Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-02399/USCOURTS-azd-2_14-cv-02399-4/pdf.json

Nature of Suit Code: 150
Nature of Suit: Overpayments &amp; Enforcement of Judgments
Cause of Action: 28:1441 Petition for Removal- Declaratory Judgement

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Airbus DS Optronics GmbH,

Plaintiff, 

v. 

Nivisys LLC, et al., 

Defendants.

No. CV-14-02399-PHX-JAT

ORDER 

Pending before the Court are three separate motions to dismiss the Second 

Amended Complaint (“SAC”). (Doc. 117; Doc. 119; Doc. 127). Defendants1

 Nivisys, 

LLC (“Nivisys”) and WWWT Enterprises, LLC (“WWWT”) seek to dismiss Counts III 

and IV of the Complaint. (Doc. 117, 119). Defendant First Texas Holdings Corporation 

(“First Texas”) seeks to dismiss the SAC in in its entirety. (Doc. 127). Having reviewed 

the parties’ filings and considered oral argument, the Court now rules on the motions. 

I. 

 Plaintiff2

 Airbus DS Optronics GmbH is a foreign company organized under the 

laws of the country of Germany, and is an international leader in the manufacturing of 

 

1 Defendant Nivisys Industries, LLC (“Nivisys Industries”) did not file a motion to 

dismiss, and is a dissolved corporate entity. 

2 The recitation of facts is taken as true from the well-pleaded factual allegations 

contained in the SAC. Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). 

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optical and optoelectronic products for defense and security purposes. (Doc. 112 at 2). 

Nivisys Industries was a limited liability company organized under the laws of the State 

of Arizona, formed on or about January 26, 2003. (Id. at 3). In or about March 2008, 

Nivisys Industries’ members sold their full interest in Nivisys Industries either to 

Relativity Holding, LLC (“Relativity Holding”), a Delaware limited liability company, or 

to one of Relativity Holding’s subsidiaries, Nivisys Holdings, LLC (“Nivisys Holdings”). 

In or about October 2011, Nivisys Industries breached a contract between itself 

and Plaintiff that had been executed approximately in or about September 2008. (Doc. 

112 at 3). Plaintiff obtained a judgment against Nivisys Industries in Stuttgart Regional 

Court, Germany, and later obtained a judgment against Nivisys Industries in Maricopa 

County Superior Court. (Id.) 

 On or about March 19, 2012, First Texas formed WWWT, a wholly owned 

subsidiary. (Doc. 112 at 3). On or about May 14, 2012, Nivisys Industries’ full ownership 

was transferred to WWWT. (Id.). First Texas, through WWWT, proceeded to run Nivisys 

Industries until August 1, 2012, when First Texas transferred Nivisys Industries’ assets to 

WWWT. (Id.). First Texas thereafter transferred Nivisys Industries’ assets again from 

WWWT to Nivisys as part of an internal reorganization. (Id.). Following the internal 

reorganization, First Texas continued to conduct Nivisys Industries’ business through 

Nivisys. (Id. at 5). Plaintiff alleges that all of Nivisys Industries’ assets have been 

transferred to Nivisys, rendering Nivisys Industries insolvent and unable to satisfy 

Plaintiff’s judgment. 

On October 28, 2014, Plaintiff filed suit against Nivisys in Maricopa County 

Superior Court, which was thereafter removed pursuant to 28 U.S.C. § 1441(b) (2012). 

(Doc. 1). Plaintiff added WWWT, First Texas, and Nivisys Industries by amendment.

Plaintiff’s principal contention is that Defendants be held “liable for their debt owed” to 

Plaintiff, as Defendants are “responsible and liable for satisfaction of the [Maricopa 

County] Judgment or the Stuttgart Court Judgment obtained by [Plaintiff] against Nivisys 

Industries, LLC.” (Doc. 112 at 2). On November 6 and November 23, 2015, respectively, 

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Defendants each filed a motion to dismiss the SAC pursuant to Federal Rule of Civil 

Procedure 12(b)(6). First Texas seeks to have the SAC dismissed against it in its entirety. 

WWWT and Nivisys seek to have Counts III and IV—piercing the corporate veil and 

lender liability—dismissed against them. Having set forth the pertinent factual and 

procedural background, the Court turns to Defendants’ motions.

II. 

