Mountain Valley Realty LLC, et al. v. AKF Incorporated, et al.

• Court: District Court, D. Arizona
• Decided: July 7, 2026
• Docket: 3:26-cv-08117
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Mountain Valley Realty LLC, et al., No. CV-26-08117-PCT-DWL

10 Plaintiffs, ORDER

11 v.

12 AKF Incorporated, et al.,

13 Defendants. 14 15 AKF Incorporated (“AKF”) prevailed in an arbitration proceeding against Mountain 16 Valley Realty LLC (“Plaintiff”), an Arizona-based realty and property management firm, 17 and then confirmed that award via a $193,218.69 judgment issued by a New York state 18 court. Afterward, AKF utilized an unusual feature of New York law called a “restraining 19 notice”—governed by § 5222 et seq. of the New York Civil Practice Law and Rules 20 (“CPLR”)—in an effort to freeze Plaintiff’s funds in anticipation of collection efforts. 21 More specifically, in March 2026, AKF mailed a restraining notice to Wells Fargo Bank, 22 N.A. (“Wells Fargo”), which then froze a total of $386,582.38—twice the amount of the 23 judgment—held in various bank accounts Plaintiff had previously opened in Arizona. 24 Upon learning these funds had been frozen, Plaintiff retained New York counsel, 25 reached out to AKF, and raised various objections, including that the frozen funds were 26 not actually Plaintiff’s funds but were instead security deposits, rent proceeds, and other 27 similar types of deposits that Plaintiff was holding in trust for tenants, landlords, and 28 property-management clients. Plaintiff also threatened to challenge the validity of the 1 restraining notice in New York state court, as contemplated under New York law, but then 2 changed course and filed an action in Mohave County Superior Court against AKF and 3 Wells Fargo (together, “Defendants”), along with a motion for a temporary restraining 4 order (“TRO”) and preliminary injunction (“PI”). The state-court judge granted a TRO 5 without providing notice to Defendants, ordering Wells Fargo to unfreeze half of the frozen 6 funds (while leaving $193,218.69 frozen). After AKF was later served with process—and 7 just before a state-court PI hearing was scheduled to begin—AKF removed this action to 8 federal court. 9 On June 30, 2026, after the PI motion became fully briefed, the Court held a PI 10 hearing. (Doc. 36.) Having carefully considered the parties’ arguments and the evidence 11 presented at the hearing, the Court concludes the PI motion should be denied. 12 RELEVANT BACKGROUND 13 Plaintiff is an Arizona LLC that does business as Black Mountain Valley Realty and 14 Black Mountain Valley Property Management. (Doc. 1-5 at 4 ¶ 6.) It conducts, among 15 other things, property-management operations in Arizona and does not conduct any 16 business in New York. (Id. at 4 ¶ 6; Doc. 24-1 ¶¶ 1, 6.) 17 On July 7, 2025, AKF obtained a final arbitration award against Plaintiff (as well as 18 against certain other non-party entities and a non-party individual) in the amount of 19 $181,103.24. (Doc. 24-7 at 1.) 20 On August 19, 2025, AKF filed an application in the Supreme Court of New York, 21 County of New York to confirm the arbitration award. (Id.) 22 On March 18, 2026, the New York court granted the confirmation application. (Id.) 23 On March 24, 2026, the New York court entered judgment against Plaintiff (and 24 Plaintiff’s co-defendants) for “the total amount of $ 193,218.69.” (Id. at 2.)1 25 On March 30, 2026, AKF’s New York counsel mailed a CPLR § 5222 restraining 26 notice to Wells Fargo at Wells Fargo’s corporate office in North Carolina. (Docs. 19-2, 27 19-4.) Wells Fargo subsequently froze a total of $386,582.38 that was being held in several 28 1 This sum was larger than the arbitration award because it included costs and interest. 1 of Plaintiff’s Wells Fargo accounts located in Mohave County, Arizona. (Doc. 1-5 at 3 2 ¶¶ 3-4.) Specifically, Plaintiff contends that Wells Fargo froze funds in its accounts ending 3 in 0168 (the “0168 Account”), 1313 (the “1313 Account”), 1370 (the “1370 Account”), 4 and 0184 (the “0184 Account”) (collectively, the “Arizona Accounts”).2 (Doc. 1-8 at 4.) 5 Under New York law, a judgment creditor—here, AKF—serving a restraining 6 notice must also “provide the banking institution with . . . an exemption notice and two 7 exemption claim forms with sections titled ‘ADDRESS A’ and ‘ADDRESS B’ 8 completed,” and “[w]ithin two business days after receipt of the restraining notice or 9 execution, exemption notice and exemption claim forms, the banking institution shall serve 10 upon the judgment debtor”—here, Plaintiff—“the copy of the restraining notice, the 11 exemption notice and two exemption claim forms.” CPLR § 5222-a(b)(1), (b)(3). It 12 appears that process was followed here, as on April 3, 2026, Sarah Juarez, “the sole 13 owner/operator of [Plaintiff’s] Property Management division” (Doc. 1-5 at 4 ¶ 7), filled 14 out a “exemption claim form” (Doc. 19-3 at 20). On that form, which bore the caption of 15 the New York court that entered the judgment, Plaintiff indicated that the funds in the 16 Arizona Accounts were exempt from restraint because they are “Trust Accounts.” (Id.) 17 On April 10, 2026, Plaintiff’s New York counsel emailed the claim exemption form, 18 along with an accompanying letter, to AKF, requesting that AKF fax the form to Wells 19 Fargo. (Doc. 19-3 at 16; Doc. 19-1 ¶ 5.) In the accompanying letter, Plaintiff’s New York 20 counsel stated: 21 The [Arizona Accounts] are trust / fiduciary property-management accounts maintained in Arizona. The funds in those accounts are not the personal 22 property of the judgment debtor and are not general operating funds of the 23 company. Rather, they are monies held for the benefit of third parties, including tenant security deposits, landlord rent proceeds, and maintenance 24 reserve funds, in connection with the management of rental properties. 25 . . . 26

