Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_12-cv-00136/USCOURTS-azd-4_12-cv-00136-1/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Fraud

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

KIRK M. RICHBOURG and CAROLE

LEE RICKS, a married couple, 

Plaintiffs,

vs.

BOBBY L. JIMERSON and JANE

DOE JIMERSON, husband and wife;

KIM JIMERSON and JANE DOE

JIMERSON, husband and wife;

ARIZONA TRANSMISSION & 

ENGINE EXCHANGE, INC.,

an Arizona corporation dba

GLOBAL INDUSTRIAL

AUTOMATICS, 

Defendants. 

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No. CV-12-0136-TUC-BGM

ORDER

Currently pending before the Court are Defendants’ Motion for Summary Judgment

(Doc. 78) (based solely on the statute of limitations) and Motion for Summary Judgment Re:

Spoliation of Evidence (Doc. 119). Also pending are Plaintiffs’ Cross-Motion for Summary

Judgment on the Issue of the Statute of Limitations (Doc. 97), Motion for Summary

Judgment on the Indispensable Party, Accord and Satisfaction, Warranty Contract, and

Economic Loss Defenses (Doc. 98), Response to Defendants’ Supplemental Statement of

Facts in Support of Reply in Support of Defendants’ Motion for Summary Judgment Re:

Statute of Limitations and Motion to Strike Affidavit of Patrick Mehall and for Sanctions

(Doc. 115), Response to Defendants’ Controverting Statyment [sic] of Response to Plaintiffs’

Motion for Summary Judgment on the Indispensable Party, Accord and Satisfaction,

Warranty Contract and Economic Loss Defenses and Motion to Strike Affidavit of Patrick

Case 4:12-cv-00136-BGM Document 136 Filed 07/02/13 Page 1 of 15
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Mehall and Motion for Sanctions (Doc. 122), Motion to Strike Affidavits of Patrick Mehall

and Bobby L. Jimerson (Doc. 125) and Plaintiffs’ counsel’s Application of John MacMullin

to Withdraw as Counsel for Plaintiffs (Doc. 126). On May 9, 2013, the Court heard oral

argument on the summary judgment motions.

I. MOTIONS TO STRIKE

A. Motions to Strike Contained Within Responses

Rule 11, Federal Rules of Civil Procedure, delineates the form of motions for

sanctions. It provides in relevant part:

A motion for sanctions must be made separately from any other motion and

must describe the specific conduct that allegedly violates Rule 11(b). The

motion must be served under Rule 5, but it must not be filed or be presented

to the court if the challenged paper, claim, defense, contention, or denial is

withdrawn or appropriately corrected within 21 days after service or within

another time the court sets. If warranted, the court may award to the prevailing

party the reasonable expenses, including attorney's fees, incurred for the

motion.

Fed. R. Civ. P. 11(c)(2). As such, the Plaintiffs’ first two motion for sanctions, embedded

within their response is improper. See Pls.’ Resp. to Defs.’ Suppl. Statement of Facts in

Supp. of Reply in Supp. of Defs.’ Mot. for Summ. J. Re: Statute of Limitations (Doc. 115);

Pls.’ Resp. to Defs.’ Controverting Statement of Resp. to Pls.’ Mot. for Summ. J. on the

Indispensable Party Accord and Satisfaction, Warranty Contract, and Economic Loss

Defenses and Mot. to Strike Aff. of Patrick Mehall and Mot. for Sanctions (Doc. 122).

Further, Plaintiffs’ third motion to strike amends and reiterates the arguments made in their

first motion two. See Pls.’ Mot. to Strike Aff. of Patrick Mehall and Bobby L. Jimerson and

Mot. for Sanctions (Doc. 125). Accordingly, the Court will deny Plaintiffs’ Response to

Defendants’ Supplemental Statement of Facts in Support of Reply in Support of Defendants’

Motion for Summary Judgment Re: Statute of Limitations and Motion to Strike Affidavit of

Patrick Mehall and for Sanctions (Doc. 115) and Response to Defendants’ Controverting

Statyment [sic] of Response to Plaintiffs’ Motion for Summary Judgment on the

Indispensable Party, Accord and Satisfaction, Warranty Contract and Economic Loss

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Defenses and Motion to Strike Affidavit of Patrick Mehall and Motion for Sanctions (Doc.

