Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_14-cv-02514/USCOURTS-azd-4_14-cv-02514-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Joseph Cesare, et al.,

Plaintiffs, 

v. 

Pima, County of, et al., 

Defendants.

No. CV-14-02514-TUC-CKJ (EJM)

REPORT AND 

RECOMMENDATION 

 

Pending before the Court is Defendants’ Motion to Dismiss First Amended 

Complaint in Part. (Doc. 38). Defendants argue for dismissal under Fed.R.Civ.P. 12(b)(1) 

because Plaintiffs lack standing as to some counts, and also argue for dismissal under 

Fed.R.Civ.P. 12(b)(6) as to other counts for failure to state a claim upon which relief may 

be granted. 

Pursuant to the Rules of Practice of this Court, this matter was referred to the 

undersigned for a Report and Recommendation. (Doc. 29). 

In this civil rights action, Plaintiffs allege Defendants committed a number of acts 

in retaliation against Plaintiff Joseph Cesare for his support of a Republican candidate 

during the 2012 Pima County elections. Plaintiffs are Joseph Cesare, a property 

developer, and S.V.A. Corporation (“SVA”). Joseph Cesare is a shareholder, director, 

and vice president of SVA. SVA is a member of USH/SVA Star Valley, LLC (“LLC”),1

 

1 Lennar Home Builders is also a member of the LLC, but neither Lennar nor the 

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which is the master developer of a residential development in Pima County called Star 

Valley. The LLC is also the beneficiary of the trust that holds legal title to the Star Valley 

property. Defendants are Pima County, the Pima County Board of Supervisors, Sharon 

Bronson (an elected Supervisor on the Pima County Board of Supervisors), Chuck 

Huckelberry (Pima County Administrator), and Carla Blackwell (Deputy Director of 

Development Services). 

Plaintiffs allege fifteen counts in their First Amended Complaint: Count One, 

Defamation; Count Two, False Light; Count Three, Injurious Falsehoods; Count Four, 

Tortious Business Interference; Count Five, Violation of 42 U.S.C. § 1983—First 

Amendment; Count Six Violation of 42 U.S.C. § 1983—Equal Protection; County Seven, 

Violation of 42 U.S.C. § 1983—Substantive Due Process; Count Eight, Equal Protection; 

Count Nine, Substantive Due Process; County Ten, Negligence; Count Eleven, Violation 

of Ariz. Const. Art. 2, § 6—Freedom of Speech; Count Twelve, RICO—Federal; Count 

Thirteen, RICO—State; Count Fourteen, Violation of A.R.S. § 11-1604; Count Fifteen, 

Punitive Damages. (Doc. 31). 

Because oral argument would not aid the Court’s decisional process and the 

briefing is adequate, Defendants’ and Plaintiffs’ request for oral argument will be denied. 

See generally Mahon v. Credit Bur. of Placer County, Inc., 171 F.3d 1197, 1200 (9th Cir. 

1999).

The Motion has been fully briefed by the parties. For the reasons stated below, the 

Magistrate Judge recommends that the District Court grant the Motion to Dismiss under 

Fed.R.Civ.P. 12(b)(1) in part, and grant the Motion to Dismiss under Fed.R.Civ.P. 

12(b)(6) in part. 

I. FACTUAL AND PROCEDURAL BACKGROUND

The allegations in this action concern a residential property development known as 

Star Valley. Pima County approved Star Valley’s master block plat on or about July 15, 

 LLC are parties to this action. The LLC was a party to a separate action filed in Pima 

County Superior Court. 

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2002. (Doc. 31 at 5 ¶ 27). On April 8, 2003, the Pima County Roadway Development Fee 

Ordinance was passed, which obligated Star Valley to pay development impact fees. Id. ¶ 

33. The stated purpose of this ordinance was for “new development to pay its 

proportionate share of the costs to Pima County associated with providing beneficial 

transportation facilities to the development.” Id. ¶ 34. Plaintiffs maintain that Plaintiffs 

and the LLC never signed an agreement with Pima County to pay separately for 

construction of additional offsite infrastructure as the Star Valley population grew. Id. at 

6 ¶ 35. Plaintiffs further state that if the LLC had signed an agreement, it would have 

obligated the LLC to pay twice for the same infrastructure because the LLC was already 

paying for offsite infrastructure through the development impact fees. Id. ¶ 36. From 

2003 to October 25, 2013, the LLC paid $5,139,305.00 in development impact fees to 

Pima County. Id. ¶ 37; Doc. 38 Ex. 2 at 17. 

During the 2012 elections in Pima County, the incumbent Democrat Sharon 

Bronson sought reelection for the position of Supervisor for District Three. (Doc. 31 at 7 

¶ 42). Ms. Bronson ran against Tanner Bell, a Republican. Id. ¶ 43. Ms. Bronson won the 

election. Id. ¶ 44. Plaintiffs allege that Ms. Bronson believes and/or perceives that 

Plaintiff Joseph Cesare and his family supported Mr. Bell, and that they provided 

information on the road conditions in District Three to Mr. Bell to use in his campaign 

against Ms. Bronson. Id. ¶¶ 47, 48. Plaintiffs further allege that Ms. Bronson told Joseph 

Cesare that she was going to get even with him for supporting a Republican in the 2012 

elections. Id. at 8 ¶ 49. Plaintiffs claim that since 2013, Defendants “have taken actions 

that amount to revenge and retaliation against Mr. Cesare, including his entities.” Id. ¶ 

52. 

Plaintiffs allege that Pima County received complaints from Star Valley residents 

in 2011, 2012, and 2013 regarding the need of an additional road to access the 

development and the maintenance of trails built next to the development. Id. ¶¶ 55, 56. 

 On November 29, 2012, Pima County sent Joseph Cesare a letter stating that as the 

master developer, he was responsible for building the Camino Verde road extension and 

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for paying half the cost of a traffic signal to be installed at Wade and Valencia roads. Id. ¶ 

60. 

On May 4, 2013, Defendants Blackwell, Bronson, and Huckelberry attended a 

public meeting with residents of Star Valley. Id. at 10 ¶ 63. Plaintiffs allege that at the 

meeting, Pima County attempted to lay responsibility for the Camino Verde extension on 

the master developer, that Defendant Huckelberry told Star Valley residents that the 

County would build the Camino Verde extension but require the developer to pay for it, 

and that Defendant Huckelberry stated the County had the money for the extension 

because it could allocate impact fees to be used for the extension. Id. ¶¶ 67–69. Plaintiffs 

further allege that Pima County refused to accept responsibility for maintenance of the 

trail system and advised Star Valley residents that the developer was responsible for trail 

maintenance. Id. at 11 ¶ 71. 

On April 9, 2014, Defendant Carla Blackwell sent a letter to Joseph Cesare (as 

president of the Star Valley HOA), Jeffrey Cesare (as vice president of the HOA), and 

Kathleen Buske, president and CEO of Platinum Management Inc. (the HOA’s

management company). (Doc. 38 Ex. 2).2 The letter noted that the County had received 

several inquiries from Star Valley homeowners and that the County planned to respond to 

the inquiries as outlined in the letter. Id. at 2. The letter stated that: 

The comments as reported to us from the meeting represent a 

lack of fiduciary responsibility on your behalf as the sole 

Board members and officers [of the Star Valley HOA] . . . 

Your misrepresentations are harming the residents’ 

enjoyment of their property rather than solving or addressing 

issues, thereby opening the door to future claims against you 

from the homeowners for negligence. 

Id. In response to the homeowners’ concerns, Ms. Blackwell stated that the County could 

not accept responsibility for the maintenance of the trails, that the LLC was responsible 

for constructing the access road as a condition of the master block plat and the 

transportation implementation plan, and that the development impact fees were used to 

 

2

 The April 9, 2014 is the main basis of Plaintiffs’ claims against Defendants. 

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pay for regional roadways but not roads that directly serve the Star Valley development. 

Id. at 2–4. The letter also noted that: 

Neglecting your responsibilities to the homeowners and 

future homeowners by not completing infrastructure and not 

maintaining the existing trials and amenities of the Star 

Valley will not further resolution of these issues. As the sole 

Board members and officers for the HOA, not properly 

maintaining the assets of the neighborhood is acting in bad 

faith. As previously communicated, no further lots or blocks 

will be released for development without payment of the 

traffic light and resolution of Camino Verde among other 

issues. 

Id. at 4.3

 Plaintiffs claim that Ms. Blackwell copied the April 9, 2014 letter to several 

members of the HOA, and that Ms. Blackwell knew or should have known, and also 

intended, that her letter would be forwarded to the 1400 members of the Star Valley 

HOA. (Doc. 31 at 18–19 ¶¶ 115, 117–119). Plaintiffs allege that after receiving the letter, 

members of the HOA incited each other to pass out flyers to future homeowners and slow 

sales within Star Valley. Id. at 20 ¶ 122. 

On July 10, 2014, Pima County sent a notice to the LCC and Stewart Title & Trust 

advising them of the County’s intent to exercise its option to re-plat Blocks 4, 7, and 8 of 

Star Valley. (Doc. 31 at 23 ¶ 141). Plaintiffs maintain no such notice was sent to Lennar 

for the blocks owned by Lennar, nor has any such notice been sent to any other property 

developer in Pima County. Id. ¶¶ 142–143. As summarized by Defendants, the notice 

sent to Plaintiffs 

explained that the County had decided to initiate its option to 

re-plat blocks 4, 7, and 8 of Star Valley and outlined the factors that had led to the decision, including: (1) failure to 

complete subdivision improvements within the time allowed 

by the related assurance agreements; (2) transfer of title of 

blocks 4, 7, and 8 without Pima County authorization in 

violation of assurance agreements; (3) failure to comply with 

transportation plans and rezoning conditions (including the 

3 Attached to the April 9, 2014 letter is another letter from Pima County to Joseph Cesare dated May 1, 2009, informing Mr. Cesare that the county was “accepting the 

drainage improvements outlined on the attached aerial photographs” but noting that 

“trails that have been built within the drainage channels . . . are specifically excluded 

from this acceptance . . . and the County shall not . . . be deemed to have in any way 

accepted maintenance of or responsibility for those trails.” Id. at 6. 

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previously discussed improvements); and (4) changes in 

surrounding conditions. 

(Doc. 38 at 3–4) (citing Ex. 4 at 1–2). “The notice provided that the owner was allowed 

to cure the default with new agreements that would ‘fulfill the obligations and ensure 

performance,’ at which point the County could cease the re-platting process.” Id. at 4 

(citing Ex. 4 at 2). The notice also included a copy of the Pima County Board of 

Supervisors policy authorizing re-platting. (Doc. 38 Ex. 4 at 5–7). The policy explains 

that when a developer is in default of an assurance agreement to complete subdivision 

improvements, “the County has the option to re-plat the subdivision.” Id. at 5. The policy 

further states that “in partially constructed developments where some lots have been 

released and sold prior to completion of all infrastructure . . . it is in the best interests of 

the County to consider exercising its option to re-plat.” Id. Defendants note that “[a]s of 

January 20, 2015, the Board of Supervisors has not re-platted the subdivision.” (Doc. 38 

at 4).4 

Plaintiffs maintain that no agreement, statute, ordinance, rule, or regulation exists 

which obligates the LLC to maintain the trail system, to construct the Camino Verde 

extension, or to construct a traffic light at Wade and Valencia roads. (Doc. 31 at 14 ¶¶ 

88–90). Plaintiffs also allege that Defendants knew, at all times relevant to the 

Complaint, that no transportation finance plan was in place between Pima County and the 

master developer (the LLC), and that the master developer had no responsibility to pay 

for the construction of offsite improvements. Id. at 16 ¶ 103. Plaintiffs claim that: 

In retaliation for Mr. Cesare’s and USH/SVA’s refusal to 

accept responsibility for the Camino Verde extension and the 

traffic light, and for Mr. Cesare’s and his sons’ suspected 

political affiliations during the 2012 elections, and for Mr. 

