Naegele v. Albers , 843 F. Supp. 2d 123 ( 2012 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
TIMOTHY D. NAEGELE, :
:
Plaintiff, : Civil Action No.: 03-2507 (RMU)
:
v. : Re Document No.: 102
:
DEANNA J. ALBERS et al., :
:
Defendants. :
MEMORANDUM OPINION
DENYING THE PLAINTIFF’S MOTION FOR A TEMPORARY RESTRAINING ORDER
I. INTRODUCTION
This matter comes before the court on the plaintiff’s motion for a temporary restraining
order. The plaintiff is an attorney who contends that the defendants, his former clients, failed to
pay him for certain legal services. The defendants maintain that they were overcharged and
should not be required to pay for the plaintiff’s services. After this fee dispute arose, the
defendants sought resolution of this matter via arbitration in California. The plaintiff now moves
for a temporary restraining order, asking this court to issue an injunction that would stay any
proceedings in the Los Angeles County Superior Court that relate to the arbitration. Because the
plaintiff has not demonstrated a substantial likelihood of success on the merits or an irreparable
injury, the court denies his motion.
II. FACTUAL & PROCEDURAL BACKGROUND
A. Statutory Framework
This case involves a fee dispute arising out of an attorney-client relationship that
originated in California. See generally Am. Compl. California’s Mandatory Fee Arbitration
Act, CAL. BUS. & PROF. CODE §§ 6200 et seq., provides the relevant statutory framework for
resolving attorney-client fee disputes that originate in California. See Meis & Waite v. Parr, 654
F. Supp. 867, 868 (N.D. Cal. 1987). Specifically, if there is an attorney-client fee dispute, the
client has a statutory right to arbitrate the matter. CAL. BUS. & PROF. CODE §§ 6200(b), 6200(c),
6201. If the client chooses to arbitrate, the attorney must join the arbitration proceedings. Id.;
see also Meis and Waite, 654 F. Supp. at 686. The result of this arbitration is normally
nonbinding. Schatz v. Allen Matkins Leck Gamble & Mallory LLP, 198 F.3d 1109, 1118 (Cal.
2009). Accordingly, a party who disagrees with the result reached by the arbitration panel may
initiate a lawsuit to challenge the arbitrators’ decision. Id. One important exception applies,
however; if one of the parties willfully fails to appear at the arbitration hearing, that party cannot
later challenge the result in a separate lawsuit. CAL. PROF. & BUS. CODE § 6204(a).
B. Factual & Procedural History
The plaintiff, Timothy D. Naegele, is an attorney who practices in California and
Washington, D.C. Am. Compl. ¶ 4. The defendants, Deanna Albers and Raymond Albers II, are
two of the plaintiff’s former clients. Id. ¶¶ 4-6. After a dispute over legal fees arose between the
parties, the plaintiff brought suit in this court. Id. ¶¶ 11-48. At the same time, the defendants
elected to initiate arbitration hearings under California’s Mandatory Fee Arbitration Act, and a
hearing before a panel of arbitrators subsequently took place in Los Angeles, California. Defs.’
Opp’n to Pl.’s Mot. at 2.1
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The plaintiff’s motion is duplicative of an earlier motion filed by the plaintiff titled “Motion for
Stay and for Permanent Injunction.” Because the plaintiff’s motion for a temporary restraining
order merely restates the arguments raised in his previous motion, the court will cite to the earlier
motion and subsequent briefing.
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The plaintiff did not appear at the arbitration panel. Id. Shortly thereafter, the panel
ruled against him. Pl.’s Opp’n to Defs.’ Mot. to Dismiss, Ex. B, Arbitration Award Opinion
(“Arbitration Award”) at 1. The panel ruled that the plaintiff was not entitled to recover any fees
from the defendants and that the plaintiff had repeatedly pursued meritless litigation at a
needlessly great cost. Id. at 7-8. The panel thus concluded that the plaintiff owed the defendants
$735,481.32 for legal fees. Id.
In February 2012, the plaintiff filed a motion for a temporary restraining order. See
generally Pl.’s Mot. The plaintiff’s motion seeks an injunction that would stay any proceedings
in the Los Angeles County Superior Court that relate to the arbitration. Id. With that motion
now ripe for adjudication, the court turns to the relevant legal standards and the parties’
arguments.
III. ANALYSIS
A. Legal Standard for a Temporary Restraining Order
This court may issue interim injunctive relief only when the movant demonstrates “[1]
that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the
absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an
injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 129 S. Ct. 365,
374 (2008) (citing Munaf v. Geren, 128 S. Ct. 2207, 2218-19 (2008)). It is particularly important
for the movant to demonstrate a likelihood of success on the merits. Cf. Benten v. Kessler, 505
U.S. 1084, 1085 (1992) (per curiam). Indeed, absent a “substantial indication” of likely success
on the merits, “there would be no justification for the court’s intrusion into the ordinary
processes of administration and judicial review.” Am. Bankers Ass’n v. Nat’l Credit Union
Admin., 38 F. Supp. 2d 114, 140 (D.D.C. 1999) (internal quotation omitted).
