Gullum v. Endeavor Infrastructure Holdings, LLC

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NORTH CAROLINA

ASHEVILLE DIVISION

1:21-cv-245-MOC-WCM

LAWRENCE E. GULLUM, )

)

)

Plaintiff, pro se, )

)

vs. ) ORDER

)

)

ENDEAVOR INFRASTRUCTURE HOLDINGS, )

LLC, et al., )

)

)

)

Defendants. )

THIS MATTER is before the Court on Plaintiff’s Motion for Preliminary Injunctive,

Motion for Restraining Order, and Request for Hearing. (Doc. No. 22). Because this Motion asks

for relief which the Court cannot grant as part of a preliminary injunction such as a “garnishment

order” and “summary judgment” and does not even attempt an analysis of how this request would

satisfy the Winter test, the Motion is DENIED.

I. BACKGROUND

Plaintiff, proceeding pro se, initiated this action by filing his hand-delivered complaint on

September 14, 2021. (Doc. No. 1). Plaintiff is a resident of Madison County, North Carolina, and

the founder and former majority owner of MCC Development, Inc. (hereinafter “MCC

Development”). Defendants are two individuals, Anthony Buffa and Dane James, who recently

purchased Plaintiff’s 90% stake in MCC Development through their jointly owned partnership

EIH, also named as a Defendant. (Id. at 1–3). Defendant Buffa is an Indiana resident, Defendant

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James is an Illinois Resident, and EIH is a Delaware corporation. (Doc. No. 8 at 1; Doc. No. 9 at

1–2).

In his complaint, Plaintiff describes his business transaction with Defendants. (Id.).

Specifically, Plaintiff asserts that he agreed to sell his 90% stake in the company to Defendants in

December of 2017. (Id. at 1). He represents that these shares had an enterprise value of $1.2

million. (Id.). In consideration for these shares, Plaintiff received “payment at closing and

Promissory Notes in the sum of $90,000 and $348,000.” (Id.).

According to the complaint, Plaintiff subsequently discovered that Defendants had misled

him as to numerous aspects of their financial position and, by extension, the likelihood of being

able to satisfy their obligations under the promissory notes, for instance by “falsely claim[ing] to

have $300,000 to invest” and “fail[ing] to disclose” debts discharged by Defendant Buffa in

bankruptcy. (Id. at 2). Plaintiff argues that “these concealments and misrepresentations were

reasonably calculated to deceive and induce Plaintiff to accept their personal guaranties and

installment payments for the purchase of his stock.” (Id.).

Plaintiff asserts that Defendants then breached the terms of the promissory note agreement,

that the parties disputed the matter and arrived at a Settlement Agreement and Consent Agreement

in Madison County, but that Defendants then violated this agreement as well. (Id.) Plaintiff now

brings suit for damages under three separate causes of action: “Deceptive Trade Practices/Fraud

in the Inducement,” “Breach of Contract,” and “Injunction and Garnishment.” (Id. at 3–4).

Defendants responded with motions to dismiss this suit for lack of personal jurisdiction.

(Doc. Nos. 5, 8). The Court held a hearing on these motions on December 16, 2021, and issued an

order denying the motions on January 27, 2022. (Doc. No. 16). Plaintiff subsequently attempted

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to amend his Complaint to, among other things, add MCC Development as a party. (Doc. No. 18).

The U.S. magistrate judge denied this Motion without prejudice on March 3, 2022. (Doc. No. 23).

As the magistrate judge noted, adding MCC Development as a party would deprive this

Court of subject matter jurisdiction. Federal courts are courts of limited subject matter jurisdiction,

and generally can only hear cases that either arise out of federal law or (when not arising from

federal law) in which diversity of citizenship exists between the parties and certain other

requirements are satisfied. See 28 U.S.C. §§ 1331, 1332. Plaintiff’s claims do not appear to arise

from federal law. Because Plaintiff is a citizen of North Carolina and MCC Development is a

North Carolina company, diversity of citizenship does not exist between Plaintiff and MCC

Development. Therefore, a federal court lacks jurisdiction to hear this lawsuit if MCC is added as

a party. See Strawbridge v. Curtiss, 7 U.S. 267 (1806). Adding MCC would violate the “rule of

complete diversity” which the federal courts are generally required to apply in assessing the extent

of their subject matter jurisdiction. State courts, on the other hand, including those in North

Carolina, have general subject matter jurisdiction and could adjudicate a case between all of the

parties proposed by Plaintiff including MCC Development.

Plaintiff’s filed this Motion for Preliminary Injunctive relief along with a brief in support

on February 17, 2022. (Doc. Nos. 22, 22-1). Defendants responded on March 3, 2022. (Doc. No.

