Free Motion for Reconsideration - District Court of Arizona - Arizona

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FENNEMORE CRAIG, P.C.
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FENNEMORE CRAIG, P.C. Janet Weinstein (No. 011910) Kevin J. Bonner (No. 017944) Sherida Colvin (No. 020064) 3003 North Central Avenue Suite 2600 Phoenix, Arizona 85012-2913 Telephone: (602) 916-5000 Email: [email protected] Attorneys for Plaintiff

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Century 21 Real Estate Corporation, Plaintiff, v. Daryush B. Motlagh and Jane Doe Motlagh, husband and wife; Integrity Assurance, Inc. an Arizona corporation, Defendants. Daryush B. Motlagh and Jennifer Motlagh, husband and wife; Integrity Assurance, Inc., an Arizona corporation, Counterclaimants, v. Century 21 Real Estate Corporation, a Delaware corporation doing business in the State of Arizona, Does(s) 1 through 100, Counterdefendants. MOTION FOR RECONSIDERATION, OR IN THE ALTERNATIVE, REQUEST FOR CLARIFICATION REGARDING REMAINING ISSUES No. CIV 03 2353-PHX-DGC

(Assigned to the Hon. David G. Campbell)

Case 2:03-cv-02353-DGC

Document 87

Filed 09/26/2006

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I.

The Court Should Enter Judgment On CREC' Contract and s Unjust Enrichment Claims Because Integrity' Bankruptcy s Operating Statement Establishes Defendants'Gross Revenue.

Century 21 Real Estate Corporation ("CREC") requests that the Court reconsider that portion of its November 28, 2005 and September 19, 2006 Orders which denied CREC' motion for summary judgment with respect to CREC' breach of contract and s s unjust enrichment claims. The November 28, 2005 Order denied CREC' May 13, 2005 s motion for summary judgment in part because Motlagh had purchased the counterclaims, discovery on which might be relevant to defenses to CREC' claims. Now that the Court s has granted summary judgment in CREC' favor on the counterclaims, CREC requests s that the Court reconsider its November 28, 2005 Order and enter judgment on its breach of contract and unjust enrichment claims.1 CREC also requests that the Court reconsider its September 19, 2006 Order, which indicated that CREC did not provide evidence to support the gross revenue generated by defendants in their real estate business following their filing of the bankruptcy petitions in December 2001. There is support in the record for the revenue number of $723,114.46 proffered by CREC, a number CREC simply took from defendants' own records. In paragraph 69 of CREC' Statement of Facts, CREC indicated that "defendants s owe CREC $56,780.48 in post-petition franchise fees through November 30, 2003, plus a 10% late fee, interest and attorneys' fees." Footnote 76 to the Statement of Facts cited to the Franchise Agreement and also indicated that Integrity' post-petition gross revenue s through November 30, 2003 was $723,114.46. CREC intended to cite to Integrity' s November 2003 bankruptcy Operating Statement for this fact, but inadvertently did not do
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There is good cause to waive the 10-day requirement in Local Rule 7(g) with respect to the November 28, 2005 Order. The Order denied the prior motion for summary judgment without prejudice and reconsideration of the Order is in the interest of judicial economy and will avoid having the parties spend time and money preparing for trial when the defendants' own records establish the gross revenue figure CREC is relying on.
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Case 2:03-cv-02353-DGC

Document 87

Filed 09/26/2006

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so. The Operating Statement, which was already part of the record in connection with CREC' original motion for summary judgment filed May 13, 2005,2 establishes s Integrity' post-petition gross revenue through November 2003, a point which Daryush s Motlagh admitted in his deposition, which was also part of the record. See Motlagh Deposition I at 12:8-12 attached as Exhibit 2 to CREC' Statement of Facts. s Further, in the Reply Brief in Support of CREC' Renewed Motion for Summary s Judgment, CREC specifically cited to Motlagh' deposition testimony in which he s admitted that Integrity' post-petition s revenue through November 2003 was

approximately $723,000. See Reply at p. 7, lines 13-16, citing Motlagh Deposition I at 12:8-12, attached as Exhibit 2 to CREC' Statement of Facts. s Defendants claimed in their Response that the figure taken from the Operating Report did not relate to the Franchise Agreement requirements in paragraph 8 and did not take into account those revenues realized for property management that they claim are exempt from royalty fees. Paragraph 8 of the Franchise Agreement, however, makes clear that the franchise fee is calculated as a percentage of all revenue received in connection with defendants' real estate business, including property management revenue. In particular, in § 8(A)(i) provides that the franchise fee is 6% of the: gross revenue earned, derived an/or received by Franchisee and its Affiliates described in subparagraph 8A(ii) below, during the term of this Agreement from: (1) all transactions involving the purchase, sale, lease, rental, hypothecation, license, exchange or other transfer or disposition of any interest in real estate, condominiums, mobile homes, panelized housing, time share units or manufactured homes; (2) all other transactions for which a real estate license or auctioneer' license is s required (which, for purposes of this Agreement, is deemed to include all fees and remuneration collected or earned by Franchisee in performing title or escrow services, or organizing, promoting, selling, managing or otherwise servicing any kind of real estate syndicate, partnership (whether general or limited) or corporation, real estate investment trust or other real estate investment organization, or finding any
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See paragraph 21 of CREC' Statement of Facts in support of its Motion for Partial s Summary Judgment, filed May 13, 2005 and Exhibit 11 thereto. For the Court' s convenience, a copy of the Operating Statement is attached hereto as Exhibit 1.
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investors for any of the above, said royalty fees being payable with respect not only to any cash payments, but also to the value of all other forms of compensation and remuneration received, including, but not limited to, promissory notes, securities, partnership interests, interests in real estate and other forms of property); (3) all transactions in which CENTURY 21 Marks or the CENTURY 21 System are used, including that portion of a transaction in which personal property is bought or sold; and (4) the sale or provision by Franchisee or by any third party of any products or services developed or made available by Franchisor or any of its affiliates.3 There are no exceptions for the revenue derived by Motlagh or Integrity, his affiliate, in their real estate business. 100% of their revenue is subject to the franchise fees. CREC submits that the following facts are undisputed: 1) The Franchise Agreement requires Motlagh to pay Century 21 eight percent

