Opinion
2022 CA 0418
12-14-2023
Randall MOORE and ETI, Inc. v. IDREAM ENTERPRISES, INC.
Jack M. Alltmont, New Orleans, Louisiana, Counsel for Plaintiffs/Appellants #2, Randall Moore and ETI, Inc. Lawrence R. DeMarcay, III, New Orleans, Louisiana, Counsel for Defendant/Appellant #1, iDream Enterprises, Inc.
On Appeal from the Twenty-Second Judicial District Court, In and for the Parish of St. Tammany, State of Louisiana, Docket No. 2021-13374, Honorable Ellen M. Creel, Judge Presiding
Jack M. Alltmont, New Orleans, Louisiana, Counsel for Plaintiffs/Appellants #2, Randall Moore and ETI, Inc.
Lawrence R. DeMarcay, III, New Orleans, Louisiana, Counsel for Defendant/Appellant #1, iDream Enterprises, Inc.
BEFORE: McCLENDON, HOLDRIDGE . AND GREENE, JJ.
Judge Guy Holdridge, retired, is serving as pro tempore by special appointment of the Louisiana Supreme Court
HOLDRIDGE, J.
2In this contract case, the defendant and the plaintiffs separately appealed the judgment of the trial court that ordered the issuance of a mandatory injunction for the payment of a certain amount of money by the defendant to one of the plaintiffs, but denied all other requested relief. For the reasons that follow, we vacate in part, affirm in part, and remand. FACTS AND PROCEDURAL HISTORY
ETI, Inc. (ETI), a Louisiana corporation, was the sole stockholder and owner of Hi-Tech Tower Services, Inc. (Hi-Tech), another Louisiana corporation. On November 25, 2020, ETI sold all stock of Hi-Tech to iDream Enterprises, Inc. (iDream), a Delaware corporation with its principal place of business in California, in accordance with a Stock Purchase Agreement (SPA). iDream paid no cash at the closing. Rather, the parties agreed to defer cash payments in the amount of $682,566.37 and agreed to remove the personal guaranty of the owner of ETI, Randall Moore, the guarantees of any of Mr. Moore’s companies, and Mr. Moore’s real estate as collateral on Hi-Tech’s debt.
The SPA, originally dated September 16, 2019, was subsequently amended on January 31, 2020, again on March 12, 2020, by a Mediation Settlement Agreement on October 20, 2020, and again by another amendment on November 19, 2020. The Mediation Settlement Agreement was between ETI, iDream, and C-Cubed Communications, Inc. (C-Cubed), a company that purchased at discount an "earn-out" of $3.3 million, which was part of the purchase price for Hi-Tech when ETI purchased Hi-Tech in 2017 C-Cubed is owned by Dan Holbrook and Keyur Nagrik, the owners of iDream. The mediation proceeding involved the "earn-out" and resulted in the Mediation Settlement Agreement, which was incorporated into the SPA
While Mr. Moore put forth substantial and compelling evidence of irreparable harm and the lack of adequate remedy if he was forced to remain on the indebtedness, given the current procedural posture of the case, this issue will have to be addressed by the trial court in a later ordinary proceeding as it was not properly before us.
Thereafter, on July 29, 2021, ETI and Mr. Moore filed a Petition for Injunctive Relief, Specific Performance and Damages against iDream in the Twenty-Second Judicial District Court, asserting that iDream failed to fulfill any of its obligations under the SPA, as amended. Particularly, ETI and Mr. Moore alleged that iDream failed to pay ETI $300,000.00 in accordance with the terms of a promissory note 3dated November 25, 2020, and payable to ETI in May of 2021; failed to release $382,566.37 in funds to ETI escrowed with Hancock Whitney Bank as agreed upon; and failed to remove Mr. Moore and any of his companies as guarantors and Mr. Moore’s real estate as collateral for Hi-Tech’s debt in the amount of approximately $1.8 million within 120 days of the closing.
Petitions for injunctive relief, specific performance, and damages are all ordinary proceedings that require service, citation, and a default judgment or trial. See La. C.C.P. art. 851.
Although the record presents the issue of whether the parties acquiesced to the preliminary and permanent injunctions being heard concurrently, same is not dearly established. Therefore, we need not address whether acquiescence would be an exception to or a waiver of an express stipulation by the parties.
