Just Us Realtors v. Nudge LLC et al

Filing 96

MEMORANDUM DECISION AND ORDER granting in part 74 Motion to Amend/Correct; granting in part 89 Motion to Stay. See order for details. Signed by Magistrate Judge Cecilia M. Romero on 3/31/2020. (las)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
JUST US REALTORS, LLC on Behalf
of Itself and All Others Similarly Situated,
Plaintiff,

MEMORANDUM DECISION AND
ORDER GRANTING IN PART [74]
MOTION FOR LEAVE TO AMEND
AND GRANTING IN PART [89]
MOTION FOR STAY

vs.
Case No. 2:18-CV-00128-HCN-CMR
NUDGE, LLC ET AL.,
Judge Howard C. Nielson, Jr.
Defendants.
Magistrate Judge Cecilia M. Romero

Before the court is Plaintiff Just Us Realtors’ (Plaintiff) Motion for Leave to File
Amended Complaint (Motion to Amend) (ECF 74) and Defendants BuyPD (BuyPD), Income
Property USA (Income), Nudge, LLC (Nudge), and Ryan Poleman’s (Poleman) (collectively
Nudge Defendants) Motion to Stay (ECF 89) referred to the undersigned from Judge Nielsen in
accordance with 28 U.S.C. § 636(b)(1)(A). The court notes this is a procedurally complicated
matter with no perfect solution. For the reasons set forth below the court GRANTS in part the
Motion to Stay and GRANTS in part the Motion to Amend.
I.

BACKGROUND

Plaintiff, on behalf of itself and all others similarly situated1, filed this putative class
action against nine defendants, which include a number of individuals and limited liability
corporations that allegedly sold and financed real estate through investor training seminars.
Plaintiff’s original complaint (Complaint) alleged defendants misrepresented the ownership and
value of the real estate they offered for sale and fraudulently induced it and other investors to
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The court has not yet certified this action as a class action.

overpay for property (ECF 2). On June 19, 2019, Judge Campbell granted defendants’ motions
to dismiss (ECF 24, 26, 28, 29) and dismissed the Complaint without prejudice (ECF 72). In her
Order Judge Campbell ordered Plaintiff to file a motion to amend its complaint, along with a
proposed amended complaint, within twenty-eight days.
On July 17, 2019, Plaintiff filed the pending Motion to Amend contending its proposed
amended complaint (Amended Complaint) (ECF 74 at 1) cured the deficiencies outlined in Judge
Campbell’s Order by: 1) specifying each defendant that caused or reasonably foresaw the use of
mail or wire in violation of 18 U.S.C. § 1341 and § 1343; 2) specifying each defendant that
caused inducement of interstate travel in violation of 18 U.S.C. § 2314; and 3) replacing terms
“Property Defendants,” “Attorney Defendants,” and “Defendants” with the names of the specific
defendants, stating their role and specifying who is connected to the fraud. Plaintiff also alleges
the Amended Complaint cures deficiencies related to jurisdictional issues and the amount in
controversy, addresses issues raised by defendants’ motions to dismiss, and incorporates
allegations uncovered during Plaintiff’s investigation. In response, Defendants American Legal
& Escrow, LLC, Invictus Law, LLC, and Blair Jackson (collectively Jackson Defendants),
Insider’s Cash, LLC (Insider’s Cash”), Guardian Law, LLC (Guardian Law), and the Nudge
Defendants filed respective oppositions to the Motion to Amend (ECF 81, 82, 83, 84). In
general, all four groups of defendants (Jackson Defendants, Guardian Law, Insider’s Cash, and
Nudge Defendants) request the court deny Plaintiff’s Motion to Amend on futility grounds.
Prior to any ruling on the Motion to Amend, on December 19, 2019, Chief Judge Robert
J. Shelby issued a preliminary injunction in a matter involving the Federal Trade Commission
(FTC), Utah Division of Consumer Protection, and a number of defendants including three of the

