Clean Energy v. Applied LNG Technologies USA LLC et al, No. 8:2008cv00746 - Document 38 (C.D. Cal. 2008)
Court Description: FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION; ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION 3 signed by Judge Alicemarie H. Stotler. (See document for details) (db)
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Clean Energy v. Applied LNG Technologies USA LLC et al Doc. 38 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 SOUTHERN DIVISION CLEAN ENERGY, 12 13 14 Plaintiff, v. APPLIED LNG TECHNOLOGIES, USA, LLC., et al., 15 16 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) SA CV 08-746 AHS (RNBx) FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF ORDER DENYING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION; ORDER DENYING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION 17 18 I. 19 PROCEDURAL BACKGROUND 20 The above motion for preliminary injunction (the 21 “Motion”) was heard on August 4, 2008, and the Court, having 22 considered the papers in support of the Motion filed by Plaintiff 23 Clean Energy (“Plaintiff” or “Clean Energy”), the declarations 24 and exhibits submitted therewith and the reply papers, the 25 opposition papers submitted by Applied LNG Technologies USA, LLC 26 (“Defendant” or “ALT”), and the declarations, exhibits, and 27 objections submitted therewith, and all pleadings on file in 28 connection with this motion, the Court makes the following Dockets.Justia.com 1 findings of fact and conclusions of law. 2 II. 3 FINDINGS OF FACT 4 5 A. Contractual Relationship 1. Clean Energy and ALT are competitors in the 6 business of producing and distributing Liquefied Methane/Natural 7 Gas (“LMG”). 8 2; Declaration of Kevin Markey (“Markey Decl.”), ¶ 4; and 9 Defendant’s Memorandum of Points and Authorities in Opposition to Declaration of Mitchell W. Pratt (“Pratt Decl.”), ¶ 10 Plaintiff’s Motion for Preliminary Injunction (“Defendant’s 11 Memorandum”), p. 2, ll. 20-2. 12 2. LMG is used principally by municipalities to power 13 their fleets of buses and other vehicles that run on natural gas. 14 Pratt Decl., ¶ 2; Markey Decl., ¶ 4. 15 3. Clean Energy “manufactures some of its own LMG, 16 but purchases the majority of its LMG from other third-party 17 producers.” 18 Support of its Motion for Preliminary Injunction (“Plaintiff’s 19 Memorandum”), p. 4, ll, 19-20. 20 4. Plaintiff’s Memorandum of Points and Authorities in Clean Energy manufactures LMG at its own 21 liquefaction plant in Houston, Texas. 22 Pickens Plant, is capable of producing up to 35 million gallons 23 of LMG per year (95,000 gallons per day). 24 S-3 Registration Statement filed July 11, 2008 (Exhibit A, p. 10 25 to Defendant’s Request for Judicial Notice). 26 5. That plant, known as the Clean Energy’s Form Clean Energy is in the process of building another 27 liquefaction plant in California. 28 represented at the hearing held on August 4, 2008, that the new 2 Counsel for Clean Energy 1 plant is located approximately one hundred (100) miles from Los 2 Angeles. 3 fall of 2008, initially will be capable of producing up to 60 4 million gallons of LMG per year (164,000 gallons per day), and 5 will be expandable to 90 million gallons (246,000 gallons per 6 day). 7 11, 2008 (Exhibit A, p. 10 to Defendant’s Request for Judicial 8 Notice). The plant, which is expected to be operational in the Clean Energy’s Form S-3 Registration Statement filed July 6. 9 By agreement effective as of May 15, 2007, Clean 10 Energy contracted with ALT for ALT to provide LMG to Clean 11 Energy. Markey Decl., ¶ 5 and Exhibit A thereto. 7. 12 A second agreement, effective January 1, 2008, is 13 substantially identical to the first. 14 thereto (“Agreement”). 15 8. 16 “take-or-pay” contract. 17 to Defendant’s Request for Judicial Notice). 9. 