Cesare’s questioning about the County’s use of the 

$5,139,305.00 development impact fees, the County, Sharon 

Bronson and Chuck Huckelberry have refused to release any further blocks/lots in Star Valley, and have refused to issue 

any further building permits at Star Valley for blocks in 

 

4 The Board of Supervisors voted to remove the abandonment and re-platting of Star Valley from the agenda during a meeting on January 20, 2015, pending the outcome 

of the lawsuit pending in Pima County Superior Court. (Doc. 38 Ex. 5 at 4). 

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which Mr. Cesare and SVA have an interest (but not for 

blocks owned by Lennar). 

Id. at 20 ¶ 123. Plaintiffs further allege that the Defendants “have illegally begun a ‘replatting’ process of the undeveloped portions of Star Valley in which Mr. Cesare has an 

interest (but not the blocks owned by Lennar).” Id. at 21 ¶ 125. Plaintiffs also claim that 

as a result of Defendants’ allegations against Joseph Cesare and the County’s refusal to 

release lots or issue building permits, the LLC lost a contract to sell 572 lots at Star 

Valley to another developer, LGI Inc. Id. at 22 ¶¶ 131, 133–134. Plaintiffs further state 

that because Plaintiff SVA has 50% ownership of the LLC, Plaintiff SVA personally lost 

50% of the profits from the sale to LGI. Id. ¶ 135. 

Plaintiffs also note that the LLC brought suit against Pima County in Pima County 

Superior Court regarding the threatened re-platting of Star Valley. (Doc. 31 at 26 ¶ 156). 

Plaintiffs allege that the LLC offered to settle that suit with Pima County for the full 

amount that the County alleged the LLC owed, but that the County refused to settle

unless Joseph Cesare also dropped his claims against the County in this suit. Id. ¶¶ 158–

159. However, Plaintiffs note that the LLC’s suit was eventually settled and dismissed on 

April 28, 2015. (Doc. 45 at 12 n. 34). Plaintiffs maintain that in the present suit, Joseph 

Cesare is bringing personal claims that are independent of the claims brought by the LLC

in its suit against the County. (Doc. 31 at 26 ¶ 160). 

Plaintiffs filed the present action in this Court on December 3, 2014. (Doc. 1). The 

case is now proceeding on Plaintiffs’ First Amended Complaint, filed February 20, 2015. 

(Doc. 31). Defendants filed their Motion to Dismiss on April 15, 2015. (Doc. 38). 

II. MOTION TO DISMISS: STANDING 

Defendants argue Counts Three, Four, Six, Eight, Ten, Twelve, Thirteen and 

Fourteen should be dismissed for lack of subject matter jurisdiction because Plaintiffs do 

not have standing to bring claims belonging to the non-party LLC. (Doc. 38 at 4). 

Defendants’ argument is based on the premise that Plaintiffs only allege injuries to the 

non-party LLC but not to themselves. Id. at 5. Defendants do not contest that a 

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corporation and a stockholder may both having standing arising from the same injury 

when certain conditions are met, but argue that Plaintiffs’ error here is that they fail to 

allege distinct harm to Plaintiffs. (Doc. 48 at 2–3). 

 Plaintiffs contend that they are not seeking redress for the injury caused to the 

LLC, but that they are seeking redress for the harm caused to Plaintiffs “as a result of the 

County’s efforts to prevent Mr. Cesare from earning a living in his trade and profession.” 

(Doc. 45 at 4). Specifically, Plaintiffs allege “the County has been, and is, engaged in a 

campaign of retaliation and retribution against Mr. Cesare and his family,” and that “[t]he 

goal of this campaign has been to drive Mr. Cesare out of business by inducing third 

parties to cease and/or refrain from doing business with any entity in which Mr. Cesare 

has an interest (including plaintiff SVA Corporation, of which Mr. Cesare is the sole 

shareholder).” Id. at 5. Plaintiffs further allege that “the County tailored its attacks so as 

to focus the injury on Mr. Cesare and avoid injury to other parties that did not commit 

Mr. Cesare’s political offenses.” Id. Thus, Plaintiffs conclude, while “the harm to 

USH/SVA was an unavoidable by-product that the County was willing to accept . . . the 

‘gravamen’ of the plaintiffs’ claims in this case is the injury to Mr. Cesare and SVA 

Corporation, not the collateral injury to USH/SVA.” Id. at 5–6. 

A. Legal Standard 

The Court must analyze the jurisdictional question of standing at the outset of a 

case because it “precedes, and does not require, analysis of the merits” of a case. Maya v. 

Centex Corp., 658 F.3d 1060, 1068 (9th Cir. 2011) (citation omitted). Under Federal Rule 

of Civil Procedure 12(b)(1), a party may seek dismissal of an action for lack of subject 

matter jurisdiction. Allegations raised under Rule 12(b)(1) should be addressed before 

other reasons for dismissal because if the complaint is dismissed for lack of subject 

matter jurisdiction, other defenses raised become moot. See Wright and Miller, Federal 

Practice and Procedure: Civil 2d § 1350, 209–10 (1990). 

The Supreme Court has established a three-part test for standing: “First, the 

plaintiff must have suffered an ‘injury in fact’—an invasion of a legally protected interest 

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which is (a) concrete and particularized . . . and (b) ‘actual or imminent,’ not 

‘conjectural’ or ‘hypothetical.’” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–561 

(1992) (citation omitted). “Second, there must be a causal connection between the injury 

and the conduct complained of—the injury has to be ‘fairly trace[able] to the challenged 

action of the defendant,’ and not . . . th[e] result [of] the independent action of some third 

party not before the court.” Id. (citation omitted). “Third, it must be ‘likely,’ as opposed 

to merely ‘speculative’ that the injury will be ‘redressed by a favorable decision.’” Id. 

(citation omitted). 

Although Defendants are the moving party, Plaintiffs have the burden of 

establishing standing. Hernandez v. Vallco Int’l Shopping Ctr., LLC, 2011 WL 890720, 

*3 (N.D. Cal. March 14, 2011) (“when subject matter jurisdiction is challenged under 

Rule 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the 

motion.”). In effect, the court presumes lack of jurisdiction until the plaintiff proves 

otherwise. Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). 

 To defeat a Rule 12(b)(1) motion, Plaintiffs “need only show that the facts alleged, 

if proved, would confer standing upon [them].” Warren v. Fox Family Worldwide, Inc., 

328 F.3d 1136, 1140 (9th Cir. 2003) (citation omitted). The Court “must accept as true all 

material allegations of the complaint, and must construe the complaint in favor of the 

complaining party.” See Desert Citizens Against Pollution v. Bisson, 231 F.3d 1172, 1178 

(9th Cir.2000) (internal quotations and citations omitted). However, the Court need not 

“accept the truth of legal conclusions merely because they are cast in the form of factual 

allegations.” Doe v. Holy, 557 F.3d 1066, 1073 (9th Cir. 2009). The standing inquiry 

“requires careful judicial examination of a complaint’s allegations to ascertain whether 

the particular plaintiff is entitled to an adjudication of the particular claims asserted.” 

Allen v. Wright, 468 U.S. 737, 752 (1984). 

B. Standing Analysis 

At issue in the present case is whether Plaintiffs have standing to bring the claims 

in Counts Three, Four, Six, Eight, Ten, Twelve, Thirteen and Fourteen of the First 

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Amended Complaint, or if those claims properly belong to the non-party LLC. Under 

Arizona law, a member may bring a derivative action in the right of the limited liability 

corporation if certain conditions are met. See A.R.S. § 29–831. Here, however, Plaintiffs 

do not claim to bring a derivative action on behalf of the LLC, but instead filed a direct 

action on their own behalf. 

“As a general rule, an action enforces a corporate right ‘if the gravamen of the 

complaint is injury to the corporation, or to the whole body of its stock or property 

without any severance or distribution among individual holders.’” Sax v. World Wide 

Press, Inc., 809 F.2d 610, 613 (9th Cir. 1987) (quoting 12B W. Fletcher, Cyclopedia of 

the Law of Private Corporations, § 5911 (rev. perm. ed. 1984) (footnotes omitted)). 

A shareholder may maintain a direct action under certain 

circumstances, however, such as when (1) the relationship 

between the shareholders and a wrongdoer is separate from 

the shareholders’ status as shareholders or their ownership 

interest in the corporation, (2) the wrongdoer owes a duty to 

the shareholders for some reason other than their status as 

shareholders, or (3) the injuries or damages were sustained by individual shareholders rather than by the corporation. 

Albers v. Edelson Tech. Partners L.P., 201 Ariz. 47, 52 (Ct. App. 2001). 

The Arizona Supreme Court considered the issue of shareholder rights of action 

and derivative suits in the case of Hidalgo v. McCauley, 50 Ariz. 178 (1937), quoting 

extensively from the case of Green v. Victor Talking Machine Co., 24 F.2d 378 (2d Cir. 

1928): 

When there are numerous shareholders, it is apparent that 

each suffers relatively, depending upon the number of shares 

he owns, the same damage as all the others, and that each will 

be made whole if the corporation obtains restitution or 

compensation from the wrongdoer. Obviously it is sound 

policy to require a single action to be brought by the 

corporation, rather than to permit separate suits by each 

shareholder. In logic the result is justified, because the only right of the shareholder which has been infringed is what may 

be called his derivative or corporate right . . . even a sole shareholder has no independent right which is violated by 

trespass upon or conversion of the corporation’s property. 

Only his ‘corporate rights’ have been invaded, and 

consequently he cannot sue the tort-feasor in an action at law. 

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Hidalgo, 50 Ariz. at 182–83 (quoting Green, 24 F.2d at 380–81). Defendants argue that 

“[t]he policy reasons for barring member actions on behalf of a LLC are particularly 

prominent in this case . . . [because] there is not only a risk, but a certainty, of a 

multiplicity of actions because the LLC has already brought an action based on the same 

injuries alleged by one of its members here.” (Doc. 38 at 6–7). While the LLC has 

apparently settled its suit against the County in Pima County Superior Court, the Court 

finds that the risk of multiplicity is still present because the current suit may re-litigate 

issues already resolved in the settled suit, and because there remains the possibility that 

other members of SVA or the LLC may also file suit. 

 The Green court further found that even where “a tort-feasor is motivated by 

malice toward a particular shareholder,” there is still no personal right of action because: 

The intention of the defendant is to invade the ‘corporate 

rights’ of the shareholders; that is, the corporation’s rights, 

whether this end is desired as a means of satisfying a grudge 

against some particular shareholder or all of them, or for 

some other motive . . . motive will not of itself create an 

independent cause of action in favor of shareholders, because 

only their derivative or corporate rights have been infringed. The policy of having their remedy lie in a suit by the 

corporation is not affected by the wrongdoer’s malice toward 

an individual shareholder. 

Hidalgo, 50 Ariz. at 183–84 (quoting Green, 24 F.2d at 381); see also Sax, 809 F.2d at 

614 (“Even if the defendants depleted [the corporation’s] assets with the sole purpose of 

decreasing the value of Sax’s stock and destroying his return on his investment, the 

action would nonetheless be derivative.”). In the present case, Plaintiffs allege 

Defendants’ conduct was motivated by a desire to drive Joseph Cesare out of business. 

(Doc. 45 at 4–5). However, even if that were the case, Hidalgo makes clear that 

regardless of Defendants’ alleged motive, Plaintiffs still do not have a personal right of 

action against Defendants because Defendants’ intention in withholding building permits 

and threatening to abandon and re-plat Star Valley is an invasion of the LLC’s rights, and 

Plaintiffs’ remedy therefore lies in a suit brought by the LLC. 

 The Green court also noted that in order “[f]or a shareholder to obtain a personal 

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right of action there must be relations between him and the tort-feasor independent of 

those which the shareholder derives through his interest in the corporate assets and 

business.” Hidalgo, 50 Ariz. at 184 (quoting Green, 24 F.2d at 381). Plaintiffs argue that 

a special relationship and duty exist under Hidalgo and Albers because “the County, as a 

governmental body, together with its officers and officials, unquestionably has a 

relationship with, and owes a duty to, its citizens (including the plaintiffs) that is separate 

from and independent of their status as interest-holders in USH/SVA.” (Doc. 45 at 7). 

