ORDER GRANTING IN PART PLAINTIFFS' MOTIONS FOR TEMPORARY RESTRAINING ORDER

TIMOTHY S. BLACK, District Judge.

This civil action is before the Court on Plaintiffs' motion for temporary restraining order (Doc. 2), which was filed on June 29, 2016, and Plaintiffs' supplemental motion for temporary restraining order (Doc. 6), which was filed on July 1, 2016.1 On July 5, 2016, the Court held a hearing by telephone with respect to these motions. Defendants did not participate.2

On June 6, 2016, Plaintiffs submitted additional evidentiary support for their motion. (Docs. 7, 8). On July 15, 2016, at Plaintiffs' request, the Court held a brief evidentiary hearing. Defendants did not participate.3 During the evidentiary hearing, Plaintiffs elicited testimony from Timothy Spurlock, a Special Investigator with the Corporate Investigations Team at Fifth Third Bank. Plaintiffs' motions for temporary restraining order (Docs. 2, 6) are now ripe for the Court's review.

I. BACKGROUND FACTS

Plaintiffs Dr. Richard Abrahamson and Melinda Abrahamson seek a temporary restraining order and a preliminary injunction against Defendants Brian D. Jones, Brian Jones Farms, and Nathanial & Riggs Livestock, LLC. (Doc. 2). Plaintiffs claim that Defendant Jones defrauded them through a series of misrepresentations, resulting in a loss in excess of $500,000. (Id.)4

In October 2015, Mrs. Abrahamson came into contact with Defendant Jones via Doug Beech, one of Mrs. Abrahamson's business acquaintances. (Doc. 1 at ¶ 9).5 Defendant Jones informed Mrs. Abrahamson that he was offering an investment opportunity as part of a business plan involving the transfer of male calves in Wisconsin to Texas for slaughter ("Texas Investment"). (Id. at ¶¶ 9-13). Defendant Jones represented that he had discovered a market inefficiency in the cattle industry and that he expected to realize a $38,000 profit per week of cattle transfers. (Id. at ¶¶ 12-14). As a part of the Texas Investment Defendant Jones presented to Mrs. Abrahamson, and later to Dr. Abrahamson, Defendant Jones guaranteed that for each $25,000 "investment unit" purchased, an investor would receive returns of $1,000 per week for fifty-two weeks. (Id. at ¶¶ 15, 18). Based on these representations, between October 2015 and April 2016, Plaintiffs purchased twenty-one "investment units" in the Texas Investment. (See id. at ¶¶ 16-30).6

At the end of February 2016, Defendant Jones approached Dr. Abrahamson about investing in a separate deal in which male calves would be sold to a large rancher in Missouri ("Missouri Deal"). (Doc. 1 at ¶ 25). Defendant Jones explained that the Missouri rancher had committed to purchasing a minimum of 2,000 calves per week for at least one year and Defendant Jones would realize a gross profit of $60,000 for the weekly sale of 2,000 calves. (Id. at ¶¶ 26-27). Defendant Jones sought $100,000 to help fund the Missouri Deal, which Plaintiffs agreed to provide. (Id. at ¶¶ 29-30). In exchange, Plaintiffs were promised 50% of the weekly profits on the Missouri deal for eight weeks. (Id. at ¶ 29).7

On November 11, 2015, Plaintiffs had begun receiving weekly payments of $2,000 from Defendant Jones, and Plaintiffs' weekly payment amounts increased as Plaintiffs purchased additional "investment units." (Doc. 1 at ¶ 22).8 In total, Plaintiffs received $170,000 from Defendant Jones as purported returns on their investment. (Doc.

8 at ¶ 3). However, in March 2016, Defendant Jones stopped making the required payments on the investments. (Id. at ¶ 37).9 Defendant Jones offered numerous excuses and explanations for these missed payments. (Id. at ¶ 42).10

On April 10, 2016, Dr. Abrahamson loaned Defendant Jones $16,198 for emergency repairs to Defendant Jones's home HVAC. (Doc. 1 at ¶ 41). On April 29, 2016, Defendant Jones promised to repay Dr. Abrahamson $220,000, plus $16,198 for the HVAC loan, by May 2, 2016. (Id. at ¶ 43). Defendant Jones claimed that he had a cashier's check for over $1,500,000 from US Bank that he was going to deposit into Bath State Bank in Indiana, so that he could issue payment to Plaintiffs. (Id.) Within a few days, Defendant Jones claimed that he deposited the US Bank cashier's check (as well as another deposit of over $200,000) with Fifth Third Bank instead, because his attorney had resolved Suspicious Activity Reports that had frozen his Fifth Third account(s). (Id. at ¶ 44). Defendant Jones provided Plaintiffs with copies of purported deposit receipts to prove that he had deposited the money with Fifth Third. (Id.) When Plaintiffs contacted Fifth Third to see if the deposit slips matched its records, Fifth Third confirmed that the deposit slips were fraudulent. (Id. at ¶ 45).11

