Free Proposed Findings of Fact - District Court of Arizona - Arizona

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Timothy A. Shimko (PRO HAC VICE) (OSBN 0006736) David A. Welling (PRO HAC VICE) (OSBN 0075934) TIMOTHY A. SHIMKO & ASSOCIATES 2010 Huntington Building 925 Euclid Ave. Cleveland, Ohio 44115 Tel. (216) 241-8300 Fax (216) 241-2702 Attorneys for Plaintiffs IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA ) ) ) ) ) ) ) ) ) ) Case No. CV-04-00078-FJM Judge Frederick J. Martone PLAINTIFFS' PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW

SHIMKO & PISCITELLI, et al., Plaintiffs, v. PAUL WOODCOCK, et al., Defendants.

NOW COME Plaintiffs, and hereby submit their Proposed Findings of Fact and Conclusions of Law. I. 1. PROPOSED FINDINGS OF FACT The Plaintiff, Timothy A. Shimko, is a resident of the State of Ohio and is a practicing attorney in that state and at all times relevant maintained his sole place of business in the State of Ohio under the name Shimko & Piscitelli. 2. 3. The Defendants in this action are residents of Arizona. The Plaintiff was asked by the Defendants to represent them and their wives, personally, and several of their business interests in a number of lawsuits each expected to be filed against them in various jurisdictions across the country.

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4.

The Plaintiff agreed to and did represent the Defendants, personally, and their wives, their partners, and their partnerships in approximately forty (40) separate fraud lawsuits that were filed across the country, although the vast majority of the cases were filed in Arizona.

5.

The Plaintiff immediately associated with local counsel and proceeded to represent the Defendants.

6.

However, in April of 2003, the Plaintiff pressed for payment of his attorney's fees, which at that time were delinquent in the amount of approximately $359,668. At that time, the

Plaintiff's services were terminated by the Defendants without any provision being made for paying the past due fees, and the Plaintiff shortly thereafter brought this action to collect the outstanding attorney's fees. 7. This case was initially filed in the U.S. District Court for the Northern District of Ohio under Case No. 1:03CV0794. On or about September 29, 2003, venue was transferred to the U.S. District Court of Arizona in Tucson under Case No. CIV-03-506-TUC-ACM. Subsequently, the case was moved to the District Court sitting in Phoenix, under Case No. 04-CV-00078 FJM (the instant case number). 8. On October 1, 2004, this Court granted summary judgment in favor of Defendants Goldfarb and Ross on all of the Plaintiff's claims. The Court denied the motions for summary judgment filed by the Woodcocks and Guenthers.

13 14 15 16 17 18 19 20 21 22 23 24 25 26 9. The Plaintiff appealed the granting of summary judgment to Defendants Goldfarb and Ross. Importantly, after a de novo review, the Ninth Circuit reversed this Court's granting of summary judgment to Ross and Goldfarb and has remanded the case for trial.

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10. The Plaintiff's claims against Woodcock were re-filed after he was dismissed for filing bankruptcy, and that case has now been consolidated with this case. 11. In this case, after Defendants Goldfarb and Ross were dismissed on summary judgment, and Defendant Woodcock was dismissed after filing for bankruptcy, the case proceeded to a full bench trial against Dr. Guenther on May 17, 2005. 12. On May 24, 2005, this Court issued its findings of fact and conclusions of law and entered judgment for the Plaintiff in the amount of $359,668. Dr. Guenther appealed to the Ninth Circuit. 13. The Ninth Circuit reversed in part and remanded this case for a re-determination of damages. This Court recently re-determined damages in favor of the Plaintiff and against Defendant Guenther in the amount of $59,945.00.

