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Otchkov v. Everett

United States District Court, Ninth Circuit

September 4, 2013

ALAN EVERETT, in his official and individual capacities as Director of the Arizona Department of Liquor Licenses and Control; Former Director of the Arizona Department of Liquor and Licenses Control JERRY OLIVER Sr., in his official and individual capacities; OSCAR CORTEZ in his official and individual capacities as an officer in the Phoenix Police Department; CITY OF PHOENIX; Attorney JESS LORONA, and the law firm LORONA, DUCAR & STAINER LTD., Defendants.


JAMES A. TEILBORG, Senior District Judge.

Pending before the Court are pro se Plaintiff Nikolay Otchkov's Motion for Default Judgment (Doc. 16) against Defendant Alan Everett ("Everett" or "Defendant"), Everett's Motion to Set Aside Default (Doc. 19), and Everett's Motion to Dismiss (Doc. 33). The Court denies Plaintiff's motion and grants Defendant's motions for the following reasons.


In 2000, Plaintiff owned and operated a restaurant and sports bar called "Famous Sam's." (Doc. 1 at 3). On June 14, 2007, City of Phoenix officials including Defendant Cortez and the Phoenix Police Department conducted an inspection of Famous Sam's. ( Id. at 4). As a result of the inspection, Phoenix Police issued Plaintiff an "Arizona Traffic Ticket and Complaint" for no game center license, operating games of chance, and operating untagged coin operated games. ( Id. ). Plaintiff was allegedly not handcuffed or detained but was read his Miranda rights. ( Id. ). Plaintiff was ordered to appear in the City of Phoenix Municipal Court on June 28, 2007. ( Id. ). Plaintiff appeared in Court but was allegedly told by the court clerk that no complaint had been filed against him and none existed against him in the court file. ( Id. ).

In 2007, Plaintiff changed the name of the restaurant to "Big Nixx." ( Id. at 3). In January 2008, the Arizona State Liquor Board (the "Board") audited Big Nixx and found multiple violations of Arizona law. ( Id. ). Plaintiff was required to surrender his current liquor license and get a series 6 liquor license. ( Id. ).

To acquire a series 6 license Plaintiff had to enter the Arizona Liquor License Lottery. ( Id. ). On May 4, 2008, Plaintiff was randomly selected in the lottery, which allowed Plaintiff to apply for a series 6 license with the Department of Liquor Licenses and Control ("DLLC"). ( Id. ). To obtain a series 6 license, Plaintiff was required to apply with the DLLC and pay a "nonrefundable fifty percent (50%) deposit of the Fair Market Value" of his series 6 license which was "$55, 834.00." ( Id. ). Plaintiff paid the $55, 834.00 "nonrefundable deposit" to the DLLC. ( Id. ). Plaintiff claims he was never warned that DLLC would keep his "nonrefundable deposit" in the case his application was disqualified by the Board. ( Id. ). Plaintiff also filed the application with the DLLC. ( Id. at 4).

In the application, one question asks "Have you ever been detained, cited, arrested, indicted or summoned into court for violation of any law or ordinance?" (Doc. 1-1 at 13). Plaintiff answered the question by saying he was warned in June 2007 for possible game violations. ( Id. ). Another question asks "Have you or an entity in which you have held ownership, been an officer, member, director or manager, ever had a business, professional or liquor application or license rejected, denied, revoked, suspended or fined in this or any other state?" ( Id. ). In answering the question, Plaintiff failed to disclose some violations and the fine he was assessed for violations. ( Id. ).

In July 2008, the Phoenix City Council recommended disapproval of Plaintiff's application for a series 6 license based on information provided by Defendant Cortez and the Phoenix Police Department regarding Plaintiff's past violations. (Doc. 1 at 4). Plaintiff alleges that Defendant Cortez falsely accused Plaintiff of falsifying his series 6 license application. ( Id. ).

In order to resolve the issues presented by the Phoenix City Council's recommendation, the Board set a hearing. ( Id. ). Plaintiff retained assistance of attorney Jerry Lewkowitz for the hearing. ( Id. ). The hearing was held on December 8, 2008. ( Id. ).

On December 8, 2008, Defendant Cortez also allegedly entered Big Nixx and ordered the customers to leave and the bartender to close the restaurant. ( Id. ).

