Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_07-cv-08027/USCOURTS-azd-3_07-cv-08027-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Jean Reidhead, et al., 

Plaintiffs/Counterdefendants, 

vs.

Joseph P. Myers, et al., 

Defendants/Counterclaimants.

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No. CV 07-8027-PCT-MHM

ORDER

Currently pending before the Court is Defendants/Counterclaimants Caribbean

Financial Corporation (“CFC”)’s Motion for Default Judgment, or in the alternative, Motion

for Summary Judgment. (Dkt.#76). After reviewing the record and determining oral

argument unnecessary, the Court issues the following Order. 

I. BACKGROUND

The Court has issued several Orders during the course of this protracted litigation. To

establish as clear a record as possible, the Court will once again set forth the procedural

history of this dispute. The claims involved in this case arose from the transfer of property

and the sale of ore in Navajo County, Arizona. Plaintiffs/Counterdefendants Jean Reidhead,

Patrick Kent Reidhead, and Reidhead Sand & Rock, Inc. (“the Reidheads”) filed their

original Complaint in Navajo County Superior Court on May 4, 2007. On June 4, 2007,

Defendants removed the case to federal court. (Dkt.#1). Following the filing of a dismissal

motion by CFC, the Court granted the Reidhead’s leave to amend their Complaint, and on

Case 3:07-cv-08027-GMS Document 80 Filed 06/08/10 Page 1 of 9
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February 4, 2008, the Reidheads lodged an Amended Complaint with the Court. (Dkt.#18).

CFC responded by filing a second Motion to Dismiss arguing that all of the Reidhead’s

claims were time-barred. (Dkt.#21). CFC also requested an award of attorneys’ fees that were

incurred in association with their second Motion to Dismiss. (Id.).

The Reidheads completely failed to respond to CFC’s second Motion to Dismiss.

Accordingly, on April 23, 2008, the Court granted CFC’s second Motion to Dismiss and

dismissed all of the Reidhead’s claims with prejudice. (Dkt.#22). That same day, the

Reidheads filed a Motion for Leave to File a Delayed Response and to Vacate the Court’s

Order. (Dkt.#23). After advising counsel for the Reidheads that he should seek timely leave

of the Court when requesting extensions of time, the Court directed the Reidheads to file a

Response, and stayed its decision on the Reidhead’s Motion to Vacate the Order. (Dkt.#24).

On April 25, 2008, the Reidheads filed their Response, (Dkt.#26), and CFC replied on May

5, 2008. (Dkt.#27).

On July 1, 2008, the Court granted the Reidhead’s Motion to Vacate. (Dkt #29). The

Court stated that “in light of Plaintiffs’ Response alerting the Court to their claims of

equitable tolling, the Court finds it appropriate to vacate its April 23, 2008 Order, which

dismissed Plaintiff’s claims with prejudice . . ..” (Id.). In the same Order, the Court granted

CFC’s second Motion to Dismiss, but this time dismissed the Reidhead’s claims without

prejudice and with leave to file another Amended Complaint. (Id.). In effectuating a

dismissal without prejudice, the Court noted that “Plaintiffs have not alleged equitable tolling

in their Amended Complaint. Nor have Plaintiffs alleged any facts to show they were

unaware of the scheme to defraud or when it was they eventually ‘discovered’ the scheme.”

(Id.). The Court further advised the Reidheads that “an amended complaint supercedes the

original complaint and any documents attached to the original complaint must also be

attached to the amended complaint or their reference will be waived.” (Id., p. 5) (citations

omitted). The Court required the Reidheads to attach to their forthcoming second Amended

Complaint any documents they wished the Court to consider as part of their pleading, and

that failure to do so would result in waiver of reference to any documents not attached. (Id.).

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The Court then ordered the Reidheads to file a second Amended Complaint by close of

business, July 25, 2008. (Dkt.#30). 

On July 25, 2008, the Reidheads lodged their second Amended Complaint, alleging

the following claims: (1) Rescission Based on Fraud; (2) Breach of Duty of Good Faith and

Fair Dealing; (3) Quiet Title; (4) Breach of Contract; and (5) Punitive Damages. (Dkt #32).

