United States District Court, D. Arizona
Douglas L. Rayes, United States District Judge
case involves a dispute over the ownership of a 4.05 carat
blue heart-shaped diamond worth approximately $2 million.
Plaintiff moves to preliminarily enjoin Defendant from
selling, moving, or otherwise transferring the diamond
pending the resolution of this action. Doc. 13. The Court
held oral argument on the motion on June 1, 2016. For the
reasons below, the motion is granted.
purposes of the preliminary injunction motion, the following
facts are undisputed unless otherwise noted. In June 2013,
Plaintiff Mellen Incorporated acquired a rare 4.05 carat
internally flawless fancy blue heart-shaped diamond ring
valued at approximately $2 million. Doc. 15, ¶ 3. In
January 2015, Mellen received a call from the diamond dealer
from whom it had purchased the ring. The dealer informed
Mellen that Scott Meyrowitz, a diamond dealer from Florida,
was interested in taking the ring "on memo" from
Mellen to show to a potential buyer.
Id. Because the dealer vouched for Meyrowitz,
Mellen contacted Meyrowitz via telephone. Id.,
¶ 5. Meyrowitz stated that he had a customer in
Pittsburgh interested in purchasing the ring. Id.
The parties agreed that the memorandum price would be $2
million, and Meyrowitz provided proof of insurance to cover
the ring. Id., ¶¶ 5-6. Meyrowitz assured
Mellen that he would keep the ring in a vault at Wells Fargo
Bank in Florida and would remove it to only to show to
customers. Id., ¶ 6. With these assurances,
Mellen sent the ring to Meyrowitz via Brinks transport.
Id., ¶ 8.
the course of the next two months, Mellen periodically
contacted Meyrowitz to inquire about the status of the ring.
Id., ¶ 9. At one point, Meyrowitz stated that a
sale was imminent and that the ring was on its way to
Pittsburgh for the customer to inspect. Id. No sale
ever occurred, however, and after several weeks, it became
increasingly difficult to get a response from Meyrowitz.
Id. Eventually, Mellen demanded return of the ring,
and Meyrowitz stated that he would ship it back to New York.
Id., ¶ 10. In May 2015, Meyrowitz ceased
contact with Mellen, failed to return the ring, and failed to
pay the memorandum price. Id., ¶ 11.
to Mellen, once Meyrowitz received the ring, he immediately
contacted David Goldstein of Defendant Biltmore Loan and
Jewelry - Scottsdale LLC ("Biltmore"). Doc. 24 at
Meyrowitz told Goldstein that he knew someone who wanted to
pawn a diamond and asked whether Goldstein was interested.
Id. Shortly thereafter, Joseph Gutekunst called
Goldstein and discussed pawning the diamond he owned.
Id. Goldstein believed Gutekunst owned the diamond
and that Meyrowitz was "brokering the diamond ring for
Mr. Gutekunst." Doc. 24-2, ¶ 6. Goldstein asserts
that Meyrowitz told him that Gutekunst "had two diamonds
and that Mr. Gutekunst needed money for the expansion of his
business." Id. Goldstein believed that
Gutekunst was in the vitamin business and that Gutekunst had
purchased the diamond from Meyrowitz. Id.
February 2, 2015, the ring was delivered to Biltmore from a
Wells Fargo bank in Florida, "rather than [from] Mr.
Gutekunst’s home state [of] Minnesota." Doc. 24 at
5. Goldstein examined the ring and requested a current
Gemological Institute of America (GIA) certificate.
Id. On February 20, 2015, Meyrowitz sent the new GIA
certificate to Goldstein. Id. at 6. On February 26,
2015, Goldstein received a shipment containing only the
diamond-the ring mount was no longer included. Id.
Nevertheless, Goldstein and Gutekunst agreed that Gutekunst
would pledge the diamond to Biltmore for a $1 million loan.
