United States District Court, D. Nevada
TRANSFIRST GROUP, INC. f/k/a TransFirst Holdings, Inc., et al., Plaintiffs,
DOMINIC J. MAGLIARDITI; FRANCINE MAGLIARDITI, in her individual capacity, and as trustee of FRM TRUST, DJM IRREVOCABLE TRUST and the FANE TRUST; ATM ENTERPRISES, LLC; DII CAPITAL, INC.; DFM HOLDINGS, LTD.; DFM HOLDINGS, LP; DII PROPERTIES LLC; and SPARTAN PAYMENT SOLUTIONS, LLC, Defendants.
TEMPORARY RESTRAINING ORDER
P. GORDON, UNITED STATES DISTRICT JUDGE
the court is the plaintiffs' oral motion for a temporary
restraining order, made at the March 27, 2017 hearing in this
matter. For the reasons herein explained, and for the reasons
given on the record during that hearing, Plaintiffs'
motion is granted with respect to defendants Dominic J.
Magliarditi; Francine Magliarditi sued in her individual
capacity and in her capacity as trustee for FRM Trust, DJM
Irrevocable Trust, and Fane Trust; DII Capital, Inc.; ATM
Enterprises, LLC; and Spartan Payment Solutions, LLC; DFM
Holdings, Ltd.; and DFM Holdings, LP.
plaintiffs' Motion for Preliminary Injunction (ECF No. 6)
is set for hearing on April 10, 2017 beginning at 9:00 a.m.
Factual and Procedural Background
plaintiffs are TransFirst Group, Inc. f/k/a TransFirst
Holdings, Inc. (“TransFirst”), a Delaware
corporation with its principal place of business in
Hauppauge, New York; and two Delaware limited liability
companies: TransFirst Third Party Sales, LLC and Payment
Resources International, LLC, whose sole member is
TransFirst. Plaintiffs have a judgment in the amount of $4,
486, 725 against defendant Dominic J. Magliarditi. The
judgment was obtained in a separate lawsuit brought by the
plaintiffs against Mr. Magliarditi and others in 2006.
See TransFirst Holdings, Inc., et al. v. Dominic J.
Magliarditi, et al., Case No. 3:06-CV-2303-C, in the
United States District Court for the Northern District of
Texas (the “2006 Action”). Following a
three-week bench trial in 2009, the Honorable Jorge A. Solis
adjudged Mr. Magliarditi and other entities liable for mail
and wire fraud in violation of the Racketeer Influenced and
Corrupt Organizations Act (“RICO”) and found that
Mr. Magliarditi had lied under oath in sworn interrogatory
responses and affidavits. On August 30, 2011, Judge Solis
entered a final judgment and, after several amendments, on
April 22, 2013 he entered the Third Amended Final Judgment
(the “Judgment”) against Mr. Magliarditi and the
other entities and in favor of Plaintiffs in the amount of
$4, 486, 725. In June 2014, the United States Court of
Appeals for the Fifth Circuit affirmed the Judgment.
TransFirst Holdings Inc. v. Magliarditi, 574 F.
App'x 345 (5th Cir. 2014).
entry of the Judgment, and continuing until the present, the
plaintiffs have sought to uncover Mr. Magliarditi's
assets and to enforce the Judgment in various jurisdictions.
Among other things, a postjudgment discovery dispute between
the plaintiffs and Mr. Magliarditi was referred to Magistrate
Judge Paul D. Stickney in Texas who, on August 6, 2015,
overruled Mr. Magliarditi's objections to postjudgment
discovery requests, sanctioned him, and ordered him to travel
to Texas at his own expense to testify in a postjudgment
deposition in the court's Chambers in Dallas, which took
place on September 16, 2015. Further, on June 29, 2016, after
numerous failed attempts to depose Mrs. Magliarditi in Texas
and in California, the plaintiffs deposed her in Nevada,
where she provided testimony that Mr. Magliarditi continues
to exercise sole control over assets in various closely held
companies and trusts. That testimony is inconsistent with Mr.
Magliarditi's prior testimony that he was no longer
affiliated with the companies and trusts and that his wife
had exclusive control over those entities, leaving him with
no funds to pay the Judgment. That litigation is ongoing, as
evidenced by recent docket entries in 2016 and 2017.
30, 2016, one day after deposing Francine Magliarditi, the
plaintiffs filed this lawsuit against Mr. Magliarditi and
several defendants who were not parties to the 2006 Action,
alleging that Mr. Magliarditi fraudulently transferred assets
to these new defendants in an ongoing effort to defraud the
plaintiffs and prevent them from collecting on the Judgment.
