Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-02338/USCOURTS-azd-2_05-cv-02338-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1330 Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Ribadab Properties Corporation, an

Arizona Corporation, and RPC-Eaton,

L.L.C., an Arizona limited liability

company,

Plaintiffs,

vs.

Roy W. Eaton and Judith A. Eaton, a

married couple,

Defendants.

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Roy W. Eaton and Judith A. Eaton, a

married couple,

Counterclaimants/Third-Party

Plaintiffs

vs.

Ribadab Properties Corporation, an

Arizona Corporation, Rae Ribadeneira, a

married woman, and Michelle

Ribadeneira and Hugo Ribadeneira, wife

and husband; John Does I-XI; Jane Does

I-XI; Black Corporations I-X;

Counterdefendants,

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No. CV-05-2338-PHX-DGC

ORDER

Pending before the Court are Defendants Roy W. Eaton and Judith A. Eaton’s motion

to dismiss all claims asserted by RPC-Eaton, L.L.C., and the Eatons’ motion for appointment

of a special master. Docs. #31, 38. For the reasons stated below, the Court will grant the

Case 2:05-cv-02338-DGC Document 44 Filed 06/19/06 Page 1 of 5
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Eatons’ motion to dismiss RPC-Eaton from the present action and will deny their motion for

appointment of a special master. 

I. Background.

In May 2000, Ribadab Properties Corporation (“RPC”) and the Eatons formed RPCEaton for the purpose of building and selling a single-family home in Scottsdale, Arizona.

Doc. #38 at 2. The home has been built, but remains unsold. See id. at 3. 

On April 12, 2005, RPC and RPC-Eaton filed suit against the Eatons in part to clarify

the parties’ respective rights to and interests in the property. Compl. The Eatons removed

the case pursuant to 28 U.S.C. §§ 1332 and 1441(a) on the basis of this Court’s diversity

jurisdiction. Doc. #2. On February 17, 2006, RPC filed an amended complaint which asserts,

among other things, a claim for involuntary judicial dissolution of RPC-Eaton pursuant to

A.R.S. § 29-785. Doc. #28 at 9. In its counterclaim against RPC and others, the Eatons also

seek dissolution of RPC-Eaton under the same Arizona law. Doc. #30 at 24. The Eatons

now move to dismiss RPC-Eaton from the suit and to appoint a special master to oversee its

dissolution.

II. Motion to Dismiss RPC-Eaton.

The Eatons move to dismiss all claims asserted by RPC-Eaton because RPC-Eaton

has not retained counsel since November 4, 2005. Doc. #31. A corporation may appear in

federal court only when represented by a licensed attorney. Rowland v. Cal. Men’s Colony,

Unit II Men’s Advisory Counsel, 506 U.S. 194, 201-202 (1993). RPC-Eaton has not retained

counsel to appear in court or to oppose this motion. RPC does not oppose Defendants’

motion. Doc. #34. The Court accordingly will dismiss RPC-Eaton as a party.

III. Motion to Appoint a Special Master.

A. Legal Standard.

On application of a member of a limited liability company, a court applying Arizona

law “may decree dissolution” of a company if the court finds that (1) the company cannot

reasonably carry on its business purpose, (2) the management is deadlocked, (3) the

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members’ conduct is illegal or fraudulent, or (4) substantial assets are being wasted for

purposes not related to the business. A.R.S. § 29-785(A). Management is deadlocked when

the business of the company “cannot be conducted to the advantage of the members.” Id.

(A)(2).

A federal court may appoint a special master to address pretrial and post-trial matters

which the court cannot effectively address. Fed. R. Civ. P. 53(a)(1)(C). The court has

discretion to appoint or refuse to appoint a master. See Burlington N. R.R. Co. v. Dep’t of

Revenue, 934 F.2d 1064, 1071-72 (9th Cir. 1991). A master should be appointed “only when

the need is clear,” and appointment remains “the exception and not the rule.” Fed. R. Civ.

P. 53, Advisory Committee Notes (2003 Amendments), Subdivision (a)(1); see also

Burlington N. R.R. Co., 934 F.2d at 1071. 

“The court must give the parties notice and opportunity to be heard before appointing

a master.” Fed. R. Civ. P. 53(b)(1). This requirement can be satisfied by an opportunity to

make written submissions. Id., Advisory Committee Notes (2003 Amendments), Subdivision

(b). The master must be compensated by the parties or from the subject matter of the

litigation. Fed. R. Civ. P. 53(h)(2). A court will consider “the nature and amount of the

controversy, the means of the parties, and the extent to which any party is more responsible

than other parties” before allocating the master’s compensation among the parties. Id. (h)(3).

B. Analysis. 

The Eatons request that a special master be appointed to oversee the dissolution of

RPC-Eaton because RPC’s minimum sale price for the home is unreasonable and has created

a deadlock in the management of RPC-Eaton. Doc. #42 at 2. The Eatons claim that

substantial assets are being wasted to service loans on the property. Doc. #38 at 5. RPC

denies that the parties are deadlocked and opposes the appointment of a special master with

its attendant costs. Doc. #40 at 3. 

In November 2005, the parties agreed to make a fresh attempt to sell the home and to

put the proceeds in escrow pending settlement or final judgment. Doc. #38 at 3. A real

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estate agent employed by RPC-Eaton listed the home at a selling price of $1.895 million. Id.

In March 2006, the agent recommended lowering the selling price to $1.695 million because

the real estate market had changed and the home had not received offers. See id. Ex. P. 

In April 2006, RPC-Eaton received an offer to buy the home for $1.4 million. Doc.

#38 at 4. RPC, however, said that it “[would] not accept an offer that will net anything less

than $1.695 mil[lion.]” Id. Ex. O. According to the Eatons, the home would have to gross

more than $1.8 million in sale to produce a net of $1.695 million. Doc. #42 at 2. The Eatons

contend that the management of RPC-Eaton is deadlocked because of RPC’s unwillingness

to sell at a fair market value. Id.

RPC apparently made the statement that it would only accept an offer netting $1.695

million because it was willing to purchase the home at that price. See Doc. #38 Ex. O. In

response to the Eatons’ motion, RPC claims that Counterdefendant Rae Ribadeneira, a

principal of RPC, has offered $1.695 million to purchase the property. Doc. #40 at 3. The

Eatons concede that there has been some “discussion among counsel” concerning an RPC

offer to buy the home, but the Eatons submit that no valid offer has been received. Doc. #42

at 3.

The Court will not appoint a special master. The parties should be able to achieve a

mutually agreeable sale of the home. RPC claims to have made an offer that would satisfy

the Eatons and RPC, and the Eatons acknowledge that there has been discussion about such

an offer. Given the prospect of an achievable out-of-court resolution, the Eatons have not

shown that the need for a master is clear. 

IT IS ORDERED:

1. Defendants’ motion to dismiss all claims asserted by RPC-Eaton, L.L.C.,

Doc. #31, is granted. RPC-Eaton shall be dismissed as a party and the caption

of this action shall be amended accordingly.

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2. Defendants’ motion for appointment of a special master, Doc. #38, is denied.

DATED this 16th day of June, 2006.

Case 2:05-cv-02338-DGC Document 44 Filed 06/19/06 Page 5 of 5