13 14 15 16 17 18 19 20 best lawyers, and was selected as one of Ohio's best lawyers. 21 22 23 24 25 26 Anthony J. Celebreeze Chapter of the American Inns of Court. 17. The Defendants, Richard Ross, David Goldfarb, and Paul Woodcock, are residents of Arizona. The Defendants, at all times relevant, were owners, officers, and executives of CORF Management Services, LP ("CMS") and CORF Licensing Services, LP ("CLS"). The He is also a Barrister in the 14. The Plaintiff, Timothy A. Shimko, is an attorney, and has been a member in good standing of the bar of the State of Ohio since 1976. 15. For his entire career, Mr. Shimko has concentrated his practice in the field of civil litigation. He has extensive civil trial experience, and has tried well over a hundred jury trials to completion. 16. The Plaintiff has been selected by his peers in the legal profession as one of Northeast Ohio's

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Defendants, at all times relevant, appeared directly involved in the day to day activities of CMS and CLS. 18. Under a consulting agreement, the customers of CLS paid approximately $125,000 for CLS to advise and assist the customer in establishing a Medicare approved Comprehensive Outpatient Rehabilitation Facility (CORF). Demand for CLS' services was generated by advertisements in publications with national distribution and over the internet. In the newspapers and on its website, CLS informed the investing public what a CORF was and what awaited the knowledgeable investor that would open up his or her own CORF. Potential investors were given an e-mail address and a telephone number, by which they could communicate with CLS' employees. 20. Potential investors or customers would generally speak to David Goldfarb, who would expand

13 14 15 16 17 18 19 20 21. From 1999 up until the end of 2001, the Defendants attended these seminars, and gave talks to 21 22 23 24 25 26 the groups on the services that CLS and CMS provided. Dr. Woodcock, Richard Ross, and David Goldfarb would also address the group on their own individual topics. Before the seminar, during lunch, and after the seminar, the Defendants spoke and met with the potential customers and answered their questions. If, after the seminar, the potential customers were upon the benefits of owning and operating a CORF and answer any questions the customer had. If the customer remained interested, he or she would be invited to a daylong seminar at the Troon Country Club, at which they would be addressed by Dr. Guenther, Dr. Woodcock, David Goldfarb and Richard Ross. These seminars took place approximately twice a month from 1999 to the middle of 2002, and were attended usually by six (6) to twelve (12) customers at a time.

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still interested, he or she would receive the standard agreements. There were two sets of agreements: one for CLS and one for CMS. 22. The companies CLS and CMS were labeled separate, but in essence appeared as the same company. They were operated out of the same offices, shared the same employees and were financed out of the same funds. 23. For a $125,000 "Service Fee" paid to CLS by the customer, CLS' agents and employees would assist the customer in locating a facility to rent that would not only pass Medicare regulations and requirements, but that would also be advantageous for referral business from local physicians. CLS, through its agents, would also assist the customer in designing the facility and would assist in the hiring of a Medical Director and a competent and qualified staff, and in the purchase of rehabilitation equipment, all in accordance with Medicare guidelines. Once the

13 14 15 16 17 18 19 20 obligation to continue to use CMS as its management company to assist the owner in the 21 22 23 24 25 26 management and operations of the facility to keep it Medicare compliant. CMS would provide these management services in exchange for a percentage of the CORF facility's accounts receivable. facility had been located, designed, built, equipped, and staffed, CLS would assist and advise the customer through the Medicare application and approval process right up through the facility inspection and certification. Once the facility was fully licensed and started, CLS' obligations under the Service Agreement terminated. 24. The other set of Agreements that the customers signed was the CMS Management Services Contract. This was an optional agreement. Once licensed, the customer was under no

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25. The business of CLS grew rapidly from 1999 through the first part of 2002. Throughout most of 2000 and 2001, CLS was executing service agreements with its customers at a minimum cost of $125,000 each at the rate of 10 to 20 contracts per month. 26. However, complaints from their earliest customers began to swell in the summer of 2001. The complaining customers alleged that the patients that were promised to arrive and fill the facilities to capacity did not do so in the numbers that the CLS customers alleged had been represented to them. 27. With the number of complaints on the rise, in November of 2001, the Plaintiff was asked by Paul Woodcock to meet with him in Phoenix, Arizona to discuss representing him and his partners in this venture in which they were involved. Dr. Guenther and Dr. Woodcock had previously retained the Plaintiff from 1991 to 1996 to represent them in their personal