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Nudge Defendants—BuyPD, Nudge and Poleman (“FTC Matter”).2 In the Stipulated
Preliminary Injunction (Preliminary Injunction), Judge Shelby enjoined BuyPD, Nudge,
Poleman, and “other persons seeking to establish or enforce any claim, right, or interest against
or on behalf of Defendants, and all others acting for or on behalf of such persons . . . from taking
action that would interfere with the exclusive jurisdiction of this Court over the Assets or
Documents of Defendants, including but not limited to: “[c]ommencing, prosecuting, or
continuing a judicial, administrative, or other action or proceeding.”3 The Preliminary Injunction
is in “full force and effect until entry of a final judgment adjudicating all the claims and all the
parties’ rights and liabilities unless sooner modified or dissolved” (FTC Matter, ECF 89 at 9).
On January 3, 2020, the Nudge Defendants filed the pending Motion to Stay requesting
the court stay all proceedings in this matter until “entry of a final judgment in the FTC litigation
or until the Preliminary Injunction is otherwise modified or dissolved” (ECF 89). Jackson
Defendants filed a partial objection to the Motion to Stay (ECF 90) arguing that if the court was
to deny the motion to amend, it could proceed with the present matter, but granting leave to
amend would require a stay “in order to comply with the injunction” (ECF 90 at 1). Jackson
Defendants also filed a reply to Plaintiff’s opposition clarifying their narrow objection that Judge
Shelby’s Preliminary Injunction “by its express terms, enjoins Plaintiff from taking any further
action in this matter relating to defendants Nudge, BuyPD, and Ryan Poleman without first

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See Federal Trade Commission et al v. Nudge LLC et al., Case No. 2:19-cv-00867-DBB-EJF (D. Utah) at ECF 89.
Income is not a named party in the FTC Matter (ECF 89). However, without explanation, the Nudge Defendants
argue the Motion to Stay applies to Income (FTC Matter, ECF 89). A logical conclusion is that because the
Preliminary Injunction applies to “subsidiaries, affiliates, successors and assigns” Income would be included. Id.
However, because that has not been made clear the court cannot confirm the Preliminary Injunction applies to Income.
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Per ECF 93 in the FTC Matter, the Complaint is currently under seal, so the court does not reference its specific
factual allegations herein. Nonetheless in reviewing the Complaint and the Preliminary Injunction in the FTC Matter,
while the claims of relief differ from the present matter, the underlying factual premise is similar to the present matter.

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obtaining leave from Judge Shelby” in the FTC matter (ECF 92 at 2). The Jackson Defendants
reiterated their position that this court could proceed, but if the court was inclined to grant the
motion to amend, a stay is necessary because “it would be impossible to prosecute or defend the
matter going forward without violating the injunction” where the parties are “lumped” together
and there is no way to parcel out the claims against particular defendants (ECF 92 at 2).
Plaintiff filed an opposition to the stay arguing Judge Shelby’s Preliminary Injunction
does not stay all proceedings against all the defendants in the present matter, is unduly
prejudicial to Plaintiff, and that the court should rule on Plaintiff’s Motion to Amend prior to
considering a stay (ECF 91). Plaintiff argues there is a way to proceed in the present matter as to
the remaining six defendants and not violate the Preliminary Injunction (ECF 74). Defendants
Insider’s Cash and Guardian Law did not file papers in response to the Motion to Stay.
II.

DISCUSSION

A. Motion to Amend
Federal Rule of Civil Procedure 15(a)(2) provides that the court should freely give leave
to amend when justice so requires. “The district court has ‘wide discretion to recognize a motion
for leave to amend in the interest of a just, fair or early resolution of litigation.’” Bylin v.
Billings, 568 F.3d 1224, 1229 (10th Cir. 2009) (quoting Calderon v. Kan. Dep't of Soc. & Rehab.
Servs., 181 F.3d 1180, 1187 (10th Cir. 1999)).
Plaintiff’s Amended Complaint asserts causes of action against all defendants collectively
including fraud, violations of 18 U.S.C. § 1962, the Racketeering Influenced and Corrupt
Organizations Act (RICO claims), civil conspiracy, and breach of fiduciary duty. Judge
Campbell in her Order Granting Motion to Dismiss (ECF 72) directed Plaintiff to submit a
complaint that alleges at least two predicate acts as to each defendant, sufficiently pleads an
amount in controversy over $75,000, pleads underlying fraud with specificity in accordance with

