The opinion of the court was delivered by: Matthew F. Kennelly, District Judge
MEMORANDUM OPINION AND ORDER
The Court previously entered a temporary restraining order that, among other things, had the effect of freezing certain accounts held by Frederick Cuppy and a corporation of which he is the sole shareholder. Plaintiff Dexia Credit Local has moved for entry of a preliminary injunction seeking essentially the same relief. Cuppy opposes entry of a preliminary injunction. For the reasons stated below, the Court grants Dexia's motion in part and denies it in part. This constitutes the Court's findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).
Dexia holds a judgment against Peter Rogan in an amount in excess of $124 million. In August 2008, Dexia filed an ex parte motion for a temporary restraining order and a preliminary injunction, seeking an order freezing and turning over various assets in the United States and abroad that it alleges are Rogan's or in his control or that he fraudulently transferred. In that motion, Dexia alleged that Rogan, in concert with Cuppy (Rogan's attorney) and others, had engaged in an elaborate and longstanding scheme to hinder Dexia and other creditors from executing against Rogan's assets. Dexia filed the motion ex parte based on its allegations that Rogan had taken steps in the past to hinder Dexia from collecting, including evading court orders, and that if he became aware of the motion, Rogan likely would take further steps to evade its intended effect.
Dexia supported the motion with an extensive and voluminous factual and legal submission. The Court initially heard Dexia's counsel in camera, albeit on the record, and made findings that permitted Dexia to submit its materials ex parte. The Court then took Dexia's motion for a temporary restraining order under advisement. On or about September 2, 2008, the Court summoned Dexia's counsel for a further in camera court session. During that session, the Court advised Dexia's counsel that it intended to grant the requested temporary restraining orders and asked counsel to prepare and submit the necessary draft orders. Dexia's counsel did so, and the Court signed the orders on September 4-5, 2008.
The temporary restraining orders the Court entered barred Peter Rogan, his wife Judith Rogan, and Cuppy from directly or indirectly making or allowing transfers or other dispositions of various assets. The orders also froze assets held by certain institutions and entities that, based on Dexia's submissions to the Court, appeared to be within Rogan's effective control. These included assets held by a number of trusts Rogan had established with Cuppy's assistance: the Peter G. Rogan Irrevocable Trust, the RPP Finance Trust, and domestic and offshore trusts established for the benefit of Rogan's children, as well as accounts in which funds the trusts had transferred to the children and others were held.
Cuppy did not seek to dissolve the temporary restraining order but did oppose entry of a preliminary injunction. Cuppy filed an affidavit and a memorandum in opposition to Dexia's motion for a preliminary injunction. Dexia then filed a supplemental memorandum providing additional evidence and argument relating to Cuppy. The Court held an evidentiary hearing on September 29 and October 31, 2008.
In his affidavit, Cuppy stated that the temporary restraining order had the effect of, among other things, freezing a personal bank account at Chase Bank, a personal investment account at Smith Barney, and an account at Chase Bank in the name of Dynamic Alliance Inc., a corporation of which Cuppy is the sole shareholder. See Cuppy 1st Affid. ¶¶ 6-7, 10.
Cuppy stated in his affidavit that he had rendered legal services to Rogan at various times and is also Rogan's friend. Id. ¶ 4. He also stated that he had invested in certain projects in which "entities referenced in the Dexia motion" had also invested. Cuppy also stated that he had "received fees for management services from entities referenced by Dexia," and that "[t]hose payments were for services rendered." Id. ¶ 9.
Cuppy stated in his affidavit that he is a trustee of certain domestic trusts established for the benefit of Rogan's children in 1992 and, as such, is "responsible for managing investments on behalf of the various beneficiaries." Id. ¶ 11. Cuppy expressed concern that because the trusts' assets consist in part of securities and options, the injunction could prevent him as trustee from closing open orders and positions, risking a diminution of the assets' value. Id. Cuppy further stated that he acts as a trustee of certain Belizean trusts established for the benefit of Rogan's children and that he discharges those responsibilities through an entity called Caribe Trustees Limited, of which he is the sole owner. He stated that these trusts possess no assets other than an indirect interest in an entity called 410 Montgomery, LLC. Id. ¶ 12.
Cuppy further stated in his affidavit that he acts in a managerial capacity for CFMT Ltd. and, through Dynamic, for CFMT of Florida, LLC, each of which is owned, directly or indirectly, by the Peter G. Rogan Irrevocable Trust. That trust, Cuppy stated, owns a partial interest in two real estate projects in Savannah, Georgia, and a real estate project in Hilton Head, South Carolina that Dynamic manages. Id.
Finally, Cuppy stated that Peter Rogan has never owned an interest in or received a payment from Dynamic. He stated that Dynamic owns four assets: a minority interest in real estate in Merrillville, Indiana that it has held for twenty-five years; two condominium units in Jacksonville, Florida, which it manages for itself and other investors (not including Rogan); a passive minority interest in Seal Wrap Systems, LLC; and an indirect one percent interest in 410 Montgomery, LLC. Id. ¶ 10.
Cuppy separately filed an affidavit, pursuant to directions in the temporary restraining order, identifying assets held for the benefit of "Rogan Entities" as that term was defined in the order. This affidavit identified accounts holding the assets of the Rogan children's trusts and various other entities and listed the amounts held in those accounts as of September 12, 2008. See Cuppy 2d Affid. ¶¶ 4-10.
In his memorandum in opposition to Dexia's preliminary injunction motion, Cuppy argued that Dexia had offered no evidence that any of his personal accounts or those of Dynamic contained any assets belonging to Peter Rogan, see Cuppy Mem. at 3, 6-7; that his investment in and management of projects in which Rogan-related entities has no bearing on whether his accounts contain Rogan's assets, see id. at 4; and that absent such evidence, there is no basis to freeze Cuppy's accounts. See id. at 4-5. Cuppy also argued that the temporary restraining order had caused him significant harm and that a preliminary injunction would compound this and would jeopardize the continued existence of Dynamic. See id. at 5-7. Finally, Cuppy argued that he should be permitted to discharge his responsibilities as trustee of the Rogan children's trusts. See id. at 9-10.
2. Dexia's Supplemental Submission
Dexia filed a supplemental memorandum in which it contended, and offered evidence, that the financial affairs of Cuppy and his company Dynamic are closely intertwined with those of Peter Rogan and the trusts he established and that Cuppy had received significant transfers from entities connected with the trusts and/or Rogan. This included the following:
- The children's Belizean trusts indirectly own ninety-nine percent of Boulevard Investors, LLC, which in turn owns the 410 Montgomery condominium development in Savannah; Cuppy's company Dynamic owns the other one percent; and Dynamic received ...