Sussex et al v. Turnberry/MGM Grand Towers, LLC et al

MOTION to Lift Stay re Order, 63 Order,, Set/Reset Deadlines, MOTION TO LIFT STAY OF ARBITRATION

D. Nev.March 22, 2010

12 13 MORRIS PETERSON Steve Morris, No. 1543 Email: sm@morrislawgroup.com Akke Levin, No. 9102 Email: al@morrislawgroup.com Jean-Paul Hendricks, No. 10079 Email: jph@morrislawgroup.com 900 Bank of America Plaza 300 South Fourth Street Las Vegas, Nevada 89101 Telephone: (702) 474-9400 Facsimile: (702) 474-9422 WOOD, SMITH, HENNING & BERMAN LLP Jason C. Gless, No. 8469 Email: jgless@wshblaw.com 7670 West Lake Mead Boulevard, Suite 250 Las Vegas, Nevada 89128 Telephone: (702) 222-0625 Facsimile: (702) 253-6225 Attorneys for Defendants MARY ANN SUSSEX; MITCHELL PAE; MALCOLM NICHOLL and SANDY SCALISE; ERNESTO VALDEZ, SR. and ERNESTO VALDEZ, JR; JOHN HANSON and ELIZABETH HANSON, Plaintiffs, TURNBERRY/MGM GRAND TOWERS, LLC, a Nevada LLC; MGM GRAND CONDOMINIUMS LLC, a Nevada LLC; THE SIGNATURE CONDOMINIUMS, LLC, a Nevada LLC; MGM MIRAGE, a Delaware Corporation; TURNBERRY/ HARMON AVE., LLC, a Nevada LLC; and TURNBERRY WEST REALTY, INC., a Nevada Corporation, NOTICE OF WITHDRAWAL OF MOTION TO DETERMINE WHETHER NON-PARTIES ARE REQUIRED TO APPEAR IN ARBITRATION (# 60) AND REQUEST TO LIFT STAY OF ARBITRATION 1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA Case No. 2:08-cv-00773-RLH-PAL v. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORRIS PETERSON ATTORNEYS AT LAW 100 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 ) ) ) ) ) ) ) Defendants. Case 2:08-cv-00773-MMD-PAL Document 66 Filed 03/22/10 Page 1 of 7 1 The defendants hereby withdraw their motion for determination of 2 non-arbitrability of claims against non-signatory defendants (# 60) and request 3 that the Court lift the stay imposed in arbitration and allow this case to proceed 4 before an arbitrator to disposition. 5 I. INTRODUCTION 6 The defendants who are not parties to the arbitration agreement 7 withdraw their motion for determination of non-arbitrability without prejudice to 8 or waiver of their rights to assert all defenses to plaintiffs’ complaint in 9 arbitration, including that the plaintiffs have not stated a viable claim against 10 them. All of the defendants believe that the stay ordered by the Court and the 90- 11 day period for discovery on whether non-signatories must appear in arbitration 12 will occasion great expense and disputes over the nature and scope of the 13 discovery on whether non-parties to the arbitration agreement must go along to 14 arbitration with defendant-signatory Turnberry/MGM Grand Towers LLC. 15 Discovery on arbitrability will also occasion a duplication of discovery in 16 arbitration, because the Court has already ruled that one other non-signatory 17 defendant Turnberry/Harmon Aye, LLC - must defend against the same 18 allegations that plaintiffs have made against the other non-signatories that file this 19 Notice of Withdrawal and Request to Lift Stay. 20 Unrestricted discovery into the relationships between 21 Turnberry/MGM Grand Towers and these four non-signatory defendants on 22 allegations which, as the Court correctly pointed out, are “generally conclusory,” 23 seems to be contrary to the Supreme Court’s recent holdings in Bell Ati. Corp. v. 24 Twombly, 550 U.S. 544, 555 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009), 25 in which conclusory allegations were deemed insufficient to warrant further 26 expenditure of the parties’ and the courts’ resources to continue litigating claims 27 for which, as here in respect to the non-parties, no facts have been alleged to 28 MORRIS FETERSO\ ATtORNEYS AT LAW O0 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 66 Filed 03/22/10 Page 2 of 7 1 support the conclusory claims. Nevertheless, discovery and the adjudication of 2 claims in this case are for the arbitrator to deal with. 3 Support for this request to lift the stay is found in state court: It has 4 been two years since Clark County District Judge Denton ordered the KJH 5 plaintiffs to arbitration, which, due to resistance by the plaintiffs to an arbitral 6 forum, has yet to get underway. This case, Sussex, engineered by the KJH lawyers, 7 has been pending in this Court since June 13, 2008. See Notice of Removal (# 1).1 8 The Court granted the motion to compel arbitration in this case last year, on 9 June 16, 2009. See Order (# 59). The Court should permit the defendants to move 10 this case to arbitration by lifting the stay so that this dispute may proceed to 11 conclusion in arbitration for resolution of all claims, as contemplated by the 12 Federal Arbitration Act, and as agreed to by the plaintiffs when they entered into 13 their purchase contract with Turnberry/MGM Grand Towers. 