Case 2:19-ap-01147-SK Doc 109 Filed 04/01/20 Entered 04/01/20 …€¦ · -CV 2314 (FB), 2018 WL 7053375 (E.D.N.Y. Nov. 15, 2018)..... 10, 11 Caribbean Marine Servs. Co. v. Baldrige,

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CALI’s OPPOSITION TO TRUSTEE’S MOTION TO COMPEL

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HOLLAND & KNIGHT LLP Robert J. Labate (SBN 313847) Email: [email protected] 50 California Street, Suite 2800 San Francisco, CA 94111 Telephone: 415.743.6900 Facsimile: 415.743.6910 Kristina S. Azlin (SBN 235238) Email: [email protected] Alan J. Watson (SBN 177531) Email: [email protected] 400 South Hope Street 8th Floor Los Angeles, CA 90071 Telephone: 213.896.2400 Facsimile: 213.896.2450

UNITED STATES BANKRUPTCY COURT

CENTRAL DISTRICT OF CALIFORNIA

LOS ANGELES DIVISION

In re: ZETTA JET USA, INC., a California corporation,

Debtor. In re: ZETTA JET PTE, LTD., a Singaporean corporation,

Debtor. JONATHAN D. KING, solely in his capacity as Chapter 7 Trustee of Zetta Jet USA, Inc. and Zetta Jet PTE, Ltd.,

Plaintiff, v.

CAVIC AVIATION LEASING (IRELAND) 22 CO. DESIGNATED ACTIVITY COMPANY; and BOMBARDIER AEROSPACE CORPORATION,

Defendants.

)))))))))))))))))))))))

Lead Case No.: 2:17-bk-21386-SK Chapter 7 Jointly Administered With: Case No.: 2:17-bk-21387-SK Adv. Proc. No. 2:19-ap-01147-SK CAVIC AVIATION LEASING (IRELAND) 22 CO. DESIGNATED ACTIVITY COMPANY’S OPPOSITION TO TRUSTEE’S MOTION TO COMPEL BOMBARDIER TO DEPOSIT FUNDS INTO THE COURT REGISTRY OR, IN THE ALTERNATIVE FOR MANDATORY PRELIMINARY INJUNCTION Hearing Date: May 13, 2020 Time: 9:00 a.m. Place: Courtroom 1575 255 East Temple Street Los Angeles, CA 90012

))

Case 2:19-ap-01147-SK Doc 109 Filed 04/01/20 Entered 04/01/20 15:09:45 DescMain Document Page 1 of 26

mailto:[email protected]

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TABLE OF CONTENTS

I. INTRODUCTION .................................................................................................... 1

II. ARGUMENT ........................................................................................................... 4

A. THE TRUSTEE’S RULE 22 MOTION IS PROCEDURALLY DEFECTIVE ................................................................................................. 4

B. THE TRUSTEE CANNOT USE CODE § 105 TO SAVE A PROCEDURALLY DEFECTIVE MOTION ............................................... 7

C. THE TRUSTEE HAS NOT MET HIS SUBSTANTIAL BURDEN TO OBTAIN A PRELIMINARY INJUNCTION ............................................... 9

1. The Trustee Fails to Establish That He Will Succeed On The Merits ............................................................................................... 10

2. The Trustee Does Not Establish That Anyone Will Suffer “Irreparable Harm” In The Absence Of A Preliminary Injunction .. 13

3. The Balance of Equities Favors Bombardier ................................... 17

4. The Public Interest is Best Served by Denying Trustee’s Motion ... 18

III. CONCLUSION ...................................................................................................... 19


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TABLE OF AUTHORITIES

Page(s)

Federal Cases

AFMS LLC v. United Parcel Serv. Co.,

105 F. Supp. 3d 1061 (C.D. Cal. 2015), aff'd, 696 Fed. App'x 293 (9th

Cir. 2017) ......................................................................................................................... 14

Am. Gen. Life Ins. Co. v. Eisenhauer, et al.,

No. EDCV 15-00412-VAP, 2015 WL 13039439 (C.D. Cal. May 7,

2015) ...................................................................................................................................7

Am. Passage Media Corp. v. Cass Commc'ns, Inc.,

750 F.2d 1470 (9th Cir. 1985) ......................................................................................... 14

Bankers Trust Co. v. Mfrs. Nat’l Bank of Detroit,

139 F.R.D. 302 (S.D.N.Y. 1991) ........................................................................................6

Bauer v. Uniroyal Tire Co.,

630 F.2d 1287 (8th Cir. 1980) ............................................................................................7

Bricklayers Ins. and Welfare Fund v. LaSala,

No. 12-CV-2314 (FB), 2018 WL 7053375 (E.D.N.Y. Nov. 15, 2018) ..................... 10, 11

Caribbean Marine Servs. Co. v. Baldrige,

844 F.2d 668 (9th Cir. 1988) ..................................................................................... 13, 14

CCDC Fin. Corp. v. Craven,

Civ.A. No. 91-1069-LFO, 1991 WL 206231 (D.D.C. Sept. 26, 1991) ..............................7

Ctr. for Competitive Politics v. Harris,

784 F.3d 1307 (9th Cir. 2015) ............................................................................................9

Dahl v. HEM Pharm. Corp. (9th Cir. 1993)

7 F.3d 1399 ...................................................................................................................... 10

Delhagen v. McDowell,

No. 3:08-cv-00285, 2010 WL 2574038 (M.D. Penn. June 23, 2010) ................................6

Dunbar v. U.S.,

502 F.2d 506 (5th Cir. 1974) ......................................................................................... 5, 6

Earth Island Inst. v. Carlton,

626 F.3d 462 (9th Cir. 2010) ..............................................................................................9


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Emmco Ins. Co. v. Frankford Trust Co.,

352 F. Supp. 130 (E.D. Penn. 1972) ...................................................................................7

Farris v. Seabrook,

677 F.3d 858 (9th Cir. 2012) ..............................................................................................9

Field v. United States,

No. 2:15-cv-00241-TLN-DB, 2019 WL 7038382 (9th Cir. Dec. 20,

2019) ...................................................................................................................................5

In re Focus Media Inc.,

387 F.3d 1077 (9th Cir. 2004) ................................................................................... 11, 16

Garcia v. Google, Inc.

786 F.3d 733 (9th Cir. 2015) ................................................................................. 9, 10, 13

Grupo Mexicano de Desarrollo S.A. v. All. Bond Fund, Inc.,

527 U.S. 308, 333 (1999) ............................................................................................... 3, 8

Int’l Fid. Ins. Co. v. Anchor Envt’l, Inc.,

2008 WL 1931004 (E.D. Pa. May 1, 2008) ..................................................................... 17

J.P. v. Sessions,

No. LA CV18-06081 JAK, 2019 WL 6723686 (C.D. Cal. Nov. 5, 2019) ...................... 12

Law v. Siegel,

571 U.S. 415 (2014) ....................................................................................................... 2, 8

Lazar Charles Schwab & Co., No. SA CV 12-02141 BRO, 2013 WL

12403551 (C.D. Cal. Aug. 21, 2013) ..................................................................................7

Los Angeles Mem’l Coliseum Comm'n v. NFL,

634 F2d 1197 (9th Cir. 1980) .......................................................................................... 15

Mack v. Kuckenmeister,

619 F.3d 1010 (9th Cir. 2010) ....................................................................................... 1, 5

Mazurek v. Armstrong,

520 U.S. 968 (1997) ..................................................................................................... 9, 14

