United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
J. Casper, United States District Judge.
reasons discussed here, the Court DENIES Plaintiffs'
motion for a temporary restraining order and/or preliminary
injunction, D. 5, principally due to lack of irreparable harm
since Plaintiffs' requested injunctive relief is
primarily concerned with recouping money damages and
Plaintiffs have failed to demonstrate the lack of an adequate
remedy at law.
parties entered agreements to fund a loan facility that would
be used to help a distributor, Bevriqo, Inc.
(“Bevriqo”), acquire vodka inventory from
Defendant Medea, Inc. (“Medea”). Plaintiffs CRG
Financial, LLC (“CRG”) and Claims Recovery Group,
LLC (“Claims Recovery”) (collectively,
“Plaintiffs”) seek injunctive relief against
Defendant Two Diamond Capital Corp. (“Two
Diamond”) in connection with the loan facility and
related participation agreements, namely that Two Diamond: 1)
immediately pay out $21, 757.83 to participants, including
Plaintiffs; 2) be enjoined from keeping any or all of $26,
067.75 in proceeds from sale of a portion of the inventory at
issue; 3) collect funds owed pursuant to a judgment in a
civil action, Two Diamond Capital Corp. v. Bevriqo, Inc.,
et. al., Civil Action No. 17-83-cv-00865 (Mass. Super.
Ct.); foreclose on security interests in Bevriqo and
liquidate those security interests for the benefit of
participants to the loan facility; 4) immediately provide
participants with all documentation on potential sales of the
vodka inventory; and 5) be enjoined from alienating assets
“outside of the ordinary course of business”
until further order of this Court. D. 5 at 1-2.
prevail on its motion, CRG must establish a reasonable
likelihood of success on the merits; the potential for
irreparable harm if the injunction is withheld; that the
balance of equities tips in its favor; and that the
injunction is in the public interest. Adams v. Wells
Fargo Bank, N.A., No. 16-cv-40153-TSH, 2016 WL 6275589,
at *3 (D. Mass. Oct. 26, 2016) (citing Voice of The Arab
World, Inc. v. MDTV Medical News Now, Inc., 645 F.3d 26,
32 (1st Cir. 2011)). The Court has “broad discretion in
deciding what evidence to consider in connection with a
motion for preliminary injunction” or other injunctive
relief. Rice v. Wells Fargo Bank, N.A., 2 F.Supp.3d
25, 31 (D. Mass. 2014) (considering affidavit of bank
employees over plaintiff's hearsay objection in
connection with preliminary injunction).
Diamond is an asset-based lender. D. 9 ¶ 5. On or about
April 11, 2017, Two Diamond and Bevriqo entered a Loan and
Security Agreement (“the “Loan Agreement”)
secured by a promissory note (the “Bevriqo Note”)
pursuant to which Two Diamond agreed to issue a $2, 000, 000
loan facility to Bevriqo. D. 1 ¶ 20; D. 1-8; D. 1-9.
Richard Cabael (“Cabael”), a principal at
Bevriqo, signed a personal guaranty in connection with the
Bevriqo Note. D. 1-10. Two Diamond and Bevriqo also executed
an inventory addendum pursuant to which Two Diamond agreed to
make loan advances to the Bevriqo on a revolving demand basis
that were not to exceed the lesser of $1, 500, 000 or
“60% of the Lender-approved value of [Bevriqo's]
Eligible Inventory located at Gateway Warehouses, Inc.”
D. 1-8 at 23.
and others who had agreed to help Two Diamond finance
Bevriqo's loan entered into separate participation
agreements with Two Diamond. See, e.g., D. 1-11
(including CRG's Participation Agreement); D. 1-12
(including Claims Participation Agreement). Pursuant to their
Participation Agreements, Plaintiffs CRG and Claims agreed to
pay Two Diamond $800, 000 and $500, 000, respectively, for a
total of $1.3 million to help finance Bevriqo's loan.
See D. 1-11 at 2; D. 1-12 at 2. Under the
Participation Agreements, Two Diamond agreed to (1) collect
and receive Bevriqo's loan interest and other payments on
behalf of Plaintiffs; and (2) distribute the portion of such
payments owed to Plaintiffs. D. 1-11 at 4; D. 1-12 at 4.
Plaintiffs and other participants were not parties to the
Loan Agreement between Bevriqo and Two Diamond.
point between April 11, 2017 and May 2017, Two Diamond
transferred approximately $1.5 million to Medea to finance
Bevriqo's acquisition of Medea's vodka. D. 1-14 at 4.
In May 2017, Two Diamond paid Plaintiffs $12, 638.92 in
purported interest on Bevriqo's loan, and, in June 2017,
Two Diamond paid Plaintiffs $17, 222.26 in interest on the
same. D. 1 ¶¶ 30-31. Plaintiffs allege, however,
that these funds did not originate with Bevriqo, but instead,
Two Diamond paid Plaintiffs from funds it had extended to
Bevriqo as an advance on the loan at issue. D. 1 ¶ 32.
2017, Bevriqo had defaulted on the Loan Agreement. D. 1
¶¶ 33-34. On August 16, 2017, Two Diamond filed a
civil action against Bevriqo, Cabael and others in Plymouth
Superior Court. D. 1 ¶ 35. Around the same time, Two
Diamond took control of Bevriqo's vodka inventory and
engaged The Branford Group (“Branford”), a
third-party appraiser, to help liquidate the inventory. D. 9
¶ 25; see D. 1 ¶ 36. Branford sold one
container of vodka to a wholesaler for the State of New
Hampshire Liquor and Wine Outlets. D. 1 ¶ 36. Two
Diamond recovered $21, 757.83 from the proceeds of this sale
(“the New Hampshire Sale”). D. 1 ¶ 37.
Branford has been unable to sell the remaining collateral
since the New Hampshire Sale. D. 9 ¶ 27. Two
Diamond's efforts at liquidation are ongoing. D. 9 ¶
28. On May 31, 2018, Two Diamond settled with Bevriqo, Cabael
and Spectrum Spirits, Inc., which was also named as a
defendant in the Plymouth Action, (collectively,
“Bevriqo Parties”). According to the Settlement
Agreement, the Bevriqo Parties jointly owed Two Diamond
approximately $2, 250, 000, but Two Diamond agreed to accept
$2, 100, 000 to settle the matter. D. 1-15 at 2. Two Diamond
also agreed, among other things and under limitations
discussed later, to release Cabael from his guaranty and to
share certain net proceeds from sales of the remaining
inventory. D. 1-15 at 4-5. On June 27, 2018, Two Diamond,
Bevriqo, Cabael and Spectrum filed an agreement of judgment
as to the Settlement Agreement. D. 1 ¶ 43; D. 1-16. That
same day, Two Diamond requested an execution on the judgment.
D. 1 ¶ 44.
December 2018, a company called Grocery Outlet submitted a
purchase order for approximately 1, 000 cases of Medea vodka
inventory. Plaintiffs allegedly asked Two Diamond for a copy
of the purchase order and for the amount to be paid to Cabael
as commission for his involvement in the ...