Silver Two Investments LLC v. Arizona Greenway Hirani Investments LLC et al

Filing 47

ORDER: IT IS ORDERED DENYING Plaintiff's Motion for Entry of Default Judgment 38 . (See attached PDF for details). Signed by Senior Judge Frederick J Martone on 1/15/14.(JAMA)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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Arizona Greenway Hirani Investments,)
LLC, Capon Acquisition, LLC, and The)
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Hirani Family Foundation,
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Defendants.
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_________________________________ )
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The Hirani Family Foundation,
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Counter-Claimant,
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v.
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Silver Two Investments, LLC, Zulfikar)
Hirani and Sofi Hirani, and Abdul Hirani)
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and Soniya Hirani,
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Counter-Defendants.
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Silver Two Investments, LLC,

No. CV-13-00159-PHX-FJM
ORDER

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Before the court is plaintiff’s motion for entry of default judgment against defendant

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Capon Acquisition, LLC (“Capon”) (doc. 38), defendants Arizona Greenway Hirani

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Investments LLC (“Arizona Greenway”) and The Hirani Family Foundation’s objection (doc.

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43), and Plaintiff’s reply (doc. 46).1 Defaulting defendant Capon did not respond to the

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motion.

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Plaintiff filed this action against Capon and others on January 23, 2013. Capon was

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served with the summons and complaint on April 17, 2013. Capon did not answer or

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otherwise file a responsive memorandum. The clerk entered default against Capon on May

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28, 2013.

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damages in the amount of $392,670.00.

Plaintiff now seeks the entry of default judgment against Capon and seeks

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After an entry of default, we may grant default judgment pursuant to Rule 55(b)(2),

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Fed. R. Civ. P. In exercising our discretion under Rule 55(b)(2), we may consider the

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possibility of prejudice to the plaintiff, the merits of the claims, the sufficiency of the

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complaint, the amount of money at stake, the possibility of a dispute of material facts,

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whether default was due to excusable neglect, and the policy favoring a decision on the

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merits. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986).

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According to the allegations in the Complaint, on or about March 16, 2009, the parties

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signed a Settlement Agreement whereby Capon agreed to transfer a 28% interest in the

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Greenway Shopping Center (the “Property”) to Arizona Greenway and Plaintiff. Because

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of an ambiguity in the Settlement Agreement, Plaintiff and Nazy Hirani–manager and agent

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of Arizona Greenway–entered into a separate oral agreement whereby Nazy agreed that

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Capon would transfer the entire 28% interest in the Property to Arizona Greenway, and in

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turn Arizona Greenway would transfer a 22.4% membership interest in Arizona Greenway

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to Plaintiff. Plaintiff contends that neither transfer has occurred, and now seeks default

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judgment against Capon for its failure to transfer the 28% interest to Arizona Greenway.

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In response to the motion for entry of default judgment, defendants Arizona Greenway

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and The Hirani Family Foundation contend that Capon has in fact complied with its

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obligation under the Settlement Agreement by executing a deed in favor of Arizona

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It is doubtful Arizona Greenway has standing to defend Capon, but Plaintiff fails to
raise the issue.
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Greenway of a 28% interest in the Property, but instead of recording the deed, has placed it

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into escrow. Plaintiff acknowledges that this deed has been placed in escrow, but complains

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that this does not constitute a transfer of Capon’s interest—Capon is still the record owner

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of the 28% interest.

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The Settlement Agreement specifically provides that the transfer of Capon’s 28%

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interest in the Property “shall occur solely conditioned upon, and not before, consent by

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Wells Fargo,” the lender holding the deed of trust on the Property. Compl. ¶ 28. The escrow

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instructions also recognize that the “Transaction is contingent on Wells Fargo (Existing

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Financing) (“Lender”) approving of this transfer of property interest between the parties

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pursuant to the governing loan documents.” Motion, ex. C. Because there is no showing that

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Wells Fargo has consented to the transfer, we cannot say that Capon has breached its

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obligation under the Settlement Agreement.

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Considering the Eitel factors, we conclude that the merits of Plaintiff’s claims against

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Capon are questionable at best, the amount of money at stake is large, the possibility of

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prejudice to Plaintiff is small given that Plaintiff’s primary claims lie against the remaining

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defendants, and policy considerations favor a decision on the merits. Therefore, we conclude

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that default judgment against Capon is not warranted.

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IT IS ORDERED DENYING plaintiff’s motion for entry of default judgment at this
time (doc. 38).
DATED this 15th day of January, 2014.

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