To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must 

meet the requirements of Fed. R. Civ. P. 8(a)(2). Rule 8(a)(2) requires a “short and plain 

statement of the claim showing that the pleader is entitled to relief,” so that the defendant 

has “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 

(1957)). A complaint must also contain sufficient factual matter, which, if accepted as 

true, states a claim to relief that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 

678 (2009). Facial plausibility exists if the pleader sets forth factual content that allows 

the court to draw the reasonable inference that the defendant is liable for the misconduct 

alleged. Id. Plausibility does not equal “probability,” but requires more than a sheer 

possibility that a defendant acted unlawfully. Id. “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.’” Id. (citing Twombly, 550 U.S. at 

557). 

Although a complaint attacked for failure to state a claim does not need detailed 

factual allegations, the pleader’s obligation to provide the grounds for relief requires 

“more than labels and conclusions, and a formulaic recitation of the elements of a cause 

of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). Rule 8(a)(2) 

“requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief,” as 

“[w]ithout some factual allegation in the complaint, it is hard to see how a claimant could 

satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim, but 

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also ‘grounds’ on which the claim rests.” Id. at 555 n.3 (citing 5 Charles A. Wright & 

Arthur R. Miller, Federal Practice & Procedure § 1202, pp. 94, 95 (3d ed. 2004)). Thus, 

Rule 8’s pleading standard demands more than “an unadorned, the-defendant-unlawfullyharmed-me accusation.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). 

 The Court must construe the facts alleged in the complaint in the light most 

favorable to the drafter and must accept all well-pleaded factual allegations as true,

Shwarz, 234 F.3d at 435, Cafasso, 637 F.3d at 1053 (“[w]hen considering a Rule 12(c) 

dismissal, we must accept the facts as pled by the nonmovant”), but need not accept as 

true legal conclusions couched as factual allegations. Papasan v. Allain, 478 U.S. 265, 

286 (1986). 

III. 

The Court will begin its analysis with Defendants’ argument that Count III 

(piercing the corporate veil) and Count IV (lender liability) must be dismissed from the 

SAC. The Court will then turn to First Texas’ argument that Count II3

 (fraudulent 

transfer) must be dismissed. Finally, the Court will address Plaintiff’s request for leave to 

amend and Defendants’ request for attorneys’ fees. 

A. Count III: Piercing the Corporate Veil 

 Defendants4 first contend that the SAC pleads “piercing the corporate veil” as a 

substantive cause of action, which the state of Arizona does not recognize, and therefore 

 

3

 Count I of the SAC, seeking a declaratory judgment, does not name First Texas. 

4 First Texas argues that Texas law should apply to the Court’s analysis of Plaintiff’s “piercing the corporate veil” claim. (Doc. 127 at 4). First Texas, however, 

fails to identify substantive differences between each state’s respective jurisprudence, 

and argues that “whether Texas or Arizona law is applied,” First Texas is entitled to 

prevail. (Id.). The Court finds it unnecessary to determine which state has the “most 

significant relationship” to the matter and will apply Arizona law. See Gianaculas v. 

Trans World Airlines, Inc., 761 F.2d 1391, 1393 (9th Cir. 1985) (The Court need not 

decide a choice of law question if the result would be the same under the law of both 

states) 

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the claim must be dismissed. Defendants are correct in noting that Arizona does not 

recognize piercing the corporate veil5 or alter ego as an independent cause of action. See 

Five Points Hotel P’ship v. Pinsonneault, 11-CV-00548-PHX-JAT, 2014 U.S. Dist. 

LEXIS 60627, at *8-13 (D. Ariz. May 1, 2014) (finding that although the Arizona 

Supreme Court has not directly addressed the issue, overwhelming persuasive 

jurisprudence leads to the prediction that it would not recognize piercing the corporate 

veil or alter ego as a standalone cause of action under Arizona law); Piquadio, 2016 U.S. 

Dist. LEXIS 12135, at *5-7. Plaintiff asserts that Defendants argue form over substance, 

and that the SAC clearly pleads alter ego as a basis for relief, rather than a substantive 

cause of action. (Doc. 132 at 7). 

