Gordon et al v. Urbahns
OPINION AND ORDER granting in part and denying in part 20 defendant's Motion to Dismiss or for Summary Judgment. Signed by District Judge George Caram Steeh (MBea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
FRED GORDON, WILLIAM WIDMYER,
OSCAR STEFANUTTI, BROWN
ROAD GROUP, BFO INVESTMENT
COMPANY, and REFCO, INC.,
Case No. 12-CV-13724
HON. GEORGE CARAM STEEH
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION TO DISMISS OR FOR SUMMARY JUDGMENT
On August 22, 2012, plaintiffs filed this action asserting a number of claims. On
October 29, 2012, plaintiffs filed a first amended complaint.
In their first amended
complaint, plaintiffs assert claims of breach of fiduciary duty (count I), contribution (count
II), violation of MCL 450.4404 (count III), violation of MCL 450.4515 (count IV), accounting
pursuant to MCL 450.4503 (count V), breach of contract (count VI), and piercing the
corporate veil (count VII). On November 27, 2012, defendant filed a motion to dismiss or
for summary judgment. The motion has been fully briefed. Oral argument occurred at a
hearing on the motion on March 21, 2013. For the reasons that follow, the court GRANTS
in part and DENIES in part defendant’s motion.
All of the parties in this action have connections with a commercial real estate
development project in Auburn Hills and Orion Township, Michigan.
developer is Dutton Corporate Center, LLC (“DCC”). Plaintiff Brown Road Group (“BRG”)
is a 50% member of DCC. Plaintiff Gordon is BRG’s manager. Plaintiff BFO is a 10%
member of BRG. REFCO, Widmyer, and Stefanutti are equal members of BFO. Gordon
is BFO’s manager. Gordon is also the sole stockholder of REFCO.
The other 50% of DCC is owned by Dutton Investment, LLC. Dutton Investment is
DCC’s manager. Defendant Urbahns is the sole member and the manager of Dutton
Dutton Retail Center South, LLC (“DRCS”) is a related entity to DCC. The parties
in this case have generally the same connections with DRCS and they do with DCC.
Plaintiffs Gordon, Widmyer, Stefanutti, and Refco and defendant Urbahns
guaranteed mortgage loans made by Huntington National Bank to finance development of
the DCC project. DCC also intended to utilize the program of financial incentives for
“Brownsfield Development” that the State of Michigan enacted to pay for the environmental
measures needed for the DCC project.
In 2009, DCC defaulted on its payment obligations to Huntington and to various
contractors. In June 2009, Huntington notified DCC, DRCS, and the guarantors that the
loans were in default.
On August 18, 2009, Huntington filed a lawsuit in Oakland County Circuit Court
against the plaintiff guarantors to collect on the guaranties of the loans used to fund the
DCC project. Around December of 2010, I-75 Partners, LLC (formed and owned by
Urbahns), purchased the loans’ indebtedness from Huntington. On April 13, 2011, the
state court granted summary judgment for liability in favor of Huntington and against the
plaintiff guarantors. On April 28, 2011, I-75 Partners was substituted in place of Huntington
as the plaintiff. The court held a bench trial to determine damages. On March 6, 2012, the
court awarded damages in the amount of $20,508,991.32 to I-75 Partners and against the
plaintiff guarantors. That case is currently on appeal in the Michigan Court of Appeals.
When Huntington sued the plaintiff guarantors, it also filed a lawsuit in Indiana state
court to enforce the guaranty signed by defendant Urbahns. That lawsuit was dismissed
in conjunction with I-75 Partners acquiring the loans from Huntington.
Around the same time the state guaranty lawsuits were filed, contractors on the DCC
project began to file construction liens to recover monies they claimed to be owed. Several
contractors sued in Oakland County Circuit Court to foreclose their liens. Those cases are
all pending in state court.
On May 21, 2012, DCC filed a lawsuit in Oakland County Circuit Court against two
of the construction lien claimants on the DCC project. In that action, DCC alleges that its
investigation of the project disclosed defective work and other failures by those contractors.
