United States District Court, D. Arizona
ORDER
HONORABLE ROSLYN U.SILVER, SENIOR UNITED STATES DISTRICT
JUDGE.
Plaintiffs
Terry Dishon and Luci Dishon, husband and wife, filed suit
against Defendants Connie Gorham and Gary Haak, alleging
breach of contract and requesting declaratory judgment. (Doc.
6.) On June 4, 2019, the Court conducted a bench trial.
During the trial, Defendants declined to offer any evidence
for admission.[1] (Doc. 156 at 131–32.) Pursuant to
Federal Rule of Civil Procedure 52, the Court makes the
following findings of fact and conclusions of law.
FINDINGS
OF FACT
Plaintiffs
Terry Dishon and Luci Dishon met David Gorham, the late
husband of Defendant Connie Gorham, in October 2011. (Doc.
156 at 55.) At that time, Terry Dishon was the owner of
Dishon Disposal, Inc., an oil field services company in North
Dakota. (Doc. 156 at 54.) David Gorham offered to provide
business consulting services to Dishon Disposal. (Doc. 156 at
55.)
David
Gorham and Scott Hepford owned MCI Partners, which provided
business consulting, management, planning, and strategy
services to Dishon Disposal. (Doc. 156 at 56.) The Dishons
have never been owners, members, officers, or employees of
MCI Partners. (Doc. 156 at 56.) In May 2012, Gary Haak began
work for MCI Partners. (Doc. 156 at 60.) Haak did not work
for Dishon Disposal, the Dishons, or any company owned by the
Dishons. (Doc. 156 at 61.) The Dishons never made any
promises to Haak for the services that he provided to Dishon
Diposal through MCI Partners; nor did Dishon Disposal agree
to pay Haak for his work through MCI Partners. (Doc. 156 at
61.)
In
November 2012, Dishon Disposal was acquired by Digerati
Technologies, Inc., through a series of transactions and
reverse merger that the parties call the “November
Transactions.” (Doc. 156 at 61–62.) Shortly
thereafter, litigation relating to the November Transactions
ensued between David Gorham and other parties, but the
Dishons were not named as parties in any of the litigation.
(Doc. 165 at 68.) In May 2013, Digerati Technologies filed
for Chapter 11 Bankruptcy in the United States Bankruptcy
Court for the Southern District of Texas. (Ex. 2.) Pursuant
to the bankruptcy, two settlement agreements were executed:
the Rule 11 Mediated Settlement Agreement and the Bankruptcy
Settlement Agreement (collectively, the “Settlement
Agreements”). (Exs. 1; 2.) The Dishons, David Gorham,
Connie Gorham, MCI Partners, and multiple other parties were
signatories to the Settlement Agreements, which provided that
all parties “mutually release, acquit and forever
discharge . . . any and all claims, causes of action,
demands, of any character or kind, known or unknown, whether
in contract or in tort, relating to the Lawsuits . . . or any
theory of law concerning the facts giving rise to the
allegations brought forth in any of the Lawsuits or that
could have been brought forth related to any of the Lawsuits
through the date of this Settlement Agreement.” (Exs. 1
at 21.)
After
David Gorham passed away in 2015, Defendant Connie Gorham,
through her attorney, demanded that the Dishons pay $1.5
million “for the water treatment system and payment for
consultation and services rendered by Mr. Gorham.” (Ex.
4.) In addition, Defendant Haak also asserted claims and made
demands to the Dishons for payments relating to his
employment at MCI Partners and the November Transactions.
(Exs. 14; 17; 18; 21; 45; 46; 48; 49.) In a related lawsuit
also before this Court, Haak sued the Dishons for breach of
contract in connection with Haak’s work related to the
November Transactions. See Haak v. Dishon,
17-cv-03576-ROS (the “Related Lawsuit”).
CONCLUSIONS
OF LAW
Defendants
breached the Settlement Agreements by making demands for
payments and asserting claims related to the November
Transactions. (Doc. 6.) The Settlement Agreements explicitly
provided that all claims related to the November Transactions
and work provided by MCI Partners were released. (Ex. 1; 2.)
Defendant Gorham was a signatory to the Settlement Agreements
and Defendant Haak, as a former employee of MCI Partners, was
also a party to the Settlement Agreements. Accordingly,
Defendants are liable for breach of contract.
In
their Proposed Findings of Fact and Conclusions of Law,
Plaintiffs argue they are titled to $339, 166.57 in damages,
which represents “the amount of reasonable and
necessary attorney’s fees and costs incurred by
Plaintiffs in connection with Defendants’ improper
claims and demands.” (Doc. 153 at 6.) However,
Plaintiffs cite no law and offer no explanation for their
damages theory. The Court notes that under the
“American Rule, ” courts generally prohibit the
recovery of attorney’s fees as damages. Seattle
Times Co. v. Seattle Mailer’s Union Non. 32, 664
F.2d 1366, 1370 (9th Cir. 1982). As such, Plaintiffs shall
file a brief explaining why they are entitled to
attorney’s fees and citing relevant law supporting
their theory.
Finally,
Plaintiffs argue that the Related Lawsuit should be dismissed
because the claims in the Related Lawsuit are compulsory
counterclaims in this lawsuit. Plaintiffs are correct.
“A pleading shall state as a [compulsory] counterclaim
any claim which at the time of serving the pleading the
pleader has against any opposing party, if it arises out of
the transaction or occurrence that is the subject matter of
the opposing party's claim[.]” Pochiro v.
Prudential Ins. Co. of America, 827 F.2d 1246, 1249 (9th
Cir. 1987) (citations omitted). Whether two claims arise out
of the same “transaction or occurrence” depends
on whether "the essential facts of the various claims
are so logically connected that considerations of judicial
economy and fairness dictate that all the issues be resolved
in one lawsuit." Id. Haak's claims in the
Related Lawsuit involve his alleged consulting work for the
Dishons' business-the very subject of the present
lawsuit. Haak alleges he was hired by the Dishons to work for
MCI Partners and was also promised payment in exchange for
his work related to the November Transactions. (Haak v.
Dishon, 17-cv-03576-ROS, Doc. 56.) Haak did not assert
these claims in the present suit as compulsory counterclaims,
and is not allowed to assert them in a separate lawsuit.
Accordingly,
IT IS ORDERED no later than October 3, 2019,
Plaintiffs shall file a brief explaining their damages theory
and citing law supporting the theory. Defendants shall
respond no later than October 17, 2019.
IT
IS FURTHER ORDERED the Related Lawsuit, Haak v.
Dishon, 17-cv-03576-ROS, ...