Wells Fargo Bank NA v. Breakwater Equity Partners LLC et al
Filing
137
ORDER denying 125 Motion to Dismiss Counts/Claims. Signed by Judge David G Campbell on 12/30/2013.(DGC, nvo)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Wells Fargo Bank NA,
Plaintiff,
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ORDER
v.
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No. CV-13-01475-PHX-DGC
Breakwater Equity Partners LLC, et al.,
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Defendants.
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Cross-Defendant Breakwater Equity Partners, LLC has filed a motion to dismiss
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(Doc. 125) Cross-Claimants Richard Gee and Maxwell Drever’s cross-claim (Doc. 104).
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Cross-Defendant also moves to realign Cross-Claimants. Doc. 125. For the reasons set
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forth below, the Court will deny each motion.1
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Since filing this motion, Cross-Defendant and Cross-Claimants have stipulated to
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dismiss the cross-claim without prejudice (Doc.135) and the Court has granted the
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stipulation (Doc. 136). The Court will deny the motion to dismiss as moot.
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Cross-Defendant argues that Cross-Claimants have aligned themselves with
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Plaintiff in opposition to all remaining Defendants. Doc. 125 at 4. Accordingly, Cross-
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Defendant asks the Court to “look beyond the pleadings, and [realign] the parties
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according to their sides in the dispute.” City of Indianapolis v. Chase Nat’l Bank of N.Y.,
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314 U.S. 63, 69 (1941) (internal quotes omitted). Realignment would defeat diversity
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jurisdiction in this case.
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The request for oral argument is denied because the issues have been sufficiently
briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b);
Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998).
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Courts are to realign parties “whose interests coincide respecting the ‘primary
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matter in dispute.’” Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d
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867, 873 (9th Cir. 2000) (quoting Cont’l Airlines, Inc. v. Goodyear Tire & Rubber Co.,
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819 F.2d 1519, 1523 (9th Cir. 1987). Where a named defendant would benefit if a
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plaintiff prevails, realignment may be appropriate. Prudential, 204 F.3d at 873. In this
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case, Plaintiff and Cross-Claimants are clearly adverse.
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The primary matter in dispute is whether Defendants converted Plaintiff’s money
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or otherwise breached the parties’ contract. Cross-Claimants are the individuals who
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sponsored the investment by other named Defendants in the property at issue. Cross-
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Defendant argues that Cross-Claimants and Plaintiff both wish “to ignore all
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responsibility lender and sponsor had in concocting an unsustainable investment and
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blaming a third party for the outcome,” but the Court finds this characterization to be
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incomplete and unpersuasive. Doc. 125 at 5. Plaintiff seeks to recover converted funds.
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If Plaintiff succeeds, Cross-Claimants are not entitled to any recovery. To the contrary,
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Cross-Defendant’s alleged conversion may trigger recourse against Cross-Claimants.
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Doc. 104, ¶ 198. Because Cross-Claimants could be exposed to personal liability if
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Plaintiff succeeds, the Court cannot accept Cross-Defendant’s assertion that the interests
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of Cross-Claimants and Plaintiff are aligned.
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Cross-Defendant argues that Cross-Claimants’ tactics pursued during the course of
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this litigation reveal an alignment with Plaintiff’s interest. Doc. 125 at 4. For example,
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Cross-Defendant finds this alignment in Cross-Claimants’ refusal to file a motion to
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dismiss Plaintiff’s complaint. Id. But the Court may not look to “facts that arose after
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the complaint was filed in federal court,” such as litigation tactics, in determining
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whether to realign the parties. See In re Digimore Corp. v. Derivative Litig., 549 F.3d
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1223, 1236 (9th Cir. 2008) (finding that the district court erred in relying on evidence of
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defendant’s cooperation with plaintiff three weeks after the suit was filed).
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IT IS ORDERED:
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Cross-Defendant’s motion to dismiss (Doc. 125) is denied as moot.
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Cross-Defendant’s motion to realign (Doc. 125) is denied.
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Cross-Defendant’s motion for fees and costs (Doc. 125) is denied.
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Dated this 30th day of December, 2013.
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