United States District Court, M.D. Pennsylvania
November 4, 2005.
ALNOOR RAHEMTULLA and SHYROSE RAHEMTULLA, Plaintiffs
NAZIM HASSAM, a/k/a NAZIM B. HASSAM, a/k/a HAZIM B. HASSAM, a/k/a NAZIM HASIAM, t/a HOWARD JOHNSON INN; SHAMSHAD N. HASSAM, a/k/a SHAMIM B. HASSAM, a/k/a SHAMI-HASSAM; OMSRISHI, INC., a fictitious entity; KILIMANJARO STEAKHOUSE BAR & GRILL; JOHN and JANE DOES 1-100, fictitious persons; ABC and XYZ CORPORATIONS 1-100, fictitious entities, Defendants.
The opinion of the court was delivered by: MALACHY MANNION, Magistrate Judge
MEMORANDUM AND ORDER
Pending before the court is the plaintiffs' motion for a
preliminary injunction. (Doc. No. 15). Based upon the court's
review of the record and the evidence presented at the November
1, 2005 hearing, the plaintiffs' motion for a preliminary
injunction will be denied.
By way of background, on March 31, 2004, the plaintiffs
commenced the instant action in the United States District Court
for the District of New Jersey. In their complaint, the
plaintiffs raise various claims in relation to the formation and
operation of the Kilimanjaro Steakhouse Bar and Grill partnership between the plaintiff, Alnoor Rahemtulla, and the defendant,
Nazim Hassam. The plaintiffs seek an invalidation of the
partnership documents; a disgorgement and return of the monies
which they invested in the partnership; compensatory and punitive
damages; and costs, interest and attorney's fees for bringing the
After service of the summons and the complaint, default
judgment was entered against the defendants. This default was
later vacated, after which the defendants filed an answer
counterclaims. The plaintiffs subsequently filed an answer to the
The defendants having filed a motion to dismiss and/or change
venue, by order dated January 10, 2005, the District of New
Jersey directed that the matter be transferred to the Middle
District of Pennsylvania. Upon transfer, the parties consented to
the jurisdiction of the undersigned.
On July 18, 2005, the plaintiffs filed the instant motion for a
preliminary injunction, in which they seek an order compelling
the defendants to produce and deposit into an interest bearing
court account the sum of $340,000 which is the subject of the
plaintiffs' claims for misappropriation, conversion, breach of
fiduciary duties and unjust enrichment, as well as to enjoin the
defendants from transferring and concealing assets to prevent the
satisfaction of a potential judgment. (Doc. No. 15). On the same
day, the plaintiffs filed a supporting brief, (Doc. No. 16), and
declarations, (Doc. Nos. 17 & 18). After having been granted extensions of time to do so, (Doc. Nos. 22,
24, 26), the defendants filed a brief in opposition to the
plaintiffs' motion for preliminary injunction, (Doc. No. 29),
along with a supporting affidavit and materials, (Doc. No. 30).
A hearing on the matter was held on November 1, 2005, at which
time the court received testimony from the defendant, Nazim
Hassam, as well as from Kirit Patel, a shareholder of OM SRI SAI,
Inc.*fn1 The court also received into evidence documentation
in addition to that already filed by the parties.
With respect to the plaintiffs' motion for injunctive relief,
the Supreme Court has instructed that the tool of the preliminary
injunction should be reserved for "extraordinary" situations.
Sampson v. Murray, 415 U.S. 61, 88 (1974). In following that
instruction, the Third Circuit has held that the granting of
injunctive relief is an exercise of a very far-reaching power,
never to be indulged in except in a case clearly demanding it.
Warner Bros. Pictures v. Gittone, 110 F.2d 292 (3d Cir. 1940).
More recently, the Third Circuit has insisted that "the use of
judicial power to arrange relationships prior to a full
determination on the merits is a weighty matter, and the
preliminary injunction device should not be exercised unless the
moving party shows that it specifically and personally risks
irreparable harm." Adams v. Freedom Forge Corporation, 204 F.3d 475 (3d Cir. 2000) (citing
Campbell Soup Co. v. ConAgra, Inc., 977 F.2d 86, 91 (3d Cir.
1992); Frank's GMC Truck Center, 847 F.2d 100, 102-03 (3d Cir.
In considering a motion for injunctive relief, the court must
consider: (1) whether the movant has shown probability of success
on the merits; (2) whether the movant will be irreparably harmed
by denial of the relief; (3) whether granting preliminary relief
will result in even greater harm to the nonmoving party; and (4)
whether granting the preliminary relief will be in the public
interest. Brian B. v. Commonwealth, 230 F.3d 582 (3d Cir.
2000). A plaintiff's failure to establish any one of these
elements in its favor renders a preliminary injunction
inappropriate. The NutraSweet Company v. Vit-Mar Enterprises,
Inc., 176 F.3d 151, 153 (3d Cir. 1999).