122) as moot. See Ferdik v. Bonzelet, 963 F.2d 1258, 1262 (9th Cir. 1992) (first amended

complaint supersedes original complaint and court will treat the original complaint as nonexistent).

B. Third Motion to Strike

Plaintiffs seek this Court to strike the affidavits of Patrick Mehall and Bobby L.

Jimerson. Plaintiffs argue inter alia that Mehall’s affidavit is not based upon personal

knowledge, lacks foundation and contains hearsay. Pls.’ Mot. to Strike Affs. of Patrick

Mehall and Bobby L. Jimerson and Mot. for Sanctions (Doc. 125) at 2-3; See Pls.’ Resp. to

Defs.’ Controverting Statement of Resp. to Pls.’ Mot. for Summ. J. on the Indispensable

Party Accord and Satisfaction, Warranty Contract, and Economic Loss Defenses and Mot.

to Strike Aff. of Patrick Mehall and Mot. for Sanctions (Doc. 122). Additionally, Plaintiffs

argue that Bobby Jimerson’s affidavit is not based on personal knowledge and is not based

on “a disclosed, qualified expert opinion.” Mot. to Strike Affs. of Patrick Mehall and Bobby

L. Jimerson and Mot. for Sanctions (Doc. 125) at 3.

The Affidavits provide both Mehall’s and Bobby Jimerson’s position with Arizona

transmission & Engine Exchange, dba Global Industrial Automatics (“ATEE”). Mehall Aff.

3/13/2013 (Doc. 114) at ¶ 1; Jimerson Aff. (Doc. 120) at ¶ 2. The Mehall Affidavit states,

in relevant part, that the affiant “make[s] this Affidavit of [his] own personal knowledge and

experience in [his] capacity as CFO (Chief Financial Officer) of ATEE.” Mehall Aff.

3/13/2013 (Doc. 114) at ¶ 3. Similarly, Bobby Jimerson’s Affidavit states that “[he] make[s]

this Affidavit of [his] own personal knowledge and experience in [his] capacity as the

manager of ATEE.” Jimerson Aff. (Doc. 120) at ¶ 2. Furthermore, the affiants rely on

documentary evidence in support of their contentions, many of which are the same as those

relied on by the Plaintiffs. “Rule 56 permits the use of affidavits in evaluating a motion for

summary judgment[; however,] [w]hile the facts underlying the affidavit must be of a type

that would be admissible as evidence, Fed. R. Civ. P. 56(e), the affidavit itself does not have

to be in a form that would be admissible at trial.” Hughes v. United States, 953 F.2d 531

Case 4:12-cv-00136-BGM Document 136 Filed 07/02/13 Page 3 of 15
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(9the Cir. 1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553,

91 L.Ed.2d 265 (1986)). Additionally, the statements made by Mehall and Bobby Jimerson

regarding their positions at ATEE and the personal knowledge regarding their statements are

sufficient to demonstrate such personal knowledge. Sea-Land Service, Inc. v. Lozen Intern.,

LLC., 285 F.3d 808, 819 (9th Cir. 2002) (rejecting defendant’s argument to exclude affidavit

for lack of foundation and personal knowledge, and holding that the district court did not

abuse its discretion by admitting declarations of an employee whose affidavit stated her

position and responsibilities and personal knowledge of all matters discussed therein).

Rule 702, Federal Rules of Evidence, provides:

If scientific, technical, or other specialized knowledge will assist the trier of

fact to understand the evidence or to determine a fact in issue, a witness

qualified as an expert by knowledge, skill, experience, training or education,

may testify thereto in the form of an opinion or otherwise, if (1) the testimony

is based upon sufficient facts or data, (2) the testimony is the product of

reliable principles and methods, and (3) the witness has applied the principles

and methods reliably to the facts of the case.