CFC responded by filing a third Motion to Dismiss on August 1, 2008, again arguing that all

of the Reidhead’s claims violated the applicable statute of limitations. (Dkt #33). CFC also

requested an award of attorneys’ fees incurred in association with their prior pleadings to

date and their third Motion to Dismiss. (Id.). The Reidheads filed a Response on August 25,

2008, (Dkt.#36), and CFC filed a Reply on September 5, 2008. (Dkt #37).

On December 10, 2008, the Court finally dismissed all claims contained in the

Reidhead’s second Amended Complaint with prejudice and granted in part CFC’s request

for attorneys’ fees. (Dkt.#38). The Court determined that all five of the Reidhead’s claims

were indeed barred by the statute of limitations, and that despite the Court’s patience, the

Reidheads had failed to allege facts, which even if taken as true, would entitle the Reidheads

to rely on the seldom invoked doctrine of equitable tolling. (Id.); see Alvarez-Machain v.

United States, 107 F.3d 696, 701 (9th Cir. 1996). Following dismissal of the Reidhead’s

second Amended Complaint, only CFC’s counterclaims remained. CFC’s Counterclaims

alleged: (1) Breach of Contract; (2) Conversion; (3) Constructive Fraud; (4) Trespass; (5)

Breach of Implied Covenant of Good Faith and Fair Dealing; (6) Ejectment; (7) Slander of

Title; (8) Unjust Enrichment; (9) Specific Performance—Easment; (10) Punitive Damages.

(See Dkt.#34).

On December 12, 2008, the Clerk of the Court entered default against the Reidheads,

who at the time had not yet answered CFC’s counterclaims. (Dkt.#41). The Reidheads filed

a Motion to Set Aside Entry of Default on December 18, 2008. (Dkt.#42). On December 19,

2008, the Court granted the Reidhead’s Motion and ordered them to file an Answer within

30-days. (Dkt.#43). 

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The Court then issued a Scheduling Order on March 2, 2009, (Dkt.#52), in which it

set an October 16, 2009 deadline for the completion of all fact discovery, noting that “[a]ll

depositions must be scheduled to commence at least five business days prior to the discovery

deadline.” (Id.) (emphasis omitted). 

A turbulent period of discovery soon followed. CFC issued requests for written

discovery—requests for production, requests for admission and interrogatories—to the

Reidheads that were due on or before September 14, 2009. (See Dkt.#76). On October 20,

2009, the Court held a discovery dispute hearing to resolve the Reidhead’s outstanding

discovery responses, (Dkt.#64), at which time the Court extended the discovery deadline

until November 3, 2009 and the dispositive motion deadline to December 3, 2009. (Id.). In

addition, Counsel for the Reidheads represented to the Court at the hearing that the delays

in discovery could be attributed to a serious and unexpected illness that Counsel had been

afflicted with, and the illness unfortunately required extensive hospital visits and medical

treatment. Counsel for the Reidheads also made representations to the Court that he had

never actually received delivery of the discovery requests (despite evidence in the record that

he had negotiated with opposing counsel for an extension and a receipt showing that the

requests were hand-delivered to Counsel for the Reidhead’s business address). (See Dkt.#63).

On October 22, 2009, CFC moved for clarification on the Court’s discovery dispute

Order. (Dkt.#65). In its Motion, Counsel for CFC stated that he understood the Court’s

Order as extending the discovery deadline for the sole purpose of requiring the Reidheads

to provide responses to the outstanding discovery requests, but not otherwise providing a

blanket extension of all fact discovery. (Id.). Counsel for CFC noted that he did not believe

that the Court’s Order permitted the Reiedheads to take a belated deposition of Mr. Joesph

P. Meyers, as Counsel for the Reidheads had indicated. (Id.). Counsel for CFC also requested

that the Court provide the Reidheads with a date certain for responding to all outstanding

discovery requests, as Counsel for the Reidheads was continually unable to meet promised

deadlines for the submission of the belated documents. (Id.). 

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On October 27, 2009, Counsel for the Reidheads filed a Motion for an Extension of

Time. (Dkt.#66). In the Motion, Counsel for the Reidheads noted that he would not be able

to provide Counsel for CFC with the long awaited discovery responses by October 27th, due

to contracting another significant illness. (Id.). CFC opposed the Reidhead’s request for an

extension, arguing that it had still not received any responses to its requests for production

and the responses to the interrogatories that it had been received were completely

unacceptable due to vagueness. (Dkt.#68). 