In this case, the weight of the evidence presented by the
plaintiffs in support of their motion for a preliminary
injunction relates to the merits of their claims. Even assuming
for purposes of the instant motion that the plaintiffs have shown
a probability of success on the merits, the court finds that
there is insufficient evidence to establish that the plaintiffs
will be irreparably harmed by the denial of injunctive relief. To
this extent, the plaintiffs must establish more than a risk of
irreparable injury. They must demonstrate "`a clear showing of
immediate irreparable injury.'" Hoxworth v. Blinder, Robinson &
Co., 903 F.2d 186, 197 (3d Cir. 1990) (quoting ECRI v. McGraw- Hill, Inc., 809 F.2d 223, 225 (3d Cir. 1987)). An injunction
may not be used "simply to eliminate a possibility of a remote
future injury . . ." Acierno v. New Castle County, 40 F.3dd
645, 653 (3d Cir. 1994) (citations omitted).
The plaintiffs in this case claim that they provided defendant
Hassam with the sum of $340,000*fn2 with the specific
obligation for him to deposit the money into a partnership
account. The plaintiffs claim that defendant Hassam did not
deposit the money into a partnership account, but diverted and
misappropriated the funds and commingled them with the other
defendants. In addition, the plaintiffs allege that, after the
start of the instant action, defendant Hassam disposed of real
properties to avoid the potential of judgment and that ownership
interests which defendant Hassam claimed herein have been
revealed as either not being owned by him or held by others to
conceal and shield his ownership.
In Hoxworth, supra, the Third Circuit found that a district
court may issue a preliminary injunction to protect a potential
future damages remedy. The court found, however, that this power
is far from unlimited.*fn3 Specifically, the court found that the moving party must demonstrate that the
traditional requirements for obtaining equitable relief are met.
To this extent, the plaintiffs must establish that they are
likely to become entitled to the funds upon final judgment and
that, without the injunction, they would be unable to recover
those funds. Id. This second element is essentially an
irreparable harm inquiry.
In this case, the plaintiffs argue that, in light of the
actions of defendant Hassam, as set forth above, they may be
unable to collect on any judgment entered in their favor at the
conclusion of these proceedings. They have not, however, provided
any evidence which would indicate that defendant Hassam would be
unable to satisfy any judgment entered against him. To this
extent, while the plaintiffs have shown that defendant Hassam has
transferred properties since the inception of this action, they
have not demonstrated that he has done so in an attempt to avoid
liability to the plaintiffs or that the transfer of properties
would render him unable to satisfy any judgment which may be
entered against him. In fact, defendant Hassam testified under
oath at the hearing in this matter that, in addition to selling
three properties since the inception of this action, he has also acquired three
properties in New York and one property in Pennsylvania. He
further submitted documentation reflecting his 49% ownership of
the OM SRI SAI, Inc., corporation. According to the evidence,
this corporation owns and operates the Howard Johnson's hotel in
Bartonsville, Pennsylvania, and the accompanying restaurant which
is the subject of this suit. Testimony provided at the hearing by
Mr. Patel, a shareholder in OM SRI SAI, Inc., reflects that the
value of the corporation is between $7 million and $8 million.
Defendant Hassam further submitted a personal financial statement
as of October 30, 2005,*fn4 which reflects that his 49%
interest in OM SRI SAI, Inc., is valued at $3.25 million and his
overall net worth is approximately $7 million. Therefore, the
weight of the evidence establishes that defendant Hassam would be
capable of satisfying any judgment entered against him with
respect to the instant action.
The plaintiffs further argue that defendant Hassam has either
misstated his involvement with other ownership interests he
claims in this case or is using others to conceal and shield his
interests. To this extent the plaintiffs argue that defendant
Hassam held himself out to be the president of OM SRI SAI, Inc.,
and further held himself out to be the personal owner of the
Howard Johnson's Hotel in Bartonsville, Pennsylvania. The plaintiffs
argue that neither of these assertions are true. In fact, at the
hearing in the above matter, defendant Hassam admitted that he is
not the president of OM SRI SAI, Inc. Instead, the testimony
presented indicated that, at one point, there was some confusion
among the shareholders as to defendant Hassam's position within
the company and that he may have believed himself to be the
president of the corporation but, in fact, was never in any such
position. There was also testimony that, since the inception of
this action, defendant Hassam was made the vice president of the
corporation. Defendant Hassam further admitted that he is not the
personal owner of the Howard Johnson's Hotel. Instead, the
testimony revealed that OM SRI SAI, Inc., is the owner of the
Howard Johnson's Hotel and the accompanying restaurant.
Regardless of whether defendant Hassam improperly held himself
out as the president of OM SRI SAI, Inc., or as the personal
owner of the Howard Johnson's Hotel, the evidence establishes
that he is a 49% shareholder in OM SRI SAI, Inc., an asset valued
at approximately $3.25 million and has a significant amount of
other assets which would enable him to satisfy any judgment
entered against him with respect to the instant action.
Based upon the foregoing, the plaintiffs have failed to
demonstrate the immediate, irreparable injury necessary to
justify injunctive relief. Now, therefore, IT IS HEREBY ORDERED THAT the plaintiffs'
motion for a preliminary injunction, (Doc. No. 15), is
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