24). Plaintiff filed a reply on March 9, 2022. (Doc. No. 25). The matter is ripe for disposition.

II. LAW GOVERNING TROs AND PRELIMINARY INJUNCTIONS

Applications for issuance of a temporary restraining order (“TRO”) and Preliminary

Injunction are governed by FED. R. CIV. P. 65(b). However, “when the opposing party actually

receives notice of the application for a restraining order, the procedure that is followed does not

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differ functionally from that of an application for a preliminary injunction.” Wright and Miller,

11A Fed. Prac. & Proc. Civ. § 2951 (3d ed.).

In evaluating a request for a TRO, the court considers the same factors applied for a

preliminary injunction. Pettis v. Law Office of Hutchens, Senter, Kellam & Pettit, No. 3:13-CV-

00147-FDW, 2014 WL 526105, at *1 (W.D.N.C. Feb. 7, 2014) (citing Hoechst Diafoil Co. v. Nan

Ya Plastics Corp., 174 F.3d 411 (4th Cir. 1999)). In assessing such factors, a plaintiff must

demonstrate that: (1) it is likely to succeed on the merits; (2) it will likely suffer irreparable harm

absent an injunction; (3) the balance of hardships weighs in its favor; and (4) the injunction is in

the public interest. League of Women Voters of N. Carolina v. N. Carolina, 769 F.3d 224, 236 (4th

Cir. 2014), cert. denied, 135 S. Ct. 1735 (2015) (citing Winter v. Natural Res. Def. Council, Inc.,

555 U.S. 7, 20 (2008)).

Finally, where, as here, the plaintiff is proceeding pro se, the court must construe the

complaint liberally. Brown v. Charlotte Rentals LLC, No. 3:15-cv-0043-FDW-DCK, 2015 WL

4557368, at *2 (W.D.N.C. July 28, 2015) (citing Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir.

1978)). At the same time, however, the Court should not “assume the role of advocate for the pro

se plaintiff.” Gordon, 574 F.2d at 1151 (quotation omitted).

III. DISCUSSION

Plaintiff’s Motion does not specify what injunctive relief Plaintiff seeks but instead

presents a generalized request for “injunctive relief, and for such other judicial relief and financial

remedy that the Court deems just and proper without limitation.” (Doc. No. 22 at 2). Plaintiff’s

brief in support of the Motion, however, specifies four remedies which Plaintiff asks the Court to

grant in response to Plaintiff’s motion: (1) to “[e]nter a Preliminary Injunction in accordance with

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… NCGS 1-485 without notice or hearing restraining EIH and its officers … including Anthony

Buffa and Dane James from distributing any money or dividend distributions …”; (2) to “[e]nter

a Garnishment Order to enforce Plaintiff’s rights to payment by ordering defendants to remit the

sum $38,511.77 now due Plaintiff in accordance with the provision of the promissory notes an

Defendant’s [sic] explicit guaranties for payment”; (3) to “[e]nter Motion for Summary Judgement

[sic] to enforce the ‘call-in’ provision of the promissory note executed on July 15, 2020; and enter

an Order compelling Defendants to remit the entire principal balance of $107,666.53 …

immediately due and payable to Plaintiff …”; and (4) “[g]rant further injunctive relief in the form

of Recover Judgement [sic] in the sum of $200,000 in liquidated damages as remedy to Plaintiff

pursuant to the shareholder agreement and the law.” (Doc. No. 22-1 at 3). For the reasons that

follow, the Court is unable to grant any of this relief at this time. The Court will discuss each issue

in turn below.

Preliminary Injunction. Plaintiff asks the Court to “[e]nter a Preliminary Injunction in

accordance with … NCGS 1-485 without notice or hearing restraining EIH and its officers …

including Anthony Buffa and Dane James from distributing any money or dividend distributions

…” (Id.). The Court will disregard Plaintiff’s request for a “Preliminary Injunction … without

notice” because Defendants have had notice and have had the opportunity to respond to Plaintiff’s

motion. The Court cannot grant this relief for the following reasons. First, N.C. GEN. STAT. § 1-

485 is a North Carolina statute empowering North Carolina courts to grant injunctive relief which,

by its terms, appears to only apply to North Carolina courts. See N.C. GEN. STAT. § 1-485. This

Court’s power to grant injunctions, even in cases involving state law claims, arises from federal

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law, not North Carolina state law. See FED. R. CIV. P. 65.1 Second, to obtain a preliminary

injunction, Plaintiff must satisfy all four factors of the Winter test, as set forth above. Plaintiff does

not even attempt to explain how his Motion satisfies the Winter test. It does appear to the Court

that Plaintiff is likely to succeed on the merits of his breach of contract claim against Defendants.