Plaintiffs broadly assert that neither Mehall or Bobby Jimerson are experts as required by Rule

702 and Supreme Court of the United States case law. See e.g., Daubert v. Merrell Dow

Pharmaceuticals, Inc., 516 U.S. 869, 116 S.Ct. 189, 133 L.Ed.2d 126 (1995); Kumho Tire Co.,

Ltd. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). Plaintiffs, however,

have failed to adduce any evidence to support a finding that Mehall or Bobby Jimerson

are unqualified to make the statements found within their affidavits as relating to their

position and experience with ATEE. Accordingly, Plaintiffs’ Motion to Strike Affidavits

of Patrick Mehall and Bobby L. Jimerson (Doc. 125) is DENIED.

 . . .

 . . .

 . . .

 . . .

 . . .

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1

For purposes of brevity and clarity, the Court has consolidated the factual recitations

and objections of the parties from all of the summary judgment motions into one section.

2

Plaintiff disputes this characterization, arguing that the verbal agreement was entered

into on August 21, 2008, and the engine was paid for on August 26, 2008. This is a

distinction without a difference. The actual sale, “the transfer of ownership of and title to

property from one person to another for a price” occurred on August 26, 2008. Merriam

Webster Dictionary, http://www.merriam-webster.com/dictionary/sale (last visited May 6,

2013).

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II. SUMMARY JUDGMENT

A. Factual Background1

This matter arises from the sale of an allegedly defective engine sold to Plaintiffs

on August 26, 2008.2

 Defs.’ SOF at ¶ 1. On August 20, 2008, Plaintiffs were operating

their truck in Pima County, Arizona, when the engine broke down due to a valve failure. 

SOF (Doc. 96) at ¶ V. Plaintiffs needed a replacement engine quickly in order to

complete the load that they were hauling. Id. at ¶ W. Plaintiffs located Defendant

Arizona Transmission & Engine Exchange (“ATEE”) through the internet. Id. at ¶ Y. On

August 21, 2008, Plaintiff Richbourg called Defendant Bobby Jimerson of Defendant

ATEE and spoke to him regarding the purchase of a remanufactured Detroit Diesel Series

60 engine. Id. at ¶ DD. At the time of the purchase of the engine, Plaintiffs were

contracted with Admiral Merchants as independent contractors to haul freight. Id. at ¶ S. 

Admiral Merchants maintained checking accounts for Plaintiffs. Pls.’ SOF (Doc. 96) at ¶

T. 

On August 26, 2008, Plaintiffs borrowed money from their in-laws and paid for

the engine through their Admiral Merchants account by T-Check. Id. at ¶ GG. Plaintiffs

registered the T-Checks and Defendants deposited them as payments for the engine. Id.

at ¶ HH. Defendants assert that the remanufactured Detroit S60 DDEC III diesel engine,

identified by ECM serial number 06R0245629, was sold to Admiral Merchants. Defs.’

Controverting SOF (Doc. 118) at ¶ 1; See also Defs.’ SOF in Support of Mot. for Summ.

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3

Plaintiffs again dispute Defendants’ statement; however, they fail to give any

specifics about what they dispute, point only generally to Plaintiff Richbourg’s deposition

testimony, which they fail to attach and reference their First Amended Complaint (Doc. 74),

which is not inconsistent with either Defendants’ statement nor Plaintiff Richbourg’s

deposition testimony.

4

Plaintiffs dispute this stating that “defendants faxed 4 pages to plaintiffs, which

included a document with purported warranty terms.” Pls.’ SOF (Doc. 96) at ¶ 3. Again, this

is a distinction without a difference.

5

The fax coversheet is addressed to Kirke/Admiral Merchants. Defs.’ Controverting

SOF (Doc. 118), Exh. “B.”

