United States District Court, D. Nebraska
MAX C. KANT, Husband and Wife; and ANN M. KANT, Husband and Wife, Plaintiffs,
THE SECURITY NATIONAL BANK OF SIOUX CITY, IOWA, Defendant.
TEMPORARY RESTRAINING/ PRELIMINARY INJUNCTION
F. Bataillon Senior United States District Judge.
matter is before the Court on the motion for a temporary
restraining/preliminary injunction order pursuant to
Fed.R.Civ.P. 65 filed by the plaintiffs in this case. Filing
No. 6. Briefs and evidence were filed in support of the
motion. Filing Nos. 20, 21, 22, 25 and 26. This case was
originally filed in the Douglas County District Court in
Nebraska. Security National Bank of Sioux City, Iowa
(hereinafter the Bank) removed the case to this Court. The
Bank has filed an opposition and briefs and evidence in
support of its arguments. Filing Nos. 17, 18, 19 and 24.
Plaintiffs move to enjoin the sale by the Bank of an 8-acre
and 80-acre parcel of real estate executed and recorded under
Deeds of Trust.
were in the cattle business. The plaintiffs entered into
various loan agreements over the course of time with the
Bank. Plaintiffs had multiple other customers involved in the
sale of cattle. On several occasions, plaintiffs needed
additional money and took out loans from the Bank. The Bank
contends that during much of this time, plaintiffs were
operating a Ponzi scheme and had been forward contracting
since 2010. Max Kant admits that he sold contract cattle
ahead of purchasing the cattle. Filing No. 19, Ex. 1, p. Def.
15-17. The Bank alleges that plaintiffs fraudulently
falsified records, showing greater numbers of cattle and sales
than existed. Then, plaintiffs would allegedly take the fresh
loan money and pay off old debt without the number of cattle
represented to the Bank and other investors.
point, plaintiffs entered into a contract with creditors
Clark and Andrea Johnson. The purpose of this contract was to
help the Johnsons pay down its debt with the Bank and to then
permit the Kants to borrow additional money from the Bank.
Filing No. 19, Ex. 14, pp. 58-59. At that time the plaintiffs
admitted they owed money to the Johnsons and other customers
and investors. The plaintiffs entered into an agreement
to make monthly payments to the Johnsons and pledged both
parcels of land to the Johnsons. These contracts included
hypothecation agreements, deeds of trust and assignments of
rent. There was a deed of trust for both parcels of land.
They were pledged to the Johnsons for the Johnson's
debts. The Bank alleges that, thereafter, the plaintiffs were
short several thousand head of cattle, committed fraud and
then defaulted. The Bank then filed a foreclosure action
against the plaintiffs. The sale was set for December 23,
now for the first time in six years, contend that the
agreements with the Johnsons are invalid. Filing Nos. 21 and
22, Ex. 2, Aff. of Ann Kant. Mrs. Kant contends she was
threatened with criminal prosecution as well as coerced.
Plaintiffs contend they were coerced into executing the
documents in 2013 by Bank officers Roger Klingensmith and
Darren Tooley. Plaintiffs assert that the documents executed
in June of 2013 are defective. First, they argue that the
legal description is incorrect in the Deed of Trust; and
second, they contend that the language identifying the
parties is mixed up. Plaintiffs also contend that they made
$28, 000 payments each month from May of 2013 through August
of 2017. Essentially, the Kants paid Johnson's debt
because of the forward contracting. They ask this Court to
maintain the status quo and grant the temporary restraining
also contend that the documents were unfairly drafted against
them. However, the Bank has an affidavit indicating that the
relevant documents between plaintiffs and the Johnsons were
prepared by counsel for the plaintiffs/Johnsons. Filing No.
19, pp. 5-13; 65-73, Affidavits of Roger Klingensmith and
Darren Tooley of Security National Bank. Plaintiffs also
contend that there are caps on the amount they owe up to
$625, 000 and $250, 000. They argue the contracts are
ambiguous as to the dollar amounts.
property in question was originally farmed by the Kants. The
Johnsons had the feedlot. The feedlot was valued at about
$1.6 million. The feedlot closed in 2017, was liquidated, and
the cattle replevined. The Kants owe $1.7 million dollars to
the Bank.Further, the Bank is holding $1.5 million,
which it may be required to pay out to various feedlot
customers. The value of the 8-acre lot, with a house,
is approximately $200, 000 to $250, 000. The value of the 80
acres is approximately $500, 000.
point the Kants and the Johnsons each owe $1.7 million
dollars to the Bank (less any money that may or may not be
deducted from the declaratory judgment action). Had the
December sale proceeded, the proceeds would have been applied
to Johnson's debt and to the debts of other customers.
evaluating whether to issue a preliminary injunction, a
district court should consider four factors: (1) the threat
of irreparable harm to the movant; (2) the state of the
balance between this harm and the injury that granting the
injunction will inflict on other parties; (3) the probability
that the movant will succeed on the merits; and (4) the
public interest. Dataphase Sys., Inc. v. C L Sys.,
Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc);
Roudachevski v. All-American Care Centers, Inc., 648
F.3d 701, 705 (8th Cir. 2011). A preliminary injunction is an
extraordinary remedy and the burden of establishing the
propriety of an injunction is on the movant.
Roudachevski, 648 F.3d at 701, 705 (8th Cir. 2011).
No. single factor is determinative, although the failure to
demonstrate the threat of irreparable harm is, by itself,
sufficient grounds to deny a preliminary injunction. See
Adam-Mellang v. Apartment Search, Inc., 96 F.3d 297, 299
(8th Cir. 1996); see also Modern Computer Sys., Inc. v.
Modern Banking Sys., Inc., 871 F.2d 734, 738 (8th Cir.
1989) (en banc). The burden on a movant to demonstrate that a
preliminary injunction is warranted is heavier when granting
the preliminary injunction will in effect give the movant
substantially the relief it would obtain after a trial on the
merits. Calvin Klein Cosmetics Corp. v. Lenox Lab.,
815 F.2d 500, 503 (8th Cir. 1987).
on the merits has been referred to as the most important of
the four factors, but it is insufficient on its own.
Roudachevski, 648 F.3d at 706. Even when a plaintiff
has a strong claim on the merits, preliminary injunctive
relief is improper absent a showing of a threat of
irreparable harm. Id.The threat of irreparable harm
requirement is a necessity in proving the propriety of
preliminary injunctive relief. Id.To succeed in
demonstrating a threat of irreparable harm, “a party
must show that the harm is certain and great and of such
imminence that there is a clear and present need for
equitable relief.” Id. (quoting Iowa
Utils. Bd. v. Fed. Commc'ns Comm'n, 109 F.3d
418, 425 (8th Cir. 1996)).
basis of injunctive relief in the federal courts has always
been irreparable harm and inadequacy of legal
remedies.'” Bandag, Inc. v. Jack's Tire
& Oil, Inc., 190 F.3d 924, 926 (8th Cir. 1999)
(quoting Beacon Theatres, Inc. v. Westover, 359 U.S.
500, 506-07 (1959)). Thus, to warrant a preliminary
injunction, the moving party must demonstrate a sufficient
threat of irreparable harm. Id.The Court finds that
there is no irreparable injury if it ...