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The other critical factor in the injunctive relief analysis is irreparable injury. A movant
must “demonstrate that irreparable injury is likely in the absence of an injunction.” Winter, 129
S. Ct. at 375 (citing Los Angeles v. Lyons, 461 U.S. 95, 103 (1983)). Indeed, if a party fails to
make a sufficient showing of irreparable injury, the court may deny the motion for injunctive
relief without considering the other factors. CityFed Fin. Corp. v. Office of Thrift Supervision,
58 F.3d 738, 747 (D.C. Cir. 1995). Provided the plaintiff demonstrates a likelihood of success
on the merits and of irreparable injury, the court “must balance the competing claims of injury
and must consider the effect on each party of the granting or withholding of the requested relief.”
Amoco Prod. Co. v. Gambell, 480 U.S. 531, 542 (1987). Finally, “courts of equity should pay
particular regard for the public consequences in employing the extraordinary remedy of
injunction.” Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982).
As an extraordinary remedy, courts should grant such relief sparingly. Mazurek v.
Armstrong, 520 U.S. 968, 972 (1997). The Supreme Court has observed “that a preliminary
injunction is an extraordinary and drastic remedy, one that should not be granted unless the
movant, by a clear showing, carries the burden of persuasion.” Id. Therefore, although the trial
court has the discretion to issue or deny a preliminary injunction, it is not a form of relief granted
lightly. In addition, any injunction that the court issues must be carefully circumscribed and
“tailored to remedy the harm shown.” Nat’l Treasury Employees Union v. Yeutter, 918 F.2d 968,
977 (D.C. Cir. 1990).
B. The Plaintiff Fails to Demonstrate a Substantial Likelihood of Success on the Merits
The plaintiff argues that the Anti-Injunction Act, 28 U.S.C. § 2283, grants this court the
power to enjoin certain state court proceedings that are currently underway in California. See
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Pl.’s Mot. at 6. More specifically, the plaintiff contends that the Anti-Injunction Act does not
limit this court’s ability to enjoin a California state court proceeding because the case that he
initiated in this court was somehow “removed” from the state court in California. Id. The
defendants counter that the plaintiff flatly misconstrues the record, as the plaintiff clearly brought
suit in the District Court for the District of Columbia. Defs.’ Opp’n at 4. They therefore
conclude that the Anti-Injunction Act prohibits this court from enjoining any proceedings in the
Los Angeles County Superior Court. Id.The Anti-Injunction Act forbids federal courts from issuing injunctions to stay
proceedings in state courts unless one of three enumerated exceptions applies. 28 U.S.C. § 2283.
More specifically, a court of the United States may not grant an injunction to stay proceedings in
a state court unless (1) expressly authorized by an act of Congress, (2) an injunction is necessary
to aid the federal court’s jurisdiction, or (3) an injunction is necessary to protect or effectuate the
federal court’s judgments. Id. The Anti–Injunction Act serves as “an absolute prohibition
against enjoining state court proceedings, unless the injunction falls within one of [the Act’s]
three specifically defined exceptions.” Atl. Coast Line R. Co. v. Bhd. of Locomotive Eng’rs, 398
U.S. 281, 286 (1970). These statutory exceptions are not to be enlarged by “loose statutory
construction.” Id. at 287; see Amalgamated Clothing Workers v. Richman Bros., 348 U.S. 511,
514 (1955) (“[T]he prohibition [of § 2283] is not to be whittled away by judicial
improvisation.”). Animating the Anti–Injunction Act is Congress’ focus on the delicate balance
between federal and state courts’ respective spheres of authority. See Toucey v. N.Y. Life Ins.
Co., 314 U.S. 118, 135 (1941) (“The Act . . . expresses the desire of Congress to avoid friction
between the federal government and the states resulting from the intrusion of federal authority
into the orderly functioning of a state’s judicial process.”). Courts therefore recognize that “any
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doubts are to be resolved in favor of allowing the state court action to proceed.” Tex. Employers’
Ins. Ass’n v. Jackson, 862 F.2d 491, 499 (5th Cir. 1988) (en banc).
The plaintiff is correct to note that a federal court may enjoin state proceedings if the
plaintiff brought suit in state court but the defendants removed to federal court. See 1975
Salaried Retirement Plan for Eligible Employees of Crucible, Inc. v. Nobers, 968 F.2d 401, 407
& n.5 (3d Cir. 1992) (concluding that a federal injunction of ongoing state proceedings in a case
that has been removed to federal court falls within the first or third exception to the Anti-
Injunction Act). That is not what occurred here. The plaintiff’s action was originally filed in the
U.S. District Court for the District of Columbia. See Compl. The court therefore concludes that
the plaintiff’s contention has no merit.
Beyond this argument, the plaintiff has not made any further effort to show that this
court has the power to enjoin California’s state court proceedings. Moreover, the court’s
independent analysis of the case law does reveal any legal doctrine allowing such an injunction.
Cases often fall in the second exception to the Anti-Injunction Act if both a federal and state
court undertake parallel in rem proceedings that concern the same subject matter. See In re
Abraham, 421 F.2d 226, 228 (5th Cir.1970) (holding that an injunction of state court proceedings
was proper if the federal court had initial, prevailing jurisdiction over the disputed property); cf.