27 2 In its response brief, AKF notes that Plaintiff’s PI motion “claims an additional account at Wells [Fargo]” in reference to the 0184 Account. During the PI hearing, 28 Plaintiff seemed to only discuss three frozen accounts. This distinction does not alter the analysis. 1 New York courts applying CPLR 5222 have emphasized that the restraint is directed at the judgment debtor’s property, not money belonging beneficially 2 to someone else. 3 . . . 4 The New York exemption procedure expressly permits a debtor to assert that 5 restrained funds are exempt and to seek release of the restraint through the Exemption Claim process and an Article 52 proceeding if necessary. 6 . . . 7 Accordingly, demand is hereby made for the immediate release of the 8 restrained funds. 9 (Doc. 19-3 at 17-20.) 10 Between April 10 and April 21, 2026, Plaintiff’s New York counsel and AKF’s New 11 York counsel exchanged a series of emails. (Doc. 19-3 at 2-16.) In those emails, AKF 12 indicated that it “was in receipt of [Plaintiff’s] April 10 letter and the Exemption Claim 13 Form signed by Sarah Juarez” and that AKF “objects to the release of any restrained funds.” 14 (Id. at 9.) 15 On April 21, 2026, after a back-and-forth exchange over whether the Arizona 16 Accounts are in fact third-party trust accounts, Plaintiff’s New York counsel indicated that 17 “[u]nless AKF consents to immediate release, [Plaintiff] will proceed with an emergency 18 [order to show cause] seeking to vacate or modify the restraint and obtain expedited relief.” 19 (Doc. 19-3 at 3.) “Unless we hear back from you we will be filing said motions before the 20 end of the week.” (Id.) 21 Plaintiff did not follow through on that threat. Instead, on May 11, 2026, Plaintiff, 22 through its current non-New York counsel, filed a verified complaint (Doc. 1-5) and an 23 application for a TRO and PI (Doc. 1-8)3 in Mohave County Superior Court. In the 24 complaint, Plaintiff asserts three causes of action: (1) “Declaratory Judgment”; (2) 25 “Temporary, Preliminary, And Permanent Injunctive Relief”; and (3) “Wrongful Restraint 26 / Equitable Relief.” (Doc. 1-5 at 8-10 ¶¶ 33-48.) 27

28 3 Although the caption of Plaintiff’s motion only seeks a “preliminary injunction,” the motion itself also references the standard for issuing a TRO. (Doc. 1-8 at 6-7.) 1 On May 12, 2026, without providing notice to AKF or Wells Fargo,4 the Mohave 2 County Superior Court granted the TRO, “enjoining Wells Fargo . . . from transferring, 3 using, or dissipating any portion of the $386,582.28 that have been frozen” and further 4 ordering that “Wells Fargo Bank shall . . . release $193,363.69 to [Plaintiff].” (Doc. 1-9 at 5 2-3.) The order provided that “[t]his Temporary Restraining [Order] shall remain in full 6 force and effect until further ordered of this Court.” (Id. at 3.) The order also set “an initial 7 Hearing on [Plaintiff]’s Application for Preliminary Injunction” for May 27, 2026. (Id.) 8 On May 20, 2026, AKF received “service of process of the Summons, [TRO], and 9 Application for Preliminary Injunctive Relief from Plaintiffs.” (Doc. 19-1 ¶ 7.)5 10 On May 26, 2026, AKF filed a notice of removal. (Doc. 1.) 11 On June 5, 2026, Plaintiff filed a motion for an order setting hearing on its 12 application for injunctive relief. (Doc. 12.)6 That same day, the Court set an expedited 13 briefing schedule. (Doc. 15.) 14 On June 30, 2026, after the PI motion became fully briefed (Docs. 17, 19, 29, 34), 15 the Court held a PI hearing (Doc. 36).7 16 4 Arizona law, like federal law, generally requires that a TRO be issued “only with 17 notice to the adverse party” and authorizes the issuance of a no-notice TRO only when, inter alia, “the movant’s attorney certifies in writing any efforts made to give notice or the 18 reasons why it should not be required.” Ariz. R. Civ. P. 65(a)-(b). Plaintiff did not include such a certification in its motion papers and, indeed, did not expressly request the issuance 19 of a TRO without notice to Defendants. (Doc. 1-8.) Instead, it appears (and the parties seemed to suggest during the PI hearing) that the state-court judge chose to grant relief on 20 that basis sua sponte. 5 Although AKF has argued, both in its briefing (Doc. 19 at 5) and during the PI 21 hearing, that the TRO should not have been issued without notice, that issue is not before the Court. Cf. MacPherson v. Town of Southampton, 738 F. Supp. 2d 353, 365 (E.D.N.Y. 22 2010) (“[A] finding by this Court that Defendants’ conduct violated Plaintiffs’ due process rights would necessarily involve a review of the state court’s determination that (1) no 23 notice was required before the TROs could be issued and/or (2) the notice given to Plaintiffs by Defendants, as alleged in the Complaint, was constitutionally sufficient. Such 24 a review would be barred by the Rooker-Feldman doctrine.”). 25 6 Under LRCiv 3.6(d), “[i]f a motion is pending and undecided in the state court at the time of removal, the Court need not consider the motion unless and until a party files 26 and serves a notice of pending motion.” Because no party filed such a notice here, the Court was unaware of the pending PI motion until Plaintiff’s June 5, 2026 filing. 27 7 On June 26, 2026, at AKF’s request (Doc. 31), the Court held a telephonic status conference (Doc. 33). During the status conference, the Court authorized AKF to file a 28 three-page sur-reply—which AKF has now done (Doc. 34). The parties also stipulated to correct page seven of Doc. 29, “advising it was Plaintiff who made the trust designations, 1 DISCUSSION 2 I. Legal Standard 3 “A preliminary injunction is an extraordinary and drastic remedy, one that should 4 not be granted unless the movant, by a clear showing, carries the burden of persuasion.” 