While acknowledging that alter ego is not an independent cause of action, the 

Court finds that sufficient factual allegations throughout the SAC establish that alter ego 

was pleaded as a form of derivative liability to disregard Nivisys Industries, WWWT’s 

and/or Nivisys’ corporate form and hold First Texas and/or WWWT and Nivisys liable

for fraudulent transfer of assets, the underlying substantive cause of action. Defendants’ 

argument is reasonable, given the presentation of “piercing the corporate veil” as a 

specifically delineated count, as well as Plaintiff’s failure to concretely identify which 

corporate form should be disregarded, and for what underlying substantive claim. 

Nonetheless, the Court is not persuaded, as Defendants advocate for an overly formulistic 

federal pleading requirement, in tension with Rule 8. The Court’s finding is based on a 

plain reading of the face of the SAC, and not on Plaintiff’s attempts to “clarify” the SAC 

in its brief. See Frenzel v. Aliphcom, 76 F. Supp. 3d 999, 1009 (N.D. Cal. 2014) (noting 

that “[i]t is axiomatic that the complaint may not be amended by the briefs in opposition 

to a motion to dismiss”); Horne v. USDE, No. 08-CV-1141-PHX-MHM, 2009 U.S. Dist. 

LEXIS 24016, at *14 (D. Ariz. March 23, 2009). 

 5 The Court will hereafter refer to this theory of derivative liability as “alter ego.” 

See Piquadio v. Am. Legal Funding LLC, No. CV-15-00579-PHX-GMS, 2016 U.S. Dist. 

LEXIS 12135, at *4-5 (D. Ariz. Feb. 2, 2016) (noting that “piercing the corporate veil” is 

“otherwise known as an alter ego claim”).

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In the alternative, Defendants argue that the SAC fails to plead sufficient facts to 

establish a plausible claim upon which relief can be granted. The Court must first 

determine which of Defendants’ “corporate forms” the SAC seeks to disregard, and for 

which substantive claims. Plaintiff pleads that the “observance of the corporate form of 

WWWT, Nivisys, and Nivisys Industries would work substantial injustice on” Plaintiff 

and that “the corporate veil of WWWT, Nivisys, and/or Nivisys Industries should be 

pierced and disregarded such that their respective members and parent companies are 

liable for the debt owed to” Plaintiff. (Doc. 112 at 7). Plaintiff must tie this theory of 

derivative liability to a substantive cause of action in the SAC; it cannot seek to reach 

Nivisys Industries’ members for the judgment domesticated in Maricopa County Superior 

Court. The SAC contains claims of fraudulent transfer of assets and successor liability.6

 Plaintiff’s fraudulent transfer claim is asserted against WWWT and/or Nivisys and 

Nivisys Industries as the transferor and transferee in certain transactions, (Doc. 112 at 6),

but Plaintiff seeks to hold First Texas derivatively liable for the acts of its subsidiaries. 

(Id. at 6-7, 8). Thus, Plaintiff seeks to disregard the corporate form of WWWT and 

Nivisys, and the SAC must therefore plead sufficient facts to establish a plausible claim 

that First Texas should be held derivatively liable for WWWT’s and/or Nivisys’ 

fraudulent transfers.7

 

6 The Court’s finding that Plaintiff’s claim of lender liability must be dismissed is 

fully addressed infra. 

7 The Court notes that oral argument, as well as the parties’ briefs included 

substantial argument relying on materials outside of the SAC. (See Doc. 132 at 9; Doc. 

131 at 9; Doc. 157 at 6; Doc. 154 at 13). “[W]hen the legal sufficiency of a complaint’s 

allegations is tested by a motion under Rule 12(b)(6), “review is limited to the 

complaint.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (citation 

omitted). Generally, the Court “may not consider any material beyond the pleadings in 

ruling on a Rule 12(b)(6) motion,” except where the material “is properly submitted as 

part of the complaint” or where “the documents authenticity . . . is not contested and the 

plaintiff’s complaint necessarily relies on them,” or if the Court takes “judicial notice of matters of public record.” Id. (internal quotation marks and citations omitted). The parties have not asserted the grounds upon which to consider these materials, and as a result, the Court will restrict its review to the factual allegations contained in the SAC. 

