Free Response to Motion - District Court of Arizona - Arizona

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Dan W. Goldfine (#018788) Richard G. Erickson (#019066) Adam Lang (#022545) SNELL & WILMER L.L.P. One Arizona Center 400 East Van Buren Street Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 [email protected] Attorneys for Plaintiff and Counterdefendant Meritage Corporation and Third Party Defendants Steve Hilton, John Landon and Larry Seay IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Meritage Homes Corporation, a Maryland Corporation, formerly d/b/a Meritage Corporation, Hancock-MTH Builders, Inc., an Arizona corporation, Hancock-MTH Communities, Inc., an Arizona corporation, and currently d/b/a Meritage Homes Construction, Inc., an Arizona corporation, and Meritage Homes of Arizona, Inc., an Arizona corporation, Plaintiffs, v. Ricky Lee Hancock and Brenda Hancock, husband and wife; Gregory S. Hancock and Linda Hancock, husband and wife, Rick Hancock Homes L.L.C., an Arizona limited liability company; RLH Development, L.L.C., an Arizona limited liability company; and J2H2, L.L.C., an Arizona limited liability company, Defendants.

Case No. CV-04-0384-PHX-ROS PLAINTIFFS' RESPONSE RE GREG HANCOCK'S MOTION FOR WITHDRAWAL OF THIS COURT'S MAY 31, 2005 DISMISSAL ORDER

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Snell & Wilmer L.L.P.

(Assigned to the Honorable Roslyn O. Silver)

Case 2:04-cv-00384-ROS

Document 240

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Greg Hancock, an individual, Defendant, CounterClaimant, and Third Party Plaintiff, v. Steven J. Hilton, an individual; John R. Landon, an individual; Larry W. Seay, an individual; and Snell & Wilmer, L.L.P., an Arizona professional corporation, Third Party Defendants.

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Plaintiff/Counterdefendant and Third-Party Defendants1 ("Meritage") respond to Defendant/Counterclaimants/Third Party Plaintiff Greg Hancock's ("Hancock") Motion for Withdrawal of this Court's May 31, 2005 Order to dismiss his state claims without prejudice voluntarily ("Motion"). Hancock's Motion raises new arguments to justify why he has been in contempt for six months. These arguments have been waived, are

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procedurally barred under the Rules 59(e) and 60(b), Federal Rules of Civil Procedure ("Rule") and, on the merits, simply do not justify relief from this Court's Order, and is simply another attempt to delay compliance with this Court's Order. I. PRELIMINARY MATTERS a. Hancock Continues to Defy the Court's Orders.

Obviously, Hancock remains in contempt of the Court's May 31, 2005 Order. His contempt is plainly intentional and in bad faith. Filing this Motion and raising entirely stale arguments, in complete disregard of the Court's clear direction at the December 7, 2005 Show Cause Hearing, only reinforces the fact that Hancock is acting in bad faith. At this Court's show cause hearing on December 7, 2005, the Court ordered the parties to brief whether Hancock and his counsel complied with the Court's March 25, 2005 Order with respect to certifying the complete production of documents ("Certification Order"). See Transcript of Proceedings on December 7, 2005, at 23:1724:19, 32:24-33:7 (directing that defiance of other Orders would go to Hancock's state of
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Excluding third-party defendant Snell and Wilmer.
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mind in defying the May 31, 2005 Order); Meritage's December 9, 2005 Position Paper (detailing the Certification Order and the failure to certify). Hancock did not respond to Meritage's Position Paper as directed by the Court. Id. at 33:4. Instead of complying with the Court's order and without seeking leave, Hancock exploited the briefing opportunity with respect to the Certification Order to once more attack the Court's Order of May 31, 2005. This time, Hancock raised entirely new arguments. Now six months old, the May 31, 2005 Order required Hancock to dismiss his state claims without prejudice. See id., at 35:22 (in response to a question as to whether the May 31, 2005 Order was still in effect, the Court stated that "... my order is still in effect ... [and] I have not vacated that order ..."). The issues surrounding the May 31, 2005 Order have, indeed, been fully briefed and were taken by the Court under advisement, subject only to the Court's invitation of Position Papers with respect to the Certification Order. Id. at 33:1-7, 36:25-37:2. By filing his Motion for Withdrawal, Hancock has demonstrated his unwillingness ­ once again ­ to comply with the Federal Rules of Civil Procedure and this Court's Orders directed at maintaining its jurisdiction and control over this case, which are the precise reasons why this Court entered the May 31, 2005 Order in the first place. See id. at 8:20-10:24 (this Court explains the context of the May 31, 2005 Order, stating that it "was trying to get a hold of the case" and it was concerned that "the state court proceedings were undermin[ing] the jurisdiction of the court"); see, e.g,, Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1202-03 (7th Cir. 1996) (federal courts are entitled under the All Writs Act, Anti-Injunction Act and the courts' inherent powers to enjoin state courts or parties to a state court action when the injunction is intended to prevent a party's vexatious and harassing conduct from interfering with the federal courts' ability to control litigation before it and enforce its discovery orders). b. Hancock Has Waived his Anti-Injunction Act Argument

