Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01269/USCOURTS-azd-2_10-cv-01269-4/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 9:9 Motion to Confirm Arbitration Loan

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

UV2, LLC, a Michigan limited liability

company, as successor interest to UV2, 

Plaintiff/Judgment Creditor, 

vs.

EMC TELECOM CORPORATION, an

Arizona corporation, now known as

EMCT ACQUISITIONS, INC., 

Defendant/Judgment Debtor.

DIGITAL VENTURES, LLC, an Arizona

Limited Liability Company,

Garnishee/Judgment Debtor. _________________________________

WMM HOLDINGS, LLC, a Nevada

limited liability company,

Garnishee.

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No. CV 10-01269-PHX-ROS

REPORT AND RECOMMENDATION

TO THE HONORABLE ROSLYN O. SILVER, CHIEF JUDGE, UNITED STATES

DISTRICT COURT:

This matter arises on Plaintiff/Judgment-Creditor UV2, LLC’s (“Plaintiff”)

Application for Writ of Garnishment against Garnishee WMM Holdings, LLC (“Garnishee”),

filed on December 19, 2012. (Doc. 53.) Defendant/Judgment Debtor Garnishee Digital

Ventures, LLC (“Digital Ventures”) was previously ordered to pay restitution to Plaintiff in

the amount of $602,735.00, as principal, with interest accruing at the rate of 0.18% per

annum from December 12, 2012. (Doc. 49.) Plaintiff sought the Writ because of its belief

Case 2:10-cv-01269-ROS Document 94 Filed 05/21/13 Page 1 of 4
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that Garnishee is in possession of property in which Digital Ventures has a nonexempt

interest. On January 9, 2013, Garnishee filed its Answer admitting it owed the Digital

Ventures $643.18. (Doc. 64.) On January 17, 2013, Plaintiff filed an Objection and Request

for Hearing Regarding Garnishee WMM Holdings, LLC’s Answer, averring therein that

good cause exists to believe that Garnishee does in fact have additional money belonging to

Digital Ventures, and that, based upon discovery provided in ongoing litigation in state court

involving the parties, there is “substantial evidence showing that Garnishee has significant

financial obligations to [Digital Ventures].” (Doc. 67.) 

This Court, pursuant to A.R.S. §12-1580, scheduled a telephonic Conference between

Plaintiff and Garnishee on February 6, 2013. (Doc. 73.) During the telephonic conference,

Plaintiff waived its right to a hearing on its objection. Plaintiff was directed to file a

Memorandum in support of its objection by February 20, 2013, and Garnishee was directed

that any responsive pleading must be filed by March 6, 2013. On February 20, 2013,

Plaintiff filed a Memorandum in Support of Plaintiff’s/Judgment-Creditor’s Objection to

Garnishee WMM Holdings, LLC’s Answer. (Doc. 82.) Garnishee has not filed a response.

Plaintiff argues that Garnishee is indebted to Digital Ventures by virtue of a 3-year

Non-Exclusive Digital Distribution Agreement (“the Agreement”) entered into between

Garnishee and Double D Holdings, LLC (“Double D Holdings”) on July 8, 2010. (Doc. 82,

at 11-21.) Pursuant to the agreement, Garnishee had agreed to distribute and promote certain

motion pictures, video titles, still photographs and other audio and visual content produced

by Double D Holdings, and agreed to pay license fees, according to an incorporated

schedule, by the 15th of each month. The agreement was signed by Double D Holdings

Partners Scott Delong and Dennis Ashe and Garnishee president Scott Coffman. Plaintiff

argues that Digital Ventures transferred its assets to Double D Holdings just prior to the

effective date of the Agreement, and that this transfer was an attempt to avoid liability to

Plaintiff on a judgment Plaintiff was seeing against Digital Ventures in a state court matter.

Plaintiff asserts that this is a fraudulent transfer pursuant to the Uniform Fraudulent Transfer

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Act, A.R.S. §44-1007(a)(1), and that therefore Plaintiff is entitled to garnishment against Garnishee.

