North Carolina Business Litigation Report

Business Court Denies Motion For Asset Freeze And Appointment Of A Receiver

Today, in TAI Sports, Inc. v. Hall, the Business Court denied Plaintiff's' Motion for a Preliminary Injunction freezing Defendants' assets and appointing a receiver to manage the business of the Defendants.

The claim made by Plaintiff was that one of the Defendants had used his position as an officer of one of the Plaintiff's companies to misappropriate over $1 million in cash and inventory.  The Defendants had disputed the allegations.

Judge Diaz observed that the bulk of the damages sought by Plaintiff were lost profits, and that Plaintiff had not shown that it would be able to prove those with the required "reasonable certainty."  He held:

the Court notes that TAI is a relatively new enterprise, having been formed in 2005, and the record is silent on Plaintiff’s history of profitability, if any. And while North Carolina law has no per se rule precluding an award of damages for lost profits here a business has no recent record of profitability, such businesses, like established businesses, must prove such damages with reasonable certainty. . . .  Plaintiff’s evidence here falls short of proving its lost revenue or profits with reasonable certainty, and thus, Plaintiff has not shown a likelihood of success on the merits of a substantial portion of its claim.  

The Court concluded, in denying the Motion::

At bottom, this is a case where Plaintiff seeks money damages. Plaintiff is asking the Court to issue a preliminary injunction to prevent the Hall Defendants from rendering a monetary judgment against them unenforceable. Plaintiff, however, has not sustained its burden to show that it will suffer irreparable injury should the injunction not issue. Specifically, there is no evidence in this record that the Hall Defendants have fraudulently transferred assets (whether those purportedly belonging to Plaintiff or their own) to a third party or taken any other action to thwart Plaintiff’s ability to recover damages should it prevail on the claims.

Brief in Support of Motion for Preliminary Injunction

Brief in Opposition to Motion for Preliminary Injunction

 

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Mack Sperling
Brooks Pierce, LLP
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