Free Motion to Withdraw - District Court of Arizona - Arizona

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Mark I. Harrison, 001226 Sarah Porter, 014409 OSBORN MALEDON, P.A. 2929 North Central Avenue Suite 2100 Phoenix, Arizona 85012-2794 (602) 640-9000 Attorneys for Greg & Linda Hancock and Robert Frisbee, Counsel of Record

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA MERITAGE HOMES CORPORATION, a Maryland Corporation, formerly dba Meritage Corporation; HANCOCK-MTH Builders, Inc., an Arizona corporation; HANCOCK-MTH Communities, Inc., an Arizona corporation, dba Meritage Homes Construction, Inc.; and MERITAGE HOMES OF ARIZONA, INC., an Arizona Corporation, Plaintiffs, vs. RICKY LEE HANCOCK and BRENDA HANCOCK, husband wife; GREGORY S. HANCOCK and LINDA HANCOCK, husband and wife; RICK HANCOCK HOMES LLC, an Arizona Limited Liability Company; RLH Development, LLC, an Arizona Limited Liability Company; and J2H2, LLC, an Arizona Limited Liability Company, Defendants. and ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. CV 04-0384-PHX-ROS

GREG HANCOCK'S MOTION FOR WITHDRAWAL OF THIS COURT'S MAY 31, 2005 DISMISSAL ORDER

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) ) Defendant, Counter-claimant ) and Third-party Plaintiff, ) ) vs. ) ) STEVEN J. HILTON, an individual; JOHN ) R. LANDON, an individual; LARRY W. ) SEAY, an individual; and SNELL & ) WILMER, LLP, an Arizona professional ) corporation, ) ) Third-Party Defendants. ) MOTION At last Wednesday's hearing on the November 16, 2005 Order to Show Cause, this Court re-affirmed its intention to continue in effect its May 31, 2005 Order ("Dismissal Order") requiring Defendant Greg Hancock to dismiss his state court lawsuit and pay the state court defendants' costs and fees incurred in connection with the lawsuit. Because the Dismissal Order conflicts with federal law and creates undue complications in the state court action, Defendant Greg Hancock respectfully requests that this Court withdraw the Dismissal Order. This Motion is brought pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure, and is supported by the following Memorandum as well as Defendant Hancock's December 5, 2005 Response to Order to Show Cause. MEMORANDUM I. Procedural Background In the interests of brevity, following is a summary of the procedural background related to the Dismissal Order. A more detailed account of the factual and procedural background may be found in Defendant Hancock's December 5, 2005 Response to Order to Show Cause. [Docket # 225] 2
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GREG HANCOCK, an individual,

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On April 27, 2005, this Court issued an Order instructing Defendant Greg Hancock to "dismiss his state law cause of action with prejudice within ten (10) days from the date of this Order," and to pay Meritage Corporation's "costs and fees in conjunction with the state court cause of action." [Order at 8:21-22, 9:12-14 (Docket # 157)] On May 10, 2005, Defendant Hancock1 filed in the Ninth Circuit Court of Appeals a petition for a writ of mandamus seeking relief from that Order. [Petition for Writ of Prohibition and Mandamus (May 10, 2005)] In accordance with Rule 21 of the Federal Rules of Appellate Procedure, Hancock provided copies of the petition to this Court and the other parties in this action. [Id. at 27] On May 24, 2005, Defendant Hancock filed a motion requesting that the Order be stayed until the Ninth Circuit's ruling on the Petition. [Response and Motion (May 24, 2005) (Docket # 173)] This Court never ruled on Defendant Hancock's motion for a stay of the April 27th Order. However, on May 31, 2005, this Court amended the Order to instruct Defendant Hancock to dismiss his claims without prejudice. In all other respects, the April 27, 2005 Order was left unchanged. [Amended Order (Docket # 174)] Meanwhile, as this Court had been informed, Hancock's state claims were already subject to Meritage's2 motions to dismiss with prejudice. [See CV2004-017311 Case History (attached herewith as Exh. 1); Transcript of Proceedings at 10:14-23 (March 25, 2005) (attached herewith as Exh. 2)] These motions were fully briefed by

