United States District Court, D. Delaware
to Rule 65 of the Federal Rules of Civil Procedure, Plaintiff
Temsa Ulasim Araclari Sanyi Ve Ticaret A.S.
("Temsa") has moved for a Temporary Restraining
Order and Preliminary Injunction against Defendant CH Bus
Sales, LLC ("CH Bus"). (D.I. 20). For the reasons
set forth below, the motion for a temporary restraining order
is granted in part and denied in part. The motion for
preliminary injunction will be decided after discovery and a
manufacturers motorcoaches sold worldwide. (D.I. 21 at 2). In
February 2010, Temsa and CH Bus entered into a Distribution
Agreement, by which CH Bus became the exclusive distributor
and servicer of Temsa motorcoaches in the United States,
Canada, Guam, and the Commonwealth of Puerto Rico. (D.I. 1-1,
Ex. A to Ex. A, § 1.1). The Distribution Agreement, as
amended, requires CH Bus to remit payment for the
motorcoaches to Temsa by cash or wire transfer within ninety
(90) days of the bill of lading or the time of sale, if sold
earlier. (Id. at § 4.5; D.I. 1-1, Ex. B to Ex.
A). Finally, the Distribution Agreement provides that any
unresolved disputes "arising under this Agreement"
shall be submitted to arbitration to be held in New York.
(Id. At § 17.3).
January 2016, CH Bus and Temsa entered into a Security
Agreement that granted Temsa a security interest in each
motorcoach "sold ... to date" and each motorcoach
"sold hereafter." (D.I. 1-1, Ex. D to Ex. A,
Recitals). The security interest secures CH Bus's
"Payment Obligation," which is the obligation of CH
Bus "to pay the full purchase price for each
[motorcoach] pursuant to the terms of the Distribution
Agreement." (Id.). The Security Agreement
further provides that Temsa holds the security interest in,
and retains title to, each motorcoach "until [Temsa]
shall have been paid in full" for that motorcoach.
(Id. at § 1(a)). Any breach of any Payment
Obligation constitutes "an event default" that
gives Temsa "all rights and remedies available at law or
in equity," including its rights as a secured party
under the Uniform Commercial Code. (Id. at § 1
(f)). The Delaware Uniform Commercial Code provides,
"After default, a secured party may take possession of
the collateral." 6 Del C. § 9-609(a)(1).
There does not appear to be any arbitration clause in the
Motorcoaches At Issue
claims that, to date, CH has failed to remit payment for 74
motorcoaches. (D.I. 22 at ¶ 9). The 74 motorcoaches fall
into two groups: (i) 41 motorcoaches Temsa financed directly
pursuant to the Security Agreement; and (ii) 33 motorcoaches
financed by Turkiye Ihracat Kiedi Bankasi A.S., also known as
Turk EximBank ("EximBank"). (D.I. 22 at ¶ 6).
According to Temsa, CH Bus defaulted under its agreement with
EximBank, Temsa satisfied the debt CH Bus owed to EximBank,
and EximBank assigned its rights to Temsa. (D.I. 21 at 1 n.
1). Neither EximBank's contract with CH Bus nor
EximBank's assignment agreement with Temsa are in the
record.Other facts about when and why the
assignment occurred are also not in the record. Nevertheless,
Temsa's counsel represented at the hearing that EximBank
financed only 80% of the purchase price for each motorcoach,
leaving CH Bus responsible for paying Temsa directly for the
remaining 20%. Because the Security Agreement provides that
Temsa retains a security interest in the motorcoach until it
is paid in full for that motorcoach, Temsa asserts that it
has a security interest in the 33 motorcoaches financed by
EximBank, because CH Bus never remitted payment to Temsa for
the remaining 20%. Finally, Temsa believes that CH Bus has
unlawfully disposed of 57 of the 74
motorcoaches. (D.I. 21 at 6-9).