On November 11, 2009, Counsel for the Reidheads filed with the Court a notice of

a discovery dispute. (Dkt.#67). The Reidhead’s discovery dispute notice restated Counsel’s

request for an extension of time, highlighting his recurrent illness and the adverse effect that

it was having on his ability to meet Court imposed deadlines. (Id.). 

In order to accommodate Counsel for the Reidheads, on November 16, 2010, the

Court issued an Order extending all fact discovery in the case until December 16, 2009.

(Dkt.#69). The Court further ordered that by the close of discovery, the Reidheads “must

provide responses to all of Caribbean Financial Corporation's written document requests

while also providing specific facts and documents that the Reidheads allege are supportive

of their defenses, rather than conclusory assertions with no reference to dates, times,

documents or locations.” (Id.). Lastly, given the extraordinary delay that had occurred during

the prosecution of the Reidhead’s initial claims and the fact that this delay had seemingly

infected the Reidhead’s defense of CFC’s counterclaims, the Court reluctantly noted that

failure on the part of the Reidheads to adhere to these firm deadlines “may likely result in the

Court entering a default judgment against [the Reidheads].” (Id.). 

On December 15, 2009, the Reidheads filed a “Certificate of Service of Plaintiffs’

Answers to Defendant Counterclaimant’s Request for Production.” (Dkt.#72). There is

nothing to show that any other discovery took place during this time period, including the

deposition of Mr. Meyers. 

On January 15, 2010, CFC moved the Court for a default judgment against the

Reidheads on CFC’s counterclaims, or in the alternative, summary judgment. (See Motion

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as Amended, Dkt.#76). On January 27, 2010, the Reidheads once again requested an

extension of time from the Court; this was a 60-day extension allegedly needed to adequately

respond to CFC’s dispositive motion. (Dkt.#74). The Reidhead’s Motion contended that

their Counsel needed additional time to gather counterveiling facts to oppose CFC’s

summary judgment motion, including obtaining additional affidavits and declarations. On

April 8, 2010, the Court issued an Order noting that because the 60-day period specified by

the Reidheads had come and gone without a response filed, the Motion for an Extension

Time was now moot. (Dkt.#77). The Court then directed the Reidheads to file a response by

April 14, 2010. (Id.). The Reidheads responded on April 14, 2010, (Dkt.#78), and CFC

replied on May 5, 2010. (Dkt.#79).

II. ANALYSIS

While “the strong policy underlying the Federal Rules of Civil Procedure favor[s]

decisions on the merits,” Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986), for a variety

of reasons not all cases are capable of being resolved in such a manner. The Ninth Circuit

has consistently reaffirmed the inherent power of district courts to control their dockets and

“[i]n the exercise of that power . . . impose sanctions including, where appropriate, default

or dismissal of a case.” Thompson v. Housing Auth., 782 F.2d 829, 831 (9th Cir. 1986). A

dismissal or entry of default is considered an appropriate sanction for flagrant violations of

court orders. See, e.g. Hingano v. Channing & Ass’n, LLC, 2010 U.S. Dist. LEXIS 5558,

*3-4 (E.D. Cal. Jan. 4, 2010) (citing Malone v. United States Postal Serv., 833 F.2d 128, 130

(9th Cir. 1987)). In determining whether to impose a default judgment for failure to comply

with a court order, a district court weighs five factors “(1) the public’s interest in expeditious

resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice to

the defendants; (4) the public policy favoring disposition of cases on their merits; and (5) the

availability of less drastic alternatives.” See Ferdik v. Bonzelet, 963 F.2d 1258, 1260-61 (9th

Cir. 1992) (internal citations omitted). 

After carefully evaluating the relevant factors, the Court is of the firm opinion that all

factors favor the summary resolution of this matter by way of default judgment. During the

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Although on December 15, 2009, the Reidheads filed a notice with the Court that

they had served CFC with responses to CFC’s requests for production, answering CFC’s

requests for production by itself did not constitute compliance with the Court’s November

16, 2009 Order. It should have been obvious to the Reidheads, based on the extensive

litigation before this Court on the issue of their inadequate discovery responses, that the

Reidheads were obligated to provide CFC with much more comprehensive discovery

responses, including, but not limited to, revised responses to CFC’s Non-Uniform

Interrogatories.