"Defendant Hancock" refers to Defendants Greg Hancock and Linda Hancock and not to Defendant Rick Hancock or his spouse or to Defendant Rick Hancock Homes, LLC. The defendants in the superior court action include Meritage Corporation, Steven Hilton, John Landon, Larry Seay and Snell & Wilmer LLP. In this Motion, unless otherwise indicated, they are referred to collectively as "Meritage." 3
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December 2004, months before this Court's Dismissal Order issued. 3 [Id.] As those motions were supported by exhibits and affidavits outside the pleadings, they arguably constituted motions for summary judgment, precluding Hancock's ability to file a voluntary dismissal. See Ariz. R. Civ. P. 12(b). In mid-August, Defendant Hancock received word that the Ninth Circuit had denied his petition. [Order of Ninth Circuit (Entered August 10, 2005, Docket # 197)] Before hearing from the Court of Appeals, Defendant Hancock had moved to continue the state court case on the inactive calendar, and on August 31, 2005, the superior court granted that motion, setting a status conference date in early November. [(Minute Entry, (August 1, 2005) (Response to Order to Show Cause, Exh. 3) (Docket # 225)] Two days later, noting that the superior court had not yet ruled on the motions to dismiss, Meritage filed an objection to continuing the case on the inactive calendar. [Case History (Exh. 1)] On August 25, 2004, the superior court denied the request to remove the case from the inactive calendar but invited Meritage to renew the motions to dismiss. [Minute Entry (August 25, 2005) (Response to Order to Show Cause, Exh. 4) (Docket # 225)] Meritage accepted that invitation and on September 7, 2005, the court set a date for oral argument on the motions to dismiss. [Minute Entry (September 7, 2005) (Response to Order to Show Cause, Exh. 5) (Docket # 225)] At the conclusion of oral argument, the superior court granted Meritage's motion, dismissing one of the claims, for abuse of process, with prejudice and taking under advisement whether to dismiss another of the claims, for malicious prosecution, with or without prejudice. [Id.] The final order of dismissal and Meritage's request

As used herein, "Dismissal Order" refers to the April 27th Order as amended by the May 31st Amended Order.
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for fees and costs incurred in defending against the state court claims have been briefed and are awaiting the superior court's determination. [Case History, Exh. 1] II. The Dismissal Order Should Be Withdrawn Because It Violates the AntiInjunction Act and Creates Undue Complications in the State Court Proceedings. Rule 60(b)(6) authorizes this Court to relieve a party from an order for "any . . . reason justifying relief." Because the Dismissal Order violates federal law and injects unwarranted complications into the state court proceedings, the Order should be withdrawn. A. The Dismissal Order Violates the Anti-Injunction Act.

As discussed in Defendant Hancock's December 5, 2005 Response to Order to Show Cause, the Anti-Injunction Act provides: A court of the United States may not grant an injunction to stay proceedings in a State Court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction or to protect or effectuate its judgments. 28 U.S.C. § 2283. The Act imposes an "absolute prohibition against [a district court's] enjoining state court proceedings, unless the injunction falls within one of three specifically defined exceptions." Atlantic Coast Line Railroad Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281 (1970); see also Bennett v. Medtronic, 285 F.3d 801, 806 (9th Cir. 2002) (noting that Anti-Injunction Act creates presumption in favor of permitting parallel proceedings in state and federal court and that federal court may interfere only where state court proceedings threaten "to render the exercise of federal jurisdiction nugatory"). Because none of those three exceptions exists in this case, the Dismissal Order violates section 2283. There is no statutory authorization for the Court's interference with Defendant Hancock's state court lawsuit, and the Dismissal Order cannot be characterized as "necessary in aid of" this Court's jurisdiction or to "protect or effec5
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tuate its judgments." Atlantic Coast Line, 398 U.S. at 294-95 ("Both exceptions to the general prohibition of § 2283 imply that some federal injunctive relief may be necessary to prevent a state court from so interfering with a federal court's consideration or disposition of a case as to seriously impair the federal court's flexibility and authority to decide that case."). While the District Court may believe that the Dismissal Order is justified because the state court case appears to duplicate claims asserted in the District Court, the law is clear that Defendant Hancock's state court case may nonetheless proceed concurrently with the instant case without risk that the state court case will impair this Court's ability to decide the case before it. The fact that the Dismissal Order was directed at Defendant Hancock rather than the state court does not alter the conclusion that the Order contravenes the AntiInjunction Act. "The prohibition of § 2283 cannot be evaded by addressing the order to the parties." Id. at 287; accord Tropf v. Fid. Nat. Title Ins. Co., 289 F.3d 929, 942 (6th Cir. 2002), cert. denied, 537 U.S. 1118 (2003) (holding that Anti-Injunction Act prohibited district court from enjoining plaintiff to post a bond in or dismiss plaintiff's state court action on a claim identical to plaintiff's RICO claim in federal suit); Empire Blue Cross & Blue Shield v. Janet Greason's a Place for Us, 985 F.2d 459, 462-63 (9th Cir. 1993) (holding that Anti-Injunction Act prohibited district court from enjoining court ordered arbitration); Los Angeles Memorial Coliseum Comm'n v. City of Oakland, 717 F.2d 470 (9th Cir. 1983) (holding that Anti-Injunction Act could not be avoided by enjoining one of the parties rather than enjoining the state court proceedings). B. The Dismissal Order Improperly Interferes in the Superior Court's Business, Injecting Unwarranted Complication into the Case.