Throughout May and June 2016, Defendant Jones agreed on multiple occasions to pay Plaintiffs approximately $95,000 by a specific deadline. (Doc. 1 at ¶ 47). Defendant Jones has further agreed, both orally and through text messages, that if the $95,000 payment were not delivered by the agreed-upon deadline, he would refund Plaintiffs' entire investment, in excess of $500,000. (Id.) The deadline has been extended several times after Defendant Jones claimed he could not deliver the money as promised. (Id.) Despite his repeated promises to do so, Defendant Jones has not made the $95,000 payment to Plaintiffs or refunded Plaintiffs' investment. (Id.)

At various times, Defendant Jones executed promissory notes with Plaintiffs. (Doc. 1 at ¶ 31). The first promissory note was executed on December 10, 2015, and states that $225,000 is to be repaid one year from the date of execution. (Id. at ¶ 32; Doc. 1-1, Ex. 1). The second promissory note was executed on January 29, 2016, and states that $125,000 is to be repaid one year from the date of execution. (Doc. 1 at ¶ 33; Doc. 1-1, Ex. 2). The third promissory note was executed on February 4, 2016, and states that $100,000 is due to be repaid in full by May 2, 2016. (Doc. 1 at ¶ 34; Doc. 1-1, Ex. 3). The fourth promissory note was executed on February 26, 2016 and called for Defendant Jones to make eight consecutive weekly payments of $30,000 beginning on February 29, 2016 and one balloon payment of $100,000 on April 22, 2016. (Doc. 1 at ¶ 35). Defendant Jones failed to make the required payments on the third and fourth promissory notes, and is now in default on those notes. (Id. at ¶¶ 34, 35).12

In their Complaint, Plaintiffs bring claims against Defendants for violations of federal and state securities laws, common law fraud, negligent misrepresentation, conversion, and unjust enrichment. (Doc. 1 at 9-17). Plaintiffs seek preliminary and permanent injunctive relief,13 compensatory damages, punitive damages, attorney's fees, and costs. (Id. at 16-17).

At this time, Plaintiffs seek the following injunctive relief:

(Doc. 6 at 2). In total, Plaintiffs invested $525,000 with Defendant Jones and his purported business entities. Therefore, their total out-of-pocket loss is $335,000, plus any applicable interest. (Doc. 8 at ¶ 3).14

II. STANDARD OF REVIEW

"The Sixth Circuit has explained that `the purpose of a TRO under Rule 65 is to preserve the status quo so that a reasoned resolution of a dispute may be had.'" Reid v. Hood, No. 1:10 CV 2842, 2011 U.S. Dist. LEXIS 7631, at *2 (N.D. Ohio Jan. 26, 2011) (citing Procter & Gamble Co. v. Bankers Trust Co., 78 F.3d 219, 227 (6th Cir. 1996)). "The standard for issuing a temporary restraining order is logically the same as for a preliminary injunction with emphasis, however, on irreparable harm given that the purpose of a temporary restraining order is to maintain the status quo." Id. (citing Motor Vehicle Bd. of Calif. v. Fox, 434 U.S. 1345, 1347 n.2 (1977)).15

An "injunction is an extraordinary remedy which should be granted only if the movant carries his or her burden of proving that the circumstances clearly demand it." Overstreet v. Lexington-Fayette Urban County Gov't, 305 F.3d 566, 573 (6th Cir. 2002). In determining whether to grant injunctive relief, this Court must weigh four factors: (1) whether the moving party has shown a strong likelihood of success on the merits; (2) whether the moving party will suffer irreparable harm if the injunction is not issued; (3) whether the issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by issuing the injunction. Id. at 573.

