Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-02042/USCOURTS-azd-2_12-cv-02042-1/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 

NIKOLAY OTCHKOV, 

Plaintiff, 

v. 

ALAN EVERETT, in his official and 

individual capacities as Director of the 

Arizona Department of Liquor Licenses 

and Control; Former Director of the 

Arizona Department of Liquor and 

Licenses Control JERRY OLIVER Sr., 

in his official and individual capacities; 

OSCAR CORTEZ in his official and 

individual capacities as an officer in the 

Phoenix Police Department; CITY OF 

PHOENIX; Attorney JESS LORONA, 

and the law firm LORONA, DUCAR & 

STAINER LTD., 

Defendants. 

No. 12-CV-02042-PHX-JAT 

ORDER

 Pending before the Court are pro se Plaintiff Nikolay Otchkov’s Motion for 

Default Judgment (Doc. 16) against Defendant Alan Everett (“Everett” or “Defendant”), 

Everett’s Motion to Set Aside Default (Doc. 19), and Everett’s Motion to Dismiss (Doc. 

33). The Court denies Plaintiff’s motion and grants Defendant’s motions for the following 

reasons. 

I. BACKGROUND 

 In 2000, Plaintiff owned and operated a restaurant and sports bar called “Famous 

Sam’s.” (Doc. 1 at 3). On June 14, 2007, City of Phoenix officials including Defendant 

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Cortez and the Phoenix Police Department conducted an inspection of Famous Sam’s. 

(Id. at 4). As a result of the inspection, Phoenix Police issued Plaintiff an “Arizona 

Traffic Ticket and Complaint” for no game center license, operating games of chance, and 

operating untagged coin operated games. (Id.). Plaintiff was allegedly not handcuffed or 

detained but was read his Miranda rights. (Id.). Plaintiff was ordered to appear in the City 

of Phoenix Municipal Court on June 28, 2007. (Id.). Plaintiff appeared in Court but was 

allegedly told by the court clerk that no complaint had been filed against him and none 

existed against him in the court file. (Id.). 

 In 2007, Plaintiff changed the name of the restaurant to “Big Nixx.” (Id. at 3). 

In January 2008, the Arizona State Liquor Board (the “Board”) audited Big Nixx and 

found multiple violations of Arizona law. (Id.). Plaintiff was required to surrender his 

current liquor license and get a series 6 liquor license. (Id.). 

 To acquire a series 6 license Plaintiff had to enter the Arizona Liquor License 

Lottery. (Id.). On May 4, 2008, Plaintiff was randomly selected in the lottery, which 

allowed Plaintiff to apply for a series 6 license with the Department of Liquor Licenses 

and Control (“DLLC”). (Id.). To obtain a series 6 license, Plaintiff was required to apply 

with the DLLC and pay a “nonrefundable fifty percent (50%) deposit of the Fair Market 

Value” of his series 6 license which was “$55,834.00.” (Id.). Plaintiff paid the 

$55,834.00 “nonrefundable deposit” to the DLLC. (Id.). Plaintiff claims he was never 

warned that DLLC would keep his “nonrefundable deposit” in the case his application was 

disqualified by the Board. (Id.). Plaintiff also filed the application with the DLLC. (Id. at 

4). 

 In the application, one question asks “Have you ever been detained, cited, arrested, 

indicted or summoned into court for violation of any law or ordinance?” (Doc. 1-1 at 13). 

Plaintiff answered the question by saying he was warned in June 2007 for possible game 

violations. (Id.). Another question asks “Have you or an entity in which you have held 

ownership, been an officer, member, director or manager, ever had a business, 

professional or liquor application or license rejected, denied, revoked, suspended or fined 

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in this or any other state?” (Id.). In answering the question, Plaintiff failed to disclose 

some violations and the fine he was assessed for violations. (Id.). 

 In July 2008, the Phoenix City Council recommended disapproval of Plaintiff’s 

application for a series 6 license based on information provided by Defendant Cortez and 

the Phoenix Police Department regarding Plaintiff’s past violations. (Doc. 1 at 4). 

Plaintiff alleges that Defendant Cortez falsely accused Plaintiff of falsifying his series 6 

license application. (Id.). 

