Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-02243/USCOURTS-azd-2_10-cv-02243-2/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 28:1441 - Petition for Removal: Securities Fraud

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Kingsley Capital Management, LLC, and 

Bruce Paine Kingsley MD IRA Rollover, 

Plaintiffs, 

vs. 

Brian Nelson Sly, a married man; Brian Sly 

and Company, Inc., a California corporation 

and successor to Brian Sly and Company, a 

sole proprietorship; Wilbur Anthony Huff, 

an individual; Charles J. Antonucci, Sr., an 

individual; Thomas J. Bean, an individual; 

Thomas Cunningham and Jane Doe 

Cunningham, husband and wife, 

Defendants.

No. CV 10-02243-PHX-NVW

ORDER 

Before the Court is “Plaintiffs’ Motion to Strike Untimely Notices of Nonparty at 

Fault” (Doc. 173). For the reasons stated below, the motion will be granted. 

I. BACKGROUND 

On August 1 and August 2, respectively, Defendants Cunningham and Sly filed 

notices of non-parties at fault, as generally permitted by A.R.S. § 12-2506(B). Both 

Cunningham’s notice and Sly’s notice named Bruce Kingsley (Plaintiff Kingsley Capital 

Management’s principal, and Plaintiff Bruce Paine Kingsley MD IRA Rollover’s 

trustee); and Paul Conant, one of Plaintiffs’ attorneys here who supposedly advised 

Kingsley about various issues relating to his investment. 

Sly also names several other potential non-parties at fault. He accuses Kingsley’s 

wife, Jane Kingsley, of advising and participating in the investment decisions; and 

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another attorney (who has not appeared here), Rand Haddock, who likewise allegedly 

advised Kingsley and participated in Kingsley’s decision to enter into the investment. In 

addition, Sly names six former directors of the Park Avenue Bank whom Kingsley has 

sued in a separate lawsuit to recover his losses under indirect and control person liability 

theories. Finally, Sly has named River Falls Financial Services, LLC and River Falls 

Investments, LLC, which he accuses of failing to compensate Kingsley as provided for 

by contract. 

II. ANALYSIS 

Kingsley has moved to strike Cunningham’s and Sly’s notices as untimely. 

Kingsley argues that defendants had an obligation to file their notices within 150 days of 

answering the complaint, making Cunningham’s notice 110 days late and Sly’s notice 41 

days late. Neither Sly nor Cunningham dispute Kingsley’s calculations, but they 

challenge whether they were obligated to act within 150 days of answering. They 

alternatively move for leave to file late. 

Under Arizona law, 

[i]n assessing percentages of fault the trier of fact shall 

consider the fault of all persons who contributed to the 

alleged injury, death or damage to property, regardless of 

whether the person was, or could have been, named as a party 

to the suit. Negligence or fault of a nonparty may be 

considered . . . if the defending party gives notice before trial, 

in accordance with requirements established by court rule, 

that a nonparty was wholly or partially at fault. 

A.R.S. § 12-2506(B). The “requirements established by court rule” can be found at 

Arizona Rule of Civil Procedure 26(b)(5), which establishes that a notice of non-parties 

at fault must be filed within 150 days of answering. If the defendant fails to timely file, 

“the trier of fact shall not be permitted to allocate or apportion any percentage of fault to 

any nonparty . . . except . . . upon motion establishing good cause, reasonable diligence, 

and lack of unfair prejudice to other parties.” 

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Sly and Cunningham argue that this Arizona rule does not apply in federal court. 

Although Arizona Rule 26(b)(5) does not apply of its own force, this Court has held that 

it should nonetheless be applied to prevent forum shopping and potential inequity. 

Wester v. Crown Controls Corp., 974 F. Supp. 1284, 1286–87 (D. Ariz. 1996). Further, 

if the Arizona rule does not apply, there is no deadline for filing a notice of non-party at 

fault — an unacceptable circumstance given the effect that such notices have on 

discovery. Accordingly, Sly and Cunningham had an obligation to file notices of 

nonparties at fault within 150 days of answering the complaint, just as they would if this 

case had remained in state court. Neither disputes that he missed this deadline. 

Therefore, their notices must be stricken unless they can establish “good cause, 

reasonable diligence, and lack of unfair prejudice to other parties.” 

Defendants have not met this standard. Their only argument for good cause is 

simply to further the policies of the comparative fault statute — but those policies depend 

on timely notice. As for reasonable diligence, the only non-parties defendants had not 

known about long before expiration of their filing deadline are the Park Avenue Bank 

directors named in Sly’s notice. Sly learned of these non-parties in March but still waited 

until August to file a notice. Thus, neither Sly nor Cunningham has demonstrated 

reasonable diligence. Finally, Kingsley would be prejudiced by excusing these notices’ 

untimeliness. Discovery is already underway, and these notices would significantly 

expand it. They also raise complicated questions about the extent of non-party liability, 

which would certainly require additional litigation. For example, naming Kingsley 

personally evades the law of director liability and veil-piercing — Plaintiffs made no 

decisions except through Kingsley, and therefore any fault allocable to Kingsley is 

necessarily the fault of Plaintiffs. Naming Kingsley’s lawyers is potentially abusive, as it 

creates a weapon one could wield in many cases simply to create a conflict with the 

client. These factors weigh strongly against late attempts to further expand and delay this 

case. Defendants’ untimely filing will not be excused. 

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IT IS THEREFORE ORDERED that is “Plaintiffs’ Motion to Strike Untimely 

Notices of Nonparty at Fault” (Doc. 173) is GRANTED. 

IT IS FURTHER ORDERED that Defendant Sly’s and Defendant Cunningham’s 

motions to excuse their untimely filing are DENIED. 

IT IS FURTHER ORDERED that “Thomas Cunningham’s Notice of Non-Parties 

at Fault” (Doc. 170) and “Notice of Non-Parties at Fault by Defendants Brian Sly, Brian 

Sly and Company and Brian Sly and Company, Inc.” (Doc. 171) are STRICKEN. 

Dated this 20th day of August, 2012. 

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