Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-00965/USCOURTS-azd-2_08-cv-00965-1/pdf.json

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

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Conlon Group Arizona, LLC; Phillip

Boshaw, 

Plaintiffs, 

vs.

CNL Resort Biltmore Real Estate, Inc.;

KSL Biltmore Resort, Inc., 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-08-0965-PHX-FJM

ORDER

The court has before it Conlon’s motion for leave to amend (doc. 23), defendants’

response (doc. 35), and Conlon’s reply (doc. 42). We also have before us Conlon’s motion

for permission to file another motion for leave to amend (doc. 32) and its proposed second

motion to amend (doc. 33), defendants’ response to both motions (doc. 44), Conlon’s reply

(doc. 50), and defendants’ supplemental response (doc. 70). We also have before us

defendants’ motion to consolidate Conlon’s motions for leave to amend and to expedite oral

argument on the motions for leave to amend (doc. 43). 

In its first motion for leave to amend (doc. 23), Conlon seeks to assert a claim for

breach of the implied covenant of good faith and fair dealing. It also seeks to remove the

name of a plaintiff who has recently assigned his claims to Conlon. Defendants do not

Case 2:08-cv-00965-FJM Document 89 Filed 02/02/09 Page 1 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

oppose these amendments, and therefore Conlon’s first motion to amend is granted to this

extent.

Conlon also seeks to join as defendants the former and current owners of the Arizona

Biltmore Hotel and Spa (“Hotel”)—Grossman Company Properties, Inc. (“Grossman”), Boca

Resorts (“Boca”), and Morgan Stanley. Defendants oppose the joinder because the presence

of Grossman and Boca is unnecessary, the joinder of Grossman would defeat diversity

jurisdiction, and Morgan Stanley has never owned the Hotel.

It is undisputed that Grossman owned the Hotel from 1992 to 1999, and that Boca

purchased the property in 1999, and sold it in 2000 to defendant KSL Biltmore Resort, Inc.

Through various mergers and/or name changes, defendants contend that the current owner

of the Hotel is MSR Biltmore Resort, LP, not Morgan Stanley. It also appears to be

undisputed that each of the Hotel owners was either a party to or an assignee of the rental

pool agreements. 

Defendants acknowledge that, in the event it proves its case, Conlon can obtain

complete relief for all claims from the current defendants. Response at 3, 5. Therefore, none

of the proposed additional defendants is a necessary party under Rule 19(a), Fed. R. Civ. P.

Joinder of additional defendants at this stage of the litigation will likely disrupt the firm

deadlines set by our Rule 16 scheduling order (doc. 11). We are unwilling to permit such a

disruption, particularly where full relief is already available. Conlon waited seven months

after the case was filed and four months after it was removed to seek to add new defendants.

There is no allegation that this belated request was based on newly discovered evidence, or

that the delay was otherwise excusable. If Conlon in fact has separate claims against these

other defendants, it can assert them in a separate action. Conlon’s motion to join additional

defendants is denied.

Conlon also filed a “motion for permission to file another motion for leave to amend

the complaint” (doc. 32). We grant the motion (doc. 32) in order to consider the second

motion for leave to amend on its merits. 

Case 2:08-cv-00965-FJM Document 89 Filed 02/02/09 Page 2 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

In its second motion for leave to amend (doc. 33), Conlon seeks to assert claims of

intentional interference with contract, aiding and abetting tortious conduct, and punitive

damages against four additional defendants—Hilton Hotels Corporation, Andrew Stegen,

general manager of the Hotel, and defendants’ lawyer Andrew Federhar and his law firm

Fennemore Craig, P.C. 

In September 2008, the Villa owner assigned their claims to Conlon. Conlon contends

that Andrew Stegen, with the knowledge of defense counsel, intentionally interfered with

these assignment contracts by sending these Villa owners refund checks after an audit

revealed errors in the calculation of charges for travel agency expenses, credit card fees, and

employee compensated rooms under the rental pool agreements. Defendants oppose the

amendment, contending that it fails to state a claim and therefore it would be futile.

To prove interference with contractual relations, Conlon must prove the existence of

a valid contractual relationship, that defendants knew of the relationship, intentionally and

improperly interfered with that relationship, thereby causing a breach or termination of the

relationship, resulting in damage to Conlon. Wagenseller v. Scottsdale Mem’l Hosp., 147

Ariz. 370, 386-87, 710 P.2d 1025, 1041-42 (1985). 

Defendants argue that they have an ongoing obligation under the terms of the rental

pool agreements to make quarterly distribution payments to each participating Villa owner,

including the obligation to correct errors in prior distribution payments. They assert that

Stegen paid all the Villa owners participating in the rental pool, not just those involved in

this lawsuit; that the refund payment was not contingent on the Villa owners signing a release

of claims; and that defendants advised Villa owners to consider transferring their refund to

Conlon. 

Based on these undisputed facts, we conclude that any “interference” by defendants

with Conlon’s assignment agreements was justified by its ongoing contractual obligation

with the Villa owners and was not improper. Moreover, Conlon has failed to allege how the

refund payments resulted in any breach or termination of the contractual relationship by Villa

owners, or how Conlon was damaged thereby. Because Conlon has failed to present a prima

Case 2:08-cv-00965-FJM Document 89 Filed 02/02/09 Page 3 of 4
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

facie case of intentional interference with business relationship, its concomitant claims of

aiding and abetting and punitive damages fail as well. We deny Conlon’s second motion to

amend the complaint as futile (doc. 33). 

IT IS ORDERED GRANTING IN PART AND DENYING IN PART Conlon’s

first motion for leave to amend (doc. 23). The motion is granted to the extent that it seeks

to add an additional claim of breach of the implied covenant of good faith and fair dealing,

and to remove a party from the caption. The motion is denied to the extent that it seeks to

add Grossman, Boca, and Morgan Stanley as defendants.

IT IS FURTHER ORDERED GRANTING Conlon’s motion for permission to file

a second motion for leave to amend (doc. 32), and DENYING Conlon’s second motion for

leave to amend (doc. 33). 

IT IS FURTHER ORDEREDDENYING the motion for an expedited oral argument

on the motions for leave to amend (doc. 43).

The clerk is directed to change the caption to terminate Phillip Boshaw as a plaintiff.

DATED this 30th day of January, 2009.

Case 2:08-cv-00965-FJM Document 89 Filed 02/02/09 Page 4 of 4