United States District Court, D. Arizona
Cindy K. Jorgenson United States District Judge
On December 7, 2015, Magistrate Judge Eric J. Markovich issued a Report and Recommendation (Doc. 50) in which he recommended Counts Four, Six, Eight, Twelve, Thirteen, and Fourteen be dismissed for lack of standing, Count Ten be dismissed for lack of standing, but only as to the second and third duties, and Counts Six, Seven, Eight, Nine, Eleven, and Fifteen be dismissed for failure to state a claim. Magistrate Judge Markovich also recommends Count Ten, as to the first duty alleged and only on a theory of common law negligence, and Counts One, Two, and Three to go forward, as well as Count Five, which was not at issue in the Motion to Dismiss. The magistrate judge advised the parties that written objections to the Report and Recommendation (“R&R”) were to be filed within fourteen days of service of a copy of the “R&R” pursuant to 28 U.S.C. § 636(b).
Plaintiffs have filed an Objection (Doc. 51) and Defendants have filed a response (Doc. 52).
Report and Recommendation
This Court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.” 28 U.S.C. § 636(b)(1). Further, under 28 U.S.C. § 636(b)(1), if a party makes a timely objection to a magistrate judge's recommendation, then this Court is required to “make a de novo determination of those portions of the [report and recommendation] to which objection is made.” The statute does not “require  some lesser review by [this Court] when no objections are filed.” Thomas v. Arn, 474 U.S. 140, 149-50, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985). Rather, this Court is not required to conduct “any review at all . . . of any issue that is not the subject of an objection.” Id. at 149.
Failure to Respond
Plaintiffs object to the Magistrate Judge’s statements that they did not respond directly to Defendants’ arguments. Plaintiffs assert Defendants made the same argument regarding standing multiple times as to separate claims. Plaintiffs assert that their response to this repetitive single argument was made under one heading, rather than repeating it again and again.
In their Motion to Dismiss, Defendants set forth the principles regarding standing of LLC members, then argued why each claim at issue lacked standing. In their response, Plaintiffs argued general principles in support of the assertion that standing exists, but did not argue standing as to each individual claim. Therefore, the Court agrees with the Magistrate Judge that Plaintiffs did not directly respond to Defendant’s arguments as to specific claims. However, as such findings are not necessary for resolution of the issues, the Court finds such language superfluous and declines to adopt those findings of the “R&R.” Factual Background Plaintiffs include a subsection entitled “Factual Background” under its “Objections” section. However, Plaintiffs do not appear to be objecting to the Factual and Procedural Background of the Report and Recommendation. Rather, they appear to be providing additional facts for the Court’s consideration. As no objections to any particular facts have been made, the Court adopts the Factual and Procedural Background of the Report and Recommendation.
Count Four: Tortious Business Interference
The Magistrate Judge recommended that Count Four, Tortious Business Interference, be dismissed for lack of standing because the injury asserted in this claim is the termination of the contract to purchase 572 lots at Star Valley by L.G.I., Inc. (“LGI”), which properly belongs to USH/SVA Star Valley, LLC (“LLC”). Plaintiffs assert the Magistrate Judge erred in his reasoning because the Magistrate Judge failed to acknowledge and address that Count Four is not only based on the termination of the LGI contract. Rather, Plaintiffs also assert that Lennar Home Builders (“Lennar”), Plaintiffs’ partner in the LLC, had threatened to terminate the partnership of the LLC, and to file suit against Plaintiffs Joseph Cesare (“Cesare”) and S.VA. Corporation (“SVA”). Plaintiffs also assert the claim is based on tortious interference with Mr. Cesare’s future business expectancies.
Defendants argue that, because Plaintiffs did not refer to these allegations in their response, they cannot now complain that it was not specifically discussed by the Magistrate Judge. Greenhow v. Sec’y of Health & Human Servs., 863 F.2d 633, 638-39 (9th Cir. 1988) (overruled in part on other grounds). Indeed, a “district judge has discretion to consider new evidence or legal arguments made only in the objections to the magistrate judge's report[.]” United States v. Song Ja Cha, 597 F.3d 995, 1003 n. 7 (9th Cir. 2010). Additionally, the Court agrees with Defendants that every paragraph of a complaint need not be addressed in considering whether a motion to dismiss should be granted. However, in its discretion, the Court finds it appropriate to consider this argument.
Defendants assert there is no basis to support Plaintiffs’ assertion that the Magistrate Judge did not consider the allegations which were included in the First Amended Complaint. Defendants point out that Plaintiffs do not allege Lennar’s threat to file suit ever materialized.
Further, Defendants argue that these assertions do not change the fact that the gravamen of the claim continues to be the harm to the LLC regarding the sale of the Star Valley Lots.
Plaintiffs allege in Count Four of the First Amended Complaint:
220. Plaintiffs incorporate the allegations contained in the preceding paragraphs of this complaint.
221. Defendants’ actions, allegations and insinuations have interfered with Plaintiffs’ existing and prospective contractual ...