Michelman v. Lincoln Nat. Life Ins. Co.,

685 F.3d 887 (9th Cir. 2012) ..............................................................................................5

Minn. Mut. Life Ins. Co. v. Ensley,

174 F.3d 977 (9th Cir. 1999) ......................................................................................... 2, 5

Munaf v. Geren,

553 U.S. 674 (2008) ............................................................................................................1


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Neitzke v. Williams,

490 U.S. 319 (1989) ......................................................................................................... 12

New England Dairies, Inc. v. Dairy Mart Convenience Stores, Inc. (In re

Dairy Mart Convenience Stores, Inc.),

351 F.3d 86 (2d Cir. 2003) .................................................................................................8

Norwest Bank Worthington v. Ahlers,

485 U.S. 197 (1988) ............................................................................................................8

Oakland Tribune, Inc. v. Chronicle Pub. Co.,

762 F.2d 1374 (9th Cir. 1985) ......................................................................................... 13

Pyro Spectaculars N., Inc. v. Souza,

861 F. Supp. 2d 1079 (E.D. Cal. 2012) ........................................................................... 15

Quantum Corporate Funding, Ltd. v. Assist You Home Health Care Servs.

of Va., L.L.C.,

144 F. Supp. 2d 241 (S.D.N.Y. 2001) ............................................................................. 16

Rent-A-Center, Inc. v. Canyon Television and Appliance, Inc.,

944 F.2d. 597 (9th Cir. 1991) .......................................................................................... 15

Republic of the Philippines v. Marcos,

862 F.2d 1355 (9th Cir. 1988) (en banc) ......................................................................... 11

In re Rinard,

451 B.R. 12 (Bankr. C.D. Cal. 2011) ............................................................................... 15

Roland v. Hickman,

No. 2:15-cv-1133-JCM-VCF, 2015 WL 10735658 (D. Nev. Aug. 12,

2015) ...................................................................................................................................7

S. Pac. Co. v. Conway,

115 F.2d 746 (9th Cir. 1940) ........................................................................................... 11

Sharp v. SKMP Corp., Inc. (In re SK Foods, L.P.),

No. 11-2337-D, 2011 WL 10723414 (Bankr. E.D. Cal. Oct. 11, 2011) ............. 15, 16, 18

Sierra Forest Legacy v. Rey,

577 F.3d 1015 (9th Cir. 2009) ............................................................................................9

Titaness Light Shop, LLC v. Sunlight Supply, Inc.,

585 Fed. Appx. 390 (9th Cir. 2014) ................................................................................. 14

U.S. v. Zermeno,

66 F.3d 1058 (9th Cir. 1995) ........................................................................................... 11


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United Investors Life Ins. Co. v. Grant,

No. 2:05-cv-1716-MCE-DAD, 2006 WL 1282618 (E.D. Cal. May 9,

2006) ...................................................................................................................................6

United States v. Sutton,

786 F.2d 1305 (5th Cir. 1986) ............................................................................................8

Univ. of Texas v. Camenisch,

451 U.S. 390 (1981) ......................................................................................................... 14

Weinberger v. Romero–Barcelo,

456 U.S. 305 (1982) ......................................................................................................... 18

In re Willett,

No. 9:14-BK-11123-PC, 2015 WL 8975218 (Bankr. C.D. Cal. Dec. 14,

2015) ................................................................................................................................ 15

Wilmington Trust Co. v. Gillespie,

397 F. Supp. 1337 (D. Del. 1975) .......................................................................................7

Winter v. Nat’l Res. Def. Council, Inc., et al.,

555 U.S. 7, 24 (2008) ................................................................................................ passim

Zochlinski v. Regents of the Univ. of Cal.,

578 F. App’x 636 (9th Cir. 2014) .................................................................................... 12

Federal Statutes

28 U.S.C. §§ 1335, 1397, 2361 ................................................................................................6

28 U.S.C. § 1442(a)(1) .............................................................................................................7

Code § 105 ..................................................................................................................... 7, 8, 19

Code § 105(a) .............................................................................................................. 2, 3, 8, 9

Code §§ 361 and 362 ........................................................................................................... 8, 9

Code § 362 ................................................................................................................................8

Federal Interpleader Act, 28 U.S.C. § 1335 .............................................................................6

Other State Statutes

New York Civil Procedure Law § 5225 ................................................................................ 10

New York Debtor and Creditor Law § 273-a ........................................................................ 10


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Other Authorities

2 Collier on Bankruptcy ¶ 105.01[2] (16th ed. 2013) ..............................................................2

Federal Rule of Bankruptcy Procedure 7022 ................................................................. passim

Federal Rule of Civil Procedure 22 ................................................................................ passim

Federal Rule of Civil Procedure 65 ..........................................................................................4

Rule 12(b)(6) ......................................................................................................................... 12


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Cavic Aviation Leasing (Ireland) 22 Co. Designated Activity Company (“CALI”)

submits this opposition to the Motion to Compel Defendant Bombardier Aerospace

Corporation (“Bombardier” or “BAC”) to Deposit Funds Into the Court Registry or Other

Appropriate Court Controlled Account or, in the Alternative, For a Mandatory Preliminary

Injunction Requiring Deposit of Funds Into the Court Registry or Other Appropriate Court

Controlled Account (the “Motion”) [Dkt. No. 90] filed by Jonathan D. King, chapter 7

Trustee (the “Trustee”) of Zetta Jet USA, Inc. and Zetta Jet PTE, Ltd. (collectively, the

“Debtors”) in the above-captioned adversary proceeding (the “Adversary Proceeding”).

I. INTRODUCTION1

The Trustee’s Motion is procedurally untenable and substantively unsustainable. His

attempt to use Federal Rule of Civil Procedure 22 (“Rule 22”) against an unwilling

stakeholder ignores statutory requirements and rests on a fiction that Bombardier’s Reply is

the equivalent of a counterclaim or crossclaim. It is not. And, the Trustee’s alternative

motion for a mandatory preliminary injunction – based solely on his own pleadings and

links to ambivalent news articles – fails completely to establish an entitlement to such an

“extraordinary and drastic remedy,” (Munaf v. Geren, 553 U.S. 674, 676 (2008) (internal

quotation marks omitted), and must be rejected.

Applicable precedent – and the statute itself – refutes the Trustee’s notion that Rule

22, designed to shield disinterested stakeholders from vexatious and costly litigation, may

be used as a sword against an unwilling defendant with significant economic interests in the

Trustee’s adversary proceedings.2 “The purpose of interpleader is for the stakeholder to

‘protect itself against the problems posed by multiple claimants to a single fund.’” Mack v.

1 All capitalized terms not defined herein have the same meaning as in CALI’s Motion to Dismiss Counts I, III, IV, V,

VI and VII of the Trustee’s Adversary Complaint (Dkt. No. 59) (“CALI’s Motion to Dismiss”). References to the

Trustee’s Motion to Compel (Dkt. No. 90), are cited herein as “Trustee’s Motion” or “Motion.” References to the

Trustee’s Complaint (Dkt. No. 1) are cited herein as “Compl.” or “Complaint.” References to CALI’s Reply in

Further Support of CALI’s Motion to Dismiss (Dkt. No. 82) are cited herein as “CALI’s Reply.”

2 As noted in Bombardier’s Reply in Further Support of Its Motion To Dismiss the Trustee’s Adversary Proceeding,

filed as Doc 96 in case no. 2:19-ap-01147-SK (the “BAC’s Reply”), the issue of recharacterizing the relationship

between CALI and the Debtors as one between a lender and borrower is central to both cases and Bombardier has a

significant economic interest in each case. Reply at 2.