Defendant argues this case arises out of the same transactions, facts, and
occurrences as the state court cases, particularly the guaranty lawsuit. In this case,
plaintiffs allege the actions of Urbahns caused DCC to default on its obligations to make
loan payments to Huntington and payments to the project’s contractors. Plaintiffs also
accuse Urbahns of breaching fiduciary and other duties in connection with I-75 Partners’s
acquisition and enforcement of the loans in the guaranty lawsuit. Plaintiffs also seek
contribution from Urbahns for his share, as co-guarantor, of the guaranty lawsuit judgment.
In his motion to dismiss or for summary judgment, Urbahns argues: (1) this case
should be dismissed because it is barred by res judicata; (2) this court should decline to
exercise jurisdiction over this case under the doctrine of Colorado River abstention; and (3)
this court should dismiss this case for failure to state a claim.
Motion to Dismiss
In deciding a motion to dismiss under Rule 12(b)(6), the court must construe the
complaint in favor of the plaintiff, accept the factual allegations as true, and determine
whether the allegations present plausible claims. Bell Atlantic Corp. v. Twombly, 127 S.
Ct. 1955, 1964-65 (2007). The pleading must provide "more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action will not do." Id. at 1964-65.
Although the complaint need not contain detailed factual allegations, its "factual allegations
must be enough to raise a right to relief above the speculative level[.]" Ass’n of Cleveland
Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (citing Twombly, 127
S.Ct. at 1965).
The court should first identify any conclusory allegations and bare
assertions that are not entitled to an assumption of truth, then consider the factual
allegations that are entitled to a presumption of truth and determine if they plausibly
suggest entitlement to relief. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1951 (2009). The wellpleaded facts must permit an inference of more than a mere possibility of misconduct. Id.
Motion for Summary Judgment
Federal Rule of Civil Procedure 56(c) empowers the court to render summary
judgment forthwith if the “pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law." See
Redding v. St. Edward, 241 F.3d 530, 532 (6th Cir. 2001). The Supreme Court has
affirmed the court's use of summary judgment as an integral part of the fair and efficient
administration of justice. The procedure is not a disfavored procedural shortcut. Celotex
Corp. v. Catrett, 477 U.S. 317, 327 (1986).
The standard for determining whether summary judgment is appropriate is "'whether
the evidence presents a sufficient disagreement to require submission to a jury or whether
it is so one-sided that one party must prevail as a matter of law.'" Amway Distributors
Benefits Ass’n v. Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir. 2003) (quoting Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). The evidence and all reasonable
inferences must be construed in the light most favorable to the non-moving party.
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). "[T]he
mere existence of some alleged factual dispute between the parties will not defeat an
otherwise properly supported motion for summary judgment; the requirement is that there
be no genuine issue of material fact." Anderson, 477 U.S. at 247-48 (emphasis in original).
If the movant establishes by use of the material specified in Rule 56(c) that there is
no genuine issue of material fact and that it is entitled to judgment as a matter of law, the
opposing party must come forward with "specific facts showing that there is a genuine issue
for trial." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 270 (1968); see also McLean
v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). Mere allegations or denials in
the non-movant's pleadings will not meet this burden, nor will a mere scintilla of evidence
supporting the non-moving party. Anderson, 477 U.S. at 248, 252. Rather, there must be
evidence on which a jury could reasonably find for the non-movant. Id.
In the motion before the court, defendant argues: (1) this case should be dismissed
because it is barred by res judicata; (2) this court should decline to exercise jurisdiction
over this case under the doctrine of Colorado River abstention; and (3) this court should
dismiss this case for failure to state a claim.
Defendant first argues this case is barred by res judicata. Defendant argues the
claims in this case arise out of the same facts and transactions as those asserted in the
guaranty lawsuit. Defendant argues the guaranty lawsuit briefs show the similarities.
In the guaranty lawsuit, plaintiff guarantors (Gordon, Widmyer, Stefanutti, and Refco)
asserted the following arguments based on the behavior of Urbahns:
“Urbahns is, instead, trying to use this Court to perpetrate a fraud by retaining
money and other assets that could be used to pay the debt of the entities in
which he is the managing member and, instead, using an entity he owns [I-75
Partners] to force the guarantors to pay the debts while he retains the assets
for his own use!”
“Had Urbahns complied with his fiduciary and other duties and used
corporate assets to pay these loans, Urbahns would not now be able to try
to use this Court in an attempt to profit from the defaults he created.”
