Judge: Robert B. Broadbelt, Case: 22STCV38301, Date: 2023-09-29 Tentative Ruling

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Case Number: 22STCV38301    Hearing Date: March 21, 2024    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                Plaintiff Forex Express Corp., d/b/a WireCash

RESPONDING PARTIES:    (1) Defendant Eliran Grushkowsky, (2) Defendants Inter & Co. Payments, Inc., and Inter & Co., Inc., and (3) Defendant Fernando Fayzano

Order to Show Cause re Preliminary Injunction

The court considered the moving, opposition, and reply papers filed in connection with this Order to Show Cause.

DISCUSSION

On February 14, 2024, the court issued an order granting in part the ex parte application filed by plaintiff Forex Express Corp., d/b/a WireCash (“Plaintiff”) and ordering defendants Eliran Grushkowsky (“Grushkowsky”), Inter & Co., Inc., Inter & Co. Payments, Inc., f/k/a Pronto Money Transfer, Inc., d/b/a Pontual (“Inter & Co. Defendants”), and Fernando Fayzano (“Fayzano”) (collectively, “Defendants”) to appear for an order to show cause why a preliminary injunction should not be issued against them, their agents, servants, employees, and those acting in concert with any of them, that (1) orders Grushkowsky (i) not to access, alter, delete, destroy or otherwise dispose of the MacBook Pro laptop with serial number C02X433WJG5K (the “Second Laptop”), (ii) to return the Second Laptop to Plaintiff within one day of the issuance of the injunction, (iii) to provide to counsel for Plaintiff all information, documents, files, or data on the Second Laptop, and (iv) to provide to counsel for Plaintiff all information, documents, files, or data transferred to or off of the Second Laptop, and (2) orders Defendants to preserve and cease accessing, tampering with, purging, deleting, removing, concealing, spoliating, secreting, altering, or destroying throughout the pendency of this dispute all sources of potentially relevant evidence (both hard copy and electronic, including all documents, data, USB drives, external drives or devices, or cloud-based systems) related to the use of the Second Laptop or the use of any information from that device.  (Feb. 14, 2024 Order re Ex Parte Application, p. 2:9-27.)

A preliminary injunction may be granted “[w]hen it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do . . . some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual.”  (Code Civ. Proc., § 526, subd. (a)(3).)  Code of Civil Procedure section 527, subdivision (a) provides:  “A preliminary injunction may be granted at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exist therefor.  No preliminary injunction shall be granted without notice to the opposing party.” 

“To obtain a preliminary injunction, a plaintiff ordinarily is required to present evidence of irreparable injury or interim harm that it will suffer if an injunction is not issued pending an adjudication of the merits.”  (White v. Davis (2003) 30 Cal.4th 528, 554.)  “A trial court must weigh two interrelated factors when deciding whether to grant a plaintiff’s motion for a preliminary injunction: (1) the likelihood that the plaintiff will prevail on the merits at trial, and (2) the relative interim harm to the parties from the issuance or nonissuance of the injunction, that is, the interim harm the plaintiff is likely to sustain if the injunction is denied as compared to the harm the defendant is likely to suffer if the preliminary injunction is issued. [Citations.]”  (SB Liberty, LLC v. Isla Verde Assn., Inc. (2013) 217 Cal.App.4th 272, 280.)  The burden is on the party seeking injunctive relief to show all the elements necessary to support the issuance of a preliminary injunction.  (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)  

First, the court finds that Plaintiff has not met its burden to show that there is a likelihood that it will prevail on the merits of its claims against Inter Defendants and Fayzano at trial and therefore denies Plaintiff’s request for a preliminary injunction against those defendants.  (SB Liberty, LLC, supra, 217 Cal.App.4th at p. 280.)

In its moving papers, Plaintiff has argued that it is likely to prevail on the merits of its claim that Grushkowsky breached the parties’ employment agreement.  (Ex Parte App., pp. 15:7-9, 16:5-11 [stating that Plaintiff “is likely to prevail on the merits of this claim at trial”] [emphasis added].)  However, Plaintiff neither identified nor showed that it is likely to prevail on the merits of any of its claims against Inter Defendants and Fayzano.  (Ibid.)  The second cause of action for breach of contract is alleged only against defendant Grushkowsky and does not name as defendants Inter Defendants or Fayzano.  (SAC p. 27:15-17.)  Moreover, although Plaintiff asserts, in reply, that the threat of further destruction of evidence extends to Inter Defendants because Grushkowsky currently holds executive positions at Pontual, Plaintiff did not (1) establish, in its moving papers, that this shows that Plaintiff will prevail on any of its claims against Inter Defendants at trial, and (2) explain how Grushkowsky’s employment with Inter Defendants shows that Plaintiff will prevail on any of its claims against Fayzano.  (Reply, p. 5:15-19.)