5 Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) (cleaned up). See also Winter v. 6 Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (“A preliminary injunction is an 7 extraordinary remedy never awarded as of right.”) (citation omitted); Dymo Industries, Inc. 8 v. Tapeprinter, Inc., 326 F.2d 141, 143 (9th Cir. 1964) (“The grant of a preliminary 9 injunction is the exercise of a very far reaching power never to be indulged in except in a 10 case clearly warranting it.”). 11 “A plaintiff seeking a preliminary injunction must establish [1] that he is likely to 12 succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of 13 preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction 14 is in the public interest.” Winter, 555 U.S. at 20. However, “if a plaintiff can only show 15 that there are serious questions going to the merits—a lesser showing than likelihood of 16 success on the merits—then a preliminary injunction may still issue if the balance of 17 hardships tips sharply in the plaintiff’s favor, and the other two Winter factors are 18 satisfied.” Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir. 2013) 19

20 not Wells Fargo.” (Doc. 33.) Finally, AKF also requested expedited discovery to determine whether the funds held in the Arizona Accounts are, in fact, trust funds that 21 Plaintiff is holding on behalf of third parties. (See also Doc. 19 at 10 [“The Court should require [Plaintiff] to provide discovery concerning its claim that the accounts are 22 trust/fiduciary accounts.”].) The Court informed AKF that (1) a defendant is not ordinarily entitled to postpone a plaintiff’s request for emergency relief on the ground that the record 23 is insufficiently developed, see generally TGI Friday’s Inc. v. Stripes Restaurants, Inc., 2015 WL 2341991, *2 (E.D. Cal. 2015) (“Plaintiff, as the moving party to its motion for a 24 preliminary injunction, bears the burden of proof of demonstrating that the requirements for a preliminary injunction have been met. Moreover, the burden on Plaintiff is a heavy 25 one . . . . Accordingly, the lack of discovery in this action is more prejudicial to Plaintiff than Defendants, since Plaintiff carries the burden of proof on its motion. Generally, 26 motions for expedited discovery in connection with motions for preliminary injunctions are made by the moving party requesting the injunctive relief, not the opposing party who 27 does not carry the burden of justifying injunctive relief.”); and (2) in any event, the Court would postpone resolution of this request until after hearing the evidence presented at the 28 PI hearing. Because the Court has now denied Plaintiff’s PI request, AKF’s request for expedited discovery in advance of the PI hearing is moot. 1 (cleaned up).8 The movant “carries the burden of proof on each element of either test.” 2 Env’t. Council of Sacramento v. Slater, 184 F. Supp. 2d 1016, 1027 (E.D. Cal. 2000). 3 II. Analysis 4 A. Likelihood Of Success On The Merits 5 1. The Parties’ Arguments 6 Plaintiff advances three reasons why it is likely to succeed on the merits: (1) “[AKF] 7 Has Not Domesticated Its Out-of-State Judgment In Arizona” (Doc. 1-8 at 8-9); (2) “New 8 York’s Separate Entity Rule Prevents The Garnishment Of [the Arizona Accounts]” (id. at 9 9-11); and (3) “[The Arizona Accounts] Are Owned Exclusively By Unrelated Third- 10 Parties And Are Not And Cannot Be Subject To A New York Garnishment” (id. at 11-13.) 11 As to its domestication argument, Plaintiff elaborates that “the [Arizona Accounts] 12 deposited in an Arizona bank have been garnished based on a New York judgment that has 13 not been domesticated in Arizona as required by Arizona’s Revised Uniform Enforcement 14 Of Foreign Judgment Act” and that “[u]nder Arizona law, a foreign judgment must be 15 domesticated for enforcement purposes.” (Id. at 8.) 16 17 8 The existence of serious questions often turns on the presence of disputed factual 18 issues. Assurance Wireless USA, L.P. v. Reynolds, 100 F.4th 1024, 1031 (9th Cir. 2024) (“[P]arties do not show serious questions when they raise a merely plausible claim, nor can 19 a district court forgo legal analysis just because it has not identified precedent that places the question beyond debate. This less demanding merits standard requires serious factual 20 questions that need to be resolved in the case.”) (cleaned up); Alliance for the Wild Rockies v. Petrick, 68 F.4th 475, 497 (9th Cir. 2023) (“[L]ike many legal questions, the meaning of 21 HFRA’s unambiguous provisions would not become clearer with at least some discovery or a further hearing on the merits. There is no need for more deliberative investigation or 22 development of the record to resolve the plain meaning of HFRA.”) (cleaned up). However, the Ninth Circuit has indicated that unsettled and debatable legal issues may also 23 qualify as serious questions. See, e.g., hiQ Labs, Inc. v. LinkedIn Corp., 31 F.4th 1180, 1184, 1195 (9th Cir. 2022) (identifying unresolved issue of statutory interpretation over 24 the meaning of the term “without authorization” before concluding that “[a]t the very least, . . . hiQ has raised a serious question as to this issue” and also noting that, during an earlier 25 stage in the case, “we focused on whether hiQ had raised serious questions on the merits of the factual and legal issues presented to us”) (emphasis added); City of Tenakee Springs 26 v. Clough, 915 F.2d 1308, 1311 (9th Cir. 1990) (reversing denial of preliminary injunction in part because the movants’ “interpretation of the language of the contract [was] not 27 unreasonable” and raised “at least a serious question as to its proper interpretation”); Adultworld Bookstore v. City of Fresno, 758 F.2d 1348, 1351-52 (9th Cir. 1985) (reversing 28 denial of preliminary injunction because “the question of the constitutionality of the Fresno ordinance presents a fair ground for litigation” and “at least a serious litigation question”). 