13 14 15 16 17 18 19 20 profits. Each received a draw from the companies. 21 22 23 24 25 26 29. After explaining the nature of the operations and the extent of each of their individual involvements in the operations of the business, the Plaintiff was asked to jointly advise the Defendants on the extent of their individual and personal exposure, if any, beyond the capacities in other litigation matters pending in Ohio and in Arizona unrelated to this matter. 28. The Plaintiff met with Dr. Guenther, Dr. Woodcock, David Goldfarb, and Richard Ross who explained the nature of the business that they were in. At this meeting, it was explained that the ownership of CLS and CMS on paper was structured in layers of limited partnerships, but that the companies were owned and operated by Drs. Guenther and Woodcock and Messrs. Ross and Goldfarb as equal partners. Each had an equal say and each was paid an equal share of the

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protection offered to them by the limited partnership structure under which they owned and operated CLS and CMS. 30. At this time, disenchanted customers were making complaints alleging that the Defendants had deliberately and intentionally misrepresented the true potential of CORFs by fabricating success stories to induce new investors, and by paying previous customers substantial sums of money to say good things about CORFs and CLS. 31. The Plaintiff advised all of the Defendants that if such allegations were proven against them, then no corporate or limited partnership structure would shield them from personal liability. At a meeting in November 2001, attended by Dr. Guenther, Dr. Woodcock, Dick Ross, and David Goldfarb, the Plaintiff was asked to jointly represent each of them, and their wives, personally in litigation they anticipated would soon be filed across the country.

13 14 15 16 17 18 19 20 was advised to submit his monthly bills to CLS, the Plaintiff advised each of the gentlemen that 21 22 23 24 25 26 though he would submit his bills to CLS, he was looking to payment from each of them. 34. At that meeting, the Defendants agreed to be personally responsible for the fees and expenses incurred in the preparation and disposition of resolving the claims. In November of 2001, the Plaintiff's firm began to field a growing number of lawsuits from customers of CMS and CLS. 32. The principal issue with which the CORF owners and officers were concerned with was potential personal liability. 33. At that dinner meeting that occurred in Scottsdale, Arizona, at the Defendants' joint request, the Plaintiff agreed to jointly represent the Defendants and their wives, personally, in disputes that might arise nationwide. For purposes of convenience, the Plaintiff was requested to and did agree to submit billings for services rendered to the Defendants to CLS. When the Plaintiff

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Many of the claims contained allegations of fraud and deceit directly attributable to specific representations that had been made by Dr. Guenther, Dr. Woodcock, Richard Ross, and David Goldfarb, which the customers were alleging had not turned out to be true or accurate. 35. Upon being retained by the Defendants, the Plaintiff immediately associated with local counsel in Arizona and in the other states where litigation against the Defendants was commencing. 36. In Arizona, the Plaintiff initially associated with Arizona attorney, Mr. Cameron Artigue, of the Phoenix firm of Gammage & Burnham. Later, in March of 2003, when the Defendants stopped paying Mr. Artigue's invoices, the Arizona law firm of Boates & Welty was substituted in to work with the Plaintiff. 37. From November 2001 through April 2002, the Plaintiff's firm was able to negotiate settlements short of litigation in claims against the Defendants and their companies. In fact, the Defendants

13 14 15 16 17 18 19 20 settlements. 21 22 23 24 25 26 39. There was never any conflict of interest in the Plaintiff's joint representation of the Defendants because the Defendants jointly hired the Plaintiff, and the Plaintiff agreed to jointly represent them. Further, the Defendants jointly instructed the Plaintiff to use litigation strategy to gave the Plaintiff express instructions to settle all claims that were being made against them. The Defendants advised the Plaintiff to settle all claims brought against them based upon the fact that they all faced personal exposure for the allegations that were being levied. 38. The litigation strategy throughout the Plaintiff's involvement was to work the cases towards settlement. The Defendants jointly directed the Plaintiff to use litigation strategy to attempt to slow the progress of the cases down so that the Defendants could gather funds to pay the