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Hancock has waived his stale Anti-Injunction Act argument. Failure to raise arguments in a timely matter consistent with the Federal Rules of Civil Procedure
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amounts to a waiver. See Novosteel SA v. United States, 284 F.3d 1261, 1274 (Fed. Cir. 2002) (holding that a party waives an argument when it does not present its argument to the court at the time assigned by the Federal Rules of Civil Procedure because the failure to do so fails to give the court "a fair opportunity to rule on an issue"). Hancock simply did not comply with the procedures set forth in the Rules. Hancock should have filed a Rule 59(e) Motion on his own and raised therein, if he believed it had merit, the "Anti-Injunction Act" argument within ten days after the May 31, 2005 Order. In addition to what he should have filed, Hancock had two separate chances to raise the "Anti-Injunction Act" argument but failed to do so: in his Response to Meritage's Motion to Show Cause on May 23, 2005 and in his Response to Meritage's Renewed Motion to Show Cause on August 22, 2005. Allowing this argument to

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proceed at this juncture would not only disturb court proceedings, but would contravene previously established waiver law. Because Hancock did not raise the "Anti-Injunction Act" argument when it was ripe, assuming it had merit, Meritage will have spent thousands of dollars pursuing its motions for an order to show cause in an effort to aid in the enforcement of this Court's Order. Considering these arguments now would render previous briefings and briefing schedules meaningless and would unfairly give Hancock another bite at an apple that he has already had ample opportunity to chew. c. Hancock Has Waived his Right to Challenge the Court's May 31, 2005 Order

Snell & Wilmer L.L.P.

More broadly, Hancock has waived his right to challenge this Court's May 31, 2005 Order. The Federal Rules of Civil Procedure do not expressly recognize Hancock's 23 Motion, whether captioned as a Motion to Withdrawal an Order or as a Motion for 24 Reconsideration. See, e.g., Computerized Thermal Imaging, Inc. v. Bloomberg, L.P., 312 25 26 alter or amend a judgment under Rule 59(e) or motions for relief from judgments or 27 orders under Rule 60(b). See, e.g., FEDERAL CIVIL RULES HANDBOOK at 961 (2006). 28
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F.3d 1292, 1296 n.3 (10th Cir. 2002). Such Motions are treated as motions for relief to