On December 19, 2008, the Board denied Plaintiff's application for a series 6 liquor license, allegedly solely on the basis of the information provided by Defendant Cortez-that Plaintiff had been arrested before and had falsified his application. ( Id. at 5). As a result of his application denial, Plaintiff forfeited the $55, 834.00 "nonrefundable deposit." ( Id. ). Plaintiff did not appeal the Board's decision because Lewkowitz advised Plaintiff that an appeal would be futile because the City of Phoenix based its recommendation on Defendant Cortez's information. ( Id. ).

Plaintiff contacted Defendant Oliver, the former Director of the Arizona DLLC, and apparently asked for his nonrefundable deposit back. Oliver refused to return the deposit and advised Plaintiff to seek legal counsel in order to dispute the issue in court. ( Id. ). In March 2010, Plaintiff hired Defendant Lorona to pursue a claim in an attempt to get the deposit back. ( Id. ).

On June 28, 2010, the DLLC sent a letter to Plaintiff signed by Defendant Alan Everett, the Director of the DLLC, re-asserting that the DLLC would not refund the deposit that Plaintiff paid in May 2008 because the deposit was nonrefundable. (Doc. 1-1 at 25). The letter also informed Plaintiff that he had the option to pay the balance of the license fee in the next ninety (90) days even though he could not qualify for the license himself. ( Id. ). Plaintiff alleges Defendant Lorona expressed to Plaintiff that this letter was an acknowledgment by the DLLC of wrongful acts and that the letter would be useful inculpatory evidence against the DLLC in a forth coming section 1983 claim. (Doc. 1 at 5).

In September 2010, Defendant Lorona advised Plaintiff that there may be some preventing Plaintiff from being successful on a claim under section 1983. ( Id. at 6). In December 2010, Plaintiff filed a complaint with another judge in this Court under 42 U.S.C. ยง 1983 against the State of Arizona, the DLLC, City of Phoenix, and the Police Department. (Doc. 1-1 at 29-39). The complaint was eventually dismissed for failure to serve the defendants. In January 2011, Defendant Lorona and his law firm informed Plaintiff that the firm would no longer represent Plaintiff because Lorona had determined that Plaintiff had no legal claim. ( Id. ).

Plaintiff alleges he was deceived and betrayed by Lewkowitz and Defendant Lorona because they allegedly acted in favor of the DLLC and the City of Phoenix. ( Id. ). On June 16, 2011, Plaintiff sent a letter to Everett which was referred to the Arizona Department of Administration Risk Management Division (the "Department"). (Doc. 1-1 at 41). The Department sent a letter back to Plaintiff on September 27, 2011, denying the claims Plaintiff presented and explaining that an investigation into Plaintiff's application denial had revealed that Plaintiff's application was handled and processed in accordance with established procedures and Arizona law. ( Id. ).

On September 26, 2012, Plaintiff filed a complaint (the "Complaint") in this Court alleging five counts against Alan Everett, Director of the Arizona DLLC, Jerry Oliver Sr., former Director of the Arizona DLLC, Oscar Cortez of the Phoenix Police Department, the City of Phoenix, and Attorney Jess Lorona, and the law firm Lorona, Ducar & Stainer Ltd. (Doc. 1).

Kay Hughes at the Arizona DLLC was served with the Complaint for Everett on November 2, 2012. (Doc. 4). On December 5, 2012, Plaintiff filed a motion for entry of default against Everett for failing to respond to the Complaint. (Doc. 14). Pursuant to Federal Rule of Civil Procedure 55(a), the Clerk of the Court entered default against Everett on December 7, 2012. (Doc. 15). On December 10, 2012, Plaintiff filed the pending Motion for Default Judgment against Everett (Doc. 16). The next day, Everett filed the pending Motion to Set Aside Default ("Motion to Set Aside") (Doc. 19). Plaintiff then filed a Response to Everett's Motion to Set Aside (Doc. 22) and Everett filed a Reply to Plaintiff's Response (Doc. 26).

Following these motions regarding default, Plaintiff personally served Everett on January 17, 2013. (Doc. 32). On February 7, 2013, Everett filed the pending Motion to Dismiss (Doc. 33) and Plaintiff ...

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