United States District Court, D. Arizona
CWT Canada II Limited Partnership, an Ontario, Canada Limited Partnership, et al., Plaintiffs,
Elizabeth J. Danzik, an Individual, et al., Defendants.
G. Campbell, United States District Judge
CWT Canada II Limited Partnership and Resource Recovery
Corporation (collectively, “CWT” or
“Plaintiffs”) move to strike certain defense
theories raised by Defendants Tony Ker, Richard Carrigan,
Elizabeth Danzik, and Danzik Applied Sciences, LLC
(“DAS”) as barred by the doctrine of res
judicata. Doc. 128. Plaintiffs also move for a protective
order prohibiting Defendants from conducting discovery on the
theories, and for an order quashing two nonparty subpoenas
aimed at obtaining such discovery. Id. The motion is
fully briefed. Docs. 133, 136. The Court will deny the
to strike are viewed with disfavor and are not frequently
granted. S. Gensler, Federal Rules of Civil Procedure,
Rules and Commentary at 302 (2017) (citing cases). They
“should not be granted unless it is clear that the
matter to be stricken could have no possible bearing on the
subject matter of the litigation.” Netflix, Inc. v.
Blockbuster, Inc., No. C06-02361 WHA, 2006 WL 2458717,
at *8 (N.D. Cal. Aug. 22, 2006). The Court's local rules
attempt to curtail the overuse of motions to strike.
See LRCiv 7.2(m).
Court's order of January 26, 2018, held that claims
brought by Dennis Danzik and RDX Technologies, Corp. were
precluded because they could have been raised in a prior
action in New York involving the same parties and underlying
transaction (the “New York Action”). See
Doc. 119 at 16-23. CWT now argues that the remaining
Defendants, who were not parties in the New York Action, are
precluded from defending themselves in this suit because
“they are in privity with Dennis and RDX.” Doc.
128 at 4. Plaintiffs ask the Court to preclude Defendants
from arguing “that (1) the CWT Parties defrauded RDX
into entering into the UPA; (2) RDX was entitled to retain
the tax credits, either because of the CWT Parties'
alleged fraud or because of the terms of the UPA; (3) Dennis
did not convert the tax credits; and (4) RDX was not required
to keep the tax credits it received in a segregated account,
or RDX was permitted to spend the tax credits upon
receipt.” Doc. 128 at 5.
issue-preclusion argument is misguided. Even if the Court
were to assume that privity exists, Plaintiffs cite no
authority for the proposition that the doctrine of res
judicata, also known as claim preclusion, can be
used to preclude a party from asserting particular
issues in defense of a subsequent suit not initiated
by that party. See Kret v. Brookdale Hosp. Med.
Ctr., 462 N.Y.S.2d 896, 899 (App. Div. 1983),
aff'd, 462 N.E.2d 147 (N.Y. 1984) (“[R]es
judicata in the sense of claim preclusion ‘involves the
question of whether a plaintiff's present claim, as
distinguished from discrete issues previously litigated, has
been extinguished by a final adjudication in a prior
proceeding[.]'”). Plaintiffs do not argue that
Defendants' theories are precluded by collateral
estoppel, which bars relitigation of particular
issues, nor do they attempt to show that collateral
estoppel could be satisfied here. See Specialty
Restaurants Corp. v. Barry, 236 A.D.2d 754, 755-56
(N.Y.App.Div. 1997) (“Collateral estoppel or issue
preclusion ‘bars relitigation of issues that have
necessarily been determined in a prior proceeding' . . .
. As the proponent of preclusion, it was plaintiff's
burden to demonstrate that the issue was actually litigated
in [the prior proceeding].”). This likely is because
the issues were not litigated in the New York Action - they
were resolved on the basis of sanctions against Dennis Danzik
also argue - again on the basis of res judicata - that
because Elizabeth was in privity with her co-defendant in
this case, Deja II, LLC, and the Court entered default
judgment against Deja II, Elizabeth is precluded from
asserting any defenses that Deja II could have asserted. Doc.
128 at 13-15. But Plaintiffs cite no precedent to suggest
that res judicata would bar a defendant from asserting
particular issues simply because her co-defendant defaulted.
To the extent Plaintiffs believe that the Court should pierce
the corporate veil and hold Elizabeth liable for the judgment
against Deja II, the proper avenue to assert that argument is
not a motion to strike.
in Plaintiffs' motion, reply, or more than 400 pages of
supporting exhibits do Plaintiffs provide relevant law to
support their theory. This motion falls far short of the
clarity and rarity required for a motion to strike. Parties
on all sides of this litigation are cautioned to avoid such
unnecessary filings in the future.
IS ORDERED that the motion to strike Defendants'
defenses, to quash nonparty subpoenas, and for a protective
order (Doc. 128) is denied.
 Defendants generally have not asserted
counterclaims; they simply are attempting to defend against
CWT's lawsuit. Defendant Ker has asserted a counterclaim
for defamation, but it does not appear that the claim arises
out of the same transaction as the New York Action (nor did
Plaintiffs make this argument in their motion to dismiss the
counterclaim or in this motion).
 Plaintiffs also argue that the
defenses should be stricken because they are
“circular.” Doc. 128 at 13. The Court is aware of
no law that would allow it to summarily strike a ...