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Kuckenmeister, 619 F.3d 1010, 1024 (9th Cir. 2010) (quoting Minn. Mut. Life Ins. Co. v.

Ensley, 174 F.3d 977, 980 (9th Cir. 1999)).

The requirements of Rule 22 are quite clear. The party seeking interpleader status

must be exposed to double or multiple liability resulting from its position as stakeholder.

The statute simply does not allow a third party to seek interpleader status on behalf of

another entity. The Trustee offers no case that allows him to bring an interpleader action on

behalf of another.

Case law is uniformly against the Trustee’s position. Under Rule 22, a party seeking

interpleader must frame his pleading either as a crossclaim against a co-party defendant

already in the lawsuit, or as a counterclaim asserting a claim for relief against the plaintiff.

Bombardier filed a Motion to Dismiss the Trustee’s Complaint (Dkt. No. 70) (“BAC’s

Motion to Dismiss”): it did not file a crossclaim or a counterclaim. Thus, there is no

pleading before this Court that might qualify as an interpleader.

The Trustee cannot ignore the statutory and procedural requirements of Rule 22.

Substantively, the shield designed to protect disinterested stakeholders from vexatious

litigation cannot be used as a sword to wrest funds from an unwilling defendant which

receives no benefit.

The Trustee suggests that the Court may use Code § 105(a) to augment Rule 22 in

order to compel Bombardier to deposit funds into Court Registry. Yet, the Trustee’s Motion

mentions Code § 105(a) in only one sentence, without comment as to how, or explanation as

to why, the Court should use its Code § 105(a) authority. Motion at 8. We are left to guess.

If the Trustee suggests that Code § 105(a) authorizes this Court to overlook or ignore

the procedural and substantive defects in his request for Rule 22 interpleader, then he is

flatly wrong. “It is hornbook law that § 105(a) ‘does not allow the bankruptcy court to

override explicit mandates of other sections of the Bankruptcy Code.” Law v. Siegel, 571

U.S. 415, 421 (2014) (citing 2 Collier on Bankruptcy ¶ 105.01[2], p. 105–6 (16th ed.

2013)). Such powers must be used “within the confines of ‘the Bankruptcy Code.”’ Id.


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Explicit statutory language and case law precedents govern the requirements for

granting Rule 22 interpleader. If those requirements are not satisfied, Code § 105(a) does

not provide “carte blanche” to override statutory and Code mandates.

As to the Trustee’s request for a mandatory injunction, Ninth Circuit case law makes

clear that he must establish that the law and facts clearly favor his position, not simply that

he is likely to succeed on the merits. The Trustee asks this Court to ignore this requirement

and instead apply the lower “likely to succeed” standard because the Trustee purportedly

seeks only to require Bombardier “to do that which it should have done earlier”, which it

argues is to turn over the $30 Million PDP. Motion at 9. Yet, the Trustee cites to no order

or judgment that, at any time, required Bombardier to turn over the PDP to the Trustee or

into a Court Registry and Bombardier has no legal obligation to do so. Rather, the Trustee’s

turnover request is a prejudgment attachment which, under Supreme Court precedent, is

permitted only in narrow circumstances not present here. See Grupo Mexicano de

Desarrollo S.A. v. All. Bond Fund, Inc., 527 U.S. 308, 333 (1999).

In any event, arguing about the applicable standard is largely academic because the

Trustee does not – and cannot – meet even the lower “likely to succeed” requirement.

Ignoring his burden entirely, the Trustee offers no actual evidence in support of his Motion.

Instead, the Trustee relies solely on pleadings – his Oppositions to CALI’s and

Bombardier’s pending Motions to Dismiss,3 which argue that, assuming all facts alleged in

the Complaint to be true, the Trustee’s claim is sufficiently “plausible” to survive a motion

to dismiss.

Yet, pleadings are not evidence. And pleadings are not sufficient to satisfy the

Trustee’s “likely to succeed” burden, nor is the Trustee entitled to any “presumption of

truth” in the preliminary injunction context. Tellingly, the Trustee does not even bother to

describe what portions of his Oppositions allegedly show that he satisfies his burden

3 References to the Trustee’s Opposition to CALI’s Motion to Dismiss (Dkt. No. 75) (“Trustee’s Opposition to

CALI’s Motion to Dismiss”) and the Trustee’s Opposition to BAC’s Motion to Dismiss (Dkt. No. 80) are collectively

cited herein as “Oppositions.”


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(because none do) -- it is not this Court’s job to sift through the Trustee’s pleadings in

search of evidence.

The Trustee’s “irreparable harm” argument is mere speculation. Instead of evidence,

the Trustee offers four news articles commenting on Bombardier’s recent business

activities. The articles have no probative value: none of the articles suggests that

Bombardier is considering more than sales of assets and additional financing. None portend

imminent doom. To the contrary, as one of the industry professionals quoted states: “It’s

not a problem, [Bombardier] will get the money at a very good rate of interest.”4 Such

ambivalent third-party reports cannot satisfy the Trustee’s burden of showing a likelihood of

“immediate and irreparable injury” – as required under Federal Rule of Civil Procedure 65.

The balancing of equities favor Bombardier because the Trustee seeks an

unprecedented prejudgment attachment based without presenting evidence of dissipation or

immanent transfer of assets. There is no basis for ignoring established case law and, as yet,

there is no reason to believe that distributions to creditors will exceed administrative

expenses of this estate.

Finally, the public interest is not served by issuing a preliminary injunction based

solely on ambivalent news stories. Such a result would violate Supreme Court and Ninth

Circuit precedent that injunctive relief as an extraordinary remedy that may only be awarded

upon a clear showing that the plaintiff is entitled to such relief. The Trustee’s Motion falls

far short of this standard.

II. ARGUMENT

A. The Trustee’s Rule 22 Motion is Procedurally Defective

The Trustee asks this Court to treat BAC’s Motion to Dismiss as an interpleader

under Rule 22, made applicable to this adversary proceeding by Federal Rule of Bankruptcy

Procedure 7022 (“Rule 7022”). The Trustee makes this request without citation to any rule,

statute, case, or other legal precedent that would authorize this Court to do so. And the

4 See Declaration of John K. Lyons in Support of Trustee’s Motion (“Lyons Decl.”), Dkt. No. 91, at ¶ 3, Exhibit “A”

(Dkt. 91-1) at 3.


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cases to which he does cite are inapplicable to this adversary proceeding because they all

involve factual scenarios in which the stakeholder previously filed an actual interpleader

action. Recognizing that BAC has chosen not to avail itself of Rule 7022, the Trustee asks

the Court to intercede on his behalf – merely because he claims that BAC “recognizes that

the true nature of [BAC’s Motion to Dismiss] is as an interpleader pursuant to” Rule 7022.

Motion at 1. Yet, BAC’s Reply belies the Trustee’s claims.

Rule 7022 provides that “[p]ersons with claims that may expose a [plaintiff or

defendant] to double or multiple liability may be joined as defendants and required to

interplead. . . . A defendant exposed to similar liability may seek interpleader through a

crossclaim or counterclaim.” (Emphasis added).

The Ninth Circuit has explained that “[t]he purpose of interpleader is for the

stakeholder to ‘protect itself against the problems posed by multiple claimants to a single

fund.’” Mack, 619 F.3d at 1024 (9th Cir. 2010) (quoting Minn. Mut. Life Ins. Co, 174 F.3d

at 980). “This includes protecting against the possibility of a court-imposed liability to a

second claimant where the stakeholder has already voluntarily paid the first claimant.” Id.