 In order to resolve the issues presented by the Phoenix City Council’s 

recommendation, the Board set a hearing. (Id.). Plaintiff retained assistance of attorney 

Jerry Lewkowitz for the hearing. (Id.). The hearing was held on December 8, 2008. (Id.). 

 On December 8, 2008, Defendant Cortez also allegedly entered Big Nixx and 

ordered the customers to leave and the bartender to close the restaurant. (Id.). 

 On December 19, 2008, the Board denied Plaintiff’s application for a series 6 

liquor license, allegedly solely on the basis of the information provided by Defendant 

Cortez—that Plaintiff had been arrested before and had falsified his application. (Id. at 5). 

As a result of his application denial, Plaintiff forfeited the $55,834.00 “nonrefundable 

deposit.” (Id.). Plaintiff did not appeal the Board’s decision because Lewkowitz advised 

Plaintiff that an appeal would be futile because the City of Phoenix based its 

recommendation on Defendant Cortez’s information. (Id.). 

 Plaintiff contacted Defendant Oliver, the former Director of the Arizona DLLC, 

and apparently asked for his nonrefundable deposit back. Oliver refused to return the 

deposit and advised Plaintiff to seek legal counsel in order to dispute the issue in court. 

(Id.). In March 2010, Plaintiff hired Defendant Lorona to pursue a claim in an attempt to 

get the deposit back. (Id.). 

 On June 28, 2010, the DLLC sent a letter to Plaintiff signed by Defendant Alan 

Everett, the Director of the DLLC, re-asserting that the DLLC would not refund the 

deposit that Plaintiff paid in May 2008 because the deposit was nonrefundable. (Doc. 1-1 

at 25). The letter also informed Plaintiff that he had the option to pay the balance of the 

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license fee in the next ninety (90) days even though he could not qualify for the license 

himself. (Id.). Plaintiff alleges Defendant Lorona expressed to Plaintiff that this letter 

was an acknowledgment by the DLLC of wrongful acts and that the letter would be useful 

inculpatory evidence against the DLLC in a forth coming section 1983 claim. (Doc. 1 at 

5). 

 In September 2010, Defendant Lorona advised Plaintiff that there may be some 

preventing Plaintiff from being successful on a claim under section 1983. (Id. at 6). In 

December 2010, Plaintiff filed a complaint with another judge in this Court under 42 

U.S.C. § 1983 against the State of Arizona, the DLLC, City of Phoenix, and the Police 

Department. (Doc. 1-1 at 29-39). The complaint was eventually dismissed for failure to 

serve the defendants. In January 2011, Defendant Lorona and his law firm informed 

Plaintiff that the firm would no longer represent Plaintiff because Lorona had determined 

that Plaintiff had no legal claim. (Id.). 

 Plaintiff alleges he was deceived and betrayed by Lewkowitz and Defendant 

Lorona because they allegedly acted in favor of the DLLC and the City of Phoenix. (Id.). 

On June 16, 2011, Plaintiff sent a letter to Everett which was referred to the Arizona 

Department of Administration Risk Management Division (the “Department”). (Doc. 1-1 

at 41). The Department sent a letter back to Plaintiff on September 27, 2011, denying the 

claims Plaintiff presented and explaining that an investigation into Plaintiff’s application 

denial had revealed that Plaintiff’s application was handled and processed in accordance 

with established procedures and Arizona law. (Id.). 

 On September 26, 2012, Plaintiff filed a complaint (the “Complaint”) in this Court 

alleging five counts against Alan Everett, Director of the Arizona DLLC, Jerry Oliver Sr., 

former Director of the Arizona DLLC, Oscar Cortez of the Phoenix Police Department, 

the City of Phoenix, and Attorney Jess Lorona, and the law firm Lorona, Ducar & Stainer 

Ltd. (Doc. 1). 

