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Pinnacle Fitness and Recreation Management, LLC, A Delaware Limited Liability Company v. the Jerry and Vickie Moyes Family Trust

April 21, 2011

PINNACLE FITNESS AND RECREATION MANAGEMENT, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
PLAINTIFF,
v.
THE JERRY AND VICKIE MOYES FAMILY TRUST, AN ARIZONA TRUST,
DEFENDANTS.



The opinion of the court was delivered by: Hon. Anthony J. BattagliaU.S. District Judge

ORDER GRANTING MOTION TO AMEND AND DENYING DEFENDANTS MOTIONS FOR SUMMARY JUDGMENT AS MOOT AND WITHOUT PREJUDICE
[Doc. Nos. 107, 127, 128, 129, 130, 131, 132, 133, 134 and 142]

AND RELATED COUNTER CLAIMS.

Pinnacle Fitness and Recreation Management, LLC ("Pinnacle") filed this action on July 29, 2008 against the Jerry and Vickie Moyes Family Trust ("the Trust"), Deer Valley Capital, LLC, and Carefree Capital Investments, LLC alleging causes of action including breach of contract, fiduciary duty, and covenant of good faith and fair dealing and seeking (1) judicial declaration that Plaintiff and the Moyes Trust entered into a valid and enforceable Buy-Out Agreement whereby Moyes Trust agreed to purchase Plaintiff's entire 50% interest in MFC; (2) judicial enforcement of the Buy-Out Agreement; (3) immediate payment to Plaintiff of all consideration due under the Buy-Out Agreement; and, (4) compensatory and punitive damages. (Pl.'s Comp. ¶ 6.).*fn1 (Doc. No. 1.)

On March 10, 2011, Pinnacle filed motion for leave to file a First Amended Complaint ("FAC"), in which they seek to add a Ninth Cause of Action for fraud and a Tenth Cause of Action for constructive fraud. Defendants oppose the motion. The hearing date for this motion set for April 27, 2011 at 4:00 p.m. is hereby vacated as this matter is appropriate for submission on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the reasons set forth below, the Plaintiffs' motion for leave to amend is hereby GRANTED. In as much as the Court has GRANTED Plaintiff leave to amend, the Defendants' Motions for Partial Summary Judgment, [Doc. Nos. 127, 128, 129, 130, 131, 132, 133 and 134] are hereby DENIED AS MOOT and Plaintiff's Ex Parte Motion to Strike, [Doc. No. 142], is DENIED AS MOOT.

Background

1. Relevant Procedural Background

The deadline to amend pleadings was June 14, 2010. [Doc. Nos. 40 and 41.] The fact discovery and expert discovery was to be completed on or before March 25, 2011. [Doc. No. 97.] All motions, other than motions to amend or join parties, or motions in limine, must be filed on or before April 15, 2011 and were set for hearing on May 16, 2011.Id.The final pretrial conference was vacated by Judge Huff prior to the case being transferred to Judge Battaglia. Id. A hearing on the parties' motions in limine is set for July 18, 2011 at 10:30 a.m. in courtroom 12. [Doc. No. 71.] All motions in limine should be filed in accordance with Local Civil Rule 7.1(e). Id. The trial is set to begin on July 19, 2011 at 9:00 a.m. in Courtroom 12.

2. Relevant Factual Background

This action centers around an agreement between the Trust and Pinnacle Fitness and Recreation Management, LLC ("Pinnacle Fitness") to jointly provide funding for and invest in a number of fitness facilities owned by Xeptor, LLC ("Xeptor"). On July 29, 2010, Pinnacle Fitness brought the original action against the Trust, alleging causes of action including breach of contract, fiduciary duty, and covenant of good faith and fair dealing. (Doc. No. 1.) On July 6, 2010, the Trust filed its answer to the original complaint and its counterclaims against Pinnacle Fitness. (Doc. No. 50.) On August 6, 2010, the Trust filed a third-party complaint against Marsha Forsythe-Fournier, alleging causes of action for breach of fiduciary duty and interference with contract and business advantage. (Doc. No. 61 ("Compl.").) Third-Party Defendant Marsha Forsythe-Fournier is the sole member of Pinnacle Fitness. (Compl. ¶ 2.)

Both Pinnacle Fitness and the Trust were approached to help assist Xeptor, which owned and operated struggling fitness and gym facilities in Arizona. (Compl. ¶ 7.) The Trust and Pinnacle Fitness both agreed and jointly formed MFC Investments, LLC ("MFC") to provide funding and assistance to Xeptor. (Id. ¶ 21.) On August 6, 2007, Pinnacle Fitness and the Trust entered into the Operating Agreement of MFC Investments, LLC ("Operating Agreement"). (Id. ¶ 22.) The Operating Agreement stated that Pinnacle Fitness and the Trust each owned a 50% interest in MFC. (Id. ¶ 23.)

Sometime after the Operating Agreement was executed, Plaintiff's relationship with Moyes Trust began to deteriorate. (Pl.'s Comp. ¶ 18--22.) Plaintiff alleges that in March 2008, Moyes Trust "made it clear to [Plaintiff] that it would no longer be [its] partner and that it desired to purchase [Plaintiff's] interest in MFC." (Id. ¶ 23.) Plaintiff claims it then engaged in negotiations and reached an agreement (the "Buy-Out Agreement") that Moyes Trust would purchase Plaintiff's 50% interest. (Id. ¶ 28.) After the alleged Buy-Out Agreement, Plaintiff claims that Moyes Trust and entities under its control, including Deer Valley and Carefree, seized control of MFC and its assets in a manner at odds with the fiduciary and contractual duties owed to Plaintiff under the Operating Agreement. (Id. ¶ 7.) Plaintiff also alleges that Moyes Trust unlawfully conspired with Deer Valley and Carefree to commit other unlawful Id. ¶ 8.)

Legal Standard

1. Leave to Amend Under Rule 15 of the ...


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