18 Pratt Decl., Exhibit A Clean Energy characterizes the Agreement as a Clean Energy’s 10-K (Exhibit D, p. 139 Under the agreements, ALT was to supply and Clean 19 Energy was to purchase 20,000 gallons per day of LMG on weekdays 20 and Saturdays. 21 LMG was ALT’s plant located in Topock, Arizona. 22 Article IV, § 4.4 and Article VI, § 6.1. 23 into trailers that each hold 10,000 gallons per trailer. 24 Decl., ¶ 5; Clean Energy’s 10-K (Exhibit D, p. 61 to Defendant’s 25 Request for Judicial Notice). 10. 26 Agreement § 3.1. The point of delivery for all Agreement, The LMG is delivered Markey The price of LMG under the agreements was not 27 fixed. Rather, it fluctuates based on published “Prices of Spot 28 Gas Delivered to Pipelines.” Agreement, p. 37 (attachment 3 1 “Exhibit A” to Agreement). 11. 2 The agreements provide for the sale and delivery 3 of LMG “As Available FOB Topock Plant” and anticipates supply 4 disruptions due to “non-scheduled plant shut down or production 5 problems.” 6 Article IV, § 4.5, pp. 25-26. 7 8 Agreement, Article I(d), Article III, § 3.1 and 12. Under the agreements, Clean Energy was to schedule the “pick up” of LMG on a weekly basis. By the Close of Business each Thursday, 9 10 Buyer [Clean Energy] will provide Seller 11 [ALT] with a pick up schedule . . . for 12 each day of the following week. 13 14 Agreement, Article VI, § 6.2, p. 27. 13. The agreements required ALT to render via e-mail 15 an invoice to Clean Energy for each load of LMG delivered. 16 Agreement, Article VII, § 7.1, p. 28. 17 “[w]ithin twenty (20) days of receipt of an invoice.” 18 Article VII, § 7.2, p. 28. 19 14. Payment for LMG was due Agreement, The agreements expressly condition a party’s 20 obligation to perform on the other party’s full performance of 21 all of its obligations. 22 15.8 23 Performance of any duty imposed on 24 either party by this Agreement is 25 conditioned on the other party’s full 26 performance of all duties imposed on it 27 in this Agreement. 28 Full Performance Required. Agreement, Article XV, § 15.8, p. 34. 4 15. 1 Under the agreements, Clean Energy and ALT 2 contracted to exclude liability for consequential and incidental 3 damages resulting from a breach: 4 11.3 No Liability for Consequential 5 Damages. 6 to the other for special, incidental, 7 punitive indirect or consequential 8 damages, under any circumstances, 9 including without limitation, Neither party shall be liable 10 consequential damages caused or arising 11 out of, in whole or in part, any 12 negligent act or omission or related 13 strict liability. 14 Agreement, Article XI, § 11.3, p 31. 15 16. The agreements may be amended and any waiver by 16 either or both parties of the time for performing any act under 17 the Agreement shall not constitute a waiver of the time for 18 performing any other act or an identical act required to be 19 performed at a later time. 20 15.14, pp. 33, 35. 21 17. Agreement, Article XV, §§ 15.1, The agreements are to be interpreted in accordance 22 with the laws of the State of Texas. Agreement, Article XV, § 23 15.2, p. 33. 24 construed “for or against any party based upon any attribution to 25 such party as the source of the language in question.” 26 Agreement, Article XV, §15.10, p. 34. 27 // 28 // The provisions of the agreements are not to be 5 1 B. Course of Dealings between the Parties during 2 Contractual Relationship 3 18. It is undisputed that the parties’ course of 4 dealings deviated from the terms of their agreements. 5 Plaintiff’s Reply Memorandum of Points and Authorities in Support 6 of its Motion for Preliminary Injunction (“Plaintiff’s Reply 7 Memorandum.”), p. 4. 19. 8 9 pick ups. Clean Energy never provided a weekly schedule of Declaration of Christa Peila (“Peila Decl.”), ¶¶ 11-12 10 (the citation is to the paragraph numbers as they appear in the 11 Peila Decl.; the numbering, however, is erroneous). 