 Kay Hughes at the Arizona DLLC was served with the Complaint for Everett on 

November 2, 2012. (Doc. 4). On December 5, 2012, Plaintiff filed a motion for entry of 

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default against Everett for failing to respond to the Complaint. (Doc. 14). Pursuant to 

Federal Rule of Civil Procedure 55(a), the Clerk of the Court entered default against 

Everett on December 7, 2012. (Doc. 15). On December 10, 2012, Plaintiff filed the 

pending Motion for Default Judgment against Everett (Doc. 16). The next day, Everett 

filed the pending Motion to Set Aside Default (“Motion to Set Aside”) (Doc. 19). 

Plaintiff then filed a Response to Everett’s Motion to Set Aside (Doc. 22) and Everett filed 

a Reply to Plaintiff’s Response (Doc. 26). 

 Following these motions regarding default, Plaintiff personally served Everett on 

January 17, 2013. (Doc. 32). On February 7, 2013, Everett filed the pending Motion to 

Dismiss (Doc. 33) and Plaintiff filed a Response to the Motion to Dismiss (Doc. 34). 

II. DEFAULT 

 Subsequent to the Court’s entry of default against Everett, Plaintiff has now asked 

the Court to enter default judgment against Everett under Federal Rule of Civil Procedure 

55(b). (Doc. 16). Everett has asked the Court to set aside the Clerk of the Court’s entry of 

default against him under Rule 55(c). (Doc. 19). Everett argues that the Court should set 

aside the entry of default because Everett was improperly served under Rule 4(e) and for 

good cause. (Id. at 5-8). 

 The Court finds Everett has shown good cause to set aside the entry of default and 

need not address Everett’s argument regarding service under Rule 4(e). The Ninth Circuit 

Court of Appeals “has emphasized that [default] judgments are ‘appropriate only in 

extreme circumstances; a case should, whenever possible, be decided on the merits.’” TCI 

Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001), overruled on other 

grounds, Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 147–50 (2001) (quoting Falk 

v. Allen, 739 F.2d 461, 463 (9th Cir. 1984) (per curiam)). “The court may set aside an 

entry of default for good cause.” Fed. R. Civ. P. 55(c). “To determine ‘good cause’, a 

court must ‘consider[ ] three factors: (1) whether [the party seeking to set aside the 

default] engaged in culpable conduct that led to the default; (2) whether [the party] had 

[no] meritorious defense; or (3) whether reopening the default judgment would prejudice’ 

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the other party.” United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 

F.3d 1085, 1091 (9th Cir. 2010) (citation omitted); see also TCI Group, 244 F.3d at 696. 

“This standard, which is the same as is used to determine whether a default judgment 

should be set aside under Rule 60(b), is disjunctive, such that a finding that any one of 

these factors is true is sufficient reason for the district court to refuse to set aside the 

default.” Id. However, 

“[w]hile the same test applies for motions seeking relief from 

default judgment under both Rule 55(c) and Rule 60(b), the 

test is more liberally applied in the Rule 55(c) context,” such 

as we consider here. Cracco v. Vitran Exp., Inc., 559 F.3d 

625, 631 (7th Cir. 2009) (quotations and citations omitted). 

This is because in the Rule 55 context there is no interest in 

the finality of the judgment with which to contend. See 

Hawaii Carpenters’ Trust Funds v. Stone, 794 F.2d 508, 513 

(9th Cir. 1986). 

Id. at 1091 n. 1. 

 In this case, first, Everett’s conduct was not culpable. “[A] defendant’s conduct is 

culpable if [he] has received . . . notice of the filing of the action and intentionally failed to 

answer.” TCI Group, 244 F.3d at 697–98 (emphasis in original) (citation omitted). “[I]n 

this context the term ‘intentionally’ means that a movant cannot be treated as culpable 

simply for having made a conscious choice not to answer; rather, to treat a failure to 

answer as culpable, the movant must have acted with bad faith, such as an ‘intention to 

take advantage of the opposing party, interfere with judicial decisionmaking, or otherwise 

manipulate the legal process.’” Signed Pers. Check No. 730, 615 F.3d at 1092 (quoting 

TCI Group, 244 F.3d at 697). 

