United States District Court, N.D. Alabama, Middle Division
MEMORANDUM OPINION AND ORDER
OWEN BOWDRE, CHIEF UNITED STATES DISTRICT JUDGE
matter comes before the court on Plaintiff Cincinnati
Insurance Company's “Motion for Preliminary
Injunction.” (Doc. 6). Cincinnati seeks a preliminary
injunction compelling Defendants Gina Gilbert, Theodore Cook,
and Richard Rhea to deposit $2, 000, 000.00 with Cincinnati
to collateralize a loss reserve per the indemnity agreement
between the parties. The parties fully briefed the motion,
and the court held a hearing on the motion on May 16, 2019.
case arises from an underlying probate proceeding. The
Probate Court for Etowah County, Alabama appointed Ms.
Gilbert and Mr. Cook, two siblings, as co-guardians and
co-conservators for their mother, Mrs. Patricia Jerome
(“the Ward”), on August 1, 2014. As a condition
of their appointment as co-conservators, Cincinnati issued a
surety bond on their behalf. The bond was signed by Ms.
Gilbert, Mr. Cook, and Mr. Rhea-their attorney-as principals,
with Cincinnati as the surety. In the bond agreement, the
principals agreed to indemnify Cincinnati from any liability,
loss, cost, attorneys' fees, and expenses. The bond also
included a clause stating that Ms. Gilbert, Mr. Cook, and Mr.
Rhea would “[u]pon demand by the Company in the event
it deems necessary to establish a reserve, . . . deposit cash
funds with the Company in an amount sufficient to satisfy any
claim against the Company by reason of such
suretyship.” (Doc. 1-1 at 4).
November 10, 2014, Mr. Rhea, on behalf of Mr. Cook and Ms.
Gilbert, filed an inventory in the probate court, which
represented that the Ward's estate had $8, 584, 465.23 in
assets. On August 28, 2017, Mr. Rhea filed a petition for
partial settlement in the probate court. Mr. Rhea included
with the petition an affidavit of income and expenditures,
which showed that Mr. Cook and Ms. Gilbert spent $6, 669,
500.96 of the Ward's assets. At that point, the probate
court appointed Krystal Padula as guardian ad litem
(“GAL”) for the Ward.
February 13, 2018, Andy Cook, another sibling acting as next
friend of the Ward, petitioned the Circuit Court for Etowah
County to remove the guardianship and conservatorship action
from probate court to the circuit court. The court granted
that motion on February 16, 2018. Cincinnati received notice
of a potential claim against the bond by being named an
“interested party” in the circuit court
March 6, 2018, the GAL for the Ward filed a motion to remove
Ms. Gilbert and Mr. Cook as conservators. Ms. Gilbert
“propose[d] to deposit with the Court certain amount to
which the [GAL] and interested parties have made objection
thereto, ” including deposits such as American Express
credit card payments totaling $305, 899.71, funds from the
Ward's e-trade account totaling $760, 000.00, and other
“[c]onservatorship fees which are pending approval of
the Court.” (Doc. 1 at 6-7). She ultimately deposited
$1, 340, 899.71 in the circuit court's registry.
Rhea subsequently withdrew from representing Ms. Gilbert and
Mr. Cook on March 20, 2018.
April 12, 2018, the circuit court accepted Ms. Gilbert's
and Mr. Cook's resignations as co-conservators, and
appointed a successor conservator. The successor conservator
then challenged 567 separate disbursements of the Ward's
assets and asserted claims against Ms. Gilbert and Mr. Cook
for breach of fiduciary duty, statement of account,
conversion, money had and received, claim against interplead
funds, and accounting and removal of custodians under the
Alabama Uniform Transfers to Minors Act. The successor
conservator sought to recover more than $7, 615, 174.12,
including the money already deposited by Ms. Gilbert into the
circuit court's recovery, and would seek to recover some
or all of those damages from Cincinnati under the surety
October 29, 2018, Cincinnati sent a letter to Ms. Gilbert,
Mr. Cook, and Mr. Rhea reminding them of their obligations
under the indemnity agreement and that Cincinnati would
require them to deposit collateral to equal the loss reserve
once Cincinnati established a loss reserve for the successor
conservator's claim against the bond.
established a loss reserve for $2, 000, 000.00, and sent a
letter to the Defendants on December 31, 2018, demanding that
they deposit the cash collateral within five business days.
The Defendants refused to post the collateral.
filed this action on February 11, 2019, raising three counts:
(1) specific performance of the indemnity agreement; (2)
breach of the indemnity agreement; and (3) equitable
indemnity, reimbursement, and exoneration. (Doc. 1). On March
1, 2019, it filed this motion for preliminary injunction
seeking the court to compel the Defendants to post $2, 000,
000 to equal the loss reserve Cincinnati established. (Doc.
seeks extraordinary relief in moving for a preliminary
injunction. See Bloedorn v. Grube, 631 F.3d 1218,
1229 (11th Cir. 2011) (“We begin our analysis with the
unremarkable observation that a preliminary injunction in
advance of trial is an extraordinary remedy.”). But
“[t]he purpose of the preliminary injunction is to
preserve the positions of the parties as best [the court] can
until a trial on the merits may be held.” Id.
court uses a four-part test to determine if a preliminary
injunction is appropriate. The plaintiff must clearly
(1) [the plaintiff] has a substantial likelihood of success
on the merits; (2) irreparable injury will be suffered unless
the injunction issues; (3) the threatened injury to the
movant outweighs whatever damage the proposed injunction may
cause the opposing party; and (4) if issued, the injunction
would not be adverse to the public interest.
Am. Civil Liberties Union of Fla., Inc. v. Miami-dade
Cty. Sch. Bd., 557 F.3d 1177, 1198 (11th Cir. 2009)
(quoting Siegel v. LePore, 234 F.3d 1163, 1176 (11th
Cir. 2000) (en banc)). The court will ...