United States District Court, D. Oregon
David C. Silver, Silver Law Group, Coral Springs, Florida,
Franklin J. Seibert, F.J. Seibert, LLC - A Law Office, Salem, Oregon, Attorneys for plaintiff.
Jeffrey A. Trautman, Fetherston Edmonds, LLP, Salem, Oregon, Attorney for defendant.
OPINION AND ORDER
ANN AIKEN, Chief District Judge.
Plaintiff James Burt moves for a preliminary injunction freezing defendant Christine Denoyo's assets during the pendency of this action, as well as an order authorizing expedited discovery and a full accounting, pursuant to Fed.R.Civ.P. 65 and Or. Rev. Stat. § 95.260. For the reasons set forth below, plaintiff's motion is denied.
At all relevant times, Rafael Denoyo and David Sullivan owned and operated Key Trading, LLC ("Key"). In January 2005, Peter Larkin joined Denoyo and Sullivan as a Key associate. In March 2005, Larkin introduced plaintiff to Denoyo and Sullivan. Between September 2005 and January 2006, plaintiff invested $2, 000, 000 with Key based on. Denoyo's, Larkin's, and/or Sullivan's representations that Key "had developed a proprietary leveraged trading system" that would yield plaintiff "monthly returns [on his] investment." Compl. ¶ 15. Plaintiff never received any proceeds from Key. "In essence, [Key] stole the $2, 000, 000 from [plaintiff] with no intent of returning any funds to him." Id. at ¶ 18.
In September 2010, Key, Sullivan, Larkin, and Denoyo entered into a settlement agreement with plaintiff, in which they agreed to repay plaintiff $1, 932, 214. Key, Sullivan, Larkin, and Denoyo subsequently breached that agreement in myriad respects. As a result, in October 2012, plaintiff initiated a lawsuit in the United States District Court for the District of New Jersey ("District of New Jersey"), alleging claims for fraud and breach of contract. In October 2013, plaintiff, Key, Sullivan, Larkin, and Denoyo negotiated a provisional settlement that was ultimately approved by the District Court of New Jersey. In June 2014, the New Jersey Court entered judgment, in the principal amount of $1, 800, 000, against Key, Sullivan, Larkin, and Denoyo after they defaulted on the October 2013 settlement agreement.
On July 10, 2014, plaintiff filed a complaint in this Court against defendant, asserting violations of Or. Rev. Stat. § 95.230, Or. Rev. Stat. § 95.240, and Or. Rev. Stat. § 59.115. Specifically, the complaint alleges that: (1) Denoyo and/or Key transferred $57, 705 to defendant between October 2007 and January 2012; (2) Denoyo and/or Key provided $234, 811 to Centurian Securities, LLC ("Centurian"), a company controlled by Denoyo, in 2007; these amounts "were later directly disbursed" to defendant; (3) Denoyo and defendant used the funds stolen from plaintiff "to live a lavish lifestyle in an affluent neighborhood and acquire at least six vehicles"; and (4) defendant "aided and abetted" Key, Denoyo, Sullivan, and Larkin "in their scheme to defraud Plaintiff." Compl. ¶¶ 36-40, 57, 63. As relief, plaintiff requests that a constructive trust be imposed on defendant's assets and that all funds in her name be disgorged. That same day, plaintiff filed the present motion.
A preliminary injunction, as a matter of equitable discretion, is an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief. Winter v. Natural Res. Defense Council Inc. , 555 U.S. 7, 24 (2008); see also Fed.R.Civ.P. 65; Or. Rev. Stat. § 95.260. The party seeking injunctive relief bears the burden of demonstrating that: "(1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in its favor, and (4) an injunction is in the public interest." Barnett v. BAC Home Loan Servicing, L.P. , 772 F.Supp.2d 1328, 1333 (D.Or. 2011) (citing Winter , 555 U.S. at 19). "The elements of [this] test are balanced, so that a stronger showing of one element may offset a weaker showing of another.'" Id . (quoting Alliance for the Wild Rockies v. Cottrell , 632 F.3d 1127, 1131 (9th Cir. 2011)); see also Save Our Sonoran, Inc. v. Flowers , 408 F.3d 1113, 1120 (9th Cir. 2005) (discussing the "sliding scale" used to determine the propriety of injunctive relief).
This dispute arises out of plaintiff's previously litigated claims against Key, Denoyo, Sullivan, and Larkin, which resulted in a final judgment in the District Court of New Jersey. According to plaintiff, defendant was "instrumental as an aider and abettor to [the] securities fraud" perpetrated against him; she "lives a lavish lifestyle" as a result of "the hundreds of thousands of [his] assets" that were transferred to her by Denoyo and/or Key. Pl.'s Mem. in Supp. of Mot. Prelim. Inj. 2-3, 15. Plaintiff therefore requests that the Court "freez [e] [defendant's assets] pending the resolution of this matter, " as a well as issue an order requiring defendant to expedite discovery, provide "a full accounting, " "repatriate all assets [and] preserve evidence, " and "Show Cause Why a Permanent Injunction should not be entered." Id. at 2.
Defendant opposes plaintiff's motion of the basis that he omits several salient facts, which, when taken into account, render the complaint "devoid of any meaningful claims whatsoever." Def.'s Resp. to Mot. Prelim. Inj. 7. Significantly, in 1998, defendant legally separated from Denoyo and, in 2000, they divorced; defendant subsequently married Jerry Jordan. Pursuant to their divorce decree, Denoyo was required to pay defendant approximately $2000 per month in child support and $1000 per month in alimony. See Jordan Decl. Ex. 1. Accordingly, the $57, 705 in assets transferred from Key and/or Denoyo to defendant were "partial payments for child and spousal support, " an arrangement which "began over five years before [Denoyo and Key] entered into any financial transactions with Plaintiff, and almost ten years before either the settlement agreements referenced in the complaint took effect." Def.'s Resp. to Mot. Prelim. Inj. 6. Furthermore, defendant asserts that, "[s]ince at least the time of their divorce, [she] has had absolutely nothing to do with [Denoyo' s] business ...