The superior court has already considered and decided, at least in part, motions to dismiss Defendant Hancock's claims. Now pending before the superior court are 26 6
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the parties' motions and objections regarding the form of judgment and Meritage's requests for fees and costs. This Court's Dismissal Order, requiring Greg Hancock to dismiss his state court claims without prejudice and pay the defendants' costs and fees in the action, interferes with the superior court's authority to decide those matters. Indeed, given the superior court's imminent order dismissing the claims, it is not possible for Defendant Hancock to comply with the Dismissal Order. Yet, Meritage continues to point to Defendant Hancock's failure to comply as evidence of his contempt. The Order creates other complications in the state court proceedings. If the state court claims are dismissed with prejudice, Defendant Hancock will be forced to file an appeal if he hopes to pursue those claims, since failing to appeal the dismissal would obviously preclude his pursuit of the claims in federal court. Yet, if the Dismissal Order is permitted to stand, Meritage is likely to exploit the situation and argue that Hancock's state court appeal is evidence of contempt or bad faith. Likewise, if the superior court determines that Meritage is entitled to less than all of its costs and fees incurred in the state court action, Meritage may argue that if Defendant Hancock pays less than all of Meritage's fees and costs, Hancock is in contempt for complying with the superior court order rather than this Court's order to pay all of Meritage's costs and fees. These are just some examples of the types of complications that may arise from the District Court's unwarranted and unnecessary involvement in the state court proceedings. The Anti-Injunction Act exists to avert such complications from occurring. This Court should withdraw the Dismissal Order in order to obviate the possibility of such scenarios. ... ... 7
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IV.

Conclusion For the reasons discussed above, Defendant Greg Hancock respectfully re-

quests that the Court withdraw its Dismissal Order. RESPECTFULLY SUBMITTED this 13th day of December, 2005. OSBORN MALEDON, P.A. By s/ Mark I. Harrison ___ Mark I. Harrison Sarah Porter 2929 North Central Suite 2100 Phoenix, Arizona 85012-2794 Attorneys for Greg & Linda Hancock and Robert Frisbee, Counsel of Record

I hereby certify that on December 13, 2005, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Ivan K. Mathew, Esq. MATHEW & MATHEW, PC 1850 N. Central Avenue Suite 1910 Phoenix, AZ 85004-0001 Attorney for Rick Hancock, etc. Dan W. Goldfine, Esq. Rick Erickson, Esq. SNELL & WILMER, LLP One Arizona Center 400 E. VanBuren Phoenix, AZ 85004-2202 Attorneys for Plaintiffs and Third-Party Defendants Hilton, Landon and Seay ... ... ... 8
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Kenneth J. Sherk FENNEMORE CRAIG, PC 3003 N. Central Avenue Suite 2600 Phoenix, AZ 85012-2913 Attorneys for Third-Party Defendant Snell & Wilmer

s/ Joni J. Jarrett-Mason___
1135197/13493.1

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