Defendants counter, and the Court agrees, that Plaintiffs’ interpretation of the special 

relationship exception would swallow the rule—under Plaintiffs’ proposed interpretation, 

“any shareholder would have standing to claim injury to any business entity as long as a 

government or government official is the alleged wrongdoer.” (Doc. 48 at 5). There is no 

more a special relationship between Plaintiffs and Defendants here than there is between 

Defendants and any other individual living in Pima County. The nature of the relationship 

between Defendants and Plaintiffs is not based on anything other than Plaintiffs’ status as 

shareholders in the LLC, and even if Defendants did owe a special duty to shareholders, 

the duty would be owed to all members of the LLC, not just Plaintiffs. 

The Arizona Supreme Court also examined the individual injury exception to the 

general rule that only the corporation may bring a cause of action in the case of Funk v. 

Spalding, 74 Ariz. 219 (1952).: 

If the injury is one to the plaintiff as a stockholder and to him 

individually, and not to the corporation, as where the action is 

based on a contract to which he is a party, or on a right 

belonging severally to him, or on a fraud affecting him 

directly, it is an individual action . . . The action is derivative, i.e., in the corporate right, if the gravamen of the complaint is 

injury to the corporation. 

Funk, 74 Ariz. at 223 (quoting Sutter v. Gen. Petroleum Corp., 28 Cal.2d 525, 530 (Sup. 

Ct. 1946)). Plaintiffs rely on Funk to argue that “a stockholder may sue as an individual 

where he is directly and individually injured although the corporation may also have a 

cause of action for the same wrong.” (Doc. 45 at 7) (quoting Funk, 74 Ariz. at 223) 

(emphasis added by Plaintiffs). However, Funk is distinguishable from the present case. 

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In Funk, two stockholders each owned 50 percent of stock in a corporation. When one 

stockholder entered the navy, the other stockholder took over management of the 

company but then failed to pay the enlisted stockholder his share of the profits when the 

company was sold. The court found that there was a special relationship between the 

parties in that there was an express or implied contract to share in profits, and further 

found that there was no injury to the corporation because the profits were not a corporate 

asset but an obligation due to the two stockholders. Thus, the court held that the failure to 

properly distribute the profits resulted in injury solely to the enlisted stockholder, and he 

could therefore properly bring an individual action pursuant to the exception in Sutter. 

Funk, 74 Ariz. at 224. In the present case, there is no special duty owed by Defendants to 

Plaintiffs that is distinct from Plaintiffs’ status as shareholders in the LLC, nor have 

Plaintiffs alleged a distinct personal injury separate from the injury to the LLC for Counts 

Four, Six, Eight, Ten, Twelve, Thirteen and Fourteen. Accordingly, the individual injury 

exception applied by the court in Funk does not apply to the case at hand. 

With the above principles on injury to the corporation versus injury to individual 

shareholders in mind, the Court will now turn to each of the claims Defendants allege 

Plaintiffs lack standing for. 

i. Count Three: Injurious Falsehoods 

In Count Three of the Complaint, Plaintiffs allege Defendants Pima County, 

Sharon Bronson, Chuck Huckelberry, and Carla Blackwell made false and misleading 

allegations, actions, and insinuations about Joseph Cesare, and that Defendants published 

these disparaging falsehoods to prevent others from doing business with Joseph Cesare. 

(Doc. 31 at 35 ¶¶ 213–214). The basis for this claim is the April 9, 2014 letter regarding 

the Star Valley homeowners’ complaints. Id. at ¶ 215. Defendants note that “the only 

injury identified is that residents, as a result [of the letter], ‘planned to slow sales within 

the Star Valley development.’” (Doc. 38 at 7) (citing Doc. 31 ¶ 215). Thus, Defendants 

argue that “[t]he gravamen of this count is that the statements harmed Star Valley sales, 

and only the non-party LLC as the owner of the lots in Star Valley can recover damages

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for lost sales.” Id. Plaintiffs do not respond directly to Defendants’ arguments regarding 

Count Three. 

The Court finds that the injury asserted in this claim goes beyond harm solely to 

the LLC in terms of hampered sales of Star Valley lots. Count Three also generally 

alleges harm to Mr. Cesare personally due to the statements in the April 9, 2014 letter 

allegedly preventing others from engaging in business dealings with Mr. Cesare or his 

entities. Accordingly, this count alleges a distinct injury separate from the injury to the 

LLC, and the undersigned recommends that Plaintiffs do have standing to bring Count 

Three. 

ii. Count Four: Tortious Business Interference 

In Count Four, Plaintiffs allege Defendants Pima County, Sharon Bronson, Chuck 

Huckelberry, and Carla Blackwell’s actions, allegations, and insinuations have harmed 

Plaintiffs by interfering with Plaintiffs’ existing and prospective contractual relations, 

including LGI’s termination of the contract to purchase 572 lots at Star Valley. (Doc. 31 

at 36 ¶¶ 221, 223, 225). As Defendants note, “[a]lthough the Complaint does not allege 

either Plaintiff was a party to the contract, Plaintiffs allege ‘Mr. Cesare, in his personal 

capacity and through his business entities, also has a business expectancy of selling the 

remainder of the Star Valley development.’” (Doc. 38 at 8) (citing Complaint ¶ 226). 

Thus, Defendants contend, “[t]he only reasonable inference to be drawn from the 

allegations in the Complaint is that [Joseph Cesare’s] expectancy consists entirely of 

SVA’s ownership interest in the LLC.” Id. Defendants conclude that “[t]he essence of 

this claim is that the LLC was injured by the termination of its contract with LGI, and 

only the non-party LLC can recover if it was damaged because LGI withdrew from that 

contract.” Id. 

Plaintiffs do not respond directly to Defendants’ arguments regarding Count Four, 

and their non-response may be deemed consent to the Court granting Defendants’ motion 

as to Count Four. See LRCiv 7.2(i). 

The Court finds that because the injury asserted in this claim is LGI’s termination 

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of the contract to purchase 572 lots at Star Valley, the claim properly belongs to the LLC 

as the master developer and owner of the Star Valley lots. Because the gravamen of this 

claim is injury to the LLC and Plaintiffs do not meet any of the criteria to bring a direct 

action, Plaintiffs do not have standing to bring Count Four. 

iii. Count Six: 42 U.S.C. § 1983—Violation of Equal Protection and 

Count Eight: Violation of Equal Protection 

In Count Six, Plaintiffs allege Defendants Bronson, Huckelberry, and Blackwell 

have treated Plaintiffs differently than Lennar and differently than other developers in 

Pima County by only withholding building permits for lots that Plaintiffs have an interest 

in, and by only pursuing abandonment and re-platting of the Star Valley blocks that 

Plaintiffs have an interest in. (Doc. 31 at 44–46). Plaintiffs also allege Defendants 

Bronson and Huckelberry have not withheld building permits for blocks owned by 

Lennar, nor have Defendants pursued the abandonment and re-platting of any other 

development in Pima County. Id. ¶¶ 283–285. In Count Eight, Plaintiffs make the same 

allegations against Defendant Pima County. (Doc. 31 at 51–53). 

Defendants contend that despite Plaintiffs’ characterization of the blocks and lots 

as ones that Plaintiffs have an interest in, “this does not change the reality that the alleged 

similarly situated owners are the LLC and other developers.” (Doc. 38 at 8). Defendants 

further contend that “the targeting of a particular LLC member does not affect the 

standing analysis, which is focused on injury rather than intent.” Id. Thus, Defendants 

conclude that even if the LLC blocks and lots were being treated differently, any cause of 

action would belong to the LLC. Id. at 9. Plaintiffs do not respond directly to Defendants’ 

arguments regarding Counts Six and Eight. 

“In general, shareholders lack standing to assert an individual § 1983 claim based 

on harm to the corporation in which they own shares.” RK Ventures, Inc. v. City of 

Seattle, 307 F.3d 1045, 1057 (9th Cir. 2002). “A shareholder does have standing, 

however, when he or she has been ‘injured directly and independently from the 

corporation.’” Id. (quoting Shell Petroleum, N.V. v. Graves, 570 F.Supp. 58, 63 (N.D.

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Cal. 1983), aff’d, 709 F.2d 593, 595 (9th Cir. 1983)). Here, Plaintiffs contend that the 

injury is Defendants’ actions to only withhold building permits for lots that Plaintiffs 

have an interest in, and only attempting to abandon and re-plat blocks that Plaintiffs have 

an interest in. However, Plaintiffs’ interest in the lots and blocks at Star Valley is by 

virtue of Joseph Cesare’s membership in SVA, and SVA’s membership in the LLC. 

While Plaintiffs contend that Defendants’ actions are motivated by a desire to prevent 

Joseph Cesare from practicing his chosen profession, the wrong-doer’s motivation to 

harm a particular shareholder is irrelevant when the injury is to the corporate rights of the 

shareholders, and thus injury to the corporation. See Hidalgo, 50 Ariz. at 183–84. 

Accordingly, the Court finds that these claims properly belong to the LLC because 

(1) Defendants’ alleged withholding of building permits for lots in Star Valley primarily 

affects the LLC and its ability to sell lots, and (2) Defendants’ alleged plans to abandon 

and re-plat blocks 4, 7, and 8 of Star Valley primarily affects the LLC and its ownership 

of the lots. Thus, because the gravamen of the claims in Counts Six and Eight is injury to 

the LLC and Plaintiffs do not meet any of the criteria to bring a direct action, Plaintiffs do 

not have standing to bring Count Six or Count Eight. 

iv. Count Ten: Negligence 

In Count Ten, Plaintiffs allege Defendants Pima County, Sharon Bronson, Chuck 

Huckelberry, and Carla Blackwell had a duty to Plaintiffs to: (1) only provide truthful 

statements to the public regarding negotiations between Joseph Cesare and the County; 

(2) to only withhold building permits from Star Valley where there was statutory 

authority to do so; and (3) to not attempt to abandon and re-plat Star Valley without 

statutory authority and good cause. (Doc. 31 at 59 ¶¶ 367, 370, 373). Plaintiffs maintain 

that Defendants’ breach of these duties constitutes negligence and/or negligence per se. 

Id. at 60 ¶ 376. 

Defendants initially note that the first alleged duty identifies a distinct individual 

injury, which they address separately in the motion to dismiss under Rule 12(b)(6). (Doc. 

38 at 9). Defendants then note that “the second and third alleged duties would be owed to 

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the LLC as the developer and beneficial owner of the Star Valley development, and 

Plaintiffs do not have standing to raise the LLC’s claims of alleged breach of any such 

alleged duty.” Id. 

Plaintiffs do not respond directly to Defendants’ arguments on Count Ten, and 

their non-response may be deemed consent to the Court granting Defendants’ motion as 

to Count Ten. See LRCiv 7.2(i). 

The Court finds Plaintiffs do have standing to assert a negligence claim for 

Defendants’ alleged duty to only provide truthful statements to the public regarding 

negotiations between Joseph Cesare and the County because this claim asserts an 

individual injury. However, the Court finds Plaintiffs lack standing to bring a negligence 

claim for the second and third alleged duties because (1) the injury for allegedly 

withholding building permits without statutory authority is an injury to the LLC, and (2)

the injury for allegedly attempting to abandon and re-plat Star Valley without statutory 

authority also belongs to the LLC. Accordingly, because the second and third alleged 

duties assert injury to the LLC, and Plaintiffs do not meet any of the criteria to bring a 

direct action, Plaintiffs do not have standing to bring negligence claims for the second or 

third duties. Plaintiffs do, however, have standing for their negligence claim under the 

first alleged duty. 

v. Count Twelve: Federal RICO and Count Thirteen: State RICO 

In Count Twelve, Plaintiffs allege Defendants Pima County, Sharon Bronson, and 

Chuck Huckelberry have engaged in racketeering activity in violation of federal law by 

threatening to take actions, taking actions, and withholding actions to force Joseph Cesare 

and his business to pay for infrastructure that neither Mr. Cesare nor his business are 

responsible for. (Doc. 31 at 64–65 ¶¶ 414–416). In Count Thirteen, Plaintiffs make the 

same allegations regarding racketeering activity in violation of state law. (Doc. 31 at 63 

¶¶ 398–400). 