6

Plaintiffs dispute this statement “in part” stating that “[t]he warranty is not part of the

contract, but is evidence of fraud.” Pls.’ SOF (Doc. 96) at ¶ 4. This “dispute” is without

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J. Re: Spoliation of Evid. (Doc. 120) at ¶ 1. The engine was delivered to Tim’s Wrecker

and Road Service (“Tim’s”) in Benson, Arizona, for installation of the engine in the

vehicle. See Pls.’ SOF (Doc. 96) at ¶¶ X, II; See also Defs.’ Controverting SOF (Doc.

118) at ¶ 5; Defs.’ SOF in Support of Mot. for Summ. J. Re: Spoliation of Evid. (Doc.

120) at ¶ 3. On August 26, 2008, Tim’s installed and tested the engine. Pls.’ SOF (Doc.

96) at ¶ JJ. After the installation and testing of the engine, Plaintiffs left Benson to

deliver the load. Id. at ¶ KK.

Defendants allegedly made various representations to Plaintiffs regarding where

the engine could be serviced, what repairs would be covered, the length of the warranty,

and which party would cover labor costs during a breakdown.3

 Defs.’ SOF (Doc. 79) at ¶

2. On September 3, 2008, Plaintiff Richbourg called Defendants to inquire about the core

charge. Id. at LL. Defendants faxed Plaintiffs four pages including the Invoice and

Warranty. Id. at ¶ MM. Defendants describe these documents as a written document

describing the terms and conditions of the warranty for the engine.4

 Defs.’ SOF (Doc. 79)

at ¶ 3. Defendants assert that this was faxed to Admiral Merchants not Plaintiffs.5

 Defs.’

Controverting SOF (Doc. 118) at ¶ 3. Plaintiffs had not received a written copy of the

warranty prior to the sale.6

 Id. at ¶ 4. When Plaintiffs received the written warranty in

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merit.

7

Plaintiffs dispute this statement, reciting to various portions of Plaintiff Richbourg’s

deposition testimony. Plaintiffs do not attach a copy of the relevant deposition transcript

excerpts; however, he improperly filed the entire transcript in the docket. See LRCiv.

56.1(f).

8

Plaintiffs dispute this statement, arguing that they did not “know of the defective

engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’ SOF (Doc.

96) at ¶ 8. Defendants statement; however, accurately reflects Plaintiff Richbourg’s

deposition testimony.

9

Plaintiffs dispute this statement, again arguing that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’

SOF (Doc. 96) at ¶ 9. Defendants statement; however, accurately reflects Plaintiff

Richbourg’s deposition testimony.

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September 2008, they had concerns regarding the document being different from what

had been orally represented to them by Defendants.7

 Id. at ¶ 5. Plaintiffs assert that the

warranty contained “a whole lot of things that are not accurate.” Id. at ¶ 6; Defs.’ SOF

(Doc. 79), Exh. 1, Richbourg Depo.10/26/2012 at 44:19-21.

Defendants assert that upon receipt of the warranty in September 2008, Plaintiffs

knew that Defendants had made misrepresentations to them. Defs.’ SOF (Doc. 79) at ¶ 7. 

Plaintiffs dispute this statement insofar as they claim that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time.” Pls.’

SOF (Doc. 96) at ¶ 7. Plaintiff Richbourg testified that it appeared that he and Plaintiff

Ricks were mislead by Defendants at the time they received the warranty in September

2008.8

 Defs.’ SOF (Doc. 79) at ¶ 8. Plaintiff Richbourg testified that Paragraph 3 of the

Warranty, which describes the process of obtaining repairs, was different than what

Defendants represented over the phone prior to the sale.9

 Id. at ¶ 9. Plaintiff Richbourg

further testified that Defendants told him that he could go to an authorized Detroit Diesel

dealer whereas the written warranty states that repairs will be performed at a facility

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10Plaintiffs dispute this statement, again arguing that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’

SOF (Doc. 96) at ¶ 10. Defendants statement; however, accurately reflects Plaintiff

Richbourg’s deposition testimony.