1 In response, AKF sets forth a host of arguments.9 Among other things, AKF argues 2 that “[t]here is no garnishment” but rather “a restraining notice.” (Doc. 19 at 2.) AKF 3 argues that under CPLR § 5222, “there is a two-step process rather than a single 4 ‘garnishment’” and that a “restraining notice operates as an injunction and merely restrains 5 a party upon which it is served from making any transfer.” (Id. at 8, cleaned up.) AKF 6 argues that “the restraining notice confers upon the creditor no lien upon or interest in the 7 property . . . [and to] achieve these objectives further enforcement procedures are required.” 8 (Id., cleaned up.) AKF also argues that “[t]he restraining notice can properly freeze funds 9 even if the judgment debtor claims they are trust funds, as here.” (Id.) AKF questions 10 “why [Plaintiff] file[d] in Arizona at all,” contends that Plaintiff acted with “unclean 11 hands,” and argues that “[Plaintiff]’s New York counsel had correctly identified the 12 procedure for relief from the restraining notice on April 21, 2026: filing a motion ‘to vacate 13 or modify the restraint.’” (Id. at 7-9.) Finally, AKF argues that “declaratory judgments 14 and injunctions are remedies, rather than causes of action.” (Id. at 17.) 15 2. Discussion 16 AKF obtained a $193,218.69 judgment against Plaintiff, issued by a New York state 17 court. AKF then utilized a tool available to it under New York law and served a CPLR 18 § 5222 restraining notice on Wells Fargo. Under New York law, the service of this 19 restraining notice functionally operated as an injunction, issued by the New York state 20 court that entered the judgment, compelling Wells Fargo to freeze the funds at issue 21 pending further proceedings. See, e.g., Cruz v. TD Bank, N.A., 22 N.Y.3d 61, 76 (N.Y. 22 2013) (“Whether issued by a court or an attorney acting as an officer of the court, a 23 restraining notice is an injunction and disobedience is punishable as a contempt of court.”) 24 (cleaned up); Doubet, LLC v. Trustees of Columbia Univ. in City of New York, 2011 WL 25 2636259, *10 (N.Y. Sup. Ct. 2011), aff’d, 99 A.D.3d 433 (N.Y. App. Div. 2012) 26 (“Although CPLR 5222(a) permits an attorney for the judgment creditor to issue a 27

28 9 Because Wells Fargo “takes no position on the merits of the dispute” (Doc. 17 at 3), the analysis here focuses on the arguments made by Plaintiff and AKF. 1 restraining notice without the court’s involvement, it is legal process nonetheless. . . . The 2 restraining notice operates like an injunction. Indeed, it is an injunction, issued by the 3 attorney acting as an officer of the court.”) (cleaned up); Aspen Indus., Inc. v. Marine 4 Midland Bank, 52 N.Y.2d 575, 579 (N.Y. 1981) (“[T]he restraining notice serves as a type 5 of injunction prohibiting the transfer of the judgment debtor’s property. This notice may 6 be served on either the judgment debtor himself or, as in the present case, upon a third- 7 party ‘garnishee’—a person who owes a debt to the judgment debtor or who is in 8 possession of property in which the judgment debtor has an interest. When served upon a 9 garnishee, the injunctive effect of the restraining notice continues for one year or until such 10 time as the judgment is satisfied or vacated, whichever occurs first . . . .”).10 Wells Fargo 11 then proceeded to restrain funds held in the Arizona Accounts. Although Plaintiff raises 12 various arguments as to why it believes the restraint of the Arizona Accounts is 13 substantively and procedurally impermissible under CPLR § 5222 and/or Arizona law, the 14 Court is skeptical that this lawsuit is a proper vehicle for advancing such challenges. 15 Rather, it appears that the appropriate way to advance such challenges would be to seek 16 relief in the same New York state court that issued the restraining notice. 17 CPLR § 5222 provides, in relevant part, that “[a] restraining notice may be issued 18 by . . . the attorney for the judgment creditor as officer of the court” and that “[a] judgment 19 debtor or obligor served with a restraining notice is forbidden to make or suffer any sale, 20 assignment, transfer or interference with any property in which he or she has an interest, 21 except as set forth in subdivisions (h) and (i) of this section, and except upon direction of 22 the sheriff or pursuant to an order of the court, until the judgment or order is satisfied or 23

24 10 Although it may not be intuitive that an attorney of a judgment creditor is functionally allowed to issue an injunction, “CPLR § 5222 reflects a policy judgment by 25 the New York legislature—which this Court is not free to second-guess—that an attorney’s status as ‘officer of the court’ when issuing a restraining notice should prevent abuse.” 26 Wells Fargo Bank NA v. Wyo Tech Investment Group LLC, 385 F. Supp. 3d 863, 871 (D. Ariz. 2019) (citing Save Way Oil Co. v. 284 E. Parkway Corp., 453 N.Y.S.2d 554 (N.Y. 27 Civ. Ct. 1982)). See also N.Y. C.P.L.R. § 5222, cmt. 5222:1 (practice commentary) (“It is a rare example of an injunction, complete with contempt punishment as its sanction, not 28 embodied in a court order or judgment.”) (cited with approval in CSX Transp., Inc. v. Island Rail Terminal, Inc., 879 F.3d 462, 465 n.1 (2d Cir. 2018)). 1 vacated.” Id. § 5222(a), (b). 