March 22, 2018, Temsa filed a demand for arbitration against
CH Bus with the American Arbitration Association. (D.I. 5-1,
Ex. C). The arbitration demand asserts claims for breach of
contract, breach of the implied covenant of good faith and
fair dealing, unjust enrichment, conversion, and an
accounting. (Id.). On April 9, 2018, Temsa sued CH
Bus in the Delaware Court of Chancery, asserting claims for
declaratory judgment, specific performance, and a
constructive trust. (D.I. 1-1, Ex. A at ¶¶ 15-40).
Based on the representations of Temsa's counsel, it
appears that Temsa is asking the court to issue an order that
will prevent the loss or destruction of the motorcoaches that
serve as collateral until the arbitration is resolved. CH Bus
has answered the complaint and filed counterclaims for
breaches of contract and tortious interference. (D.I. 26).
seeking a temporary restraining order must show: (1) a
likelihood of success on the merits; (2) that it will suffer
irreparable harm if the injunction is denied; (3) that
granting preliminary relief will not result in even greater
harm to the nonmoving party; and (4) that the public interest
favors such relief. KOS Pharms., Inc. v. Andrx
Corp., 369 F.3d 700 (3d Cir.2004); QVC, Inc. v. Your
Vitamins, Inc., 714 F.Supp.2d 291, 297 (D. Del. 2010).
In addition to disputing whether Temsa has satisfied each of
these four factors, CH Bus has raised two equitable defenses:
laches and unclean hands. (D.I. 27 at 6-7, 14-15). Finally,
if a temporary restraining order does issue, CH Bus has
requested that Temsa post a bond. (Id. at 15).
"The court may issue a preliminary injunction or a
temporary restraining order only if the movant gives security
in an amount that the court considers proper to pay the costs
and damages sustained by any party found to have been
wrongfully enjoined or restrained." Globus Med, Inc.
v. Vortex Spine, LLC, 605 Fed.Appx. 126, 129 (3d Cir.
2015) (quoting Fed.R.Civ.P. 65(c)). The court will address
each of these issues in turn.
on the Merits. Because the facts upon which Temsa
asserts a security interest in the 33 motorcoaches financed
by EximBank are not currently in the record, Temsa cannot
show at this time that is likely to succeed on the merits
with respect to those motorcoaches. The court recognizes that
an amended complaint combined with some evidence may remedy
this defect and grants leave for Temsa to file such a
complaint if it chooses. As for the 41 motorcoaches financed
by Temsa, Temsa has shown a likelihood of success on the
merits. Temsa has established the existence of a valid
contract (the Security Agreement) giving it the right to take
immediate possession of a motorcoach if CH Bus has not been
paid in full for that motorcoach within 90 days. (D.I. 1-1,
Ex. A to Ex. A, § 4.5; D.I. 1-1, Ex. D to Ex. A at
§ 1). CH Bus has not disputed Temsa's assertion that
it has not remitted payment for those 41 motorcoaches
financed pursuant to the Security Agreement. Thus, Temsa has
shown that it likely has the right to take possession of
those 41 motorcoaches.
Harm. As a general matter, "a purely economic
injury, compensable in money, cannot satisfy the irreparable
injury requirement." Minord Run Oil Co. v. U.S.
Forest Service,670 F.3d 236, 255 (3d Cir. 2011). The
rule, however, is not absolute. "Where secured creditors
(under the UCC or otherwise) seek court intervention to
maintain their position, the prospective loss of their status
quo security interest has been held sufficient to constitute
the irreparable harm needed to justify an injunction."
Plainfield Specialty Holdings II Inc. v. Children's
Legal Services PLLC,634 F.Supp.2d 833, 846 (E.D. Mich.
2009) (collecting cases); see also State Farm
Mut. Auto. Ins. Co. v. American Rehab & Physical Therapy,
Inc., 376 Fed.Appx. 182, 184 (3d Cir. 2010)
(finding irreparable harm where defendant "would
continue to conceal assets ... in a manner that would further
evade [plaintiffs] collection efforts"); WM Capital
Partners I, LLC v. BBJ Mortg. Services,
Inc.,2010 WL 5903262, at *2-3 (E.D.
Mich. Aug. ...