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Gopher Protocol, Inc. v. Discover Growth Fund, LLC

United States District Court, D. Nevada

July 18, 2019

Gopher Protocol, Inc., a Nevada corporation, Plaintiff,
v.
Discover Growth Fund, LLC, a U.S. Virgin Islands limited liability company, Defendant.

          Marquis Aurbach Coffing Terry A. Coffing, Esq. Nevada Bar No. 4949 Brian R. Hardy, Esq. Nevada Bar No.10068 Attorneys for Plaintiff Gopher Protocol, Inc.

          ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION [ECF NO. 5]

         Plaintiff, Gopher Protocol, Inc. (“Plaintiff”) having submitted its Motion for Preliminary Injunction and Ex Parte Application for Temporary Restraining Order [ECF No. 5], and the Court having considered the pleadings, papers, evidence and documents on file herein and being otherwise fully advised following a hearing held on Friday, July 12, 2019, hereby finds as follows:

         1. On December 3, 2018, a Securities Purchase Agreement (“SPA”) was entered into between Plaintiff and Defendant, pursuant to which Plaintiff granted a security interest in all of Plaintiff's assets.[1] The SPA clearly identifies and sets forth the following relevant facts: (i) Plaintiff (identified in the SPA as the “Company”) is a Nevada corporation;[2] (ii)

         any dispute, controversy, claim or action of any kind arising out of, relating to, or in connection with the SPA, or in any way involving the parties or their respective affiliates must be resolved by final and binding arbitration before a retired judge at JAMS in the Virgin Islands;[3] and (iii) either party is entitled to seek equitable and injunctive relief to prevent any actual or threatened breach of the SPA or other agreements.[4]

         2. There is a dispute between Defendant and Plaintiff. Consequently, and consistent with the express terms of the SPA, Plaintiff filed its arbitration demand with JAMS on Friday, June 7, 2019.[5]

         3. On July 2, 2019 Honorable Philip Pro (Ret.) was appointed as Arbitrator in Gopher Protocol, Inc. vs. Discovery Growth Fund, LLC (JAMS Ref # 1260005395) following a selection process in which all parties participated.[6] As such, currently there is a pending arbitration as contemplated under the express terms of the SPA.[7]

         4. On or about May 28, 2019, Defendant declared all amounts immediately due and payable and scheduled the sale and disposition of all of the assets of Plaintiff for 10:00 AM Eastern Time on Monday, June 24, 2019 at Defendant's offices in St. Thomas, Virgin Islands.[8]

         5. On June 18, 2019, Plaintiff filed the instant action seeking exclusively declaratory and injunctive relief.[9] On that same date, Plaintiff also filed its Motion for Preliminary Injunction and Ex Parte Application for Temporary Restraining Order.[10]

         6. This Court granted the Ex Parte application for Temporary Restraining Order temporarily enjoining the Defendant from selling, foreclosing upon, encumbering, dissipating, or otherwise transferring any of the Plaintiff's assets upon the Plaintiff's posting of security in the amount of $5, 000.[11]

         7. Thereafter, this Court set and conducted a hearing on Plaintiff's Motion for Preliminary Injunction for July 12, 2019.[12]

         Accordingly, IT IS HEREBY ORDERED, ADJUDGED and DECREED that, as of the date of the hearing, there is jurisdiction and venue, however, the Court will further review the question of jurisdiction and venue as it considers the Defendant's pending Motion to Dismiss Plaintiff's Verified Complaint for Injunctive Relief [ECF No. 13].

         IT IS FURTHER ORDERED that Plaintiff's Motion for Preliminary Injunction is GRANTED as it has established “(1) a likelihood of success on the merits, (2) that the plaintiff will likely suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tip in its favor, and (4) that the public interest favors an injunction.” Wells Fargo & Co. v. ABD Ins. & Fin. Servs., Inc., 758 F.3d 1069, 1071 (9th Cir. 2014), as amended (Mar. 11, 2014) (citing Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22 (2008)). In its Verified Complaint, GPI seeks a judicial determination that, among other things, pursuant to the SPA, the parties are required to attend arbitration to resolve any dispute, controversy, claim or action.[13]

         Here, Plaintiff enjoys a likelihood of success in prevailing on its declaratory relief claims. Further, it appears that Plaintiff would suffer irreparable harm absent injunctive relief. Notably, any foreclosure sale of the Plaintiffs assets would put the Plaintiff out of business rendering the pending arbitration moot. Simply put, not only would allowing the Defendant to sell off all of the Plaintiffs assets prior to arbitration result in irreparable harm, but clearly evidences the balance of equities favors Gopher where the injunction will prevent shutting down Gopher's business.

         Finally, “[w]hen the reach of an injunction is narrow, limited only to the parties, and has no impact on non-parties, the public interest will be at most a neutral factor in the analysis rather than one that favor[s] in [granting or] denying the preliminary injunction.” Stormans, Inc. v. Selecky, 586 F.3d 1109, 1138-39 (9th Cir. 2009) (internal quotation marks omitted). Here, among other things, there is a public interest in the enforcement of contracts and ...


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