2 In Hillwick Inc. v. Advanced Ready Mix Supply Corp., 2017 WL 4694865 (N.Y. 3 Sup. Ct. 2017), the New York Supreme Court, quoting McKinney’s CPLR Practice 4 Commentaries 5222:9 Vacating the Notice, stated that “[i]f the restraining notice is 5 defective in some way, . . . or for any other reason that undermines it, it can be vacated on 6 motion. The motion should of course be made to the court out of which the restraining 7 notice issued (i.e., was captioned), which will usually but not invariably be the court that 8 rendered the judgment being enforced.” Id. at *3 (emphasis added). 9 Similarly, in CSX Transp., Inc. v. Emjay Env’t Recycling, Ltd., 2016 WL 6495530 10 (E.D.N.Y. 2016), the Eastern District of New York explained that “[a]lthough no other 11 case appears to have addressed this precise issue, the natural reading of Section 5222 12 suggests that only the court that issued the judgment may vacate a restraining notice. 13 Permitting any court in any circumstance to undo a restraining notice would not only injure 14 the rights of creditors but also threaten [the issuing court’s] injunctive power. On that 15 basis, the Garnishees’ expansive reading would produce absurd results.” Id. at *5 16 (emphasis added). The court went on to note that “[t]he Practice Commentary to Section 17 5222 reinforces” this interpretation. Id. The Second Circuit then affirmed. CSX Transp., 18 Inc., 879 F.3d 462. The Second Circuit began by noting that it was “unaware of any New 19 York cases that precisely address the issue before [it]” but that nevertheless “the plain and 20 unambiguous meaning of C.P.L.R. § 5222(b) is that ‘the’ court refers to the court out of 21 which the restraining notice issued. The use of the definite article ‘the’ indicates a singular 22 court, whereas the indefinite article ‘any’ or ‘a’ denotes multiple courts.” Id. at 470-71. 23 The Second Circuit also stated that “permitting a second court to dissolve a restraining 24 notice issued out of the first court would injure the rights of creditors and threaten the first 25 court’s injunctive power.” Id. at 471. 26 The Court agrees. Not only is Plaintiff’s request contrary to the text of § 5222, but 27 Plaintiff is effectively asking the Court to interfere with an injunction issued by a New 28 York state court. That, at the very least, raises serious federalism concerns. Pressman v. 1 Neubardt, 2002 WL 31780183, *3-4 (S.D.N.Y. 2022) (dismissing a lawsuit that Pressman 2 filed in federal court, which sought to vacate CPLR § 5222 restraining notices that 3 judgment creditors had served on certain third parties after obtaining a judgment against 4 Pressman in New York state court, both because (1) “a restraining notice serves as an 5 enforcement device and is therefore deemed an adjunct of the action that gave rise to the 6 judgment,” so “a party seeking to vacate a restraining notice is to proceed by motion in the 7 court in which the restraining notice was issued, and not through a plenary action”; and (2) 8 “[t]he restraining notice at issue in this case is a state court proceeding within the meaning 9 of the Anti–Injunction Act,” so “Plaintiff’s request would impede the enforcement 10 proceedings related to a New York State Supreme Court judgment”). 11 The Court reached a similar conclusion in an earlier case, recognizing that “in 12 general, the proper court in which to dispute the validity of a restraining notice is the ‘court 13 out of which the restraining notice issued.’” Wyo Tech, 385 F. Supp. 3d at 872 (quoting 14 CSX Transportation, Inc, 879 F.3d at 471). Tellingly, Plaintiff started going down that 15 path in this case, by filling out the formal New York state court exemption form (Doc. 19- 16 3 at 20) and threatening, via its New York counsel, to pursue expedited relief in New York 17 state court (Doc. 19-3 at 3). 18 Moreover, even if it were theoretically possible for Plaintiff to file a lawsuit in 19 Arizona state court, rather than New York state court, to challenge the restraining notice, 20 Plaintiff has failed to demonstrate a likelihood of success on the merits (or serious 21 questions going to the merits) for other reasons. As noted, the complaint asserts three 22 causes of action: (1) “Declaratory Judgment”; (2) “Temporary, Preliminary, And 23 Permanent Injunctive Relief”; and (3) “Wrongful Restraint / Equitable Relief.” But as for 24 Counts One and Two, “[d]eclaratory and injunctive relief are remedies, not causes of 25 action.” Ajetunmobi v. Clarion Mortg. Cap., Inc., 595 F. App’x 680, 684 (9th Cir. 2014). 26 See also Kendrick v. World Savings Bank, 2016 WL 1268519, *5 (D. Ariz. 2016) (“It is 27 well-established law that injunctive relief is not an independent cause of action, and in 28 order to succeed on a claim for injunctive relief, Plaintiff must first offer a valid cause of 1 action for which injunctive relief would be a remedy.”); Thomas v. Wells Fargo Home 2 Mortg., Inc., 2012 WL 122803, *2 (D. Ariz. 2012) (“[I]njunctive and declaratory relief are 3 remedies for underlying causes of action . . . not separate causes of action.”) (cleaned up). 4 Although Count One is brought “pursuant [to] A.R.S. § 12-1831,” that statute provides for 5 a “declaratory judgment action” and “is not a separate cause of action as Plaintiff alleges.” 