14 II. GROUNDS FOR WITHDRAWAL AND REQUEST TO LIFT STAY 15 Discovery on the Arbitrability of Plaintiffs’ Claims Against Four Non- Signatory Defendants Further Delays the Arbitration Proceeding and 16 Threatens to Infringe on the Merits of the Dispute. 17 ‘The unmistakably clear congressional purpose [in enacting the 18 Federal Arbitration Act is] that the arbitration procedure, when selected by the 19 parties to a contract, be speedy and not subject to delay and obstruction in the 20 courts.” Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967). 21 “[P]ermitting discovery on. . . the district court level and arbitration level []is a 22 great waste of resources and frustrates the basic purpose of the Arbitration Act 23 . . . “Hires Parts Serv., Inc. v. NCR Corp., 859 F. Supp. 349, 355 (N.D. md. 1994). In 24 determining to what extent discovery is necessary to determine arbitrability, these 25 26 27 1 The KJH action has been pending in state court for almost two and a half 28 years. MORRIS PETERSON ArFORNEYS AT LAW 100 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 66 Filed 03/22/10 Page 3 of 7 1 goals of arbitration should be considered. O.N. Equity Sales Co. v. Emmertz, 526 F. 2 Supp. 2d 523, 528 (E.D. Pa. 2007). 3 Discovery on issues of arbitrability may not encroach on the merits of 4 the dispute to be arbitrated. AT&T Techs., Inc. v. Commc’ns. Workers, 475 U.S. 643, 5 647 (1986). If the question of whether plaintiffs’ claims against non-signatories are 6 arbitrable is bound up with the merits of the dispute, as it seems to be here, it may 7 be inappropriate for the Court to decide the issue. See AXA Equitable Life Ins. Co. 8 v. Infinity Fin. Group, LLC, 608 F. Supp. 2d 1330, 1342-43 (S.D. Fla. 2009) 9 (recommending denial of plaintiff’s request for discovery where it appeared to 10 bear more on the merits of the litigation than on issues of arbitrability). In any 11 event, rather than litigate for several months over whether there is a basis to send 12 the non-signatories to arbitration to deal with plaintiffs’ claims, they withdraw 13 their motion and will deal with the claims before the arbitrator. 14 Here, the Court ordered that all non-signatory defendants, except for 15 Turnberry/Harmon Ave., LLC, participate in discovery in this Court to determine 16 whether they may be compelled to arbitrate based on agency or veil- 17 piercing/alter ego principles. Order (# 64). Discovery under these criteria will be 18 time consuming and expensive because the plaintiffs have not pleaded any factual 19 circumstances that would focus the discovery. For example, they have not 20 identified conduct and linked such conduct to specific officers or defendants of 21 the non-parties. Instead, they speculate that “[t]he commission of this fraud and 22 illegal sales of the Securities could not have occurred without the clear and precise 23 directions from the Defendants MGM Mirage and Turnberry/Harmon Ave., LLC 24 . . .“ Compi. (# 14) ¶ 21 (emphasis added). If this were an allegation in a case in 25 which jurisdiction lay in this Court to decide the merits, the claim/allegation 26 would be dismissed under Twombly and Iqbal, supra. 