Defendants contend that the gravamen of Plaintiffs’ two RICO claims is injury to 

the LLC, and that the general rule is that “[s]hareholders or members typically lack 

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standing to assert RICO claims where their injury derives from the corporation’s or 

partnership’s harm.” (Doc. 38 at 9–10). Defendants further argue that while there may 

have been some correspondence between Joseph Cesare and Pima County, the most 

recent correspondence “clarifies that it is the LLC that is in default and it is the ‘property 

owner’ that can cure the default by fulfilling its obligations.” Id. at 10. Defendants 

conclude that even if “Plaintiffs have been affected by the County’s efforts to hold the 

LLC accountable for its default, any effect is entirely by virtue of SVA’s status as a 

member of the LLC and Mr. Cesare’s even more remote interest as a shareholder in SVA. 

The LLC alone has a right of action for any damage incurred.” Id. 

Plaintiffs do not respond directly to Defendants’ arguments on Counts Twelve and 

Thirteen, and their non-response may be deemed consent to the Court granting 

Defendants’ motion as to these counts. See LRCiv 7.2(i). 

 In Sparling v. Hoffman Const. Co., 864 F.2d 635, 640 (9th Cir. 1988), the Ninth 

Circuit noted that “[t]his Circuit apparently has not considered the issue of shareholder or 

guarantor standing to assert RICO claims. Those circuits that have considered the issue, 

however, are unanimous in holding that there is no shareholder standing to assert RICO 

claims where the harm is derivative of harm to the corporation.” In Sparling, the court 

found that plaintiffs “must show either an injury distinct from that to other shareholders 

or a special duty between [the defendant] and the [plaintiffs] if they are to have standing 

to assert RICO claims based on injury to the corporation.” Id. The court concluded that 

The wrong alleged is a fraud on the corporation. Because 

[plaintiffs] are the sole shareholders they cannot show an injury distinct from that to other shareholders. Nor was there 

a special relationship between the Sparlings and Hoffman 

which would create the kind of duty required. Thus, the court 

was correct in ruling that they had no standing as 

shareholders to assert a RICO claim. 

Id. at 641. 

In the present case, Plaintiffs have not shown that they suffered an injury distinct 

to that from other shareholders, nor is there a special relationship between Plaintiffs and 

Defendants that would confer standing on Plaintiffs to bring the claims in Counts Twelve 

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and Thirteen. While Plaintiffs frame their claims as the Defendants taking actions and 

threatening to take actions to force Joseph Cesare and his business to pay for 

infrastructure improvements, the reality is that it is the LLC’s responsibility as the master 

developer to pay for the road improvements. Any harm suffered by Plaintiffs is therefore 

derivative to the harm suffered by the LLC. Accordingly, because the gravamen of the 

claims in Counts Twelve and Thirteen is injury to the LLC, Plaintiffs do not have 

standing to bring Count Twelve or Count Thirteen. 

vi. Count Fourteen: Violation of A.R.S. § 11-1604 

A.R.S. § 11-1604(A) provides that “[a] county shall not base a licensing decision 

in whole or in part on a licensing requirement or condition that is not specifically 

authorized by statute, rule, ordinance or delegation agreement.” In Count Fourteen, 

Plaintiffs allege Defendants Pima County, Sharon Bronson, and Chuck Huckelberry 

“have violated A.R.S. § 11-1604 by making the decision to withhold building permits as 

retaliation for Mr. Cesare’s exercise of his constitutionally protected rights,” (Doc. 31 at 

66 ¶ 431), and making the decision to abandon and re-plat Star Valley, Id. at 67 ¶ 432. 

Defendants argue that Plaintiffs fail to specify an injury for this count, and further state 

that the actions taken or threatened to be taken were against the LLC, and thus this claim 

belongs solely to the LLC. (Doc. 31 at 11). 

Plaintiffs do not respond directly to Defendants’ arguments regarding Count 

Fourteen, and their non-response may be deemed consent to the Court granting 

Defendants’ motion as to Count Fourteen. See LRCiv 7.2(i). 

The Court finds that if Defendants withheld building permits or decided to 

abandon and re-plat Star Valley without specific authorization by statute, rule, ordinance, 

or delegation agreement, then the injury would belong to the LLC as the master 

developer and owner of the Star Valley lots. Thus, because the gravamen of this claim is 

injury to the LLC and Plaintiffs do not meet any of the criteria to bring a direct action, 

Plaintiffs do not have standing to bring Count Fourteen. 

. . . 

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C. Ripeness 

Defendants contend that the Court lacks jurisdiction over any claims alleging 

actual re-platting of the Star Valley development because no re-platting has occurred, 

thus making any such claims unripe. (Doc. 38 at 11). Defendants further state that if any 

re-platting had occurred, the cause of action would belong to the LLC. Id. Plaintiffs 

contend that this is not a ripeness argument but a mootness argument, and that the 

voluntary cessation of wrongdoing does not render a case moot. (Doc. 45 at 9). 

Both parties rely on the case of Western Oil & Gas Ass’n v. Sonoma Cnty., 905 

F.2d 1287 (9th Cir. 1990) to argue their respective positions. There, the court explained 

that: 

The ripeness and mootness doctrines are based in part upon 

the Article III requirement that courts decide only cases or 

controversies. An action is unripe when the issues are not sufficiently concrete for judicial resolution. An action is moot 

when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome. The ripeness

inquiry asks whether there yet is any need for the court to act,

while the mootness inquiry asks whether there is anything left 

for the court to do. 

Id. at 1290 (internal quotations and citations omitted). 

Regarding mootness, the Ninth Circuit noted that “actions are not moot when the 

issues they concern are likely to recur,” and “when a controversy is an on-going one, the 

case has not become moot.” Id. The Court also cited its earlier opinion in Seay v. 

McDonnell Douglas Corp., 533 F.2d 1126, 1130 (9th Cir. 1976), where it found that “a 

defendant’s voluntary cessation of wrongdoing did not render the case moot because it 

provided no assurance that the alleged wrongdoing would not recur.” Western Oil, 905 

F.2d at 1290. Thus, “when the possibility of controversy remains, the case is not yet 

moot.” Id. 

Here, Plaintiffs argue that although the re-platting of Star Valley has been 

removed from the Board of Supervisor’s agenda, it could be placed back on the agenda at 

any time. (Doc. 45 at 12). Plaintiffs contend that this voluntary cessation of wrongdoing 

“does not render the case moot because it provides no assurance that the alleged 

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wrongdoing will not recur,” and further contend that “it is almost a certainty that it will 

continue.” Id. at 13. Defendants argue that “[t]he County does not contend that it will not 

re-plat the subdivision, only that it has not yet done so. Therefore . . . this is an issue of 

ripeness rather than mootness because any claims based on an actual re-plat have never 

been ripe.” (Doc. 48 at 5–6). 

“In deciding whether an issue is ripe for review, the court ‘evaluate[s] both the 

fitness of the issues for judicial decision and the hardship to the parties of withholding 

court consideration.’” W. Oil & Gas Ass’n v. Sonoma Cnty., 905 F.2d at 1291 (quoting 

Abbott Laboratories v. Gardner, 387 U.S 136, 148–49 (1967)). To determine fitness, 

“[t]he court inquires whether the controversy generated is essentially legal in nature or 

whether further factual amplication is necessary.” Id. “To meet the hardship requirement, 

a litigant must show that withholding review would result in direct and immediate

hardship and would entail more than possible financial loss.” Id. (internal quotations and 

citation omitted). 

Defendants argue that any claims based on actual re-platting of Star Valley are not 

ripe for judicial review because “facts yet to develop could change the nature of the 

dispute.” (Doc. 38 at 11). Defendants note that “as reflected in the January 20, 2015 

Board of Supervisors’ Meeting Minutes the Board has not yet re-platted Star Valley and 

the staff recommendation to re-plat has been removed from the Board’s agenda.” Id. 

(citing Ex. 5, item 10). In contrast, Plaintiffs argue that their claims are ripe for review 

because “Plaintiffs’ injury arises from the concrete nature of the steps that the County has 

already taking [sic] towards the re-platting.” (Doc. 45 at 12). Specifically, Plaintiffs 

allege that the County’s decision to abandon and re-plat Star Valley and the passing of 

the ordinance empowering the County to take these actions has harmed Plaintiffs by 

creating uncertainty around the future of Star Valley. Id. Thus, Plaintiffs claim that “[t]he 

fact that the subdivision has not yet actually been abandoned is irrelevant to Plaintiffs’ 

claims,” and that further factual amplication is not required for the Court to decide this 

controversy. Id. 

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The parties make two different arguments on this issue: Defendants’ argument is 

that any claims based on actual re-platting of Star Valley are not ripe for review. 

Plaintiffs’ argument is that their injuries are based not in the actual re-platting, but in the 

steps taken by Defendants towards re-platting. The Court concludes that to the extent that

any claims are based on the actual re-platting of Star Valley, those claims are not ripe for 

judicial review. First, the Board of Supervisors has removed the recommendation to 

abandon and re-plat Star Valley from its agenda. This item was removed from the agenda 

on January 20, 2015, and there is no evidence to suggest that it has been added back to 

the agenda. While this item could be added to the agenda for a future meeting, it also 

might not be. Second, Plaintiffs noted in a footnote in their Response to the Motion to 

Dismiss that the LLC has settled its lawsuit against Pima County. While the Court does 

not know the specifics of that settlement, it is entirely possible that the parties reached an 

agreement concerning the infrastructure improvements that would negate the need for the 

County to pursue abandonment and re-platting of Star Valley. 

However, the Court has reviewed Plaintiff’s Complaint and concludes that Counts 

Four through Fourteen are all based on Defendants’ threat or attempt to abandon and replat the Star Valley blocks.5 Thus, to the extent that these claims are not based on the 

actual re-platting of Star Valley but on the steps taken by Defendants toward re-platting, 

these claims are ripe for review and are not moot because the Court may properly 

determine whether Defendants’ threatened actions caused harm to Plaintiffs.

6

 However, 

because the injury alleged in Counts Four, Six, Eight, Ten,7 Twelve, Thirteen, and 

Fourteen is uncertainty around the future of Star Valley, any causes of action based on 

 

5 Counts One, Two and Three are based on the statements in the April 9, 2014 letter, while Count Fifteen is for punitive damages. Counts Four through Fourteen are 

also based on additional grounds, including the April 9, 2014 letter and Defendants’ 

decision to withhold building permits. 

6 For example, Plaintiffs allege that Defendants’ threats to abandon and re-plat Star Valley caused LGI to terminate its contract with Star Valley. 

7 With the exception of the first duty alleged in Count Ten, which the undersigned recommends Plaintiffs do have standing to bring. 

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the harm created by this uncertainty properly belong to the LLC, and Plaintiffs lack 

standing to bring them. 

D. Conclusion 

In sum, the undersigned recommends that Plaintiffs lack standing to bring Counts 

Four, Six, Eight, Ten,8 Twelve, Thirteen and Fourteen because the claims properly 

belong to the non-party LLC. Furthermore, Plaintiffs have failed to show that they meet 

any of the criteria to establish standing for a direct action: there is no special relationship 

between Plaintiffs and Defendants separate from Plaintiffs’ interest in the corporation, 

Defendants do not owe a duty to Plaintiffs for some reason other than their status as 

shareholders, and Plaintiffs have failed to allege a distinct injury to Plaintiffs separate 

from the injury to the LLC. See Albers, 201 Ariz. at 52. The Court finds Plaintiffs do 

have standing to bring Count Three and the first duty alleged in Count Ten, because these 

claims assert injuries to Mr. Cesare personally. Accordingly, the undersigned 

recommends that the District Court enter an order granting in part and denying in part 

Defendants’ Motion to Dismiss for lack of standing pursuant to Fed. R. Civ. P. 12(b)(1). 

III. MOTION TO DISMISS: FAILURE TO STATE A CLAIM 

Defendants argue Counts One, Two, Three, Six, Seven, Eight, Nine, Ten, Eleven, 

and Fifteen should be dismissed for failure to state a claim upon which relief can be 

granted. (Doc. 38 at 12).9

 

A. Legal Standard 

Pursuant to Rule 12(b)(6), the Court may grant a motion to dismiss when the 

plaintiff fails to state a claim upon which relief can be granted. A complaint must contain 

 

8 With the exception of the first duty alleged in Count Ten, which the undersigned recommends Plaintiffs do have standing to bring. 