12 provided 24 hours advance notice. 20. 13 At most, it Powers Decl., ¶ 3. A spreadsheet of all of the loads delivered since 14 the inception of the parties’ agreements indicates that there 15 were many days on which Clean Energy did not take delivery of two 16 loads of LMG (i.e., 20,000 gallons). 17 no loads, and on others, it received a single delivery. 18 Likewise, there were days when it received three or even four 19 loads. 20 21 22 On some days, it received Markey Decl., Exhibit B. 21. No documents or records of Clean Energy contradict ALT’s spreadsheet. 22. Clean Energy generally did not pay for LMG within 23 the twenty-day payment terms provided in the agreements. 24 Decl., ¶ 8 and Exhibit B thereto. 25 23. On at least two occasions, ALT complained to Clean 26 Energy respecting unpaid invoices. 27 Kevin Markey (“Markey Suppl. Decl.”) ¶¶ 4, 6. 28 24. Markey Supplemental Declaration of Clean Energy currently is delinquent on invoices 6 1 totaling $180,861.48. Markey Decl., ¶ 8. Clean Energy does not 2 deny that the invoices are in arrears and affirmatively states 3 that it deliberately is withholding payment because ALT is not 4 delivering 20,000 gallons of LMG per day. 5 C. Powers Decl., ¶ 6. Clean Energy’s Demand that Full Daily Deliveries be 6 Restored and the City of Phoenix Contract 7 25. By letter dated May 2, 2008, Clean Energy’s Senior 8 Vice President, Engineering, Operations and Public Affairs, 9 Mitchell W. Pratt (“Pratt”), wrote to ALT’s Vice President of 10 Operations and Interim Chief Executive Officer, Kevin Markey. 11 Pratt acknowledged that there had been “interruptions to our 12 contracted quantities” of LMG and stated that Clean Energy “now 13 must have the full daily deliveries restored.” 14 Exhibit B thereto. 26. 15 Pratt Decl., ALT responded by letter dated May 20, 2008. Pratt 16 Decl., Exhibit C thereto. 17 experiencing maintenance issues including “water tower 18 replacement, cold box leaks, main compressor seal replacement, 19 gas regeneration compressor replacement as well as other sundry 20 items.” 21 In the letter, ALT stated that it was Id. 27. The timing of Clean Energy’s demand to have “full 22 daily deliveries restored” coincides with the “rebidding” of a 23 contract to supply 45,000 gallons of LMG per day to the City of 24 Phoenix. 25 Declaration of James Harger (“Harger Decl.”), ¶ 2. 28. After ALT secured the contract to supply the City 26 of Phoenix, Clean Energy challenged the award by letter to the 27 City of Phoenix dated June 18, 2008. 28 Decl., Exhibit E thereto. Markey Decl., ¶ 11; Harger In the letter, Clean Energy contended 7 1 that ALT did not have the “demonstrated ability” to deliver LMG 2 in adequate quantity pursuant to the contract. 3 Exhibit E thereto. 29. 4 Harger Decl., Clean Energy’s challenge to the awarding of the 5 contract with the City of Phoenix to ALT was partially 6 successful. 7 from ALT and restored to Clean Energy. 8 Decl., ¶ 11. One third of the contract (15,000 gallons) was taken 30. 9 Harger Decl., ¶ 3; Markey Performance under of the contract to supply LMG to 10 the City of Phoenix began on July 7, 2008. 11 The very next day, July 8, 2008, Clean Energy commenced this 12 action and filed its motion for mandatory injunctive relief. 13 D. 14 Harger Decl., ¶ 2. Clean Energy’s Alleged Damages 31. Based on the non-delivery of LMG, Clean Energy 15 claims damages of $2,046,046 over the remaining term of the 16 parties’ agreement. 17 32. Powers Decl., ¶ 7. Of the amount claimed, Clean Energy concedes that 18 nearly 90% ($1,801,800) is ascribed to transportation costs. 19 Powers Decl., ¶ 7. 20 33. Clean Energy also concedes that ALT is entitled to 21 a setoff because the price of fuel from suppliers other than ALT 22 is likely to be lower than the price charged by ALT. 23 Decl., ¶ 7. 