ETI and Mr. Moore sought a preliminary injunction and thereafter a permanent injunction commanding iDream to immediately turn over all of the stock and all control and management of Hi-Tech to ETI in accordance with the terms of the SPA; a mandatory preliminary injunction and thereafter a mandatory permanent injunction commanding iDream to immediately do everything necessary to remove ETI, Mr. Moore, and all of Mr. Moore’s companies and real estate from any obligations to guarantee or stand as security for the Hi-Tech obligations to Bank of Ozarks (Bank OZK); a preliminary and thereafter a permanent injunction commanding iDream to pay $382,566.37 in escrowed funds that ETI was owed; judgment commanding iDream to pay to ETI $300,000.00 as required under the promissory note; judgment in favor of ETI and Mr. Moore for the damages they incurred as a result of the defaults by iDream; attorney fees; and all other appropriate legal and equitable relief. On November 5, 2021, iDream filed an Answer and Reconventional Demand, raising several defenses and alleging breaches of contract related to iDream’s purchase of Hi-Tech from ETI and Mr. Moore. iDream claimed that ETI and Mr. Moore misrepresented the financial status and obligations of Hi-Tech prior to closing the sale and that it filed its Reconventional Demand to recover the damages, funds, and assets it lost due to ETI and Mr. Moore’s misrepresentations and fraudulent actions.
ETI and Mr. Moore originally requested that iDream execute and transmit written instructions to Hancock Whitney Bank to disburse the escrowed funds in accordance with the SPA and the escrow agreement, but it was later determined that the funds had already been disbursed to iDream.
I also disagree with the majority’s statement, in footnote 9 of the opinion, questioning the validity of those cases holding that if a judgment against a defendant would be valueless because of insolvency or other reasons, injunctive relief may be proper, and choosing not to follow their holdings. I find this to be dicta, given that these issues were not properly before the court, and would leave that decision for another day.
4The trial court conducted evidentiary-hearings on the injunctive relief, including specific performance, on November 23, 2021, and December 1, 2021. Documentary evidence was introduced, and Mr. Moore testified. Although iDream’s counsel was present for the hearing, Dan Holbrook and Keyur Nagrik, the owners of iDream, did not appear. At the conclusion of the hearing, the trial court granted ETI and Mr. Moore certain injunctive relief and provided oral reasons for judgment. On December 15, 2021, the trial court signed its judgment, ordering a "preliminary and permanent mandatory injunction" in favor of ETI and Mr. Moore and against iDream, ordering that iDream immediately pay to ETI the sum of $382,566.37. The judgment further ordered that should iDream not make the payment as ordered, the parties were to appear before the trial court on January 11, 2022, for iDream to show cause, if any, as to why iDream should not be held in contempt of court and for any appropriate additional relief. In all other respects, the judgment denied "the petition for injunctive relief and for specific performance … at this time without prejudice" and reserved to ETI and Mr. Moore the right to re-urge their petition.
As will be discussed later in this opinion, the evidentiary hearings were summary proceedings to address preliminary issues and did not constitute trials on the merits.
On December 28, 2021, ETI and Mr. Moore filed a motion for new trial, submitting additional evidence and asserting that the judgment, in part, was contrary to the law and evidence. The trial court denied the motion for new trial, without a hearing, on January 10, 2022.
Thereafter, iDream appealed, arguing that the trial court erred in granting the injunction by awarding a money judgment. iDream contends that the December 15, 2021 judgment requiring it to pay to ETI the sum of $382,566.37 proved that ETI 5and Mr. Moore’s damages were not irreparable in nature and could be satisfied with a money judgment.
iDream filed a motion for suspensive appeal on December 23, 2021. On February 24, 2022, iDream filed a motion to convert the suspensive appeal to a devolutive appeal, in lieu of posting a suspensive appeal bond, which was granted.
ETI and Mr. Moore also appealed, raising several assignments of error. Essentially, they argue that the trial court erred in refusing to grant to them the remaining injunctive relief requested, maintaining that they proved their case on each and every element by a clear preponderance of the evidence, which was completely unrefuted by iDream. ETI and Mr. Moore also appealed the denial of their motion for new trial.
