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Chabrowski v. Litwin

United States District Court, D. Arizona

August 29, 2017

Derek Jahn Chabrowski, Plaintiff,
v.
Wlodzimierz Jan Litwin, Defendant.

          ORDER

          Douglas L. Rayes, United States District Judge.

         Before the Court is Defendant Litwin's motion to dismiss pursuant to Rule 12(b)(6). (Doc. 66.) The motion is fully briefed. (Docs. 72, 76.) For reasons stated below, the motion is denied.[1]

         I. Background

         Chabrowski commenced this action by filing a pro se complaint on behalf of ARTBE Enterprises LLC. ARTBE was formed five years ago by Chabrowski and Litwin as a high-end car rental and leasing business. The articles of organization for ARTBE listed Chabrowski as the sole member and Litwin as manager. Chabrowski claims to have served as primary financial investor and holder of legal interest in the vehicles, most of which were supplied by Litwin when ARTBE was established. Chabrowski alleges that Litwin falsely claimed to be the true owner of some of the vehicles while others were either never located in the United States or smuggled out of the country to Europe. (Doc. 1.)

         At a status conference on December 9, 2016, Chabrowski was advised that he cannot proceed in this matter representing ARTBE because only licensed attorneys may represent a limited liability company in federal court. (Doc. 11.) Chabrowski thereafter sought leave to file an amended complaint asserting claims of fraud and swindling, embezzlement, and civil conspiracy. (Docs. 15, 16.) The Court denied leave to amend because the proposed complaint impermissibly sought to bring claims on behalf ARTBE, asserted claims under criminal statutes, and otherwise failed to meet the pleading requirements of Rule 8. (Doc. 19.)

         Chabrowski thereafter moved for leave to file a second amended complaint. (Doc. 23.) The Court granted the motion under Rule 15(b)(2), finding in part that the proposed amended pleading did not appear to be futile. (Doc. 27.) Litwin has now moved to dismiss the complaint pursuant to Rule 12(b)(6) for failure to state a claim for relief. (Doc. 66.)

         II. Legal Standard

         A successful Rule 12(b)(6) motion must show that the complaint lacks a cognizable legal theory or fails to allege facts sufficient to support such a theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a cognizable legal theory will survive a motion to dismiss where it contains "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556).

         III. Discussion

         The amended complaint asserts claims under A.R.S. § 29-858 for civil liability and equitable remedies for false filings with the Arizona Corporation Commission (ACC). (Doc. 28 ¶¶ 79-95). Chabrowski alleges that in September and October 2015, Litwin made unauthorized filings with the ACC including articles of termination falsely declaring that company assets had been properly collected and distributed to members. (¶¶ 23, 27.) Chabrowski claims that company assets, including the vehicles identified in the complaint, were never collected and distributed as Litwin declared and he therefore has violated § 29-858 by knowingly filing a materially false document with the ACC. (¶¶ 80-88.)

         Section 29-858 was enacted in 2016 as part of the "Arizona business entities competitive omnibus act." 2016 Ariz. Sess. Laws, ch. 354, § 27 (S.B. 1356 at 32). Section 29-858(A) creates a civil right of action, which did not previously exist, "that the corporation or LLC, its creditors, and shareholders or members, may exercise against any person that authorizes or signs a document delivered for filing with the [ACC] that the person knows contains false or misleading information."[2] Section 29-858(A) provides, in pertinent part:

[A]ny person that authorizes or signs a report, certificate, notice or other document with respect to [an LLC] that is delivered for filing with the [ACC] pursuant to this chapter and that has knowledge at the time of delivery . . . that the information contained in that . . . document is materially false or misleading is liable to the [LLC] and its creditors and members for all damages resulting.

         In addition to a request for damages, the plaintiff may, pursuant to § 29-858(E), seek an "award of equitable remedies, if appropriate."

         The complaint alleges that on October 14, 2015, Litwin filed articles of termination with the ACC falsely declaring, under penalty of perjury, that company assets had been properly collected and distributed to members and all priority liens discharged. (Doc. 28 ¶ 27; see Doc. 25 at 26; http://ecorp.azcc.gov/Details/Corp?corpId=L17447110; http://corporations.images.azcc.gov/05232519.pdf (last visited Aug. 29, 2017)). The cause of action for false filings alleges that company assets, including the vehicles identified in the complaint, were never collected and distributed as Litwin declared and he therefore has violated ยง 29-858(A) by knowingly ...


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