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Tffi Corp. v. Williams

United States District Court, Fourth Circuit

November 20, 2013

TFFI CORP., Plaintiff,
v.
WILBERT WILLIAMS et al., Defendants.

MEMORANDUM OPINION

ALEXANDER WILLIAMS, Jr., District Judge.

The instant case sounds in breach of contract and fraud. Pending before the Court is Plaintiff's Ex Parte Motion for a Temporary Restraining Order with Asset Freeze (Motion for TRO). The Court has reviewed the record and deems a hearing unnecessary. For the following reasons, the Court DENIES IN PART Plaintiff's Motion for TRO.

I. FACTUAL AND PROCEDURAL BACKGROUND

On June 20, 2013, Plaintiff TFFI Corp. d/b/a Top Funding, Inc. filed a Complaint, which is not verified. Plaintiff generally alleges that it entered into a "factoring agreement" with Defendants by which Plaintiff agreed to make Defendants installment payments in exchange for the right to the (presumably greater) payments that government agency HUD supposedly owed Defendants. Plaintiff further alleges that the payments that HUD supposedly owed Defendants were based on bogus invoices.

Plaintiff is a Nevada corporation whose principal place of business is California. According to the Complaint, Plaintiff "is a business engaged in providing factoring assistance to other corporate entities, most often pursuant to federal government contracts." Doc. No. 1 ΒΆ 11. Plaintiff has sued four Defendants: Wilbert Williams (Williams); Alpha Technology Systems, Inc. (Alpha); Global Holdings, LLC (Global); and Kamran Jones. Plaintiff alleges that Williams is the resident agent and controlling corporate officer of Alpha. Similarly, Plaintiff alleges that Williams is the principal officer of Global. The Court refers to Williams, Alpha, and Global collectively as "the Williams Defendants." For his part, Plaintiff alleges that Jones works at HUD and was a participant and coconspirator in the fraudulent scheme described above. Except as otherwise noted, facts and allegations relating to Jones are irrelevant to the instant Motion.

In September 2011, Plaintiff and Alpha entered into a factoring agreement (Agreement 1). Under this Agreement, Plaintiff basically agreed to provide payments to Alpha in exchange for HUD invoices representing payments that HUD supposedly owed Alpha. Although Williams and Alpha performed under this Agreement, Plaintiff essentially alleges that there is no evidence that a valid contract underlying the HUD invoices existed.

The Parties entered into three more Agreements. These Agreements followed a similar structure as Agreement 1, with allegedly sham receipts showing that HUD owed Alpha payments pursuant to purported subcontractor agreements. Agreement 2 was executed on or about October 20, 2012. Pursuant to Agreement 2, Plaintiff paid the Williams Defendants $45, 000. After a series of negotiations, Williams sent Plaintiff of payment of $55, 000. The Parties allegedly entered into Agreement 3 on November 30, 2012. Plaintiff alleges that Agreement 3 was for $98, 500, and that it provided the Williams Defendants with $80, 533 under this Agreement. Williams gave Plaintiff a partial payment of $55, 000 on or around February 5, 2013. The Parties entered into Agreement 4 on or about December 28, 2012. Plaintiff alleges that Agreement 4 was for $97, 500 and that it paid the Williams Defendants $76, 011 under this Agreement. Plaintiff alleges that the Williams Defendants have not submitted payments under Agreement 4. In sum, Plaintiff alleges that the Williams Defendants incurred obligations of $251, 000 under Agreements 2-4; that it has provided the Williams Defendants with $201, 544; and that the Williams Defendants have repaid only $110, 000.

The Complaint and Motion for TRO contain a series of averments purporting to show that the Williams Defendants fraudulently induced Plaintiff into entering into Agreements 2-4. Inter alia, Plaintiff avers as follows: (1) the Williams Defendants' pattern of making full payment on Agreement 1, partial payments on Agreements 2-3, and no payment on Agreement 4 is suggestive of fraud; (2) Jones's refusal to talk about the alleged contracts underlying the invoices and the general lack of evidence showing the existence of contracts underlying the invoices suggests fraud; (3) Williams's emails attributing his failure to provide Plaintiff with full payment to misrouted bank transfers are "silly"; (4) Williams allegedly admitted to Plaintiff's director that Alpha had never been awarded certain HUD contracts, that Jones assisted the fraudulent scheme, and that the entire purpose of the scheme was to keep Williams's foundering companies afloat; and (5) the fact that Global was incorporated around the time that Alpha went into forfeiture status and was created a company specializing in asset protection suggests fraud.

Plaintiff filed its Complaint on June 20, 2013. Doc. No. 1. The Complaint contains causes of action for breach of contract, fraud, civil conspiracy, and RICO violations. In its prayer for relief, Plaintiff asks for, inter alia: (1) a declaration that Plaintiffs are liable for breach of contract, fraud, and for RICO violations; (2) compensatory and consequential damages on Plaintiff's fraud and breach of contract claims; and (3) compensatory and treble damages for the alleged RICO violations. The Complaint contains no explicit request for equitable relief.

A law firm sought leave to enter a limited appearance on behalf of the Williams Defendants. The law firm argued that the HUD inspector general had commenced an investigation into the allegations underlying the Complaint and suggested that making Williams proceed in this case would compromise his Fifth Amendment rights. The Court held a hearing on this and related motions on November 15, 2013. On the same day, the Court issued an Opinion and Order (Opinion), inter alia, denying the law firm's motion to enter a limited appearance. See Doc Nos. 27-28. At the hearing, Plaintiff made an unspecific request that the Court freeze the Williams Defendants' assets. The Court responded that such a request would have to be made via formal motion.

In response, on November 18, 2013, Plaintiff filed its Motion for TRO. Plaintiffs argue primarily, if not exclusively, from fact in the Motion. That is, the Motion contains very little, if any, legal argumentation and no citations to legal authority. Plaintiff asks for the following relief in the Motion: "(1) freezing the assets of the Williams Defendants and maintaining the status quo; (2) preventing the Williams Defendants from destroying or altering documents; (3) requiring the Williams Defendants to provide sworn written accountings of all assets within 10 days; and (4) setting a show-cause hearing to determine whether to issue a continuing Asset Freeze Order." Doc. No. 29 at 2. As Plaintiff filed this Motion ex parte on an emergency basis, the Court resolves it despite the absence of a response from the Williams Defendants.[1]

II. LEGAL ANALYSIS

Titled "Temporary Restraining Order, " Federal Rule of Civil Procedure 65(b) provides:

(1) Issuing Without Notice. The court may issue a temporary restraining order without written or oral notice to the ...

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