VW CREDIT, INC. v. CTE2, LLC ( 2019 )

NOT FOR PUBLICATION UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY VW CREDIT, INC., Civil Action No. 2:19-cv-19523-CCC-ESK Plaintiff. V. CTE2, LLC; CTE2 LAND, LLC; Seen peobsston FOR CARMINE DEMAIO; AND FRANK HOLTHAM, Defendants. I. Background This matter comes before the Court on the application of Plaintiff VW Credit Inc. (“VCI” or “Plaintiff’), seeking preliminary injunctive relief of an Order of Possession and Writ of Replevin (the “Application”). ECF No. 29. Plaintiff filed the Application and supporting documents on November 19, 2019. Id. On November 21, 2019, the Court entered an Order to Show Cause with Temporary Restraints and Other Relief indicating that without opposition from Defendants by November 26, 2019, the Application would be decided on the papers and “relief may be granted by default.” ECF No. 32 at 2. To date, Defendants have not filed any opposition to the relief requested in Plaintiff's Application and the hearing scheduled for December 2, 2019 on the Application was adjourned due to the lack of opposition. Accordingly, the Court decides Plaintiff's Application and considers it unopposed. For reasons set forth below, Plaintiffs Application is granted. Il. Legal Standard The decision whether to grant or deny a request for a preliminary injunction rests in the discretion of the Court. See Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004). A party seeking the extraordinary remedy of a preliminary injunction bears the burden of establishing that the following four factors weigh in favor of granting the injunction: ““[1] that [it] is likely to succeed on the merits, [2] that [it] is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of the equities tips in [its] favor, and [4] that an injunction is in the public interest.’”” Ferring Pharms., Inc. v. Watson Pharms., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (quoting Winter v. NRDC, 555 U.S. 7, 20 (2008)). III. Analysis The Court relies upon factual assertions underlying Plaintiffs complaint (the “Complaint”), which are incorporated by reference in the Application. ECF No. 29 at 1. Plaintiff has shown a reasonable likelihood of success on the merits of its replevin claim. ECF No. 1 977-81; ECF No. 29 at 2-3.! Federal Rule of Civil Procedure 64(b) allows for replevin in accordance with the replevin procedures applicable under New Jersey state law. To succeed on a claim for replevin, Plaintiff must allege the existence of a debt and the existence of a security interest, perfected or unperfected, and a chattel in possession of the debtor. N.J.S.A. 2B:50-1; New Jersey Court Rule 4:61-2. In this case, VCI has shown both the existence of a debt owed to it by Defendant CTE2, LLC (“CTE2”) and a security interest in the collateral presently held by CTE2. ECF No. 1 at ff 10-15; see also ECF No. 29 at 3 (““VCI is a perfected secured creditor with a right to immediate possession of its collateral. CTE2 is in possession of these goods, has failed to pay for the same, and refuses to release them, despite clearly agreeing to do so in the MLSA.. . . These circumstances demonstrate VCI’s likelihood of success on the merits.”). WVCI has | This order analyzes only the adequacy of Plaintiff's replevin claim as Plaintiff solely moves for emergent relief for an Order of Possession and Writ of Replevin. ECF No. 29; see also Kraft v. Wells Fargo & Co., No. 16-5729, 2016 WL 6841076, at *3 (D.N.J. Nov. 21, 2016). provided contract agreements and other documentation showing it loaned the collateral to Defendants in exchange for payment from vehicle sales and that it is owed outstanding monies. See ECF Nos. 1, 1-1-5 (Complaint and accompanying exhibits showing various agreements between parties); ECF Nos. 4-2, 29-2 (declarations of William Zozokos, Senior Manager at VCI outlining agreements and current status of debts owed). The Court finds that VCI is owed a debt by CTE2 and has a security interest in the collateral held by CTE2, that demand for delivery of possession of the goods and chattels identified has been made on CTE2, and that CTE2 has failed and refused to make delivery of such goods and chattels. Accordingly, the Court finds that Plaintiff has shown that it is likely to succeed on the merits of its replevin claim. Next, Plaintiff has shown that it is likely to suffer irreparable harm absent injunctive relief. A plaintiff demonstrates irreparable harm and is entitled to injunctive relief when it is threatened with harm that “cannot be redressed by a legal or an equitable remedy following trial.” Nat’l Reprographics, Inc. v. Strom., 621 F. Supp. 2d 204, 222 (D.N.J. 2009). Here, Plaintiff has shown that it will suffer irreparable harm if it is not allowed to