Thus, the court denies Plaintiff’s request that the court issue a preliminary injunction against Inter Defendants and Fayzano that they “preserve and cease accessing, tampering with, purging, deleting, removing, concealing, spoliating, secreting, altering, or destroying throughout the pendency of this dispute all sources of potentially relevant evidence (both hard copy and electronic, including all documents, data, USB drives, external drives or devices, or cloud-based systems) related to the use of the Second Laptop or the use of any information from that device.”  (SB Liberty, LLC, supra, 217 Cal.App.4th at p. 280; Anderson v. County of Santa Barbara (2023) 94 Cal.App.5th 554, 570 [“‘A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim’”] [internal citation omitted].)

Second, the court finds that Plaintiff has met its burden to show that there is a likelihood that it will prevail on the merits of its second cause of action for breach of contract against Grushkowsky at trial.  (SB Liberty, LLC, supra, 217 Cal.App.4th at p. 280.)

Plaintiff has alleged, in its Second Amended Complaint, that Grushkowsky breached the parties’ employment agreement by, inter alia, transferring Plaintiff’s confidential information to non-WireCash devices and failing to return confidential information to Plaintiff upon the termination of Grushkowsky’s employment on December 13, 2019.  (SAC ¶ 151.)  In support of its request for a preliminary injunction, Plaintiff has presented evidence showing that (1) it and defendant Grushkowsky entered into an employment agreement in 2016 that required Grushkowsky to return all property of Plaintiff’s upon termination of his employment with Plaintiff; (2) Grushkowsky purchased the Second Laptop from Apple using Plaintiff’s Chase credit card; (3) Grushkowsky transferred files from the first laptop issued to him by Plaintiff to conduct its business (the “First Laptop”) to the Second Laptop, including (i) a folder saved as “workspace,” which contained approximately 11,800 source code and development-related files and (ii) a file saved as “MSB-recommendations.dox[,]” which contains Plaintiff’s proprietary and confidential information; (4) in his resignation letter, Grushkowsky stated that he had “a WireCash laptop” that he would not access again but did not reference the Second Laptop; and (5) Grushkowsky has not returned the Second Laptop to Plaintiff as required by their employment agreement.  (Cooper Decl., Ex. 2, Employment Agreement, p. 2, § 4; Cooper Decl., ¶¶ 16, 21, 24, 39-40, 43, 48-49; Cooper Decl., Exs. 5-7 [documents showing purchase of Second Laptop], 8, p. 2 [Grushkowsky’s resignation letter], 11 [January 9, 2020 email from Grushkowsky stating that he was “no longer in possession of any WireCash intellectual property”]; Hammerquist Decl., ¶¶ 9, 15-19; Hammerquist Decl., Ex. 3 [list of AirDrop transfers from First Laptop to Second Laptop]; Ancone Decl., ¶¶ 5, 7.)

Thus, the court finds that Plaintiff has shown that it has a likelihood of prevailing on the merits of its second cause of action by submitting evidence showing (1) that there existed a contract between Plaintiff and Grushkowsky (i.e., the employment agreement) (Cooper Decl., Ex. 2); (2) Plaintiff’s performance under the agreement (i.e., by making Grushkowsky Plaintiff’s Chief Executive Officer) (Cooper Decl., ¶ 13)); (3) Grushkowsky’s breach of the employment agreement (i) by transferring Plaintiff’s confidential information to the Second Laptop (Hammerquist Decl., ¶¶ 15, 19; Cooper Decl., ¶¶ 47-49) and (ii) by failing to deliver the Second Laptop to Plaintiff upon the termination of his employment and when demanded to do so by Plaintiff’s counsel (Ancone Decl., ¶¶ 6-7); and (4) Plaintiff was damaged by the breach.  (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402 [elements of cause of action for breach of contract].)

The court notes that, in support of his opposition, Grushkowsky has submitted his declaration, in which he (1) denies that he used his personal laptop to code for Plaintiff or to store its trade secrets and source code, and (2) asserts that he paid for the Second Laptop with his own personal funds because (i) the company credit card used to purchase the Second Laptop was personally guaranteed by him and (ii) he personally resolved the balance on that credit card for Plaintiff’s benefit “by paying an amount that was less than the balance due, but more than the price of the” Second Laptop.  (Grushkowsky Decl., ¶¶ 28-29 [stating that, if he did purchase the Second Laptop, “it would have been for [his] personal use only” because he only used the First Laptop to conduct business for Plaintiff], 32-33.)  The court finds that Grushkowsky’s declaration purporting to establish that the Second Laptop is not Plaintiff’s property, alone, does not show that Plaintiff does not have a likelihood of prevailing on the merits of the second cause of action against him.  Moreover, the court finds that Grushkowsky’s assertion of his belief that the “workspace” folders identified in Plaintiff’s expert’s chart “are projects unrelated to” Plaintiff, purporting to show that he did not transfer confidential information belonging to Plaintiff, is insufficient to show that Plaintiff does not have a likelihood of prevailing on the merits of the second cause of action against him when considered and weighed against the declaration of Plaintiff’s expert, who has stated that the workspace folder “contained approximately 11,800 source code and development-related files.”  (Grushkowsky Decl., ¶ 30; Hammerquist Decl., ¶ 19.)

