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Beanstalk Innovation, Inc. v. Srg Technology, LLC

United States District Court, S.D. Ohio, Western Division

August 31, 2017




         This civil action is before the Court regarding Plaintiff Beanstalk Innovation, Inc.'s motion for temporary restraining order (Doc. 5) and the parties' responsive memoranda (Docs. 9, 13).

         I. BACKGROUND

         Plaintiff Beanstalk Innovation, Inc. is a corporation in the business of marketing and reselling various technology, content, and media products and services. On September 1, 2014, Plaintiff entered into a “strategic reseller agreement” with Defendant SRG Technology, LLC. (Doc. 1-1). Per the agreement, Plaintiff provided direct sales services for Defendant to assist in securing a contract between Defendant and the Hamilton County, Ohio Education Service Center (“HCESC”), which is not a party to this action. In exchange, Defendant was to pay Plaintiff a sales fee of $437, 500, in four equal installments of $109, 375; each payment was due within 30 days of Defendant receiving a scheduled payment of license fees from HCESC. (Id. at 4).

         Defendant made the first payment to Plaintiff on schedule, but failed to pay Plaintiff within 30 days of receiving its second license fee payment from HCESC. Plaintiff accordingly filed suit in this District on October 26, 2015, to recover the amount owed under the contract. Beanstalk Innovation, Inc., v. SRG Technology, LLC, Case No. 1:15-cv-695, Doc. 1 (S.D. Ohio Oct. 26, 2015).

         On January 13, 2016, Plaintiff and Defendant entered into a settlement agreement. (Doc. 1-2). Under the terms of the Settlement Agreement, Defendant agreed to make the second installment payment, as well as additional amounts for interest and attorneys' fees, in two payments on dates specified in the Settlement Agreement. (Id. at 2). Defendant also agreed that, upon receipt of the forthcoming third and fourth licensing fee payments from HCESC, Defendant would hold the amount from each payment owed to Plaintiff in trust for Plaintiff's benefit until the money was transferred to Plaintiff. (Id. at 3).

         As a result of the settlement, the prior case filed in this District was closed. Defendant made the second installment payments (modified by the settlement agreement) as required. (Doc. 1, at 4). Defendant also made the third of four installment payments as required and without issue. (Id.).

         Defendant received funds from HCESC for its final licensing fee payment on April 19, 2017. (Doc. 9). Defendant admits that it did not hold that portion of the final payment owed to Plaintiff in trust as required by the settlement agreement; instead, Defendant comingled the entirety of the final payment from HCESC with Defendant's general finds and spent the money received from HCESC on “operating expenses.” (Id. at 2).

         Plaintiff filed the instant complaint in this Court on August 22, 2017, advancing a breach of contract claim against Defendant for failing to abide by the settlement agreement from the previous case in this district. (Doc. 1). The same day, Plaintiff filed the motion for temporary restraining order currently before the Court. (Doc. 5). Plaintiff's motion requests that the Court enjoin Defendant from distributing the funds held in trust for Plaintiff except to the extent that said funds are paid to Plaintiff. (Id. at 10). In the alternative, Plaintiff requests that the Court impose a constructive trust against Defendant's assets to protect the res of the trust while litigation moves forward. (Id.).


         Per the original contract of the parties, as modified by the subsequent settlement agreement closing the previous case filed in this District, this breach of contract claim is governed by Florida law. (Doc. 1-1, at 3).

         The factors to be evaluated in reviewing a motion for temporary restraining order under Florida law are identical to those evaluated in reviewing a motion for preliminary injunction. “The requirements for establishing the right to preliminary injunctive relief are: (a) the likelihood of irreparable harm, and the unavailability of an adequate remedy at law, (b) the substantial likelihood of success on the merits, (c) the threatened injury to petitioner outweighs any possible harm to the respondent, and, (d) the issuance of the injunction will not disserve the public interest.” Sanchez v. Solomon, 508 So.2d 1264, 1265 (Fla. 3d Dist. Ct. App. 1987). “The trial court may exercise broad discretion in granting, denying, dissolving, or modifying injunctions, and unless a clear abuse of discretion is demonstrated, this court will not disturb the trial court's decision.” Id.

         III. ANALYSIS

         A. Plaintiff has demonstrated the likelihood of irreparable harm and the unavailability of an adequate remedy at law

         Typically, a temporary restraining order or preliminary injunction is an inappropriate remedy when the moving party seeks only monetary compensation, as the law provides an adequate remedy for monetary harm. Bender v. CenTrust Mortg. Corp., 51 F.3d 1027, 1030 (11th Cir. 1995); see also Landmark at Crescent Ridge LP v. Everest Financial, Inc., 219 So.3d 218, 220 (Fla. 1st DCA 2017) (“irreparable harm is not established where the potential loss can be adequately compensated for by a monetary award”). This is the case even when, as in this case, a plaintiff claims that an injunction is necessary because a failure to quickly act could result in the plaintiff being permanently unable to recover the full amount owed. See id.; see also IMG ...

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