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INX, LLC v. Music Group Services U.S., Inc.

United States District Court, Ninth Circuit

December 19, 2013

INX, LLC, Plaintiff,
v.
MUSIC GROUP SERVICES U.S., INC., Defendant.

TEMPORARY RESTRAINING ORDER

RICHARD A. JONES, District Judge.

I. ORDER ON MOTION

This matter comes before the court on Plaintiff INX, LLC's motion for a temporary restraining order ("TRO"). Dkt. # 10. Plaintiff seeks a TRO to restrain any potential sale of real property owned by Defendant Music Group Services U.S., Inc. until the court can rule on the motion for writ of attachment. Defendant agrees to the entry of the TRO as proposed by plaintiff until such time as defendant posts a judicial bond for $350, 000 with the court. Dkt. # 17 at 2.[1] The court granted the parties additional time for the parties to attempt to resolve whether plaintiff would accept the $350, 000 bond in lieu of an order restraining the sale until the court rules on the motion for writ of attachment. Dkt. # 18. Defendant submitted an application for the $350, 000 bond on Tuesday, December 17, 2013, and is awaiting a response from International Fidelity Insurance Company. Dkt. # 20 at 2. Defendant was advised that the bonding company may need up to 48 hours to underwrite the bond. Id. The parties met and conferred regarding the amount of the bond, the need for plaintiff to determine whether the bond has sufficient sureties, and whether the posting of the bond would replace the need for the writ of attachment. Id. However, the parties were unable to reach agreement on these issues, and are unlikely to reach an agreement until it is known whether the bonding company will issue the bond. Id.

In plaintiff's motion, it requested, in the alternative, that the court direct defendant to deposit $350, 000 into the registry of the court in case defendant sells, transfers or encumbers the property prior to the hearing on INX's attachment motion. Dkt. # 10 at 10. "This amount represents a reasonable estimate of (a) the amount Defendant owes INX under the parties' contract (including interest), plus (b) reasonable attorney's fees and costs that could be incurred by Plaintiff in recovering judgment against Defendant, to which INX is entitled under the terms of the parties' contracts." Id.

It is unclear to the court why plaintiff has reservations regarding defendant's attempt to post a $350, 000 bond when it requested that amount to be deposited into the registry of the court in the first instance. Nevertheless, since the parties have not reached an agreement, the court will rule on plaintiff's motion.

The standard for a temporary restraining order is substantially identical to the standard for granting a preliminary injunction. Stuhlbarg Int'l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). "A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 129 S.Ct. 365, 374 (2008). An injunction will not issue if the moving party merely shows a possibility of some remote future injury or a conjectural or hypothetical injury. Park Village Apartment Tenants Ass'n v. Mortimer Howard Trust, 636 F.3d 1150, 1160 (9th Cir. 2011).

A. Likelihood of Success on the Merits

INX only seeks the TRO until the court resolves the attachment motion, and it argues that it is likely to succeed in this context because it is entitled to pre-judgment writ of attachment. Dkt. # 10 at 4-7. INX also argues it is likely to succeed on the merits of the breach of contract claim. Id. at 7.

Federal Rule of Civil Procedure 64 provides: "At the commencement of and throughout an action, every remedy available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment. But a federal statute governs to the extent it applies." Fed. R. Civ. Proc. 64(a). To prevail on a motion for issuance of prejudgment writ of attachment, plaintiffs must establish that (1) there is probable cause to believe that the alleged statutory ground for attachment exists, and (2) the probable validity of the claims. RCW 6.25.070(1); see L.C. v. Gilbert, Case No. C09-5586 BHS, 2010 WL 2650603 (W.D. Wash. 2010).

1. Probable Cause regarding Statutory Grounds for Attachment

Under Washington law, a plaintiff may obtain a prejudgment writ of garnishment if the writ is issued for a purpose other than garnishing a defendant's earnings "(a) on the ground that an attachment has been issued in accordance with chapter 6.25 RCW, (b) on the ground that the plaintiff sues on a debt that is due and owing and unpaid, or (c) on one or more of the grounds for issuance of attachment stated in RCW 6.25.030 or 6.25.040." RCW 6.26.010. Section 6.25.030 allows the court to issue a writ of attachment on the grounds that, among others, "the defendant... is about to assign, secrete, or dispose of, any of his property, with intent to delay or defraud his or her creditors[, ]" "the defendant is about to convert his or her property, or a part thereof, into money for the purpose of placing it beyond the reach of his or her creditors[, ]" and "the object for which the action is brought is to recover on a contract, express or implied[.]" RCW 6.25.030(6), (7), (10).

Here, INX has brought this action to recover debts and obligations owed by defendant to plaintiff pursuant to various agreements between the parties. Dkt. # 12 (Hedgecock Decl.) ¶ 4. Defendant contractually agreed to pay INX for its services, and failed to do so. Id. ¶¶ 6-19., Exs. A-C.

Accordingly, the court finds probable cause that statutory grounds for issuing a prejudgment ...


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