1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 GP ASSET HOLDINGS, LLC, Case No.: 23-CV-2360 TWR (KSC)

12 Plaintiff,

ORDER DENYING PLAINTIFF’S

13 v. APPLICATION FOR A

TEMPORARY RESTRAINING

14 ROSSLAW, PLLC and MATTHEW E.

ORDER

ROSS,

15 Defendants. (ECF No. 5) 16

17 Presently before the Court are Plaintiff GP Asset Holdings, LLC’s Complaint and 18 Jury Demand (“Compl.,” ECF No. 1) and Application for a Temporary Restraining Order 19 (“TRO”) and Order to Show Cause Regarding Preliminary Injunction (“TRO App.,” ECF 20 No. 5), to which Defendants RossLaw PLLC and Matthew E. Ross have filed an 21 Opposition (ECF Nos. 7 (“Opp’n”) & 8 (“Ross Decl.”)) and in support of which Plaintiff 22 has filed a Reply (ECF No. 11). Through its TRO Application, Plaintiff seeks “a temporary 23 restraining order and preliminary injunction requiring Defendants to turn over [a] surety to 24 GP Asset Holdings within (1) business day so that GP Asset Holdings can deposit it before 25 it expires on January 11, 2024, after which GP Asset Holdings, within three (3) business 26 days of receipt and clearing of the funds from the surety, will deposit with the Court either 27 the funds it obtained from the surety or a bond for the equivalent amount . . . pending 28 resolution of the parties’ dispute.” (See TRO App. at 1.) The Court held a hearing on 1 January 9, 2024. (See ECF No. 16.) Having carefully considered the record, the Parties’ 2 arguments, and the relevant law, the Court DENIES Plaintiff’s TRO Application. 3 BACKGROUND 4 Although the Parties are well aware of the underlying facts, the Court provides a 5 brief overview of the underlying dispute: 6 In January 2023, non-party SC Endowment, Ltd. offered to facilitate an investment 7 of $111,500,000 in Plaintiff through a bond offering. (See Compl. ¶¶ 3, 9–11; ECF No. 1- 8 2 (“Ex. A”).) The primary obligor was to be non-party TC Advantage Traders, Ltd. 9 (“TCAT”), an affiliate of SC Endowment. (See Ex. A.) Plaintiff was required to put down 10 4%, or $4,240,000 less applicable fees, as a refundable down payment to help SC 11 Endowment cover the costs of creating and selling the bond. (See Compl. ¶¶ 3–4, 12–13; 12 Ex. A.) Plaintiff took out a line of credit to pay the refundable down payment and has paid 13 over $300,000 in interest to date. (See Compl. ¶ 34.) The deposit was to be secured by a 14 private surety in the amount of €4,500,000 from Banco BBVA Spain and held in 15 RossLaw’s escrow account for payment to Plaintiff in the event the transaction did not 16 close in 120 days. (Id. ¶¶ 3, 12–15, 18–19; Ex. A.) 17 On January 9, 2023, Plaintiff and SC Endowment signed a Letter of Commitment, 18 (see Compl. ¶ 22; ECF No. 1-4 (“Ex. C”)), and Plaintiff, Defendants, and SC Endowment 19 entered into an Escrow Agreement. (See Compl. ¶ 22; ECF No. 1-3 (“Ex. B”).) Under the 20 Escrow Agreement, the down payment was to be disbursed from RossLaw’s escrow 21 account to SC Endowment only when RossLaw had attested to Plaintiff by email that he 22 had received: (1) the Banco BBVA Spain pay order; (2) a Notice of Readiness email from 23 Kendall Knowles, attorney for TCAT; and (3) an invoice from SC Endowment. (See 24 Compl. ¶¶ 20, 28–30; Ex. B § 1.3(B).) Defendants disbursed the escrowed deposit on 25 January 17, 2023, (see Compl. ¶¶ 35–36; ECF No. 1-5 (“Ex. D”)), although Plaintiff now 26 contends that Defendants failed to provide Plaintiff with copies of any of the requisite 27 underlying documents. (See Compl. ¶¶ 37–38.) 28 / / / 1 On April 8, 2023, Plaintiff’s then-CEO Stacey Iyer signed a “Declaration/Statement 2 of Services Rendered” acknowledging that SC Endowment “ha[d] created or caused to be 3 created a Corporate [Medium Term Note] 144A CUSIP 87225H AC2, 144A ISIN US 4 87225HAC25.” (See Ross Decl. ¶ 17; ECF No. 8-5 (“Ex. 5”).) The Parties dispute whether 5 this terminated Plaintiff’s right to the surety under Section 1.3(D) of the Escrow 6 Agreement. (Compare TRO App. at 13–14, with Opp’n at 8–9.) Meanwhile, the initial 7 120-day deadline for the transaction to close, i.e., early May 2023, passed. (See Compl. 