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Dishon v. Gorham

United States District Court, D. Arizona

September 5, 2018

Terry Dishon, et al., Plaintiffs,
v.
Connie R. Gorham, et al., Defendants.

          ORDER

          Honorable Roslyn O. Silver Senior United States District Judge

         Terry Dishon and Luci Dishon (collectively “the Dishons”) allege Defendants Gary Haak (“Haak”) and Connie Gorham (“Mrs. Gorham, ” and collectively with Haak “Defendants”) began demanding payment from the Dishons which Defendants claimed the Dishons owed deceased non-party Mr. Gorham. The Dishons allege Defendants' requests for payment violated a prior agreement between the parties, and filed this suit seeking a declaratory judgment barring Defendants' demand for payment, plus costs and fees. Following this, Haak initiated a separate suit, which was assigned to Judge Humetewa, alleging, among other things, that the Dishons also failed to compensate Haak for his services.

         The Dishons now move to transfer/consolidate Haak's suit with the present suit, and also move for leave to amend their complaint in the present suit. Defendants oppose both motions. In addition, Defendants move to stay discovery in the present case pending resolution of the motion to transfer/consolidate, which the Dishons oppose. Since Haak's suit and the present suit involve many of the same underlying facts and a transfer will prevent duplication of labor, the Dishons' motion to transfer will be granted. And since the Dishons' proposed amendments are not futile and will not prejudice Defendants, the Dishons' motion for leave to amend will be granted as well. However, since Haak's suit and the present suit are at opposite stages of litigation, the suits will not be consolidated. And since Defendants have not set forth a valid basis for staying discovery, Defendants' motion to stay discovery will be denied.

         BACKGROUND

         The Dishons' amended complaint, (Doc. 6), alleges the following: the Dishons owned Dishon Disposal, an oil field waste disposal company, until November 2012. Non-party David Gorham (“Mr. Gorham”), husband of Defendant Mrs. Gorham, provided consulting services to Dishon Disposal. While providing these consulting services, the Dishons allege Mr. Gorham and some unnamed associates designed a scheme whereby another company, Digerati Technologies, acquired Dishon Disposal through a reverse acquisition in November 2012. As a result of this transaction, numerous disputes and litigation developed between Mr. Gorham and numerous third-parties, and Digerati Technologies eventually went bankrupt.

         The Dishons allege that, although neither the Dishons nor Dishon Disposal were named in these other suits, the Dishons paid millions of dollars in legal fees and costs associated with them. Then, in January 2014, the Dishons, Mr. Gorham, Mr. Gorham's wife, Defendant Connie Gorham (“Mrs. Gorham”), and several other individuals and entities entered into a settlement agreement (the “January 2014 settlement agreement”) allegedly resolving all ongoing litigation and pending claims between the parties.

         Over a year and a half later, in November 2015, Mr. Gorham passed away in Utah. Then, beginning in February 2016, Defendants Haak, allegedly a representative of Mr. Gorham's estate, and Mrs. Gorham began demanding sums from $1, 000, 000 to $1, 500, 000 from the Dishons, and threatening to release the Dishons' private information to the public if Defendants did not receive payment. The Dishons allege Defendants claimed the Dishons failed to compensate Mr. Gorham for consulting services he provided the Dishons, for Mr. Gorham's investment in a water treatment system, and for legal fees Mr. Gorham paid. The Dishons allege Defendants' payment request violated the parties January 2014 settlement agreement, and thus filed this suit seeking both a declaratory judgment barring Defendants' monetary demand, as well as costs and attorney's fees stemming from that contract's breach.[1]

         The Dishons now move for leave to amend their complaint. In doing so, the Dishons explain they “do not seek to add parties or otherwise make wholesale changes to the allegations of the pending lawsuit, ” but rather seek to “clarify . . . the factual background and further define the scope of the relief sought.” (Doc. 72). Defendants responded, arguing the Dishons are attempting to “control damage” and that the proposed amendments are “futile and prejudicial, ” (Doc. 73), and the Dishons replied, (Doc. 74).

         In addition, after the Dishons had already initiated this suit, Defendant Haak filed a separate suit in October 2017, which was given case number 17-CV-03576 and assigned to Judge Humetewa (the “Second Lawsuit”). The Second Lawsuit involves some of the same underlying facts as the present suit. For example, like in the present suit, the Second Lawsuit alleges the Dishons owned Dishon Disposal, that Dishon Disposal was sold to Digerati Technologies in November 2012, and that litigation followed this sale and eventually led to Digerati Technologies' bankruptcy. In addition, Haak's amended complaint in the Second Lawsuit names the Dishons, and also several other individuals not involved in the present suit, as defendants, meaning both suits involve some of the same parties. That said, the claims in the Second Lawsuit are distinct from the claims in the present suit. For example, the Second Lawsuit involves services that Haak, not Mr. Gorham, allegedly provided the Dishons and the Dishons' companies.

         The Dishons now move to transfer/consolidate the two cases, pursuant to Local Rule 42, arguing Haak's claims in the Second Lawsuit arise from substantially the same allegations that are the basis of the Dishons' claims here and that underlied Defendants' now-dismissed counterclaims. (Doc. 69). Defendants responded, arguing a transfer/consolidation would prejudice Defendants and would be inappropriate as the cases involve different parties and issues of law, (Doc. 70), and the Dishons replied, (Doc. 71). Defendants then moved to stay discovery pending resolution of the motion to transfer/consolidate, (Doc. 76), to which the Dishons responded, (Doc. 77), and Defendants replied, (Doc. 80).

         ANALYSIS

         This order resolves the Dishons' motion for leave to amend their complaint, (Doc. 72), the Dishons' motion to transfer/consolidate, (Doc. 69), and Defendants' motion to stay discovery, (Doc. 76), which are addressed seriatim.

         I. Motion for Leave to Amend

         When a party seeks to amend its pleading within the date specified in the scheduling order, the party must demonstrate amendment is proper under Rule 15. See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir. 1992). Rule 15 states that a party may amend its pleading with the court's leave, and courts “should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). Courts may, however, deny leave to amend for: (1) “undue delay, bad faith or dilatory motive on part of the movant, ” (2) “repeated failure to cure deficiencies by amendments previously allowed, ” (3) “undue prejudice to the opposing party, ” or (4) ...


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