9 Defendants make this argument in the alternative for Counts Three, Six, and Eight in the event that the Court does not dismiss these counts based on lack of standing. 

Defendants also argue that if the Court dismisses Count Ten in part based on lack of 

standing, the remaining part of Count Ten should be dismissed based on failure to state a 

claim. Finally, Defendants note that they do not address whether Counts Four, Twelve, 

Thirteen, and Fourteen also fail to state a claim upon which relief may be granted because 

they argue Plaintiffs lack standing to bring these claims. See Doc. 38 at 12 n. 7. 

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a “short and plain statement of the grounds for the court’s jurisdiction,” a “short and plain 

statement of the claim showing that the pleader is entitled to relief,” and “a demand for 

the relief sought.” Fed.R.Civ.P. 8(a). While Rule 8 does not demand factual allegations, 

“it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of a cause of action, 

supported by mere conclusory statements, do not suffice.” Id. 

 A dismissal for failure to state a claim “is proper only where there is no cognizable 

legal theory or an absence of sufficient facts alleged to support cognizable legal theory.” 

Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001) (internal citation omitted). However, 

“the court [is not] required to accept as true allegations that are merely conclusory, 

unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State 

Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 

To survive a motion to dismiss under Rule 12(b)(6), a pleading must allege facts 

sufficient “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 555 (2007). A claim must be plausible, allowing the court to 

draw the reasonable inference that the defendant is liable for the conduct alleged. Iqbal, 

556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,’ but 

it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. 

(quoting Twombly, 550 U.S. at 557). “Where a complaint pleads facts that are merely 

consistent with a defendant’s liability, it stops short of the line between possibility and 

plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678. 

“In adjudicating a Rule 12(b)(6) motion to dismiss, . . . a court does not resolve 

factual disputes between the parties on an undeveloped record. Instead, the issue is 

whether the pleading states a sufficient claim to warrant allowing the [plaintiffs] to 

attempt to prove their case.” Coleman v. City of Mesa, 230 Ariz. 352, 363 (Sup. Ct. 

2012); see also Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (“factual 

challenges to a plaintiff’s complaint have no bearing on the legal sufficiency of the 

allegations under Rule 12(b)(6)”), overruling on other grounds recognized by Jack 

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Loumena v. Walter P. Hammon, 2015 WL 7180679 (N.D. Cal. Nov. 16, 2015). Thus, 

Defendants’ Motion to Dismiss does not require the Court to analyze the nature and 

extent of the transportation finance plan agreement between Plaintiffs and Defendants, if 

any, or what alleged obligations Plaintiffs or the LLC have in regard to offsite 

improvements. The Court only considers whether Plaintiffs have sufficiently stated their 

claims to justify allowing those claims to move forward. 

The Court must view the complaint in the light most favorable to the nonmoving 

party, with every doubt resolved on his behalf, and with that party’s allegations taken as 

true. See Abramson v. Brownstein, 897 F.2d 389, 391 (9th Cir. 1990). Generally, the 

Court only considers the face of the complaint when deciding a motion under Rule 

12(b)(6). See Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 

2002). Consideration of matters outside the pleading converts the Rule 12(b)(6) motion to 

a Rule 56 motion for summary judgment, unless one of two exceptions are met: 

First, a court may consider material which is properly 

submitted as part of the complaint on a motion to dismiss 

without converting the motion to dismiss into a motion for 

summary judgment. If the documents are not physically 

attached to the complaint, they may be considered if the 

documents’ authenticity . . . is not contested and the plaintiff's complaint necessarily relies on them. Second, under 

Fed.R.Evid. 201, a court may take judicial notice of matters of public record. 

Lee, 250 F.3d at 688–89 (internal quotations and citations omitted); see also Harris v. 

Cnty. Of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (“documents not attached to a 

complaint may be considered if no party questions their authenticity and the complaint 

relies on those documents.”). The Court “may take judicial notice of court filings, as they 

are matters of public record, and ‘[i]t is also well established that a federal district court 

can take judicial notice of its own records.’” Baca ex rel. Nominal Defendant Insight 

Enterprises, Inc. v. Crown, 2010 WL 2812712, at *2 (D. Ariz. July 12, 2010) aff’d sub 

nom. Baca v. Crown, 458 F. App’x 694 (9th Cir. 2011) (citations omitted). “[While a] 

court may take judicial notice of matters of public record without converting a motion to 

dismiss into a motion for summary judgment . . . a court may not take judicial notice of a 

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fact that is subject to reasonable dispute.” Lee, 250 F.3d at 689. 

B. Count One: Defamation 

In Count One, Plaintiffs allege Defendants Pima County, Sharon Bronson, Chuck 

Huckelberry, and Carla Blackwell defamed Joseph Cesare when Defendant Blackwell 

published false allegations and insinuations about Mr. Cesare to members of the Star 

Valley HOA. (Doc. 31 at 31). Citing the April 9, 2014 letter, Plaintiffs allege that 

Defendant Blackwell stated that Mr. Cesare breached his fiduciary responsibility to the 

HOA, that he lied and misrepresented facts to the HOA members, that his lies harmed the 

HOA members, that he is negligent, that he deserves to be sued, that he has neglected his 

legal and moral responsibilities, that he has acted in bad faith, and that he has not acted 

properly to maintain the HOA’s assets. Id. ¶ 186. Plaintiffs claim these allegations have 

harmed Joseph Cesare’s reputation and have deterred others from associating with him, 

and that he has lost business expectancies and contractual relationships, which have 

resulted in lost profits. Id. at 32–33 ¶¶ 197–198. 

Defendants argue Plaintiffs have failed to state a defamation claim because 

Defendant Blackwell’s statements are protected by qualified immunity and Plaintiffs 

“allege insufficient objective facts to plausibly infer a knowing or recklessly false 

publication.” (Doc. 38 at 13). Defendants further contend that the text of the April 9, 

2014 letter makes clear that Defendant Blackwell had no malicious intent and that the 

statements in the letter were made in response to Star Valley residents’ comments. Id. at 

14. 

“One who publishes a false and defamatory communication concerning a private 

person . . . is subject to liability if, but only if, he (a) knows that the statement is false and 

it defames the other, (b) acts in reckless disregard of these matters, or (c) acts negligently 

in failing to ascertain them.” Dube v. Likins, 216 Ariz. 406, 417 (Ct. App. 2007) (internal 

quotations and citations omitted). “To be defamatory, a publication must be false and 

must bring the defamed person into disrepute, contempt, or ridicule, or must impeach 

plaintiff’s honesty, integrity, virtue, or reputation.” Id. at 418 (internal quotations and 

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citations omitted). “Whether a statement is capable of defamatory meaning is a question 

of law for the court, but whether the meaning conveyed was defamatory is a question for 

the jury.” Id. (citation omitted). 

“Qualified immunity protects government officials from liability for acts within 

the scope of their public duties unless the official knew or should have known that he was 

acting in violation of established law or acted in reckless disregard of whether his 

activities would deprive another person of their rights.” Chamberlain v. Mathis, 151 Ariz. 

551, 558 (Sup. Ct. 1986). “State officials are acting within their discretionary authority 

when they set policy or perform an act that inherently requires the exercise of their 

judgment or discretion.” Carroll v. Robinson, 178 Ariz. 453, 457 (Ct. App. 1994). 

 To protect public officials from time-consuming trials, plaintiffs are required to 

establish proof of objective malice. Chamberlain, 151 Ariz. at 559. 

Thus, in a defamation case, qualified immunity will protect a 

public official if the facts establish that a reasonable person, 

with the information available to the official, could have 

formed a reasonable belief that the defamatory statement in 

question was true and that the publication was an appropriate 

means for serving the interests which justified the privilege. 

Id. (internal quotations and citation omitted); see also W. Technologies, Inc. v. Neal, 159 

Ariz. 433, 440 (Ct. App. 1988). Because Defendants in the present case are public 

officials, they are entitled to qualified immunity for their allegedly defamatory statements 

about Plaintiffs. Defendants “forfeit[] [t]his immunity if, and only if, [they] (1) acted 

outside the outer perimeter of [their] required or discretionary functions, or (2) acted with 

malice in that [they] knew [their] statements regarding plaintiffs were false or acted in 

reckless disregard of the truth.” Id. at 560. 

The Court finds that there are factual issues as to whether the statements contained 

in the April 9, 2014 letter were made in reckless disregard of the truth. The parties in this 

case dispute whether Plaintiffs and the LLC ever signed an agreement with the County 

regarding who would pay for construction of offsite infrastructure, and who was 

obligated to maintain the trail system. Plaintiffs contend that there is no transportation 

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finance plan in place between the County and the LLC, while the County maintains that 

there is an agreement and that it obligates the LLC to pay for the Camino Verde road 

extension and half the cost of a traffic signal. Given these disputed issues of fact, the 

Court cannot at this juncture resolve the factual issue of whether the alleged defamatory 

statements were knowingly false when made or were made in reckless disregard of the 

truth. Further, it is also plausible that the Defendants made the statements outside the 

scope of their discretionary authority. Accordingly, there is a disputed factual issue as to 

whether Defendants are entitled to qualified immunity on this claim, and the undersigned 

therefore recommends that the Motion to Dismiss be denied as to Count One. 

C. Count Two: False Light 

In Count Two, Plaintiffs allege Defendants Pima County, Sharon Bronson, Chuck 

Huckelberry, and Carla Blackwell have placed Joseph Cesare in a false light in the public 

eye because of the false allegations, actions, and insinuations Defendants published about 

Mr. Cesare. (Doc. 31 at 34 ¶¶ 206–207). 

 Defendants contend Plaintiffs have “fail[ed] to state a claim for false light invasion 

of privacy because the publicized matter concerned the life of a person in whom the 

recipients had a rightful interest and the information communicated was of public 

benefit.” (Doc. 38 at 15). Defendants first argue that “Plaintiffs plead insufficient facts to 

plausibly infer that the statements in Carla Blackwell’s letter were knowingly false or 

made with reckless disregard as to falsity or false innuendo.” Id. at 16. Second, 

Defendants argue that the comments made in the April 9, 2014 letter were limited to 

Joseph Cesare’s professional responsibilities as a board member and officer of the Star 

Valley HOA and his professional obligations to the Star Valley residents, and that “Mr. 

Cesare has no right of privacy in withholding information from the residents about how 

he executes his official duties in relation to the development.” Id. at 17. Defendants 

further contend that “[t]he residents of Star Valley have a rightful interest in that 

information, and the County has a responsibility to respond to its constituents with 

information that is of public benefit.” Id. Plaintiffs contend that Joseph Cesare is not a 

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public figure but “simply a businessman in Tucson.” (Doc. 45 at 17). 

False light invasion of privacy occurs when “the defendant knowingly or 

recklessly published false information or innuendo about the plaintiff that a reasonable 

person would find highly offensive.” Hart v. Seven Resorts Inc., 190 Ariz. 272, 280 (Ct. 

App. 1997). “[T]he plaintiff in a false light case must prove that the defendant published 

with knowledge of the falsity or reckless disregard for the truth.” Godbehere v. Phoenix 

Newspapers, Inc., 162 Ariz. 335, 340 (Sup. Ct. 1989). “A defendant is not liable in a false 

light case unless the publication places the plaintiff in a false light highly offensive to a 

reasonable person.” Id. “Thus, the plaintiff’s subjective threshold of sensibility is not the 

measure, and ‘trivial indignities’ are not actionable.” Id. “[T]o qualify as a false light 

invasion of privacy, the publication must involve a major misrepresentation of [the 

plaintiff’s] character, history, activities, or beliefs.” Id. at 341 (internal quotations and 

citation omitted). 

Privacy rights are “absent or limited in connection with the life of a person in 

whom the public has a rightful interest, [or] where the information would be of public 

benefit.” Id. at 343 (internal quotations and citation omitted). Invasion of privacy “does 

not exist if there has been consent to publication, or where the plaintiff has become a 

public character, and thereby waived his right to privacy, nor in the ordinary 

dissemination of news and events.” Reed v. Real Detective Pub. Co., 63 Ariz. 294, 304 

(Sup. Ct. 1945). While “a public figure may bring a false light claim for statements that 

relate to his private life and present[] his private life in a false light,” the plaintiff is 

required to “show that the defendant acted with actual malice— that is, knowledge that [a 

statement] was false or reckless disregard of whether it was false or not.” Ultimate 

Creations, Inc. v. McMahon, 515 F. Supp. 2d 1060, 1066 (D. Ariz. 2007) (internal 

quotations and citations omitted); Godbehere, 162 Ariz. at 343. 

