Free Order on Motion for Summary Judgment - District Court of Arizona - Arizona

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

) ) ) ) Plaintiff, ) ) vs. ) ) PETER THIMMESCH, et al., ) ) Defendants. ) ___________________________________) O R D E R

BILTMORE ASSOCIATES, L.L.C., as Trustee for the Visitalk Creditors' Trust,

No. 2:02-cv-2405-HRH

Plaintiff's Motion for Summary Judgment; Plaintiff's Motion for Summary Disposition Plaintiff moves for summary judgment1 on its claims against Peter Thimmesch in Counts I, II, V, VII, XI, XII, XIV, and XXI.2 This motion is unopposed; therefore, plaintiff has also moved for this court to summarily grant its motion for summary judgment.3 Oral argument has not been requested and is not deemed necessary. Facts Plaintiff is Biltmore Associates, as trustee for the Visitalk Creditors' Trust. The remaining defendants in this action

1

Docket No. 362.

Id. at 1. The court infers that plaintiff is abandoning its Counts III, VI, X, XIII, and XV as to defendant Thimmesch.
3

2

Docket No. 391. -1-

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are Peter Thimmesch and Snell & Wilmer, LLP.

The instant motions Plaintiff's

involve plaintiff's claims against Peter Thimmesch.

claims against Snell & Wilmer are the subject of a motion for summary judgment by Snell & Wilmer, which is addressed in a separate order being filed concurrently with this order. Thimmesch was one of the initial shareholders of

Visitalk.com, Inc., the company's chief Executive Officer, and a member of the Board of Directors. The facts surrounding the

incorporation of Visitalk and its existence up to its filing bankruptcy in November 2000 are set forth in the order on the Snell & Wilmer motion for summary judgment and are incorporated herein by reference. Plaintiff seeks summary judgment as to eight claims asserted against Thimmesch in its second amended complaint. Seven

of these claims allege that Thimmesch breached his fiduciary duties. Plaintiff alleges that Thimmesch breached his fiduciary duties by using corporate funds for personal expenses (Count I),4 by making fraudulent transfers (Count II),5 in connection with the Founders Warrants (Count V)6 in connection with the Cardwell settlement

4

Second Amended Complaint at 14-15, Docket No. 289. Id. at 15-16. Id. at 19-21. -2-

5

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(Count VII),7 in connection with the purchase of the Portal software and related consulting services (Count XI),8 in connection with the purchase of the Oracle accounting software (Count XII),9 and in connection with the MP3 transactions (Count XIV).10 As for the

conspiracy claim (Count XXI), plaintiff alleges that Thimmesch conspired with other Visitalk directors and officers to commit tortious acts in connection with the MP3 transactions.11 Plaintiff now moves for summary judgment on its claims against Thimmesch and seeks to have a judgment entered against Thimmesch in the amount of $54,870,646. Discussion Rule 56, Federal Rules of Civil Procedure, provides that summary judgment should be granted if there is no genuine dispute as to material facts and if the moving party is entitled to judgment as a matter of law. The court may grant an unopposed motion for

summary judgment if the movant's papers are themselves sufficient to support the motion and do not on their face reveal any genuine issues of material fact. 950 (9th Cir. 1993). Henry v. Gill Indus., Inc.,983 F.2d 943,

7

Id. at 23-26. Id. at 28-30. Id. at 30-32. Id. at 34-37. Id. at 44. -3-

8

9

10

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To prevail on its breach of fiduciary duty claims, plaintiff must establish that Thimmesch owed a fiduciary duty, that he breached that duty, and that his breach was the proximate cause of Visitalk's damages. See Shriners Hospitals for Crippled Children v. Gardiner, 733 P.2d 1110, 1111-13 (Ariz. 1987). "To establish

liability on the basis of conspiracy, a plaintiff must show by clear and convincing evidence that the defendant and at least one other person agreed to accomplish an unlawful purpose or a lawful purpose by unlawful means, and accomplish[ed] the underlying tort, which in turn caused damages." (Ariz. Ct. App. 2007). Thimmesch failed to respond to plaintiff's First Set of Requests for Admissions. "Rule 36(a)[, Federal Rules of Civil Dawson v. Withycombe, 163 P.3d 1034, 1053