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If filed within the 10-day period set for Rule 59(e) motions, the "reconsideration" or "withdrawal of a court order" will be treated under Rule 59(e). See, e.g., American Ironworks & Erectors, Inc. v. North American Const. Corp., 248 F.3d 892, 898-99 (9th Cir. 2001). If not within 10 days of the order, as is the case here when Hancock waited six months, Rule 60(b) and its more circumscribed relief govern. See, e.g., Computerized Thermal Imaging, 312 F.3d at 1296 n.3. The Ninth Circuit and the Federal Rules of Civil Procedure permit motions for reconsideration only in "highly unusual" circumstances and must be raised at the first reasonable opportunity. See, e.g., Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (emphasis added). Hancock has the burden of proof of demonstrating that he meets each of the prerequisites for relief under Rule 60(b). See, e.g., McCurry ex rel. Turner v. Adventist Health Sys./Sunbelt, Inc., 298 F.3d 586, 592 (6th Cir. 2002). First, Hancock's Motion is also untimely under Rule 60(b) because he unreasonably delayed filing it. Rule 60(b) expressly required that Hancock "shall be made within a reasonable time." Here, Hancock knew of his arguments raised in his Motion as early as his filing of his Petition for Writ of Prohibition and Mandamus before the Ninth Circuit on May 10, 2005 and for some unknown reason failed to bring them to the Court's attention. See e.g. Transcript of Proceedings on December 7, 2005, at 7:1-17, 9:1-10:24. This Court asked precisely these questions at the Show Cause Hearing, see id. at 10:5-24, and Hancock did not explain at the Hearing, and has not explained in this Motion, why he delayed six months before raising them. Instead, Hancock flagrantly and intentionally remained in contempt of this Court's May 31, 2005 Order to the prejudice of Meritage despite clear direction from the Rules of Civil Procedure, as well as from the Federal Rules of Appellate Procedure and clear reminders in Meritage's repeated briefings on the issue. See e.g. Fed. R. Civ. P. 60(b) ("a motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation"); see also Cashner v. Freedom Stores, Inc., 98 F.3d 572, 579 n.4 (10th Cir.

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1996) (taking an appeal does not extend the Rule 60(b) time limit).2

Clearly, not only

does his contempt make his delay in filing unreasonable under Rule 60(b), such contempt in tandem with his intentional delay amount to an express waiver of a party's rights under the Rule. Second, even if we were to assume that Hancock's Motion is timely under Rule 60(b) and that Hancock had not waived his Anti-Injunction Act argument, Hancock has not met any of the substantive prerequisites for relief under Rule 60(b). Because he failed to articulate his Motion properly, it is not entirely clear under which of the categories under Rule 60(b) Hancock believes his arguments fall, but the only potentially salient category is subdivision (4) of the Rule for void judgments and orders. However, Hancock does not meet his burden of establishing that this Court's May 31, 2005 Order is a "void order." As discussed below, this Court's May 31, 2005 Order is neither wrong nor "void." An "erroneous" order is not "void" under Rule 60(b)(4), even if that order involves the jurisdiction or powers of the court. See, e.g., United States v. Berke, 170 F.3d 882, 883 (9th Cir. 1999). To be "void" under Rule 60(b), courts require even jurisdictional errors not only to be wrong but to be egregiously wrong and a clear usurpation of judicial power. Central Vermont Pub. Serv. v. Herbert, 341 F.3d 186, 190 (2d Cir. 2003). There must be a "total want of jurisdiction and no arguable basis" to support the order. Id. (emphasis added); see e.g. United States v. Tittjung, 235 F.3d 330, 334 (7th Cir. 2000). As the Second Circuit has held, "when reviewing the denial of a Rule 60(b)(4) motion to vacate for want of jurisdiction, we consider only whether there is
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Rule 8(a) of the Federal Rules of Appellate Procedure ("Appellate Rules") clearly and unambiguously states that "a party must ordinarily move first in the district court for...a stay of....[an] order of a district court pending appeal." That did not take place. As if the Appellate Rules were not clear, the Federal Rules of Civil Procedure ("Rules") state that a party challenging injunctive relief like this Court's May 31, 2005 Order must obtain an order, and there is no automatic stay provision. Rule 62(a). "Unless otherwise ordered by the court, an interlocutory judgment in an action for an injunction . . . shall not be stayed during the period after its entry and until an appeal is taken or during the pendency of an appeal." Id. (emphasis added). The Court has stated that Hancock's reason for not seeking a stay was "extraordinarily absurd." Transcript of Proceedings on December 7, 2005, at 7:5-7.
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at least an arguable basis for jurisdiction. If so, we will not disturb the judgment on jurisdictional grounds." Central Vermont Pub. Serv., 341 F.3d at 190. Even if Hancock were to establish the Anti-Injunction Act barred the May 31, 2005 Order, which he does not as explained below, Hancock does not even assert that this Court had "no arguable basis" to support the May 31, 2005 Order or that that Order was not just wrong but "egregiously" wrong.3 In other words, Hancock's sole remedy for the "mere error" he asserts in his Motion ­ even if the error relates to the jurisdiction or powers of this Court -- is a proper, timely merits appeal and not relief under Rule 60(b). See, e.g., Durfee v. Duke, 375 U.S. 106 (1963); Central Vermont Pub. Serv., 341 F.3d at 190; FEDERAL CIVIL RULES HANDBOOK at 973.4 Accordingly, either because Hancock did not file this Motion within a reasonable time period after the May 31, 2005 Order, because Hancock waived his Anti-Injunction argument, or because Hancock does not meet his burden of proof under Rule 60(b)(4), this Court must deny Hancock's Motion. II. THE COURT'S DISMISSAL ORDER DOES NOT PRESUMPTIVELY VIOLATE THE ANTI-INJUNCTION ACT. Assuming this Court reaches the merits of his Motion, Hancock's argument that