24 34. Powers Although Clean Energy’s Assistant Vice President, 25 Operations, Joseph Brian Powers, presents calculations of Clean 26 Energy’s alleged damages as part of his declaration, he fails to 27 provide details or documentary evidence to support his figures. 28 No particulars are offered respecting the source of the 8 1 replacement LMG or the actual distances and costs attendant to 2 its transportation. 3 E. ALT’S Financial Condition 35. 4 Powers Decl., ¶ 7. Clean Energy’s conclusions respecting the 5 financial condition of ALT and its ability to pay damages in the 6 event of a judgment against it are based entirely on public 7 filings made with the Securities and Exchange Commission (the 8 “SEC”). 9 Plaintiff’s Request for Judicial Notice. 36. The public filings indicate that, as a result of a 10 corporate restructuring completed in July 2008, ALT was acquired 11 by PNG Ventures, Inc. 12 Ventures, Inc. dated June 30, 2008 (Exhibit I to Plaintiff’s 13 Supplemental Request for Judicial Notice). 14 the transaction, ALT did not assume any of the obligations of its 15 former parent, Earth Biofuels, Inc. and is not liable for that 16 company’s obligations. 17 37. Markey Decl., ¶ 13; Form 8-K of PNG In connection with Markey Decl., ¶ 13. ALT benefitted by the corporate restructuring in 18 that it enabled ALT to expand its credit facilities. 19 Decl., ¶ 13. 20 infused ALT with $2.1 million in cash. 21 Memorandum, p. 8, ll. 21-23, p. 9, ll. 1-6. 22 Markey According to Clean Energy, the restructuring 38. Plaintiff’s Reply Public filings respecting Earth Biofuels, Inc. and 23 PNG Ventures, Inc. were available to Clean Energy when it 24 negotiated and entered into the agreements with ALT for the 25 supply of LMG. 26 condition and contained “going concern qualifications” of the 27 kind on which Clean Energy now seeks to rely. 28 39. Those filings disclosed each company’s financial ALT asserts it is able to meet all of its current 9 1 financial obligations as they become due and has not exhausted 2 its available lines of credit. 3 beneficiary of valuable contracts, including the contract to 4 supply the City of Phoenix with LMG, and that it has the ability 5 to compensate Clean Energy for any damages by delivering LMG. 6 Markey Decl., ¶¶ 14-15. It also asserts that it is the 7 III. 8 CONCLUSIONS OF LAW 9 1. The purpose of a preliminary injunction is to 10 preserve the relative positions of the parties until a trial on 11 the merits can be held. 12 Petroleum, Inc., 2000 U.S. Dist. LEXIS 8100 (C.D. Cal. Jan. 19, 13 2000) (citing Univ. of Texas v. Camenisch, 451 U.S. 390 (1981)); 14 see also Kentz v. Wrigley, 2006 U.S. Dist. LEXIS 82852 (E.D. Cal. 15 Nov. 13, 2006) (same)). 16 2. Virgin Enters., Ltd. v. Virgin “To obtain a preliminary injunction, plaintiffs 17 are required to demonstrate ‘(1) a strong likelihood of success 18 on the merits, (2) the possibility of irreparable injury to 19 plaintiff[s] if preliminary relief is not granted, (3) a balance 20 of hardships favoring the plaintiff[s], and (4) advancement of 21 the public interest (in certain cases).’” 22 F.3d 988, 994 (9th Cir. 2004) quoting Johnson v. Cal. State Bd. 23 of Accountancy, 72 F.3d 1427, 1430 (9th Cir. 1995) (citation and 24 internal quotation marks omitted). 25 relief may be granted where plaintiffs “demonstrate either a 26 combination of probable success on the merits and the possibility 27 of irreparable injury or that serious questions are raised and 28 the balance of hardships tips sharply in [their] favor.” 10 Rodde v. Bonta, 357 Alternatively, injunctive Id. 1 (emphasis in original; citations and internal quotation marks 2 omitted). 3 continuum, rather than two separate tests. . . .” 4 Outdoor Inc. v. City of Los Angeles, 340 F.3d 810, 813 (9th Cir. 5 2003) (internal citation and quotation marks omitted). 