MW2 Invs. LLC v. IMH Special Asset NT 168 LLC
| Decision Date | 19 December 2019 |
| Docket Number | No. 1 CA-CV 18-0271,1 CA-CV 18-0271 |
| Parties | MW2 INVESTMENTS LLC, Plaintiff/Appellant/Cross-Appellee, v. IMH SPECIAL ASSET NT 168 LLC, et al., Defendants/Appellees/Cross-Appellants. R. STEWART HALSTEAD, et al., Cross-Appellees. |
| Court | Arizona Court of Appeals |
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
Appeal from the Superior Court in Maricopa County
The Honorable Christopher T. Whitten, Judge
AFFIRMED
By Benjamin W. Reeves, Christopher H. Bayley, James G. Florentine
Broening, Oberg, Woods & Wilson, Phoenix
Counsel for R. Stewart Halstead and R. Stewart Halstead, P.C.
MEMORANDUM DECISIONPresiding Judge Jennifer B. Campbell delivered the decision of the Court, in which Judge Maria Elena Cruz and Judge James B. Morse Jr. joined.
¶1 MW2 Investments LLC ("Investments") appeals the superior court's orders dismissing its complaint and denying it leave to amend its complaint against IMH Special Asset NT 168, LLC and several other related entities (collectively, "IMH"). IMH cross-appeals the court's denial of its request for sanctions pursuant to Arizona Rule of Civil Procedure ("Rule") 11. For the following reasons, we affirm.
¶2 Investments is a member of Seagoville Investments, LLLP ("Seagoville"). The present case is predicated on a judgment and subsequent receivership entered in a separate lawsuit involving Seagoville ("Lawsuit 1"). In that case, IMH obtained a judgment (the "Judgment") against the then-general partner of Seagoville, David Maniatis, and his revocable trust (collectively, "Judgment Debtors"). With that judgment secured, IMH asked the court to appoint a receiver to manage all assets owned or controlled by the Judgment Debtors and aid IMH in executing on the Judgment. As relevant to this case, the court appointed MCA Financial Group, Ltd. ("Receiver") as a receiver pursuant to Rule 66(b)2 (the "Receivership Order"). See A.R.S. § 12-1241 (). The court expressly authorized the Receiver to "take immediatepossession, custody and control of all . . . partnership interests . . . owned . . . or controlled in whole or in part by" Maniatis, as the judgment debtor, and to "manage and takeover all of [Maniatis'] business affairs." The court also charged the Receiver with the duty to exercise rights in the receivership estate "for the benefit of [Maniatis'] creditors."
¶3 After the Receiver identified over 150 different partnerships, corporations, and trusts that Maniatis created and controlled, the receivership court amended the initial Receivership Order, authorizing the Receiver to take control of many of the businesses and identify assets to be gathered into the receivership estate. This amended order included Seagoville, an entity the court determined Maniatis owned and controlled: "
¶4 Before the Receiver was appointed, Maniatis had executed an agreement (the "Seagoville PSA") on behalf of Seagoville to sell approximately 12 acres of property in Texas ("the Seagoville Property") to a buyer (the "Buyer") for a sum certain. After execution of the Seagoville PSA, the court appointed a receiver. When Maniatis failed to timely close the sale, the Buyer sued Seagoville and the Receiver seeking specific performance.
¶5 Rather than litigate the specific performance action, the Receiver chose to perform under the Seagoville PSA. The Receiver, joined by IMH, asked the receivership court to (1) allow the Receiver to exercise Seagoville's rights as seller pursuant to the Seagoville PSA, and (2) approve a related agreement between the Buyer and IMH that authorized IMH to purchase the Buyer's interest in the Seagoville PSA. The Receiver notified the court that IMH intended to assemble the Seagoville Property with several other parcels that could then be sold together for more money than if each parcel was sold separately. The receivership court granted the motion, finding "Seagoville [was] ultimately owned and controlled by [the Judgment Debtors]" and therefore was "subject to administration under [the] MCA Receivership Order." The court also found that all parties who claimed an ownership or management interest in Seagoville or the Seagoville Property received proper notice of the joint motion. The Receiver completed the transaction pursuant to the Seagoville PSA, and after IMH acquired ownership rights, it sold the assembled properties to a third-party.