“[Urbahns] repeatedly attempted to evade...his obvious conflict of
interest...Mr. Urbahns is one of the guarantors and he is also the managing
member of the [sic] all of the principal obligors, and yet, now Mr. Urbahns is
(through an entity he owns) pursuing the other guarantors for defaults under
loans where he was the managing member of the entity that agreed to pay
the loan in the first place.”
“Urbahns effectively caused the defaults as managing member of the
principal obligors and is now trying to profit from the very defaults he
“Urbahns, as manager of the Borrowers, failed to use available assets to pay
down the loans...Urbahns actions caused the default in the first place and,
now Urbahns is wrongfully attempting to profit from his own wrongdoing by
retaining the assets and trying to use this Court to force Defendants to pay
the loans while Urbahns retains the assets and the property.”
In the guaranty lawsuit appeal, plaintiff guarantors argue:
“Urbahns is the [manager] of Dutton and is responsible for the day to day
management and operations of Dutton...Urbahns had complete control over
the operations of Dutton and the repayment of the loans.”
“In approximately October of 2009, as the manager of Dutton, Urbahns made
the decision to stop using the brownsfield reimbursement funds that Dutton
was receiving to make payments on the loans...Mr. Urbahns never even
consulted his partners - who he is now suing - before he stopped making
payments on the loans.”
“Urbahns simply elected to stop making payments on the loans from the
brownsfield reimbursements and to create a default under the loans.”
“Urbahns waited until September 14, 2011 - after the evidentiary hearing had
already closed - to disclose [tax information] to Appellants. This was
obviously because Urbahns knew that Appellee was attempting to improperly
sue based on debt that had previously been forgiven.”
Based on the above statements, defendant Urbahns asserts that plaintiff guarantors
argued in the guaranty action that their liability on the loans was a direct result of the
malfeasance of Urbahns in his running of DCC. Defendant therefore argues plaintiff
guarantors should have brought any claims based on such actions in the guaranty action.
Because they did not, defendant argues they are now barred from bringing such claims by
Under Michigan law, “res judicata bars successive actions if (1) the prior action was
decided on the merits; (2) both actions involve the same parties or their privies, and (3) the
matter in the second case was, or could have been, resolved in the first.” McCoy v. State
of Michigan, 369 Fed. Appx. 646, 649 (6th Cir. 2010). “Michigan courts take a ‘broad
approach to the doctrine of res judicata’, and the presence of these three elements ‘bars
not only claims already litigated, but also every claim arising from the same transaction that
the parties, exercising reasonable diligence, could have raised but did not.’ This approach
has been labeled the ‘transactional test.’” Id.
With respect to the first prong, the parties do not dispute that the guaranty lawsuit
was decided on the merits. Judgment was entered by the Oakland County Circuit Court
on May 2, 2012 after a dispositive motion which determined liability and a bench trial which
On the second prong, defendant argues the actions involve the same parties or their
privies. While BFO and BRG were not part of the guaranty lawsuit, apparently most or all
of their members were parties to the guaranty lawsuit. Defendant therefore argues they
were adequately represented by their “privies.” Plaintiffs merely state that BFO and BRG
were not parties to the guaranty lawsuit. Plaintiffs do not address defendant’s argument
regarding the members of the entities being parties to the guaranty lawsuit. Plaintiffs also
argue that while they were parties to the lawsuit, they were defendants and therefore had
different interests. Even if the second prong is met, plaintiffs argue the third prong cannot
Third, defendant argues the claims should have been raised in the guaranty lawsuit.
Defendant cites Washington v. Sinai Hospital, 478 Mich. 412, 420 (2007), in which the
Michigan Supreme Court explained that “this Court uses a transactional test to determine
if the matter could have been resolved in the first case...[which] provides that the assertion
of different kinds of theories of relief still constitutes a single cause of action if a single
group of operative facts give rise to the assertion of relief.” Defendant argues that because
the claims in this case are predicated on the guaranty lawsuit judgment, and the allegations
of wrongdoing that allegedly led to its entry, the claims in this case arise from the same
group of operative facts as the claims in the guaranty lawsuit.