These four considerations are factors to be balanced, not prerequisites that must be met. McPherson v. Michigan High Sch. Athletic Ass'n, Inc., 119 F.3d 453, 459 (6th Cir. 1997). Nonetheless, a finding that there is no likelihood of success on the merits is usually fatal. Gonzales v. Nat'l Bd. of Med. Exam'rs, 225 F.3d 620, 625 (6th Cir.2000),

III. ANALYSIS16

A. Likelihood of Success on the Merits17

In Ohio, the elements of an unjust enrichment claim are as follows: (1) a benefit conferred by a plaintiff upon a defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment. L & H Leasing Co. v. Dutton, 82 Ohio App.3d 528, 612 N.E.2d 787, 791 (1992) (citing Hambleton v. R.G. Barry Corp., 12 Ohio St.3d 179, 465 N.E.2d 1298 (1984)). Unjust enrichment arises out of a contract implied in law. Hummel v. Hummel, 133 Ohio St. 520, 14 N.E.2d 923, 925-26 (1938). A "contract implied in law" is not a true contract, but is a "quasi-contract" implied by a court when a party "retains money or benefits which in justice and equity belong to another." Id. at 926-27.

Ohio law does not allow parties to "seek damages under quasi-contractual theories of recovery" such as a claim of unjust enrichment when a contract governs the relationship. Davis & Tatera, Inc. v. Gray-Syracuse, Inc., 796 F.Supp. 1078, 1085 (S.D. Ohio 1992). Recovery under an unjust enrichment theory is precluded because the terms of the agreement define the parties' relationship. Wolfer Ent., Inc. v. Overbrook Dev. Corp., 132 Ohio App.3d 353, 724 N.E.2d 1251, 1253 (1999). However, a claim for unjust enrichment may be pled in the alternative when the existence of an express contract is in dispute and may be maintained despite the existence of an express contract where there is evidence of fraud, bad faith, or illegality. Resource Title Agency, Inc. v. Morreale Real Estate Services, Inc., 314 F.Supp.2d 763, 772 (N.D. Ohio 2004).

As an initial matter, Plaintiffs' Verified Complaint sufficiently demonstrates that Plaintiffs conferred benefits on Defendants (i.e. investment funds) and that Defendants knew of these benefits (in fact, Defendants had solicited them). Plaintiffs have also carried their burden to prove a likelihood that Defendants' retention of the investment funds would be unjust without payment because there of the evidence of fraud, bad faith, and illegality.

As demonstrated in Plaintiffs' Verified Complaint, Defendant Jones consistently misled Plaintiffs as to the nature and status of his business ventures, leading Plaintiffs to invest, repeatedly, what was, in all likelihood, a Ponzi scheme. Defendant Jones failed to meet the obligations owed to Plaintiffs under the terms of their investment agreements, both oral and written, including promissory notes signed on February 4, 2016 and February 26, 2016, by not providing guaranteed investment returns to Plaintiffs. (Doc. 1 at ¶¶ 34-35). In order to justify his failure to provide Plaintiffs with returns, Defendant Jones provided Plaintiffs with one story after another, including claims that large bank deposits that he made had been flagged and withheld by Fifth Third Bank. (Id. at ¶ 38). Finally, when Plaintiffs challenged Defendant Jones, he doctored bank documents in an effort to assuage Plaintiffs' concerns. (Id. at ¶ 45).18 For all of these reasons, this factor weighs in favor of injunctive relief.

B. Irreparable Harm

"To demonstrate irreparable harm, the plaintiffs must show that . . . they will suffer actual and imminent harm rather than harm that is speculative or unsubstantiated." Abney v. Amgen, Inc., 443 F.3d 540, 552 (6th Cir. 2006). Harm is irreparable if it cannot be fully compensated by monetary damages. Overstreet v. Lexington-Fayette Urban County Gov't., 305 F.3d 566, 578 (6th Cir. 2002).

The loss of the ability to collect a money judgment is not typically regarded as irreparable harm under Rule 65. The United States Supreme Court underscored this point in Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 333 (1999), in which it held that a district court has "no authority to issue a preliminary injunction preventing [the defendants] from disposing of their assets pending adjudication of [the plaintiffs'] contract claim for money damages." The plaintiff in Grupo Mexicano sought a preliminary injunction to prevent the defendant from transferring its rights in certain bonds to other parties on the grounds that defendant was: (1) at a high risk of insolvency; (2) in the process of dissipating its assets to other creditors; and (3) taking actions with its assets that would "frustrate any judgment" plaintiff could obtain. Id. at 312. Despite these risks—and the district court's determination that plaintiff was "almost certain" to succeed on the merits of its claim—the Supreme Court reversed the preliminary injunction, explaining that "a general creditor (one without a judgment) had no cognizable interest, either at law or in equity, in the property of his debtor, and therefore could not interfere with the debtor's use of that property." Id. at 319-20.

