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Wei v. Rocky Point International LLC

United States District Court, E.D. Wisconsin

December 2, 2016

SEAH CHEE WEI and TAN SUAH PIN, Plaintiffs,
v.
ROCKY POINT INTERNATIONAL LLC, Defendant.

          ORDER

          J.P. STADTMUELLER, U.S. DISTRICT JUDGE

         In this action, Plaintiffs, Liquidators of Traxiar Drilling Partners II Pte., Ltd. (“Traxair”), assert several causes of action arising from allegedly fraudulent transfers of funds to Defendant Rocky Point International LLC (“Rocky Point”). (Docket #1). On September 26, 2016, Plaintiffs filed an expedited motion for temporary restraining order and preliminary injunction which seeks to restrain Defendant from transferring the subject assets as well as a home in the state of Wisconsin which was purportedly renovated using a portion of those funds. (Docket #3). The Court set an expedited briefing schedule for the motion. (Docket #18). The motion is now fully briefed and, for the reasons stated below, it will be denied.

         1. BACKGROUND

         The following facts, most of which are undisputed, are drawn from the complaint and the parties' submissions. In late 2013, Symphony Ventures Pte. Ltd. (“Symphony”) entered into a loan agreement for $15 million with Traxiar in order to finance the down payment on the Somnath, an oil rig located in Qatar. Pursuant to the agreement, in December 2013, Symphony advanced $6 million of the $15 million loan to a bank account owned by Dag Dvergsten Pte., Ltd. (“DDPTE”). The transfer was not made directly to Traxair because according to Mr. Dvergsten, a Norwegian businessman and owner of DDPTE, Traxiar did not have its own bank account. Once it did have an account, DDPTE was to transfer the $6 million to Traxiar's account.

         Plaintiffs allege that DDPTE did not follow through on its promise. Instead, on December 27, 2013, DDPTE transferred $3.25 million of the $6 million to TY Global, LLC (“TY Global”), a company located in Houston, Texas. Three days later, on December 30, 2013, TY Global transferred $2.25 million to AT Offshore, LLC (“AT Offshore”), another Houston company. On January 2, 2014, AT Offshore transferred $2 million to Rocky Point, which is located in Pewaukee, Wisconsin. All the transfers were by bank wire. Mr. Dvergsten does not have an ownership interest in either TY Global or AT Offshore but, at the time of the transfers, he is alleged to have owned and controlled DDPTE and Rocky Point. Because it appears that Mr. Dvergsten transferred Traxair's funds through TY Global and AT Offshore into a company which he controls, Plaintiffs believe that Dvergsten intended to keep for himself the $2 million transferred to Rocky Point rather than transfer it to Traxair.

         According to Rocky Point, the $3.25 million transferred to TY Global was for commissions and fees for brokerage services. The loan agreement between Symphony and Traxair contemplated Traxair paying brokers for their services in connection with the oil rig purchase. TY Global transferred some of that payment to AT Offshore, which then sent $2 million to Rocky Point. Rocky Point claims that it received the $2 million so that it could reinvest it for TY Global's benefit. Rocky Point allegedly used most of the funds to renovate a lake house in Pewaukee, Wisconsin.

         Eventually, Traxiar defaulted on its loan from Symphony because the Somnath was not available for sale. Traxiar never purchased the Somnath and never returned the $6 million. Plaintiffs, acting as liquidators for Traxair, have recovered funds so that the balance due from Traxiar is now just a little more than $4.3 million.[1]

         In this action, Plaintiffs seek to recover Rocky Point's $2 million pursuant to the Wisconsin Uniform Fraudulent Transfers Act (“WUFTA”), which allows a creditor to recover transfers made either “[w]ith actual intent to hinder, delay or defraud any creditor” or “[w]ithout receiving a reasonably equivalent value in exchange for the transfer.” See Wis. Stat. § 242.04(1). Plaintiffs say that both circumstances occurred here, since, among other things, there are no business relationships between TY Global, AT Offshore, and Rocky Point that would provide a justification for the transfers. Moreover, Plaintiffs assert, the allegedly secretive nature of the transactions indicates that they were undertaken with the intent to defraud Traxair. In addition to their WUFTA claims, Plaintiffs assert numerous related common-law causes of action, including unjust enrichment and conversion.

         Plaintiffs originally filed this action in the U.S. District Court for the Southern District of Texas, where TY Global and AT Offshore are located. However, the district court there dismissed Rocky Point from that case for want of personal jurisdiction. Plaintiffs then filed their complaint in this court, and they now seek a preliminary injunction restraining $2 million of Rocky Point's assets and the Wisconsin lake house during the pendency of these proceedings.

         2. APPLICABLE LAW

         Plaintiffs must establish each of the following elements to be entitled to a preliminary injunction: (1) that they are likely to succeed on the merits; (2) that they are likely to suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in their favor; and (4) that an injunction is in the public interest. D.U. v. Rhoades, 825 F.3d 331, 335 (7th Cir. 2016). A preliminary injunction is “an extraordinary remedy and is never awarded as of right.” Knox v. Shearing, 637 F. App'x 226, 228 (7th Cir. 2016). To meet their burden, Plaintiffs must make a “clear showing that [they are] entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). WUFTA permits courts to issue preliminary injunctions against further disposition of the subject assets “[s]ubject to applicable principles of equity and in accordance with applicable rules of civil procedure.” Wis.Stat. § 242.07(c)(1).

         3. ANALYSIS

         Plaintiffs have not made the robust showing needed to secure a preliminary injunction in this case. The Court need only discuss one of the required elements-irreparable harm-to show why Plaintiffs' motion must be denied.

         Plaintiffs have not established that they will suffer irreparable harm if the injunctive relief they request is not granted. As the Supreme Court has stated, “[t]he key word in this consideration is irreparable.... The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm.” Sampson v. Murray, 415 U.S. 61, 90 (1974) (quotation omitted). Where harm may be compensated by an award of money damages, courts generally have refused to find that harm irreparable. See, e.g., Morton v. Beyer, 822 F.2d 364, 371-72 (3d Cir. 1987); Foxboro Co. v. Arabian Am. Oil Co., 805 F.2d 34, 36 (1st Cir. ...


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