(emphasis added). Indeed, “[t]he main purpose of interpleader actions is to protect the

stakeholder from the expense of multiple lawsuits and from having to contend with

inconsistent or multiple determinations of liability.” Field v. United States, No. 2:15-cv-

00241-TLN-DB, 2019 WL 7038382, at *1 (9th Cir. Dec. 20, 2019). The stakeholder “must

have ‘a good faith belief that there are or may be colorable competing claims to the stake,’

based on ‘a real and reasonable fear of exposure to double liability or the vexation of

conflicting claims.’” Id. (quoting Michelman v. Lincoln Nat. Life Ins. Co., 685 F.3d 887,

894 (9th Cir. 2012)). It is only after the stakeholder has “satisfied [these] interpleader

requirements” that the court “may discharge the stakeholder from liability . . . .” Id. at *2

(emphasis added). Further, “the burden is on the party seeking interpleader to demonstrate

that he is entitled to it.” Dunbar v. U.S., 502 F.2d 506, 511 (5th Cir. 1974).

BAC, as the holder of the $30 Million PDP, “wishes to be involved in the resolution

of the competing claims because it has an interest in the outcome as well.” BAC’s Reply at


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2. Through this adversary proceeding, the Trustee is seeking to “recharacterize the

relationship between CALI and the Debtors as one between a lender and borrower.” Id.

The Court’s resolution of this matter “may have a real economic impact on BAC and its

affiliates.” Id. Try as he might, the Trustee simply cannot force BAC to file a Rule 7022

interpleader where BAC, in its discretion, has not done so.

“The decision to seek interpleader is at the discretion of the” stakeholder. Delhagen

v. McDowell, No. 3:08-cv-00285, 2010 WL 2574038, at *1 (M.D. Penn. June 23, 2010). In

Delhagen, the plaintiff filed a motion to compel asking the court to compel the defendant’s

insurance carrier to deposit the proceeds of defendant’s insurance policy with the court. Id.

The court first explained that while the insurance company was free to “file an action for

interpleader pursuant to 28 U.S.C. §§ 1335, 1397, 2361 and Fed. R. Civ. P. 22.,” the

insurance company was not seeking to do so. Id. Instead, it was the plaintiff that was

seeking such relief by way of what the court described as a “reverse interpleader.” Id. The

court noted that it had “researched all district and circuit courts, and found no support for

this ‘reverse interpleader’ that plaintiff suggests.” Id. The court further explained that it

was “not aware of any authority to support plaintiff’s position.” Id. Concluding its opinion,

the court denied the plaintiff’s motion to compel, explaining that the insurance company

was “under no obligation to pay these monies into court,” and that it was “of the opinion

that [it had] no authority or jurisdiction to order the insurance company to do so.” Id.

Indeed, an interpleader action “‘must be brought by the stakeholder, and despite the

prospects of multiple suits a claimant not in possession or control of property cannot bring

the action and thus force the stakeholder to interplead.’” Bankers Trust Co. v. Mfrs. Nat’l

Bank of Detroit, 139 F.R.D. 302, 307 (S.D.N.Y. 1991) (citation omitted) (addressing a

statutory interpleader action).5 The Trustee’s Motion cites absolutely no support for a

contrary position.

5 Interpleader actions in federal court may be brought under the Federal Interpleader Act, 28 U.S.C. § 1335, or Rule 22.

“The general prerequisites for maintaining an interpleader action are identical for both statutory and Rule 22 interpleader.”

United Investors Life Ins. Co. v. Grant, No. 2:05-cv-1716-MCE-DAD, 2006 WL 1282618, at *2 (E.D. Cal. May 9, 2006).


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In each case cited by the Trustee in support of his argument as to the Court’s

discretionary power to order a deposit under Rule 22, the stakeholder had previously filed

an interpleader action. See Lazar Charles Schwab & Co., No. SA CV 12-02141 BRO, 2013

WL 12403551, at *9 (C.D. Cal. Aug. 21, 2013) (stakeholder filed a crossclaim for

interpleader); Wilmington Trust Co. v. Gillespie, 397 F. Supp. 1337, 1339-40 (D. Del. 1975)

(“This is an action of interpleader brought under Rule 22 of the Federal Rules of Civil

Procedure . . . .”); Bauer v. Uniroyal Tire Co., 630 F.2d 1287, 1291 (8th Cir. 1980) (“In the

present case, . . . the interpleader action was brought pursuant to Rule 22 . . . .”); CCDC Fin.

Corp. v. Craven, Civ.A. No. 91-1069-LFO, 1991 WL 206231, at *1 (D.D.C. Sept. 26, 1991)

(“This matter is before the Court on motions . . . in a Rule 22 interpleader proceeding.”);

Roland v. Hickman, No. 2:15-cv-1133-JCM-VCF, 2015 WL 10735658, at *1 (D. Nev. Aug.

12, 2015) (Plaintiff “commenced an interpleader action in state court, which the United

States removed under 28 U.S.C. § 1442(a)(1).”); Am. Gen. Life Ins. Co. v. Eisenhauer, et

al., No. EDCV 15-00412-VAP, 2015 WL 13039439, at *1 (C.D. Cal. May 7, 2015)

(Plaintiff filed an interpleader action against defendants); Emmco Ins. Co. v. Frankford

Trust Co., 352 F. Supp. 130, 132 (E.D. Penn. 1972) (Plaintiff’s “action in the nature of

interpleader [was] appropriate.”).

Where, as here, the stakeholder elects not to file an interpleader action, the Trustee

cannot force it to do so. Case law cited by the Trustee merely supports the black letter law

proposition that once stakeholder files a Rule 7022 interpleader action, the court has the

discretionary power to order that the funds in question be deposited with the court. Such

case law is inapposite here where BAC has not filed a Rule 7022 interpleader action.

B. The Trustee Cannot Use Code § 105 to Save a Procedurally Defective

Motion

Apparently anticipating that case law and Rule 22 lend no support to his claims, the

Trustee requests that the Court “exercise its discretion” under Code § 105 to compel BAC to

deposit the $30 Million PDP into the Court’s registry. However, apart from reciting the

operative provisions of Code § 105, the Trustee fails to support his demand with any case


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law – not one opinion – because such case law does not exist.

Code § 105(a) states that “[t]he court may issue any order, process, or judgment that

is necessary or appropriate to carry out the provisions of [Title 11].” However, “Section

105(a) confers authority to ‘carry out’ the provisions of the Code, but it is quite impossible

to do that by taking action that the Code prohibits.” Law, 571 U.S. at 421. “We have long

held that ‘whatever equitable powers remain in the bankruptcy courts must and can only be

exercised within the confines of’ the Bankruptcy Code.” Id. (quoting Norwest Bank

Worthington v. Ahlers, 485 U.S. 197, 206 (1988)).

Section 105(a) “does not ‘authorize the bankruptcy courts to create substantive rights

that are otherwise unavailable under applicable law, or constitute a roving commission to do

equity.’” New England Dairies, Inc. v. Dairy Mart Convenience Stores, Inc. (In re Dairy

Mart Convenience Stores, Inc.), 351 F.3d 86, 91-92 (2d Cir. 2003) (quoting United States v.

Sutton, 786 F.2d 1305, 1308 (5th Cir. 1986)).

