Fengler v. Numismatic Americana, Inc.

832 F.2d 745 (1987)

Facts

P contracted to sell 60% of the stock in her financially-troubled office supply company, Stationers, to D. Cameron (D) was the president of D. Preliminary negotiations had been conducted by Simon (D), who was the Senior Acquisitions Director of U.S. Rare Gold Eagles, Inc. P claims that Simon orally promised that his company would invest $50,000 into Stationers; would pay P a salary of $ 1,100 weekly; would satisfy all of Stationers' outstanding checks issued to creditors, and would conduct an audit of Stationers so that the business could be restored to financial health. The contract which was ultimately signed provided for the audit, for the investment of $50,000 into Stationers, and for the payment of a $1,100 weekly salary to P. The contract was executed on December 24, 1986. Simon and Cameron were present and were represented by Bochner (D). P was unrepresented and alleged that Simon assured her that his own attorney, Bochner, would adequately represent the interests of all parties to the transaction. Within two weeks Ds removed all the inventory, business records, and furnishings of Stationers, leaving P with only a desk, chair, and telephone. Ds converted all the cash assets of Stationers to their personal use and refused to satisfy the claims of Stationers' creditors. P received only one weekly salary check, and Ds never returned her phone calls. P sued Ds under the federal securities laws, RICO, and common-law fraud, and requesting both monetary and injunctive relief. Simon and Cameron disappeared, but the two corporate defendants were served, but did not appear and are currently in default. Bochner and Bochner and Berg were properly served. The Judge issued an ex parte temporary restraining order against Ds. A motion for preliminary injunction was set, and P and Bochner appeared. After argument, Bochner submitted an affidavit which stated that his firm no longer represented the corporate defendants and that neither he nor his firm was in a position to engage in any acts on behalf of Stationers. The district court did not hold a requested evidentiary hearing. The court issued a preliminary injunction, unsupported by any factual findings, which restrained Ds from engaging in any activities with respect to Stationers. D appealed.