However, the Supreme Court distinguished cases in which a plaintiff seeks equitable relief. See Grupo Mexicano, 527 U.S. at 324-25. This "exception" was applied in Concheck v. Barcroft, No. 2:10-cv-656, 2010 WL 4117480 (S.D. Ohio Oct. 18, 2010), a case which Plaintiffs contend is analogous to the instant case. In Concheck, the plaintiff asserted various claims (including breach of contract, breach of fiduciary duty, fraud, and unjust enrichment) stemming from his investment relationship with the defendants. Id. at * 1. After an adversarial hearing, the Concheck court granted the plaintiff's motion for injunctive relief and ordered that the defendants deposit $500,000 into an interest bearing account with the clerk of the court. Id. at *3. The Concheck court concluded that the plaintiff's claim for unjust enrichment "sound[ed] in equity," and, therefore, injunctive relief did not run afoul of the Supreme Court's decision in Grupo Mexicano. Id. at *2-3.

Here, Plaintiffs have similarly pled an unjust enrichment claim, which is grounded in equity. Plaintiffs also request the "return" of their investment, which constitutes equitable relief.19 Plaintiffs have provided evidence that their investments, less the amount already returned in the form of purported returns, totaled $355,000.

The Concheck court found that the Plaintiff was "likely to suffer irreparable harm if [the defendants] are not required to submit funds from Plaintiffs initial investment they still retain to the safekeeping of the Court" where evidence "indicat[es] that [the defendants] are willing to dispose of or conceal remaining funds rather than return them" and the funds at issue are "likely contracted by fraud").20 Here, Plaintiffs have made repeated demands to Defendant Jones for the return of their investment funds, only to be rebuffed. (Doc. 1 at ¶ 47). While Defendant Jones, on several occasions, assured Plaintiffs that he would return to them some or all of their invested funds by certain dates, he failed to meet those obligations. (Id.) Plaintiffs argue that Defendant Jones' recent behavior—including the forging of bank deposit slips—indicates that Defendant Jones realizes that his schemes are failing and puts Plaintiffs' assets at risk.

However, in this context, Plaintiffs must articulate "a clear and close nexus to the assets sought to be enjoined." Trustees of Sheet Metal Workers' Local Union No. 80 Pension Trust Fund v. Winchester Land, L.L.C., 722 F.Supp.2d 826, 828 (E.D. Mich. 2010) (quoting In re Qwest Communications Int'l, Inc. Sec. Litig., 243 F.Supp.2d 1179, 1183-84 (D.Colo. 2003)) ("The plaintiff's equitable claim must have a `sufficient nexus to the assets sought to be enjoined, before a court may issue a prejudgment injunction freezing or limiting a defendant's use of his assets.'").21 In light of this principle, the Court believes it is premature to freeze Defendants' assets in an amount equal to Plaintiffs' loss or to order that assets in that amount be deposited with the Court. Instead, a prohibition on the use, conversion, and disposition of Plaintiffs' assets, and an order that Defendants provide an accounting of their assets, will maintain the status quo, while seeking to protecting Plaintiffs from irreparable harm to their assets and enabling Plaintiffs to pursue evidence prior to the hearing on their motion for a preliminary injunction.

C. Substantial Harm to Others or the Public

The Court finds that limited injunctive relief would not prevent or impede Defendants from operating any legitimate business endeavors with which they may be involved. Defendants will not suffer a loss of revenue as a result of the Court's prohibition on their use of Plaintiffs' assets in their possession.

Further, it is in the public interest to enjoin Defendants from using, disposing of, or distributing Plaintiffs' assets. After all, the temporary restraining order "may deter others from orchestrating fraudulent investment schemes." Concheck, 2010 WL 4117480 at *3. Additionally, Defendants will be prevented from using Plaintiffs' assets to give purported returns to unsuspecting investors.

For the foregoing reasons, the factors, on balance, weigh in favor of limited injunctive relief.

IV. CONCLUSION

Accordingly, Plaintiffs' motion for temporary restraining order (Doc. 2) and supplemental motion for temporary restraining order (Doc. 6) are GRANTED IN PART. Specifically, the Court orders as follows:

This Temporary Restraining Order shall expire fourteen (14) days from the entry of this Order. The Court determines that Plaintiffs need not post a bond currently.22

Accordingly, this civil action is set for a status conference by telephone on July 25, 2016 at 2:00 p.m., at which time the Court will address the necessity of a hearing on Plaintiffs' motions for preliminary injunction (Docs. 2, 6). COUNSEL SHALL CALL: 1-888-684-8852; Access Code 8411435; Security Code 123456; and wait for the Court to join the conference.

IT IS SO ORDERED.