STANDARD OF REVIEW
[1] Louisiana Code of Civil Procedure article 3612(B) provides, in pertinent part, that "[a]n appeal may be taken as a matter of right from an order or judgment relating to a preliminary or final injunction." The issuance of a preliminary injunction addresses itself to the sound discretion of the trial court and will not be disturbed on review unless a clear abuse of discretion has been shown. State Machinery & Equipment Sales, Inc. v. Iberville Parish Council, 2005-2240 (La. App. 1 Cir. 12/28/06), 952 So.2d 77, 81.
APPLICABLE LAW
[2, 3] An injunction shall be issued in cases where irreparable injury, loss, or damage may otherwise result to the applicant, or in other cases specifically provided by law. La. C.C.P. art. 3601(A). The writ of injunction, a harsh, drastic, and extraordinary remedy, should only issue in those instances where the moving party is threatened with irreparable loss or injury and is without an adequate remedy at law. Concerned Citizens for Proper Planning, LLC v. Parish of Tangipahoa, 2004-0270 (La. App. 1 Cir. 3/24/05), 906 So.2d 660, 664. Generally, irreparable injury means a loss that cannot be adequately compensated in money damages or measured by a pecuniary standard 6 Louisiana Vaping Association v. Department of Revenue, 2020-0816 (La. App. 1 Cir. 2/19/21), 318 So.3d 221, 225. writ denied, 2021-00415 (La. 5/11/21), 315 So.3d 869; Concerned Citizens, 906 So.2d at 664.
[4–6] A preliminary injunction is an interlocutory judgment designed to preserve the status quo between the parties pending a trial on the merits. Stevens Construction & Design, L.L.C. v. St. Tammany Fire Protection District No. 1, 2018-1759 (La. App. 1 Cir. 1/16/20), 295 So.3d 954, 957-58 (en banc), writ denied, 2020-00977 (La. 11/4/20), 303 So.3d 650. A preliminary injunction is issued in summary proceedings incidental to the main demand for permanent injunctive relief. Concerned Citizens, 906 So.2d at 664. Generally, a party seeking the issuance of a preliminary injunction must show that it will suffer irreparable injury if the injunction does not issue and must show entitlement to the relief sought; this must be done by a prima facie showing that the party will prevail on the merits of the case. Id.
[7, 8] In contrast, the principal demand of the permanent injunction is determined on its merits only after a full trial in an ordinary proceeding, in which the party seeking injunctive relief must carry its burden of proof by a preponderance of the evidence, rather than by a prima facie showing. Singleton v. East Baton Rouge Parish School Board, 2022-0667 (La. App. 1 Cir. 9/16/22), 353 So.3d 164, 174; Charter School of Pine Grove, Inc. v. St. Helena Parish School Board, 2007-2238 (La. App. 1 Cir. 2/19/09), 9 So.3d 209, 218. Nevertheless, parties may agree to consolidate the trial on the merits of a permanent injunction with the hearing on the preliminary injunction. Mary Moe, L.L.C. v. Louisiana Board of Ethics, 2003-2220 (La. 4/14/04), 875 So.2d 22, 29. See Envirozone, LLC v. The Tarp Depot, 2016-0015 (La. App. 1 Cir. 12/22/16), 2016 WL 7444091, *3 (unpublished), writ denied, 2017-0308 (La. 4/7/17), 218 So.3d 112. However, the parties must expressly agree to submit the case for final decision at the hearing on the rule for a7 preliminary injunction. Otherwise, even though the summary hearing on the rule for a preliminary injunction may tentatively decide merit issues, the trial court must decide the principal demand for a permanent injunction on its merits only after a full trial under ordinary process. Envirozone, 2016 WL 7444091 at *3.
