CCSAC, Inc. v. Pacific Banking Corp ( 2020 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CCSAC, INC., et al., Case No. 20-cv-02102-JD 8 Plaintiffs, ORDER GRANTING EX PARTE 9 v. TEMPORARY RESTRAINING ORDER AND SETTING PRELIMINARY 10 PACIFIC BANKING CORP, et al., INJUNCTION HEARING 11 Defendants. Re: Dkt. No. 12 12 Plaintiffs CCSAC, Inc. and CANN Distributors, Inc. have filed a complaint and an ex parte 13 motion for a temporary restraining order (“TRO”) against defendants Pacific Banking Corp. 14 (“PBC”), Justin Costello and GRN Funds, LLC. Dkt. Nos. 1, 12. 15 Plaintiffs state that they deposited in excess of $2.8 million with PBC pursuant to Capital 16 Management Agreements. Dkt. No. 1 ¶¶ 2-4. They allege that PBC has “failed to execute the 17 financial transactions required of it by the Agreements and by the directions of plaintiffs,” and has 18 instead “unilaterally transferred some or all of plaintiffs’ funds to accounts held by GRN Funds, 19 LLC (‘GRN’), an entity controlled by its chief executive officer, Costello.” Id. ¶¶ 5-6. Plaintiffs 20 have sued defendants for breach of contract, fraud, negligence, injunctive relief and declaratory 21 relief regarding indemnification. Id. ¶¶ 34-71. They seek to preserve the cash deposits pending 22 resolution of these claims. 23 Under Federal Rule of Civil Procedure 65(b), a court may issue an ex parte TRO if: (1) it 24 clearly appears that immediate and irreparable injury, loss, or damage will result to the movant 25 before the adverse party can be heard in opposition; and (2) the movant’s attorney certifies to the 26 court in writing any efforts made to give notice and the reasons why it should not be required. 27 Fed. R. Civ. Pro. 65(b); Reno Air Racing Ass’n v. McCord, 452 F.3d 1126, 1130-31 (9th Cir. 1 McCord, 452 F.3d at 1131. Temporary restraining orders granted ex parte are to be “restricted to 2 serving their underlying purpose of preserving the status quo and preventing irreparable harm just 3 so long as is necessary to hold a hearing, and no longer.” Granny Goose Foods, Inc. v. 4 Brotherhood of Teamsters, 415 U.S. 423, 438-39 (1974); McCord, 452 F.3d at 1131. 5 The facts adduced in plaintiffs’ affidavits demonstrate a threat of immediate and 6 irreparable injury, as required by Rule 65(b)(1)(A). See Dkt. No. 12-3 (Declaration of John Oram, 7 CEO of CANN Distributors and CCSAC); 12-4 (Declaration of Ed Ng, CFO of CANN and 8 CCSAC). The declarations lay out in detail the factual basis of the concern that PBC may 9 immediately “divert [plaintiffs’] remaining $2.8 million to other accounts, companies or 10 individuals.” Dkt. No. 12-3 ¶ 13; Dkt. No. 12-4 ¶ 16. Plaintiffs’ attorney has also certified in 11 writing the multiple attempts made to give notice of the TRO application, and established that 12 defendants could not be located in time for a hearing. Dkt. No. 12-2 (Declaration of Steven M. 13 Morger). 14 Consequently, upon receiving actual notice of this order by personal service or otherwise, 15 defendants and their officers, agents, servants, employees and attorneys, and any other persons in 16 active concert or participation with them, are prohibited and enjoined from: 17 1. Using, drawing down, transferring or in any way reducing the funds deposited with 18 PBC by CCSAC, Inc. or CANN Distributors, Inc. without their express consent; and 19 2. Deleting, destroying, editing, or in any way altering any records relating to plaintiffs’ 20 deposits, including without limitation all transaction and deposit balance records. 21 Given the nature of the case and the relief ordered, a bond need not be posted under 22 Federal Rule of Civil Procedure 65(c). See Jorgensen v. Cassiday, 320 F.3d 906, 919-20 (9th Cir. 23 2003); Barahona-Gomez v. Reno, 167 F.3d 1228, 1237 (9th Cir. 1999). 24 This order was issued at 12:00 p.m., California time, on April 8, 2020, and will expire on 25 April 22, 2020. A preliminary injunction hearing is set for April 22, 2020, at 1 p.m. The hearing 26 will proceed telephonically pursuant to instructions the Court will provide in advance of the 27 hearing. Plaintiffs are directed to file a preliminary injunction motion by April 13, 2020, and to 1 order, and the preliminary injunction motion. Pursuant to Rule 65(b)(4), defendants may apply to 2 || the Court for modification or dissolution of this order upon two days’ notice to plaintiffs. 3 IT IS SO ORDERED. 4 Dated: April 8, 2020 5 6 JAMES PONATO 7 United ptates District Judge 8 9 10 11 12 © 15 16 = 17 Z 18 19 20 21 22 23 24 25 26 27 28