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Generally, a parent corporation is not held liable for the actions of a subsidiary. UHaul Int’l v. Nat’l Fire Ins. Co., 10-CV-1047-PHX-SMM, 2011 U.S. Dist. LEXIS 219, at 

*9 (D. Ariz. Jan. 3, 2011) (citing Deutsche Credit Corp. v. Case Power & Equip. Co., 

876 P.2d 1190, 1195 (Ariz. Ct. App. 1994)). But there are exceptions to this rule, one 

such being the alter ego theory, which “allows a parent corporation to be held liable for 

the acts of its subsidiary when the individuality or separateness of the subsidiary 

corporation has ceased.” Id. at *10 (quoting Gatecliff v. Great Republic Life Ins. Co., 821 

P.2d 725, 728 (Ariz. 1991)). To prevail and hold a parent corporation liable pursuant to 

the alter ego theory, Plaintiff must “prove both (1) unity of control and (2) that 

observance of the corporate form would sanction a fraud or promote injustice.” Gatecliff, 

821 P.2d at 728 (citing Dietel v. Day, 492 P.2d 455, 457 (Ariz. 1972)). To establish unity 

of control, Plaintiff must show that the parent corporation “exerts ‘substantially total 

control over the management and activities’ of its subsidiary.” U-Haul Int’l, 2011 U.S. 

Dist. LEXIS 219, at *10 (citation omitted). “Substantially total control may be proved” 

by a number of factors, including “stock ownership by the parent; common officers or 

directors; financing of subsidiary by the parent; payment of salaries and other expenses of 

subsidiary by the parent; failure of subsidiary to maintain formalities of separate 

corporate existence; similarity of logo; and plaintiff’s lack of knowledge of subsidiary’s 

separate corporate existence.” Gatecliff, 821 P.2d at 728. 

 The SAC, taking all well-pleaded facts as true and drawing reasonable inferences 

in Plaintiff’s favor, establishes a plausible claim that WWWT and Nivisys operated as 

mere alter egos, and that First Texas should be held liable for their engagement in 

fraudulent transfers. To begin, the SAC pleads that First Texas, through WWWT and 

Nivisys, transferred the assets of Nivisys Industries for the purpose of shielding these 

assets from collection by a judgment creditor. Plaintiff has two valid judgments against 

Nivisys Industries for breach of contract, and it cannot collect due to the fact that Nivisys 

Industries was stripped of its assets and then dissolved. Observance of WWWT’s and 

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Nivisys’ corporate form under these facts would “sanction a fraud” by validating First 

Texas’ attempts to shield its assets. 

The Court further finds that the SAC pleads sufficient factual allegations to 

establish “unity of control” by First Texas over WWWT and Nivisys. Both WWWT and 

Nivisys are wholly-owned subsidiaries of First Texas and all three companies are 

managed by the same individual. First Texas created WWWT for the sole purpose of 

acquiring Nivisys Industries’ assets and continuing Nivisys Industries’ business while 

retaining many of Nivisys Industries’ employees, customers, and suppliers. First Texas 

then transferred Nivisys Industries’ assets a second time to Nivisys, to maintain Nivisys 

Industries’ business and to continue to market products that contained components 

produced by Plaintiff, which were the subject of Plaintiff’s breach of contract judgment 

against Nivisys Industries. Succinctly, the pleaded facts establish that First Texas had 

significant financial and management control over the two subsidiaries, and utilized these 

subsidiaries to continue the business of Nivisys Industries while simultaneously hiding its 

assets from a judgment creditor. The facts pleaded establish a plausible claim of shared 

common officers and directors, financing by the parent corporation, full ownership of 

subsidiaries, and—ultimately—substantial control over the management and activities of 

the subsidiaries by the parent corporation. See U-Haul Int’l, 2011 U.S. Dist. LEXIS 219, 

at *12-13 (finding that the plaintiff failed to state a plausible claim for derivative liability 

under the alter ego theory where the plaintiff simply identified the parent corporation and 

did not allege that it took active part in the actions that gave rise to the lawsuit) 

Based on the foregoing, the Court finds that the SAC pleads a plausible claim for 

derivative liability based on First Texas’ control of subsidiaries that were engaged in 

fraudulent transfer of assets. 

B. Count IV: Lender Liability 

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Defendants next argue that Count IV—Plaintiff’s claim of lender liability—must 

be dismissed, as it has not been recognized as a cause of action under Arizona law.8

 The 

Court agrees. 

Plaintiff asserts, absent citation to Arizona case law, that “lender liability is a 

theory of liability under Arizona law[] and the bases for such liability are varied.” (Doc. 

