BOKF, NA v. Estes et al

Filing 57

ORDER that plaintiff's motion to dismiss counterclaims (ECF No. 30 ) is GRANTED; Defendants counterclaims (ECF No. 24 ) are DISMISSED in their entirety. Signed by Judge Larry R. Hicks on 4/10/2018. (Copies have been distributed pursuant to the NEF - LH)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 *** 9 BOKF, NA, 10 Plaintiff, Case No. 3:17-cv-0694-LRH-(WGC) 11 v. 12 13 14 15 ORDER ROBERT ESTES, KAREN NILES, JERRY CARPENTER, SHIRLEY CARVEY, and JAMES CARPENTER and BECKY LYNN CARPENTER as Co-Trustees of the CARPENTER FAMILY REV TRUST UAD 1/19/14, 16 Defendants. 17 18 Before the court is plaintiff BOKF, NA’s (“BOKF”) motion to dismiss defendants’ 19 20 counterclaims (ECF No. 24). ECF No. 30. Defendants filed an opposition to the motion 21 (ECF No. 35) to which BOKF replied (ECF No. 38). 22 I. 23 Facts and Procedural Background Plaintiff BOKF is a federally chartered commercial bank. BOKF serves as the indenture 24 trustee for conduit municipal bonds issued in the United States. Relevant to this action, BOKF 25 served as the indenture trustee for a series of allegedly fraudulent conduit municipal bond 26 offerings for the purchase and renovation of senior living facilities located throughout the 27 Southeastern and Midwestern United States. 28 /// 1 Defendants are bondholders of the underlying conduit municipal bonds. On June 30, 1 2 2017, defendants initiated arbitration against BOKF pursuant to the Code of Arbitration of the 3 Financial Industry Regulatory Authority (“FINRA”) alleging that BOKF engaged in conduct 4 violating federal securities laws. On November 13, 2017, BOKF filed a complaint against defendants alleging two causes 5 6 of action: (1) declaratory judgment that BOKF is not subject to FINRA arbitration; and 7 (2) injunctive relief. ECF No. 1. In response, defendants filed counterclaims against BOKF 8 alleging two causes of action: (1) declaratory judgment that BOKF is subject to FINRA 9 arbitration; and (2) injunctive relief. ECF No. 24. Thereafter, BOKF filed the present motion to 10 dismiss defendants’ counterclaims. ECF No. 30. 11 II. 12 Discussion In its motion, BOKF contends that defendants’ counterclaims are just the “mirror image” 13 of BOKF’s claims for relief and therefore, the counterclaims should be dismissed as redundant. 14 See ECF No. 30. The court agrees. 15 A district court “has discretion to dismiss, under Rule 12(b)(6), a declaratory relief 16 counterclaim which mirrors the complaint or raises the same factual or legal issues as those 17 placed at issue in the pleadings.” Englewood Lending, Inc. v. G & G Coachella Invs., LLC, 18 651 F.Supp.2d 1141, 1145 (C.D. Cal. 2009); see also, Perez v. Roofing, 2016 WL 898545, at *2 19 (W.D. Wash. March 9, 2016) (recognizing that “[i]n the context of counterclaims for declaratory 20 relief . . . courts use their discretion to dismiss ‘mirror image’ counterclaims that are redundant 21 of affirmative defenses or claims found in the complaint.”). 22 Here, both parties are seeking declaratory relief regarding the propriety of the underlying 23 FINRA arbitration. In particular, BOKF seeks “[a] declaration that Defendants may not bring an 24 action in FINRA’s arbitration forum against BOKF since FINRA has no jurisdiction over 25 BOKF.” ECF No. 1. In contrast, defendants seek “[a] declaration that FINRA has jurisdiction to 26 arbitrate the claims brought by the [defendants] against BOKF in the [defendants’] claim.” 27 ECF No. 24. These competing claims are the direct mirror image of each other and there is a 28 complete identity of the legal and factual issues between the parties’ competing claims. As such, 2 1 a decision on the complaint’s merits would necessarily render the counterclaims for declaratory 2 relief moot. Perez, 2016 WL 898545, at *2. The only real difference between the complaint and 3 the counterclaims is the factual disputes between the parties. Where the only difference between 4 the parties is their “differing views of the facts” dismissal of the counterclaims is appropriate. Id., 5 at *2-3. Therefore, the court shall grant BOKF’s motion to dismiss, notwithstanding that the 6 legal dispute between the parties shall remain the same. 7 8 IT IS THEREFORE ORDERED that plaintiff’s motion to dismiss counterclaims 9 (ECF No. 30) is GRANTED. Defendants’ counterclaims (ECF No. 24) are DISMISSED in their 10 entirety. 11 IT IS SO ORDERED. 12 DATED this 10th day of April, 2018. 13 14 LARRY R. HICKS UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3

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