6 “These two alternatives represent extremes of a single 3. Clear Channel The party seeking a preliminary injunction has the 7 burden of persuasion by a “clear showing” on each of the factors 8 necessary to obtain the requested relief and also must not have 9 an adequate remedy at law. See Mazurek v. Armstrong, 520 U.S. 10 968, 972 (1997) (“It frequently is observed that a preliminary 11 injunction is an extraordinary and drastic remedy, one that 12 should not be granted unless the movant, by a clear showing, 13 carries the burden of persuasion.”) (internal quotations and 14 citation omitted); see also Stanley v. Univ. of So. Cal., 13 F.3d 15 1313 (9th Cir. 1994), (citing, Beacon Theatres, Inc. v. Westover, 16 359 U.S. 500, 506-507 (1959)). 17 4. “When a mandatory preliminary injunction is 18 requested, the district court should deny such relief ‘unless the 19 facts and law clearly favor the moving party.’” 20 at 1320 (quoting Anderson v. U .S., 612 F.2d 1112, 1114 (9th Cir. 21 1979)); see also Dahl v. HEM Pharmaceuticals Corp., 7 F.3d 1399, 22 1403 (9th Cir. 1993) (noting that mandatory injunctions are 23 “subject to a heightened scrutiny and should not be issued unless 24 the facts and law clearly favor the moving party”). 25 heightened scrutiny is reasonable given that unlike a preliminary 26 injunction, a mandatory injunction “changes the position of the 27 parties as opposed to preserving the status quo.” 28 Minutemen v. California Business Transp. and Housing Agency's 11 Stanley, 13 F.3d Such San Diego 1 Dept. of Transp., 2008 WL 2781138, *22 (S.D. Cal. Jun 27, 2008). 2 5. “[U]nless the facts and law clearly favor the 3 moving party, a mandatory injunction will be denied.” 4 v. United States, 612 F.2d 1112, 1115 (9th Cir. 1979). 5 A. 6 7 8 9 Anderson Likelihood of Success on the Merits 6. There is substantial evidence tending to show that Clean Energy has breached the contract it now seeks to enforce. 7. Under the law of the State of Texas, which the parties have designated as the law applicable to their agreement, 10 “[i]t is elementary that a party to a contract who is himself in 11 default cannot maintain a suit for its breach.” 12 58 S.W. 2d 1080, 1081 (Tex. App. Amarillo 1933); see also 13 Shuttuck v. Griffin, 44 Tex. 566, 567 (1876). 14 performance of the conditions it imposes upon him or a valid 15 legal excuse for his failure to do so.” 16 1081; see also Federal Sign Co. v. Ft. Worth Motors, Inc., 314 17 S.W. 2d 878, 881 (Tex. App. Fort Worth 1958) (“[w]here one party 18 seeks to enforce performance of a contract or to recover damages 19 for a breach thereof, and the contract contains mutual covenants 20 or requires him to do an act to entitle him to the action, he 21 cannot maintain such action without alleging and proving 22 performance or tender of performance on his part, unless such 23 performance has been excused”). 24 8. Smith v. Fort, “He must allege Smith, 58 S.W. 2d at In addition to Texas law which requires that a 25 plaintiff not be in breach, in Article XV, Section 15.8 of their 26 agreement, the parties expressly made full performance a 27 condition precedent to the other party’s obligation to perform: 28 15.8 Full Performance Required. 12 1 Performance of any duty imposed on 2 either party by this Agreement is 3 conditioned on the other party’s full 4 performance of all duties imposed on it 5 in this Agreement. 9. 6 Clean Energy admittedly has not fully performed 7 the parties’ agreement in that it is withholding payment of at 8 least $180,861. 10. 9 Clean Energy acknowledges a “course of dealings” 10 that deviated from the express terms of the agreement. 11 these circumstances, Clean Energy does not demonstrate a 12 likelihood of success on the merits of its claim for breach of 13 contract. 11. 14 Under Clean Energy also fails to meet its burden as to 15 damages because it has not provided details or documentary 16 evidence so as to permit the Court to verify its calculations. 