 Everett argues that his conduct was not culpable because he did not act in bad 

faith. (Doc. 19 at 8); (Doc. 26 at 4). Everett contends that service was not proper under 

Federal Rule of Civil Procedure 4 because Everett did not waive service under Rule 4(d), 

he was not served personally, nor did he authorize anyone to accept service on his 

behalf—service was effectuated upon Kay Hughes at the offices of the Arizona DLLC. 

“Without personal service in accordance with Rule 4, the district court is without 

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jurisdiction to render a personal judgment against a defendant.” Hutchinson v. United 

States, 677 F.2d 1322, 1328 (9th Cir. 1982) (upholding dismissal of declaratory judgment 

for want of jurisdiction for improper service). Because he was not properly served, 

Everett “made a conscious choice not to answer.” Signed Pers. Check No. 730, 615 F.3d 

at 1092. The Court of Appeals has determined that he “cannot be treated as culpable 

simply” for this. Id. There is no evidence that Everett “inten[ded] to take advantage of 

the opposing party, interfere[d] with judicial decisionmaking, or otherwise manipulate[d] 

the legal process.” Id. Accordingly, there is no evidence that Everett acted in bad faith 

and his conduct was not culpable. 

 Second, Everett has a meritorious defense. “A defendant seeking to vacate a 

default judgment must present specific facts that would constitute a defense. But [even] 

the burden on a party seeking to vacate a default judgment is not extraordinarily heavy.” 

TCI Group, 244 F.3d at 700 (citations omitted). To show he has a meritorious defense all 

a “defendant must [do is] state a defense good at law which is sufficient if it contains even 

a hint of a suggestion which, proven at trial, would constitute a complete defense.” 

Thompson v. Am. Home Assur. Co., 95 F.3d 429, 434 (6th Cir. 1996) (quotations and 

citation omitted). 

 In this case, Everett contends that the claims against him are barred because 

Plaintiff has failed to state any claims against him upon which relief can be granted. (Doc. 

19 at 7). As explained below, see infra Section III, Plaintiff’s claims are in fact barred 

because Everett is entitled to qualified immunity. Accordingly, Everett has shown he has 

a meritorious defense justifying his Motion to Set Aside. 

 Finally, Plaintiff will not be prejudiced by allowing the case he filed to move 

forward. “To be prejudicial, the setting aside of a judgment must result in greater harm 

than simply delaying resolution of the case. Rather, ‘the standard is whether [plaintiff’s] 

ability to pursue his claim will be hindered.’” TCI Group, 244 F.3d at 701 (quoting Falk, 

739 F.2d at 463); Thompson, 95 F.3d at 433-34 (to be considered prejudicial, “the delay 

must result in tangible harm such as loss of evidence, increased difficulties of discovery, 

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or greater opportunity for fraud or collusion”). Everett has sufficiently explained that 

Plaintiff would not be prejudiced by setting aside the entry of default and Plaintiff has not 

addressed this issue in responding to Everett’s Motion to Set Aside. 

 Accordingly, the Court will deny Plaintiff’s Motion for Default and grant Everett’s 

Motion to Set Aside the entry of default. 

III. DEFENDANT’S MOTION TO DISMISS (Doc. 33) 

 Next, Everett has moved for the Court to dismiss the claims in Plaintiff’s 

Complaint against him 1) because the claims are barred by the statute of limitations, 2) 

because the claims fail to state claims upon which relief can be granted, and 3) because 

Everett is entitled to qualified immunity. (Doc. 33 at 1). In the Complaint, Plaintiff has 

made three claims against Everett: a claim under 42 U.S.C. § 1983 in Count One for 

“conspiracy” with other defendants to deprive Plaintiff of “property and privilege” 

without “due process of law” in violation of the “Fourteenth Amendment to the 

Constitution” (Doc. 1 at 6-7); that Everett is liable again in Count Three under section 

1983 for “conspiracy” with other defendants to deprive Plaintiff “of property and 

privileges through deception and fraud . . . in violation of [the] First, Fourth and 

Fourteenth Amendments” (id. at 8); and that Everett and other defendants are liable in 

Count Five under State law for the tort of intentional infliction of emotional distress (id. at 

9-10). As the Court finds the resolution of the immunity issue to be dispositive in this 

case, the Court will not address the other issues raised by Everett. 

