Judge: Thomas Falls, Case: 22PSCV01000, Date: 2022-09-27 Tentative Ruling

Case Number: 22PSCV01000    Hearing Date: September 27, 2022    Dept: R

Tentative Ruling

PLAINTIFFS’ MOTION IN SUPPORT OF THEIR EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION is DENIED WITHOUT PREJUDICE.

Background

This is an embezzlement case. Plaintiffs Aknine Group Inc., Key Ecommerce Inc., and Yizhong Chen (“Chen”)[1] (collectively, “Plaintiffs”) allege the following against Defendants Zhongliang Wang (“Defendant Wang”), AZ Express Group Inc. (“Defendant AZ”), KB Int’l, Inc. (“Defendant KB”), Luckie Trading LLC (“Defendant Luckie”) and EZ Supply Group LLC (“Defendant EZ Supply”) (collectively, “Defendants”): In March 2020, Defendant Wang began his employment with Plaintiffs as the corporate secretary. Between August 26, 2022 and September 9, 2022, Defendant stole embezzled at least $4.5 million from Plaintiffs’ various business bank accounts.

On September 6, 2022, Plaintiffs filed a verified complaint against Defendants for:

1. Breach of Contract,

2. Conversion,

3. Breach of Fiduciary Duty,

4. Theft and Misappropriation, and

5. Unjust Enrichment

On September 7, 2022, the court granted Plaintiffs’ ex-parte application.

On September 12, 2021, Plaintiffs filed their Memorandum of Points And Authorities In Support Of Their Ex Parte Application For A Temporary Restraining Order And Order To Show Cause Re Preliminary Injunction (“Motion”).

On September 12, 2021, Plaintiffs filed a Verified First Amended Complaint (“FAC”), adding Luckie Trading LLC, a California limited liability company, and EZ Supply Group LLC, as Defendants.

To date, no opposition has been received.

Legal Standard

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. (See Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536.) The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. (14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396. 1402.) The burden of proof is on the plaintiff as moving party. (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.) A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. (Code Civ. Proc. § 526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors (1967) 255 Cal.App.2d 300, 307.)   

The trial court considers two factors in determining whether to issue a preliminary injunction: (1) the likelihood the plaintiff will prevail on the merits of its case at trial, and (2) 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 court grants a preliminary injunction. (Code Civ. Proc. § 526(a); Husain v. McDonald’s Corp. (2012) 205 Cal.App.4th 860, 866-67.) The balancing of harm between the parties “involves consideration of such things as the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo.” (Husain, supra, 205 Cal.App.4th at 867.) Thus, a preliminary injunction may not issue without some showing of potential entitlement to such relief.  (Doe v. Wilson (1997) 57 Cal.App.4th 296, 304.) The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. (Thornton v. Carlson (1992) 4 Cal.App.4th 1249, 1255.) 

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(a); Cal. Rules of Court, rule 3.1150(f); City of South San Francisco v. Cypress Lawn Cemetery Assn. (1992) 11 Cal.App.4th 916, 920.) 

Discussion

The court denies the Motion because Plaintiffs failed to serve Defendant Wang with the summons, complaint and Motion.  The docket reveals that Defendant Wang has not been served with a copy of the summons, complaint and Motion.[2]

Attempting to call or send messages to Defendant Wang and counsel’s good faith attempts to notify orally, falls wholly short of the requirements to comply with due process. (See Chen Decl., p. 6; Liu Decl., p. 2.) The failure to serve Defendant Wang with the summons, complaint and Motion is perhaps further evidenced by Defendant’s failure (or rather inability) to oppose Plaintiffs’ ex parte application and appear at the September 7, 2022, ex-parte hearing.

Therefore, considering the serious concern that Defendant Wang has not been served, it would be inequitable to issue a preliminary injunction against Defendant as his constitutional right to due process outweighs Plaintiffs’ financial harm. (See Code Civ. Proc. § 527(a) [“No preliminary injunction shall be granted without notice to the opposing party.”].)[3] The Motion must therefore be denied until such time ad Defendant Wang is served with the summons, complaint and Motion.

Conclusion

Based on the foregoing—considering that the decision to issue a preliminary injunction is enormously consequential—the court exercises its discretion to deny the motion without prejudice due to the lack of service. Plaintiff may bring the motion again once service has been properly effected.