The new defendants include Francine Magliarditi, sued in her
individual capacity and as trustee of FRM Trust, DJM
Irrevocable Trust, and Fane Trust (the “Trust
Defendants”); ATM Enterprises LLC; DII Capital, Inc.;
DFM Holdings, Ltd.; DFM Holdings, LP; DII Properties LLC; and
Spartan Payment Solutions, LLC (the “Shell Company
plaintiffs' First Amended Complaint the plaintiffs allege
that Mr. Magliarditi has paid only $62 toward the Judgment.
The plaintiffs allege that Mr. Magliarditi and Mrs.
Magliarditi, “are working together to defraud
Plaintiffs and prevent them from collecting on the Judgment
by hiding and transferring assets through the use of a
labyrinth of layered shell companies and trusts [which are]
shams, existing for no reason other than to hide assets,
defraud Transfirst, and otherwise act as the alter ego of
[Mr. Magliarditi].” ECF No. 11 at 2. Seeking to unwind
the alleged fraudulent transfers and to hold Mrs.
Magliarditi, the Trust Defendants, and the Shell Company
Defendants liable for the Judgment entered in the 2006
Action, the plaintiffs assert the following causes of action:
(1) fraudulent transfers under the Texas Uniform Fraudulent
Transfer Act (“TUFTA”), Tex. Bus. & Com. Code
§§ 24.006(b) and 24.005(a); (2) unjust enrichment;
and (3) alter ego, alleging that Mrs. Magliarditi, the Trust
Defendants, and the Shell Company Defendants “are
alter-egos of [Mr. Magliarditi] and, therefore, they should
be held jointly and severally liable with [him] on the
Judgment.” Id. at 2-3. The plaintiffs seek
compensatory damages, restitution, punitive and exemplary
damages, attorney's fees, injunctive relief, appointment
of a receiver, and any other relief to which they are
entitled. Id. at 30-31.
8, 2016, the plaintiffs filed their sealed request for an
ex parte temporary restraining order while this case
was still pending in Texas. E C F N o. 6. The plaintiffs
sought to enjoin the defendants from directly or indirectly:
(1) transferring, concealing, withdrawing, or otherwise
disposing of any assets, property, or funds that they control
or possess; (2) opening or closing accounts; (3) opening or
accessing safe deposit boxes or rental storage units; and (4)
opening or creating any new entities or trusts without prior
approval of the court. The plaintiffs asserted that their
application for a temporary restraining order must be pursued
ex parte; otherwise, Mr. Magliarditi “will
simply move his money to undisclosed accounts, as he has
previously done over the past several years.”
Judge Sam Lindsay found that the plaintiffs had established a
prima facie case for the court's exercise of personal
jurisdiction over Mr. Magliarditi, the Trust Defendants, ATM
Enterprises, LLC; DII Capital, Inc.; DII Properties LLC; and
Spartan Payment Solutions, LLC (hereinafter, the
“Enjoined Defendants”). ECF No. 32. At the time
Judge Lind say ruled on the motion for temporary restraining
order, the question of w hether the court had personal
jurisdiction over the remaining defendants was under
Lindsay granted the ex parte application for temporary
restraining order. ECF No. 33. He also ruled that he lacked
personal jurisdiction over Mrs. Magliarditi in her individual
capacity, DFM Holdings, Ltd. and DFM Holdings, LP, and thus
he transferred the case to the District of Nevada. ECF No.
36. I was not aware a motion for preliminary injunction was
pending until Mrs. Magliarditi filed an emergency motion to
dissolve the temporary restraining order. ECF No. 48. I
promptly set that motion for hearing. ECF No. 50. As I
explained at the March 27, 2017, I cannot extend the TRO
entered by Judge Lindsay because that TRO expired.
Fed.R.Civ.P. 65(b)(2). However, I reinstate the TRO because I
agree with Judge Lindsay's ruling that the plaintiffs
have demonstrated a TRO is warranted.
Standard for Ex Parte TRO and Preliminary Injunction
obtain a temporary restraining order, a plaintiff must
demonstrate: (1) a likelihood of success on the merits, (2) a
likelihood of irreparable harm, (3) the balance of hardships
favors the plaintiff, and (4) an injunction is in the public
interest. Winter v. Natural Res. Def. Council, Inc.,
555 U.S. 7, 20 (2008). Alternatively, the plaintiff must
demonstrate (1) serious questions on the merits, (2) a
likelihood of irreparable harm, (3) the balance of hardships
tips sharply in the plaintiff's favor, and (4) an
injunction is in the public interest. Alliance for the
Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir.
2011). The purpose of a TRO is to “preserv[e] the
status quo and prevent irreparable harm just so long as is
necessary to hold a hearing, and no longer.” Granny
Goose Foods, Inc. v. Brotherhood of Teamsters & Auto
Truck Drivers, 415 U.S. 423, 439 (1974).
Rule 65(b)(1) of the Federal Rules of Civil Procedure, the
court may issue a TRO without notice to the adverse party or
its attorney only ...