In New England Dairies, a creditor brought a pre-petition contract action against the

eventual debtor. Id. at 88. The federal court “ordered as a prejudgment remedy that [the

eventual debtor] post a letter of credit and renew or replace it as necessary throughout the

course of the litigation.” Id. After a few renewals, the debtor filed for Chapter 11

protection and “declined any further renewal.” Id. The creditor subsequently filed a motion

with the bankruptcy court “[i] to compel [the debtor] to comply with its renewal obligation

as adequate protection under” Code §§ 361 and 362, “[ii] to lift the automatic stay under

[Code § 362] to allow enforcement of [the creditor’s] prejudgment remedy; or [iii] for

equitable relief under” Code § 105. Id. The bankruptcy court denied the creditor’s motion,

and the district court affirmed.

On appeal, the creditor “concede[d] that section 105(a) does not operate on a stand-

alone basis, but argue[d] that it applies here nonetheless because its motion implicated

sections 361 and 362 . . ., and because the relief it sought was consistent with the policies of

those sections.” Id. at 92. The Second Circuit was not convinced. It explained that while

“[i]t may be that [the creditor’s] motion ‘implicates’ sections 361 and 362 of the Bankruptcy


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Code,” the court had determined that the creditor was “not entitled to substantive relief

under those sections.” Id. The court therefore found that “[b]ecause no provision of the

Bankruptcy Code may be successfully invoked in this case, section 105(a) affords [the

party] no independent relief.” Id.

The Trustee’s request here is no different. While the Trustee’s Motion may

implicate Federal Rule of Bankruptcy Procedure 7022, the Trustee has not cited any

statutory provision that may be “successfully invoked” to compel BAC to deposit the $30

Million PDP into the Court’s registry. By its use of the word “may,” Rule 7022 simply

allows a stakeholder to file an interpleader action. In no way does Rule 7022 obligate a

stakeholder to do so. Accordingly, Code § 105(a) cannot, and should not, be used to afford

the Trustee the independent relief that he seeks.

C. The Trustee Has Not Met His Substantial Burden To Obtain A

Preliminary Injunction

Preliminary injunctions are “an extraordinary remedy never awarded as of right.”

Garcia v. Google, Inc. 786 F.3d 733, 740 (9th Cir. 2015) (citing Winter v. Nat’l Res. Def.

Council, Inc., et al., 555 U.S. 7, 24 (2008)). “Under Winter, plaintiffs seeking a preliminary

injunction must establish that (1) they are likely to succeed on the merits; (2) they are likely

to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities

tips in their favor; and (4) a preliminary injunction is in the public interest.” Sierra Forest

Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir. 2009) (citation omitted); see also Farris v.

Seabrook, 677 F.3d 858, 864 (9th Cir. 2012) (reciting factors).

Absent a “clear showing” on all factors, injunctive relief must be denied. Mazurek v.

Armstrong, 520 U.S. 968, 972 (1997) (emphasis in original); see also Ctr. for Competitive

Politics v. Harris, 784 F.3d 1307, 1312 (9th Cir. 2015) (The moving party “bears the heavy

burden of making a ‘clear showing’ that it [i]s entitled to a preliminary injunction.”); Earth

Island Inst. v. Carlton, 626 F.3d 462, 469 (9th Cir. 2010) (recognizing that plaintiffs “face a

difficult task in proving that they are entitled to this ‘extraordinary remedy’”).

The Trustee has not – and cannot – satisfy this burden.


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1. The Trustee Fails to Establish That He Will Succeed On The Merits

a) The Trustee’s plea for a lower merits showing is legally wrong

and, in any event, has no impact here.

The Trustee seeks a mandatory injunction which requires a showing that the law and

facts clearly favor the Trustee’s position, not simply that he is likely to succeed. Dahl v.

HEM Pharm. Corp. (9th Cir. 1993) 7 F.3d 1399, 1403 (mandatory injunctions “subject to

heightened scrutiny and should not be issued unless the facts and law clearly favor the

moving party.”); Garcia, 786 F.3d. at 740 (recognizing that plaintiff's burden is “doubly

demanding” if seeking mandatory injunction). The Trustee acknowledges that the higher

“clearly favor” standard generally applies to mandatory injunctions, (Motion at 9: 4-11), but

seeks to avoid its application here on the grounds that the lower “likely to succeed on the

merits” standard applies when the injunction would require defendants “do even less than

that which they ‘should have done earlier.’” Id. (citing Bricklayers Ins. and Welfare Fund

v. LaSala, No. 12-CV-2314 (FB), 2018 WL 7053375, at *2 (E.D.N.Y. Nov. 15, 2018)).

Bricklayers is inapposite here. In Bricklayers, the plaintiff requested a preliminary

injunction after having obtained a judgment against defendants and after having secured a

Temporary Restraining Order less than a month before seeking an injunction. The TRO

was “based on a substantial body of evidence amassed by plaintiffs, including bank records

that appeared to reflect fraudulent conveyances designed to move defendants’ assets beyond

plaintiffs’ reach” and at the evidentiary preliminary injunction hearing, the plaintiff offered

bank records showing that defendants continued to transfer funds out of plaintiff’s reach.

Bricklayers, 2018 WL 7053375, at *1. The court found that the plaintiffs had

“unquestionably satisfied even the heightened standard for issuing a mandatory injunction.”

Id. at *2.

Further, the Bricklayers plaintiff sought turnover of funds pursuant to specific New

York statutes: section 273-a of the New York Debtor and Creditor Law and section 5225 of

the New York Civil Procedure Law and Rules. Each statute authorized judgment creditors

to seek turnover of funds.


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Here, the Trustee cites to no statute authorizing turnover of the PDP. The Trustee is

merely a judgment creditor who filed a complaint which both CALI and Bombardier moved

to dismiss based on extensive procedural and substantive defects. What he actually seeks is

an ad hoc form of pre-judgment attachment based on absolutely nothing. And, as discussed

below, the Trustee offers no evidence in support of his requested injunction other than four

news articles, in which the source of one article states: “It’s not a problem, [Bombardier]

will get the money at a very good rate of interest.” Motion, Ex. A at 2.

If anything, Bricklayers shows the type of evidence, submitted at an evidentiary

hearing, that satisfies a request for a mandatory injunction. No such evidence is proffered

here. The Trustee’s only “evidence” offered in support of the first factor – under either the

“likely to succeed” or “clearly support” standard – are the Trustee’s own pleadings. That is,

his Opposition to CALI’s and Bombardier’s Motions to Dismiss. Those pleading, however,

address a motion to dismiss and are not evidence.6

The contrast between Bricklayers and the Trustee’s Motion could not be greater and,

absent an offer of probative evidence in support of the Trustee’s Motion, the distinction

between the “likely to succeed” and the “clearly showing” standard is moot.

b) The Trustee Offers No Evidence Regarding Success On The

Merits.

The Trustee asserts that establishing “success on the merits” is the most important of

the Winter facts. Motion at 9:23-24. Yet, the Trustee only addresses this factor in one short

paragraph which cites generally to the Trustee’s Oppositions. Both CALI’s and BAC’s

Motions to Dismiss are still pending. Aside from failing to identify which portions of his

Oppositions may be probative, the Trustee’s argument fails because pleadings are not

evidence. U.S. v. Zermeno, 66 F.3d 1058, 1062 (9th Cir. 1995); see also S. Pac. Co. v.

Conway, 115 F.2d 746 (9th Cir. 1940) (“the office of a pleading is to state ultimate facts and

not evidence of such facts”).