17 The proof is insufficient. 18 Pipe Line Co. v. Hildreth, 225 S.W. 583, 584 (Tex. App. Dallas 19 1920). 20 of ascertainment with a reasonable degree of certainty, or, as 21 the rule is sometimes stated, must be certain both in their 22 nature and in respect to the cause from which they proceed. 23 Therefore uncertain, contingent, or speculative damages cannot be 24 recovered . . .”). 25 See Pratt Decl., ¶ 10; see also Texas (“The damages recoverable in any case must be susceptible 12. Clean Energy’s damage calculation reflects a 26 comparison between the gallons delivered and the 20,000 gallon 27 per day contract amount. Pratt Decl., ¶ 8. 28 for occasions when ALT had legitimate grounds under the contract 13 It does not account 1 to cancel delivery or for instances when Clean Energy did not 2 schedule pick ups or refused to take delivery. 3 B. Irreparable Harm 13. 4 It is well-established that “economic injury alone 5 does not support a finding of irreparable harm, because such 6 injury can be remedied by a damage award.” 7 v. Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 8 (9th Cir.1991) (citing Los Angeles Mem’l Coliseum Comm’n v. Nat’l 9 Football League, 634 F.2d 1197, 1201 (9th Cir. 1980)); see also Rent-A-Center, Inc. 10 Sampson v. Murray, 415 U.S. 61, 90 (1974) (“Mere injuries, 11 however substantial, in terms of money, time and energy 12 necessarily expended are not enough” to constitute irreparable 13 injury) (quotation omitted)). 14 the basis for injunctive relief “where the plaintiffs can 15 establish that money damages will be an inadequate remedy due to 16 impending insolvency of the defendant or that defendant has 17 engaged in a pattern of secreting or dissipating assets to avoid 18 judgment.” 19 1994). 20 appropriate because of the risk that future remedies at law would 21 become uncollectible and thus inadequate. 22 However, economic injury may be In re Estate of Marcos, 25 F.3d 1467, 1480 (9th Cir. In such cases, the law provides that injunctive relief is 14. Id. Clean Energy concedes that it does not suffer from 23 nor is it seeking relief for a traditional form of irreparable 24 harm. 25 harm on ALT’s alleged financial difficulties and its alleged 26 inability to satisfy any judgment Clean Energy may be awarded. 27 Clean Energy has not met its burden of persuasion. 28 Instead, Clean Energy bases its assertion of irreparable 15. If Clean Energy were ultimately to succeed on its 14 1 claim that ALT has breached the parties’ agreement, damages 2 typically provide a sufficient remedy. 16. 3 Clean Energy does not prove that ALT cannot answer 4 for any judgment that Clean Energy is likely to recover. 5 Although the public filings on which Clean Energy attempts to 6 rely contain warnings to potential investors, they do not 7 establish that ALT cannot pay damages to Clean Energy in the 8 event a breach of the agreement is established. 9 filings indicate the completion of a corporate reorganization 10 that has improved ALT’s financial condition. 11 C. 12 Moreover, the Balance of Hardships and Public Interest 17. The hardships do not balance in favor of issuing 13 an injunction against ALT. 14 merely one of damages resulting from the added expense of having 15 to obtain LMG from other sources that may be at a greater 16 distance than the ALT Topock plant. 17 that it cannot obtain replacement LMG from other suppliers and, 18 consequently, there is no risk of Clean Energy being unable to 19 supply its customers. 20 18. The hardship faced by Clean Energy is Clean Energy makes no claim The 20,000 gallons per day provided for under the 21 parties’ agreement is only a small fraction of Clean Energy’s 22 business in LMG. 23 temporary) will have only a minor impact on Clean Energy’s 24 operations. 