131 at 10; Doc. 132 at 10; Doc. 154 at 14). Plaintiff offers in support of its contention 

two Ninth Circuit cases, both of which the Court finds to be inadequate to establish that 

“lender liability” is a cognizable cause of action in Arizona. Plaintiff first proffers Tucker 

v. First Maryland Sav. & Loan, Inc., 942 F.2d 1401, 1402 (9th Cir. 1991), a case where 

the Ninth Circuit reviewed the district court’s decision to abstain from hearing a “lender 

liability action” under the abstention doctrines established in Burford v. Sun Oil. Co., 319 

U.S. 315 (1943), and Colorado River Water Conservation Dist. v. United States, 424 U.S. 

800 (1976). The Tucker panel never addressed the “lender liability action” directly, or 

even set forth what the claim encompassed, and the Court can discern no language from 

the opinion recognizing “lender liability” as a substantive cause of action under state law.

Plaintiff’s additional citation, Newbery Corp. v. Fireman’s Fund Ins. Co., 95 F.3d 1392, 

1397 (9th Cir. 1996), is similarly unpersuasive. In Newbery Corp., the only mention of 

“lender liability” comes, in passing, during the recitation of facts. The panel merely 

mentioned that the plaintiff had filed a “multi-million dollar lender liability claim” 

against a lender and that a subsequent settlement had released the lender from potential 

liability. The panel did not address lender liability in a substantive manner. Id. 

 Absent any on-point authority from Arizona appellate courts, the Court must 

“predict how the highest state court would decide the issue,” looking to persuasive 

authority, statutes, and secondary sources for guidance. Vestar Dev. II, LLC v. Gen. 

Dynamics Corp., 249 F.3d 958, 960 (9th Cir. 2001) (citation omitted). Having consulted 

 

8 Because the Court agrees with Defendants on this point, it need not consider Defendants’ alternative argument, that there has “never been any lender/borrower relationship between Plaintiff and any of the named Defendants.” (Doc. 127 at 8). 

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the aforementioned sources, the Court finds that the Arizona Supreme Court would likely 

conclude that “lender liability” is not a substantive cause of action in Arizona. 

Substantial persuasive authority and several secondary sources have addressed the 

issue, and concluded that “lender liability” is not itself a cognizable legal claim, but 

rather an umbrella term—a descriptor—that has been applied to a number of common 

law and statutory causes of action. See Steinberger v. McVey, 318 P.3d 419, 431 (Ariz. 

Ct. App. 2014) (finding that the plaintiff had asserted a cognizable claim to hold a lender 

liable for increased risk of economic harm under the “good Samaritan” doctrine); Joseph 

Jude Norton, 1 Lender Liability Law and Litigation § 1.01 (Matthew Bender, 2015) 

(noting that “[i]ndicia of potential lender liability include inordinate lender control, 

atypical lending practices, lack of professionalism, abuse of a special relationship, and 

conflicts of interest” that manifest themselves in “[n]umerous common law theories and 

causes of action” and “[v]arious statutory theories”); Cary Oil Co. v. MG Ref. & Mktg., 

Inc., 90 F. Supp. 2d 401, 418 (S.D.N.Y. 2000) (finding that “[l]ender liability is not an 

independent cause of action, but a term that refers to the imposition of traditional contract 

or tort liability on a bank or other financial institution” that “may be predicated on . . .

inter alia, breach of contract, breach of fiduciary duty, common law fraud, duress, 

tortious interference with contract, defamation or negligence”); Sovereign Bank v. 

Fowlkes, 2010 R.I. Super. LEXIS 15, at *44 (R.I. Super. Ct. Jan. 15, 2010) (finding that 

lender liability “is not a particular cause of action but rather the umbrella term used to 

describe the body of common and statutory law covering a broad spectrum of claims, 

including both contract and tort, against lending institutions”); Pension Trust Fund v. 

Fed. Ins. Co., 307 F.3d 944, 953-54 (9th Cir. 2002) (analyzing the “breach of fiduciary 

duty” claim that was “implied in the lender liability claim”); Pearson v. Component Tech. 

Corp., 247 F.3d 471, 492 (3d Cir. 2001) (noting that the term lender liability does not 

stand for a single cause of action but “has now taken on a broad meaning to refer to any 

kind of liability that can grow out of the lender/borrower relationship”); In re Revco D.S., 

Inc., 1990 Bankr. LEXIS 2966, at *105 (N.D. Ohio Bankr. Dec. 17, 1990) (noting that 

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“[t]he doctrine of lender liability has been used to describe a broad range of theories, 

including failure to act in good faith, fraud and duress, dominating or exerting excessive 

control over a borrower, and breach of a fiduciary or special duty”); Francis E. Freund, 

Special Project: Lender Liability: A Survey of Common-Law Theories, 42 Vand. L. Rev. 