8 ¶ 39.) On June 15, 2023, Plaintiff and SC Endowment executed an Amended Letter of 9 Commitment, still dated January 23, 2023, with SC Endowment now agreeing to use its 10 best efforts to invest $505,500,000 in GP Asset Holdings. (See id. ¶¶ 43–44; ECF No. 1-6 11 (“Ex. E”).) That transaction would similarly be terminated unless closed within 120 days 12 of Plaintiff executing the Amended Letter of Commitment. (See Compl. ¶ 44; Ex. E.) 13 On October 3, 2023, as the second 120-day deadline from the signing of the 14 Amended Letter of Commitment approached, Plaintiff’s counsel made a formal demand 15 for proof of the surety from Defendants. (See Compl. ¶ 47.) On October 20, 2023, 16 Mr. Ross sent a photo of the surety to Plaintiff. (See id. ¶ 48.) The photo revealed that the 17 surety is from Sabadell, a different Spanish bank, and expires January 11, 2024. (See id. 18 ¶¶ 50–51.) The Parties dispute whether Plaintiff had foreknowledge of the substitution of 19 Sabadell for Banco BBVA. (Compare TRO App. at 12, with Opp’n at 8.) To the Court’s 20 knowledge, as of the date of this Order, Defendants continue to hold the surety and are 21 subject to competing claims from Plaintiff and SC Endowment. (See Ross Decl. ¶ 26.) 22 On December 28, 2023, Plaintiff filed a Complaint alleging three causes of action 23 for (1) breach of contract against RossLaw, (2) breach of fiduciary duty against RossLaw 24 and Mr. Ross, and (3) injunctive relief against RossLaw and Mr. Ross. (See generally ECF 25 No. 1.) The following day, Plaintiff filed the instant TRO Application, (see generally ECF 26 No. 5), which Defendants opposed on January 2, 2024. (See generally ECF Nos. 7 & 8.) 27 On January 3, 2024, Plaintiff filed its reply, and the Court ordered Plaintiff to show cause 28 why this action should not be transferred to the United States District Court for the Central 1 District of California, Southern Division, pursuant to 28 U.S.C. §§ 84(c)(3), 1391(b), and 2 1406(a). (See generally ECF No. 12 (“OSC”).) Upon receipt of Plaintiff’s response, (see 3 ECF No. 13), the Court vacated its January 3, 2024 Order to Show Cause, (see ECF No. 4 14), and set the TRO Application for a hearing on January 9, 2024. (See ECF No. 15.) 5 LEGAL STANDARD 6 Federal Rule of Civil Procedure 65 authorizes a trial judge to grant a temporary 7 restraining order under certain circumstances “to preserve the status quo and the rights of 8 the parties until a final judgment issues in the cause.” See Ramos v. Wolf, 975 F.3d 872, 9 887 (9th Cir. 2020) (quoting U.S. Philips Corp. v. KBC Bank N.V., 590 F.3d 1091, 1094 10 (9th Cir. 2010)). “A preliminary injunction [or temporary restraining order] . . . is not a 11 preliminary adjudication on the merits[,] but rather a device for preserving the status quo 12 and preventing the irreparable loss of rights before judgment.” Id. (alteration in original) 13 (quoting Sierra On-Line, Inc. v. Phx. Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984)). 14 The status quo in this context “refers not simply to any situation before the filing of a 15 lawsuit, but instead to ‘the last uncontested status which preceded the pending 16 controversy[.]’” See GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1210 (9th Cir. 17 2000) (quoting Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804, 809 (9th Cir. 1963)). 18 “The standard for issuing a temporary restraining order is identical to the standard 19 for issuing a preliminary injunction.” Lockheed Missile & Space Co. v. Hughes Aircraft 20 Co., 887 F. Supp. 1320, 1323 (N.D. Cal. 1995). “A party seeking a preliminary injunction 21 must meet one of two variants of the same standard.” Ramos, 975 F.3d at 887 (quoting All. 22 for Wild Rockies v. Pena, 865 F.3d 1211, 1217 (9th Cir. 2017)). 23 Under the original standard, plaintiffs seeking a preliminary injunction must 24 establish that: (1) they are likely to succeed on the merits; (2) they are likely 25 to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in their favor; and (4) an injunction is in the public interest. 26