[9–11] The general rule is that an injunction will issue only in its prohibitory form. Concerned Citizens, 906 So.2d at 664. However, a mandatory injunction is one that commands a party to perform a specific action. City of New Orleans v. Board of Directors of Louisiana State Museum, 98-1170 (La. 3/2/99), 739 So.2d 748, 756. A mandatory preliminary injunction has the same basic effect as a perma- nent injunction. Deshotels v. White, 2016-0889 (La. App. 1 Cir. 8/16/17), 226 So.3d 1211, 1218 (en banc), writ denied, 2017-1565 (La. 12/5/17), 231 So.3d 628. Given that mandatory injunctions and prohibitory injunctions have different procedural rules and evidentiary burdens, we recognize that "as a matter of law, it is not possible to issue a mandatory preliminary injunction." Deshotels, 226 So.3d at 1218. Stated another way, a mandatory injunction cannot, as a matter of law, be a preliminary injunction. Harrington v. Board of Supervisors of Louisiana State University and Agricultural and Mechanical College, 2021-1527 (La. App. 1 Cir. 9/29/22), 2022 WL 4587873, *3-4 (unpublished), writ denied, 22-01621 (La. 1/11/23), 352 So.3d 985. See also Plantation Trace Development, LLC v. Scott, 2018-1044 (La. App. 1 Cir. 6/25/19), 2019 WL 2612862, *4 (unpublished).
We recognize that Mr. Moore and ETI have cited the case of Vicksburg, S. & P. Ry. Co. v. Webster Sand, Gravel & Construction Co., 132 La. 1051, 62 So. 140 (La. 1913), in support of their argument that the trial court has the authority to issue a mandatory preliminary injunction However, we find the case to be factually distinguishable.
DISCUSSION
iDream’s Appeal
The trial court granted injunctive relief as to only one aspect of ETI and Mr. Moore’s requested relief, that is, ordering iDream to pay ETI the sum of $382,566.37. Initially, we recognize that in its appellate brief, iDream asserted that 8the December 15, 2021 judgment, ordering the mandatory injunction and payment of the $382,566.37 amount, was satisfied on May 10, 2022. iDream also averred that it reserved its rights on appeal and stated that it will seek reimbursement from ETI and Mr. Moore, if its appeal is successful. ETI and Mr. Moore acknowledged in their brief that iDream had paid the $382,566.37 judgment amount. While we question whether we are presented with a justiciable controversy regarding this issue, because iDream claims a reservation of rights as to the payment and because we lack any evidence in the record documenting said payment, we will address this issue.
In its appeal, iDream argues that the granting of the injunctive relief was inappropriate, as ETI and Mr. Moore’s damages, if any, could be measured and satisfied as a money judgment and, therefore, Mr. Moore and ETI failed to show irreparable harm. To the contrary, Mr. Moore and ETI submit that they suffered irreparable injury due to iDream’s continuing failure to comply with its contractual obligations.
Under the terms of the SPA, as amended, iDream agreed to release funds in the amount of $382,566.37 to ETI, which had been escrowed at Hancock Whitney Bank. The escrowed funds were to be released to ETI when the Paycheck Protection Program (PPP) loan obtained by Hi-Tech under the Coronavirus Aid, Relief, and Economic Security (CARES) Act was forgiven by the federal government and Hancock Whitney Bank. That release was granted by the government and the bank in9 July of 2021. According to ETI and Mr. Moore, iDream, acting through Hi-Tech, withdrew the entirety of the funds and did not pay any of the money to ETI. In granting the "preliminary and permanent mandatory injunction" that ordered iDream to pay ETI the sum of $382,566.37, plus interest, the trial court found that ETI was entitled to the $382,566.37 amount and that ETI and Mr. Moore would suffer irreparable injury if the injunction did not issue.
Specifically, the Second Amendment to the Amended and Restated Stock Purchase Agreement provided that as a result of the Mediation Settlement Agreement, $125,000.00 cash, $53,000.00 in credit card reimbursement, and $204,566 37 out of the PPP loan would be paid to ETI at the closing. The parties acknowledged that Hi-Tech obtained a PPP Loan in the amount of $516,097.00 under the CARES Act and that, on November 4, 2020, Hi-Tech filed an application for PPP loan forgiveness. Because the PPP loan had not been forgiven as of November 19, 2020, the parties entered into a PPP Indemnity and Escrow Agreement and agreed that Hi-Tech would cause the sum of $516,097 00 to be withheld from the proceeds of the sale and deposited into a Hancock Whitney Bank escrow account until the final determination of the PPP loan forgiveness. ETI was to receive $382,566.37, and the balance of $133,530.63 was to go to iDream. Further, pursuant to the terms of the escrow agreement, Hi-Tech was not permitted to provide instruction and direction to the bank with respect to the disposition of the funds, nor could Hi-Tech make any withdrawals without the written consent of the bank.