6 Even if the lower standard is used, to establish a substantial likelihood of success on the merits, the Trustee must

show “a fair chance of success.” In re Focus Media Inc., 387 F.3d 1077 (9th Cir. 2004) (citing Republic of the

Philippines v. Marcos, 862 F.2d 1355, 1362 (9th Cir. 1988) (en banc)).


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This is doubly true where, as here, the Trustee’s Oppositions concern “plausibility”

rather than the truth of those pleading. Indeed, there is not a whisper of actual evidence

anywhere in the Trustee’s Oppositions. Moreover, pleadings are not probative evidence

because even false pleadings may survive a motion to dismiss. “Rule 12(b)(6) does not

countenance dismissals based on a judge’s disbelief of a complaint’s factual allegations.”

Zochlinski v. Regents of the Univ. of Cal., 578 F. App’x 636, 638 (9th Cir. 2014) (quoting

Neitzke v. Williams, 490 U.S. 319, 327 (1989)). Trustee’s Opposition to CALI’s Motion to

Dismiss at 23. The Trustee, of course, is entitled to no such assumption of truth in this

preliminary injunction proceeding.

The Trustee’s reference to J.P. v. Sessions, No. LA CV18-06081 JAK, 2019 WL

6723686, at *27 (C.D. Cal. Nov. 5, 2019) at the end of his “success on the merits”

paragraph only serves to show the type of evidence required to sustain a mandatory

injunction. In that case:

Plaintiffs submitted extensive evidence in support of their claim

of the substantial trauma to them and their children that occurred

as a result of their separation while in custody. Each Plaintiff

submitted a declaration describing the fear and anxiety she

suffered due the separation. . . Plaintiffs also submitted a

declaration from Alejandra Acuña, a licensed social worker, who

conducted an evaluation of Ms. P, and determined that she had

symptoms consistent with PTSD, depression and anxiety as a

result of her separation from her daughter. . . Acuña opines that,

if not properly and timely treated, this mental trauma will get

worse. . . Dr. Jose Hidalgo, a psychiatrist, presented similar

statements in his declaration about the mental conditions of Ms.

O and Ms. M based on his examination of each of them. (citations

omitted)

Id. at *31.

The only purported evidence submitted by the Trustee is a declaration by his counsel,

John K. Lyons, declaring that he attached “true and correct” copies of news articles, which

the Trustee asks the Court to consider in evaluating the injury factor. Absolutely no

evidence is submitted in support of the Trustee’s “success on the merits” argument.


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Moreover, CALI’s Motion to Dismiss and Reply show that the Trustee’s Complaint

fails to allege sufficient facts to establish plausible causes of action. CALI’s Motion to

Dismiss at 17-35 and CALI’s Reply at 10-26. Additionally, CALI’s Motion to Dismiss and

Reply show that the Trustee fails to show how, under Bankruptcy and non-bankruptcy law,

he is entitled to grab the PDP, and in addition, that pursuant to the Bombardier Consent, the

PDP must go to EDC. CALI’s Motion to Dismiss at 22-27 and CALI’s Reply at 14-19.

CALI need only succeed on one of the myriad of issues briefed for the Court in order to

defeat the Trustee’s purported claim to the PDP – whereas the Trustee must succeed on all.

For the reasons set forth in CALI’s Motion to Dismiss and CALI’s Reply, the Trustee

simply has not and cannot establish that he is likely to succeed on the merits.

Given the strength and claim-determinative nature of CALI’s challenges to the

Trustee’s Complaint and the lack of evidence offered by the Trustee, the Trustee’s Motion

must be denied. Garcia, 786 F3d at 740 (“Because it is a threshold inquiry, when a plaintiff

has failed to show the likelihood of success on the merits, we need not consider the

remaining three Winter elements.”).

2. The Trustee Does Not Establish That Anyone Will Suffer

“Irreparable Harm” In The Absence Of A Preliminary Injunction

Under the second Winter factor, the Trustee must “demonstrate that there exists a

significant threat of irreparable injury.” Oakland Tribune, Inc. v. Chronicle Pub. Co., 762

F.2d 1374, 1376 (9th Cir. 1985). Even assuming arguendo the Court finds that the Trustee

has established a likelihood of success on the merits, which he has not, the Trustee cannot

show that the estate will suffer irreparable harm if injunctive relief is not granted.

It is well established that “a plaintiff seeking preliminary injunctive relief must

demonstrate that it will be exposed to irreparable harm.” Caribbean Marine Servs. Co. v.

Baldrige, 844 F.2d 668, 674 (9th Cir. 1988) (citations omitted). “Speculative injury does

not constitute irreparable injury sufficient to warrant granting a preliminary injunction.... A

plaintiff must do more than merely allege imminent harm sufficient to establish standing; a

plaintiff must demonstrate immediate threatened injury as a prerequisite to preliminary


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injunctive relief.” Id. (emphasis added); see also Titaness Light Shop, LLC v. Sunlight

Supply, Inc., 585 Fed. Appx. 390, 391 (9th Cir. 2014) (“To establish a likelihood of

irreparable harm, conclusory or speculative allegations are not enough.”); Am. Passage

Media Corp. v. Cass Commc'ns, Inc., 750 F.2d 1470, 1473 (9th Cir. 1985) (statements that

“are conclusory and without sufficient support in facts” do not establish irreparable harm).

The law could not be clearer. As explained by the U.S. Supreme Court: “Issuing a

preliminary injunction based only on a possibility of irreparable harm is inconsistent with

our characterization of injunctive relief as an extraordinary remedy that may only be

awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter, 555 U.S.

at 375-76; Mazurek, 520 U.S. at 972.

Despite this black-letter law, the Motion is replete with speculative allegations of

injury that are unsupported by actual evidence and facts. Indeed, while the Trustee’s

“irreparable harm” argument is slightly longer than his paragraph on “likely to succeed”, it

rests entirely on four news articles regarding Bombardier’s recent business activities—none

of which “demonstrate immediate threatened injury”.

The Trustee argues that these articles show that he “faces a risk of irreparable injury

if the funds are not deposited into the Court’s registry” because “the Bombardier entities are

in the midst of a financial crisis that may ultimately lead to the company’s bankruptcy.”

Motion at 1:22-23 and 10:18-19 (emphasis added). But, while these four articles speculate

about the business challenges faced by Bombardier, such as whether it will remain in the

rail business or whether it may divest itself of certain assets to satisfy long-term debt

obligations, they do not demonstrate that Bombardier is on the brink of insolvency.7 If

anything, they suggest that Bombardier “will get the money” it needs “at a very good rate of

interest.” Lyons Decl., Dkt. No. 91-1, Ex. A at 3.

7 Moreover, although the Court has discretion to relax admissibility standards on a preliminary injunction motion

generally, see, e.g., Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981), the standards should not be stretched so

threadbare so as to give any weight to double hearsay, in unauthenticated news articles, that do not actually even say

what Trustee cites to them for. Indeed, “[i]t is axiomatic to state that newspaper articles are by their very nature hearsay

evidence and are thus inadmissible if offered to prove the truth of the matter asserted[.]” AFMS LLC v. United Parcel

Serv. Co., 105 F. Supp. 3d 1061, 1070 (C.D. Cal. 2015), aff'd, 696 Fed. App'x 293 (9th Cir. 2017). As such, the news

articles have no evidentiary value and should be disregarded entirely.


http://www.westlaw.com/Link/Document/FullText?findType=Y&serNum=1997126600&pubNum=0000708&originatingDoc=I2c2f54e6b02911ddb7e683ba170699a5&refType=RP&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.UserEnteredCitation)

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Indeed, the Trustee’s own language makes clear that a long-list of “ifs” would

actually have to come to fruition in order to even “potentially” impact the parties’ ability to

collect the PDP. Motion at 10:13-18 (arguing that “Bombardier is … [in the] midst of

financial crisis which may lead to bankruptcy” and that “[i]f Bombardier does not succeed

in its divestiture strategy or otherwise suffers an adverse disruption to its business, it may be

forced to seek protection under bankruptcy laws”, which could then “potentially

jeopardiz[e] the ability to recover the Refund for the benefit of the Zetta estates and/or

CAVIC” in which case “[t]he Court may not be able to grant an effective remedy.”)