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attempt to avoid consideration of the cases on their merits so that the Defendants would have additional time to gather resources to settle the lawsuits. 40. There was no conflict in the joint representation because the Defendants were jointly personally exposed and their advice to the Plaintiff was to settle the cases. 41. The Defendants always acted unanimously together in their advice and direction of the litigation. They jointly made the decision to settle the cases and to try to slow the cases down so they could obtain funds to settle the claims. Before each of the cases were settled, the matter was reviewed personally by each of the Defendants. No settlement was paid without the Defendants having reviewed it and agreed to it. 42. However, by April 2002, CLS' customers began to file lawsuits in increasing numbers. In fact, the Defendants and their wives were ultimately sued in at least forty (40) separate cases

13 14 15 16 17 18 19 20 was done was set forth, and the amount of time spent doing the work and the individual doing 21 22 23 24 25 26 the work and that person's hourly rate were clearly set forth. 45. From October 2001 until October 2002, the Plaintiff was paid on the invoices submitted. The invoices reveal that the Plaintiff's firm prepared various pleadings and motions on behalf of the Defendants and their wives in each of the various lawsuits. throughout the United States, seeking tens of millions of dollars in damages; however, a large majority of the lawsuits were filed in Arizona. 43. Although various other causes of action were pled in each of these lawsuits, the principal claims against the Defendants alleged fraud and RICO violations. 44. The work done by the Plaintiff's law firm was documented in detail in invoices sent to the Defendants. In the invoices, the work that was done was detailed, the date on which the work

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46. Confirmatory of the individual nature of the representation, the Plaintiff was directed to research and advise the Defendants on issues that had nothing to do with the business of CMS and CLS. The firm's invoices just for the months of November and December 2001 and January 2002 show that in these three months alone, 115 hours of the firm's time was devoted to researching and advising the Defendants on personal matters unrelated to CLS or CMS. The Plaintiff was directed to research and to generally advise the Defendants on the various laws of fraudulent conveyances and on the viability of various international trusts and offshore investments. 47. The corporate defendants CMS and CLS had few assets of any value and the Plaintiff's representation of CMS and CLS was merely incidental to the firm's joint representation of the individual Defendants. As the cases were being filed, the strategy was always to settle the

13 14 15 16 17 18 19 20 49. 21 22 23 24 25 26 with the lead attorney, Mr. Cheifitz, who was representing the plaintiffs prosecuting the underlying cases against the Defendants. At that meeting, there was never any offer of a deal made in favor of or against any of the Defendants. Mr. Cheifitz suggested an offer with respect to Messer's Brill and Ritchie, who were officers of CMS / CLS. Towards the end of the Plaintiff's representation of the Defendants, the Plaintiff had a dinner cases when the Defendants were able. 48. The cases also became delayed because in almost each of the cases, the law firms representing the plaintiffs were filing objections to the Plaintiff's firm's motions for admission pro hac vice. The objections to the firm's admission pro hac vice effectively slowed progression of the cases by several months because there was additional briefing and argument that occurred on those motions, but the issue was also an appealable one.

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50. When that offer was made, the Plaintiff immediately notified Brill and Ritchie that they should seek independent counsel. No such deal was ever offered with respect to the Defendants. 51. Mr. Cheifitz never made any offer creating any conflict in the Plaintiff's joint representation of the Defendants. The Defendants all acted unanimously together and sought joint representation because they were all personally exposed for their own actions and for those of their partners in crime. 52. At a point during the litigation, the Plaintiff made a loan to CLS. Importantly, each of the Defendants knew about the loan, which was to serve a short-term cash flow issue. There was never any dispute between the parties about the purpose of the loan or as to how the Defendants were to repay it. 53. The Defendants simply gave the Plaintiff post-dated checks in exchange for the check the