take possession of the collateral as the collateral consists of vehicles that “are continuing to sit without maintenance and unattended by CTE2, are depreciating in value by the day and are at risk of further damage and depreciation.” ECF No. 29-1 at 4. Irreparable harm exists where a defendant dissipates assets and makes it difficult for recovery of damages in the event a judgment is entered in favor of a plaintiff. See Health Professional & Allied Employees AFT/AFL-CIO v. MHA, LLC, No. 17-3301, 2017 WL 6550488, at *3 (D.N.J. Dec. 21, 2017) (finding irreparable harm where the depletion of assets by defendant would render a judgment for plaintiff futile). That risk exists here as Plaintiff alleged that Defendants’ dealership is closed down and the business is no longer functioning or paying its bills. ECF No, 29-1 at 1. In addition, requests for injunctive relief are most often granted where the requests involve property that is subject to depreciation and physical damage, as is the case here. See Minard Run Oil Co. v. United States Forest Serv., 670 F.3d 236, 256 (3d Cir. 2011) (“[W]here interests involving real property are at stake, preliminary injunctive relief can be particularly appropriate.”). Thus, the Court finds that Plaintiff has demonstrated that it will be irreparably harmed absent the granting of a preliminary injunction. Furthermore, the granting of preliminary relief to Plaintiff outweighs any burden on the Defendants. Defendants Carmine DeMaio and CTE 2 Land, LLC have consented to the injunctive relief requested in the Application (ECF No. 39) and Defendants Frank Holtham and CTE2, LLC have not appeared in this case, nor have they opposed the Application. * The car dealership previously operated by CTE2, LLC is no longer functioning and there is no present need for the collateral at its current site. ECF No. 29 at 1. Hence, the Court agrees that the balance of the equities tips in favor of Plaintiff. Finally, the Court also finds that allowing Plaintiff to take possession of the collateral would be in the public interest. It is well-settled that “[t]he public has a strong interest in seeing that property rights are respected.” W.S. Int’l, LLC v. M. Simon Zook Co., No. 11-3014, 2011 WL 1832282, at *6 (E.D. Pa. May 12, 2011) (citing Ride the Ducks of Philadelphia, LLC v. Duck Boat Tours, Inc., 138 F. App’x. 431, 434-435 (3d Cir. 2005)). Additionally, the Third Circuit has recognized that if a plaintiff can demonstrate both a likelihood of success on the merits and irreparable injury, “it almost always will be the case that the public interest will favor the plaintiff.” Allegheny Inc. v. DQE, Inc., 171 F.3d 153, 158 (3d Cir. 1999). Accordingly, the Court finds that the public interest favors granting injunctive relief to Plaintiff. 2 On November 26, 2019, the Clerk of the Court entered default as to Frank Holtham and CTE2. For all of the foregoing reasons, the Court finds that Plaintiff has satisfied the standards for preliminary injunctive relief. THEREFORE, IT IS on this 6" day of December 2019, ORDERED that: 1. Plaintiff's request for preliminary injunctive relief of possession and replevin (ECF No. 29) is GRANTED. 2. Defendant CTE2 shall immediately deliver to Plaintiff the goods set forth on Exhibits A and B attached hereto (collectively, the “Goods”) which are believed to be located at 2155 Route 22 West and 1180 Springfield Road in Union, New Jersey. 3. A Writ of Replevin shail hereby issue commanding the U.S. Marshal, the Sheriff of Union County, or such other law enforcement officer as may be capable of executing on such Order to take possession of the Goods and deliver them to Plaintiff. 4, To effectuate the purposes of the Writ of Replevin, Plaintiff shall arrange with Defendant CTE 2 Land, LLC, for access to the real property and the Goods at a mutually agreeable date and time, but on or before December 10, 2019. In the event that Defendant CTE 2 Land, LLC cannot provide access to the property or the Goods on or before December 10, 2019, Plaintiff may cause the disabling or changing of any locks that might secure any premises on which the Goods are located, including the removal of locks or cutting any chains which are restricting access, and shall restore all such locks or chains immediately after removal of the Goods. CTE 2 Land, LLC, is permitted to have a representative at the premises at all times during the removal of the collateral as an observer only. SO ORDERED. □ Cn Com CLAIRE C. CECCHL,US.DJ. EXHIBIT “A” Volkswagen of Union [woe [mee IWAUENAF43HNO2S011__ | 2017 [Aub | AA PREMIUMPLUS WA1C2AFPBHAQ28744__ | 2017_*[| AUDI QSPREMIUM__—=s WAIGFCFS1GRO24248__ | 2016_[ Aub) [G3 PRESTIGE. 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