11Plaintiffs dispute this statement, again arguing that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’

SOF (Doc. 96) at ¶ 11. Defendants statement; however, accurately reflects Plaintiff

Richbourg’s deposition testimony.

12Plaintiffs dispute this statement, again arguing that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’

SOF (Doc. 96) at ¶ 12. Defendants statement; however, accurately reflects Plaintiff

Richbourg’s deposition testimony.

13Plaintiffs dispute this statement, again arguing that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’

SOF (Doc. 96) at ¶ 13. Defendants statement; however, accurately reflects Plaintiff

Richbourg’s deposition testimony.

14Plaintiffs dispute this statement, again arguing that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’

SOF (Doc. 96) at ¶ 14. Defendants statement; however, accurately reflects Plaintiff

Richbourg’s deposition testimony.

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authorized by Defendant Arizona Transmission.10 Id. at ¶ 10. Plaintiff testified that in

September 2008, he felt mislead regarding the authorized location of engine repair.11 Id.

at ¶ 11. Plaintiff Richbourg further testified that Paragraph 4 of the written warranty only

included normal maintenance such as injectors and gaskets, while the oral representations

made by Defendants prior to the sale included all repairs “up to and including replacing

the engine.”12 Defs.’ SOF at ¶ 12 (Doc. 79), Exh. “1” Richbourg Depo. 10/26/2012 at

52:11-13. Plaintiff Richbourg testified that the difference in Paragraph 4 was the “major”

difference from what he had been told by Defendants.13 Defs.’ SOF at ¶ 13; Exh. “1”

Richbourg Depo. 10/26/2012 at 52:5-13. Plaintiff Richbourg that Paragraph 1 of the

warranty excludes labor costs while the oral representations made by Defendants prior to

the sale included labor costs.14 Defs.’ SOF at ¶ 14. Plaintiff Richbourg testified that the

representation in the warranty regarding labor costs was “very different” from what he

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15Plaintiffs dispute this statement, again arguing that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’

SOF (Doc. 96) at ¶ 15. Defendants statement; however, accurately reflects Plaintiff

Richbourg’s deposition testimony.

16Plaintiffs dispute this statement, again arguing that they did not “know of the

defective engine and that a fraud existed as to the engine and warranty at this time[.]” Pls.’

SOF (Doc. 96) at ¶ 16. Defendants statement; however, accurately reflects Plaintiff

Richbourg’s deposition testimony.

17Plaintiffs dispute this statement, quoting the entire exchange between defense

counsel and Plaintiff Richbourg. Again, Plaintiffs failed to attach the deposition excerpt.

The Court’s review of the attached excerpt to Defendants’ motion finds that although

Plaintiffs’ quotation is correct, Defendants’ representation as to its meaning is also

appropriate.

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had been told over the telephone.15 Defs.’ SOF at ¶ 15, Exh. “1” Richbourg Depo.

10/26/2012 at 53:15. Once Plaintiffs became aware of the misrepresentations in

September 2008, they did not contact Defendants to tell them that they had been misled.16

Defs.’ SOF at ¶ 16. At that time, Plaintiffs realized that the warranty documents would

not “be much help” because the warranty was different than the oral representations.17 Id.

at 17; Exh. “1” Richbourg Depo. 10/26/2012 at 56:7-13. Defendants state that Plaintiffs

filed a single count complaint alleging Fraud in the Inducement on February 27, 2012. 

Defs.’ SOF at ¶ 18. Plaintiffs correctly point out that they filed this cause of action on

February 24, 2012. See Complaint (Doc. 1).

On April 10, 2009, the # 5 cylinder failed while Plaintiffs were outside of Mobile,

Alabama. Pls.’ SOF (Doc. 96) at ¶ SS. Plaintiffs had their truck and trailer towed to

Marine Systems, Inc. (“MSI”), an authorized Detroit Diesel repair facility. Id. at ¶ UU. 