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this Court's May 31, 2005 Order violates the Anti-Injunction Act is mistaken. Hancock 18 is mistaken because the Anti-Injunction Act, in tandem with the All Writs Act and this 19 Court's power to supervise and manage cases before it, permit federal courts to enjoin 20 state court litigation or parties to a state court action when the injunction is intended to 21 prevent a party's vexatious and harassing conduct from interfering with the federal courts' 22 ability to control litigation before it and enforce its discovery orders. See, e.g., Winkler, 23 101 F.3d at 1202-03 24 25 26 27 28 There is an interplay between this point and whether Hancock can meet his burden of establishing that he did not unreasonably delay his filing of this Motion: If the error were so glaring to meet the prerequisites of Rule 60(b), Hancock would have no excuse in waiting six months to file this Motion. 4 The fact that the Ninth Circuit saw no reason to question the Court's May 31, 2005 Order impliedly demonstrates that the Order can hardly be considered egregious, without any arguable basis or a usurpation of judicial power.
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The Anti-Injunction Statute provides three exceptions allowing for a Federal Court to stay or enjoin state proceedings: (1) where an injunction is expressly authorized by Act of Congress, (2) where an injunction is necessary in aid of jurisdiction and (3) where the injunction is necessary to protect or effectuate the Federal Court's judgments. 28 U.S.C. § 2283. In a number of contexts, federal courts have interpreted these exceptions to permit the enjoining of state court litigation when a party was using a state court litigation in an harassing and/or vexatious manner that had the purpose and/or effect of interfering with the federal court's management of pretrial discovery. See, e.g., Winkler, 101 F.3d at 1202-03;5 Sperry Rand Corp. v. Rothlein, 288 F.2d 245, 248-9 (2d Cir. 1961); American Optometric Assoc. V. Ritholz, 101 F.2d 883 (7th Cir.), cert. denied., 307 U.S. 647 (1939); Newby v. Enron Corp., 2002 U.S. Dist. LEXIS 3949, *18-24 (S.D. Tex. 2002); In re Columbia/HCA Healthcare Corp., 93 F.Supp.2d 876, 879-81 (M.D. Tenn. 2000); OMBAN Corp. v. Holtzman, 1997 U.S. Dist. LEXIS 9502, *22 (N.D.N.Y.), aff'd on the same grounds 1997 U.S. LEXIS 28543 (2d Cir. 1997); 600 California Corporation v. Harjean Co., 284 F.Supp. 843 (N.D. Tex. 1968). Here, this Court found after two hearings and an additional briefing that Hancock's state court litigation was harassing and vexatious in a manner that interfered with this Court's management of pretrial discovery, see Transcript of Proceedings on December 7, 2005, at 8:20-10:24, and, therefore, the Court's May 31, 2005 Order is authorized by the All Writs Act and falls within this well-recognized exception to the Anti-Injunction Act. See, e.g., Winkler, 101 F.3d at 1202-03. a. The Court Gave Hancock Three Opportunities to Explain Why His State Court Action was not Interfering with the Court's Management of the Federal Litigation