13 14 15 16 17 18 19 20 in the underlying fraud cases. There was never any conflict of interest in the Plaintiff's joint 21 22 23 24 25 26 representation of the Defendants in the underlying litigation. 55. The Defendants' argument now that there was a conflict is a recently and conveniently constructed argument, suggested by the Ninth Circuit's opinion. Plaintiff gave them. It was a simple transaction and did not create any conflict. The

Defendants now suggest in this litigation for the first time that the loan somehow created a conflict. It did not. 54. Further, any business transactions that the Plaintiff had with the Defendants, including any involvement with Aztec Medical, never created any conflict in the firm's representation of the Defendants. Aztec Medical had nothing to do with the firm's representation of the Defendants

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56. There was no conflict and certainly no harm that ever resulted from the Plaintiff's representation of the Defendants. 57. From November 2001 until October 2002, the Plaintiff firm's invoices were paid. However, commencing in October 2002, the firm's invoices went unpaid. In January 2003, the Plaintiff contacted the Defendants and informed them that due to non-payment of the firm's fees, the firm could no longer represent them and that the firm would be withdrawing as counsel. 58. In late January 2003, as the firm of Gammage & Burnham was threatening to withdraw for non-payment, the Defendants asked the Plaintiff to stay on the cases until they could locate new counsel, inducing the Plaintiff to do so with promises of imminent payment. In March of 2003, the Plaintiffs again informed Defendants of its intention to withdraw as counsel, and the Defendants located another Phoenix firm; to-wit, Boates & Welty, to act as counsel on all of

13 14 15 16 17 18 19 20 interest ever did arise. 21 22 23 24 25 26 61. To date, Defendants have failed to demonstrate that despite the fact that they were not consulted on the theoretical problems created by a joint representation, Defendants have not demonstrated that any such conflict arose or that if one did that any of them were harmed by it. the cases filed in Arizona. 59. At no time during Plaintiff's representation of the Defendants did he ever perceive that a potential conflict of interest existed or would arise during the period of his representation. The positions of the Defendants were so closely aligned with each other that the possibility of one of them taking a position inconsistent to the others was unforeseeable. 60. In fact, during the entire period of Plaintiff's representation of Defendants, no conflict of

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62. Finally, in April of 2003, when the Plaintiff pressed the Defendants for payment on the firm's account, the Defendants terminated the Plaintiff's services. commenced this action to collect the outstanding fees. 63. All of the work done by the Plaintiff and his firm was done for the equal benefit of all of the Defendants. Plaintiff cannot recall any work done for one client that was not also done for all of the clients. 64. Plaintiff billed the Defendants in the amount of $675,886.50. Of that amount, Plaintiff's firm's invoices clearly show that the firm received $320,937.50 in total payments from Defendants, leaving a balance of $354,949.00 owed to the firm. II. PROPOSED CONCLUSIONS OF LAW Defendants retained Plaintiff Shimko to represent them and their wives in claims for which they knew they were personally exposed, possibly beyond the protections offered by any business Shortly thereafter, the Plaintiff

14 15 16 17 18 19 20 21 four (4) months, when Dr. Guenther and his partners were able to find other counsel to represent 22 23 24 25 26 them, Plaintiff Shimko was terminated. structure under which they were doing business. Defendants retained Plaintiff Shimko and his firm to represent them personally and to provide personal services to them, as individuals, in claims for which they knew they could face personal exposure. For a time the Plaintiff Shimko firm was paid for its services, but payments stopped in December of 2002. Plaintiff Shimko thereafter was induced to continue to represent Dr. Guenther and his partners for another four (4) months by promises of imminent payment. At the end of those

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Plaintiffs contend that Defendants breached these agreements and that the Plaintiffs are owed over $350,000 in unpaid fees. Plaintiffs are proceeding to trial against Defendants on only three (3) claims; to-wit, breach of contract, action on account, and unjust enrichment. 1. Breach of Contract