855, 855-56 (1989) (stating that “lender liability suits” “are based on a number of 

common-law theories for liability including breach of contract, breach of fiduciary duty, 

and breach of good faith, . . . fraud, duress, interference, and negligence,” as well as some 

statutory claims). 

The weight of persuasive authority does not support the conclusion that the 

Arizona Supreme Court would recognize “lender liability” as a substantive cause of 

action. Plaintiff argues, seemingly in the alternative, that even if lender liability itself is 

not a substantive cause of action, the facts pleaded in the SAC establish several causes of 

action that would fall under the umbrella term of “lender liability.” (Doc. 154 at 15). 

Plaintiff, however, proffered only one: the instrumentality theory. (Id.). 

 “Where the theory is recognized, a lender may be held liable under the commonlaw instrumentality theory when the lender exerts such a degree of control over the 

borrower that the borrower becomes a mere business conduit for the lender.” Famm Steel, 

Inc. v. Sovereign Bank, 571 F.3d 93, 104 (1st Cir. 2009). To establish a claim of lender 

liability under the instrumentality theory, plaintiff must make “a strong showing that the 

creditor assumed actual, participatory, total control of the debtor” and “the facts must 

‘unmistakably show that the subservient corporation was being used to further the 

purposes of the dominant corporation and that the subservient corporation in reality had 

no separate, independent existence of its own.” Id. at 105 (quoting Krivo Indus. Supply 

Co. v. Nat’l Distillers & Chem. Corp., 483 F.2d 1098, 1104 (5th Cir. 1973)). Plaintiff has

again failed to cite to any Arizona authority recognizing instrumentality lender liability as 

a cause of action, or suggesting that Arizona courts would entertain such a claim. The 

Court’s survey of persuasive authority does not support a finding that the claim is so 

widely accepted as to assume Arizona courts would recognize the cause of action, absent 

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on-point authority. Accordingly, the Court also finds that instrumentality lender liability 

is not a recognized cause of action in Arizona. 

It is possible to read the SAC to allege that, under Count IV, the common law

instrumentality theory should be utilized to disregard the corporate form of some 

combination of Nivisys Industries, Nivisys, and WWWT to hold either First Texas or 

WWWT and Nivisys liable for the actions of their respective subsidiaries.9 (Doc. 112 at 

7, 8; Doc. 132 at 11). But while the common law instrumentality theory “is distinct from . 

. . the alter ego theory,” Gatecliff, 821 P.2d at 728, it is still a “form[] of derivative 

liability arising from the underlying substantive cause of action” and not a substantive 

claim. Lindquist v. Farmers Ins. Co., 06-CV-597-TUC-FRZ, 2008 U.S. Dist. LEXIS 

11832, at *10 (D. Ariz. Feb. 6, 2008) (citation omitted) (noting that “[j]oint venture, alter 

ego, and single business enterprise allegations” are all forms of “derivative liability”); see 

also Bobrowski v. Red Door Group, No. 09-CV-02077-PHX-FJM, 2011 U.S. Dist. 

LEXIS 89254, at *13 (D. Ariz. 2011) (noting that the plaintiff’s allegations of alter ego 

and joint venture are “forms of derivative liability arising from the underlying substantive 

cause of action”) (citation omitted). The SAC’s plain language presents “lender liability” 

as an independent, substantive cause of action to hold some variation of First Texas, 

WWWT, and Nivisys liable for “improper conduct as lenders.” (Doc. 112 at 7). Plaintiff

may not re-brand this count after the fact as a theory of derivative liability. Frenzel, 76 F. 

Supp. 3d at 1009. 

Accordingly, the Court finds that Plaintiff failed to plead a recognized cause of 

action in Count IV, and seeing no cognizable legal theory to support this claim, Count IV 

of the SAC will be dismissed. Jones v. Bank of Am., N.A., No. CV-09-2129-PHX-JAT, 

2010 U.S. Dist. LEXIS 54198, at *5 (D. Ariz. June 1, 2010) (citing Balistreri v. Pacifica 

Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988), Weisbuch v. County of L.A., 119 F.3d 

 

9 Plaintiff’s briefs appear to suggest that lender liability, similar to alter ego, is merely a basis for relief that has been pleaded, and that analyzing it as a substantive cause 

action is an overly formulistic reading of the SAC. (Doc. 131 at 10; Doc. 132 at 10; Doc. 

