EDF Res. Capital, Inc. v. U.S. Small Bus. Admin.

• Decision Date: 21 December 2012
• Docket Number: Civil Action No. 12-2043 (JDB)
• Parties: EDF RESOURCE CAPITAL, INC. Plaintiff, v. UNITED STATES SMALL BUSINESS ADMINISTRATION, et al. Defendants.
• Court: U.S. District Court — District of Columbia

EDF RESOURCE CAPITAL, INC. Plaintiff,
v.
UNITED STATES SMALL BUSINESS ADMINISTRATION, et al. Defendants.

Civil Action No. 12-2043 (JDB)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

Date: December 21, 2012

MEMORANDUM OPINION

Plaintiff EDF REsource Capital, Inc. ("EDF") seeks a temporary restraining order ("TRO") and a preliminary injunction against the U.S. Small Business Administration and Karen Mills, Administrator of SBA (collectively "defendants" or "SBA") enjoining defendants from enforcing their December 17, 2012 final agency decision revoking EDF's authority to participate in SBA's 504 loan program and permanently transferring EDF's loan portfolio to an agent for SBA. A hearing on the TRO was held on this date, and, upon consideration of the submissions by the parties and the parties' arguments, and for the reasons explained below, the temporary restraining order will be denied.

BACKGROUND

The facts and circumstances under which this case arose are briefly stated here. On February 18, 2011, SBA served EDF with a notice of proposed revocation and the proposed transfer of its loan portfolio. After nearly two years of investigation, correspondence, and

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submissions between EDF and SBA, SBA issued a final agency decision on December 17, 2012 revoking EDF's authority to participate in SBA's 504 loan program; transferring EDF's loan portfolio and all pending 504 loan applications to an agent for SBA; and ordering SBA's Central Servicing Agent to withhold from EDF all fees received and/or due and payable to SBA. Final Agency Decision at 1-2. The decision was effective immediately. Id. at 2. In support of its decision, SBA concluded that EDF had failed (1) to establish and adequately maintain the required loan loss reserve fund; (2) to pay invoiced obligations to SBA in a timely manner; and (3) to comply with SBA's loan program requirement that it maintain financial solvency to operate under the applicable regulations. Id. at 5. SBA concluded that these grounds, "either individually or in the aggregate," were sufficient to support the final decision. Id. EDF challenges these conclusions, and seeks a TRO and injunctive relief to prevent the decision from being effectuated. EDF also seeks discovery, claiming that SBA's motive for investigating and issuing the final decision was based on bias or personal animus against EDF's CEO, Frank Dinsmore. EDF's Mem. in Supp. of Mot. for Expedited Disc. [ECF 4-1] at 1.

ANALYSIS

The standard for issuance of the "extraordinary and drastic remedy" of a temporary restraining order or preliminary injunction is by now well-established. Munaf v. Geren, 553 U.S. 674, 689 (2007). To prevail on a motion for a temporary restraining order or preliminary injunction, the moving party must demonstrate: (1) a substantial likelihood of success on the merits; (2) that the moving party would suffer irreparable injury if the relief were not granted; (3) that the balance of equities tips in the movant's favor; and (4) that an injunction is in the public interest. See Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C. Cir.

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2006) (citing Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1066 (D.C. Cir. 1998)); see also Winter v. NRDC, Inc., 555 U.S. 7, 20 (2008). "The likelihood of success requirement is the most important of these factors." See Apotex, Inc. v. Sebelius, 700 F. Supp. 2d 138, 140 (D.D.C. 2010). This is because "[w]ithout any probability of prevailing on the merits, the Plaintiffs' purported injuries, no matter how compelling, do not justify preliminary injunctive relief." Id. (quoting Am. Bankers Ass'n v. Nat'l Credit Union Admin., 38 F. Supp. 2d 114, 140 (D.D.C. 1999)); see also Trudeau v. Fed. Trade Comm'n, 456 F.3d 178, 182 n.2 (D.C. Cir. 2006) (citing previous instances where denials of preliminary injunctions have been affirmed where district courts have concluded that a plaintiff had no likelihood of success on the merits). Indeed, the Supreme Court has observed that "a party seeking a preliminary injunction must demonstrate, among other things, "a likelihood of success on the merits." Munaf, 553 U.S. at 689 (quoting Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 428 (2006)) (emphasis supplied).

EDF has failed to satisfy its burden of demonstrating that it is entitled to a TRO. The Court assumes - and SBA does not seriously contest - that EDF would suffer irreparable harm absent entry of a TRO. But EDF has not demonstrated a substantial likelihood of success on the merits. EDF raises a claim under the Administrative Procedure Act, attacking SBA's decision as arbitrary and capricious. The bases it cites for that conclusion are: (1) a purported lack of due process because of SBA's failure to conduct a pre-termination evidentiary hearing; (2) a challenge to SBA's conclusion that EDF failed to satisfy its loan loss reserve requirements and that EDF owes money to SBA; and (3) improper bias on the part of SBA, based on claims that SBA personnel had personal animus against EDF's CEO Frank Dinsmore.

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I. Due Process

The "fundamental requirement of due process is the opportunity to be heard 'at a meaningful time and in a meaningful manner.'" Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (internal citation omitted); see also Propert v. District of Columbia, 948 F.2d 1327, 1331 (D.C. Cir. 1991) (stating the three basic elements to a procedural due process claim as (1) a deprivation, (2) of life, liberty, or property, (3) without...