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Some information about the context of this Court's May 31, 2005 Order is necessary.
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In late winter and early spring of 2004, this Court was grappling with

The Ninth Circuit has acknowledged the holding in Winkler although it found under the particular facts of the case it was reviewing that the party's filing of the state claim was neither vexatious nor harassing and did not interfere with the federal court's management of discovery. Sandpiper Vill. Condo. Ass'n v. Louisiana-Pacific Corp., 428 F.3d 831, 843-45 and n.20 (9th Cir. 2005); see also On Command Video Corp. v. Lodgenet Entertainment Corp., 976 F.Supp. 917, 922 (N.D. Cal. 1997).
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Hancock's failure to acknowledge this Court's jurisdiction and failure to comply with the Federal Rules of Civil Procedure. Hancock had moved to dismiss the federal litigation despite a clearly pled claim under the federal Lanham Act. Hancock then made blanket objections to written discovery in the federal litigation stating that he was going to pursue the lawsuit in state court instead, and the federal lawsuit was grinding to a halt. Despite Hancock's repeated efforts to argue and reargue the federal jurisdiction question, the Court denied Hancock's Motion to Dismiss. Minute Entry at 1 (Feb. 18, 2005). In response to Hancock's blanket objections and complete failure to comply with the Federal Rules of Civil Procedure with respect to discovery, this Court entered a series of discovery orders to wrestle control of this lawsuit from Hancock and his attorney. Minute Entry (March 25, 2005). It is in this context of wrestling control of the lawsuit from Hancock, a recalcitrant litigant, that this Court repeatedly asked Hancock to explain why he needed to file and pursue the state court action at this time. See Amended Order dated May 31, 2005, at n.1 and 7:21-27; see also Transcript of Proceedings on December 7, 2005, at 8:20-10:24. Each time, Hancock gave an unsatisfactory answer; indeed, an answer about protecting the statute of limitations that is not supported by Arizona law. The Court then gave Hancock yet a third opportunity by asking him to brief the issue for the Court. See Transcript of Proceedings on December 7, 2005, at 9:1-10:7. Hancock failed to file the brief, despite the Court's request. The Court entered an Order enjoining Hancock on April 27, 2005. Hancock did not object to the April 27, 2005 Order in this Court, filing instead an ill-tempered Petition for Writ of Prohibition and Mandamus before the Ninth Circuit, which denied it. Sua sponte, this Court modified its April 27, 2005 injunction by entering the May 31, 2005 Order. Again, Hancock did not object to the May 31, 2005 Order. Not surprisingly, six months later, when Hancock raised his "Anti-Injunction Act" disagreement with the Court's May 31, 2005 Order for the first time in this Court on December 7, 2005, the Court informed Hancock that it had found that Hancock's state
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court litigation was harassing and vexatious in a manner that interfered with this Court's management of pretrial discovery. See Transcript of Proceedings on December 7, 2005, at 8:20-10:24. In light of the record (including the Ninth Circuit's denial of Hancock's appeal), the Court's finding is hardly erroneous; let alone, clearly erroneous.6 As to harassing and vexatious litigation directed at disrupting a federal litigation, "the principles of federalism and comity which the Anti-Injunction Act is meant to protect include a strong and long established policy against forum-shopping." Winkler, 101 F.3d at 1202-03. That is, the Anti-Injunction Act cannot be used as a sword by litigants to take advantage of the dual court system in order to evade the authority of a federal court. Otherwise, the Anti-Injunction Act would have the potential "to seriously impair the federal court's flexibility and authority to decide that case." Atlantic Coastline R.R. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 295 (1970). Where a "defendant has endeavored to delay proceedings or to forestall decision on issues pending in the federal court... [his initiation of state proceedings] may represent an attempt to obtain a more favorable forum." M. Barancik et al v. Investors Funding Corporation of New York, 489 F.2d 933, 936 (7th cir. 1973). Not only does the initiation of state proceedings tend to fragment litigation that could otherwise be decided in one suit, it "may evidence disrespect for the federal tribunal." Id. The Seventh Circuit recently addressed the how and why a federal court can enjoin a state court litigation that is in effect and/or purpose disruptive to federal litigation's pretrial discovery orders and case management: Accordingly, the question is whether a federal court has the authority to issue an injunction to protect the integrity of a discovery order. Ordinarily, the "aid of jurisdiction" exception to the Anti-Injunction Act applies only to parallel state in rem rather than in personam actions. There are, however, exceptions to this rule, most notably school desegregation cases, where conflicting orders from different courts would only serve to make ongoing federal oversight unmanageable. Other courts have extended the exception to consolidated multidistrict litigation, where a parallel state 6 Taking the standard of review a step further in light of the posture of this Motion under Rule 60(b)(4), this Court's finding that Hancock's state court claims were harassing and vexatious in manner that interfered with the Court's management of the federal litigation "does not lack any arguable basis" and is "not so glaringly wrong" to justify Rule 60(b) Relief. See Section I.c., supra.
