Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-01537/USCOURTS-azd-2_06-cv-01537-13/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Best Western International, Inc., a nonprofit Arizona corporation, 

Plaintiff, 

vs.

James Furber, an Internet website

administrator; James and Nidrah Dial,

Internet website bloggers and Members

of Best Western International, Inc.;

Loren Unruh, an Internet website blogger

and Member of Best Western

International, Inc., and Gayle Unruh,

Defendants.

H. James Dial, an individual,

Counterclaimant,

vs.

Best Western International, Inc., a

non-profit Arizona corporation; and

Roman Jaworowicz,

Counterdefendants.

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No. CV-06-1537-PHX-DGC

ORDER

Case 2:06-cv-01537-DGC Document 522 Filed 12/02/08 Page 1 of 4
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A Final Pretrial Conference was held on November 21, 2008. The Court took under

advisement Best Western’s motions in limine nos. 1 and 2. Dkt. ##485-86. For reasons

stated below, the Court will deny the motions.

I. Motion In Limine No. 1.

In count two of his counterclaim, James Dial asserts a claim for intentional

interference with contractual expectancy against Best Western. Dkt. #90 ¶¶ 60-63. Dial

alleges that he operates the Best Western Greentree Inn in Clarksville, Indiana, that Best

Western improperly removed the Inn from its reservation system in December 2006, and that

the Inn “lost patrons and Jim Dial suffered harm.” Id. ¶¶ 46-55.

The Greentree Inn is owned by Greentree Investors, LLC, a Kentucky limited liability

company. Dial is a member of Greentree Investors. Citing EMI Ltd. v. Bennett, 738 F.2d

994, 996 (9th Cir. 1984), Best Western contends that Dial lacks standing to bring count two

because any harm caused by the loss of hotel guests was suffered directly by Greentree

Investors, not Dial, and mere personal economic injury resulting from the alleged wrong to

Greentree Investors is not sufficient to establish standing. Dkt. #485 at 2.

Best Western misconstrues the basis for Dial’s tortious interference claim. Pursuant

to the operating agreement of Greentree Investors, Dial serves as the manager of the

Greentree Inn and receives a management fee equal to 3% of gross revenue from hotel room

sales. Dkt. #508 §§ 10.1(c), 10.3. Dial therefore has an individual stake in the sales revenue

of the Greentree Inn separate and apart from his economic interest as a member of Greentree

Investors.

Best Western’s reliance on EMI is misplaced. In that case, the only possible injury

was the diminution in value of EMI’s holdings in its subsidiary corporation. 738 F.2d at 996.

EMI, unlike Dial in this case, was not “injured directly and independently of the

corporation.” Id. at 997; see Va. Sur. Co. v. Northrop Grumman Corp., 144 F.3d 1243, 1246

(9th Cir. 1998); see also Orgain v. City of Salisbury, 521 F. Supp. 2d 465, 476 (D. Md. 2007)

(members of limited liability company had standing to assert claims “for emotional distress

and for financial losses personal to them”); Gas Tech. Inst. v. Rehmat, 524 F. Supp. 2d 1058,

Case 2:06-cv-01537-DGC Document 522 Filed 12/02/08 Page 2 of 4
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Best Western’s argument that no fiduciary duty is owed to Dial (Dkt. #486 at 4 n.4)

is an untimely motion for summary judgment and therefore will not be considered.

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1067 (N.D. Ill. 2007) (plaintiff had standing where it alleged “an injury distinct from any

injury suffered by the limited liability company itself”).

 The Court will deny Best Western’s motion in limine no. 1. Given this ruling, the

Court need not address Dial’s argument that he has standing to assert a tortious interference

claim on behalf of Greentree Investors. See Dkt. #508 at 2-3.

II. Motion In Limine No. 2.

Best Western is a non-profit member corporation. Dkt. #491 ¶ 1. Dial is the voting

member of the Greentree Inn. Id. ¶ 7; see Dkt. #339-26 at 2. Dial alleges in count three that

by deciding to proceed with this lawsuit, Director Jaworowicz “breached [his] fiduciary duty

to Jim Dial, causing harm to Jim Dial.” Dkt. #90 ¶¶ 31-34, 66.

Directors of a non-profit corporation generally “are in a fiduciary relationship with

the stockholders or members of that corporation, and there is a duty of fair dealing with that

membership.” Hatch v. Emery, 400 P.2d 349, 353 (Ariz. Ct. App. 1965); see Mann v. GTCR

Golder Rauner, L.L.C., 483 F. Supp. 2d 884, 892 (D. Ariz. 2007).1

 Citing Funk v. Spalding,

246 P.2d 184, 223 (Ariz. 1952), Best Western contends that Dial lacks standing to bring

count three because any harm caused by Jaworowicz’s alleged breach of fiduciary duty was

suffered by the Best Western membership as a whole, not just by Dial. Dkt. #486 at 3-6. But

Dial has made clear that he seeks to recover his own damages and is not seeking redress for

any impairment of a corporate right. Dkt. ##491 at 10, 509 at 3.

As a member of Best Western, Dial “‘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.’” Funk, 246 P.2d at 223; see Albers v. Edelson Tech. Partners L.P., 31 P.3d

821, 826 (Ariz. Ct. App. 2001). Because Dial asserts that he has suffered individual harm

as a result of the alleged breach of fiduciary duty (see Dkt. #90 ¶ 66), count three is a direct

action against Best Western and Dial therefore has standing to bring the claim. See id. The

Court will deny Best Western’s motion in limine no. 2.

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IT IS ORDERED that Best Western’s motion in limine no. 1 (Dkt. #485) and motion

in limine no. 2 (Dkt. #486) are denied. 

DATED this 2nd day of December, 2008.

Case 2:06-cv-01537-DGC Document 522 Filed 12/02/08 Page 4 of 4