In support of its claim, Plaintiff produces copies of a court minute entry in UV2, LLC

v. Digital Ventures LLC, et al., Maricopa County Superior Court CV 2009-054788,

reflecting that on July 2, 2010, the court granted Plaintiff’s motion for summary judgment

on count IV of Plaintiff’s complaint, and entered judgment against Digital Ventures in the

amount of $36,665.27. (Doc. 82, at 34-37.) This claim pertained to a line of credit

agreement between Plaintiff and Digital Ventures. (Doc. 82, at 3.) Plaintiff also produces

an email Plaintiff sent to Garnishee on July 8, 2010, the same day the Agreement was signed,

informing Garnishee of the court’s ruling. (Doc. 82, at 25.) The same day, Garnishee sent

an email to Digital Ventures confirming the Agreement and notifying Messrs DeLong and

Ashe of Double D Holdings that a new account would be opened up for Double D Holdings

and that movies would be transferred from Digital Ventures’s account into the Double D

Holdings account. (Doc. 82, at 9.) On July 13, 2010, counsel for Garnishee contacted Mr.

Ashe to inform him that a third party (Plaintiff) had contacted him and made a claim to the

proceeds that were being transferred from Digital Ventures to Double D Holdings. (Doc. 82,

at 3, 44.)

Plaintiff also asserts that the Agreement merely replaced the prior nearly identical

agreement between Digital Ventures and Garnishee that had been in place since 2002, with

the only change being the substitution of Double D Holdings for Digital Ventures. (Doc. 82,

at 2.) By the time the summary judgment ruling had become a final order, Plaintiff claims

that Garnishee had assisted Digital Ventures in successfully transferring the account out of

Digital Ventures’s name and delaying Plaintiff’s collection efforts. (Doc. 82, at 3.) Plaintiff

paints a clear picture that Garnishee’s previous financial obligation to Digital Ventures was

simply transferred to Double D Holdings by virtue of the Agreement, but that the nature of

services provided by Garnishee was not altered.

Despite having an opportunity to respond to Plaintiff’s Memorandum, Garnishee did

not file a response. The Court finds that the uncontroverted documents provided by Plaintiff

are sufficient to support their assertions as set forth in their Memorandum in Support of

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Plaintiff’s/Judgment-Creditor’s Objection to Garnishee WMM Holdings, LLC’s Answer, that

Garnishee is in possession of money or property belonging to Digital Ventures. As such, the

Court will recommend the granting of the Writ. See also LRCiv 7.2(I) (if a party files a

motion, and the opposing party “does not serve and file the required answering memoranda,

... such non-compliance may be deemed a consent).

In accordance with the foregoing,

IT IS HEREBY RECOMMENDED that Plaintiff’s Objection to Garnishee WMM

Holdings, LLC’s Answer, (Doc. 67), be SUSTAINED, and judgment be entered against

Garnishee WMM Holdings, LLC..

IT IS FURTHER RECOMMENDED that the Court order Plaintiff to submit a

proposed form of judgment within 30-days of the Court’s final order.

This recommendation is not an order that is immediately appealable to the Ninth

Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of

Appellate Procedure, should not be filed until entry of the District Court’s judgment. The

parties shall have fourteen (14) days from the date of service of a copy of this

recommendation within which to file specific written objections with the Court. See 28

U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(b) and 72. Thereafter, the parties have fourteen (14)

days within which to file a response to the objections. Failure to timely file objections to the

Magistrate Judge’s Report and Recommendation may result in the acceptance of the Report

and Recommendation by the district court without further review. See United States v.

Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003). Failure to timely file objections to any

factual determinations of the Magistrate Judge will be considered a waiver of a party’s right

to appellate review of the findings of fact in an order of judgment entered pursuant to the

Magistrate Judge’s recommendation. See Fed.R.Civ.P. 72.

DATED this 20th day of May, 2013.

Case 2:10-cv-01269-ROS Document 94 Filed 05/21/13 Page 4 of 4