Dearborn Golden Invs. v. Uppercut Bros, LLC
| Decision Date | 29 October 2021 |
| Docket Number | 20-cv-13115 |
| Parties | DEARBORN GOLDEN INVESTMENTS, LLC, Plaintiff, v. UPPERCUT BROS, LLC, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS (ECF NO. 39)
This case arises out of Plaintiff Dearborn Golden Investment, LLC (“DGI”)'s suit alleging that Defendants Abbas Bazzy, Uppercut Bros, LLC (“Uppercut”), Randy Youhan, and RY Landscaping LLC (“RYL”) have been conducting an illegal marijuana manufacturing business on a property that DGI has leased to them. Now before the Court is Abbas[1] and Uppercut's Motion to Dismiss DGI's Complaint. The Court finds that the briefing adequately addresses the issues in contention and dispenses with a hearing pursuant to E.D. Mich. L. R. 7.1(f)(2).
“DGI is a Michigan limited liability company that owns commercial rental property in Dearborn.” (ECF No. 41-1, Response to Motion to Dismiss, PageID 477). DGI is owned by three brothers: Intervenor Defendant Hussein Hammoud owns 50% of the company, Hassan Hammoud owns 30%, and Mahmoud Hammoud owns 20%. (ECF No. 1, Complaint, PageID 6).
At issue in this case is the DGI-owned warehouse at 6650 Chase Road. (ECF No. 1, Complaint, PageID 3). DGI has been renting this warehouse to RYL and Uppercut. (ECF No. 1, PageID 4). RYL is managed by Randy Youhan, and Uppercut is managed by Abbas Bazzy, who is the nephew of DGI's owners. (ECF No 1, PageID 4; ECF No. 39, Motion to Dismiss, PageID 359).
On September 7, 2017, DGI and Mahmoud filed a complaint against Hussein, Hassan, and Ayah Holdings LLC, in Wayne County Circuit Court. (ECF No. 39-5, Settlement, PageID 441; Dearborn Golden Investment LLC v. Hammoud, No. 2017-013444 (3d Judicial Cir. Mich. 2017)). According to Abbas and Uppercut, that case was about which of the Hammoud brothers “owned what shares of DGI.” (ECF No. 39, Motion to Dismiss, PageID 359).
On December 19, 2019, while the Wayne County case was still unresolved, Hassan filed a derivative suit on behalf of DGI against Uppercut, Abbas, and Randy in the United States District Court for the Eastern District of Michigan. The Complaint alleged that, “[f]rom 2018 thru present, defendants occupied [6650 Chase] and have created, maintained, and conducted an illegal marijuana manufacturing business of a vast number of marijuana plants.” (ECF No. 39-3, Complaint in Previous Federal Case, PageID 417). The Complaint asserted four counts against the defendants: Action to Abate Nuisance, Racketeer Influence and Corrupt Organizations Act (RICO), RICO Conspiracy, and Civil Conspiracy. (ECF No. 39-2, PageID 420-26).
On January 29, 2020, the parties to the Wayne County case-DGI, Mahmoud, Hussein, Hassan, and Ayah Holdings[2]-executed a Limited Mutual Release and Settlement Agreement (“Settlement”). (ECF No. 39-5, Settlement). Under a preliminary section labelled “Recitals, ” the Settlement refers to three exhibits, none of which have been provided to this Court: a 2019 settlement agreement, which it calls “the Agreement”; a 2018 memorandum of understanding, which it abbreviates as “MOA”; and an operating agreement to which DGI was subject. (ECF No. 39-5, PageID 440). The Recitals section also states that “Mahmoud and [MH] have filed a Demand for Arbitration pursuant to Written Agreement against Hussein, [and] Hassan, and DGI, Hassan has filed a counterclaim against Mahmoud, currently scheduled to be heard for private hearing with [an arbitrator], ” which events it “collectively refer[s] to as the ‘Arbitration.'” (PageID 440). Additionally, the Recitals section notes that “Hassan, on behalf of DGI has filed” the aforementioned Eastern District case, which it calls the “Federal Lawsuit.” Lastly, the Recitals section explains that “[t]he Parties . . . desire to avoid the expense and inconvenience inherent in further proceedings regarding the matters at issue in the Arbitration and wish to settle these disputes in accordance with the terms and conditions of this Settlement.” (PageID 440).
The beginning of the second and final section of the Settlement, labelled “Agreement, ” incorporates the Recitals and prior Agreement by reference, but notes that if the Settlement “conflicts with” the prior Agreement, the Settlement “shall control.” (PageID 441).