6 Snyder v. HSBC Bank, USA, N.A., 913 F. Supp. 2d 755, 770 (D. Ariz. 2012). See also 7 Horne v. Hobbs, 576 P.3d 108, 115 (Ariz. Ct. App. 2025) (“Although an action for 8 declaratory relief is remedial and to be liberally construed, A.R.S. § 12-1842, the plaintiff 9 must have an underlying cause of action . . . .”).11 10 That leaves Plaintiff’s claim in Count Three for “wrongful restraint/equitable 11 relief.” An initial difficulty with Count Three is that Plaintiff has not clearly specified the 12 basis for this claim or identified the elements that must be proved to succeed on it. The 13 complaint does, in fairness, cite A.R.S. § 12-1702, arguing that AKF “has not complied 14 with the mandatory requirements imposed under A.R.S. § 12-1702 authorizing 15 enforcement against the [Arizona Accounts].” (Doc. 1-5 at 6 ¶ 22.) It also appears possible 16 that Plaintiff seeks to assert a state-law claim for wrongful garnishment. Cf. Andrew Brown 17 Co. v. Painters Warehouse, Inc., 466 P.2d 790, 793 (Ariz. App. 1970) (“Our Supreme 18 Court has allowed a claim for wrongful garnishment to be asserted . . . in an independent 19 action.”). Either way, Plaintiff has not established a likelihood of success on, or serious 20 questions going to the merits of, Count Three. 21 As an initial matter, Plaintiff assumes, without providing any analysis, that Arizona 22 law applies here. Plaintiff then relies on that assumption as the foundation for its arguments 23 regarding the purported need for Arizona domestication and the purported invalidity of any 24 restraint over funds being held in trust for third parties. But if New York law applies here, 25 11 Moreover, even if Plaintiff had properly asserted a claim for declaratory relief, “[a] 26 . district court is not required to exercise jurisdiction over a declaratory judgment action . . . and in fact should not exercise its discretion to grant declaratory relief ‘where another 27 suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties.’” Progressive Direct Ins. Co. v. Harris, 2026 WL 860592, *1 28 (W.D. Wash. 2026) (quoting Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1366-67 (9th Cir. 1991)). 1 those arguments would likely lack merit.12 And the Court questions whether Arizona law 2 would apply in this circumstance (even assuming, contrary to the discussion in the 3 preceding paragraphs, that a lawsuit filed in Arizona state court is a permissible vehicle for 4 raising these sorts of challenges). 5 In Neill v. Bank of Am., N.A., 2012 WL 13034847 (S.D. Cal. 2012), the plaintiffs 6 argued that “Defendant was enforcing a New York judgment [pursuant to CPLR § 5225(b)] 7 in California, and therefore [California’s Sister State Judgment Act] applied, requiring 8 Defendant to domesticate the judgment in California prior to seizing any funds.” Id. at *8. 9 The court disagreed, explaining that “the New York court had jurisdiction over [Defendant] 10 to issue the restraining notice on the deposit account. Under this circumstance, California’s 11 attachment procedure as provided in California’s SSJA is not applicable. [Defendant], by 12 abiding by the restraining notice as garnishee, was part of an enforcement of the New York 13 judgment in New York, and not in California. California enforcement procedure as 14 outline[d] in California’s SSJA was not implicated.” Id. at *9. Neill casts doubt on 15 Plaintiff’s assumption that Arizona law governs the disputed issues here and, at a 16 minimum, demonstrates that Plaintiff has failed to establish a likelihood of success on the 17

18 12 Although Plaintiff argues that, under Arizona law, bank accounts holding third- party trust funds may not be restrained or garnished, under CPLR § 5222, “[a] bank or 19 other garnishee is required to apply the restraint to a particular debt or property specified in the restraining notice even if it appears that the debt or property, including bank 20 accounts, is not in the debtor’s name or is otherwise property in which the debtor does not have a right or property interest.” Effect of restraining notice, 4B N.Y. Prac., Com. Litig. 21 in New York State Courts § 66:16 (5th ed.). Indeed, “CPLR § 5222 allows a judgment creditor to freeze a bank account held by a third party based solely on an assertion by the 22 judgment creditor’s attorney that the judgment debtor holds an interest in the account— there is no requirement that the judgment creditor establish this interest to a judge before 23 the restraining notice may issue.” Wyo Tech, 385 F. Supp. 3d at 867. See generally Glob. Tech., Inc. v. Royal Bank of Canada, 2012 WL 89823, *12 n.9 (N.Y. Sup. Ct. 2012) (“[A] 24 party that seeks a restraining notice need only engage an attorney, who is authorized to issue a restraining notice as an officer of the court. The Court has no involvement with the 25 issue of whether service of the restraining notice upon the garnishee comports with due process until the garnishee challenges the restraining notice, or until the judgment debtor 26 seeks an order of contempt or a money judgment against the garnishee.”) (citation omitted). This is because, as discussed in more detail elsewhere in this order, New York law 27 contemplates that the issuance of a restraining notice will be followed by a subsequent proceeding—either the filing of objections by the judgment debtor or the initiation of a 28 turnover proceeding by the judgment creditor—during which factual questions over the judgment debtor’s interest in the restrained funds can be resolved. 1 merits or serious questions going to the merits. 2 What’s more, Plaintiff operates from the premise that AKF is pursuing a 3 “garnishment” and uses that framing as the basis for its arguments regarding domestication 4 requirements. (See, e.g., Doc. 1-5 at 2 ¶ 1 [“[AKF] is attempting to use a New York 5 garnishment to unilaterally garnish . . . .”]; id. at 7 ¶ 23 [“[AKF] served a ‘garnishment’ on 6 a Wells Fargo branch located in New York.”].) The problem with this framing is that the 7 issuance of a CPLR § 5222 restraining notice does not result in any garnishment—it simply 8 freezes the funds in anticipation of the judgment creditor subsequently filing a motion for 9 affirmative relief in the court that issued the judgment. See generally Wyo Tech, 385 F. 10 Supp. 3d at 871 (“[T]he purpose of a restraining notice . . . is to maintain the status quo 11 while the judgment creditor seeks turnover of the disputed funds. A judgment creditor 12 issues a restraining notice against a judgment debtor’s bank account to secure funds for 13 later transfer to the judgment creditor through a sheriff’s execution or turnover proceeding. 