 Plaintiff has sued Everett in both his official and personal capacities. Everett 

contends that as the Director of the Arizona DLLC he cannot be held liable for actions 

undertaken in his official capacity under section 1983 and that he is entitled to qualified 

immunity for the claims made against him in his personal capacity. (Doc. 33 at 7-8). 

A. Official Capacity 

 Under section 1983, 

Every person who, under color of any statute, ordinance, 

regulation, custom, or usage, of any State or Territory or the 

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District of Columbia, subjects, or causes to be subjected, any 

citizen of the United States or other person within the 

jurisdiction thereof to the deprivation of any rights, 

privileges, or immunities secured by the Constitution and 

laws, shall be liable to the party injured in an action at law, 

suit in equity, or other proper proceeding for redress . . . 

42 U.S.C. § 1983. However, the United States Supreme Court has explicitly held “that 

neither a State nor its officials acting in their official capacities are “persons” under § 

1983.” Will v. Mich. Dep’t of State Police, 491 U.S. 58, 71 (1989). The Supreme Court 

explained, “[o]bviously, state officials literally are persons. But a suit against a state 

official in his or her official capacity is not a suit against the official but rather is a suit 

against the official’s office. As such, it is no different from a suit against the State itself.” 

Id. (citations omitted). “The Eleventh Amendment bars [section 1983] suits [against the 

State] unless the State has waived its immunity or unless Congress has exercised its 

undoubted power under § 5 of the Fourteenth Amendment to override that immunity. [ ] 

Congress, in passing § 1983, had no intention to disturb the States’ Eleventh Amendment 

immunity.” Id. at 66. 

 In this case, Everett is a state official acting in his official capacity as the Director 

of the Arizona DLLC. Accordingly, Counts One and Three made in the Complaint 

against him in his official capacity under section 1983 must be dismissed. 

B. Individual Capacity 

 “When it comes to defenses to liability, an official in a personal-capacity action 

may, depending on his position, be able to assert personal immunity defenses.” DeNieva 

v. Reyes, 966 F.2d 480, 484 (9th Cir. 1992) (quoting Kentucky v. Graham, 473 U.S. 159, 

166 (1985)). 

Under § 1983 . . . , a plaintiff may seek money damages from 

government officials who have violated h[is] constitutional or 

statutory rights. But to ensure that fear of liability will not 

“unduly inhibit officials in the discharge of their duties,” 

Anderson v. Creighton, 483 U.S. 635, 638, 107 S.Ct. 3034, 97 

L.Ed.2d 523 (1987), the officials may claim qualified 

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immunity; so long as they have not violated a “clearly 

established” right, they are shielded from personal liability, 

Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 

L.Ed.2d 396 (1982). That means a court can often avoid 

ruling on the plaintiff’s claim that a particular right exists. If 

prior case law has not clearly settled the right, and so given 

officials fair notice of it, the court can simply dismiss the 

claim for money damages. The court need never decide 

whether the plaintiff’s claim, even though novel or otherwise 

unsettled, in fact has merit. 

Camreta v. Greene, 131 S. Ct. 2020, 2030-31 (2011). Qualified immunity is “an 

immunity from suit rather than a mere defense to liability . . . .” Mitchell v. Forsyth, 472 

U.S. 511, 526 (1985). Thus, “[w]here the defendant seeks qualified immunity, a ruling on 

that issue should be made early in the proceedings so that the costs and expenses of trial 

are avoided where the defense is dispositive.” Saucier v. Katz, 533 U.S. 194, 200 (2001), 

overruled in part on other grounds by Pearson v. Callahan, 555 U.S. 223 (2009). 

 A defendant in a section 1983 action is entitled to qualified immunity from 

damages for civil liability if his conduct does not violate clearly established statutory or 

constitutional rights of which a reasonable person would have known. Harlow, 457 U.S. 

at 818. “Thus, in order to determine whether qualified immunity protects a government 

official, a court must decide, first, whether a plaintiff has produced evidence showing that 

the official violated a constitutional right and, second, whether that right was ‘clearly 

established’ at the time of the alleged misconduct.” Conner v. Heiman, 672 F.3d 1126, 

1132 (9th Cir. 2012) (quoting Pearson, 555 U.S. at 232). Courts are “permitted to 

exercise their sound discretion in deciding which of the two prongs of the qualified 

immunity analysis should be addressed first in light of the circumstances in the particular 

case at hand.” Pearson, 555 U.S. at 236. 