At the December 1, 2021 hearing, the trial court stated:
Those are the only things that I could find in all of this back and forth that had been absolutely triggered, that were liquidated claims that go towards proving the injunction and meeting your burden of proof thereon.
So I am granting you part of the relief that you asked for. I’m going to order that iDream pay three hundred eighty-two thousand, five hundred sixty-six dollars and 37 cents ($382,566.37) to Randall Moore, The rest of it will have to be litigated.
[12] iDream argues that the trial court erred in granting injunctive relief. We agree. Irreparable injury is that which cannot be adequately compensated with monetary damages. Louisiana Vaping Association, 318 So.3d at 225. The damage claimed by ETI and Mr. Moore is iDream’s failure to fulfill its contractual obligations and, specifically, the agreed-upon payment of a certain amount of money. Clearly, this has pecuniary value that can be satisfied by a money judgment. While we recognize ETI and Mr. Moore’s argument regarding iDream’s delays, we find that ETI and Mr. Moore failed to sufficiently show that they would suffer irreparable injury regarding this issue. Although the trial court has great discretion to grant or deny injunctive relief, we find that the trial court abused its discretion, and we vacate that portion of the December 15, 2021 judgment that granted the "preliminary and permanent mandatory injunction" and ordered iDream to pay $382,566.37 to ETI.
We recognize jurisprudence holding that if a judgment against a defendant would be valueless either because of insolvency or other reasons, injunctive relief is proper. We question the validity of these Cases and are not bound by them. See Ciambotti v. Decatur St. Louis, Lupin, Properties Ventures, 533 So.2d 1352, 1358-59 (La. App. 3 Cir. 1988); see also Easterling v. Estate of Miller, 2014-1354 (La. App. 4 Cir. 12/23/15), 184 So.3d 222, 229. Furthermore, there is no documentary evidence in the record regarding any insolvency of iDream.
10 ETI and Mr. Moore’s Appeal
[13] In their cross-appeal, ETI and Mr. Moore specify several assignments of error, including their argument that the trial court erred in failing to grant them all of the relief they requested. In response, iDream asserts that the trial court was correct as iDream was never afforded the opportunity to conduct any discovery prior to the injunction hearings and that ETI and Mr. Moore used their request for injunctive relief to conduct a full trial on the merits without giving iDream an opportunity to investigate the alleged claims and prepare for trial.
As earlier stated, unless the parties expressly agree to submit the case for final decision at the hearing on the rule for a preliminary injunction, the principal demand for a permanent injunction is deter- mined on its merits only after a full trial under ordinary process, even though the summary hearing on the rule for a preliminary injunction may tentatively decide merit issues. See Envirozone, 2016 WL 7444091 at *3. In this case, there is no indication that the parties stipulated to such an agreement at the hearings. In fact, the trial court called the hearings a preliminary injunction hearing multiple times, referred to a later trial, and stated that the rest of the issues "will have to be litigated." Additionally, the trial court referred to the burden of proof for a preliminary injunction, that is, that Mr. Moore make a prima facie showing that he could prevail at trial, and referred to a later trial, At the hearings, counsel for iDream stated, "Again, this is not a trial on the merits. This is a preliminary hearing on an injunction that you’ve sought." In its reasons for judgment, the trial court used the irreparable injury and prima facie case burden of proof, which is applicable to a preliminary injunction.
It appears that iDream did not seek a continuance of the hearings on the preliminary and thereafter permanent injunction or object at the hearings or raise this issue on appeal because it did not agree that the hearings were for a permanent injunction.
Because these hearings were for preliminary injunctive relief, the trial court could not issue a mandatory injunction at a hearing on a preliminary injunction 11commanding a party to perform a specific action. See Harrington, 2022 WL 4587873 at *3-4; Plantation Trace Development, 2019 WL 2612862 at *4; Deshotels, 226 So.3d at 1218. Therefore, in accordance with our prior discussion, the trial court erred in ordering iDream to immediately pay to ETI the sum of $382,566.37, and we must vacate that part of the judgment. As to the trial court’s denial of the remainder of ETI and Mr. Moore’s requested relief, the relief sought was mandatory injunctive relief, and therefore the trial court was correct in refusing to order mandatory injunctive relief following a preliminary injunction hearing.