In the trial court, Plaintiffs pled that they and Defendants had entered into individual agreements under which the Plaintiffs would provide legal services for the Defendants, and in return, the Defendants would pay the firm for those services. Plaintiffs provided evidence in the form of sworn testimony and with invoices establishing the existence of the agreement between the Plaintiffs and the Defendants and the work that was done for the Defendants under the agreement. The Plaintiffs' testimony also established that Defendants have not fully paid the Plaintiffs for all of the services the Plaintiffs provided to the Defendants under the agreements. The testimony of the

13 14 15 16 17 18 19 20 The evidence establishes that Defendants participated in the daily operations and control of 21 22 23 24 25 26 CLS and CMS. The evidence is such that all Defendants were personally exposed and liable for the claims being made against them by CLS' customers. The evidence also establishes that Defendants were aware of these circumstances, and that they were also liable and exposed for the conduct of their co-defendants. Plaintiffs and the invoices establish that $359,000 plus interest remains unpaid under the terms of the contract. In Arizona, it is well established that in an action based on breach of contract, the plaintiff has the burden of proving the existence of a contract, breach of the contract, and resulting damages. Chartone, Inc. v. Bernini, 83 P.3d 1103, 1112; Citing Thunderbird Metallurgical, Inc. v. Ariz. Testing Lab., 5 Ariz. App. 48, 423 P.2d 124 (1967).

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The evidence establishes that Plaintiffs had an agreement to represent Defendants and their wives. Plaintiffs explained to Defendants that he was looking to them individually for payment, not the companies. Defendants agreed that Plaintiffs would represent him and their wives on an hourly basis. Defendants agreed to pay for those services. Based on that promise, Plaintiffs began to represent the Defendants. Plaintiffs submitted detailed invoices for services and at rates, which the Defendants paid up until October of 2002. Plaintiffs continued to provide services until April of 2003. During that time, Defendants were active in the operations of the partnership business and in the management and monitoring of the litigation in which Plaintiff Shimko was representing them. Defendants benefited individually from the services provided by Plaintiffs. Plaintiff Shimko and his firm provided over $350,000 in services to Defendant and his partners for which he and his firm have not been paid.

13 14 15 16 17 18 19 20 Court of Arizona stated that an Action on an Account stated "sets forth the fact that the account was 21 22 23 24 25 26 stated between the parties, that a certain sum was found due from one to the other, and that such sum is not yet paid." Id.; Citing Patillo et al. v. Allen-West Com. Co., 108 Fed. 723; Heinrich et al. v. Englund, 34 Minn. 395; Watkins v. Ford, 69 Mich. 357. 2. Action on Account

Plaintiffs' First Cause of Action alleges that Plaintiffs and Defendants conducted a series of transactions for which a balance remains to be paid. Those transactions required Plaintiffs to provide legal services for which Plaintiffs would be paid. Plaintiffs did provide the legal services, for some of which he was paid, but for some of which he was not. In Chittenden & Eastman Co. v. Leader Furniture Co. (1921), 23 Ariz. 93, 96, the Supreme

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In this lawsuit, the Invoices from the Shimko & Piscitelli firm clearly establish the existence of an open account. Detailed descriptions in the invoices clearly disclose work done for Defendants. Payments on that account were made regularly from November 2001 through December of 2002. The evidence is that the law firm unequivocally had entered into an agreement with the Defendants to perform services for them personally under this account. It was only for purposes of convenience that the invoices were submitted to CMS. From the evidence presented and through the invoices evidencing the work done and the charges levied, it is established that the Defendants maintained an open account with the law firm, and that an amount of $359,669.00 was due and owing from the Defendants, jointly and severally, and that to date, Defendants have not paid Plaintiffs the sums owed on the account. In Arizona it is the settled rule that the burden is on the person seeking to recover on an open

