United States District Court, D. Arizona
CWT Canada II, LP, an Ontario, Canada Limited Partnership Plaintiff,
Elizabeth J. Danzik, an individual, et al., Defendants.
G. Campbell United States District Judge
CWT Canada II, LP and Resource Recovery Corp. ask the Court
to consolidate this action with CWT Canada II, LP, et
al., v. Kevin Bridges, et al., No. 16-cv-02577-GMS (the
“Bridges Action”). Doc. 54. For the reasons set
forth below, the Court will deny the motion.
42(a) of the Federal Rules of Civil Procedure permits a court
to consolidate cases that involve common questions of law or
fact. A court has broad discretion in making this decision.
Inv'rs Research Co. v. U.S. Dist. Ct. Cent. Dist. of
Cal., 877 F.2d 777 (9th Cir. 1989).
case and the Bridges Action arise out of the same factual
occurrences, but involve different claims against different
defendants. Both cases arise from the allegedly fraudulent
actions of Dennis J. Danzik, the chief executive officer of
RDX Technologies Corp., a now-defunct corporation. Plaintiffs
allege that Danzik entered into a transaction with Plaintiffs
for the sale of Plaintiffs' company, Changing World
Technologies, L.P. (“CWT”), to RDX. Plaintiffs
allege that several million dollars in tax credits were paid
to RDX in trust for Plaintiffs, but that Danzik stole $5
million of the tax credits by causing RDX to pay them to him
directly or in response to bogus invoices. Plaintiffs also
claim that Danzik looted RDX, diminishing Plaintiffs'
interest in RDX. Plaintiffs assert that judgments and
criminal contempt citations have been entered against Danzik
in New York state court, that criminal investigations are
under way, and that Danzik is a fugitive.
action, Plaintiffs have sued Danzik's spouse, Elizabeth
J. Danzik (“Elizabeth”), and a limited liability
company allegedly owned by Danzik and Elizabeth, Deja II,
LLC. Doc. 1. Plaintiffs allege that Elizabeth received $730,
000 of the money Danzik stole from Plaintiffs, and must
return it to Plaintiffs. Plaintiffs also allege that
Elizabeth and Deja II participated in a fraud against
Plaintiffs. They claim that Danzik, Elizabeth, and Deja II
entered into a transaction with Plaintiffs under which
Plaintiffs paid Deja II $1 million in Canadian currency in
exchange for what was to be freely tradeable stock in RDX.
Id., ¶ 3. Plaintiffs specifically allege that
this transaction was separate from the sale of CWT to RDX.
Id., ¶ 71. Plaintiffs contend that Deja II
received the money, but provided them with restricted stock
that was not tradeable. Plaintiffs allege that Elizabeth
signed an agreement on behalf of Deja II that included
misrepresentations and fraudulently induced Plaintiffs to
part with their money. A default judgement has been entered
in this action against Deja II. Doc. 49.
Bridges Action, Plaintiffs claim that Defendants Kevin
Bridges and Richard Carrigan were the chief financial officer
and a board member of RDX, respectively. Bridges Doc. 1,
¶ 5. Plaintiffs allege that Bridges and
Carrigan approved the transfers of Plaintiffs' tax credit
funds from RDX to Danzik, knowing that the transfers were
unjustified. Plaintiffs allege that the corporate veil and
business judgment rule do not shield Bridges and Carrigan
because each committed torts on behalf of RDX. Id.,
¶ 8. Plaintiffs also allege that Bridges and Carrigan
hid from regulators and public investors the fact that Danzik
stole $5 million of the tax credits and stole another $6
million of shareholder money through fraudulent transactions
with RDX. Id., ¶ 7. Plaintiffs have sued
Bridges and Carrigan for fraud committed in their capacity as
officers and directors of RDX, conversion of funds paid to
RDX, tortious interference with the obligations between RDX
and Plaintiffs, breach of trust, misappropriation of trust
assets, breach of fiduciary duty, aiding and abetting breach
of fiduciary duty, and unjust enrichment.
do not claim that Elizabeth or Deja II were involved in the
operations of RDX, authorized allegedly wrongful payments
from RDX to Danzik, facilitated Danzik's looting of RDX,
or engaged in breach of fiduciary duty or breach of trust.
The claims against Elizabeth and Deja II do not raise the
corporate governance and shield issues likely to arise in
these claims against Bridges and Carrigan.
Plaintiffs do not allege that Bridges and Carrigan were
involved in the operations of Deja II or had any involvement
in the fraud Elizabeth and Deja II allegedly committed
against Plaintiffs. Nor do Plaintiffs allege that Bridges and
Carrigan received any part of the $730, 000 allegedly paid by
Danzik to Elizabeth.
cases involve different defendants and different claims.
Although the background transactions are the same, the
liability-creating conduct is quite different and will be
subject to different discovery, defenses, and legal
standards. To the extent both cases will require some
discovery of Danzik's alleged wrongdoing, Plaintiffs can
and should coordinate between this action and the Bridges