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Capital for Merchants, L.L.C. v. Wealth Creating Investments

United States District Court, E.D. Michigan, Southern Division

October 13, 2016

CAPITAL FOR MERCHANTS, L.L.C., Plaintiff,
v.
WEALTH CREATING INVESTMENTS, Defendant.

          OPINION AND ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER, REQUIRING PLAINTIFF TO DEMONSTRATE JURISDICTION, AND SETTING PRELIMINARY INJUNCTION BRIEFING SCHEDULE

          LAURIE J. MICHELSON U.S. DISTRICT JUDGE

         Plaintiff Capital for Merchants, LLC claims that Defendant Wealth Creating Investments, Inc., has breached a contract they had. CFM is in the business of providing cash advances (“MCAs”) to small businesses in exchange for a share of the small businesses' future receivables. On July 15, 2016, CFM agreed to sell to WCI, a collections company, $15, 000, 000 worth of its MCAs. (R. 1, PID 2, 8.) In particular, the parties' agreement states:

At the closing of the transactions contemplated by this Agreement (the “Closing”) . . . Buyer [WCI] will (i) pay to Seller [CFM] in cash or immediately available funds the sum of [$474, 084.00] and (ii) assume the Assumed Liabilities. . . .
The obligation of Seller to consummate the transactions contemplated hereby is subject to the satisfaction by Buyer, or written waiver by Seller, of the following conditions precedent: (i) Seller shall have received the Purchase Price in full, and Buyer shall have assumed, upon the terms and conditions set forth herein, the Assumed Liabilities . . . .

(R. 1, PID 8.) Now three months later, CFM says that WCI has still paid only $150, 000 of the $474, 084 purchase price. So CFM filed this breach of contract lawsuit.

         And CFM asks the Court to grant it some relief post haste. In particular, yesterday, October 12, 2016, CFM filed a motion for a temporary restraining order and for a preliminary injunction. (R. 3.)

         The Court will deny CFM's request for a temporary restraining order.

         As an initial matter, this Court is not yet certain it has jurisdiction over CFM's breach-of-contract claim. CFM claims that it is diverse from WCI, and thus invokes subject-matter jurisdiction under 28 U.S.C. § 1332. But CFM's sole member, North American Bancard, is itself an LLC, and CFM has not pled the citizenship of each and every member of North American Bancard. Instead CFM pleads that North American Bancard is a Delaware LLC, has its principal place of business in Michigan, and is a citizen of Michigan. (R. 1, PID 1-2.) But if any member of North American Bancard is a citizen of Nevada-WCI's state of citizenship-diversity would be destroyed. As such, CFM has not adequately pled diversity of citizenship. See Delay v. Rosenthal Collins Grp., LLC, 585 F.3d 1003, 1005 (6th Cir. 2009) (“When diversity jurisdiction is invoked in a case in which a limited liability company is a party, the court needs to know the citizenship of each member of the company. And because a member of a limited liability company may itself have multiple members-and thus may itself have multiple citizenships- the federal court needs to know the citizenship of each ‘sub-member' as well.”).

         Second, nothing indicates that WCI has been served with CFM's complaint let alone CFM's request for injunctive relief. And CFM's motion does not state that it has otherwise informed WCI that it is seeking an injunction. Thus, the Court presumes that WCI does not yet have notice of CFM's requested relief. And, in that scenario, Rule 65 bars the issuance of a temporary restraining order unless “the movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.” Fed.R.Civ.P. 65(b)(1)(B). CFM's counsel has provided no such certification.

         Third, a temporary restraining order serves a limited purpose: to prevent irreparable harm during the short time period between when the relief is sought and the when the Court rules on a motion for a preliminary injunction. See Bronco Wine Co. v. U.S. Dept. of Treasury, 997 F.Supp. 1309, 1313 (E.D. Cal. 1996) (“The purpose of a TRO is to preserve the status quo pending a full hearing on a preliminary injunction.”). Yet CFM's claims of irreparable harm are not only too conclusory to grant any type of injunctive relief-“CFM's relationship with its customers is being irreparably harmed by WCI's effort to resell or collect on the Accounts”-they also fail to show why the irreparable harm is so immediate that this Court must rule now as opposed to in a month or two. Indeed, the parties signed their agreement almost three months ago.

         Accordingly, the Court DENIES CFM's request for a temporary restraining order.

         The Court will, however, set an expedited schedule on CFM's motion for a preliminary injunction as follows:

Event

Due Date

Defendant's Response

October 27, 2016

Meet and Confer (see below)

November 3, 2016

Submission of Pre-Hearing Materials (see below)

November 10, 2016

Preliminary Injunction Hearing (see below)

November 22, 2016

         1. ...


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