27 Id. (citing Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). “The Ninth Circuit 28 employs an alternative ‘serious questions’ standard, also known as the ‘sliding scale’ 1 variant of the Winter standard.” Id. (citing All. for Wild Rockies v. Cottrell, 632 F.3d 1127, 2 1134 (9th Cir. 2011)). 3 Under this alternate standard, [the court] weigh[s] the preliminary injunction factors on a sliding scale, such that where there are only serious questions 4 going to the merits—that is, less than a likelihood of success on the merits— 5 a preliminary injunction may still issue so long as the balance of hardships tips sharply in the plaintiff’s favor and the other two factors are satisfied. 6

7 Id. at 887–88 (internal quotation marks omitted) (quoting Short v. Brown, 893 F.3d 671, 8 675 (9th Cir. 2018)). In other words, “[a] preliminary injunction may be granted . . . where 9 the moving party demonstrates either ‘(1) a combination of probable success on the 10 merits and the possibility of irreparable injury or (2) the existence of serious questions 11 going to the merits and that the balance of hardships tips sharply in [its] favor.’” Grocery 12 Outlet Inc. v. Albertson’s Inc., 497 F.3d 949, 951 (9th Cir. 2007) (emphasis and second 13 alteration in original) (quoting Sardi’s Rest. Corp. v. Sardie, 755 F.2d 719, 723 (9th Cir. 14 1985)). 15 This standard is “doubly demanding” when the movant seeks a mandatory 16 injunction, i.e., an injunction that “orders a responsible party to take action.” See Garcia 17 v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015) (en banc) (internal quotation marks 18 omitted) (quoting Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH, 571 F.3d 873, 879 19 (9th Cir. 2009)). This is because “a mandatory injunction ‘goes well beyond simply 20 maintaining the status quo pendente lite [and] is particularly disfavored.’” Id. (alteration 21 and emphasis in original) (quoting Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1320 (9th Cir. 22 1994)). Accordingly, “[t]he district court should deny such relief unless the facts and law 23 clearly favor the moving party.” Id. (internal quotation marks omitted) (quoting Stanley, 24 13 F.3d at 1320). “In plain terms, mandatory injunctions should not issue in ‘doubtful 25 cases.’” Id. (quoting Park Vill. Apartment Tenants Ass’n v. Mortimer Howard Trust, 636 26 F.3d 1150, 1160 (9th Cir. 2011). 27 A preliminary injunction is an “extraordinary remedy that may only be awarded 28 upon a clear showing that the plaintiff is entitled to such relief.” Winter, 555 U.S. at 22. 1 Consequently, there are several limitations on when “[t]he court may issue a temporary 2 restraining order without written or oral notice to the adverse party or its attorney,” see 3 Fed. R. Civ. P. 65(b), and “[t]he court may issue a . . . temporary restraining order only if 4 the movant gives security in an amount that the court considers proper to pay the costs and 5 damages sustained by any party found to have been wrongfully enjoined.” See Fed. R. 6 Civ. P. 65(c). Further, “every restraining order must: (A) state the reasons why it issued; 7 (B) state its terms specifically; and (C) describe in reasonable detail—and not by referring 8 to the complaint or other document—the act or acts restrained or required.” Fed. R. Civ. 9 P. 65(d)(1). 10 “In deciding a motion for a preliminary injunction, the district court ‘is not bound to 11 decide doubtful and difficult questions of law or disputed questions of fact.’” Int’l 12 Molders’ & Allied Workers’ Loc. Union No. 164 v. Nelson, 799 F.2d 547, 551 (9th Cir. 13 1986) (quoting Dymo Indus., Inc. v. Tapewriter, Inc., 326 F.2d 141, 143 (9th Cir. 1964)). 