In this lawsuit, plaintiffs allege Urbahns caused the borrowing entities to fail to pay
on the loans and to contractors, diverted DCC’s Brownsfield Development reimbursements
for his personal use, improperly acquired the Huntington loans through I-75 Partners and
obtained a judgment on the guaranties, failed to provide 2011 tax information to plaintiffs,
and generally engaged in self-dealing. Plaintiffs allege defendant took these actions
himself, or through Dutton Investment or I-75 Partners. Two claims seek contribution as
co-guarantors of the loans. Some of the claims are based on alleged breach of various
duties owed by Dutton Investment to DCC. All of the claims seek $20 million in damages
and therefore appear to be based on the judgment in the guaranty lawsuit. While it
appears these claims arise out of the same transaction or occurrence as the guaranty
lawsuit, the court need not decide that issue because it also appears plaintiffs could not
have brought these claims in the guaranty action because of the timing of I-75's
In TolTest, Inc. v. North American Specialty Ins. Co., 362 Fed. Appx. 514, 517 (6th
Cir. 2010), the Sixth Circuit “rejected an argument that only compulsory counter-claims
apply to res judicata, finding that ‘what is important is not whether a particular claim is
compulsory, but whether the claim should have been considered during the prior action.’”
In ProAssurance Corp. v. Nefcy, 2008 Mich. App. LEXIS 1203, *12-13 (June 10, 2008), the
Michigan Court of Appeals applied the doctrine of res judicata to bar an action by an insurer
against a doctor for indemnification. The court noted that the insured “obtained permission
to file a third-party complaint against defendant” in the underlying medical malpractice suit
but failed to do so. In our case, defendant notes that the trial judge in the guaranty action
specifically pointed out that the plaintiffs had failed to seek leave to assert any third-party
claims against Urbahns.
However, as plaintiffs note, I-75 did not substitute in for
Huntington in the guaranty case until after discovery had closed and trial was scheduled,
leaving little opportunity to file a counterclaim against defendant. Because of the timing of
this substitution, even if the claims arise from the same transaction or occurrence, it
appears unlikely plaintiffs could have brought the claims asserted here in the guaranty
action. The court declines to apply res judicata to bar this action at this time but notes that
this determination may change depending on the Michigan Court of Appeals decision or
further factual development or amendment of claims in this case.
Defendant also argues the abstention doctrine applies here. In Colorado River
Water Conservation Dist. v. U.S., 424 U.S. 800, 818 (1976), the Supreme Court held that
a federal court may abstain from exercising jurisdiction over a case where there is a parallel
state proceeding. As discussed by this court in GMBB v. Travelers Indemnity, 100
F.Supp.2d 465, 473 (E.D. Mich. 2000), a parallel state proceeding requires more than just
some overlap in issues with the federal proceeding and must be examined as it currently
The Sixth Circuit first stressed the importance of the presence of a parallel
state proceeding in Crawley v. Hamilton County Comm'rs, 744 F.2d 28 (6th
Cir.1984). In that case, the Sixth Circuit held that the district court improperly
abstained from deciding plaintiffs' 42 U.S.C. § 1983 challenge to their
conditions of confinement. Id. at 32. The district court had abstained under
the Colorado River doctrine on the grounds that a parallel state court
proceeding existed. Id. at 30. The Sixth Circuit disagreed and reversed the
lower court explaining that although the state court proceeding was brought
by the same prisoner-plaintiffs, it was filed against different defendants, over
a different period of time, and did not involve the same issues of fact. Id. at
31. The Sixth Circuit also rejected defendants' argument that the state action
could be modified to make it identical to the federal claim. Id. The court
stressed that the issue is whether the state court proceeding “as it currently
exists, is a parallel, state-court proceeding.” Id. at 31 (emphasis in original).
Finding that no parallel state court proceeding existed, the court determined
that Colorado River abstention was inappropriate. Id. at 32.
In making the parallel proceeding determination, a court considers whether the theories of
recovery are identical. See Romine v. Compuserve Corp., 160 F.3d 337, 339-40 (6th Cir.
Once a court decides there is parallel state court litigation, the court examines
whether judicial economy warrants abstention. In doing so, the court considers:
(1) whether the state court has assumed jurisdiction over any res or property;
(2) whether the federal forum is less convenient to the parties; (3) avoidance
of piecemeal litigation; and (4) the order in which jurisdiction was obtained ....