27 In Twombly, the United States Supreme Court acknowledged the 28 enormous financial burden to a defendant who has to engage in discovery based MORRIS PETERSON ATTORNEYS AT LAW OO BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET 4LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 66 Filed 03/22/10 Page 4 of 7 1 on a putative class action complaint that contains only ‘labels and conclusions” 2 without factual allegations and declined to endorse it. Bell Atl. Corp. v. Tzvombly, 3 550 U.S. 544, 555, 558-59 (2007). Building on that foundation, the Supreme Court 4 went on to declare last year that “Rule 8. .. does not unlock the doors of 5 discovery for a plaintiff armed with nothing more than conclusions.” Ashcroft v. 6 Iqbal, 129 S. Ct. 1937, 1949 (2009). If the plaintiffs have any claim against non- 7 parties, they have not made a case for discovery outside of arbitration to support 8 it. See ACE Am. Ins. Co. v. Huntsman Corp., 255 F.R.D. 179, 194 (S.D. Tex. 2008) 9 (considering whether non-signatory was bound to arbitration agreement based on 10 agency and alter ego, and holding that ‘the conclusory statement” that one party 11 was the agent for the other was insufficient “to survive a motion to dismiss”).2 12 Based on the all-inclusive but fact-deficient allegations in the 13 complaint with respect to the non-parties, there is a clear risk that in allowing 14 discovery on arbitrability against them, the Court will intrude on the merits of the 15 principal dispute. In any event, however, discovery on arbitrability while 16 arbitration is stayed multiplies the proceedings and will occasion great expense. 17 This time and money would be better devoted to arbitration, where the plaintiffs 18 are, by contract, required to prove their claims against all parties, whether each is 19 a signatory to the Purchase and Sale Agreement in issue or not. 20 For these reasons, the defendants withdraw their pending motion 21 and request the Court to lift the stay imposed on March 2 so that arbitration may 22 proceed. The non-parties will defend there against what they believe are 23 24 2 There is a question whether defendants MGM Mira e and The Si nature Condominiums, LLC are even subject to the Court’s jurisdiction. They were not 26 served with a copy of the summons and the amended federal class action complaint. They are not parties to this action simply because they were named in the amended complaint. Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir. 28 1982. MORRIS PETERSON ATTORNEYS AT LAW )OO BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 80101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 66 Filed 03/22/10 Page 5 of 7 1 insubstantial/opportunistic claims made by the plaintiffs to avoid or delay the 2 arbitration of their claims. 3 4 MORRIS PET ON 7 Steve Morris, No. 1543 Akke Levin, No. 9102 8 Jean-Paul Hendricks, No. 10079 900 Bank of America Plaza 9 300 South Fourth Street Las Vegas, Nevada 89101 10 11 WOOD, SMITH, HENNING & BERMAN LLP Jason C. Gless, No. 8469 12 7670 West Lake Mead Blvd., Suite 250 Las Vegas, Nevada 89128 13 Attorneys for Defendants 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORRIS PETERSON ATTORNEYS AT LAW 100 BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA 89101 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 66 Filed 03/22/10 Page 6 of 7 1 CERTIFICATE OF SERVICE 2 Pursuant to Fed. R. Civ. P. 5(b) and Section IV of District of Nevada 3 Electronic Filing Procedures, I certify that I am an employee of MORRIS 4 PETERSON, and that the following documents were served via electronic service: 5 NOTICE OF WITHDRAWAL OF MOTION TO DETERMINE WHETHER 6 NON-PARTIES ARE REQUIRED TO APPEAR IN ARBITRATION (# 60) 7 AND REQUEST TO LIFT STAY OF ARBITRATION 8T0: 9 Robert B. Gerard Ricardo R. Ehmann 10 Gerard & Associates 2840 So. Jones Blvd. - Bldg. D, Suite 4 Las Vegas, Nevada 89146 12 rgerard@gerard1aw.com rehmann@gerardlaw.com 13 Robert Felimeth 14 University of San Diego Law School 5998 Alcala Park 15 San Diego, California 92110 cpil@sandiego.edu 16 17 Norman BlumenthalBlumenthal & Nordrehaug 18 2255 Calle Clara La Jolla, California 92037 19 norm@bamlawlj.com 20 Burton Wiand Wiand Guerra King 21 3000 Bayport Drive - Suite 600 Tampa, Florida 33607 22 bwiand@wiandlaw.com Attorneys for Plaintiff 24 DATED this day of 2010. :: ___________ 27 28 MORRIS PETERSON ATTORNEYS AT LAW )OO BANK OF AMERICA PLAZA 300 SOUTH FOURTH STREET LAS VEGAS, NEVADA BE1O1 702/474-9400 FAX 702/474-9422 Case 2:08-cv-00773-MMD-PAL Document 66 Filed 03/22/10 Page 7 of 7