United States District Court, D. Arizona
ORDER
Dominic W. Lanza, United States District Judge
INTRODUCTION
In
September 2016, CWT Canada II Limited Partnership, Resources
Recovery Division, and Jean Noelting (collectively,
“Judgment Creditors”) obtained a $7 million
judgment in New York state court against Dennis Danzik and
RDX Technologies Corporation (collectively, “Judgment
Debtors”). In October 2017, the Judgment Creditors'
law firm, Schlam Stone & Dolan, LLP (“Law
Firm”), utilized this judgment to issue a
“restraining notice” to a New York-based branch
of Wells Fargo bank. The notice asserted that Wells Fargo was
required to freeze a particular account with a balance of
$546, 282.55. Upon receipt of the notice, Wells Fargo froze
the account.
Although
the Judgment Creditors had reasons to suspect the Judgment
Debtors held an interest in the frozen account, the account
was not actually held in either of the Judgment Debtors'
names. Instead, it was held in the name of Wyo Tech
Investment Group LLC (“Wyo Tech”), an
Arizona-based company. When Wyo Tech learned its account had
been frozen, it complained to the Judgment Creditors and to
Wells Fargo, disputed whether the Judgment Debtors had any
interest in the account, and threatened to sue. In response,
Wells Fargo filed an interpleader action in this Court.
Since
the interpleader action was instituted in November 2017, Wyo
Tech has asserted a veritable smorgasboard of counterclaims,
crossclaims, and third-party claims. In August 2018, the
Court issued an order (Doc. 69) dismissing Wyo Tech's
counterclaims against Wells Fargo and directing Wells Fargo
to transfer the disputed funds into an account held by the
Clerk of Court. That transfer has now occurred, and three
additional motions are now fully briefed and ripe for
resolution: (1) a motion to dismiss Wyo Tech's
crossclaims against the Judgment Creditors and third-party
claims against the Law Firm[1](Doc. 48), (2) Wyo Tech's
“Motion for Immediate Release of Wrongly Restrained
Funds” (Doc. 72), and (3) Wells Fargo's motion for
attorneys' fees and costs (Doc. 85).[2]
As
explained below, the Court will grant the motion to dismiss
Wyo Tech's crossclaims and third-party claims because the
Court lacks personal jurisdiction over any of the parties
against whom those claims are asserted. Next, the Court will
deny Wyo Tech's motion for “immediate
release” of the disputed funds because that motion is,
in essence, a prematurely-filed summary judgment motion whose
resolution should be deferred until later in the case.
Finally, the Court will deny without prejudice Wells
Fargo's motion for attorneys' fees and costs.
BACKGROUND
On
November 9, 2017, Wells Fargo brought a complaint for
interpleader under 28 U.S.C. § 1335 and Federal Rule of
Civil Procedure 22. (Doc. 1.) Wells Fargo was facing
competing claims on one of its accounts between Wyo Tech and
the Judgment Creditors. In connection with this complaint,
Wells Fargo also brought a Motion to Interplead Funds and for
Order of Discharge. (Doc. 7.)
On
January 17, 2018, Wyo Tech filed its amended answer. (Doc.
37.) The amended answer included (1) counterclaims against
Wells Fargo for wrongful garnishment and aiding and abetting
wrongful garnishment and tortious interference with
contractual relations and business expectancies; (2)
crossclaims against the Judgment Creditors for wrongful
garnishment, tortious interference with contractual relations
and business expectancies, and abuse of process; and (3)
third-party claims against the Law Firm.[3] The underlying
facts alleged in Wyo Tech's answer, and in Wells
Fargo's complaint, are essentially identical:
On or
about October 18, 2017, the Law Firm caused a restraining
notice, purportedly issued pursuant to section 5222(b) of the
New York Civil Practice Law and Rules (“CPLR”),
to be served on Wells Fargo at its location at 1755 Broadway,
New York, New York 10019. (Counterclaim ¶ 7, Crossclaim
¶ 9; TPC ¶ 8.) The Law Firm was acting on behalf of
the Judgment Creditors. (Counterclaim ¶ 7, Crossclaim
¶ 9; TPC ¶ 8.)
The
restraining notice provided that the Judgment Creditors had
obtained a judgment in the amount of $7, 033, 491.13 against
Dennis M. Danzik and RDX Technologies Corporation (f/k/a
Ridgeline Energy Services, Inc.) and that the judgment and
accrued interest remained unpaid. (Counterclaim ¶ 8,
Crossclaim ¶ 10; TPC ¶ 9.) This judgment had been
obtained by the Judgment Creditors in GEM Holdco, LLC, et
al. v. CWT Canada II Limited Partnership, et al., Case
Index No. 650841/2013, in the Supreme Court of the State of
New York, County of New York (“the GEM Holdco
case”). (Counterclaim ¶ 12, Crossclaim ¶ 14;
TPC ¶ 13.) Wyo Tech was not a party to the GEM
Holdco case and was not named as a debtor in the
judgment. (Counterclaim ¶ 13; Crossclaim ¶ 15; TPC
¶ 14.)