 Under the second prong, “[t]o determine whether a constitutional right has been 

clearly established for qualified immunity purposes, we must survey the legal landscape 

and examine those cases that are most like the instant case. The inquiry must be 

undertaken in light of the specific context of the case, not as a broad general proposition.” 

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Krainski v. Nev. ex rel. Bd. of Regents of Nev. Sys. of Higher Educ., 616 F.3d 963, 970 

(9th Cir. 2010) (quotations and citations omitted). A right is clearly established when “in 

the light of pre-existing law the unlawfulness . . . [is] apparent.” Hope v. Pelzer, 536 U.S. 

730, 739 (2002). 

 In this case, the Complaint alleges that Plaintiff paid an admittedly “nonrefundable 

deposit” of “$55,834” in order to apply for his series 6 liquor license (Doc. 1 at 3 ¶¶ 19-

21); that Plaintiff was denied this license by the Board (id. at ¶33); that Everett sent 

Plaintiff a letter in response to a letter from Plaintiff demanding the non-refundable 

deposit be refunded, giving Plaintiff an additional 90 days to pay the balance of the license 

fee (id. at ¶43); that Plaintiff believed this letter acknowledged a wrongful act on the part 

of the Everett (id. at ¶44); that Plaintiff’s hired attorney determined that Plaintiff had no 

legal claim against Everett (id. at ¶49); and that Plaintiff received a letter from the Arizona 

Department of Administration in response to another letter that Plaintiff sent to Everett, 

denying Plaintiff’s claim and informing Plaintiff that the DLLC had acted appropriately 

(id. at ¶52). Plaintiff’s two claims against Everett under section 1983 invoke the due 

process clause of the Fourteenth Amendment in Count One alleging Everett participated in 

a conspiracy to deprive Plaintiff of property and privilege (Doc. 1 at 7 ¶57), and invoke 

the First, Fourth, and Fourteenth Amendments in Count Three alleging again that Everett 

participated in a conspiracy to deprive Plaintiff of property and privilege (id. at 8 ¶69). 

 Given the Complaint, Plaintiff has not identified nor has the Court found a single 

case that is similar to the instant case and establishes, much less clearly establishes, that 

the DLLC’s denial to refund Plaintiff’s “non-refundable deposit” was a constitutional 

violation. Plaintiff merely makes the conclusory statement that “Everett acted 

intentionally, he knew and had reason to know that his conduct was unlawful in violating 

Otchkov’s clearly established rights that a reasonable officer would have known.” (Doc. 

34 at 17). Plaintiff makes no argument for how he had a clearly established right to the 

non-refundable deposit under the circumstances and how not returning the non-refundable 

deposit violated the First, Fourth, or Fourteenth Amendments. The Court finds that the 

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contours of the rights Plaintiff asserts were not sufficiently clear that a reasonable official 

would think that denying Plaintiff’s request to return the non-refundable deposit violated 

the Constitution. Accordingly, Everett is entitled to qualified immunity on Plaintiff’s 

federal claims in Counts One and Three. 

C. Immunity from State law Tort Claim 

 The only remaining claim against Everett is Count Five of the Complaint. 

Because Plaintiff’s claim in Count Five is a state law tort claim and the claim is only 

before the Court on the basis of supplemental jurisdiction, the Court must apply Arizona 

substantive law. Mason and Dixon Intermodal, Inc. v. Lapmaster Int’l LLC, 632 F.3d 

1056, 1060 (9th Cir. 2011) (“When a district court sits in diversity, or hears state law 

claims based on supplemental jurisdiction, the court applies state substantive law to the 

state law claims.”). Thus, whether Everett is immune from Plaintiff’s Arizona tort law 

claim in Count Five is a question of Arizona law. Davis v. Spier, CV-08-00050-PHXNVW, 2008 WL 1746165, at *4 (D. Ariz. Apr. 14, 2008) (citing Martinez v. California, 

444 U.S. 277, 282 n. 5 (1980) (“[W]hen state law creates a cause of action, the State is 

free to define the defenses to that claim, including the defense of immunity, unless, of 

course, the state rule is in conflict with federal law.”)). Federal courts must follow the 

decisions of a state’s highest court when deciding issues of that state’s law. Harvey’s 

Wagon Wheel, Inc. v. Van Blitter, 959 F.2d 153, 154 (9th Cir. 1992). 