14 Whether to “grant . . . a preliminary injunction is a matter committed to the discretion of 15 the trial judge[,]” and that decision will be “reverse[d] only if that discretion is abused or 16 the decision is based on an erroneous legal standard or clearly erroneous findings of fact.” 17 See Sierra On-Line, 739 F.2d at 1421. 18 ANALYSIS 19 Through the present TRO Application, Plaintiff seeks “a temporary restraining order 20 and preliminary injunction requiring Defendants to turn over the surety to GP Asset 21 Holdings within (1) business day so that GP Asset Holdings can deposit it before it expires 22 on January 11, 2024, after which GP Asset Holdings, within three (3) business days of 23 receipt and clearing of the funds from the surety, will deposit with the Court either the 24 funds it obtained from the surety or a bond for the equivalent amount . . . pending resolution 25 of the parties’ dispute.” (See TRO App. at 1.) Plaintiff bears the burden of establishing 26 that it is entitled to relief, and that burden is “doubly demanding” if Plaintiff is seeking a 27 mandatory injunction. See Garcia, 786 F.3d at 740. As in Qualcomm Inc. v. Compal 28 Elecs., Inc., 283 F. Supp. 3d 905 (S.D. Cal. 2017), the Parties dispute whether Plaintiff’s 1 requested relief amounts to a mandatory or prohibitory injunction. See id. at 914. Although 2 the answer “depends upon what the Court construes as the status quo” and is “no 3 straightforward task,” however, “[t]he Court . . . need not settle this disagreement because 4 [Plaintiff]’s request for a preliminary injunction fails even under the less demanding, 5 traditional preliminary injunction standard articulated in Winter.” See id. 6 Plaintiff contends that the irreparable injury it will suffer in the absence of injunctive 7 relief is the loss of the enforcement of its bargained-for collateral provision. (See TRO 8 App. at 17–18, 24–27; Reply at 9.) Plaintiff, however, relies solely on out-of-Circuit cases 9 that are not binding on this Court.1 As one district judge within this Circuit noted, “[s]ome 10 district courts have indeed found that loss of collateralization . . . constitutes irreparable 11 harm adequate to support issuance of a preliminary injunction or TRO.” Hudson Ins. Co. 12 v. Simmons Const., LLC, No. CV-12-407-PHX-GMS, 2012 WL 869383, at *4 (D. Ariz. 13 Mar. 14, 2012). “Usually, such courts” rely on the possible “dissipat[ion of] assets[]” or 14 the loss of the “bargained-for status as secured creditor.” See id. (citing cases from the 15 Western District of North Carolina and Middle District of Georgia). But “[n]either the 16 Ninth Circuit itself nor the District Courts within the Ninth Circuit have been swayed by 17 these arguments.” See id. (citing Hanover Ins. Co. v. TLC Investing, LLC, No. 11-CV-711 18 (JCM) 2011 WL 3841299, at *1 (D. Nev. Aug. 26, 2011)). In any event, Plaintiff 19 introduces no evidence that it is unlikely to recover its refundable deposit following the 20 expiration of the surety. Cf. TRO App. at 27 (citing Johnson v. Couturier, 572 F.3d 1067, 21 1081 (9th Cir. 2009), for the proposition that “‘a likelihood that defendants will not have 22 the resources to reimburse’ the plaintiff weighs in favor of a finding of irreparable harm”). 23 Ultimately, “the Court declines to conclude that the mere fact that [SC Endowment and 24 TCAT] are foreign entities, and that it may theoretically be difficult to enforce a judgment, 25