13 14 15 16 17 18 19 20 21 22 23 24 25 26 account to prove the correctness of the account and each item thereof. Piper v. Salem, 48 Ariz. 314, 61 P.2d 399 (1936); Kunselman v. Southern Pacific Railroad Company, 33 Ariz. 250, 263 P. 939 (1928). It is also well settled that in the absence of direction by a debtor, a creditor may apply payments made by the debtor to such portions of the debt as he prefers. Where no special application has been made, it is applied against the oldest items. Security Trust and Savings Bank v. June, 38 Ariz. 513, 517, 1 P.2d 970, 971 (1931). This rule is applicable to running accounts. Where there is a running account, the creditor may apply a payment to any item. General credits on open accounts stand as payments on the oldest items of such accounts unless some other application be clearly indicated. Hollywood Wholesale Electric Company v. Baskin, 146 Cal.App.2d 399, 402, 303 P.2d 1049, 1051 (1956). That is exactly what happened in this case, Plaintiffs provided legal services and sent weekly invoices to Defendants. When Plaintiffs received payments from Defendants. Guenther and his partners, the payments were applied to the oldest items on the account.

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3.

Quantum Meruit/Unjust Enrichment

Plaintiff's Fourth Cause of Action alleges that Plaintiffs performed services for the Defendants and that when those services were rendered Plaintiffs reasonably expected the Defendants to pay for those services. Defendants received the benefit of those services and have been unjustly enriched to the amount of $359,000 plus interest. It is the well established law of Arizona that in order to prevail upon a theory of unjust enrichment, a plaintiff must establish that, (1) plaintiff conferred a benefit upon the defendant; (2) defendant's benefit is at plaintiff's expense; and (3) it would be unjust to allow defendant to keep the benefit. Murdock-Bryant Const., Inc. v. Pearson, 146 Ariz. 48, 53, 703 P.2d 1197, 1202 (1985); Pyeatte v. Pyeatte, 135 Ariz. 346, 352, 661 P.2d 196, 202 (App.1982). While the aforementioned elements are necessary to maintain a cause of action for unjust enrichment, they are not always

13 14 15 16 17 18 19 20 contractual grounds. Pyeatte, 135 Ariz. at 353, 661 P.2d at 203; D. Dobbs, Remedies § 4.2 at 237 21 22 23 24 25 26 (1973); 1 Willeston, Contracts § 3 and 3A at 10-15 (3d ed. 1957). Whereas an implied in fact contract is a true contract, it differs from an express contract because it is proved by circumstantial evidence and not by express written or oral terms. Pyeatte, 135 Ariz. at 353, 661 P.2d at 203. By sufficient. For instance, courts have repeatedly held that the existence of a contract specifically governing the rights and obligations of each party precludes recovery for unjust enrichment. Brooks v. Valley Nat'l Bank, 113 Ariz. 169, 548 P.2d 1166 (1976); Johnson v. American Nat'l Ins. Co., 126 Ariz. 219, 223, 613 P.2d 1275, 1279 (App.1980). That the doctrine of unjust enrichment has no application to express contractual situations, quite obviously, results from the fact that unjust enrichment is a form of restitutionary relief available upon either "implied in fact" contract or quasi-

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contrast, a quasi contract is not a contract, but it is a duty imposed in equity to prevent unjust enrichment. Id. Consequently, if for whatever reason, the Court determines that Plaintiffs were unable to establish all of the necessary elements of contract, Plaintiffs would still be entitled to prove that the Defendants were unjustly enriched at Plaintiffs' expense. And, Plaintiffs have presented evidence of each of the necessary elements of this equitable remedy. The testimony of Plaintiff Shimko and the invoices provide substantial evidence to support the fact that the Plaintiffs have conferred a benefit upon the Defendants and that the Plaintiffs expected to get paid for those services and that Dr. Guenther and his partners have benefited from those services at Plaintiffs' expense. 4. Liability of Defendants' wives

