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General Electric Capital Corporation; Cef Funding Ii v. Lenders and To Sever Equity Lenders's Counter-Claims

May 24, 2012

GENERAL ELECTRIC CAPITAL CORPORATION; CEF FUNDING II, LLC; AND CEF FUNDING V, LLC,
PLAINTIFFS,
v.
LENDERS AND TO SEVER EQUITY LENDERS'S COUNTER-CLAIMS, OR TEN FORWARD DINING, INC.; ET IN THE ALTERNATIVE ENTRY OF AL.; DEFENDANTS.



ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR VOLUNTARY DISMISSAL OF CLAIMS AGAINST EQUITY FINAL JUDGMENT

This matter is before the Court on Plaintiffs General Electric Capital Corporation; CEF Funding II, L.L.C.; and CEF Funding V, LLC's (collectively "Plaintiffs") Motion For Voluntary Dismissal and to Sever Equity Lenders' Counterclaims, or in the Alternative For Entry of Final Judgment (Doc. # 134).*fn1 Plaintiffs are all citizens of Delaware. Defendant Equity Lenders, an Indiana Corporation, opposes the motion in part (Doc. #136). Plaintiffs filed a reply (Doc. # 137).

I. FACTUAL ALLEGATIONS & PROCEDURAL BACKGROUND

This action originated when Plaintiffs filed their Complaint 3 on November 29, 2009 (Doc. # 1). The Complaint alleges that 4 defendants Ten Forward Dining; Delightful Dining, Inc.; TGIA 5 Restaurants, Inc.; Kobra Restaurant Properties, LLC; and 6

Abolghassem Alizadeh (collectively the "Kobra Defendants"), but not 7 including Equity Lenders, defaulted on or breached seven written 8 loan contracts made with Plaintiffs. The loans were allegedly 9 secured by real and personal property generally associated with restaurants (the "Kobra Properties"). Plaintiffs' complaint also seeks declaratory relief against Equity Lenders because Equity Lenders may have liens against a subset of the Kobra Properties known as the "19373 Kobra Properties" and Plaintiffs seek to establish the superiority of their own liens to Equity Lenders'.

Equity Lenders alleges that the owners of the 19373 Kobra Properties defaulted on their obligations to Equity Lenders in 2009, and Equity Lenders foreclosed on November 19 or 20, 2009. In early 2010, Equity Lenders alleges that it negotiated a pay-off amount for Plaintiffs' remaining interest in the 19373 Kobra Properties, but that there was a dispute as to the final pay-off amount. Equity Lenders paid the pay-off amount demanded by Plaintiffs under protest. The payoff resolved Plaintffs' claim to the 19373 Kobra Properties, but gave rise to Equity Lenders' counter-claims.

Upon Equity Lenders' motion, the Court granted leave (Doc. # 126) to supplement its existing counterclaims with three new counterclaims: 1) a counter-claim for an accounting of the actual amount due to Plaintiffs after the default on the 19373 Kobra Properties, 2) a counter-claim for declaratory relief as to the 2 parties' interests in the 19373 Kobra Properties, and 3) a counter-3 claim for restitution of any overpayments made by Equity Lenders to 4 Plaintiffs in relation to the 19373 Kobra Properties. Equity 5 Lenders alleges in its counter-claims that $338,800 in default 6 interest was overpaid to Plaintiffs and $49,225.12 in attorney fees 7 were also paid, but the fees were not specifically attributed by 8 Plaintiffs to matters actually involving the 19373 Kobra 9 Properties.

Plaintiffs moved for summary judgment on claims 1-24 against the Kobra Defendants(Doc. # 85). Summary judgment was granted against those defendants by order on October 3, 2011 (Doc. # 94). Plaintiffs then resolved claims against or received judgment against defendants County of Placer (Doc. # 100); City of Elk Grove (Doc. # 101); County of Sacramento, County of Nevada, and County of Shasta (Doc. # 102); Apex Property Advisors Inc. (Doc. # 109); State of California Employment Development Department (Doc. # 110); and Mechanics Bank and the United States of America (Doc. # 128).

Now Plaintiffs move to voluntarily dismiss their remaining claims against Equity Lenders and to sever Equity Lenders' counter-claims from this action.*fn2 If the Court declines to sever the counter-claims, Plaintiffs seek entry of final judgment as to all other defendants.

This Court has jurisdiction pursuant to 28 U.S.C. § 1332 because the lawsuit is between citizens of different states and the 2 amount in controversy exceeds $75,000. 3 4

II. OPINION

A. Legal Standard 6

1. Voluntary Dismissal

Federal Rule of Civil Procedure 41(a)(2) permits a party, upon 8 order of the court, to voluntarily dismiss a claim without 9 prejudice. Westlands Water Dist. v. United States, 100 F.3d 94, 96 (9th Cir. 1996). When ruling on a motion for voluntary dismissal, the court must consider whether the defendant will suffer any prejudice resulting from dismissal. Id. If the defendant has also pled a counter-claim against the party seeking voluntary dismissal, the dismissal should only be granted over ...


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