The Court finds that while Mr. Cesare is the president of the Star Valley HOA and 

a property developer in Pima County, there is insufficient evidence before the Court to 

determine whether this is enough to propel Mr. Cesare into the category of public figure. 

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Further, as noted above, the Court finds that there are factual issues as to whether the 

statements contained in the April 9, 2014 letter were made in reckless disregard of the 

truth. Given the parties’ conflicting positions as to whether there was an agreement in 

place regarding financial responsibility for offsite infrastructure at Star Valley, there are 

disputed issues of fact that the Court cannot resolve on a motion to dismiss as to whether 

the Defendants in this matter knowingly or recklessly published false information about 

Plaintiffs that a reasonable person would find highly offensive. See Hart, 190 Ariz. at 

280; Godbehere, 162 Ariz. 340. Accordingly, the undersigned recommends the District 

Court deny the Motion to Dismiss as to Count Two for failure to state a claim under Rule 

12(b)(6). 

D. Count Three: Injurious Falsehoods 

 In Count Three Plaintiffs allege Defendants Pima County, Sharon Bronson, Chuck 

Huckelberry, and Carla Blackwell made false and misleading allegations, actions, and 

insinuations about Joseph Cesare, and that Defendants published these disparaging 

falsehoods to prevent others from doing business with Joseph Cesare. (Doc. 31 at 35 ¶¶ 

213–214). 

Defendants contend Plaintiffs lack standing to bring this claim, but “in an 

abundance of caution,” also move to dismiss Count Three for failure to state claim 

because (1) Defendant Blackwell is entitled to qualified immunity for the statements in 

the April 9, 2014 letter, and (2) Plaintiffs have failed to plead sufficient facts to plausibly 

infer that the statements in the letter were knowingly false or made with reckless 

disregard as to their truth or falsity. (Doc. 38 at 17). Plaintiffs do not respond directly to 

Defendants’ arguments regarding Count Three. 

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Three, and further recommends that Plaintiffs have stated a plausible claim for relief for 

injurious falsehoods. As noted above in the Court’s discussion of Count One, there are 

disputed issues of fact as to whether the statements made by Defendant Blackwell in the 

April 9, 2014 letter were made within the scope of her discretionary authority, and as to 

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whether the statements were knowingly false when made or made in reckless disregard of 

the truth. Thus, there is a factual dispute as to whether Defendants are entitled to 

qualified immunity on this count, and the Court cannot resolve these factual disputes on a 

motion to dismiss. Accordingly, the undersigned recommends that the District Court 

deny the Motion to Dismiss Count Three for failure to state a claim under Rule 12(b)(6). 

E. Count Six: 42 U.S.C. § 1983—Violation of Equal Protection and Count 

Eight: Violation of Equal Protection 

 In Count Six Plaintiffs allege Defendants Bronson, Huckelberry, and Blackwell 

have treated Plaintiffs differently than Lennar and differently than other developers in 

Pima County by only withholding building permits for lots that Plaintiffs have an interest 

in, and by only pursuing abandonment and re-platting of the Star Valley blocks that 

Plaintiffs have an interest in. (Doc. 31 at 44–46). Plaintiffs also allege Defendants 

Bronson and Huckelberry have not withheld building permits for blocks owned by 

Lennar, nor have Defendants pursued the abandonment and re-platting of any other 

development in Pima County. Id. ¶¶ 283–285. In Count Eight, Plaintiffs make the same 

allegations against Defendant Pima County. (Doc. 31 at 51–53). 

While the undersigned recommends that Plaintiffs lack standing to bring Counts 

Six and Eight because the injury alleged is harm to the LLC and its ability to sell lots, the 

undersigned will also consider whether these counts fail to state a claim under Rule 

12(b)(6). 

Plaintiffs allege the County has only denied building permits and pursued 

abandonment and re-platting of Blocks 4, 7, and 8 of Star Valley, which Plaintiffs have 

an ownership interest in. (Doc. 31 at 44 ¶¶ 277–79). Plaintiffs further allege that Blocks 

2, 13, and 18 of Star Valley are owned solely by Lennar, and that these blocks have the 

same obligations to the County as the blocks Mr. Cesare has an interest in. Id. at ¶¶ 280–

81. Plaintiffs contend that “[i]f Sharon Bronson and Chuck Huckelberry genuinely 

believe that obligations attached to Blocks 4, 7 and 8 (in which Mr. Cesare and SVA have 

an interest) dictate that the Master Developer and Mr. Cesare owe the County money, 

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then they must necessarily believe that Lennar also has those obligations in respect of 

Blocks 2, 13 and 18.” Id. at ¶ 282. Plaintiffs further contend that other developments in 

Pima County are in default of agreements with the County and owe the County money, 

yet the County has not pursued the abandonment and re-platting of any other 

developments in Pima County. Id. at 45 ¶¶ 285–87. Plaintiffs therefore conclude that 

Defendants’ reason for withholding building permits and re-platting Blocks 4, 7, and 8 is 

pretext because Plaintiffs and the LLC do not owe the County any money, and 

Defendants have no legitimate objective to justify treating Plaintiffs differently than 

Lennar and other developers. Id. at 46. 

Defendants argue “that the decision whether and how to react to a default of an 

assurance agreement is the type of discretionary decision that requires managerial 

discretion and is an improper subject upon which to request judicial supervision via the 

Equal Protection Clause.” (Doc. 38 at 19). Defendants explain that Blocks 4, 7, and 8 are 

subject to an assurance agreement that restricts sale or transfer of the lots. Id. at 19–20. 

The assurance agreements require that the subdivider (the 

LLC) not transfer lots without Pima County’s prior written 

approval, require the subdivider to construct subdivision 

improvements within four years, and give the County the 

option to re-plat all or part of the land if the LLC fails to comply with the terms of the agreement. 

Id. at 20 (citing Exhibit 6, PC Assurance Agreements at §§ 2.5, 2.11, and 2.13 of each 

agreement (pp. 2 & 3 (Block 4), 7 & 8 (Block 7), and 12 & 13 (Block 8))). Defendants 

contend that the LLC is in default of the assurance agreements for Blocks 4, 7, and 8, and 

that “[h]ow to respond to a default is a discretionary decision that calls for individualized 

assessment and treatment.” Id. at 21. Defendants further argue that even if Plaintiffs had 

alleged a viable equal protection claim, Plaintiffs fail to identify a similarly situated class 

of developers or developments. Id. 

While equal protection jurisprudence is typically focused on governmental 

classifications that affect some groups of citizens differently than others, the Supreme 

Court in Village of Willowborok v. Olech, 528 U.S. 562 (2000), “recognized that an equal 

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protection claim can in some circumstances be sustained even if the plaintiff has not 

alleged class-based discrimination, but instead claims that she has been irrationally

singled out as a so-called ‘class of one.’” Engquist v. Oregon Dep’t of Agric., 553 U.S. 

591, 601 (2008) (citations omitted). The Engquist Court noted that what was significant 

in Olech “was the existence of a clear standard against which departures, even for a 

single plaintiff, could be readily assessed,” and that “[t]here was no indication in Olech

that the [government] was exercising discretionary authority based on subjective, 

individualized determinations.” Id. at 602. Thus, the “differential treatment [in Olech] 

raised a concern of arbitrary classification, and [the Supreme Court] therefore required 

that the State provide a rational basis for it.” Id. at 603. 

The class-of-one doctrine does not apply to forms of state action that “by their 

nature involve discretionary decisionmaking based on a vast array of subjective, 

individualized assessments.” Id. 

In such cases the rule that people should be “treated alike, 

under like circumstances and conditions” is not violated when 

one person is treated differently from others, because treating 

like individuals differently is an accepted consequence of the 

discretion granted. In such situations, allowing a challenge 

based on the arbitrary singling out of a particular person 

would undermine the very discretion that such state officials 

are entrusted to exercise. 

Id. “[T]he existence of discretion, standing alone, cannot be an Equal Protection 

violation. At the very least, there must be some respect in which the discretion is being 

exercised so that the complaining individual is being treated less favorably than others 

generally are.” Towery v. Brewer, 672 F.3d 650, 661 (9th Cir. 2012). 

“To succeed on [a] ‘class of one’ claim, [the plaintiff] must demonstrate that the 

[defendant]: (1) intentionally (2) treated [plaintiff] differently than other similarly 

situated property owners, (3) without a rational basis.” Gerhart v. Lake Cty., Mont., 637 

F.3d 1013, 1022 (9th Cir. 2011). “A mere allegation of disparate impact is insufficient; 

there must also be factual allegations that the defendant was purposefully involved with a 

discriminatory intent.” Bison Contracting Co. v. Halikowski, 2013 WL 6725850, at *4 

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(Ariz. Ct. App. Dec. 19, 2013). 

Here, despite Plaintiffs’ allegations that they are being treated differently than 

Lennar and differently than other property developers in Pima County, the evidence 

shows that Defendants have provided a rational basis for their actions and that 

Defendants were exercising their discretionary authority. The Notice of Default and 

Intent to Re-Plat clearly outlines the reasons for the County’s decisions. (Doc. 38 Ex. 

4).10 The Notice explains that the LLC is in default of the assurance agreements for 

Blocks 4, 7, and 8, and that the County intends to initiate its option to re-plat based on:

“(1) failure to complete subdivision improvements within the allotted time; (2) lack of 

proper assurance agreements and transfer of title of blocks 4, 7, and 8 without County 

authorization; (3) failure to comply with transportation financing and implementation 

plan and associated conditions of rezoning; and (4) changes in surrounding conditions.” 

(Doc. 38 at 20) (citing Exhibit 4 at pp. 1–2). Attached to the Notice is Pima County 

Board of Supervisors Policy F.53.4, which outlines the process for renewing assurance 

agreements and what actions to take when an agreement is in default. The Policy explains 

that: 

If in default, the County has the option to re-plat the subdivision or, in some cases, the option to re-confirm 

compliance of the subdivision with current regulations and 

conditions . . . In many instances the failure to construct 

improvements within the timeframe does not present an 

immediate problem since none of the subdivision lots have 

been released from the assurance trust for sale to consumers 

and the surrounding conditions have not changed. However, in partially constructed developments where some lots have 

been released and sold prior to completion of all 

infrastructure, as well as in older subdivision with outdated 

traffic and hydrology studies or delinquent taxes that could 

result in lots being conveyed out of the assurance trust 

without necessary infrastructure, it is in the best interest of the 

Count to consider exercising its option to re-plat. 

(Doc. 38 Ex. 4 at 5). The Policy further states that “[t]he Development Services Director 

 

10 The Court notes that this Notice is specifically addressed to the LLC and Stewart Title & Trust of Tucson as the subdivider and trustee, and was copied to Joseph Cesare as Vice President of SVA, among others. 

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or designee may, at his sole discretion, initiate the County’s option to re-plat or allow the 

property owner to cure the default ,” and once the re-platting option is initiated, the Board 

of Supervisors will then consider a resolution to direct staff to begin the re-platting 

process. Id. at 6–7. It is evident from the Notice that the County had rational reasons for 

initiating the abandonment and re-platting process for Blocks 4, 7, and 8, and that Policy 

F.53.4 authorizes the County to exercise its discretionary authority in determining what 

actions to take when a property developer is in default of an assurance agreement. 

Furthermore, as Defendants note, Plaintiffs have failed to identify a similarly 

situated class of developers or developments. While Plaintiffs claim Blocks 2, 13, and 18 

have not been identified for abandonment and re-platting, Plaintiffs “do not allege those 

lots were transferred without authorization or that they remain subject to assurance 

agreements under which improvements had not been completed.” (Doc. 38 at 21). 