Under the sub-heading “Limited Mutual Release between Parties and Third-Party Beneficiaries as to Arbitration Claims and Counterclaims Only, ” the Settlement provides:
To the greatest extent permitted by law and effective upon the full execution of this Settlement, each party releases, acquits, and forever discharges the other parties and their respective parents, subsidiaries, affiliated or successor corporations and or companies, owners, employees, insurers, independent contractors, agents, representatives, attorneys (hereinafter “Releasees”) of and from any and all claims, counterclaims, actions, causes of action and demand whatsoever, whether direct or derivative (“Claims and Causes of Action”), which the party has pled in the Arbitration and/or Claims and Causes of Action based on events, occurrences from the Effective Date of the Agreement to though the Effective Date hereof, and any and all injuries, damages, claims, and consequences that may relate to or arise therefrom or relate in any manner to the rights, interests, ownership the parties held or potentially held in DGI. The term of the Mutual Release is limited from the date the Agreement was fully executed through the date of this Settlement was fully executed.
(PageID 442).
The Settlement also contains two forum-selection clauses. The first states that “[i]f there is a dispute under or relating in any way to, this Settlement, the Agreement, the Operating Agreement or the MOA, or concerning any aspect of any document drafted under the those documents (a ‘Dispute'), such Dispute shall be litigated in Wayne County Circuit Court.” (PageID 441). The next paragraph adds that “[t]he Parties understand and agree that with respect to litigation of a Dispute that: (a) under MCR 2.113(C)(2) litigation of a Dispute necessarily arises out of the same transactions and occurrences as alleged in the pleadings filed in a previously filed Wayne County Circuit Court action, where it was given docket number 2017-01344.” (PageID 441).
The second forum-selection clause states that “[i]n the event of any dispute between the parties, the exclusive jurisdiction and venue for litigation and determination of such dispute shall be in Wayne County, Michigan.” (PageID 444).
Additionally, the Settlement contains an integration clause, which explains that “[t]he Agreement and this Settlement contains the entire understanding between the Parties with respect to the subject matter and . . . no parol evidence of prior or contemporaneous agreements, understandings and negotiations shall govern or be used to construe or modify this Settlement.” (PageID 443). The Settlement also specifies that it should be “controlled” by “the laws of the State of Michigan.” (PageID 444).
Further, the Settlement provides that “[u]pon [its] full execution . . . the Parties authorize and direct their respective counsel to enter a stipulation and order dismissing the Arbitration and the Federal Lawsuit with prejudice and without costs to any party.” (PageID 442).
Accordingly, on January 31, two days after the Settlement's execution, DGI filed a Notice of Voluntary Dismissal under Federal Rule of Civil Procedure 41(a)(1)(A)(i) in its prior federal case. (Notice of Voluntary Dismissal, Dearborn Golden Investments LLC v. Uppercut Bros LLC, No. 19-cv-13727 (Jan. 31, 2020), ECF No. 5). In response, this Court dismissed that case with prejudice. (ECF No. 39-4, Order of Dismissal in Previous Federal Case, PageID 439).
On November 23, 2020, Hassan filed another federal derivative suit on behalf of DGI against Uppercut, Abbas, RYL, and Randy. The Complaint alleged that “[f]rom February 1, 2020 thru present, defendants occupied [6650 Chase] and have created, maintained, and conducted an illegal marijuana manufacturing business of a vast number of marijuana plants.” (ECF No. 1, Complaint, PageID 5). And it asserted the same four counts as did the previous federal complaint. Plaintiffs concede, “for purposes of th[e] motion [currently before the court], that the two lawsuits bring identical claims but for the time period involved.” (ECF No. 41-1, Response to Motion to Dismiss, PageID 487).
On January 25, 2021, DGI filed Requests for Clerk's Entry of Default against Abbas, (ECF No. 10), and Uppercut, (ECF No. 11), because they had not filed responsive pleadings or defenses to the Complaint as required by Federal Rule of Civil Procedure 12. Three days later, the Clerk entered the requested defaults. (ECF No. 12; ECF No.13).
On March 14, 2021, Abbas and Uppercut filed a Motion to Set Aside the Default entries because they were never served. (ECF No. 20, PageID 240-42). On May 12, Magistrate Judge Patti “conditionally granted” that motion, “subject to the stipulations” that “Attorney Mohammed Abdrabboh w[ould] accept service on behalf of [Abbas and Uppercut, ] . . . they w[ould] not contest personal jurisdiction, ” and they would “file their answer(s) no later than Wednesday June 2, 2021.” (ECF No. 37, Order, PageID 348-49). Judge Patti emphasized: “[i]f - and only if - [Abbas and Uppercut's] answer is timely filed will the Clerk of the Court set aside the Clerk's January 18, 2021 entries of default against them.” (PageID 349).[3]
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