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Rohan Management, Inc. v. Jantzen

Court of Appeals of Arizona, First Division

January 22, 2019

ROHAN MANAGEMENT, INC., an Arizona corporation; ROHAN MANAGEMENT, INC. DEFINED PENSION PLAN; ROHAN MANAGEMENT, INC. 401 (K) PLAN; PISHIT PATEL and JINTY PENG, husband and wife, Petitioners,
v.
THE HONORABLE LEE JANTZEN, Judge of the SUPERIOR COURT OF THE STATE OF ARIZONA, in and for the County of MOHAVE, Respondent Judge, NILAY S. PATEL, an individual; MAYANK S. PATEL, an individual, Real Parties in Interest.

          Petition for Special Action from the Superior Court in Mohave County No. S8015CV201801018 The Honorable Lee Frank Jantzen, Judge

          Quarles & Brady LLP, Phoenix By John A. Harris, Brian Sirower, Michael S. Catlett, Benjamin C. Nielsen Counsel for Petitioners

          Clark Hill PLC, Scottsdale By Darrell E. Davis, Sean M. Carroll, Ryan J. Lorenz Counsel for Real Parties in Interest

          Presiding Judge Jennifer B. Campbell delivered the opinion of the Court, in which Judge Paul J. McMurdie and Judge Kent E. Cattani joined.

          OPINION

          CAMPBELL, JUDGE

         ¶1 The question addressed in this special action is whether Arizona Revised Statutes ("A.R.S.") section 29-785(A) mandates that an action for the involuntary judicial dissolution of a limited liability company be brought in the county in which the LLC's known place of business is located. We accept special-action jurisdiction and grant relief, holding that the statute does not limit venue to the county which contains an LLCs known place of business.

         BACKGROUND

         ¶2 This case arises from a conflict over various business and financial matters among a group of siblings and their families involving jointly owned and managed companies and properties. Pishit Patel ("Petitioner") filed suit against members of his family, including Nilay Patel and Mayank Patel ("Respondents"), and various other entities in the Maricopa County Superior Court. In his second amended complaint, Petitioner alleged, in relevant part, that Respondents misused operating funds from Sammy's Island, LLC-a business he formed to operate a mobile home and RV park. Petitioner's complaint asked the court to determine the ownership interests of Sammy's Island and to appoint a receiver, and included claims for an accounting, breach of contract, fraudulent nondisclosure, breach of fiduciary duty, civil conspiracy, conversion, civil racketeering, and unjust enrichment.

         ¶3 Respondents denied all of Petitioner's claims and filed counterclaims. They alleged that, together, they owned 50 percent of the membership interests in Sammy's Island, while Petitioner effectively owned the other 50 percent. Respondents' counterclaims included breach of contract, conversion, defamation, false light, breach of fiduciary duty, and breach of the duty of good faith and fair dealing.

         ¶4The same day Respondents filed their answer and counterclaims in Maricopa County, they also filed a complaint against Petitioner in the Mohave County Superior Court. Their complaint included claims for breach of contract, accounting, conversion and aiding and abetting, injunctive and declaratory relief, and for the judicial dissolution of Sammy's Island under A.R.S. § 29-785, again alleging that Respondents together had a 50 percent ownership interest in Sammy's Island and that Petitioner's actions had made it impossible to continue operating the company.

         ¶5Petitioner filed a motion for abatement in Mohave County, arguing that substantially identical claims were already pending in Maricopa County. In their response, Respondents argued that pursuant to A.R.S. § 29-785, Mohave County was the "exclusive" forum with "subject matter jurisdiction" to resolve the judicial dissolution and related claims. The Mohave County Superior Court denied Petitioner's motion for abatement, ruling that the statute does not allow for "concurrent jurisdiction [between counties] in the dissolution claim." Petitioner then filed a petition for special action with this court.

         ¶6After the petition for special action, response, and reply were filed, Respondents filed a notice to supplement the record to inform this court they were voluntarily dismissing their counterclaims relating to Sammy's Island in the Maricopa County action. They argued this voluntary dismissal of certain claims meant there were "no longer any claims related to Sammy's Island . . . remaining in the Maricopa County [a]ction," rendering moot the issue before us.

         DISCUSSION

         ¶7 Petitioner argues the Mohave County Superior Court erred by ruling that A.R.S. ยง 29-785(A) does not allow for "concurrent jurisdiction in the judicial dissolution claim." The Mohave County Superior Court ruled that regardless of whether the Mohave claims were sufficiently identical to the Maricopa claims to warrant abatement, the statute does not permit the judicial dissolution claim to ...


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