Procedure,] states that a matter is deemed admitted 'unless, within 30 days after service of the request ... the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or by the party's attorney.'" Conlon v. United States, 474 "Once

F.3d 616, 621 (9th Cir. 2007) (quoting Fed.R.Civ.P. 36(a)).

admitted, the matter 'is conclusively established unless the court on motion permits withdrawal or amendment of the admission' pursuant to Rule 36(b)." Id. "Unanswered requests for admissions may be Id.

relied on as the basis for granting summary judgment."

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Based

on

the

facts

deemed

admitted

and

the

other

undisputed facts, the court finds that Thimmesch breached his fiduciary duties as alleged in Counts I, II, V, VII, XI, XII, and XIV, that Thimmesch's breaches of fiduciary duty were the proximate cause of harm to Visitalk, and that Visitalk suffered damages as a result of each of Thimmesch's breaches of fiduciary duty. The court also finds that Thimmesch is liable on plaintiff's conspiracy claim, Count XXI. There is clear and convincing evidence that Thimmesch

and at least one other officer of Visitalk agreed to commit tortious acts in connection with the MP3 transactions. Thus, the court

concludes that plaintiff is entitled to summary judgment as a matter of law as to liability on its claims against Thimmesch set forth in Counts I, II, V, VII, XI, XII, XIV, and XXI. Plaintiff is not entitled to summary judgment, however, on the amount of damages because there are disputed facts as to the amount of damages that Visitalk suffered because of Thimmesch's wrongdoing. Plaintiff contends that Visitalk suffered the following losses as a result of Thimmesch's wrongdoing: 1) $5,303,000 for the MP3 transaction; 2) $2,000,000 for the new building;12 3) $3,750,000 for the Portal and Oracle software; 4) $1,200,000 for the Cardwell

Visitalk moved into a new building in April 2000 and allegedly spent $2 million on tenant improvements, furniture, fixtures, and equipment. -5-

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settlement; 5) $1,153,000 for travel and entertainment;13 and 6) $26,546,820 for the Founders Warrants problem. As discussed in

detail in the order on Snell & Wilmer's motion for the summary judgment, it is disputed as to whether there are any provable damages in connection with the Founders Warrants. It is also not

clear whether plaintiff is entitled to damages based on the new building and for the allegedly excessive travel and entertainment costs, given that plaintiff never alleged that Thimmesch breached his fiduciary duties in connection with the new building or the excessive spending on travel and entertainment. Conclusion Plaintiff's motion14 for summary disposition of its summary judgment is granted. Plaintiff's motion for summary judgment15 is

granted as to liability on Counts I, II, V, VII, XI, XII, XIV, and XXI, but denied as to the amount of damages. After the trial of plaintiff's claims against Snell & Wilmer is completed and the court has entered its findings of fact and conclusions of law, plaintiff may file a motion for entry of judgment on its claims against Thimmesch. In the alternative,

should Snell & Wilmer and plaintiff settle their claims, plaintiff

Plaintiff contends that Visitalk spent this amount on travel and entertainment in one quarter.
14

13

Docket No. 391. Docket No. 362. -6-

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may file a motion for entry of judgment on its claims against Thimmesch once notice of settlement has been filed with the court. Plaintiff's motion for entry of judgment shall be served upon Thimmesch, and Thimmesch will be afforded an opportunity for an evidentiary hearing as contemplated by Rule 55(b)(2), Federal Rules of Civil Procedure, prior to the court entering judgment against him. DATED at Anchorage, Alaska, this 2007. 15th day of October,

/s/ H. Russel Holland United States District Judge

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