All proceeds from the sale of the Seagoville Property went into the receivership estate.
¶6 After IMH completed the purchase of the property, Investments attempted to intervene in the receivership proceeding. Investments moved to set aside the sale and void the appointment of the Receiver. In the alternative, Investments asked the receivership court to give it some of the proceeds of the sale of the Seagoville property. The receivership court denied Investments' motion, finding that Investments had not shown a right to intervene because its interests were already represented in the case by Maniatis, the court had already addressed the relief sought, and "if [Investments] has an interest in a receivership asset, [such as the Seagoville Property or its sale proceeds,] there is a process for [Investments] to protect that interest by submitting a claim."
¶7 The receivership court then granted the Receiver's motion to distribute the sale proceeds to IMH, explaining it had previously determined the proceeds from the Seagoville sale were to be "made available for [IMH's] execution" on the Judgment. Noting Maniatis' objections to the distribution, the court went on to explain that the Seagoville Property is owned and controlled by the Judgment Debtors [Maniatis and his various business organizations] and subject to the Receivership and Receivership Order. The Receiver then filed a motion to wind-up the estate and make its final distributions to the creditors. Investments filed a notice of adverse impact to its interests. The court granted the Receiver's motion and denied and overruled "[a]ny and all objections to the Wind-Up Motion." As provided in that order, the Receiver distributed the remaining assets of the receivership estate and was discharged by the court.
¶8 Investments then initiated the current lawsuit, on its own behalf and derivatively on behalf of Seagoville ("Lawsuit 2"). It alleged a 17% interest in Seagoville and sued to unwind the sale of the Property, claiming the sale occurred only through IMH's "misrepresentations, concealment of facts and other misconduct and fraud on the Court." Investments alleged six causes of action: (1) accounting and distribution; (2) sums owed under a contract; (3) fraud; (4) constructive fraud; (5) negligent misrepresentation; and (6) unjust enrichment.
¶9 IMH filed a motion to dismiss Lawsuit 2. The superior court granted IMH's motion to dismiss and denied Investments' oral motion for leave to amend the complaint, reasoning "there is no legal theory on which [it] could prevail." IMH sought attorney fees, costs, and sanctions againstInvestments; its sole member/manager, Robert M. Semple; its attorney, R. Stewart Halstead; and his firm, R. Stewart Halstead, P.C. The court denied the request for sanctions under Rule 11 but awarded $63,062.12 in attorney fees and $1,581.72 in taxable costs under A.R.S. §§ 12-341.01 and 12-341. Investments timely appealed the superior court's dismissal of its claim and IMH timely cross-appealed the court's denial of sanctions.
¶10 We review the dismissal of a claim under Rule 12(b)(6) de novo. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7 (2012). In doing so, we "assume the truth of all well-pleaded factual allegations and indulge all reasonable inferences from those facts." Id. at 356, ¶ 9 (citation omitted). However, we will not "speculate about hypothetical facts that might entitle the plaintiff to relief," Cullen v. Auto-Owners Ins., 218 Ariz. 417, 420, ¶ 14 (2008), nor will we "accept as true allegations consisting of conclusions of law, inferences or deductions that are not necessarily implied by well-pleaded facts, unreasonable inferences or unsupported conclusions from such facts, or legal conclusions alleged as facts." Jeter v. Mayo Clinic Ariz., 211 Ariz. 386, 389, ¶ 4 (App. 2005) (citation omitted).
¶11 The premise of each of Investments' claims is that it was improperly deprived of a share in the benefits of the sale of the Seagoville property when the Receiver executed the sale to IMH and IMH subsequently packaged the property for sale to a third party. Investments argues the superior court erred by concluding that the receivership court's rulings, along with the Receiver's judicial immunity, barred its claims. Investments contends the receivership court's orders cannot bar its claims in this case because (1) IMH committed fraud on the receivership court, (2) the receivership court's orders and rulings are void because the Judgment was partially vacated on appeal, and (3) the receivership court did not have subject matter jurisdiction to appoint a receiver.3
¶12 For the first time on appeal, Investments argues (1) the appointment of the receiver over Seagoville's assets constituted an "'event of withdrawal' under A.R.S. § 29-323"; (2) Seagoville, rather than...
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