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FRCP 9(b), and sufficiently alleges Invictus Law participated in the operation of the larger
enterprise, which the Plaintiff has cured. However, the proposed Amended Complaint cannot be
litigated as to Buy PD, Nudge, and Poleman. While the interests of justice warrant granting
Plaintiff leave to amend, Plaintiff will need to re-file a motion to amend and proposed amended
complaint that complies with the Preliminary Injunction and the stay as further set forth below.
B. Motion to Stay
The court has inherent power to stay proceedings in matters pending before it. See Pet
Milk Co. v. Ritter, 323 F.2d 586, 588 (10th Cir. 1963) (“[T]he district court has the power to stay
proceedings pending before it and to control its docket for the purpose of ‘economy of time and
effort for itself, for counsel, and for litigants.’”) (quoting Landis v. N. Am. Co., 299 U.S. 248,
254 (1936)); see also Clinton v. Jones, 520 U.S. 681, 706, 117 (1997). In exercising this
judgment, factors “‘relevant to the court’s decision are: (1) whether a stay would promote
judicial economy; (2) whether a stay would avoid confusion and inconsistent results; and (3)
whether a stay would unduly prejudice the parties or create undue hardship.’” Miller v. Basic
Research, LLC, 2001 WL 818150 (D. Utah Mar. 2, 2011) (quoting Evergreen Holdings, Inc. v.
Sequoia Global, Inc., 2008 WL 4723008, at *2 (W.D. Okla. 2008)).
Having considered these factors, the court finds that in order to avoid confusion,
inconsistent results, to promote judicial economy, and to comply with the Preliminary Injunction,
the court must stay the case as to BuyPD, Nudge and Poleman. While a party seeking a stay
“must make out a clear case of hardship or inequity in being required to go forward,” given the
Preliminary Injunction entered in the FTC Matter, the standard is shadowed by that ruling as to
BuyPD, Nudge and Poleman. See Miller v. Basic Research, LLC, 2011 WL 818150 (D. Utah
March 2, 2001). No party objects to a stay that applies to these three defendants. There is
disagreement as the remaining six defendants.

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Addressing the remaining six defendants Income, the Jackson Defendants, Insider’s Cash
and Guardian, judicial economy weighs against issuing a stay, assuming Plaintiff can submit a
proposed complaint and path forward that does not violate the Preliminary Injunction. The court
recognizes that Plaintiff and each defendant has different interests in this matter and that the
claims at issue in the present suit and the FTC Matter appear to be different. However, the
underlying factual premise appears to be the same. The present proposed Amended Complaint
(ECF 74 at 1) has extensive interconnection and overlap between the theories alleged against all
of the defendants in the present matter such that it seems difficult, if not impossible, to separate
the claims against BuyPD, Nudge and Poleman from the facts and claims against the other six
remaining defendants. However, Plaintiff argues that careful case management could allow the
claims to proceed against the six other defendants but does not offer a specific path for how that
can be achieved. For the time being, in trying to balance all the competing interests, the court
will allow Plaintiff leave to file a second motion to amend with a proposed amended complaint
that addresses the path forward.
No party directly addresses the risk of inconsistent results and/or conclusions. However,
the Jackson Defendants argue that given the intertwined nature of Plaintiff’s claims against all
the defendants in the present matter “there would be no way for Plaintiff to prosecute its claim,
seek class certification or for the Jackson Defendants to defend against Plaintiff’s claims without
involving the” Nudge Defendants (ECF 92 at 2). This matter is still at its infancy. Although the
case was filed just over a year ago, only the motions to dismiss decided by Judge Campbell have
been litigated. There is currently no scheduling order in place and therefore no discovery has
been exchanged or depositions conducted. Plaintiff has also not filed its motion for class

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certification. Given the infancy of this case, the court cannot discern if the Jackson Defendants’
argument is accurate but will allow Plaintiff the opportunity to prove otherwise.
With regard to the prejudice factor, Plaintiff argues the litigation in the FTC matter “is
unclear and could significantly delay” the present matter (ECF 91 at 8). The court acknowledges
a stay for the Plaintiff is burdensome and prolongs the litigation and therefore weighs in favor of
denying the stay as to the remaining defendants. Given the Preliminary Injunction, and in
considering all of the competing interests at play including the infancy of this matter, it is
difficult to see how the matter could proceed in a way that would be efficient for Plaintiff, the
other defendants, and the court. However, balancing all these together, the court concludes that
Plaintiff should be afforded an opportunity to address all of these issues. Plaintiff must provide
the court with insight as to how this matter may proceed, in addition to meeting each element of
the claims and diversity jurisdiction, in its second motion to amend and proposed amended
complaint.
ORDER
IT THEREFORE ORDERED that Nudge Defendants’ Motion to Stay (ECF 89) is hereby
GRANTED IN PART. This matter is stayed only as to defendants BuyPD, Nudge, and Poleman
until the FTC Matter is resolved, or a party seeks relief from the stay.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to Amend (ECF 74) is
GRANTED IN PART. Plaintiff must file a motion to amend and proposed amended complaint
that complies with this order within twenty-eight (28) days.
DATED this 31 March 2020.

Magistrate Judge Cecilia M. Romero
United States District Court for the District of Utah

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