On the same day, Plaintiff Richbourg called Defendant Bobby Jimerson, who referred

him to Defendant Kim Jimerson. Id. at ¶ WW. On April 13, 2009, Plaintiff Richbourg

finally reached Defendant Kim Jimerson, who refused to honor the warranty. Id. at ¶ XX. 

The same date, Defendant Kim Jimerson sent a fax addressed to “Kirke/Admiral

Merchant” stating that ATEE was “sending a cylinder kit and headgasket set in full

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settlement of your warranty claim.” Defs.’ Controverting SOF (Doc. 118), Exh. “E.” On

April 14, 2009, Kris Beier of Admiral Merchants faxed a letter to Defendant Kim

Jimerson requesting that Defendants honor their written warranty agreement. Id. at ¶ ZZ;

Defs.’ Controverting SOF (Doc. 118) at ¶ 6. On April 15, 2009, Defendant Kim Jimerson

sent a fax addressed to both Plaintiff Richbourg and Kris Beier of Admiral Merchant

refusing to authorize the repair facility in Mobile, Alabama. Defs.’ Controverting SOF

(Doc. 118), Exh. “F.”

Defendants assert that despite having requested a return of the engine for

inspection or repair, they have not seen the engine since the August 27, 2008 delivery to

Tim’s Wrecking and Road Service. Defs.’ SOF in Support of Mot. for Summ. J. Re:

Spoliation of Evid. (Doc. 120) at ¶¶ 4-5. Plaintiffs’ expert Christopher Lane reportedly

inspected the subject engine, but the ECM had already been removed or sold, and part of

the engine block had suffered damage or corrosion due to the elements. Id. at ¶¶ 6-7. 

Defendants assert that inspection of the ECM is essential to determining liability issues in

this case. Id. at ¶ 12. Plaintiffs assert that “[t]he location, and availability, of the engine

has been disclosed to defendants from the beginning of this lawsuit[.]” Pls.’ Resp. to

Defs.’ SOF in Supp. of Mot. for Summ. J. Re: Spoliation of Evid. (Doc. 123) at 8. In July

2009, the engine was purchased by Larry Wilson. Id. at 9 ¶ 2. In July 2010, Plaintiff

Kirke Richbourg called Wilson and arranged to ship the engine and all of its components

to Christopher Lane. Id. at 10 ¶ 6. Plaintiffs assert that the engine has been available for

inspection since the inception of this lawsuit. Id. at 11 ¶ 11.

B. Standard of Review

Summary judgment is appropriate when, viewing the facts in the light most

favorable to the nonmoving party, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255

(1986), “there is no genuine issue as to any material fact and [] the moving party is

entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact is “material” if it

“might affect the outcome of the suit under the governing law,” and a dispute is

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“genuine” if “the evidence is such that a reasonable jury could return a verdict for the

nonmoving party.” Anderson, 477 U.S. at 248. Thus, factual disputes that have no

bearing on the outcome of a suit are irrelevant to the consideration of a motion for

summary judgment. Id. In order to withstand a motion for summary judgment, the

nonmoving party must show “specific facts showing that there is a genuine issue for

trial,” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). Moreover, a “mere scintilla of

evidence” does not preclude the entry of summary judgment. Anderson, 477 U.S. at 252. 

The United States Supreme Court also recognized that “[w]hen opposing parties tell two

different stories, one of which is blatantly contradicted by the record, so that no

reasonable jury could believe it, a court should not adopt that version of the facts for

purposes of ruling on a motion for summary judgment.” Scott v. Harris, 550 U.S. 372,

380, 127 S.Ct. 1769, 1776, 167 L.Ed.2d 686 (2007).

C. Analysis

1. Statute of Limitations

“The purpose of a statute of limitation is ‘to prevent assertion of stale claims

against a defendant.’” Azer v. Connell, 306 f.3d 930, 936 (9th Cir. 2002) (citations

omitted). “Statutes of limitation are primarily designed to assure fairness to defendants

and to promote the theory that even if one has a just claim it is unjust not to put the

adversary on notice to defend within the period of limitation and that the right to be free

of stale claims in time comes to prevail over the right to prosecute them.” Balam-Chuc v.

