Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-01475/USCOURTS-azd-2_13-cv-01475-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Wells Fargo Bank NA, 

Plaintiff, 

v. 

Breakwater Equity Partners LLC, et al., 

Defendants.

No. CV-13-01475-PHX-DGC

ORDER 

 Cross-Defendant Breakwater Equity Partners, LLC has filed a motion to dismiss 

(Doc. 125) Cross-Claimants Richard Gee and Maxwell Drever’s cross-claim (Doc. 104). 

Cross-Defendant also moves to realign Cross-Claimants. Doc. 125. For the reasons set 

forth below, the Court will deny each motion.1

 

 Since filing this motion, Cross-Defendant and Cross-Claimants have stipulated to 

dismiss the cross-claim without prejudice (Doc.135) and the Court has granted the 

stipulation (Doc. 136). The Court will deny the motion to dismiss as moot. 

 Cross-Defendant argues that Cross-Claimants have aligned themselves with 

Plaintiff in opposition to all remaining Defendants. Doc. 125 at 4. Accordingly, CrossDefendant asks the Court to “look beyond the pleadings, and [realign] the parties 

according to their sides in the dispute.” City of Indianapolis v. Chase Nat’l Bank of N.Y., 

314 U.S. 63, 69 (1941) (internal quotes omitted). Realignment would defeat diversity 

jurisdiction in this case. 

 

1

 The request for oral argument is denied because the issues have been sufficiently briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b); 

Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 

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 Courts are to realign parties “whose interests coincide respecting the ‘primary 

matter in dispute.’” Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 

867, 873 (9th Cir. 2000) (quoting Cont’l Airlines, Inc. v. Goodyear Tire & Rubber Co., 

819 F.2d 1519, 1523 (9th Cir. 1987). Where a named defendant would benefit if a 

plaintiff prevails, realignment may be appropriate. Prudential, 204 F.3d at 873. In this 

case, Plaintiff and Cross-Claimants are clearly adverse. 

 The primary matter in dispute is whether Defendants converted Plaintiff’s money 

or otherwise breached the parties’ contract. Cross-Claimants are the individuals who 

sponsored the investment by other named Defendants in the property at issue. CrossDefendant argues that Cross-Claimants and Plaintiff both wish “to ignore all 

responsibility lender and sponsor had in concocting an unsustainable investment and 

blaming a third party for the outcome,” but the Court finds this characterization to be 

incomplete and unpersuasive. Doc. 125 at 5. Plaintiff seeks to recover converted funds. 

If Plaintiff succeeds, Cross-Claimants are not entitled to any recovery. To the contrary, 

Cross-Defendant’s alleged conversion may trigger recourse against Cross-Claimants. 

Doc. 104, ¶ 198. Because Cross-Claimants could be exposed to personal liability if 

Plaintiff succeeds, the Court cannot accept Cross-Defendant’s assertion that the interests 

of Cross-Claimants and Plaintiff are aligned. 

 Cross-Defendant argues that Cross-Claimants’ tactics pursued during the course of 

this litigation reveal an alignment with Plaintiff’s interest. Doc. 125 at 4. For example, 

Cross-Defendant finds this alignment in Cross-Claimants’ refusal to file a motion to 

dismiss Plaintiff’s complaint. Id. But the Court may not look to “facts that arose after 

the complaint was filed in federal court,” such as litigation tactics, in determining 

whether to realign the parties. See In re Digimore Corp. v. Derivative Litig., 549 F.3d 

1223, 1236 (9th Cir. 2008) (finding that the district court erred in relying on evidence of 

defendant’s cooperation with plaintiff three weeks after the suit was filed). 

IT IS ORDERED: 

1. Cross-Defendant’s motion to dismiss (Doc. 125) is denied as moot. 

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 2. Cross-Defendant’s motion to realign (Doc. 125) is denied. 

 3. Cross-Defendant’s motion for fees and costs (Doc. 125) is denied. 

 Dated this 30th day of December, 2013. 

Case 2:13-cv-01475-DGC Document 137 Filed 12/30/13 Page 3 of 3