Plaintiffs also fail to make specific allegations about any other developments in Pima 

County where the same conditions were present as outlined in the Notice for Blocks 4, 7, 

and 8, but where the County did not initiate abandonment and re-platting. Plaintiffs 

attached a memorandum from the Pima County Development Services Director to 

Defendant Huckelberry to their Response, which explains that Blocks 2, 10, 13, 15 and 

18 have been released for sale to homebuyers. (Doc. 45–1 Ex. A at 3). Thus, Defendants 

note, these blocks have been released from their assurance agreements and therefore 

cannot be in default of the agreements. (Doc. 48 at 12). The memorandum also explains 

that other Pima County properties in default of assurance agreements differ from Blocks 

4, 7, and 8 because the property owners have not disputed that they must comply with 

their obligations. (Doc. 45–1 Ex. A at 5) (“Of the projects requiring offsite improvements 

where partial lot releases have occurred, the Star Valley development is the only project 

with a currently confirmed default of the assurance agreement where the developer is 

disputing its obligation to construct the required improvements.”). The memorandum 

further notes that in 2008, Mr. Cesare advised the County that Title Guaranty Agency 

was no longer in business and he wished to assign Blocks 1, 3, 5, 6, 9, 11, 12, 14, 16, 17, 

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19, 21, and 25 to Stewart Title. (Doc. 45–1 Ex. A at 3). New assurance agreements for 

these blocks were made with Stewart Title, but Blocks 4, 7, and 8 were not included, and 

Blocks 4, 7, and 8 were conveyed to Stewart Title without the County’s permission and 

without new assurance agreements. Id. In addition, a Board of Supervisors Memorandum 

explains that Blocks 4, 7, and 8 have no supporting infrastructure, and the County has not 

withheld building permits on other blocks within Star Valley that do have adequate 

infrastructure. (Doc. 45–1 Ex. C at 52). In sum, Plaintiffs’ own evidence undermines their 

argument that they are being treated differently than similarly situated property 

developers, nor have Plaintiffs identified a similarly situated class of developers or 

developments. Further, Plaintiffs have not shown that Defendants lacked a rational basis 

for distinguishing Blocks 4, 7, and 8 from other lots in Pima County. See Gerhart, 637 

F.3d at 1023 (“the rational basis prong of a ‘class of one’ claim turns on whether there is 

a rational basis for the distinction, rather than the underlying government action.” 

(emphasis in original)). 

In sum, Plaintiffs have not met their burden to succeed on their “class of one” 

claim because they have failed to demonstrate that Defendants: “(1) intentionally (2) 

treated [Plaintiffs] differently than other similarly situated property owners, (3) without a 

rational basis.” Gerhart, 637 F.3d at 1022. Plaintiffs’ conclusory allegation that 

Defendants’ actions were “arbitrary and capricious” is insufficient to show Defendants 

acted with a discriminatory intent. Further, Plaintiffs have failed to identify a similarly 

situated class of developers or developments. Finally, Defendants have provided rational 

reasons for initiating the abandonment and re-platting process for Blocks 4, 7, and 8, and 

for distinguishing Blocks 4, 7, and 8 from other lots in Pima County. Further, the 

undersigned finds that Defendants were exercising the discretionary authority afforded to 

them under Pima County Board of Supervisors Policy F.53.4 when they decided how to 

respond to the LLC’s default of the assurance agreements. Accordingly, the undersigned 

recommends that the District Court dismiss Counts Six and Eight for failure to state a 

claim. 

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F. Count Seven: 42 U.S.C. § 1983—Violation of Substantive Due Process

and Count Nine: Violation of Substantive Due Process 

 In Count Seven, Plaintiffs allege Defendants Bronson, Huckelberry, and Blackwell 

have unreasonably interfered with Plaintiffs’ property and liberty interests and with Mr. 

Cesare’s right to pursue his chosen occupation of property developer. (Doc. 31 at 47–48 

¶¶ 299–301). Plaintiffs claim the retaliatory acts of Defendants include defamatory and 

harmful statements about Mr. Cesare’s honesty and integrity, the threat to abandon and 

re-plat Star Valley, the refusal to grant new building permits, the refusal to install a 

median cut at Star Valley Commercial Center, and the refusal to settle the LLC’s lawsuit 

in Pima County Superior Court unless the Plaintiffs also abandon this lawsuit. Id. at 47 ¶ 

298. Plaintiffs further state that Defendants’ actions were not motivated “by legitimate 

regulatory concerns, but by political and personal retribution and retaliation.” Id. at 49 ¶ 

309. Plaintiffs further allege that “[t]he retaliatory acts of [Defendants] have directly 

resulted in the dramatic reduction in value of the Master Developer, because the Master 

Developer can no longer sell any lots at Star Valley.” Id. at 48 ¶ 302. Thus, because Mr. 

Cesare owns SVA and SVA has a 50% ownership interest in the Master Developer (the 

LLC), Plaintiffs contend that the devaluation of the Master Developer “has directly 

interfered with the rights of Mr. Cesare and SVA to operate their business.” Id. ¶¶ 303–

304. In Count Nine, Plaintiffs make the same allegations against Defendant Pima County. 

Id. at 53–58. 

Defendants argue Counts Seven and Nine should be dismissed as duplicative of 

Plaintiffs’ First Amendment retaliation claim. (Doc. 38 at 22). Plaintiffs counter that Fed. 

R. Civ. P. 8(d)(2) “expressly permits a party to ‘set out 2 or more statements of a claim or 

defense alternatively or hypothetically, either in a single count or defense or in separate 

ones.’” (Doc. 45 at 26) (citing Fed.R.Civ.P. 8(d)(2)). Plaintiffs also cite Rule 8(d)(3), 

which allows a party to “state as many separate claims or defenses as it has, regardless of 

consistency,” and Tempe Corp. Office Bldg. v. Arizona Funding Servs., Inc., 167 Ariz. 

394, 398 (Ct. App. 1991), which noted that “[i]nconsistent pleading is permissible; a 

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party need not elect in advance of trial the theory upon which he will rely or the remedy 

he will seek.” However, Defendants argue that despite these general pleading rules, 

binding case law prevents Plaintiffs from relying on substantive due process when the 

First Amendment would provide explicit protection for the type of retaliation Plaintiffs 

allege. (Doc. 48 at 13).11 

“Section 1983 is not itself a source of substantive rights, but merely provides a 

method for vindicating federal rights conferred elsewhere.” Albright v. Oliver, 510 U.S. 

266, 271 (1994) (internal quotations and citation omitted). “The first step in any such 

claim is to identify the specific constitutional right allegedly infringed.” Id. (citation 

omitted). Here, Plaintiffs do not claim that their due process rights were violated under a 

specific amendment. Rather, Plaintiffs allege Defendants have unreasonably interfered 

with Plaintiffs’ property and liberty interests and with Mr. Cesare’s right to pursue his 

chosen occupation of property developer, and that these harms stem from Defendants’ 

retaliation against Mr. Cesare for his political support of a Republican candidate in the 

2012 Pima County elections. “The protections of substantive due process have for the 

most part been accorded to matters relating to marriage, family, procreation, and the right 

to bodily integrity,” thus Plaintiffs’ claim here “is markedly different from [the rights] 

recognized in this group of cases.” Id. 

 In Albright, the Supreme Court held that “[w]here a particular Amendment 

provides an explicit textual source of constitutional protection against a particular sort of 

government behavior, that Amendment, not the more generalized notion of substantive 

due process, must be the guide for analyzing these claims.” Id. at 273 (internal quotations 

and citation omitted). Thus, Defendants argue that because Plaintiffs state essentially the 

same claims in Count Five under the First Amendment as they do here in Counts Seven 

and Nine, and because the First Amendment provides explicit protection for the harms 

Plaintiffs allege, Counts Seven and Nine should be dismissed. 

 

11 Plaintiffs focus the remainder of their Response on the merits of Counts Seven and Nine, but Defendants do not attack the merits of these claims. Rather, Defendants’ 

argument is based on Counts Seven and Nine being duplicative of Count Five. 

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Defendants cite cases from the First and Sixth Circuits, which, though not binding 

on this Court, are instructive. In Handy-Clay v. City of Memphis, 695 F.3d 531 (6th Cir. 

2012), a wrongful termination case, the court noted that “‘what would serve to raise 

defendant’s actions beyond the wrongful to the unconscionable and shocking are facts 

which, if proven, would constitute, in themselves, a specific constitutional violation.’” Id. 

at 548 (quoting Velez v. Levy, 401 F.3d 75, 94 (2d Cir. 2005)). Thus, the court concluded 

that “[b]ecause there is . . . ‘an enumerated constitutional right . . . available as a source 

of protection’ available in Handy-Clay’s case, we conclude that she has failed to allege 

sufficient facts to support a substantive due process claim.” Id. (quoting Thaddeus-X v. 

Blatter, 175 F.3d 378, 387 (6th Cir. 1999)). Similarly, in Nestor Colon Medina & 

Sucesores, Inc. v. Custodio, 964 F.2d 32, 45–46 (1st Cir. 1992), the First Circuit noted 

that the refusal to issue building permits, even in alleged violation of state law or 

administrative procedures, does not ordinarily implicate substantive due process. There, 

the court found that: 

To the extent [plaintiff’s] substantive due process claim is 

based on the alleged retaliation for his political views, it is coextensive with his First Amendment claim. Should that 

claim turn out to be viable in regard to the residential site 

permit, . . . there is obviously no need to enter the unchartered 

thicket of substantive due process to find an avenue for relief, 

and we decline to do so. 

Id. at 46. However, in contrast to Handy-Clay and Nestor Colon, the Supreme Court of 

Arizona has held that “independent of any free speech issues, the Equal Protection and 

Due Process Clauses protect against government action that is arbitrary, irrational, or not 

reasonably related to furthering a legitimate state purpose.” Coleman, 230 Ariz. at 362. In 

that case, the court reversed the lower court’s granting of the defendants’ motion to 

dismiss and allowed the plaintiffs’ claims under the First Amendment as well as their 

claims for due process and equal protection to go forward. Id. at 363. 

In sum, while Coleman may seem to weigh against dismissal of Counts Seven and 

Nine, Coleman was a state court case and the balance of U.S. Supreme Court and Circuit 

cases on this issue hold that where the First Amendment explicitly protects against the 

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harm Plaintiffs allege, then the claims must be brought under that specific amendment 

and not the more generalized notion of substantive due process. Further, in Counts Seven 

and Nine, the essence of the harm alleged by Plaintiffs is interference with the rights of 

Mr. Cesare and SVA to operate their business. However, in Litmon v. Harris, 768 F.3d

1237, 1242 (9th Cir. 2014), the court noted that “the Supreme Court has never held that 

the right to pursue a profession is a fundamental right,” and that “a restriction on the 

conduct of a profession will run afoul of substantive due process rights only if it is 

irrational.” (internal quotations and citations omitted). Thus, the fact that Plaintiffs have 

no fundamental right to operate their business, combined with the fact that their 

substantive due process claims are based on alleged retaliation for Mr. Cesare’s protected 

political speech and are thus coextensive with their First Amendment claim, weighs in 

favor of dismissing Counts Seven and Nine. Accordingly, the undersigned recommends 

that the Court dismiss these counts for failure to state a claim. 

G. Count Ten: Negligence 

 In Count Ten Plaintiffs allege Defendants Pima County, Sharon Bronson, Chuck 

Huckelberry, and Carla Blackwell had a duty to Plaintiffs to (1) only provide truthful 

statements to the public regarding negotiations between Joseph Cesare and the County,

(2) to only withhold building permits from Star Valley where there was statutory 

authority to do so, and (3) to not attempt to abandon and re-plat Star Valley without 

statutory authority and good cause. (Doc. 31 at 59 ¶¶ 367, 370, 373). Plaintiffs maintain 

that Defendants’ breach of these duties constitutes negligence and/or negligence per se. 

Id. at 60 ¶ 376. 

As noted in the Court’s discussion of the motion to dismiss for lack of standing, 

the undersigned recommends that Plaintiffs do not have standing to bring a negligence 

claim for the second and third duties alleged. Accordingly, the undersigned now 

considers whether Plaintiffs have stated a negligence or negligence per se claim for 

Defendants’ alleged violation of their duty to only provide truthful statements to the 

public regarding negotiations between Joseph Cesare and the County. 