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three years this case has been pending on the Court’s docket, the Reidheads have displayed

a consistent inability to comply with this Court’s most basic procedural Orders, and the

dilatory manner in which they have conducted discovery has prejudiced CFC’s prosecution

of its counterclaims. Because the Reidheads have failed to provide adequate or timely

responses to CFC’s otherwise reasonable requests for information, the Court is presently

unable to assess the legal merit of CFC’s Motion for Summary Judgment. Even a cursory

review of the docket indicates this Court’s patience with the Reidheads. The Court has

repeatedly modified its Orders to accommodate Counsel for the Reidheads and his repeated

delays. The Court’s patience is, however, not unlimited, and there comes a point in time

where accommodating one side too greatly prejudices the opposition. 

In its November 16, 2009 Order, the Court expressly warned the Reidheads that

default judgment was a potential outcome of this litigation should they continue to remain

unable to provide CFC with “responses to all of Caribbean Financial Corporation’s written

document requests while also providing specific facts and documents that the Reidheads

allege are supportive of their defenses, rather than conclusory assertions with no reference

to dates, times, documents or locations.” (Dkt.#69). Despite this stern warning, there is

nothing in the record indicating that the Reidheads submitted or even attempted to submit

comprehensive discovery requests that would satisfy the Court’s clear directive.1

By way of background, the Court’s Order requiring more specific discovery responses

was necessitated by the fact that the Reidheads were defending CFC’s counterclaim based

on CFC’s allegedly fraudulent acts. Because Arizona requires that fraud be plead with

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particularity even as a defense, Fruth v. Divito, 546 P.2d 1163, 1165 (Ariz. Ct. App. 1976)

(“Rule 9(b), Rules of Civil Procedure, [...] requires that ‘the circumstances constituting fraud

or mistake shall be stated with particularity,’ and this is equally true when fraud is a defense

to an action.”), CFC was entitled to discovery responses from the Reidheads that contained

some elementary degree of specificity as to the fraudulent acts alleged. Instead of providing

CFC with specific answers, the Reidhead’s discovery responses–which were extremely

untimely—contained only vague and conclusory allegations that either: 1) repeat the same

conclusory allegations contained in the Reidheads’ Answer (which is styled as a reply) to

CFC’s counterclaims; or 2) fail to provide any details regarding the additional fraud defense

that the Reidheads appear to assert in response to the counterclaims. Not only did the

Reidheads fail to provide adequate responses to CFC’s discovery requests, but the Reidheads

seemingly did not conduct any discovery of their own. Notwithstanding the Reidheads

failure to conduct fact discovery—even though the Court extended the fact discovery

deadline at their request—the Reidheads responded to CFC’s Motion for Summary Judgment

by arguing that the Court should refrain from issuing a ruling until the Reidheads are granted

the opportunity to depose Mr. Joseph P. Meyers. (See Dkt.# 78 at 2). As CFC stated in its

Reply brief, the Reidhead’s request for additional discovery strains credulity considering the

Reidheads did not notice Mr. Meyer’s deposition on the Court’s docket and never followed

up on CFC’s Counsel’s offer to set a deposition date during the discovery period. In

addition, the Reidhead’s Response brief was supported by a bevy of new affidavits and

declarations, the substance of which were not disclosed to CFC in discovery. The

Reidhead’s submissions, along with their belated request to depose Mr. Meyers, are

indicative of the Reidhead’s pattern of unreasonable delay, their disregard for the Court’s

case management schedule, and the resultant prejudice of their actions.

For these reasons, the Court has no alternative but to reluctantly enforce its previous

warning and enter a default judgment against the Reidheads on CFC’s counterclaims.

/ / / 

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Accordingly,

IT IS HEREBY ORDERED granting in part and denying in part Caribbean Financial

Corporation’s Motion for Default Judgment or in the alternative, Motion for Summary

Judgment. (Dkt.#76). The Motion for Default Judgment is GRANTED. The Motion for

Summary Judgment is DENIED as moot. 

IT IS FURTHER ORDERED directing the Clerk to enter judgment accordingly.

DATED this 7th day of June, 2010.

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