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court action threatens to frustrate proceedings and disrupt the orderly resolution of the federal litigation. We agree that the "necessary in aid of jurisdiction" exception should be construed "to empower the federal court to enjoin a concurrent state proceeding that might render the exercise of the federal court's jurisdiction nugatory." Martin H. Redish, The AntiInjunction Statute Reconsidered, 44 U. Chi. L. Rev. 717, 754 (1977). In the case at bar, the district court quite reasonably believed that the plaintiffs were resorting to the state courts for the specific purpose of evading its ruling denying discovery of the Fentress agreement. The principles of federalism and comity which the Anti-Injunction Act is meant to protect include a strong and long established policy against forum-shopping. Kapco Mfg. Co., Inc. v. C & O Enterprises, Inc., 886 F.2d 1485, 1492 (7th Cir. 1989); Freeman v. Kohl & Vick Machine Works, Inc., 673 F.2d 196, 198 n.2 (7th Cir. 1982). The districts courts' power to control multidistrict litigation is established by statute, and as we have already noted, that with that power comes the duty to exercise it as efficiently as possible. An important aspect of that control is to prevent predatory discovery, especially of sensitive documents, ensuring that litigants use discovery properly as an evidence gathering tool, and not as a weapon. Indeed, an express purpose of consolidating multidistrict litigation for discovery is to conserve judicial resources by avoiding duplicative rulings. Where a litigant's success in a parallel state court action would make a nullity of the district court's ruling, and render ineffective its efforts effectively to manage the complex litigation at hand, injunctive relief is proper. Delineation of federal courts' authority to issue injunctions "in aid of their respective jurisdictions" under the All Writs Act supports this conclusion. The All Writs Act, the Supreme Court teaches, permits a federal court to support its jurisdiction, by "issuing such commands . . . as may be necessary or appropriate to effectuate and prevent the frustration of orders it has previously issued in its exercise of jurisdiction otherwise obtained." United States v. New York Telephone, 434 U.S. at 173. As previously noted, the "aid of jurisdiction" language in the All Writs Act parallels that of the Anti-Injunction Act, and courts regularly construe the two statutes similarly with respect to their "aid of jurisdiction" clauses. Carlough v. Amchem Products, 10 F.3d at 201 n.9. Consequently, we believe the two statutes in concert permit a district court, under certain circumstances, to issue an injunction to safeguard a pre-trial ruling like the discovery order at issue here. Litigants who engage in forum-shopping, or otherwise take advantage of our dual court system for the specific purpose of evading the authority of a federal court, have the potential "to seriously impair the federal court's flexibility and authority to decide that case." Atlantic Coastline R.R., 398 U.S. at 295. Indeed, although an injunction is extraordinary relief, where such abuses exist, failure to issue an injunction may create the very "needless friction between state and federal courts" which the AntiInjunction Act was designed to prevent. Oklahoma Packing Co. v. Oklahoma Gas & Elec. Co., 309 U.S. 4, 9, 84 L. Ed. 537, 60 S. Ct. 215 (1940); see also Baldwin, 770 F.2d at 337 ("To the extent that the impending state court suits were vexatious and harassing, our interest in preserving federalism and comity with the state courts is not significantly disturbed by the issuance of injunctive relief"). For these reasons, we hold
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that the Anti-Injunction Act does not bar courts with jurisdiction over complex multidistrict litigation from issuing injunctions to protect the integrity of their rulings, including pre-trial rulings like discovery orders, as long as the injunctions are narrowly crafted to prevent specific abuses which threaten the court's ability to manage the litigation effectively and responsibly. Winkler, 101 F.3d at 1202-03. Accordingly, as articulated by Winkler and the other cases cited above, the Court's May 31, 2005 Order is not barred by the Anti-Injunction Act. III. HANCOCK'S ARGUMENT THAT HE IS POWERLESS TO COMPLY WITH THIS COURT'S MAY 31, 2005 ORDER IS WITHOUT MERIT Despite the fact that he has not even tried to comply with this Court's Order, Hancock attempts to cast himself as powerless when it comes to compliance with the Court's Order. Hancock is simply mistaken. Hancock claims that "given the superior court's imminent order dismissing the claims, it is not possible for [him] to comply with [this Court's] Dismissal Order." Motion at 7:5-6. Not true. Nothing prevents Hancock from filing a motion to dismiss the claims in state court without prejudice. (Indeed, he did that once conditioned on