Mukasey, 547 F.3d 1044, 1049 (9th Cir. 2008) (quotations omitted). It is well-established

law that federal courts must apply the applicable statute of limitations period of the state

in which the claim arose. Musick v. Truett, 623 F.2d 89, 90 (9th Cir. 1980). Arizona law

provides that claims for fraud or mistake, e.g., fraud in the inducement, “shall be

commenced and prosecuted within three years after the cause of action accrues, and not

afterward[.]” A.R.S. § 12-543.

A cause of action is deemed to accrue when a claimant “knows, or in the exercise

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of reasonable diligence should have known, of the defendant's negligent conduct.” Sato

v. Van Denburgh, 123 Ariz. 225, 227, 599 P.2d 181, 183 (1979) (reh'g den. Sept. 6, 1979)

(citing Morrison v. Acton, 68 Ariz. 27, 198 P.2d 590 (1948)); See also Hydroculture, Inc.

v. Coopers & Lybrand, 174 Ariz. 277, 284 n. 7, 848 P.2d 856, 863 n. 7 (Ct. App. 1992)

(citing Sato, 123 Ariz. at 227, 599 P.2d at 183); See also A.R.S. § 12-543(3) (“For relief

on the ground of fraud or mistake, which cause of action shall not be deemed to have

accrued until the discovery by the aggrieved party of the facts constituting the fraud or

mistake.”). This is commonly known as the discovery rule, and has long been applied by

the Arizona courts. See CDT, Inc. v. Addison, Roberts & Ludwig, 198 Ariz. 173, 176, 7

P.3d 979, 982 (Ct. App. 2000). The rule only requires that a claimant have actual or

constructive knowledge that he has been damaged, the total extent thereof is unnecessary

for accrual to occur. Id.

Defendants assert that by September 3, 2008, Plaintiffs knew or should have

known that the warranty on its face was materially different from what Plaintiffs had been

told, and that their core charge was not returned. Defs.’ Mot. for Summ. J. (Doc. 78) at 6. 

Defendants rely on Coronado Development Corp. v. Superior Court of Arizona in support

of their motion. 139 Ariz. 350, 678 P.2d 535 (Ct. App. 1984). In Coronado

Development, the plaintiffs alleged “that misrepresentations were made to them regarding

their purchase and subsequent amendment of a contract involving the sale to them of a lot

in a subdivision in Cochise County, Arizona.” Id. at 351, 678 P.2d at 536. The developer

informed plaintiffs that they needed to choose a different lot because a road had been

constructed through their original choice. Id. Plaintiffs complied, and were subsequently

informed by a lawyer in Chicago that “they had been ‘had[.]’” Id. Despite their belief

that they had been lied to by the developer, plaintiffs did not investigate further. Id. at

351-52, 678 P.2d at 536-37. Ultimately, plaintiffs did not file suit until 1983. See id.

The court barred plaintiffs’ suit as untimely, finding that the cause of action occurred in

1977 when the lawyer first informed them that they had been deceived. Coronado

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Development, 139 Ariz. at 352, 678 P.2d at 537.

Conversely, Plaintiffs argue that where the facts have been concealed, the statute

of limitations is tolled. Pls.’ Resp. to Mot. for Summ. J. (Doc. 97) at 9. Plaintiffs argue

that they did not know that there was a fraud until the engine failed on April 10, 2009. Id.

at 5, 8. They further argue that it was not until April 13-15, 2009 that “Plaintiffs first

discovered and knew they had been scammed and that the defendants had no intentions

of: (1) performing at all under either the oral or written warranties or (2) authorizing MSI

to perform the repairs.” Id. at 5.