25 19. The loss of LMG from ALT (which may only be Diminishing the impact of the loss of 20,000 26 gallons per day is the new liquefaction plant that Clean Energy 27 anticipates opening this fall. 28 capable of producing up to 164,000 gallons of LMG per day, more That facility initially will be 15 1 than enough to offset the loss of LMG from ALT. 20. 2 In contrast to the facilities of Clean Energy, 3 ALT’s operations are more modest. 4 liquefaction plant from which it attempts to supply its 5 customers. 6 gallons per day to Clean Energy, ALT would not have sufficient 7 LMG to supply its other customers. 9 10 If the Court were to order ALT to supply 20,000 21. 8 ALT operates a single The parties compete for the same consumers of LMG. To compel ALT to deliver LMG to Clean Energy may have drastic consequences to ALT’s business. 22. 11 Unlike the readily quantifiable damages that Clean 12 Energy seeks to recover, the harm to ALT’s business from the 13 injunction will not be easily quantified or capable of proof. 14 However, ALT risks irreparable harm by the issuance of the 15 requested injunction. 23. 16 When weighing whether to issue a preliminary 17 injunction, the analysis “creates a continuum: 18 the district court is of the likelihood of success on the merits, 19 the more plaintiffs must convince the district court that the 20 public interest and balance of hardships tip in their favor.” 21 Southwest Voter Registration Educ. Project v. Shelley, 344 F.3d 22 914, 918 (9th Cir. 2003). 23 the Court that the hardships tip in its favor. 24 24. Here, Clean Energy has not satisfied For purposes of this motion, the public’s interest 25 is in equipoise as to both parties. 26 D. 27 28 the less certain The Clean Hands Defense 25. Since Clean Energy seeks equitable relief, it is appropriate for the Court to consider equitable defenses 16 1 including the defense of lack of clean hands. Precision 2 Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 3 (1945) (holding that the unclean hands doctrine “closes the doors 4 of a court of equity to one tainted with inequitableness or bad 5 faith relative to the matter in which he seeks relief, however 6 improper may have been the behavior of the defendant”). 7 Clean Energy receives equitable relief from the Court, it must 8 demonstrate that it is worthy of such relief and that it has 9 conducted its dealings in an equitable manner. Before Adler v. Federal 10 Republic of Nig., 219 F.3d 869, 877 (9th Cir. 2000) (holding that 11 “plaintiffs seeking equitable relief must have ‘acted fairly and 12 without fraud or deceit as to the controversy in issue’” (citing 13 Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir. 14 1985)); see also Precision, 324 U.S. at 814 (“The equitable maxim 15 [is] that ‘he who comes into equity must come with clean 16 hands.’”). 17 26. The Court cannot at this time conclude that Clean 18 Energy is worthy of the drastic relief of a mandatory preliminary 19 injunction. 20 agreement and currently owes at least $180,861 in overdue 21 invoices to ALT. 22 Clean Energy did not adhere to the terms of the 27. Having found no clear and convincing evidence on 23 the grounds stated above of Plaintiff’s alleged risk of 24 irreparable harm and having found that the balance of equities 25 does not favor plaintiff, the Court declines to issue a 26 preliminary injunction. 27 // 28 // 17 1 IV. 2 ORDER DENYING MOTION 3 Based on the foregoing findings of fact and conclusions 4 of law, the Court denies Plaintiff’s Motion for Preliminary 5 Injunction. 6 7 The Clerk shall serve this order on counsel for all parties in this action. 8 IT IS SO ORDERED. 9 DATED: September 3, 2008. 10 11 12 ALICEMARIE H. STOTLER CHIEF U.S. DISTRICT JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 O:\ECF Ready\CV, 08-746 FOFACOL and Ord deny pltf's mtn for prelim injunc.wpd
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