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Meritage agreeing with him only to withdraw when Meritage would not so agree.) Once he filed that motion, Hancock is correct in that he does not control what Meritage might do (e.g. Meritage may partially oppose the motion because the Superior Court is likely to dismiss some of the claims with prejudice) or what the Superior Court might do on its own (e.g. the Superior Court might conclude that Hancock has waited too long and dismiss all claims with prejudice and award fees). That fate, given Hancock's delay in complying with the Court's May 31, 2005 Order, does not excuse Hancock intentional noncompliance at this point in time. The reality is, and as Hancock has himself conceded, Hancock had a window of opportunity to dismiss the state complaint without prejudice and not incur serious repercussions. Hancock's Response dated December 5, 2005, to Order to Show Cause, 3:1-5. However, Hancock failed to dismiss his complaint during this time period and now faces a litany of possible consequences for this failure. Motion at 7:9-19. While

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Hancock attempts to posit himself as a victim, Hancock could have avoided all of his woes by timely complying with the Court's Order or by refraining from filing the state court action in the first place. Instead, Hancock has proceeded with contempt and disrespect towards this Court, and as such, he should not be granted the reprieve that he seeks. Conclusion Accordingly, the Court should deny Hancock's Motion for a Withdrawal of the May 31, 2005 Order. DATED this 3rd day of January, 2006. SNELL & WILMER L.L.P.

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Case 2:04-cv-00384-ROS

Snell & Wilmer L.L.P.

By s/Dan W. Goldfine Dan W. Goldfine Richard G. Erickson Adam Lang One Arizona Center 400 East Van Buren Street Phoenix, Arizona 85004-2202 Attorneys for Plaintiffs/Counterdefendant ORIGINAL of the foregoing filed with and COPY provided to the Clerk of the Court this 3rd day___ of January, 2006 for delivery to: The Honorable Roslyn O. Silver Unites States District Court Judge United States District Court, District of Arizona Sandra Day O'Connor U.S. Courthouse 401 West Washington Street Phoenix, Arizona 85003 COPY of the foregoing sent via regular mail this 3rd day of January, 2006 to: Robert M. Frisbee, Esq. Frisbee & Bostock, PLC 5611 N. 16th Street, Suite 300 Phoenix, Arizona 85016 Attorneys for Defendant Greg Hancock

Document 240- 13 Filed 01/03/2006

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Ivan K. Mathew, Esq. Mathew & Mathew, P.C. 1850 N. Central Avenue, Suite 1910 Phoenix, Arizona 85004 Attorneys for Defendant Rick Hancock

s/Dan W. Goldfine
HARTYE\PHX\1766282

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Case 2:04-cv-00384-ROS Document 240- 14 Filed 01/03/2006 Page 14 of 14

Snell & Wilmer L.L.P.