154 at 14). 

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778, 783 n.1 (9th Cir. 1997)) (dismissing the plaintiff’s claim for “negligent breach of 

contract” due to the plaintiff’s failure to cite any legal authority indicating that Arizona 

recognized such a claim). 

C. Count II: Fraudulent Transfer

Finally, First Texas seeks to have Count II—fraudulent transfer of assets—

dismissed, as “First Texas was not a party to the transfers complained of by Plaintiff,” 

and under the UFTA, First Texas cannot be held liable for transfers carried out by its 

subsidiaries.10 (Doc. 127 at 5). The Court has found that the SAC contained sufficient 

pleaded facts to establish a plausible theory of derivative liability to hold First Texas 

liable for fraudulent transfers carried out by its subsidiaries, WWWT and Nivisys. First 

Texas is therefore not entitled to be dismissed from the matter. 

D. Plaintiff’s Request for Leave to Amend 

The Court will not grant Plaintiff leave to amend the SAC. The Court’s Fed. R. 

Civ. P. 16 (b)(1) Scheduling Order established that “any motion to amend the Complaint 

[must] be filed no later than August 7, 2015.” (Doc. 80 at 2). The Scheduling Order was 

then amended, (Doc. 97), and set a new deadline of September 8, 2015. (Doc. 98 at 1). 

The Scheduling Order was subsequently amended a second, and third time, and all 

dispositive motions are now due no later than October 28, 2016. (Doc. 151 at 2; Doc. 186 

at 2). Given the untimely nature of Plaintiff’s request, coupled with the approaching 

deadline for dispositive motions and the maturity of this matter, Plaintiff has not shown 

good cause for leave to amend, and its request is denied. See TriQuint Semiconductor, 

 

10 First Texas again argues that the Court should apply Texas law. “Because 

[Plaintiff’s] claim for fraudulent transfer references the Arizona Revised Statutes, the 

Court need only analyze that claim under Arizona law.” Airbus DS Optronics GmbH v. 

Nivisys LLC, No. CV-14-02399, 2015 U.S. Dist. LEXIS 69074, at *23 (D. Ariz. May 28, 

2015). 

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*15-18 (D. Ariz. Aug. 3, 2010) (discussing untimely motions to amend under Rule 16). 

E. Defendants’ Request for Attorneys’ Fees 

Defendants each request attorneys’ fees pursuant to A.R.S. § 12-341.01 (2015) 

(establishing that “[i]n any contested action arising out of a contract, express or implied, 

the [C]ourt may award the successful party reasonable attorney fees”). Based on the 

aforementioned findings, Defendants’ request for attorneys’ fees is premature. The Court 

will therefore deny the request, without prejudice. 

IV. 

To conclude, Plaintiff has pleaded sufficient factual allegations to establish a 

plausible basis for derivative liability under the theory of alter ego; the suit may proceed 

on this ground and First Texas will not be dismissed from the case. Furthermore, 

Plaintiff’s claim of “lender liability” has not been recognized under Arizona law as a 

substantive cause of action, and must be dismissed. Finally, Plaintiff will not be given 

leave to amend, and Defendants’ motion for attorneys’ fees are denied, without prejudice. 

 For the aforementioned reasons, 

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Defendants’ motion to dismiss Count III of the SAC, (Doc. 117; Doc. 119; Doc. 

127), is DENIED. 

Defendants’ motion to dismiss Count IV of the SAC, (Doc. 117; Doc. 119; Doc. 

127), is GRANTED. 

 First Texas’ motion to dismiss Count II of the SAC, (Doc. 127), is DENIED. 

Plaintiff’s request for leave to amend the SAC, (Doc. 131 at 1; Doc. 132 at 1; Doc. 

154 at 1), is DENIED. 

Defendants’ request for attorneys’ fees pursuant to A.R.S. § 12-341.01, (Doc. 117; 

Doc. 119; Doc. 127), is DENIED, without prejudice. 

 Dated this 2nd day of May, 2016. 

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