 The Arizona Supreme Court has held that qualified immunity protects only those 

acts done in good faith. Chamberlain v. Mathis, 729 P.2d 905, 908 (Ariz. 1986). Further, 

“[b]oth qualified and absolute immunity protect only acts reasonably within the 

employee’s discretionary authority.” Id. at 909. “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.” Id. at 912. 

 Turning to established law regarding a claim of intentional infliction of emotional 

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distress (“IIED”), “[i]t is the duty of the court as society’s conscience to determine 

whether the acts complained of can be considered sufficiently extreme and outrageous to 

state a claim for relief.” Patton v. First Fed. Sav. & Loan Ass’n of Phx., 578 P.2d 152, 

155 (Ariz. 1978) (in banc) (citation omitted); see also Lucchesi v. Stimmell, 716 P.2d 

1013, 1016 (Ariz. 1986) (“It is for the court to determine, in the first instance, whether the 

defendant’s conduct may reasonably be regarded as so extreme and outrageous as to 

permit recovery, or whether it is necessarily so.”). To recover for this tort, the plaintiff 

must show that the defendant’s conduct was “so outrageous in character, and so extreme 

in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious 

and utterly intolerable in a civilized community.” Cluff v. Farmers Ins. Exchange, 460 

P.2d 666, 668 (Ariz. Ct. App. 1969) (quoting Restatement (Second) of Torts § 46 cmt. d). 

The elements of a cause of action for IIED are: 

 [F]irst the conduct by the defendant must be “extreme” and 

“outrageous”; second, the defendant must either intend to 

cause emotional distress or recklessly disregard the near 

certainty that such distress will result from his conduct; and 

third, severe emotional distress must indeed occur as a result 

of defendant’s conduct. 

Johnson v. McDonald, 3 P.3d 1075, 1080 ¶23 (Ariz. Ct. App. 1999) (quoting Ford v. 

Revlon, Inc., 734 P.2d 580, 585 (Ariz. 1987)). Given the nature of IIED and an IIED 

claim, if a defendant’s alleged conduct is sufficiently outrageous to state a claim for IIED, 

then the conduct would almost invariably disqualify a defendant from qualified immunity. 

Sufficiently outrageous conduct would compel a court to find a defendant would have 

known or should have known that by engaging in such conduct that he was acting in 

reckless disregard of whether his activities would deprive a claimant of their rights, and if 

he should have known this, he is not entitled to qualified immunity. 

 In this case, Plaintiff has failed to allege facts sufficient to show that Everett knew 

or should have known that merely denying Plaintiff’s request to return the non-refundable 

deposit was so extreme in degree as to go beyond all possible bounds of decency, and 

would be regarded as atrocious and utterly intolerable in a civilized community. Plaintiff 

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admits he knew he was submitting a “nonrefundable deposit” when he applied for his 

series 6 liquor license. Plaintiff merely claims he did not understand what 

“nonrefundable” meant. Further, Plaintiff has alleged only minimal facts regarding 

Everett. Plaintiff sent Everett a letter requesting that Everett refund the non-refundable 

deposit. Everett merely sent Plaintiff a letter back reiterating that the DLLC will not issue 

a refund of the nonrefundable deposit. Evidently Plaintiff sent another letter to Everett on 

June 16, 2011, which was forwarded to the Arizona Department of Administration Risk 

Management Division. The Department completed an investigation into the facts 

surrounding Plaintiff’s application and sent Plaintiff another letter on September 27, 2011, 

informing him that the Department determined that Plaintiff’s application was handled 

and processed in accordance with established procedures and Arizona law. No additional 

facts even remotely implicate Everett. Plaintiff merely alleges Everett intentionally and 

willfully inflicted emotional distress on Plaintiff. Everett’s actions in sending Plaintiff a 

letter back and referring Plaintiff’s second letter to the Department were discretionary 

actions and within the scope of his public duties. Nothing about Everett’s conduct, 

however, could be construed to reach the level required to allow Plaintiff to recover for 

IIED under Arizona law. Accordingly, Everett is entitled to qualified immunity as a 

government official on Plaintiff’s state law tort claim in Count Five. 

