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

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Don P. Williams (AZ State Bar No. 002978) LAW OFFICE OF DON P. WILLIAMS P. O. Box 5308 Goodyear, AZ 85338-0605 Phone: 623.297.4211 Fax: 1.623.321.8026 Email: [email protected] Attorney for Defendant(s) Daryush/Jennifer Motlagh and Integrity Assurance, Inc.

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

Century 21 Real Estate Corporation, a Delaware corporation, Plaintiff/Counterdefendants, vs. Daryush B. Motlagh and Jane Doe Motlagh, husband and wife; Integrity Assurance, Inc. an Arizona Corporation, Defendants/Counterclaimants

Case No.: CIV 03 2353-PHX-DGC STATEMENT OF FACTS BY DEFENDANTS DARYUSH B. MOTLAGH, JENNIFER MOTLAGH, AND INTEGRITY ASSURANCE INC., IN SUPPORT OF DEFENDANTS' OPPOSITION TO PLAINTIFF'S RENEWED MOTION FOR SUMMARY JUDGMENT (Hon. David G. Campbell)

Daryush B. Motlagh, Jennifer Motlagh and Integrity Assurance, Inc., ("Defendants") proffer the following facts and contradictions and clarifications of Plaintiff's Statement of Facts, in support of Defendants' opposition to Plaintiff's Renewed Motion for Summary Judgment. STATEMENT OF FACTS 1. On or about December 27, 2001, as a direct and sole consequence of a

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judgment obtained by former business partner and co-franchisee John Edmonds, from the
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Maricopa County Superior Court, Daryush Motlagh filed a Chapter 7 bankruptcy petition, and defendant Integrity Assurance Inc. filed a Chapter 11 bankruptcy petition. See PSF, Exhibit 33; Declaration of Daryush Motlagh. 2. (a) Prior to filing said petitions, D. Motlagh telephoned his Century 21

Corporation contact, Kim Link, and informed her of the pending filing. Defendants are informed and believe that, in December 2001 Kim Link was the Regional Director [sic]
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and was franchisees' contact for Century 21 Corporation. Declaration of Daryush Motlagh. (b) Motlagh sought specific advice from CREC through Link as to what course of action to follow in order to retain his franchise. (c) She, after ostensibly consulting with the CREC legal department, advised Motlagh that he could file a personal Chapter 7 case, but that if he wanted to retain his/Integrity's franchise, he would have to file a corporate Chapter 11. See, Affidavit of Daryush Motlagh, and, contrary Affidavit of Kimberly Link,

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Exhibit 29 to CREC's renewed motion for summary judgment. 3. Notwithstanding having actual knowledge (through its employee Kim

Link) of the bankruptcy filings of Motlagh and Integrity, CREC delivered to Motlagh, on or about February 5th, 2002, a Notice of Termination of Franchise Agreement No. 6272. Declaration of Daryush Motlagh; Exhibit F to Plaintiff's Verified Complaint and Ehibit 34 to CREC's Renewed Motion.. 4. (a) CREC had not, prior to serving said termination, obtained from the

Bankruptcy Court relief from the automatic stay, in either the Chapter 7 case or the Chapter 11 case. See, Declaration of Daryush Motlagh. (b) Motlagh complained to Kim Link about the termination letter. (c) Kim Link told Motlagh that she would take care of the matter with

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CREC, and that Motlagh was still a franchise in good standing. 5. Notwithstanding the illegality of its action, and the representation of Kim

Link, from February, 2002 and thereafter, CREC abandoned Franchise Agreement No.6272, refused to acknowledge, and affirmatively denied to third parties, CENTURY 21 Assurance Realty's existence as a franchise, and provided no support or help to Motlagh as required by the Franchise Agreement through its lawful contractual termination in December, 2003. See, Declaration of Daryush Motlagh; Declarations of Gene P. Devlin, Rosita Martinez; James C. Kilpatrick, Jr., Timothy Moynihan, and Scot A. Martin. 6. Motlagh/Integrity received no post-petition benefits or enrichment from its

display of CENTURY 21 trademarks and logos.
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7.

From approximately mid-to-late 1999 through February 2002 the

existence of CENTURY 21 Assurance Realty as a CREC franchise located in Goodyear, Arizona was denied by CREC to interested potential clients resulting in loss of business opportunities, and confusion, embarrassment, and loss of competitive advantage to sales persons associated with CENTURY 21 Assurance Realty. See, Declarations of Motlagh, Devlin, Martinez, Kilpatrick, Moynihan and Martin. 8. Despite many complaints from Motlagh and reassurances from CREC

employees that the problems causing the absence of Assurance Realty from CREC's
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"system" would be corrected, they never were. See, Declaration of Motlagh. 9. Motlagh continuously sought to negotiate a reconciliation and repair

agreement with CREC, but CREC only demanded more money and never fulfilled promises given to remediate the "system" issues. See, Declaration of Motlagh. 10. Notwithstanding that the Chapter 11 case for Integrity was filed on December 27th, 2001, a) CREC unlawfully served a notice of termination of Motlagh's executory contract in February, 2002 [at which time the contract was property of Motlagh's Chapter 7 estate]; b) CREC had actual knowledge of the bankruptcy filing through its employee Kim Link;

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c) CREC did not file its Motion for Termination of the Automatic Stay in Case No. 01-17366-PHX-RTB until January 15th, 2003. d) CREC did not obtain an Order Granting Motion Termination of Automatic Stay from the Bankruptcy Court until August 27th, 2003. Said Order provided that, "...Century 21 is hereby permitted to enforce all rights and remedies provided under a Franchise Agreement dated July 9, 1997..." e) CREC did not seek to enforce its rights and remedies provided under the Franchise Agreement until November 2003. 11. Notwithstanding that the Chapter 7 case for Daryush Motlagh was filed on December 27th, 2001, a) CREC unlawfully served a notice of termination of Motlagh's executory

