Free Response in Opposition to Motion - District Court of Arizona - Arizona

Robert M. Frisbee #018779 FRISBEE & BOSTOCK, PLC 2 5611 N. 16th Street Phoenix, Arizona 85016 3 Phone: (602) 279-9411 Attorneys for Defendant Greg Hancock 4 and Linda Hancock
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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MERITAGE CORPORATION, a Maryland corporation

) ) ) ) Plaintiff, ) ) vs. ) ) RICK HANCOCK, an individual; ) RICK HANCOCK HOMES, LLC, ) an Arizona Corporation, ) ) Defendants, ) and ) ) GREG HANCOCK, an individual, ) 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, L.L.P., an Arizona ) professional corporation, ) ) Third-Party Defendants. ) )

NO. CIV 04-0384-PHX-ROS

DEFENDANT HANCOCKS' RESPONSE TO PLAINTIFF'S RENEWED MOTION FOR ORDER TO SHOW CAUSE, AND REQUEST TO DELAY DISMISSAL UNTIL RULING ON RENEWED MOTION FOR SUMMARY JUDGMENT

A. Plaintiff's Renewed Motion is Without Merit.
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Plaintiffs again seek a hearing to obtain an order for contempt based on the allegation
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that Greg Hancock has "ignored" or "defied" the court's April 26, 2005, order. The
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allegation has no better basis now than it did when it was first made. A timely petition to
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Case 2:04-cv-00384-ROS

Document 205

Filed 08/22/2005

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the Ninth Circuit Court of Appeals is neither "ignoring" nor "defying" the order. It appears that the appeal caused a reassessment by the court of the part of its order which required a dismissal of the state court case "with prejudice," which was changed to "without prejudice" after the court became aware of the appeal. Had defendants simply obeyed the original order without challenging it, it is certain that Meritage would have used that dismissal as a res judicata defense to defendants' counter and cross-claims herein. The Ninth Circuit's decision to decline a writ was likely the result defendants informing it of the change in the appealed order. Moreover, the Ninth Circuit in no way exonerated the merits of the order, only saying that its intervention was not presently required and citing a case which holds that a customary appeal would be available later. As to Meritage's renewed contentions that defendants should have requested a stay and filed a supersedeas bond, the court is referred to Hancock's earlier reply to plaintiff's motion for order to show cause. As before, Meritage cites no authority for the contentions, and they have no support in the treatises or by the commentators. B. The Court's Order To Dismiss the State Case and To Pay Fees and Costs is Illegal. Hancocks have not yet had a chance to address the merits of the April 26, 2005 order with the court, as there was never a motion made by Meritage asking that the state court case be dismissed. That is probably because a case cannot be found which permits a federal judge to control state court proceedings without a substantial federal question involved, such as school busing or wetlands protection. Put more simply, there is simply no federal interest in or jurisdiction over the state court proceeding. In addition, the portion of the court's order requiring Hancock to pay fees and costs in conjunction with the state case is entirely illegal. In Hurd v. Ralphs Grocery Company, 824 F.2d 806 (9th Cir. 1987), the Ninth Circuit reversed an award of Rule 11 sanctions imposed by a district court judge against a litigant for a paper filed in state court prior to removal of the case to Federal court. The essence of the Court's opinion is worthy of
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quotation: * * * We have not been called upon previously to decide whether Rule 11 sanctions can be imposed solely because of the filing of a complaint in a state court prior to removal. The courts that have addressed this issue have concluded that a pleading filed in a state court is not subject to Rule 11 sanction. In Kirby v. Allegheny Beverage Corp., 811 F.2d 253 (4th Cir. 1987), the plaintiff filed a complaint in state court, but the defendant removed the action to federal district court and moved for dismissal and sanctions. Although the plaintiff then voluntarily dismissed the complaint, the district court imposed Rule 11 sanctions on plaintiff's attorney. The Fourth Circuit reversed, reasoning that application of Rule 11 to complaints filed in state courts, with less stringent requirements for pleading would encourage defendants to seek removal. * * * In Stiefvater Real Estate, Inc. v. Hinsdale, 812 F.2d 805, 809 (2nd Cir. 1987), the imposition of Rule 11 sanctions after removal, because of the filing of a frivolous claim in state court was reversed because `the district court had no authority to give [Rule 11] retrospective application.' In Columbus, Cuneo, Cabrini Medical Center v. Holiday Inn, 111 F.R.D. 444, 447 (N.D.Ill. 1986), the district court stated that the imposition of sanctions in a diversity action based on the filing of the complaint in state court and motion for voluntary dismissal `would be analogous to applying an ex post facto law.' See also Brown v. Capitol Air, Inc., 979 F.2d 106, 108 (2d Cir. 1986)(`Rule 11, of course, does not purport to authorize sanctions for actions taken in state courts.') We are persuaded that these courts have correctly interpreted the limited reach of Rule 11. We hold that sanctions cannot be imposed under Rule 11 for filing a paper in state court. 824 F.2d at 806 (emphasis supplied). While the cases do not discuss sanctions other than under Rule 11, the same reasoning would apply. Defendants are not "defiant" of the court - - they believe the court is wrong as a matter of law, and want the chance to demonstrate it. C. The State Court Case Need Not Be Dismissed Unless The Court Denies Defendants' Renewed Summary Judgment Motion. The existence of the state case is having no effect whatever on the proceedings in this

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court. It has been dormant, and continues to be so. While the appeal to the Ninth Circuit
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was pending, defendants moved the Maricopa County court for continuation of the case on
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the inactive calendar, and that court ordered it continued on the inactive calendar until
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December 5, 2005.
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Defendants have requested permission to renew their summary judgment motion in
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this court, which the court earlier denied without prejudice pending Meritage's inspection
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of documents. There is nothing in those documents which changes anything about the case,
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or which creates any justiciable factual issues. The underlying dispute is between a licensor and licensees, which does not create Lanham Act jurisdiction; there is still no evidence that Rick or Greg Hancock have ever engaged in interstate commerce, which is necessary to implicate the Lanham Act; Meritage has produced no evidence of confusion in the marketplace and no competent evidence it has suffered damage; Meritage has now entirely abandoned any use of the name "Hancock;" and the Hancocks were always entitled to use their own name. If defendants are successful in their renewed summary judgment motion, then no federal case will exist and dismissal of the state case not only will have been for nought, defendants will have lost their position on the state court calendar. On the other hand, if the renewed motion is denied, then the state court inactive status will no longer be able to be maintained and defendants will have no choice but to dismiss it. Under either scenario, there is no sound reason that it be dismissed at this point. D. Conclusion. There is no legal or practical reason for an order to show cause. Meritage's renewed motion, which accomplishes no purpose other than to harass defendants, should be denied.

RESPECTFULLY SUBMITTED this 22nd day of August, 2005. FRISBEE & BOSTOCK, PLC

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\S\ Robert M. Frisbee __________________________ Robert M. Frisbee Attorney for Greg and Linda Hancock

ORIGINAL and ONE COPY of the foregoing filed and 25 COPY of the foregoing mailed this ______ day of May, 2005, to:
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Dan W. Goldfine, Esq. Richard G. Erickson, Esq. 2 SNELL & WILMER, LLP One Arizona Center 3 400 E. Van Buren Phoenix, AZ 85004-2202 4 Attorneys for Plaintiff
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Ivan K. Mathew, Esq. Mathew & Mathew 6 1850 N. Central Avenue, Suite 1910 Phoenix, AZ 85004 7 Attorney for Rick Hancock
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_______________________________
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