United States District Court, D. Arizona
Russel Holland United States District Judge.
for Leave to Amend
move for leave to file an amended complaint to add Pitman
Property Management, LLP as a defendant. This motion is
Fahad Al-Rajhi and defendant Mayfair Real Estate, LP formed
Mayfair Holdings, LLP, for the purpose of purchasing real
estate in Arizona. Mayfair Real Estate is alleged to be
“solely controlled” by defendant Michael
Evans. Mayfair Administration, LLC, was the
original manager of Mayfair Holdings. Mayfair Administration is
owned by defendants Stuart Horwich and Leon
Dutkiewicz. Plaintiffs lent $2.5 million to Mayfair
Holdings. Plaintiffs allege that they have not been
paid the interest that is due on these loans and that Evans
has borrowed money from the Mayfair entities in breach of
now move to amend their complaint to add Pitman Property
Management, LLP as a defendant. Pitman Property Management,
which is owned by Horwich and Dutkiewicz, allegedly entered
into an Administration Agreement with Mayfair Holdings and M
& F Property Management. Mayfair Holdings is owned by
Al-Rajhi and Mayfair Real Estate. M & F Property
Management is owned by Jood and Evans.
contend that pursuant to this agreement, Pitman Property
Management was to provide day-to-day bookkeeping, approve all
checks and withdrawals from the Mayfair Holdings' bank
accounts, retain accountants to prepare tax returns, approve
interest payments to the Mayfair lenders, and approve the
corporate filings required by the Mayfair entities.
Plaintiffs contend that Pitman Property Management was to be
paid annual compensation of $50, 000 plus 1/2 percent of
Mayfair Holdings' Capital Value.
seek to assert breach of contract claims against Pitman
Property Management based on allegations that Pitman Property
Management failed to approve all checks and withdrawals from
Mayfair Holdings' bank accounts, failed to prevent Evans
from withdrawing and using partnership funds for his personal
use, and failed to pay interest to the Mayfair lenders as
required by the various Mayfair agreements. Plaintiffs seek
to assert these breach of contract claims as co-owners of
Mayfair Holdings and M & F Property Management,
entities with which Pitman Property Management contracted.
also seek to assert a fraud claim against Pitman Property
Management based on allegations that Pitman Property
Management falsely represented that the Mayfair accounts were
being properly managed and controlled, that it was properly
performing accountings, that there had been no improper
withdrawals, and that loans and interest were properly being
paid. Finally, plaintiffs seek to assert a
breach of fiduciary claim based on allegations that Pitman
Property Management failed to perform its required duties,
allowed Evans to usurp and convert assets of the Mayfair
entities for his own personal use, failed to pay amounts due
under the loans, refused to allow plaintiffs' access to
the financial records of the Mayfair entities, and
subordinated plaintiffs' loans to fictional loans made by
entities owned and controlled by the other
15(a)(2), Federal Rules of Civil Procedure, provides that
“[t]he court should freely give leave [to amend] when
justice so requires.” “This policy is to be
applied with extreme liberality.” Eminence Capital,
LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003)
(citation omitted). “Four factors are commonly used to
determine the propriety of a motion for leave to amend. These
are: bad faith, undue delay, prejudice to the opposing party,
and futility of amendment.” DCD Programs, Ltd. v.
Leighton, 833 F.2d 183, 186 (9th Cir. 1987).
has been no bad faith or undue delay here. Plaintiffs'
original complaint was filed approximately three months ago
and this case is in the early stages of development.
Plaintiffs contend that they only became aware of the facts
supporting their claims against Pitman Property Management
when reviewing defendants' initial disclosures and they
filed the instant motion shortly thereafter. As for
prejudice, given that this case is in the early stages of
development, it is unlikely that there would be any prejudice
to the existing defendants or Pitman Property Management if
plaintiffs were allowed to amend their complaint.
futility, plaintiffs acknowledge that Mayfair Administration,
Horwich, and Dutkiewicz have moved to dismiss plaintiffs'
claims against them for lack of personal jurisdiction, a
motion that the court is granting in an order being filed
concurrently with this order. Plaintiffs suggest that it is
possible that Pitman Property Management might make a similar
argument. But, plaintiffs argue that Pitman Property
Management's role in the Mayfair Arizona real estate
scheme was quite different from that of Mayfair
Administration, Horwich, and Dutkiewicz, given that Pitman
Property Management performed day-to-day administrative
duties for Mayfair Holdings and M & F Property
Management, the entities that were buying, selling, and
renting the Arizona real estate.
would be futile to allow plaintiffs to amend their complaint
to assert their proposed claims against Pitman Property
Management. As for the proposed breach of contract claims,
plaintiffs are not parties to the contract they are alleging
Pitman Property Management breached. In their proposed
amended complaint, plaintiffs allege that Pitman Property
Management breached the administration agreement that M &
F Property Management and Mayfair Holdings had with Pitman
Property Management. M & F Property Management and
Mayfair Holdings are parties to that contract, not
plaintiffs. Plaintiffs' status as co-owners of M & F
Property Management and Mayfair Holdings does not make them
parties to the ...