(emphasis added).8

The Trustee’s ambivalent news articles are insufficient as a matter of law to warrant

granting a preliminary injunction. “The standard is 'likely irreparable harm,' not possible

irreparable harm.” In re Willett, No. 9:14-BK-11123-PC, 2015 WL 8975218, at *7 (Bankr.

C.D. Cal. Dec. 14, 2015) (citing In re Rinard, 451 B.R. 12, 23 (Bankr. C.D. Cal. 2011))

(emphasis added).

Lacking evidence of concrete irreparable harm, the Trustee directs this Court to

several cases in which debtor funds were being dissipated or intentionally transferred

beyond the reach of creditors. Neither situation exists here.

For example, the Court’s lengthy recitation of evidence in Sharp v. SKMP Corp.,

Inc. (In re SK Foods, L.P.), No. 11-2337-D, 2011 WL 10723414, at *30 (Bankr. E.D. Cal.

Oct. 11, 2011) shows that none of the facts on which that injunction was issued are present

here. Among other things, the Court found: violation of injunctions entered in related

actions, transfers to overseas bank accounts by the account debtors, criminal action against

principals, inappropriate withdrawals of funds subject to prior injunction orders, inaccurate

accounting, and unreliability of unauthenticated and unsubstantiated documentation

8 Even if the Trustee could demonstrate a possible risk at some future time of collecting on a money judgment, the law

is clear that economic injury alone will not support a finding of irreparable harm. Pyro Spectaculars N., Inc. v. Souza,

861 F. Supp. 2d 1079, 1092 (E.D. Cal. 2012) (citing Rent-A-Center, Inc. v. Canyon Television and Appliance, Inc., 944

F.2d. 597, 603 (9th Cir. 1991)). Indeed, a preliminary injunction is appropriate only if the record establishes that the

harm is not economic. Id; see also Los Angeles Mem’l Coliseum Comm'n v. NFL, 634 F2d 1197, 1202 (9th Cir. 1980)

(monetary harm alone does not constitute irreparable harm).


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provided by account debtors. The findings of the Sharp Court were based on extensive

evidence submitted by the Trustee including:

o Numerous declarations of the Trustee regarding his review of the Debtors

financial and business records and of individuals with knowledge of the

debtor’s business affairs;

o the Trustee’s analysis of liabilities the Debtors incurred to customers;

o the debtor’s balance sheet and other financial records,

o records of overseas banks to which funds were improperly transferred; and

o detailed evidence of violations of prior injunctions.

Sharp, 2011 WL 10723414, at *3 -*11.

Nothing remotely like the circumstances in Sharp, or the evidence presented by the

Sharp Trustee exist here. Sharp is a primer on the nature and extent of actual evidence

required for a preliminary injunction and shows how far short the Trustee’s Motion is of

that requirement.

The other cases cited by Trustee are equally inapposite and, if anything, show that

the Trustee’s evidence is woefully inadequate to satisfy his burden of establishing

“irreparable harm.”

In Rubin v. Pringle (In re Focus Media Inc.), 387 F.3d 1077 (9th Cir. 2004), the

Bankruptcy Court based its granting of an injunction on a TRO hearing in which evidence –

including testimony for Focus Media’s chief financial officer -- was offered showing that

shortly before the involuntary was filed, the debtor transferred Defendant, Rubin, received

“around $ 20 million from Focus Media, that this money was likely a shareholder dividend,

and that Focus Media was unable to pay its creditors due their payment of Rubin. Focus

Media, 387 F.3d at 1086. There was also evidence that “in the past Rubin made away with

Focus Media funds, suggesting that he may do the same with respect to the funds that [the

Trustee] seeks to recover.” Id.

In Quantum Corporate Funding, Ltd. v. Assist You Home Health Care Servs. of Va.,

L.L.C., 144 F. Supp. 2d 241 (S.D.N.Y. 2001) the court issued a preliminary injunction


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following three days of evidentiary hearings in which the creditor showed that it held valid

security interests in the Debtor’s assets, received testimony that the defendant’s had failed to

maintain accurate and reliable financials “for quite some time,” that payroll tax liability was

in excess of $400,000, that the State of Virginia had filed tax levies, that the defendant

failed to satisfy a number of judgments, and that based on recent records, defendants were

insolvent. Against this mountain of evidence, the Trustee’s four articles are insignificant.

In Int’l Fid. Ins. Co. v. Anchor Envt’l, Inc., 2008 WL 1931004, at *7 (E.D. Pa. May

1, 2008) the court entered summary judgment against the defendant, Anchor Environmental,

which was “insolvent and defunct.” Id. at *1. The Court simultaneously entered a

preliminary and permanent injunction based on a “valid and binding Agreement of

Indemnity provides Plaintiff with the right to be collateralized as soon as liability is

asserted.” Id. at *6. The plaintiff was granted summary judgment and showed that

defendant had a valid and binding agreement to pay plaintiff. The facts of Int’l Fidelity are

vastly different from those found here where the Trustee does not have a judgment and this

Court has yet to find that Bombardier has a “valid and binding agreement to pay.”

Taken together, the “evidence” submitted by the Trustee does not establish that

Bombardier is on the verge of bankruptcy – indeed, the articles attached to the Motion

indicate that Bombardier “will get the money” it needs “at a very good rate of interest” to

help it work through its business issues which may include the sale of certain assets.

Nothing submitted by the Trustee shows that Bombardier is likely to file bankruptcy or to

cease paying its debts before this Court rules on CALI’s pending Motion to Dismiss.

Without evidence, the Trustee’s Motion fails.

3. The Balance of Equities Favors Bombardier

“In each case, courts ‘must balance the competing claims of injury and must consider

the effect on each party of the granting or withholding of the requested relief.’” Winter, 555

U.S. at 24 (citation omitted).

The Trustee creates a false narrative by suggesting that an injunction is needed to

prevent Bombardier from dissipating or transferring the $30 million PDP which could be


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used to distribute to creditors.9 See Motion at 11 and the Trustee’s quote from In re SK

Foods, LP, 2011 WL 10723414, at *36.

Bombardier has held the $30 Million PDP since March 2017 (see Complaint at Ex.

T) and the Trustee submits no evidence that Bombardier is likely to dissipate or transfer the

$30 Million PDP. This Motion rests solely on the Trustee’s unfounded suspicion that

Bombardier will file bankruptcy before this Court rules on CALI’s Motion to Dismiss and

on the Trustee’s false assumption that there is no other way to protect the estate’s tenuous

claim to the $30 Million PDP.

CALI, as one of the largest unsecured creditors of this estate, believes that the

administrative expenses of this estate will far exceed any distribution to creditors. Aside

from concern that this Court will disallow portions of the Trustee’s costs and fees, there is

no check on what the Trustee may spend. And after 30 months, neither we, the U.S.

