Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_02-cv-01277/USCOURTS-azd-2_02-cv-01277-1/pdf.json

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

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

FINOVA Capital Corporation, )

)

Plaintiff, ) No. CIV 02-1277-PHX RCB

)

Vs. ) O R D E R

)

Richard A. Arledge, Inc., )

d/b/a Arledge Motor Co., )

et al., )

)

Defendant. ) )

I. Introduction

This case commenced on July 12, 2002, when Plaintiff Finova

Capital Corporation ("Finova") filed its complaint. Compt. (doc.

1). The complaint alleged claims against Richard A. Arledge, Inc.,

et al. ("the Arledges"), arising out of a loan agreement between

the parties. 

On October 10, 2003, the Arledges filed an amended answer and

counterclaim, as well as a third-party complaint (doc. 91). The

third-party complaint was brought against Leucadia National

Corporation ("Leucadia"). Id. Defendants filed a First Amended 

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Original Third-Party Complaint ("Third-Party Complaint") on May 10,

2004. (doc. 140). 

On November 1, 2004, Third-Party Defendant Leucadia National

Corporation ("Leucadia") filed a motion for summary judgment in

this matter. Mot. (doc. 179). The Court granted Leucadia's motion

on March 18, 2005, (doc. 190), and denied the Arledges' motion for

reconsideration, (doc. 192), on April 26, 2005. Order (doc. 196).

After the Court's ruling on Leucadia's motion for summary

judgment, Leucadia filed a motion for entry of final judgement.

Mot. (doc. 191). This motion was fully briefed on May 11, 2005.

Reply (doc. 199). Having carefully considered the arguments

presented by the parties, the court now rules.

II. Background Facts

On December 14, 1995, the Arledges and Finova entered into a

Loan and Security Agreement, which was thereafter amended numerous

times. LSOF (doc. 180) at 2; ASOF (doc. 184) at 2. The last such

amendment, entitled the "Tenth Amendment and Restated Schedule to

Loan and Security Agreement," was dated October 30, 2000

(hereinafter, the "Loan Agreement"). Id. Leucadia was not a party

to the Loan Agreement, and was not involved with the negotiation of

the Initial Loan and Security Agreement or any of the subsequent

amendments. Id. All of the above listed agreements were executed

prior to Leucadia's involvement with Finova. Id.

In February 2001, Leucadia and Berkshire Hathaway, Inc. formed

a joint venture called Berkadia, L.L.C., which, in turn, agreed to

lend $6 billion to Finova. LSOF (doc. 180) at 3; ASOF (doc. 184) at

3. In connection with this loan, Finova entered into a ten-year

management services agreement with Leucadia ("the Management

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Agreement"), pursuant to which Leucadia agreed to manage the

operations of Finova in consideration of receiving a fixed annual

management fee from Finova. Id. The Management Agreement provided

that Leucadia was responsible for the "general management" of

Finova beginning on August 21, 2001. LSOF (doc. 180) at 3-4; ASOF

(doc. 184) at 3.

In their third-party complaint, the Arledges alleged that,

since the execution of the Management Agreement, Leucadia "caused"

Finova to eliminate new business development activities and "focus

on managing and maximizing the value of Finova's existing

portfolios." F. Amend. Third-Party Compt. (doc. 140) at 11. They

further maintained that Leucadia caused Finova to "wrongfully"

declare events of default so that Finova could foreclose on certain

collateral and negotiate increased interest rates and fee

structures with borrowers. Id. 

In a letter dated May 7, 2002, Finova declared certain events

of default resulting from Arledge Motor Company's alleged violation

of the "Minimum Net Cash Flow Covenant" under the Loan Agreement. 

LSOF (doc. 180) at 2; ASOF (doc. 184) at 2. Thereafter, a dispute

arose between the Arledges and Finova as to (a) whether such a

violation had occurred, and (b) whether such violation could be

cured by Arledge Motor Company, or should be waived by Finova. 

LSOF (doc. 180) at 2-3; ASOF (doc. 184) at 2. In light of this

alleged event of default, Finova refused to fund a $36,000 loan

advance request made by Arledge Motor Company. LSOF (doc. 180) at

3; ASOF (doc. 184) at 2. 