D. Defendant Jerry Oliver Sr., Former Director of the Arizona DLLC 

 Further, while Defendant Oliver has not filed a motion to dismiss nor a responsive 

pleading to Plaintiff’s Complaint, the Court will dismiss Defendant Oliver from this case 

for the same reasons that Everett will be dismissed. Abigninin v. AMVAC Chem. Corp., 

545 F.3d 733, 743 (9th Cir. 2008) (“A [d]istrict [c]ourt may properly on its own motion 

dismiss an action as to defendants who have not moved to dismiss where such defendants 

are in a position similar to that of moving defendants.”). First, Defendant Oliver was not 

served with the Complaint. Second, Defendant Oliver, as the former Director of the 

Arizona DLLC, is in a similar position to Everett and Plaintiff’s claims against Defendant 

Oliver are no more valid under Federal Rule of Civil Procedure 12(b) than Plaintiff’s 

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allegations against Everett. 

IV. LEAVE TO AMEND 

 The Court will not grant Plaintiff leave to amend the Complaint with regard to 

Defendant Everett and Defendant Oliver. Plaintiff has not amended nor sought leave to 

amend his Complaint as a matter of right under Rule 15 of the Federal Rules of Civil 

Procedure. Because the twenty-one day time frame to file an amendment following a 

motion to dismiss has expired, Plaintiff has lost his right to amend the Complaint as a 

matter of course. Fed. R. Civ. P. 15(a)(1). While previous precedent from the Ninth 

Circuit Court of Appeals instructed that district courts should grant leave to amend sua 

sponte when granting a motion to dismiss, the Court of Appeals has recently called that 

precedent into question in light of the recent revision of the Federal Rule of Civil 

Procedure 15. See Lacey v. Maricopa Cnty., 693 F.3d 896, 926-27 (9th Cir. 2012). 

 A district court’s denial of leave to amend is subject to an abuse of discretion 

standard of review. See Telesaursus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 

2010). The Court has “an obligation where the petitioner is pro se, particularly in civil 

rights cases, to construe the pleadings liberally and to afford the petitioner the benefit of 

any doubt.” Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012) (quoting Bretz v. 

Kelman, 773 F.2d 1026, 1027 n. 1 (9th Cir. 1985) (en banc)). “A district court should not 

dismiss a pro se complaint without leave to amend unless ‘it is absolutely clear that the 

deficiencies of the complaint could not be cured by amendment.’” Id. (quoting Schucker 

v. Rockwood, 846 F.2d 1202, 1203–04 (9th Cir. 1988) (per curiam)). 

 In this case, Plaintiff’s claims against Everett and Oliver are barred because of 

immunity. The Court finds that it is absolutely clear that this bar to Plaintiff’s claims 

against Everett and Oliver cannot be cured by amendment. Accordingly, any attempt to 

amend the Complaint would be futile. 

V. CONCLUSION

 Based on the foregoing, 

IT IS ORDERED that Plaintiff’s Motion for Default Judgment against Defendant 

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Alan Everett (Doc. 16) is denied. 

IT IS FURTHER ORDERED that Defendant Alan Everett’s Motion to Set Aside 

Default (Doc. 19) is granted. 

IT IS FURTHER ORDERED that Defendant Alan Everett’s Motion to Dismiss 

(Doc. 33) is granted. Defendant Alan Everett is dismissed from this case with prejudice. 

IT IS FINALLY ORDERED that the Clerk of the Court shall dismiss Defendant 

Jerry Oliver Sr. from this case with prejudice. 

 Dated this 4th day of September, 2013. 

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