Judge Mitchell L. Beckloff, Case 22STCV36067 2022-12-07 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 22STCV36067, Date: 2022-12-07 Tentative Ruling

Case Number: 22STCV36067 Hearing Date: December 7, 2022 Dept: 86

PACIFIC APEX PARTNERSHIP, LLC v. CNN LOGISTICS, LLC

Case Number: 22STCV36067

Hearing Date: December 7, 2022

[Tentative] ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION

Plaintiff, Pacific Apex Partnership, LLC, seeks a preliminary injunction enjoining Defendants CNN Logistics, LLC, Rebiga Co., and Julian Rebiga (collectively, Defendants), and its agents, employees and representatives from selling, transferring, exchanging, transporting, discarding, destroying and/or damaging the remainder of 1,700,000 boxes of Sri Trang Nitrile Gloves (Gloves) owned by Plaintiff.

Plaintiff caused Defendants to be personally served with the summons, complaint, order to show cause and other relevant documents on November 18, 2022. Defendants filed no opposition.

The motion is GRANTED.

LEGAL STANDARD

The standards governing a preliminary injunction are well known. “[A] court will deny a preliminary injunction unless there is a reasonable probability that the plaintiff will be successful on the merits, but the granting of a preliminary injunction does not amount to an adjudication of the merits.” (Beehan v. Lido Isle Community Assn. (1977) 70 Cal.App.3d 858, 866.) “The function of a preliminary injunction is the preservation of the status quo until a final determination of the merits.” (Ibid.)

As the parties recognize, “Trial courts traditionally consider and weigh two factors in determining whether to issue a preliminary injunction. They are (1) how likely it is that the moving party will prevail on the merits, and (2) the relative harm the parties will suffer in the interim due to the issuance or nonissuance of the injunction.” (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1420.) “[T]he greater the . . . showing on one, the less must be shown on the other to support an injunction.” (Ibid. [quoting Butt v. State of California, (1992) 4 Cal.4th 668, 678].) The burden of proof is on the plaintiff as the moving party “to show all elements necessary to support issuance of a preliminary injunction.” (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. (See e.g., Ancora-Citronelle Corp. v. Green (1974) 41 Cal.App.3d 146, 150.) A plaintiff seeking injunctive relief must also show the absence of adequate damages remedy at law. (Code Civ. Proc., § 526, subd. (a)(4).)

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. (See Code Civ. Proc., § 529, subd. (a); City of South San Francisco v. Cypress Lawn Cemetery Assn. (1992) 11 Cal. App. 4th 916, 920.)

ANALYSIS

Plaintiff’s complaint alleges causes of action for fraud, conspiracy, negligent misrepresentation, breach of contract, unjust enrichment, request for removal of invalid lien, conversion, accounting, request for constructive trust, declaratory judgment and injunctive relief. Based on the claims alleged, Plaintiff requests the court issue a preliminary injunction prohibiting Defendants from selling, or otherwise transferring the Gloves.

Likelihood of Success on the Merits

Plaintiff appears to seek relief here based on its conversion claim. Plaintiff’s moving papers are somewhat difficult to decipher.

“ ‘Conversion is generally described as the wrongful exercise of dominion over the personal property of another. [Citation.] The basic elements of the tort are (1) the plaintiff's ownership or right to possession of personal property, (2) the defendant's disposition of the property in a manner that is inconsistent with the plaintiff's property rights; and (3) resulting damages. [Citation.]’ ” (Regent Alliance Ltd. v. Rabizadeh (2014) 231 Cal.App.4th 1177, 1181.)

Plaintiff is in the business of furnishing medical supplies. (Gurock Decl., ¶ 2.) In December 2022, Plaintiff and Defendant CNN Logistics entered into an agreement whereby Defendant CNN Logistics would provide logistic services to Plaintiff. (Lin Decl., ¶ 4.) Specifically, Defendant CNN Logistics received a total of 47 shipping containers containing 1,700,000 boxes of Nitrile Gloves owned by Plaintiff. (Lin Decl., ¶ 6.)

As part of the its services, Defendant CNN Logistics agreed to provide storage services in its warehouse in exchange for fee for each pallet stored per month (Lease Payments). (Gurock Decl., ¶ 6; Lin Decl., ¶ 5.)

On August 25, 2022, Plaintiff received a UCC 9-404 lien notice revealing Defendant CNN Logistic is indebted to a secured creditor and requiring Plaintiff was to pay $110,000 to Defendant CNN Logistics’ creditor rather than Defendant CNN Logistics. (Lin Decl., ¶ 8; Gurock Decl., ¶ 7.) Plaintiff sent numerous communications to Defendant CNN Logistics’ principal Defendant Rebiga to determine the legitimacy of the lien. (Lin Decl., ¶¶ 8-9; Gurock Decl., ¶¶ 7-18.)

Plaintiff ultimately made a payment of $160,000 to Defendant Rebiga. (Lin Decl., ¶ 12.) Defendant Regiba claimed Plaintiff owed Defendant CNN Logistics $380,000 and, as a result, Defendants sold approximately 182,000 boxes of Gloves pursuant to a purported warehouse lien. Defendants have refused to inform Plaintiff of the amount of sale and/or the credit given to Plaintiff for the sale. (Lin Decl., ¶ 12; Gurock Decl., ¶¶ 19-20.) Defendant Rebiga has communicated to Petitioner he, Defendant Rebiga Co. and/or Defendant CNN Logistics “own the boxes of Nitrile Gloves” (Linn Decl., ¶ 13.) Defendant CNN Logistics and Defendant Rebiga have refused to release the Gloves to Plaintiff despite Plaintiff’s demand, payment of $160,000 and the sale to third parties of 182,000 boxes of Gloves. (Linn Decl., ¶ 13.)

Based on the foregoing, the court finds Plaintiff has demonstrated a likelihood of success on the merits. Plaintiff has demonstrated Defendants have wrongfully exercised dominion and control over the Gloves.

Balance of Harms

The second part of the preliminary injunction analysis requires the court to evaluate the harm the plaintiff is likely to sustain if the preliminary injunction is denied compared to the harm the defendant is likely to suffer if the injunction is issued. (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69-70.)

Plaintiff argues it will suffer harm, the loss of the Gloves, if a preliminary injunction is not granted.

Plaintiff argues it is concerned Defendants are selling the Gloves for “pennies on the dollar resulting in a million dollar loss” to Plaintiff. (Gurock Decl., ¶ 22.) While it therefore seems Plaintiff seeks to retain the Gloves to sell them (suggesting a legal remedy would be adequate), it appears Defendant are selling (or might sell) the Gloves for less than fair market value and Defendants already appear unable to satisfy their other creditors. Such evidence supports a finding Plaintiff may not be able to recover any judgment from Defendants. (Lin Decl., ¶ 22.) Given the evidence suggesting Defendants are in “financial distress,” Plaintiff has made an adequate showing of irreparable harm. (Gurock Decl., ¶ 22; Lin Decl., ¶ 22.)

In the absence of any opposition, the balance of harm weighs clearly in Plaintiff’s favor.

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CONCLUSION

Based on the balancing of the likelihood of success on the merits and the parties’ competing harms and in the absence of any opposition, the court finds Plaintiff has demonstrated it is entitled to a preliminary injunction.

IT IS SO ORDERED.

December 7, 2022 ________________________________

Hon. Mitchell Beckloff

Judge of the Superior Court