KACMARSKI v. RISING TIDE MEDIA LIMITED LIABILITY COMPANY
1:13-cv-07522
D.N.J.Dec 30, 2014Background
- Kacmarski wired $228,000 to Rising Tide Media on July 11, 2011 and claims that purchased a 50% ownership interest in the company and its domain Sportfishermen.com, but no written operating agreement was provided.
- Kacmarski alleges he was denied books/records, never received profit distributions, and that Eppehimer used corporate accounts for personal spending (e.g., watercraft, retail, casinos, ATMs).
- Eppehimer allegedly threatened to purge company assets and admitted Rising Tide Media never filed tax returns.
- Sportfishermen.com went offline (site “white”) on October 2, 2014 and remained down at the time of the opinion.
- Eppehimer (sole member of Rising Tide Media) filed Chapter 7 bankruptcy on December 3, 2014, listing Kacmarski as an unsecured creditor; an administrative termination order was entered December 23, 2014.
- Kacmarski sued for breach of contract, unjust enrichment, fraud, breach of fiduciary duty, accounting, and declaratory relief, and moved for a temporary receiver and preliminary injunction to prevent Eppehimer/Rising Tide from accessing funds or interfering with Sportfishermen.com.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a receiver be appointed over Sportfishermen.com/Rising Tide? | Kacmarski says he has an equitable ownership interest (50%) and the site/assets are being squandered, warranting receivership. | Eppehimer (through bankruptcy) raises potential automatic stay and asserts control as sole member. | Court found plaintiff showed sufficient equitable interest and imminent danger to justify appointing a temporary receiver, but raised stay issues due to Eppehimer's bankruptcy and ordered show-cause. |
| Is there imminent danger of loss/squandering of corporate assets? | Kacmarski points to alleged diversion of funds to personal use, threats to purge assets, failure to file tax returns, and the site being offline. | Defendants did not contest the motion (opposition withdrawn), but bankruptcy raises questions about handling of estate assets. | Court concluded there was imminent danger and other remedies inadequate given the website-based business and alleged dissipation. |
| Does Kacmarski suffer irreparable harm warranting a preliminary injunction? | He argues monetary recovery is unlikely given alleged malfeasance and the business’s online presence is lost while site is down, constituting irreparable injury. | Defendants withdrew opposition; bankruptcy complicates immediate injunctive relief. | Court found exception to ordinary monetary-only rule applied: irreparable harm established and preliminary injunction appropriate, subject to bankruptcy considerations. |
| Does the automatic stay from Eppehimer’s bankruptcy bar the court from appointing a receiver or issuing injunction? | Kacmarski contends injunctive relief can be ordered to prevent unlawful conduct and protect the asset pending resolution. | Bankruptcy stay may prevent actions affecting the debtor’s estate and requires coordination with the bankruptcy court. | Court recognized it must determine whether the automatic stay applies, retained jurisdiction to decide, and ordered Eppehimer and Rising Tide to show cause re: why receivership/injunction should not proceed given the bankruptcy filing. |
Key Cases Cited
- Leone Indus. v. Assoc. Packaging, Inc., 795 F. Supp. 117 (E.D. Pa. 1992) (temporary receivership is extraordinary relief and should be granted only under compelling circumstances).
- Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 (3d Cir. 2010) (four-factor test for preliminary injunction: likelihood of success, irreparable harm, balance of harms, public interest).
- United Steelworkers of America v. Fort Pitt Steel Casting, 598 F.2d 1273 (3d Cir. 1979) (monetary injury may be irreparable where likelihood of recovery is low due to defendant malfeasance).
- Minard Run Oil Co. v. U.S. Forest Service, 670 F.3d 236 (3d Cir. 2011) (economic injury generally not irreparable absent exception).
- Brock v. Morysville Body Works, Inc., 829 F.2d 383 (3d Cir. 1987) (district court has jurisdiction to determine whether proceedings are subject to the bankruptcy automatic stay).
- Larami Ltd. v. Yes! Entertainment Corp., 244 B.R. 56 (D.N.J. 2000) (section 362(a)(3) does not categorically bar post-petition injunctive relief aimed at preventing unlawful conduct that would interfere with rights of others).