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contract in February, 2002 [at which time the contract was property of the estate];

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b) Motlagh's Chapter 7 case was deemed a "no asset" case by the case trustee, and Motlagh received a discharge in May 2002 which eliminated his pre-petition scheduled debts, including the debt, if any, to CREC; c) CREC did not file its Motion for Termination of the Automatic Stay in Case No. 01-17367-PHX-RJH until January 15th, 2003. Century 21 Corporation did not obtain an Order Granting Motion Termination of Automatic Stay from the Bankruptcy Court until March 25th, 2003. d) Said Order provided that, "...Century 21 is hereby permitted to: (a) enforce all

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rights and remedies provided under a Franchise Agreement dated July 9, 1997 by and between Century 21 and Debtor and John Edmonds (Franchise Agreement") and applicable law to, among other things: (1) terminate the Franchise Agreement in accordance with the terms set forth in the Franchise Agreement; (2) enter the Debtor's real estate brokerage office without restriction or interference by the Debtor, or his representatives, and (i) remove all signs and other forms of display bearing Century 21's registered trade names, service marks and trademarks; (ii) have access to all interior areas of the real estate brokerage office and remove all personalty bearing Century 21's registered trade name, service marks or trademarks; and (iii) remove all of Century 21's proprietary materials, including operations and training manuals, policy statements, computer hardware and licensed software; and (b) collect post-petition amounts due

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under the Franchise Agreement and Guaranty executed by Debtor." e) Century 21 did not seek to enforce its rights and remedies provided under the Franchise Agreement until November 2003. See, Exhibits G & H to Plaintiff's Verified Complaint. 12. At no time between December 28th, 2001 through December 31st, 2003

[the period for which CREC seeks post-petition damages, i.e., royalty and other contract fees] did CREC provided any service or contract performance to the CENTURY 21 Assurance Realty franchise. See, Declarations of Motlagh, Devlin, Martinez, Kilpatrick, Moynihan and Martin. 13. Counterclaimants believe and allege that CREC has acted with malice not

only to frustrate Motlagh's contract expectations, but to cause the termination of the

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Franchise Agreement by inflicting the most monetary pain possible to Motlagh in order to drive him out of the real estate business in a growing competitive area. Counterclaimants have made discovery requests to obtain certain information from CREC concerning the nearest competing CENTURY 21 franchises. CREC refused, and the court declined to order production, thereby depriving Motlagh of essential information that could lead to evidence of CREC's inconsistent and unfair application of its ambiguous and discretionary powers under the Agreement, which could enable the trier of fact to infer the lack of good faith and fair dealing of CREC.

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14.

Motlagh left his original Contract office at 14175 W. Indian School Road

[Safeway Shopping Center] in August, 1998, because of a landlord-tenant dispute with SunCor; notwithstanding, CREC continued for several years thereafter to mail or deliver important documents and notices with sensitive information intended for Motlagh's eyes only, to that address, despite having actual notice that CENTURY 21 Assurance Realty had relocated. See, various Exhibits of CREC, especially letters allegedly delivered to Motalgh. 15. At the time of the Grand Opening of Motlagh's new office at 14175 W.

Indian School Road in April, 1998, Charles McLean personally presented himself to Motlagh and stated that he knew about Motlagh's financial problems and wanted to buy him out. This occurred when McLean had no office in the Far West Valley; his closest

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office was at Metrocenter [approx. 27th Ave. and Peoria]; there was no public litigation ongoing between Motlagh and John Edmonds or Motlagh and SunCor; the fact of Edmond's withdrawal of partnership financing was known to CREC employees, but was otherwise a close-held secret. See, Declaration of Daryush Motlagh and conflicting Declaration of Charles McLean, Exhibit 30 to CREC's renewed motion for summary judgment. 16. Motlagh was never able to realize his franchise expectations or receive the anticipated benefits of the franchise that he bought. See, Declaration of Motlagh. 17. CREC made no effort to correct the systemic problems that kept my franchise information out of its "system" and deprived me of the business opportunities necessary

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to allow me to grow my business and meet the minimum performance standards imposed by CREC in the Franchise Agreement. See, Declaration of Motlagh.

DATED this 7th day of August, 2006.

LAW OFFICE OF DON P. WILLIAMS
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By: /s/ Don P. Williams Don P. Williams Copy of the foregoing mailed this 8th day of August, 2006 to: Hon. David G. Campbell United States District Court Sandra Day O'Connor U.S.Courthouse, Ste.623 401 W. Washington St., SPC 58 Phoenix, AZ 85003-2156 Kevin Bonner, Esq. Fennemore Craig P.C. 3003 North Central Avenue Suite 2600 Phoenix, AZ 85012-2913 DPW

CERTIFICATE OF SERVICE
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I certify that on July 7th, 2006, 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: Kevin J. Bonner Fennemore Craig, P.C Attorney for Century 21 Corporation I certify that on July 8th, 2006, I served the attached document by U.S. Mail on the following:

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Hon. David G. Campbell United States District Court Sandra Day O'Connor U.S.Courthouse, Ste.623 401 W. Washington St., SPC 58 Phoenix, AZ 85003-2156 Kevin J. Bonner Fennemore Craig, P.C 3003 N. Central Ave., Suite 2600 Phoenix, AZ 85012-2913 /s/ Don P. Williams Don P. Williams Attorney for Daryush/Jennifer Motlagh

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