14 After a restraining notice is issued, the issuing party separately may litigate, in a turnover 15 proceeding, its claims that transfers were made without fair consideration, that the [third 16 parties] are the alter egos of the various corporate respondents, and that the corporate veil 17 may be pierced. . . . [T]he restraining notice itself does not require turnover of the funds 18 and simply requires maintenance of the status quo until a contested turnover proceeding 19 . . . .”) (cleaned up); USA Auto Funding, LLC v. Washington Mut., Inc., 2006 WL 1493115, 20 *1 (N.Y. Sup. Ct. 2006) (“[T]he restraining notice confers upon the creditor no lien upon 21 or interest in the property nor any priority as against other creditors. To achieve these 22 objectives further enforcement procedures are required. A restraining notice operates as 23 an injunction. It merely restrains a party upon which it is served from making any 24 transfer.”) (cleaned up). 25 For these reasons, Plaintiff has not established a likelihood of success on—or even 26 serious questions going to the merits of—the claims asserted in the complaint.13

27 13 Given this determination, it is unnecessary to resolve the parties’ legal dispute regarding the separate entity rule or to resolve the parties’ factual dispute over whether the 28 Arizona Accounts are, in fact, third-party trust accounts. Nevertheless, the Court notes that, as to the former issue, respected jurists have reached opposite conclusions. Compare 1 B. Remaining Winter Factors 2 “In the absence of serious questions going to the merits, the court need not consider 3 the other [Winter] factors.” Roe v. Critchfield, 137 F.4th 912, 922 (9th Cir. 2025) (cleaned 4 up). Thus, Plaintiff’s PI motion must be denied based solely on the conclusions set forth 5 in Part II.A above. 6 But even if Plaintiff had shown serious questions, “a preliminary injunction may 7 still issue [only] if the ‘balance of hardships tips sharply in the plaintiff’s favor,’ and the 8 other two Winter factors are satisfied.” Shell Offshore, Inc., 709 F.3d at 1291. In an 9 abundance of caution, the Court further clarifies that Plaintiff has not demonstrated a 10 likelihood of irreparable harm in the absence of preliminary relief or that the balance of 11 hardships tips sharply in its favor. 12 As for the former issue, Plaintiff argues that the restraining notice “is creating 13 irreparable harm as it interferes with the return of security deposits to tenants, remittance 14 of rent proceeds and owner funds to landlords, and use of maintenance reserves for 15 designated properties.” (Doc. 1-8 at 13-14.) Plaintiff also argues that “[t]he injury is not 16 merely monetary,” pointing to “potential regulatory consequences” (id. at 14) and, at oral 17 argument, the reputational harm it faces. 18 The Court is sympathetic to Plaintiff’s argument that the restraint of the accounts in 19 question may cause it to sustain harm. However, “[i]rreparable harm is traditionally 20 defined as harm for which there is no adequate legal remedy . . . .” Arizona Dream Act 21 Coal. v. Brewer, 757 F.3d 1053, 1068 (9th Cir. 2014). Here, Plaintiff is not without 22 adequate legal remedy. As discussed, Plaintiff can seek relief in New York state court and 23 file a motion to vacate the restraining notice based on the arguments it has presented here. 24 See, e.g., Plaza Hotel Assocs. v. Wellington Assocs., Inc., 378 N.Y.S.2d 859, 862 (N.Y. 25 Wells Fargo Bank NA v. Wyo Tech Inv. Grp. LLC, 2018 WL 3648417, *3 (D. Ariz. 2018) 26 (“[T]he separate entity rule only applies to accounts in foreign branches, it is inapposite here.”) with WAG SPV I, LLC v. Fortune Glob. Shipping & Logistics, Ltd., 612 F. Supp. 27 3d 321, 334 n.8 (S.D.N.Y. 2020) (“[T]he Court also acknowledges that a district court in the District of Arizona has expressed the opinion that . . . ‘the separate entity rule only 28 applies to accounts in foreign branches.’ The Court respectfully disagrees . . . .”) (citation omitted). 1 Sup. Ct. 1975) (“Wellington Associates, a partnership, moves for a protective order . . . 2 vacating a restraining notice issued by plaintiff-judgment creditor to Chase Manhattan 3 Bank affecting Wellington Associates’ account (CPLR 5222).”); Feinberg Furniture Co. 4 v. Overbaugh, 303 N.Y.S.2d 197, 197-98 (N.Y. Co. Ct. 1969) (“The defendant moves to 5 vacate and set aside a restraining notice issued by the attorney for the judgment creditor in 6 accordance with CPLR § 5222 and served upon the Montgomery County Trust Company, 7 a banking institution in the City of Amsterdam.”). That avenue of potential relief—which 8 Plaintiff had already started pursuing before it changed course and filed this lawsuit— 9 undermines Plaintiff’s claim of irreparable harm. Cf. Wisc. Cent. Ltd. v. Pub. Serv. 10 Comm’n of Wisc., 95 F.3d 1359, 1369 (7th Cir. 1996) (“The railroads have not 11 demonstrated that they will suffer irreparable harm because they have failed to show that 12 the procedures Wisconsin has provided for seeking just compensation are inadequate. 