Trustee, nor the Court has any idea of the amount of legal fees and costs incurred by the

Trustee.10 The balance of equities favor Bombardier.

4. The Public Interest is Best Served by Denying Trustee’s Motion

In exercising its sound discretion, courts of equity should pay particular regard for

the public consequences in employing the extraordinary remedy of injunction. Winter, 555

U.S. at 376-77 (citing Weinberger v. Romero–Barcelo, 456 U.S. 305, 312 (1982)).

The Trustee offers only general, non-specific statements as to the importance and

value of the Bankruptcy Code. But, the value of the Bankruptcy Code and its purposes are

not at issue here. What is at issue, and what the Trustee fails to discuss, is how this issuance

of this particular injunction best serves the Public Interest. It does not.

Here, the Trustee seeks an injunction based on nothing more than pleadings and

9 The SK Foods Court’s grant of a TRO and a preliminary injunction was based on “substantial evidence” of violations

of prior preliminary injunctions and the Government provided evidence “of actual transfers to overseas accounts, and a

stated intent to continue doing so.” In re SK Foods, LP, 2011 WL 10723414, at *35-36. No evidence of dissolution or a

transfer of assets exists here. Although not evidence, none of the four articles submitted by the Trustee discuss an

imminent bankruptcy filing by Bombardier.

10 One solution is for the Trustee to provide this Court and the U.S. Trustee with a month by month summary of his

incurred fees and costs through March 2020 for in camera review. Public disclosure of the Trustee’s fees and costs, at

this time, is not requested.


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inconclusive news stories regarding Bombardier’s business affairs. Yet, Winter and many

other cases cited above make clear that “issuing a preliminary injunction based only on a

possibility of irreparable harm is inconsistent with the Supreme court’s characterization of

injunctive relief as an extraordinary remedy that may only be awarded upon a clear showing

that the plaintiff is entitled to such relief.” Id. at 375-76. None of the cases cited in the

Trustee’s Motion stand for a different result because, unlike the facts presented by the

Trustee here, not one of those courts issued a preliminary injunction without an offer of

substantial evidence as to both “success on the merits” and “irreparable harm.” No such

showing has been made here.

In sum, issuing a preliminary injunction based solely on inconclusive news stories is

in violation of binding case precedent and contradicts the Supreme Court’s guidance that

injunctions are an extraordinary remedy. Diluting that universally-recognized standard does

not serve the public interest.

III. CONCLUSION

For the reasons set forth above, CALI respectfully requests that this Court deny the

Trustee’s request for use of Rule 22 and Code §105 to compel Bombardier to deposit the

$30 Million PDP into the Court’s registry and further deny the Trustee’s motion for a

preliminary injunction.

Dated: April 1, 2020 HOLLAND & KNIGHT LLP

/s/ Robert Labate

By:________________________

ROBERT J. LABATE (SBN 313847)

Attorneys for CAVIC Aviation Leasing (Ireland)

22 Co. Designated Activity Company


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PROOF OF SERVICE

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HOLLAND & KNIGHT LLP Robert J. Labate (SBN 313847) Email: [email protected] 50 California Street, Suite 2800 San Francisco, CA 94111 Telephone: 415.743.6900 Facsimile: 415.743.6910 Kristina S. Azlin (SBN 235238) Email: [email protected] Alan J. Watson (SBN 177531) Email: [email protected] 400 South Hope Street 8th Floor Los Angeles, CA 90071 Telephone: 213.896.2400 Facsimile: 213.896.2450

UNITED STATES BANKRUPTCY COURT

CENTRAL DISTRICT OF CALIFORNIA

LOS ANGELES DIVISION

In re: ZETTA JET USA, INC., a California corporation,

Debtor. In re: ZETTA JET PTE, LTD., a Singaporean corporation,

Debtor. JONATHAN D. KING, solely in his capacity as Chapter 7 Trustee of Zetta Jet USA, Inc. and Zetta Jet PTE, Ltd.,

Plaintiff, v.

CAVIC AVIATION LEASING (IRELAND) 22 CO. DESIGNATED ACTIVITY COMPANY; and BOMBARDIER AEROSPACE CORPORATION,

Defendants.

)))))))))))))))))))))))

Lead Case No.: 2:17-bk-21386-SK Chapter 7 Jointly Administered With: Case No.: 2:17-bk-21387-SK Adv. Proc. No. 2:19-ap-01147-SK PROOF OF SERVICE Hearing Date: May 13, 2020 Time: 9:00 a.m. Place: Courtroom 1575 255 East Temple Street Los Angeles, CA 90012

))

Case 2:19-ap-01147-SK Doc 109-1 Filed 04/01/20 Entered 04/01/20 15:09:45 DescProof of Service Page 1 of 3


PROOF OF SERVICE OF DOCUMENT

I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is: 50 California Street, 28th Floor, San Francisco, CA 94111.

A true and correct copy of the foregoing document entitled (specify): CAVIC AVIATION LEASING (IRELAND) 22 CO. DESIGNATED ACTIVITY COMPANY’S OPPOSITION TO TRUSTEE’S MOTION TO COMPEL BOMBARDIER TO DEPOSIT FUNDS INTO THE COURT REGISTRY OR, IN THE ALTERNATIVE FOR MANDATORY PRELIMINARY INJUNCTION

will be served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and (b) in the manner stated below:

1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On (date) April 1, 2020 , I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that the following persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated below:

Service information continued on attached page

2. SERVED BY UNITED STATES MAIL: On (date) April 1, 2020, I served the following persons and/or entities at the last known addresses in this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no later than 24 hours after the document is filed.


3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state method for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on (date) April 1, 2020 , I served the following persons and/or entities by personal delivery, overnight mail service, or (for those who consented in writing to such service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a declaration that personal delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the document is filed. Honorable Sandra R. Klein Ron Maroko United States Bankruptcy Court for Office of the United States Trustee the Central District of California 915 Wilshire Boulevard, Suite 1850 255 East Temple Street, Suite 1582 Los Angeles, California 90017 Los Angeles, CA 90012


I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.

April 1, 2020 Philip Dobbs /s/ Philip Dobbs

Date Printed Name Signature

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE


BOMBARDIER AEROSPACE CORPORATION:

Matthew S Walker

12255 El Camino Real Ste 300

San Diego, CA 92130-2006

619-234-5000

Fax : 858-509-4010

Email: [email protected]

Plaintiff JONATHAN D. KING, solely in his capacity as Chapter 7 Trustee of Zetta Jet USA,

Inc. and Zetta Jet PTE, Ltd.,

represented by

Robbin L. Itkin

DLA Piper LLP (US)

2000 Avenue of the Stars

Suite 400 North Tower

Los Angeles, CA 90067-4704

310-595-3000

Fax : 310-595-3343


John K Lyons

DLA PIPER LLP (US)

444 West Lake St, Ste 900

Chicago, IL 60606-0089

312-368-4000

Fax : 312-236-7516

LEAD ATTORNEY

David M Riley

DLA Piper LLP (US)

2000 Avenue of the Stars, Ste 400

North Tower

Los Angeles, CA 90067

310-595-3000

Fax : 310-595-3300


In re: ZETTA JET USA, INC.

Adv. Proc. No. 2:19-ap-01147-SK





Documents

Case 2:19-ap-01147-SK Doc 109 Filed 04/01/20 Entered 04/01/20 …€¦ · -CV 2314 (FB), 2018 WL 7053375 (E.D.N.Y. Nov. 15, 2018)..... 10, 11 Caribbean Marine Servs. Co. v. Baldrige,