(8%) of the "Gross Revenue "earned, derived and/or received by [Motlagh and his] Affiliates" from the operation of Motlagh' real estate office. See Exhibit 1 to CREC' s s SOF at §§ 8(A)(i) and 9(A). 2) Integrity, which is wholly owned by the Motlaghs is an affiliate of Motlagh.

See CREC' SOF at ¶ 2. s 3) Integrity' Gross Revenue derived from its real estate business from the s

filing of the bankruptcy through November 30, 2003 was $723,114.46. See November 2003 bankruptcy Operating Statement, Exhibit 11 to CREC' May 13, 2005 motion for s summary judgment and Exhibit 1 hereto and Motlagh Deposition I at 12:8-12, attached as Exhibit 2 to CREC' SOF. The franchise fees based on this gross revenue at eight (8%) s percent are $57,849.15. 4) Since the bankruptcy filings, Integrity has only paid Century 21 $1,068.67,

leaving a principal amount due of $56,780.48. See Debbie Iuliano Declaration, attached as Exhibit 47 to CREC' SOF. s Exhibit 1 to CREC' Statement of Facts. (emphasis added). Section 9(A) of the s Franchise Agreement similarly requires the payment of a National Advertising Fee of two (2%) of Gross Revenue.
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Accordingly, CREC requests that the Court reconsider its September 19, 2006 Order and grant summary judgment in CREC' favor in the breach of contract and unjust s enrichment claims. At a minimum, the Court should grant partial summary judgment on the issue of liability. As the Court noted in its September 19, 2006 Order: In the damages section of their initial disclosure statement, the Motlaghs state that they "may offer evidence of [their] out-of-pocket losses of monies invested in Century 21 trademarked materials, signs and other paraphernalia as a set off against [Plaintiff' claims for fees and damages." s] Dkt #78 Ex. 46 § C. It is undisputed that no such evidence has been disclosed by the Motlaghs in this litigation. Id. ¶ ¶ 95-100; Dkt. ## 7981. September 19, 2006 Order at 5:25-6:5. (emphasis added). As defendants have no

evidence of any set off, the only remaining issue should be the amount of CREC' s damage. II. In the Alternative, CREC Requests The Court Identify The Remaining Issues for Trial.

In the event that the Court declines to grant judgment on CREC' contract and s unjust enrichment claims, CREC requests clarification, pursuant to Fed. R. Civ. P. 56(d), regarding what issues remain in this matter. If the only issue remaining is the amount of defendants' post-bankruptcy gross revenue, then this will be an easy matter to prepare for trial and would likely require no more than one day for trial. If additional issues remain, however, then this matter will be more complicated, and may require motions in limine, more information in the joint pretrial statement and a longer trial. Without a clarification from the Court, defendants may continue to argue that CREC' alleged misconduct damaged them which should bar or reduce CREC' damages. s s But the Court has already found that "the Motlaghs presented no evidence of damages from Plaintiff' alleged misconduct." September 19, 2006 Order at p. 6, lines 18-19. The s

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issue of CREC' alleged misconduct is thus irrelevant to CREC' claims. If, however, the s s Court believes these or other issues are still relevant, both parties should know that so that they can appropriately prepare motions in limine and the joint final pretrial statement. Conclusion For the foregoing reasons, CREC respectfully requests that the Court reconsider that portion of its November 28, 2005 and September 19, 2006 Orders denying CREC' s motions for summary judgment as to the breach of contract and unjust enrichment claims. Although the issues could have been briefed more clearly in the renewed motion for summary judgment, there is support in the record for the gross revenue number proffered by CREC from defendants' own records and deposition testimony. In the alternative, CREC requests clarification regarding the remaining issues in this matter. DATED this 26thday of September, 2006. FENNEMORE CRAIG, P.C.

By/s/ Kevin J. Bonner Janet Weinstein Kevin J. Bonner Sherida Colvin Attorneys for Plaintiff Century 21 Real Estate Corporation ORIGINAL of the foregoing Filed electronically this 26th day of September, 2006, with: United States District Court District of Arizona 401 West Washington Street Phoenix, AZ 85003 COPY OF THE FOREGOING Mailed this 26th day of September, 2006, to:

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Don P. Williams Law Office of Don P. Williams P.O. Box 5308 Goodyear, AZ 85338 Attorney for defendants Motlagh and Integrity /s/ Carolyn Romanchuk
1836901.1/20474.039

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