26 1 The only in-Circuit authority Plaintiff cites, JP Express Service, Inc. v. KG Administrative 27 Services, No. SACV 18-00134-CJC(RAOx), 2018 WL 3815046 (C.D. Cal. July 2, 2018), did not involve collateral, but rather the “loss of ‘a unique contract right,’” i.e., discounted rates with a health insurance 28 1 are reasons alone to find that [Plaintiff] is likely to face irreparable harm.” See Qualcomm, 2 283 F. Supp. 3d at 923. 3 Given the absence of any evidence that Plaintiff will be unable to recoup its deposit 4 following the expiration of the surety; Plaintiff’s explicit acceptance of a surety that would 5 “be valid for a period of three hundred sixty (360) days),” (see, e.g., Ex. C at 4); and 6 Plaintiff’s delay in seeking relief since October 20, 2023, (see, e.g., Compl. ¶ 48), the Court 7 is unable to conclude that Plaintiff has met its burden of establishing irreparable harm such 8 that it is entitled to a TRO. See Qualcomm, 283 F. Supp. 3d at 914–15 (“Mere injuries, 9 however substantial, in terms of money, time and energy necessarily expended . . . are not 10 enough. The possibility that adequate compensatory or other corrective relief will be 11 available at a later date, in the ordinary course of litigation, weighs heavily against a claim 12 of irreparable harm. For this reason, ‘monetary injury is not normally considered 13 irreparable’ in the context of a preliminary injunction.” (first quoting Sampson v. Murray, 14 415 U.S. 61, 90 (1974); then quoting L.A. Mem’l Coliseum Comm’n v. Nat’l Football 15 League, 634 F.2d 1197, 1202 (9th Cir. 1980)); see also, e.g., W. Surety Co. v. PASI of LA, 16 Inc., 334 F. Supp. 3d 764, 795 (M.D. La. 2018) (collecting cases) (“Courts granting 17 preliminary injunctive relief under Federal Rule of Civil Procedure 65 generally require 18 some showing of irreparable harm such as evidence that establishes that the indemnitor is 19 in dire financial straits, no longer has a traditional source of credit, has been dishonest or 20 ‘is millions of dollars in the hole with various creditors.’”). Because Plaintiff fails to 21 demonstrate that it is likely to suffer irreparable harm absent preliminary injunctive relief, 22 the Court need not wade into the hotly contested facts and interpretations of underlying 23 documents that form the basis of Plaintiff’s claims. See, e.g., Ctr. for Food Safety v. 24 Vilsack, 636 F.3d 1166, 1174 (9th Cir. 2011); see also, e.g., All. for the Wild Rockies v. 25 U.S. Forest Serv., No. 1:15-CV-00193-EJL, 2016 WL 3349221, at *3 (D. Idaho June 14, 26 2016) (“Where a plaintiff fails to demonstrate a likelihood of irreparable harm in the 27 absence of preliminary relief, the court need not address the remaining elements of the 28 preliminary injunction standard.” (quoting Ctr. for Food Safety, 636 F.3d at 1174)).

I CONCLUSION

2 In light of the foregoing, the Court DENIES Plaintiff's TRO Application (ECF No. 3 4 IT IS SO ORDERED. 5 Dated: January 9, 2024 — 6 [ odd (2 re 7 Honorable Todd W. Robinson United States District Judge

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