Sterling Commercial Credit-Michigan, LLC v. Phoenix Industries I, LLC
762 F. Supp. 2d 8
D.D.C.2011Background
- Sterling Commercial Credit—Michigan, LLC sues Phoenix Industries I, LLC, Dannette Wright, United Concepts International LLC, and Melvin Woodard regarding a 2008 factoring agreement and related guaranty.
- MCC and Phoenix entered a factoring arrangement in 2008; MCC granted a security interest in Phoenix assets under the agreement.
- Ms. Wright, as Phoenix’s president, guarantied Phoenix’s obligations to MCC; the guaranty covers present and future obligations.
- MCC assigned its rights to Midstates Capital LLC in 2008 and then Midstates assigned them to Sterling on August 24, 2010, making Sterling the purported holder of contract rights.
- Plaintiff alleges Phoenix diverted accounts receivable and sale proceeds to United Concepts in a 2010 Bill of Sale, with disputed proceeds potentially diverted to third parties, including a relative of Wright.
- Plaintiff seeks a temporary restraining order and preliminary injunction to halt further misapplications of funds and to preserve assets pending merits, but the court denies relief on notice and irreparable-harm grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether proper notice was given for the injunction | Sterling argues notice was given under Rule 65.1 certificate. | Defendants contend notice was not adequately provided to Wright, United, or Woodard. | Notice not proven; TRO/PI denied on notice grounds. |
| Whether irreparable harm is shown | Economic harm and risk of irretrievable funds justify irreparable harm. | Economic harms alone are insufficient; alleged irreparable harm is speculative. | Irreparable harm not demonstrated; no injunctive relief. |
| Whether plaintiff has shown likelihood of success on the merits | Plaintiff contends Phoenix breached the factoring agreement and Wright the guaranty. | No clear contract linkage to plaintiff; assignments not in record; merits unresolved. | No substantial likelihood of success due to lack of proven contract linkage. |
| Whether there is a valid contract between the parties for the merits analysis | Assignments make all contractual provisions pertain to Sterling. | The assignment documents are not in the record; contract not clearly proven. | No clear valid contract established; merits not reached. |
Key Cases Cited
- Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290 (D.C. Cir. 2006) (irreparable harm is a high bar in preliminary relief)
- Wisconsin Gas Co. v. FERC, 758 F.2d 669 (D.C. Cir. 1985) (injunctions require imminent, unrecoverable harm)
- Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288 (D.C. Cir. 2009) (economic harm alone generally not irreparable)
- United States v. Microsoft Corp., 147 F.3d 935 (D.C. Cir. 1998) (notice requirement for preliminary injunction is mandatory)