Id. Gutekunst traveled to Scottsdale to sign the
pawn contract, and on March 4, 2015, Biltmore wired $1
million to a bank account designated by Gutekunst.
Id. at 7. In October 2015, Gutekunst offered to sell
the diamond outright for an additional $250, 000.
Id. at 8. On November 17, 2015, Biltmore wired $250,
000 to a bank account designated by Gutekunst. Id.
March 2016, Goldstein took the diamond to a trade show and
located a buyer willing to pay $1.625 million for the
diamond. Id., ¶ 12. The buyer requested a
current GIA certificate, but by that time, GIA had
"red-flagged" the diamond because Mellen had
reported it stolen to law enforcement. Id.
Consequently, the buyer backed out. Id.
September 28, 2015, Mellen filed suit against Meyrowitz and
his company SSB International LLC in Florida state court
seeking a writ of replevin to recover the ring. Doc. 13 at 6.
On January 11, 2016, the Florida court ordered Meyrowitz to
disclose the location of the ring to Mellen. Id.
After being threatened with contempt, Meyrowitz stated that
Gutekunst was holding the ring in a safe deposit box at a
Wells Fargo Bank in Minnesota. Id. Meyrowitz
promised not to transfer the ring. Id. Immediately
thereafter, Mellen filed suit in Minnesota to recover the
ring and obtained a temporary restraining order preventing
either Gutekunst or Meyrowitz from accessing the safe deposit
box. Id. at 7. When Mellen inspected the safe
deposit box, however, the ring was gone. Id. In
March 2016, under threat of sanctions, Meyrowitz appeared at
a deposition but invoked his Fifth Amendment right against
self-incrimination. Id. at 6-7. On March 2, 2016,
Mellen finally learned from law enforcement that the ring was
in Biltmore’s possession. Id. at 7. Both
Mellen and Biltmore claim ownership of the diamond.
plaintiff seeking a preliminary injunction must establish
that he is likely to succeed on the merits, that he is likely
to suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in his favor, and
that an injunction is in the public interest."
Winter v. Natural Res. Def. Council, Inc., 555 U.S.
7, 20 (2008); Am. Trucking Ass’n, Inc. v. City of
L.A., 559 F.3d 1046, 1052 (9th Cir. 2009). These
elements are balanced on a sliding scale, whereby a stronger
showing of one element may offset a weaker showing of
another. See Alliance for the Wild Rockies v.
Cottrell, 632 F.3d 1127, 1131, 1134-35 (9th Cir. 2011).
However, the sliding-scale approach does not relieve the
movant of the burden to satisfy all four prongs for the
issuance of a preliminary injunction. Id. at 1135.
Instead, "‘serious questions going to the
merits’ and a balance of hardships that tips sharply
towards the plaintiff can support issuance of a preliminary
injunction, so long as the plaintiff also shows that there is
a likelihood of irreparable injury and that the injunction is
in the public interest." Id. at 1135. The
movant bears the burden of proof on each element of the test.
Envtl. Council of Sacramento v. Slater, 184
F.Supp.2d 1016, 1027 (E.D. Cal. 2000).
seeks to enjoin Biltmore from moving or selling the diamond.
It also seeks an order requiring the diamond to be held in
the exclusive possession and control of Biltmore or a
court-appointed receiver during the pendency of this action.
Mellen has the burden of demonstrating each of the four
elements necessary to obtain preliminary injunctive relief.
The Court finds Mellen has met its burden.
Likelihood of Success on the Merits
argues that the memorandum under which Meyrowitz took
possession of the diamond "unambiguously shows that
[Mellen] is the owner" of the diamond. Doc. 13 at 11.
The memorandum signed by Meyrowitz states:
The merchandise described below, is delivered to you on
memorandum, at your own risk from all hazards, regardless of
the cause of the loss or damage, only for examination and
inspection by prospective purchasers, upon the express
condition that all such merchandise shall remain the property
of [Mellen], and shall be returned on demand, in its full and
original form. . . . You acquire no ...