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Defendants argue that Plaintiffs’ claim as to the first duty should be dismissed 

because “it merely reiterates Plaintiffs’ defamation claim and suffers the same 

deficiencies.” (Doc. 38 at 24). Defendants also contend that, despite Plaintiffs’ citing 

statutes and policies, none of the cited authority creates a statutory standard of care as is 

required for a negligence per se claim. Id. at 25. 

i. Negligence Per Se

“As a general matter, a claim for negligence per se must be based on a statute 

enacted “‘for the protection and safety of the public.’” Steinberger v. McVey ex rel. Cnty. 

of Maricopa, 234 Ariz. 125, 139 (Ct. App. 2014) (quoting Good v. City of Glendale, 150 

Ariz. 218, 221 (Ct. App. 1986)), review denied Sept. 23, 2014. “Negligence per se applies 

when there has been a violation of a specific requirement of a law.” Hutto v. Francisco, 

210 Ariz. 88, 91 (Ct. App. 2005) (quoting Griffith v. Valley of the Sun Recovery and 

Adjustment Bureau, Inc., 126 Ariz. 227, 229 (1980)); Hurvitz v. Coburn, 117 Ariz. 300, 

304 (Ct. App. 1977) (“The violation of a regulation which fixes a standard of care is 

ordinarily negligence per se.)” Here, however, Plaintiffs fail to cite a specific law that 

Defendants have violated, or against which Defendants’ conduct can be measured. See id. 

(“The statute or regulation must proscribe certain or specific acts to support a finding of 

negligence per se.”) (internal quotations and citations omitted). 

While Plaintiffs contend that Defendants have a duty to only provide truthful 

statements to the public regarding negotiations between Joseph Cesare and the County, 

none of the statutes or policies cited by Plaintiffs specifically relate to Defendants’ 

alleged duty to only provide truthful statements. For example, Plaintiffs cite generally to 

Article 2 of the Arizona Constitution. Plaintiffs also cite to A.R.S. § 11–1604, which 

concerns licensing decisions and does not apply to the first duty alleged in Count Ten, 

and A.R.S. § 11–223, which discusses the penalty for supervisor misconduct but does not 

list a specific duty to only provide truthful statements to the public. Plaintiffs also cite 

Pima County Board of Supervisors Policy No. C 2.1, which requires Pima County 

employees to act ethically when conducting county business. While this policy could 

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possibly be construed as generally requiring Defendants to only make truthful statements

in the course of their employment with the County, “[s]uch a general standard does not 

support negligence per se. The statute or regulation must proscribe certain or specific acts 

to support a finding of . . . negligence per se.” Hutto, 210 Ariz. at 91 (internal quotations 

and citations omitted); Griffith, 126 Ariz. at 229 (negligence per se applies only to 

“statutes which express rules of conduct in specific and concrete terms as opposed to 

general or abstract principles.”). Further, the Board of Supervisors policy is not a statute 

enacted for the protection and safety of the public. Steinberger, 234 Ariz. at 139. Finally, 

the policy Plaintiffs allege Defendants violated is an internal policy of the Pima County 

Board of Supervisors, but Plaintiffs cite no authority that a violation of internal county 

policies supports a claim of negligence per se. See Porter v. Arizona Dep’t of Corr., 2012 

WL 7180482, at *4 (D. Ariz. Sept. 17, 2012) (violations of internal policies and 

procedures may be evidence of negligence, but such evidence would be insufficient to 

establish the requisite standard of care for a negligence per se claim). Accordingly, 

negligence per se does not apply to the first duty alleged in Count Ten. 

ii. Negligence 

“To establish a claim for negligence, a plaintiff must prove four elements: (1) a 

duty requiring the defendant to conform to a certain standard of care; (2) a breach by the 

defendant of that standard; (3) a causal connection between the defendant’s conduct and 

the resulting injury; and (4) actual damages.” Gipson v. Kasey, 214 Ariz. 141, 143 (Sup.

Ct. 2007). Duty is a general obligation, recognized by law, requiring a defendant to 

conform to a particular standard of care to protect others from an unreasonable risk. Id.; 

see also Vasquez v. State, 220 Ariz. 304, 313–15 (Ct. App. 2008) (duty is determined as a 

matter of law and not based on specific facts in the case); Hutto, 210 Ariz. at 92 (duty 

requires the person subject to the duty to exercise reasonable care under the 

circumstances). Whether a duty exists is a threshold issue and is decided by the Court as 

a matter of law. Gipson, 214 Ariz. at 143. If a duty exists, the Court then considers 

whether the plaintiff has articulated a standard of care that was breached. The standard of 

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care is what the defendant must do or not do to satisfy the duty, and is dependent on the 

particular facts of the case. Id. 

In this case, neither party presents argument as to whether Plaintiffs have 

adequately pleaded the required elements of negligence. Plaintiffs simply contend that 

they have alleged that Defendants “have very specific constitutional, statutory and 

regulatory obligations to treat Mr. Cesare fairly, and honestly without improper motive.” 

(Doc. 45 at 31). Plaintiffs submit that this is enough for negligence per se, but do not 

address the elements of common law negligence. Similarly, Defendants first focus their 

argument on negligence per se, and then argue that “[r]egardless of the label Plaintiffs 

use, qualified immunity applies to Defendants’ allegedly ‘untruthful’ statements under 

either a defamation or a negligence theory.” (Doc. 38 at 25). 

Because neither party specifically addresses the required elements of a common 

law negligence claim, and because Plaintiffs’ complaint meets the Rule 8 pleading 

standard of a short and plain statement of the claim for Defendants’ alleged violation of 

their duty to only provide truthful statements to the public regarding negotiations between 

Joseph Cesare and the County, the undersigned recommends that Defendants’ motion to 

dismiss the first duty alleged in Count Ten be denied as to Plaintiffs’ common law 

negligence claim. 

H. Count Eleven: Violation of Ariz. Const. Art. 2, § 6 

In Count Eleven, Plaintiffs contend Defendant Pima County is liable for the 

actions Defendants Bronson, Huckelberry, and Blackwell committed within the course 

and scope of their employment, specifically the actions Defendants allegedly took in 

retaliation against Joseph Cesare for his support of a Republican candidate in the 2012 

Pima County elections. (Doc. 31 at 60–62). Plaintiffs further state that these “retaliatory 

acts caused harm because they had the effect of chilling the First Amendment right to 

free speech.” Id. at 61 ¶ 387. 

Defendants argue that this claim must fail because there is no Arizona equivalent 

of 28 U.S.C. § 1983, and no Arizona court has recognized a private right of action for 

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damages under Art. II, § 6 of the Arizona Constitution. (Doc. 38 at 26). Defendants urge 

the Court to decline to exercise its supplemental jurisdiction over this claim because it is 

a novel issue of state law, or, in the alternative, urge the Court to certify this question to 

the Arizona Supreme Court pursuant to A.R.S. § 12-1861. Id. at 26–27. Plaintiffs counter 

that the Supreme Court of the United States has awarded damages for violation of the 

First Amendment, that the Arizona Constitution provides even broader free speech 

protection than the First Amendment, and that because the Arizona Constitution also 

protects against individual action, no statute such as § 1983 is required to sue for 

damages. (Doc. 45 at 31-32). 

 Article 2, Section 6 of the Arizona Constitution provides that “[e]very person may 

freely speak, write, and publish on all subjects, being responsible for the abuse of that 

right.” As Defendants note, § 1983 does not protect against violations of state law or state 

constitutional rights. Ybarra v. Bastian, 647 F.2d 891, 892 (9th Cir. 1981). As to whether 

there are any published cases creating a damages remedy for violations of state 

constitutional rights, this Court has noted that “[t]he existence of such claims is 

unresolved.” Diaz v. Arizona, 2012 WL 1203692, at *5 (D. Ariz. Apr. 11, 2012) aff'’d, 

555 F. App’x 698 (9th Cir. 2014). 

The two cases cited by Plaintiffs are inapplicable to the issues at hand. The first 

case, Memphis Community School Dist. v. Stachura, 477 U.S. 299 (1986), does not 

discuss state constitutional rights at all, but rather holds that damages based on the 

abstract value or importance of a federal constitutional right are not a permissible element 

of compensatory damages in § 1983 cases. Id. at 2545. The second case, Mountain States 

Tel. & Tel. Co. v. Arizona Corp. Com’n, 160 Ariz. 350 (Sup. Ct. 1989), notes that the 

Arizona Constitution grants “every Arizonan a broad free speech right,” while the First 

Amendment of the United States Constitution only protects against government action. 

Id. at 354. However, Mountain States does not consider whether the Art. 2, Sec. 6 of the 

Arizona Constitution creates a private right of action for damages. In that case, the court 

held that the Corporation Commission’s order requiring presubscription for 976 

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numbers12 was void and unenforceable because it affected or impaired the right to speak 

freely under the Arizona Constitution. The court did not grant any other relief because the 

petitioners requested none. Thus, neither of the cases cited by Plaintiffs give support to 

the argument that Arizona recognizes a private right of action for damages under Art. II, 

§ 6 of the Arizona Constitution. Accordingly, Plaintiffs have failed to show that their 

claims are based on cognizable legal theories, and the undersigned recommends Count 

Eleven should be dismissed. See Navarro, 250 F.3d at 732. 

I. Count Fifteen: Punitive Damages 

In Count Fifteen, Plaintiffs allege Defendants Pima County, Sharon Bronson, 

Chuck Huckelberry, and Carla Blackwell committed wrongful acts against Plaintiffs to 

advance illegitimate interests, and that Defendants were motivated by spite, ill-will, 

malice, retaliation, and retribution. (Doc. 31 at 67 ¶¶ 435–436). Plaintiffs conclude that 

“Defendants acted so outrageously, oppressively, and intolerably to show the evil mind 

required for the imposition of punitive damages.” Id. at 70 ¶ 457. 

Defendants argue that punitive damages is not an independent legal cause of 

action and thus this claim should be dismissed for failure to present a claim based on a 

cognizable legal theory. (Doc. 38 at 27). Plaintiffs contend that they “did not include this 

count as an independent cause of action, but merely to separately assert the allegations 

necessary to support a claim for punitive damages.” (Doc. 45 at 32). 

Because Plaintiffs have not cited any authority suggesting they may bring an 

independent cause of action for punitive damages, and because Plaintiffs already request 

punitive damages in Count Five of the First Amended Complaint as well as in their 

demand for relief, the undersigned recommends dismissal of Count Fifteen. 

. . . 

 

12 These numbers “provide customers with access to a ‘dial-a-message network,’ enabling a customer to obtain information, messages, or entertainment by calling a 

provider who offers the specific message. The customer obtains the desired message by 

calling the appropriate provider’s telephone number on the ScoopLine, a service with a 

‘976’ prefix.” Mountain States, 160 Ariz. at 352. 

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IV. RECOMMENDATION 

The Magistrate Judge RECOMMENDS that the District Court GRANT IN PART 

AND DENY IN PART Defendants’ Motion to Dismiss (Doc. 38) as follows: 

1) Dismiss Counts Four, Six, Eight, Twelve, Thirteen, and Fourteen for lack of 

standing. 

2) Dismiss Count Ten for lack of standing, but only as to the second and third duties 

alleged. 

3) Dismiss Counts Six, Seven, Eight, Nine, Eleven, and Fifteen for failure to state a 

claim. 

4) Allow Count Ten to go forward, but only as to the first duty alleged, and only on 

a theory of common law negligence. 

5) Allow Counts One, Two, and Three to go forward, as well as Count Five, which 

was not at issue in the Motion to Dismiss. 

Pursuant to 28 U.S.C. §636(b), any party may serve and file written objections 

within fourteen days after being served with a copy of this Report and Recommendation. 

A party may respond to another party’s objections within fourteen days after being served 

with a copy thereof. Fed. R. Civ. P. 72(b). No reply to any response shall be filed. See id. 

If objections are not timely filed, then the parties’ rights to de novo review by the District 

Court may be deemed waived. See United States v. Reyna-Tapia, 328 F.3d 1114, 1121 

(9th Cir. 2003) (en banc). 

 Dated this 7th day of December, 2015. 

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