13 Indeed, they have failed to avail themselves of those procedures.”); Joseph v. Cnty. of Los 14 Angeles, 2025 WL 3190911, *1 (C.D. Cal. 2025) (“Plaintiff has not adequately alleged that 15 Plaintiff will suffer irreparable harm absent this TRO. The TRO application references a 16 related, Unlawful Detainer action, currently pending in Los Angeles Superior Court, Case 17 No. 25NWUD01475. Plaintiff has insufficiently established that Plaintiff cannot seek the 18 same relief requested in the instant application from the state court, which is already 19 exercising jurisdiction over this matter.”); In re Forest Grove, LLC, 448 B.R. 729, 743-44 20 (Bankr. D.S.C. 2011) (“Most significantly, Debtor did not establish it would suffer 21 irreparable harm . . . . It is clear that Debtor has an alternative avenue for relief, as Debtor 22 is already moving forward in state court.”). 23 Moreover, during the PI hearing, Plaintiff failed to establish that, at least in the short 24 term (i.e., until such time as it can seek relief in New York), it lacks the funds necessary to 25 cover its expected outflows of security deposits and similar expenses.14 Notably, in April 26 2026, Plaintiff (through its New York counsel) offered to begin paying off the outstanding 27

28 14 In a related vein, if Plaintiff is able to use other funds, at least in the short term, to cover those expenses, it is unclear how or why Plaintiff would suffer any reputational harm. 1 judgment via an initial payment of $25,000 and subsequently weekly payments of $1,000 2 to $1,200. (Doc. 19-3 at 16.) And when AKF’s counsel attempted to question Juarez 3 during the PI hearing about other bank accounts held by Plaintiff and the amount of money 4 currently in those accounts, Plaintiff objected and argued that AKF should not be given 5 access to such information (because AKF might use it for further collection efforts). 6 Although the Court appreciates the strategic dilemma these questions may have created for 7 Plaintiff, the bottom line is that Plaintiff declined to provide a complete picture of its 8 finances, its anticipated short-term expenses, and the cash currently available to it. 9 Plaintiff also contends that its failure to maintain the integrity of funds held in trust 10 and/or its use of funds in other accounts to repay security deposits and the like may expose 11 it to “regulatory consequences.” However, Plaintiff’s showing on this point during the PI 12 hearing was, at least in the Court’s view, speculative and undeveloped. The record 13 indicates that Plaintiff already “had to self report to the Arizona Real Estate Department” 14 as of April 15, 2026. (Doc. 19-3 at 7.) There is no evidence that Plaintiff has suffered any 15 regulatory consequences in the nearly three-month period since that act of self-reporting. 16 Additionally, the point of a preliminary injunction is to avoid irreparable harm that 17 will likely arise in the future in the absence of injunctive relief. Here, a regulatory violation 18 has apparently already occurred and Plaintiff has already self-reported that violation. 19 Plaintiff has failed to articulate why the issuance of a preliminary injunction now would 20 eliminate or reduce the regulatory consequences for the already-committed and -reported 21 violation. Cf. Night Vision Devices, Inc. v. Carson Indus., Inc., 2020 WL 430755, *2 (E.D. 22 Pa. 2020) (denying request for preliminary injunction in part because the complained-of 23 “harm has already transpired . . . and is therefore not grounds for an injunction to prevent 24 irreparable harm that is likely to occur in the future” and noting that “[t]he Court cannot 25 put the toothpaste back in the tube”). 26 Finally, turning to the balance of equities, although the Court does have some 27 concern—on this admittedly undeveloped record—that the restrained funds include money 28 Plaintiff is simply holding in trust for innocent third parties, it must not be overlooked that 1|| the parties’ dispute arises from Plaintiff's efforts to avoid paying a nearly $200,000 || judgment that was entered against it after losing in an arbitration that concluded in 2025. || Under these circumstances, the balance of equities does not tip so sharply in Plaintiff’s 4|| favor as to make up for its showing as to the remaining Winter factors. Cf Beverly Milligan || of Toronto v. Cheetah Int’l, Inc., 2013 WL 3724896, *3 (D. Colo. 2013) (“Sound public || policy dictates that judgment creditors should be allowed to execute on the valuable assets 7\| of judgment debtors and that judgment debtors should not be allowed to waste their assets 8 || merely to frustrate the interests of a judgment creditor.”).'° 9 Accordingly, 10 IT IS ORDERED THAT: 11 1. Plaintiff's request for a preliminary injunction (Doc. 1-8) is denied. 12 2. The TRO issued by the state court (Doc. 1-9) is dissolved. 13 3. The parties shall meet and confer, and, within 7 days of the issuance of this order, file a joint statement setting forth their respective positions on how the parties would 15 || like to proceed, and, if applicable, a deadline for AKF’s reply in support of its motion to dismiss. 17 Dated this 7th day of July, 2026. 18 19 Pm ee 20 } Dominic W. Lanza 21 United States District Judge 22 23 24) 5 2... a , To the extent AKF seeks its attorneys’ fees under A.R.S. § 12-341.01 and/or 28 25|| U.S.C. § 1927 (Doc. 19 at 18-19), that request is denied. As for the former statutory provision, imply defending against Plaintiffs [preliminary injunction request] does not 26 || make JAKE the successful or prevailing party under Section 12-341.” □□□□□□□ v. Namecheap Inc., 2025 WL 2174048, *6 (D. Ariz. 2025). As for the latter statutory provision, the Court rejects the notion that Plaintiffs counsel “unreasonably and vexatiously” multiplied the proceedings or acted in bad faith. Although the Court has 28 || denied relief, Plaintiff's arguments were not frivolous and it is apparent to the Court that Plaintiffs counsel has acted in good faith at all times.

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