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CDM Investment Group, Inc. v. Sandoval

United States District Court, D. Nebraska

February 20, 2018

CDM INVESTMENT GROUP, INC., a Nebraska Corporation; and AIRTITE, INC., a Nebraska Corporation; Plaintiffs,



         This matter is before the Court on the Motion for Preliminary Injunction, ECF No. 3, and the Motion for Temporary Restraining Order, ECF No. 11, filed by Plaintiffs CDM Investment Group, Inc. (CDM), and Airtite, Inc., doing business as E&K of Chicago, Inc. (E&K) (collectively, Plaintiffs). For the reasons stated below, the Motions will be denied.


         Plaintiff E&K is a wholly owned subsidiary of E&K Companies, Inc., [1] which is a wholly owned subsidiary of Plaintiff CDM. Plaintiffs both operate in the construction industry. Defendant Dustin Sandoval became an employee of Plaintiffs in 2001 and was eventually promoted to Vice President of Sales for E&K and Chief Procurement Officer for CDM. Defendant Ivan Meiring became an employee of Plaintiffs in 2012 and eventually achieved the position of Senior Estimator/Sales Manager. On January 22, 2018, Sandoval and Meiring resigned their positions and terminated their employment to begin working at a competing construction company they formed in September of 2017 called Integrated Specialty Contractors, LLC (Integrated).

         During their employment with Plaintiffs, Sandoval and Meiring purchased shares of CDM and are currently minor shareholders of the company. In order to purchase shares, CDM required them to enter into a Shareholder Buy-Sell Agreement. Sandoval Shareholder Agr., ECF No. 9-1, Page ID 85; Meiring Shareholder Agr., ECF No. 9-1, Page ID 71. They were also required to sign Confidentiality and Conflict of Interest Agreements at the beginning of their employment. Sandoval Confidentiality Agr., ECF No. 9-1, Page ID 96; Meiring Confidentiality Agr., ECF No. 9-1, Page ID 81.

         On January 25, 2018, three days after Sandoval and Meiring left Plaintiffs' employ, their company, Integrated, was awarded the “Brightstar” construction project by Leopardo Companies. Although Sandoval and Meiring were responsible for bidding on projects for Plaintiffs, no bid for the Brightstar project was submitted on Plaintiffs' behalf. Given the temporal proximity of their resignation and the award of the Brightstar project, Plaintiffs believe Sandoval and Meiring submitted a bid on Integrated's behalf while they were still employed by Plaintiffs. Also, on January 29, 2018, Integrated offered employment positions to two current E&K employees and they both accepted the offers the same day.

         Plaintiffs filed their Complaint, ECF No. 1-1, Page ID 5, in the District Court of Douglas County, Nebraska, and asserted a claim for breach of fiduciary duty against Sandoval, Meiring, and Integrated (collectively, Defendants) and a claim for breach of contract against Sandoval and Meiring. On February 9, 2018, Defendants removed the case to this Court and Plaintiffs filed their Motion for Preliminary Injunction. On February 12, 2018, Plaintiffs also filed their Motion for a Temporary Restraining Order. A hearing on the motions was held on February 13, 2018.


         Courts in the Eighth Circuit apply the factors set forth in Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc), when determining whether to issue a preliminary injunction or temporary restraining order. Those factors are: “(1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest.” Id. “No single factor is determinative.” WWP, Inc. v. Wounded Warriors, Inc., 566 F.Supp.2d 970, 974 (D. Neb. 2008). “A preliminary injunction is an extraordinary remedy and the burden of establishing the propriety of an injunction is on the movant.” Roudachevski v. All-Am. Care Centers, Inc., 648 F.3d 701, 705 (8th Cir. 2011) (citing Watkins, Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003)).

         I. Threat of Irreparable Harm

         “Irreparable harm occurs when a party has no adequate remedy at law, typically because its injuries cannot be fully compensated through an award of damages.” Grasso Ents., LLC v. Express Scripts, Inc., 809 F.3d 1033, 1040 (8th Cir. 2016) (quoting Gen Motors Corp. v. Harry Brown's, LLC, 563 F.3d 312, 319 (8th Cir. 2009)). Thus, “economic loss, on its own, is not an irreparable injury so long as the losses can be recovered.” Chlorine Inst., Inc. v. Soo Line R.R., 792 F.3d 903, 915 (8th Cir. 2015) (quoting DISH Network Serv. L.L.C. v. Laducer, 725 F.3d 877, 882 (8th Cir. 2013)). A mere possibility of irreparable harm, however, is insufficient to justify a preliminary injunction. The movant must “demonstrate that irreparable [harm] is likely in the absence of an injunction.” Sierra Club v. U.S. Army Corps of Eng'rs, 645 F.3d 978, 992 (8th Cir. 2011) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008) (emphasis in original). “The absence of irreparable injury is by itself sufficient to defeat a motion for a preliminary injunction.” Chlorine Inst., 792 F.3d at 915 (quoting DISH Network, 725 F.3d at 882).

         To support their argument that an injunction is warranted, Plaintiffs rely on the Confidentiality Agreements, wherein the Parties agreed that a violation would result in irreparable harm and the party in violation waived the defense that an adequate remedy at law existed. Sandoval Confidentiality Agr. § 4, ECF No. 9-1, Page ID 98; Meiring Confidentiality Agr. § 4, ECF No. 9-1, Page ID 83. However, “an irreparable-harm provision, without more, is insufficient to establish irreparable harm[ ]” and Plaintiffs have shown nothing more. Minn. Vikings Football Stadium, LLC v. Wells Fargo Bank, 157 F.Supp.3d 834, 841 (D. Minn. 2016) (citing Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256, 1266 (10th Cir. 2004)).

         Plaintiffs have not demonstrated that money damages would be an insufficient remedy for the alleged breach of contract and fiduciary duty. They argue this case is similar to Barrett v. Reynolds where the Court found a threat of irreparable harm because the circumstances indicated the party sought to be enjoined was likely to become “judgment proof” absent an injunction. No. 8:12CV328, 2012 WL 5569755, at *4 (D. Neb. Nov. 15, 2012). Here, there is no argument that Defendants are, or will likely become, judgment proof. If the injunctive relief sought by the Plaintiffs were ordered, such relief would increase the likelihood that the Defendants could become judgment proof. Thus, Barrett does not support Plaintiffs' contention that they face a threat of irreparable harm absent injunctive relief.

         Plaintiffs further argue that “[i]f they are not immediately enjoined, Defendants will continue to usurp business opportunities [from] the Plaintiffs.” Pl.'s Br. Mot. Prelim. Inj., ECF No. 4, Page ID 56. Their argument is based on Integrated's successful bid for the Brightstar project, which Plaintiffs contend might have been awarded to them but for Defendants' actions.[2] However, “a loss of customers” does not necessarily constitute irreparable harm. Novus Franchising, Inc. v. Dawson, 725 F.3d 885, 895 (8th Cir. 2013) (citing Gen. Motors Corp., 563 F.3d at 319) (affirming district court's denial of a preliminary injunction because there was a “question whether [the plaintiff's] injuries, i.e., ‘a loss of customers or customer goodwill, ' [were] truly ‘irreparable' in the sense that they could not be addressed through money damages”) (internal citations omitted). Although Plaintiffs argue Defendants have deprived ...

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