The
restraining notice issued to Wells Fargo stated that
“it appears that you are in possession or in custody of
property in which the judgment debtor has an interest as well
as account(s) or any other property, tangible or intangible
or interest in any property in the name of the judgment
debtor, including, but not limited to, the account
reflected in the check in the attached Exhibit A, and any
other accounts held in the name of Wyo Tech Investment Group
LLC.” (Counterclaim ¶ 9; Crossclaim
¶ 11; TPC ¶ 10.) The referenced check was drawn on
a Wells Fargo account ending in -2809 in Wyo Tech's name.
(Counterclaim ¶ 9; Crossclaim ¶ 11; TPC ¶ 10.)
The restraining notice further stated that “you are
hereby forbidden to make or suffer any sale, assignment, or
transfer of, or any interference with any property in which
the judgment debtors have any interest, except upon direction
of the sheriff or pursuant to an order of the court until the
aforesaid judgment is satisfied or vacated.”
(Counterclaim ¶ 11; Crossclaim ¶ 13; TPC ¶
12.)
After
being served with the restraining notice, Wells Fargo
impounded all funds in the -2809 account. (Counterclaim
¶ 14; Crossclaim ¶ 16; TPC ¶ 15.)
On
October 24, 2017, Wyo Tech representatives called counsel for
Wells Fargo to point out that Wyo Tech was not listed as a
Judgment Debtor and that the money in the frozen account was
investor money in which the GEM Holdco case Judgment
Debtors had no right, title, or interest. (Counterclaim
¶¶ 15-16; Crossclaim ¶¶ 17-18; TPC
¶¶ 16-17.) The Wyo Tech representatives also
contacted the Law Firm that day with the same information and
asked the Judgment Creditors to withdraw the restraining
notice. (Crossclaim ¶ 19; TPC ¶ 18.)
On
November 2, 2017, Wyo Tech's counsel emailed a letter to
Wells Fargo's legal counsel, copying counsel for the
Judgment Creditors, again notifying them that the GEM
Holdco case Judgment Debtors had no interest in the
impounded funds. (Counterclaim ¶ 17; Crossclaim ¶
20; TPC ¶ 19.) This letter further asserted that the
restraining notice was without binding effect and requested
that Wells Fargo and the Judgment Creditors restore the
funds. (Counterclaim ¶ 17; Crossclaim ¶ 20; TPC
¶ 19.)
On
November 6, 2017, the Law Firm wrote a letter that disputed
Wyo Tech's position and asserted that Wyo Tech was liable
to the Judgment Creditors for the fraudulent transfers of
Dennis Danzik, one of the Judgment Debtors in the GEM
Holdco case. (Crossclaim ¶¶ 21-23; TPC
¶¶ 20-22.) The letter claimed that a number of
payments had been made from the -2809 account “to
Danzik, his family members, his company, or his
cronies.” (Crossclaim ¶ 23; TPC ¶ 22.)
In
response, Wyo Tech's counsel sent a letter on November 8,
2017, notifying the Judgment Creditors and their counsel that
Wyo Tech would seek “appropriate legal sanctions”
if Wyo Tech's rights to the account were not restored.
(Crossclaim ¶¶ 25-27; TPC ¶¶ 24-26.) The
Judgment Creditors did not respond to this letter and
continued to refuse to withdraw the restraining notice.
(Crossclaim ¶¶ 28, 30; TPC ¶¶ 27, 29.)
ANALYSIS
I.
Motion to Dismiss
The
Judgment Creditors and Law Firm (collectively, “the
movants”) have moved to dismiss all of the crossclaims
and third-party claims asserted against them by Wyo Tech.
(Doc. 48.) The movants argue that (1) all of Wyo Tech's
crossclaims and third-party claims should be dismissed under
Rule 12(b)(2) based on a lack of personal jurisdiction, (2)
Wyo Tech's third-party claims should be dismissed because
they are “procedurally deficient” under Rule
14(a), and (3) all of Wyo Tech's crossclaims and
third-party claims should be dismissed under Rule 12(b)(6)
for failure to state a claim. Id.
The
Court must begin by addressing personal jurisdiction. Indeed,
“a federal court generally may not rule on the merits
of a case without first determining that it has jurisdiction
over the category of claim in suit (subject-matter
jurisdiction) and the parties (personal jurisdiction).”
Sinochem Int'l Co. v. Malaysia Int'l Shipping
Corp., 549 U.S. 422, 430-31 (2007). “[T]he Supreme
Court has specifically instructed that a district court must
first determine whether it has jurisdiction before ...