(5) whether the source of governing law is state or federal; (6) the adequacy
of the state court action to protect the federal plaintiff's rights; (7) the relative
progress of the state and federal proceedings; and, (8) the presence or
absence of concurrent jurisdiction. These factors, however, do not comprise
a mechanical checklist. Rather, they require “a careful balancing of the
important factors as they apply in a give [n] case” depending on the particular
facts at hand.
Id. “Our focus in these cases, once we have found that a parallel state proceeding exists,
has been on the relative progress of the state and federal proceedings.” Id.
Here, defendant argues the guaranty lawsuit constitutes a parallel state proceeding.
Once I-75 Partners substituted in as the plaintiff in that case, issues arose that led to the
claims asserted in this case. Defendant asserts that the pleadings and appellate briefs filed
in the guaranty action show that it is a parallel proceeding to this one. In the guaranty
case, the guarantor plaintiffs asserted that Urbahns had a conflict of interest and caused
the loan defaults. However, those arguments are not central to the enforcement of the
guaranties and the issues raised on appeal. Instead, they seem to have been offered to
give the court context. While the guarantor plaintiffs also asserted that the tax documents
were withheld and that those documents show that $12,000,000 of the debt was forgiven,
that assertion appears to be offered to dispute the amount owing on the loans rather than
as a basis for a separate tort claim. In addition, while identity of parties is not necessary,
the court finds it relevant that the defendant was not a party to the guaranty action and that
defendant’s LLC I-75 Partners did not substitute into the lawsuit until after liability was
established. Because the scope of the guaranty action is limited to the enforcement of the
guaranties, and this lawsuit is much broader and includes a number of tortious claims in
addition to breach of contract, the guaranty action is not a “parallel proceeding” under the
Colorado River abstention doctrine. Because there is no parallel state proceeding, the
court need not determine whether judicial economy warrants abstention.
Failure to State a Claim
Counts I (Breach of Fiduciary Duty), III (Violation of MCL 450.4404), and IV
(Violation of MCL 450.4515)
Counts I, III, and IV are all based on the obligations of Dutton Investment as
manager of DCC. Count I alleges Dutton Investment’s breach of fiduciary duty for alleged
mismanagement of DCC. Count III alleges Dutton Investment, as manager of DCC, had
an obligation pursuant to MCL 450.4404 to discharge its duties in good faith and in the best
interests of DCC. Count IV alleges Dutton Investment, as manager of DCC, had an
obligation to DCC and its members to refrain from engaging in illegal, fraudulent, or willfully
unfair and oppressive conduct. Because these claims are all based on duties owed by
Dutton Investment, rather than Urbahns, Urbahns argues plaintiffs fail to state a claim
Plaintiffs argue that corporate officers are personally liable for their own tortious acts
committed on behalf of a corporation. See Allen v. Morris Bldg. Co., 360 Mich. 214, 218
(1960) (finding individual defendant liable for tort along with corporate defendant because
“he was the majority stockholder, president, and in control of defendant corporation's
activities, and . . . participated in the tort.”) In Dept. of Agriculture v. Appletree Marketing,
L.L.C., 485 Mich. 1, 19 (2010), the Michigan Supreme Court found that “if the facts prove
either common law or statutory conversion, [defendant] can be held personally liable and
may not hide behind the corporate form in order to prevent liability for his active
participation in the tort.” However, in that case, “the alleged wrongful conduct was
actionable at common law and is distinct from the wrongful conduct” prohibited by the
statute regulating corporate activity. The conversion claim did not arise under the statute
nor rely on the statute to create a duty. In contrast, in this case, plaintiffs rely on the duties
owed by Dutton Investment under both statutory and common law. The duty is not owed
by Urbahns under the law. Because plaintiffs have not set forth an independent duty owed
by Urbahns, unlike the defendant in Appletree, plaintiffs fail to state a claim in counts I, III,
Counts II (Contribution) and VI (Breach of Contract)
In counts II and VI of the first amended complaint, plaintiffs allege that defendant
was a co-guarantor of the Huntington debt. In count II, plaintiffs allege that pursuant to
Section 7 of the Contribution Agreement and the laws of the state of Michigan, defendant
is liable under his guaranty to the same extent as the plaintiff guarantors. They assert a
common law contribution claim. In count VI of the first amended complaint, plaintiffs allege
Urbahns was required to reimburse plaintiffs for his proportionate share of the
$20,508,941.32 judgment entered in the guaranty lawsuit pursuant to Section 7 of the
Contribution Agreement and failed to do so. They therefore assert a breach of contract
Section 7 of the Contribution Agreement provides:
In the event Lender makes demand under the terms of any individual
guaranty executed in connection with the Loan, all other guarantors of the
Loan shall make immediate restitution to such guarantor of their respective
proportionate share of the amount paid to Lender.