The Arledges brought seven causes of action against Finova in

their counterclaim, each related to the Loan Agreement: (1) breach

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of contract; (2) declaratory judgment; (3) specific performance;

(4) fraud; (5) negligent misrepresentation; (6) exemplary damages;

and (7) wrongfully seeking temporary injunctive relief, which was

awarded to Finova by the court. S. Amend. Counterclaim (doc. 140).

The Arledges asserted these same seven claims against Leucadia,

"[b]ecause Finova and [Leucadia] were acting in concert at relevant

times[.]" Id. at ¶ 83. In a separate claim raised against Leucadia,

the Arledges alleged that Leucadia, through its management of

Finova, intentionally and willfully interfered with the business

relationship between Finova and the Arledges. F. Amend. Third-Party

Complaint (doc. 140).

III. Standard

Federal Rule of Civil Procedure 54(b) provides:

When more than one claim for relief is presented

in an action, whether as a claim, counterclaim,

cross-claim, or third-party claim, or when

multiple parties are involved, the court may

direct the entry of a final judgment as to one or

more but fewer than all of the claims or parties

only upon an express determination that there is

no just reason for delay and upon an express

direction for the entry of judgment.

In deciding whether entry of final judgment is appropriate, "[a]

district court must first determine that it is dealing with a

“final judgment,” that is, a judgment that is “‘an ultimate

disposition of an individual claim entered in the course of a

multiple claims action.’" Curtiss-Wright Corp. v. General Electric

Co., 446 U.S. 1, 7 (1980) (quoting Sears, Roebuck & Co. v. Mackey,

351 U.S. 427, 436 (1956)). Then, the court must determine whether

there is any just reason for delay. Wood v. GCC Bend, LLC, 422 F.3d

873, 878 (9th Cir. 2005). 

It is left to the sound judicial discretion of

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the district court to determine the appropriate

time when each final decision in a multiple

claims action is ready for appeal. This

discretion is to be exercised in the interest of

sound judicial administration....Whether a final

decision on a claim is ready for appeal is a

different inquiry from the equities involved, for

consideration of judicial administrative

interests is necessary to assure that application

of the Rule effectively preserves the historic

federal policy against piecemeal appeals.

Id. (internal citations omitted). Although the Supreme Court has

eschewed setting narrow guidelines for determining when there

exists a just reason for delay, Curtiss-Wright sheds light on the

factors that may inform the Court's decision. Id. at 878, n.2.

Factors affecting this inquiry include whether the claims finally

adjudicated were separate, distinct, and independent of any of the

other claims or counterclaims involved, whether review of these

adjudicated claims would not be mooted by any future developments

in the case, and whether the nature of the claims was such that no

appellate court would have to decide the same issues more than

once, even if there were separate appeals. See Curtiss-Wright, 446

U.S. at 6; Wood, 422 F.3d at 878, n.2.

IV. Analysis

A. Final Judgment

In their motion, Leucadia asserts that the "Court's order

granting Leucadia's motion for summary judgment disposes of the

entire case between the Arledges and Leucadia." Mot. (doc. 191) at

7. In contrast, the Arledges argue that they still have an active

claim against Leucadia. Resp. (doc. 194) at 2. The Arledges assert

that they pursued a claim of conspiracy against Leucadia that was

not resolved by the Court's order granting summary judgment. Id.

In their Third-Party Complaint, the Arledges stated that

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1 In its order, the Court refers to "Paragraph 82" of the

Arledges' First Amended Answer and Counterclaim; Third Party

Complaint; And Jury Demand. (doc. 91). Paragraph 83 of Defendants'

Second Amended Original Answer, Second Amended Original Counterclaim,

and First Amended Original Third-Party Complaint, (doc. 140),

contains language identical to that in Paragraph 82 in the Arledges'

original third-party complaint.

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"[b]ecause Finova and [Leucadia] were acting in concert at relevant

times, allegations and causes of action designated as against

Finova are also alleged against [Leucadia]." (doc. 140) at ¶ 83. In

a previous order, the Court analyzed this statement and found that,

although "obscure," it was sufficient to include Leucadia as a

defendant in the claims raised against Finova. Order (doc. 144) at

6. Therefore, the Arledges now argue that the statement, in

combination with the Court's prior finding, indicates that

"Leucadia can be liable if it conspired with FINOVA[.]" Id. at 3.