In addition to stating the above mentioned Causes of Action against the principal Defendants, 13 14 15 16 17 18 19 20 the following cases: 21 22 23 24 25 26 1. Any transaction for the acquisition, disposition or encumbrance of an interest in real property other than an unpatented mining claim or a lease of less than one year. 2. Any transaction of guaranty, indemnity, or suretyship. in this lawsuit, the Plaintiffs have also stated their Causes of Action against their wives. Arizona is a community property state. Chase Bank of Arizona v. Acosta, 179 Ariz. 563, 571 (Ariz. Ct. App 1994). Marital community property may be liable for the debt of a partnership in which only one spouse participated. Id. at 572-573. The holding in Chase Bank, supra, is consistent with A.R.S. § 25-214(C), which provides: "either spouse separately may acquire, manage, control or dispose of community property, or bind the community, except that joinder of the property is required in any of

In this lawsuit, Defendants' wives have been joined into this litigation as party-defendants. Therefore, joinder under A.R.S. § 25-214(C) is not at issue. And, Defendants have bound the

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community property through their acts, which bind Defendants' wives as well. Consequently, Defendants wives are is jointly and severally liable with their husbands as judgment-debtors to the Plaintiffs' claims. III. CONCLUSION Notwithstanding the fact that Defendants ownership in CLS and CMS was structured on paper as a limited partner, the evidence clearly establishes that Defendants were being sued on an individual basis along with their lives for conduct they jointly engaged in. Defendants were aware that they faced enormous personal exposure outside of the envelope of protection that their method of ownership in CLS and CMS provided them; and that they engaged Plaintiff Shimko and his firm to represent them, individually, in anticipated litigation; and that Plaintiff Shimko provided services which were accepted and up to a point paid for; and that Plaintiff Shimko and his firm are still owed

13 14 15 16 17 18 19 20 21 22 23 24 25 26 By: /s/ Timothy A. Shimko Timothy A. Shimko (OSBN 0006736) David A. Welling (OSBN 0075934) 2010 Huntington Building 925 Euclid Ave. Cleveland, Ohio 44115 Tel. (216) 241-8300 Fax (216) 241-2702 Attorneys for Plaintiffs $359,000 for the services provided to Defendants and their wives, on any one of the three counts on which Plaintiffs proceeded to trial, Plaintiffs are entitled to judgment in their favor and against the Defendants, jointly and severally, in the amount of $359,000 together with costs and interest. Plaintiff committed no ethical violations that would deprive him of a recovery. RESPECTFULLY SUBMITTED on this 13th day of August, 2008. TIMOTHY A. SHIMKO & ASSOCIATES

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RESPECTFULLY SUBMITTED ON this 13th day of August, 2008. TIMOTHY A. SHIMKO & ASSOCIATES By: /s/ Timothy A. Shimko Timothy A. Shimko (OSBN 0006736) 2010 Huntington Building 925 Euclid Ave. Cleveland, Ohio 44115 Tel. (216) 241-8300 Fax (216) 241-2702

Attorneys for Plaintiffs Shimko & Piscitelli and Timothy A. Shimko

Case 2:04-cv-00078-FJM

Document 240 20 Filed 08/13/2008

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COPY of the foregoing electronically filed and served this 13th day of August, 2008 upon: Roger L. Cohen, Esq. Jaburg & Wilk, P.C. 3200 North Central Avenue, Ste. 2000 Phoenix, Arizona 85012 [email protected] Counsel for Defendant Ross Richard J. McDaniel, Esq. 11811 N. Tatum Blvd., Ste. 1051 Phoenix, Arizona 84208 Counsel for Defendants Woodcock Served via regular U.S. Mail upon the following: Mr. and Mrs. David Goldfarb 11437 N. 53rd Place Phoenix, Arizona 85254 Defendants Milton and Kathi Guenther 3642 E. Rockwood Phoenix, Arizona 84032 Defendants in pro per

/s/ Mildred Pacheco

Case 2:04-cv-00078-FJM

Document 240 21 Filed 08/13/2008

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