the proceeds of Defendants' unlawful activity.

         8. Defendants' nearly two-year history of fraudulent and criminal activity as alleged in Plaintiffs' verified complaint strongly suggests that, if Defendants are given notice of Plaintiffs' suit prior to the issuance of the TRO, Defendants' efforts to dissipate and conceal the proceeds of their unlawful activity will intensify.

         9. Among other remedies, Plaintiffs seek the imposition of a constructive trust. This remedy will be irretrievably lost to Plaintiffs if Defendants are permitted to dissipate and conceal the res of that trust.

         10. Moreover, Defendants' dissipation and concealment, if permitted, will tend to destroy or otherwise make unavailable material evidence for use in the prosecution of this action.

         11. Accordingly, unless the TRO issues now without notice, it is likely that Plaintiffs' ability to pursue their remedies will be substantially impaired, causing irreparable injury.

         12. However, Plaintiffs have not shown why an order requiring submission of an accounting of Defendants' other assets is required to maintain the status quo or prevent irreparable injury. Accordingly, Defendants ...


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