The Arledges contend that Leucadia did not move for summary

judgment on this conspiracy claim, thus leaving a remaining claim

between the parties. Id.

The Court does not find that a claim of conspiracy currently

exists between the Arledges and Leucadia. In its Order of May 26,

2004, the Court stated,

Paragraph 82 specifically states that, "causes of

actions (sic) designated as against Finova are

also alleged against [Leucadia]." Supra. As a

result, the court must construe the complaint, for

purposes of this motion, to include Leucadia as a

defendant in claims one through seven. 

Order (doc. 144) at 6.1 Thus, the Court concluded that the claims

raised against Finova were also raised against Leucadia. In their

motion for summary judgement, Leucadia moved "for summary judgment

on all of the claims asserted against it in Defendants' Second

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Amended Original Counterclaim and First Amended Original ThirdParty Complaint[.]" Motion for Summ. Judg. (doc. 179) at 2.

Consequently, in light of the Court's order granting Leucadia's

motion for summary judgment, the Court concludes that no further

causes of action exist between the Arledges and Leucadia, and the

Court has rendered a "final judgment" in this matter.

B. Just Reason for Delay

Leucadia argues that the Arledges' claims against Leucadia are

separate, distinct, and independent of the claims and counterclaims

between Finova and the Arledges. Mot. (doc. 191) at 7. "Although

the Arledges alleged that Leucadia 'acted in concert with' Finova,

the issue before the Court on Leucadia's motion for summary

judgment and decided in the Court's Order was whether Leucadia

engaged in any conduct that would give rise to liability,

regardless of any alleged tortious conduct of Finova." Id.

Moreover, Leucadia asserts that the outcome of the case between

Finova and the Arledges will not affect appellate review of the

claims by the Arledges against Leucadia. Id. at 8.

In response, the Arledges argue that the guiding factors

considered when determining whether entry of final judgment is

appropriate weigh against entry of final judgment. Resp. (doc. 194)

at 4. They contend that the claims against Leucadia are "not

entirely separate" from those pursued against Finova. Id. In

addition, the Arledges assert that review of the adjudicated claims

could be mooted by future developments in this case. Id. at 5 ("For

instance, if the Court finds Finova did not breach the Loan and

Security Agreement, the Defendants' claims against Leucadia would

become moot."). Lastly, the Arledges argue that the issues between

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them and Leucadia and them and Finova are so related that an

appellate court would have to decide many of the same issues twice

if there were separate appeals. Id. ("For instance, the breach of

contract issue would have to be decided twice if there were

separate appeals."). Accordingly, the Arledges contest entry of

final judgment. Id.

The Court is not convinced that the claims in the Finova

action and the claims against Leucadia are separate and distinct.

The Arledges alleged seven counts against Finova in their

counterclaim, each related to the Loan Agreement: (1) breach of

contract; (2) declaratory judgment; (3) specific performance; (4)

fraud; (5) negligent misrepresentation; (6) exemplary damages; and

(7) wrongfully seeking temporary injunctive relief, which was

awarded to Finova by the court. S. Amend. Counterclaim (doc. 140).

As previously discussed, the Arledges brought these same seven

claims against Leucadia. Id. at ¶ 83. In addition, the Arledges

asserted that Leucadia, through its management of Finova,

intentionally and willfully interfered with the business

relationship between Finova and the Arledges. F. Amend. Third-Party

Complaint (doc. 140). All of these claims involve many of the same

facts and arguments. Furthermore, the outcome of the Finova action

may affect appellate review of the claims raised by the Arledges

against Leucadia. Thus, in light of the fact that the claims raised

between all the parties in this case are intricately intertwined,

and in the interest of sound judicial administration, the Court

concludes that entry of final judgment is inappropriate at this

time.

IT IS ORDERED that Third-Party Defendant Leucadia National

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Corporation's motion for entry of final judgment pursuant to Rule

54(b) (doc. 191) is DENIED, without prejudice.

DATED this 20th day of October, 2005.

Copies to counsel of record.

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