In re Am. Honda Motor Co., Inc., Dealerships Relations Litig., 315 F.3d 417, 439 (4th Cir. 2003)
(“The ‘necessary in aid of its jurisdiction’ exception to the Anti–Injunction Act is widely
understood to apply most often when a federal court was the first in obtaining jurisdiction over a
res in an in rem action and the same federal court seeks to enjoin suits in state courts involving
the same res.”). Because this action is not in rem, this exception does not apply here. Similarly,
it is commonly held that the second exception to the Anti-Injunction Act applies if a federal court
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has already issued an injunction that future state court proceedings might disturb. See Valley v.
Rapides Parish Sch. Bd., 646 F.2d 925, 943-44 (5th Cir. 1981); Swann v. Charlotte-Mecklenburg
Bd. of Ed., 501 F.2d 383, 383-84 (4th Cir. 1974). This court has not issued any injunctions, so
this doctrine is inapposite to the present matter. Finally, the third exception applies if an
injunction is necessary to protect a federal court’s judgments from repeal in future state
proceedings. See Klay v. United Healthgroup, Inc., 376 F.3d 1092, 1104 (11th Cir. 2004). As
no judgment has been issued in this action, however, this exception does not apply either.
Accordingly, neither the plaintiff’s suggestions nor the court’s independent scrutiny of
the case law reveal any legal basis for the injunction the plaintiff seeks. The court thus
concludes that the plaintiff has failed to demonstrate a substantial likelihood of success on the
merits.
C. The Plaintiff Fails to Demonstrate that He Will Suffer an Irreparable Injury
The plaintiff claims that he will be subject to “great and immediate” injury if the
arbitration panel’s decision is enforced against him. Pl.’s Mot. at 6. The defendants do not
address this argument in their opposition.
It is well-settled that economic loss alone will rarely constitute irreparable harm. Wis.
Gas Co. v. Fed. Energy Regulatory Comm’n, 758 F.2d 669, 674 (D.C. Cir. 1985); Barton v.
District of Columbia, 131 F. Supp. 2d 236, 247 (D.D.C. 2001). This is because economic
injuries are generally reparable with monetary damages in the ordinary course of litigation. Air
Transport Ass’n of Am., Inc., v. Export-Import Bank of the U.S., 2012 WL 119557, at *6 (Jan.
13, 2012). A narrow exception applies, however, in the business context: a court may deem
financial harms irreparable if the potential harm would threaten the business’ very existence.
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E.g., Wis. Gas Co., 758 F.2d at 674; Williams v. State Univ. of N.Y., 635 F. Supp. 1243, 1248
(E.D.N.Y. 1986) (explaining that “the plaintiff must quite literally find himself being forced into
the streets or facing the spectre of bankruptcy before a court can enter a finding of irreparable
harm”).
Here, there is no evidence before the court except the plaintiff’s characterization of his
potential financial harm as “great and immediate.” Pl.’s Mot. at 6. Although the court agrees
that the sum of money at stake is substantial, financial harms may be remedied through the
normal judicial process. Air Transport Ass’n of Am., Inc., 2012 WL 119557, at *6; Wis. Gas
Co., 758 F.2d at 674. In addition, the plaintiff has submitted no evidence to suggest that this
potential financial hardship will immediately affect his well-being. On that note, the court
observes that California law allows a party in the plaintiff’s situation to propose a gradual
payment plan to satisfy the type of judgment the plaintiff may face in the present matter. CAL.
BUS. & PROF. CODE § 6204(d). In addition, California law provides that an arbitration award
will not be enforced if it is shown that the attorney is unable to pay. Id. In sum, the plaintiff has
not demonstrated that he will suffer an immediate harm for which there is no legal remedy. The
court therefore concludes that the plaintiff has not demonstrated that he will suffer an irreparable
injury for the purposes of obtaining interim injunctive relief.
D. Because the Plaintiff Has Not Demonstrated the First Two Elements, the Court Denies
the Plaintiff’s Motion for a Temporary Restraining Order
If a party moving for injunctive relief fails to show irreparable injury, the court need not
consider the remaining factors for issuance of a preliminary injunction. CityFed Fin. Corp. v.
Office of Thrift Supervision, 58 F.3d 738, 747 (D.C. Cir. 1995) (stating that because the movant
“has made no showing of irreparable injury here, that alone is sufficient for us to conclude that
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the district court did not abuse its discretion by rejecting [the movant’s] request. We thus need
not reach the district court’s consideration of the remaining factors relevant to the issuance of a
preliminary injunction”). Accordingly, the court need not advance any further and may instead
conclude that the plaintiff has failed to prove his entitlement to interim injunctive relief. The
court thus denies the plaintiff’s motion for a temporary restraining order.
IV. CONCLUSION
For the foregoing reasons, the court denies the plaintiff’s motion for a temporary
restraining order. An Order consistent with this Memorandum Opinion is separately and
contemporaneously issued this 21st day of February, 2012.
RICARDO M. URBINA
United States District Judge
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