Plaintiffs rely heavily on Mister Donut of America, Inc. v. Harris, 150 Ariz. 321,

723 P.2d 670 (Ariz. 1986); however, the Court finds this reliance misplaced. The

Arizona Supreme Court in Mister Donut held that the court of appeals improperly

“substitut[ed] its factual determination for that of the jury’s” when it overruled the jury’s

determination of when the statute of limitations accrued. Id. at 323, 723 P.2d at 673. 

Furthermore, Plaintiffs’ counsel asserted at oral argument that the remanufactured engine

is the crux of the problem, because Plaintiffs could not know that it was defective until

the engine failed. Counsel went on to assert that the statute of limitations would then toll

in perpetuity until the engine broke down.

The Court finds that this argument is inconsistent with the purpose of a statute of

limitations. The warranty was for a limited time, yet despite this limitation Plaintiffs

would assert a right to bring a claim well beyond the termination of the warranty period. 

Moreover, Plaintiffs’ argument is contracted by Plaintiffs’ deposition testimony. Plaintiff

Richbourg testified that when he read the warranty on September 3, 2008 he thought, “I

hope I don’t have a problem because if I do, it looks like I am not going to get much help

here.” Richbourg Depo. 10/26/2013 (Doc. 86) at 56:11-13. Plaintiff Ricks testified that

“regarding the verbal and written warranties[,] [h]ad we known or seen the warranty prior

to those two checks being cashed by them versus what Bobby had shared with my

husband, we never would have bought that motor. Never.” Ricks Depo. 10/26/2012

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(Doc. 87) at 24:17-21. The Court finds that Plaintiffs knew both the “what” and could

relate that to a particular “who” “in such a way that a reasonable person would be on

notice to investigate whether the injury might result from fault” by September 3, 2008. 

Walk v. Ring, 202 Ariz. 310, 316, 44 P.3d 990, 996 (2002). This matter was filed on

February 24, 2012, beyond the three year statute of limitations period. Accordingly,

Defendants’ Motion for Summary Judgment (Doc. 78) is GRANTED.

2. Other Motions for Summary Judgment

In light of the foregoing, the Court finds it unnecessary to reach the issues

addressed in the other motions for summary judgment. As such, they will be denied as

moot.

Accordingly, IT IS HEREBY ORDERED that:

1) Defendants’ Motion for Summary Judgment (Doc. 78) is GRANTED;

2) Plaintiffs’ Cross-Motion for Summary Judgment on the Issue of the Statute

of Limitations (Doc. 97) is DENIED;

3) Plaintiffs’ Motion for Summary Judgment on the Indispensable Party,

Accord and Satisfaction, Warranty Contract, and Economic Loss Defenses (Doc. 98) is

DENIED AS MOOT;

4) Plaintiffs’ Response to Defendants’ Supplemental Statement of Facts in

Support of Reply in Support of Defendants’ Motion for Summary Judgment Re: Statute

of Limitations and Motion to Strike Affidavit of Patrick Mehall and for Sanctions (Doc.

115) is DENIED AS MOOT;

5) Defendants’ Motion for Summary Judgment Re: Spoliation of Evidence

(Doc. 119) is DENIED AS MOOT;

6) Plaintiffs’ Response to Defendants’ Controverting Statyment [sic] of

Response to Plaintiffs’ Motion for Summary Judgment on the Indispensable Party,

Accord and Satisfaction, Warranty Contract and Economic Loss Defenses and Motion to

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Strike Affidavit of Patrick Mehall and Motion for Sanctions (Doc. 122) is DENIED AS

MOOT;

7) Plaintiffs’ Motion to Strike Affidavits of Patrick Mehall and Bobby L.

Jimerson (Doc. 125) is DENIED; 

8) Plaintiffs’ Counsel’s Application of John MacMullin to Withdraw as

Counsel for Plaintiffs (Doc. 126) is DENIED AS MOOT; and

9) The Clerk of the Court shall enter judgment and close its file in this matter.

DATED this 28th day of June, 2013.

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