CONCLUSION
For the foregoing reasons, we vacate that portion of the December 15, 2021 judgment that granted a "preliminary and permanent mandatory injunction," ordering iDream to pay to ETI the sum of $382,566,37. In all other respects, we affirm the trial court’s judgment denying ETI and Mr. Moore’s petition for injunctive relief and for specific performance without prejudice. The case is remanded for further proceedings consistent with this opinion. Costs of this appeal shall be shared one-half by the plaintiffs, Randall Moore and ETI, Inc., and one-half by the defendant, iDream Enterprises, Inc.
Because of our decision herein, we pretermit any discussion as to the validity of the trial court’s order for iDream to appear at a hearing for contempt if payment was not made as ordered.
JUDGMENT AFFIRMED IN PART, VACATED IN PART; CASE REMANDED.
McClendon, J., concurs in part and dissents in part for reasons assigned.
McClendon, J., concurs in part and dissents in part.
1I agree with the majority that permanent injunctive relief was not properly before the trial court. However, the majority errs in not simply vacating the trial court’s rulings as to all issues regarding permanent injunctive relief.
ETC, Inc. (ETI) and Randall Moore requested both preliminary and permanent injunctive relief, and the trial court con- ducted an evidentiary hearing on the request for injunctive relief, including specific performance. At the conclusion of the hearing, the trial court ordered a "preliminary and permanent mandatory injunction" in favor of ETI, and Mr. Moore, ordering that iDream Enterprises, Inc. (iDream) pay to ETI the $382,566.37 amount. The trial court denied the remaining requested relief.
In its opinion, the majority correctly set forth the law regarding preliminary and permanent injunctions, stating that a preliminary injunction is an interlocutory judgment designed to preserve the status quo between the parties. Further, a preliminary injunction is issued in summary proceedings incidental to the main demand for permanent injunctive relief, where the burden of proof is by a prima facie showing that the party seeking the relief will prevail on the merits of the case. Stevens Construction & Design, L.L.C. v. St. Tammany Fire Protection District No. 1, 2018-1759 (La.App. 1 Cir. 1/16/20), 295 So.3d 954, 957-58 (en banc), writ denied, 2020-00977 (La. 11/4/20), 303 So.3d 650; Concerned Citizens for Proper Planning, LLC v. Parish of Tangipahoa, 2004-0270 (La.App. 1 Cir. 3/24/05), 906 2So.2d 660, 664. However, and as stated by the majority, a request for a permanent injunction is determined on the merits only after a full trial in an ordinary proceeding, where the burden of proof is by a preponderance of the evidence. Singleton v. East Baton Rouge Parish School Board, 2022-0667 (La.App 1 Cir. 9/16/22), 353 So.3d 164, 174. The majority correctly found that there was, no express agreement between the parties and accordingly, the trial court could not combine the requests for a preliminary injunction with the requests for a permanent injunction. See Mary Moe, L.L.C. v. Louisiana Board of Ethics, 2003-2220 (La. 4/14/04), 875 So.2d 22, 29. Thus, the only issues properly before the trial court were the requests for preliminary injunctive relief.
The relief sought herein by ETI and Mr. Moore was to command iDream to pay money, to remove Mr. Moore, his companies, and real estate from certain debt, and to turn over all of the stock and control of Hi-Tech Tower Services, Inc. to ETI.1a All of these requests clearly were for permanent injunctive relief. Because the record is void of any express agreement by the parties to hear the permanent injunctive relief at the hearing for preliminary injunctive relief, the trial court erred in ruling on any of the permanent injunctive relief issues, and the entirety of the judgment should be vacated.2a
However, the majority goes further and states that that the trial court properly denied some of the requests for injunctive relief. While this statement may be dicta, it creates the appearance of reviewing the merits of the denial of the permanent and mandatory injunctions. Once the majority correctly determined that the hearing on the permanent injunctive relief was not properly before the court, it erred in doing anything other than vacating all action by the trial court regarding same.3a
3Therefore, to the extent the opinion could be interpreted as addressing the merits of the requested permanent injunctive relief, I respectfully dissent. I concur in the remainder of the opinion.