(Emphasis added). “The right to contribution is the right of a person who has discharged
a common liability or burden to recover of another, who is also liable, the portion he or she
ought to pay or bear.” 18 Am. Jur. 2d Contribution § 1. Thus,“[i]t has been frequently
stated that no right to contribution in favor of a joint debtor exists until actual payment of
more than the share of the whole debt which that debtor ought to pay.” 12 Williston on
Contracts § 36:16 (4th ed.)
In Hollingsworth Logistics Group v. Equipment Leasing Services, No. 10-11011,
2010 WL 4386975, *4 (E.D. Mich. Oct. 29, 2010), the court evaluated a contribution claim
under Michigan law and required: 1) a common debt; and 2) payment on the claim. The
court noted a Michigan Supreme Court decision which states:
When two or more persons are jointly liable for the payment of the same debt
or obligation and one has paid the entire claim, he may have contribution
from his co-debtors or obligees in cases where it would be equitable and just.
Id., citing Comstock v. Potter, 191 Mich. 629, 638 (1916).
Defendant argues plaintiffs’ claims for contribution and breach of contract fail
because plaintiffs have not alleged that they have paid on the judgment. Plaintiffs argue
payment is not necessary but fail to cite any authority for their position. Section 7 of the
Contribution Agreement references “the amount paid to Lender” as a basis for a
contribution claim. Because plaintiffs have not alleged payment or other discharge of the
joint obligation in excess of their own share of it, plaintiffs fail to set forth a plausible
contribution or breach of contract claim.
Count VII (Piercing the Corporate Veil)
In count VII of the first amended complaint, plaintiffs allege that Dutton Investment
is a mere instrumentality of Urbahns, used “regularly and consistently” to allow Urbahns to
engage in tortious conduct against his partners with impunity. Plaintiffs allege only “a small
fraction” of this conduct is set forth in the first amended complaint. Plaintiffs allege that the
improper use of Dutton Investment resulted in the $20 million judgment against plaintiffs.
Plaintiffs therefore seek a judgment piercing the corporate veil of Dutton Investments and
holding defendant personally liable.
Defendant argues plaintiffs fail to state a claim for piercing the corporate veil. In
Florence Cement Co. v. Vettraino, 292 Mich. App. 461, 469 (2011), the Michigan Court of
Appeals found “in order for a court to order a corporate veil to be pierced, the corporate
entity (1) must be a mere instrumentality of another individual or entity, (2) must have been
used to commit a wrong or fraud, and (3) there must have been an unjust injury or loss to
the plaintiff.” Defendant argues plaintiffs’ conclusory allegation that Urbahns used Dutton
Investment as a “mere instrumentality” is not sufficient to pierce the corporate veil. “It is
well established that piercing the corporate veil is not itself a cause of action.” Brennan v.
National Action Financial Services, Inc., 2012 WL 3888218, *3 (E.D. Mich. Sep. 7, 2012)
(summarizing case law finding piercing the corporate veil is a remedy, not a cause of
action). Because piercing the corporate veil is not an independent cause of action, plaintiffs
fail to state a claim in count VII. The court also questions whether plaintiffs sufficiently set
forth the factual basis for their allegation that defendant used Dutton Investment as a “mere
instrumentality.” The court is willing to entertain a motion for leave to amend this claim
within a reasonable time.
For the reasons set forth above, defendant’s motion to dismiss or for summary
judgment is GRANTED in part and DENIED in part. Defendant’s requests to dismiss based
on res judicata and abstention are denied. Counts I, II, III, IV, VI, and VII are dismissed for
failure to state a claim. Count V remains.
Dated: April 17, 2013
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
April 17, 2013, by electronic and/or ordinary mail.
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