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Continental Casualty Co. v. Hardin

United States District Court, M.D. Florida, Tampa Division

April 2, 2017

JOHN W. HARDIN, ET AL., Defendants.



         This cause came on to be heard upon John W. Hardin's Motion for an Award of Costs and Fees Pursuant to Fed. R. Civ. Pro. 65(c) (Doc. 100).[1] The motion was referred to me for a report and recommendation (Doc. 104). After reviewing the memoranda, the parties' exhibits, and conducting oral argument on the motion, I recommend that the motion be denied because the movants fail to establish that Rule 65(c) is a cognizable basis for recovery of their attorney's fees and expenses.


         The plaintiffs allege that the defendants engaged in fraudulent transfers in order to avoid satisfying multi-million dollar judgments entered in favor of the plaintiffs and against certain defendants (see Doc. 1). The plaintiffs filed on February 10, 2016, a Motion for Temporary Restraining Order and Preliminary Injunction, seeking, among other relief, to freeze all assets, including a prohibition against the transfer of any assets (Doc. 2, p. 3).

         On February 11, 2016, the court granted in part the motion for a Temporary Restraining Order (TRO) (Doc. 4). As pertinent here, the TRO enjoined the defendants "from transferring assets outside of the ordinary course of business, " and specified that "ordinary course transfers [may] not exceed $250, 000 per transfer or $1, 000, 000 in the aggregate" (id., P- 12). The court also scheduled a hearing on the motion (id., p. 13). The court ordered that the TRO would become effective upon the plaintiffs posting of a $100, 000 injunction bond, and stay in effect for 14 days thereafter (id., p. 12).

         On February 17, 2016, the plaintiffs posted the bond as required by the TRO (Doc. 39). On February 22, 2016, Thomas Cushing, counsel for the JH defendants, notified the court in correspondence that "the limits set forth in ... [the TRO] ... do not reflect the size of routine, 'ordinary course transfers' to contractual counterparties and others for my clients" (Doc. 100-7). Cushing advised that, consequently, the JH defendants would be making payments in excess of the limits stated in the TRO in order to fulfill their obligations to the IRS and their clients (id.). Cushing also informed the court that he would attend the court hearing "to contest the plaintiffs' motion for temporary restraining order and preliminary injunction" (id.).

         On February 24, 2016, the court held a hearing on the TRO (Doc. 51). The court focused upon its authority to restrict the defendants' use of their assets, and the proper amount of the bond (see id.). During that hearing, Cushing stated that the transactional monetary limits in the TRO did not satisfy his clients' business needs (id., pp. 46-48). The court continued the TRO in effect until the hearing scheduled for the following week. The court added, however, that it had no objection to the parties stipulating to an increase in the amount of funds that the defendants could transfer in order to meet their customary business obligations (id., PP-49-50).

         On February 25, 2016, defense counsel sent correspondence to plaintiffs' counsel, requesting them to withdraw the motion for temporary restraining order or, alternatively, to "agree to a modification of the [TRO] to allow my clients to meet their financial obligations to their clients ... governments, and to employees" (Doc. 100-8, p. 1). Plaintiffs' counsel stated that he was amenable to the latter request, and the parties agreed to a modification of the TRO to permit the JH defendants to make certain payments that exceeded the limits of the TRO (see Doc. 100-9, 100-10).

         On February 29, 2016, the court held a second hearing on the TRO (see Doc. 100-12). Also pending before the court were the defendants' Motion to Dissolve the Temporary Restraining Order (Doc. 56), and the plaintiffs' brief in further support of their Motion for a Preliminary Injunction (Doc. 52; see Doc. 100-12, p. 84). At the hearing, the defendants argued that the plaintiffs' claims are for money damages and, therefore, this is an action at law for which there is no judicial authority to freeze or restrict a defendant's assets before judgment (see Doc. 64, pp. 36, 37). The plaintiffs contended that they were seeking the equitable remedy of restitution and, consequently, the court has the authority to enjoin use of assets in a preliminary injunction without it amounting to an prejudgment attachment of assets (see id., pp. 30-32, 74).

         At the close of the hearing, the court issued an Order Granting, in Part, and Denying in Part, the defendants' Motion to Dissolve Temporary Restraining Order (Doc. 59). It stated that, "[h]aving reviewed the motions, heard the arguments of counsel, and for the reasons stated in open Court, " the Motion to Dissolve is granted, except with respect to the defendants' obligation to preserve all potentially relevant evidence and electronically stored information (id.).[2] The Court expressly stated that the TRO is dissolved as to the asset freeze (id.)- John W. Hardin subsequently filed this Motion for an Award of Costs and Fees Pursuant to Fed.R.Civ.Pro. 65(c) (Doc. 100). The JH defendants request an attorney's fees award of $7, 462.50, and expenses of $1, 076.40, incurred as a result of the "wrongfully entered restraining order of February 11, 2016" (Doc. 100; Doc. 100-1).[3] The attorney's fees relate primarily to defense counsel's attendance at the two court hearings and his efforts to modify the TRO's limits on monetary transactions (see Doc. 100-1, ¶¶ 2a-2e). The JH defendants also seek reimbursement for counsel's airline flights to attend the hearings (id., ¶ 4).

         The plaintiffs oppose this motion (Doc. 102). They dispute that the defendants were wrongfully enjoined, and argue that the defendants' attorney's fees and expenses are not recoverable under this Rule (id., p. 4). Oral argument was conducted on the motion (see Doc. 172).

         Correspondingly, the court denied the plaintiffs' Motion for Preliminary


         As indicated, the JH defendants seek an award of attorney's fees and expenses pursuant to Rule 65 (c), ...

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