Third, the court finds that Plaintiff has met its burden to show that Plaintiff is likely to suffer harm if the court does not issue an injunction (1) prohibiting Grushkowsky from accessing, altering, or disposing of the Second Laptop, (2) prohibiting Grushkowsky from altering, deleting, or destroying files or other data on the Second Laptop, and (3) ordering Grushkowsky to preserve and enjoining him from deleting, concealing, altering, or destroying evidence (including hard copy and electronic evidence) related to the use of the Second Laptop or the use of any information from that device because Plaintiff will otherwise be unable to preserve evidence associated with Grushkowsky’s use of and transfer of confidential documents to the Second Laptop.  (SB Liberty, LLC, supra, 217 Cal.App.4th at p. 280; Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 148-1419.)

Fourth, the court finds that Plaintiff has not met its burden to show that it is likely to suffer harm if the court does not issue an injunction directing Grushkowsky to return the Second Laptop and to provide to counsel for Plaintiff all information, documents, files, or data on, transferred to, or transferred from the Second Laptop because Grushkowsky has established that he is no longer in possession of the Second Laptop.  (SB Liberty, LLC, supra, 217 Cal.App.4th at p. 280.)  Specifically, Grushkowsky states that, after conducting a search of his possessions, he has concluded that the Second Laptop “is no longer in [his] possession (assuming that it was in [his] possession at all).”  (Grushkowsky Decl., ¶ 38.)  Grushkowsky believes that the Second Laptop was lost during his move from Los Angeles to Las Vegas in approximately June 2021.  (Grushkowsky Decl., ¶ 39.)  Grushkowsky has also asserted that he does not have possession of any backups of the Second Laptop.  (Grushkowsky Decl., ¶ 40.)  The court finds that Grushkowsky’s testimony is credible on these points.  Thus, the court finds that Plaintiff has not shown that it is likely to suffer harm if the court does not issue an injunction ordering Grushkowsky to return the Second Laptop and to provide all the information transferred to or from it.

Finally, the court finds that Plaintiff has shown that Grushkowsky, by entering into the employment agreement with Plaintiff, has waived the bond requirement set forth in Code of Civil Procedure section 529.  (Cooper Decl., Ex. 2, Employment Agreement, p. 3, § 6 [“in the event of a breach or threatened breach of this Agreement by Employee, Company . . . may . . . apply to any court of competent jurisdiction for . . . injunctive or other relief . . . (without posting a bond or other security)”]; Smith v. Adventist Health System/West (2010) 183 Cal.App.4th 729, 744 [“the injunction bond requirement of section 529 can be waived or forfeited by the party to be enjoined”].)  Moreover, Grushkowsky did not present evidence or argument (1) disputing his waiver of the bond requirement or, (2) establishing what would be an appropriate amount for a bond.  Thus, the court will not require Plaintiff to provide an undertaking.  

ORDER

            The court grants in part and denies in part plaintiff Forex Express Corp., d/b/a WireCash’s request for a preliminary injunction as follows.

            The court denies plaintiff Forex Express Corp., d/b/a WireCash’s request for a preliminary injunction against defendants Inter & Co., Inc., Inter & Co. Payments, Inc., f/k/a Pronto Money Transfer, Inc., d/b/a Pontual, and Fernando Fayzano.

            The court grants in part plaintiff Forex Express Corp., d/b/a WireCash’s request for a preliminary injunction against defendant Eliran Grushkowsky.

            The court orders that, during the pendency of this action, defendant Eliran Grushkowsky and each of his agents, employees, servants, aiders, abettors, volunteers, successors or assigns, or anyone acting in concert with him or acting on his behalf (1) are enjoined from accessing or disposing of the MacBook Pro laptop with the serial number C02X433WJG5K, or accessing, altering, deleting, or destroying files or other data on that device, and (2) shall preserve and are enjoined from deleting, concealing, altering, or destroying evidence (including hard copy and electronic evidence, including any documents, data, USB drives, external drives or devices, or cloud-based systems) related to the use of the MacBook Pro laptop with the serial number C02X433WJG5K or the use of any information from that device.

            The court orders plaintiff Forex Express Corp., d/b/a WireCash to give notice of this ruling.

IT IS SO ORDERED.

DATED:  March 21, 2024

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court