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Zibalstar, L.C. v. Conte

United States District Court, D. Utah

June 14, 2017

ZIBALSTAR, L.C., a Utah Limited Liability Company, et al., Plaintiffs,
v.
ROBERT CONTE, an individual, et al., Defendants.

          MEMORANDUM DECISION AND ORDER DENYING PLAINTIFFS' EX PARTE MOTION FOR INJUNCTIVE RELIEF

          Jill N. Parrish United States District Court Judge

         Before the court is Plaintiffs' Ex Parte Motion for Temporary Restraining Order and Preliminary Injunction pursuant to Fed.R.Civ.P. 65. (Docket No. 3). Plaintiffs also request an emergency hearing regarding the Motion. As explained below, the court DENIES the Motion without hearing.

         BACKGROUND

         According to the instant Motion, Plaintiffs are owners and lessees of numerous commercial properties who hired Defendants and their agents (collectively, “Defendants” or “Conte-Hansen”) to manage these properties on their behalf. Plaintiffs allege that Defendants and their agents have “seriously mismanaged” the properties. (Docket No. 3, at 10). This mismanagement, coupled with suspected fraud by certain Defendants and related contractual and property disputes, ostensibly led Plaintiffs to terminate Defendants as managers of their properties. Plaintiffs thereafter issued several cease-and-desist letters to some of the Defendants or their agents, “instructing them not to trespass on the premises of the Properties.” (Id.). Defendants and their agents apparently ignored the termination of their contract and the cease- and-desist letters by continuing to conduct their management responsibilities on the properties at issue and allegedly entering and damaging certain of the properties. A named Plaintiff, Gary Brinton, visited several properties to demand that Defendants' employees leave the property, but, by and large, the employees refused to leave absent a court order.

         In the instant Motion, Plaintiffs allege that, since the termination, Defendants or their agents have continued to sell inventory purchased using funds belonging to Plaintiffs and have pocketed the proceeds at one property. They also allege that Defendants' agents have attempted to remove certain equipment from a storage shed on Plaintiffs' property. Plaintiff also suggests, though does not outright allege, that Defendants' agents eventually broke into the shed and stole the equipment. Additionally, Plaintiffs allege that “someone” attempted to break into a storage area at the same property, actually broke into the storage area the next day, “spread paint around on the walls and floors, and damaged or destroyed many of the pipes on the back of the laundry machines.” (Id. at 13). Plaintiffs further allege that Defendants' agents recently stole “computer monitors, equipment, papers, and files” from one of Plaintiffs' properties. (Id.at 12).

         On June 12, 2017, Plaintiffs filed an extensive and complex complaint, alleging multiple causes of action under federal and state law against Defendants. (Docket No. 2). Specifically, the complaint alleges that Defendants or their agents have violated the Racketeer Influence and Corrupt Organizations Act of 1978 (“RICO”), 18 U.S.C. §§ 1961, et seq., committed fraud related to real estate transactions between the parties, negligently misrepresented the status of a future real estate transaction between the parties, committed fraud related to their property management responsibilities, breached their property management contract, breached certain implied covenants, and failed to fulfill a promise regarding a future real estate transaction upon which Plaintiffs relied. (Docket No. 2, at 35-49). On the same day, Plaintiffs filed the instant Motion, requesting an ex parte temporary restraining order (“TRO”) and preliminary injunction, prohibiting Plaintiffs from trespassing on the properties at issue. (Docket No. 3). In their Motion, Plaintiffs also request an emergency ex parte hearing. The court now considers the Motion under authority derived from 28 U.S.C. §§ 1331, 1367.

         DISCUSSION

         As explained above, Plaintiffs ask this court to issue an ex parte TRO and preliminary injunction against Defendants and their agents, prohibiting them from trespassing on certain properties owned or leased by Plaintiffs. The court notes at the outset that any form of preliminary injunctive relief is “an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.” Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (quotations and emphasis omitted) (quoting 11A C. Wright et al., Federal Practice & Procedure § 2948 (2d ed. 1995)); Schrier v. Univ. of Colo., 427 F.3d 1253, 1258 (10th Cir. 2005) (“As a preliminary injunction is an extraordinary remedy, the right to relief must be clear and unequivocal.” (quotations omitted) (quoting SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1098 (10th Cir. 1991)). The court will first address the exacting standard by which Plaintiffs' requests must be judged, then Plaintiffs' request for a preliminary injunction, then their request for a TRO, and finally their request for an emergency ex parte hearing.

         I. STANDARD FOR DISFAVORED INJUNCTIVE RELIEF

         As an initial matter, the court concludes that the relief requested in the instant Motion would disrupt the status quo and is therefore subject to closer scrutiny than other requests for injunctive relief. See O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d 973, 975-76 (10th Cir. 2004) (per curiam); Schrier, 427 F.3d at 1259. The Tenth Circuit has consistently held that injunctive relief that disrupts the status quo is disfavored and must be “more closely scrutinized” to ensure that relief is warranted. Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC, 562 F.3d 1067, 1070 (10th Cir. 2009) (quoting Schrier, 427 F.3d at 1259). “An injunction disrupts the status quo when it changes the ‘last peaceable uncontested status existing between the parties before the dispute developed.'” Id. at 1070-71 (quoting Schrier, 427 F.3d at 1260). Here, the “last peaceable uncontested status existing between the parties” was apparently prior to the termination when Plaintiffs and Defendants had an ongoing contractual relationship regarding property management, as is plainly evidenced by Defendants' refusal to vacate the properties or cease operations upon request. An injunction or order forbidding Defendants or their agents to reenter or otherwise conduct business in accordance with this prior arrangement clearly disrupts the status quo existing prior to the instant dispute. Accordingly, the relief requested by Plaintiffs is disfavored and “must be more closely scrutinized to assure that the exigencies of the case support the granting of a remedy that is extraordinary even in the normal course.” See O Centro Espirita, 389 F.3d at 975.

         With this more exacting standard in mind, the court now turns to evaluation of the requested preliminary injunction and the requested TRO.

         II. REQUEST FOR EX PARTE PRELIMINARY INJUNCTION

         First, Plaintiffs appear to request an ex parte preliminary injunction. As Rule 65 flatly prohibits the issuance of an injunction without notice to the adverse party, see Fed. R. Civ. P. 65(a)(1), the court denies this request outright.

         III. REQUEST FOR EX PARTE ...


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