However, Plaintiff has not established why he would suffer irreparable harm without a preliminary

injunction, as opposed to obtaining a judgment for money damages through the ordinary legal

process. Multi-Channel TV Cable Co. v. Charlottesville Quality Cable Operating Co., 22 F.3d 546,

551 (4th Cir. 1994) (“[I]rreparable injury is suffered when monetary damages are difficult to

ascertain or are inadequate.”). Indeed, essentially all of Plaintiff’s claims in this matter are for

money damages. Therefore, Plaintiff has not satisfied the Winter test and the Court cannot grant

this relief.

Garnishment Order. Plaintiff asks the Court “[e]nter a Garnishment Order to enforce

Plaintiff’s rights to payment by ordering defendants to remit the sum $38,511.77 now due Plaintiff

in accordance with the provision of the promissory notes and Defendant’s [sic] explicit guaranties

for payment.” (Doc. No. 22-1 at 3). Federal Rule of Civil Procedure 64 governs garnishments and

provides that “every remedy is available that, under the law of the state where the court is located,

provides for seizing a person or property to secure satisfaction of the potential judgment” and

includes “garnishment” as one of the “remedies available under this rule.” FED. R. CIV. P. 64. But

Plaintiff has not cited any law, and the Court is not aware of any, that would permit the Court to

order a garnishment as injunctive relief in a civil lawsuit, primarily concerning breach of contract.

1 Congress originally conferred the power to order equitable remedies to the federal courts

through the Judiciary Act of 1789. Judiciary Act of 1789, ch. 20, § 11, 1 Stat. 73, 78 (1789). See

also Michael T. Morley, The Federal Equity Power, B. C. L. REV. 217, 232 (2018).

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In general, garnishment is a legal mechanism allowing a party that has prevailed in a

lawsuit to collect money owed to them as a result of a judgment from that lawsuit. While Plaintiff

has established a likely of success on the merits of his breach of contract claim, Plaintiff has yet to

prove his claims and obtain an order from this court reducing this to judgment. In the ordinary

course of the legal process, Defendants still have the opportunity to argue that they are not, in fact,

liable to Plaintiff before the Court issues an order authorizing Plaintiff to seize Defendants’

property through a garnishment.

Motion for Summary Judgment. Plaintiff also asks this Court to “[e]nter Motion for

Summary Judgement [sic] to enforce the ‘call-in’ provision of the promissory note executed on

July 15, 2020; and enter an Order compelling Defendants to remit the entire principal balance of

$107,666.53 … immediately due and payable to Plaintiff …” (Doc. 22-1 at 3). With this request,

Plaintiff appears to be asking the Court to rule on a motion for summary judgment as part of this

Motion for Preliminary Injunctive Relief. The Court declines to do so. A motion for summary

judgment is not a type of preliminary injunctive relief but is, instead, a distinct type of motion in

its own right asking the Court to rule on the merits of a claim prior to trial. See FED. R. CIV. P. 56.

Summary judgment is only proper where “the movant shows that there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a).

Plaintiff has not shown that there is no genuine dispute of material fact as to his claims. Moreover,

Defendants have not had the opportunity to be heard on any motion for summary judgment in this

matter. Therefore, the Court cannot grant this relief at this time.

“Recover Judgement.” Plaintiff asks this Court to “[g]rant further injunctive relief in the

form of Recover Judgement [sic] in the sum of $200,000 in liquidated damages as remedy to

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Plaintiff pursuant to the shareholder agreement and the law.” The Court is unaware what relief

Plaintiff seeks in asking for a “Recover Judgement,” and is not aware of any form of injunctive

relief by that name. For the reasons explained above, the Court is not able to issue a judgment at

this time because Plaintiff has yet to prove that he is entitled to a remedy from this Court.

Plaintiff appears to conflate preliminary relief, which is temporary relief available when a

party can show the likelihood of irreparable harm absent such relief and can satisfy the other

Winter factors, with the relief that a court can order as part of a judgment issued at the conclusion

of a civil lawsuit (and mechanisms to enforce such a judgment like garnishment). Plaintiff is not

entitled to ordinary remedies at this stage of the litigation, and he is not entitled to preliminary

injunctive relief because he cannot satisfy the Winter test.

Finally, to the extent Plaintiff has requested a hearing on this motion, the request is denied.

ORDER

IT IS, THEREFORE, ORDERED that Plaintiff's Motion for Preliminary Injunctive,

Motion for Restraining Order, and Request for Hearing, (Doc. No. 22), is DENIED.

Signed: April 25, 2022

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Max O. Cogburn iC yg

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