CHRISTINA A. SNYDER, District Judge.
CIVIL MINUTES - GENERAL
Proceedings: MOTION TO DISMISS CASE THIRD-PARTY COMPLAINT (Docket #31, filed April 18, 2013)
I. INTRODUCTION & BACKGROUND
Plaintiff Alliance Bank of Arizona ("Alliance") filed the instant action in this Court on February 1, 2013. Defendants in this action are Mahesh Patel and Ninette Patel (collectively "the Patels"), individuals who reside in Los Angeles, California. Through this action, plaintiff seeks to foreclose on three parcels of real property located in Huntington Park, California ("Huntington Park Property"); Hemet, California ("Hemet Property"); and Rolling Hills, California ("Rolling Hills Property").
The events underlying this case began in June 28, 2007, when plaintiff made a loan in the amount of $7, 000, 000 to non-party MSJ Investment Properties, LLC ("MSJ Investment"). Complaint ("Comp.") ¶¶ 8-9. In connection with this loan transaction, defendants Mahesh Patel and Ninette Patel unconditionally agreed to repay plaintiff all amounts owed under the loan agreement with MSJ Investment (the "Patel Guaranty"). Id . ¶ 14.
The full balance of plaintiff's loan to MSJ Investment became due on October 5, 2009. Id . ¶ 17. MSJ Investment refused to pay the amount due, and on March 5, 2010, plaintiff filed a state court lawsuit against the Patels for breach of the Patel Guaranty. Id . ¶ 18. The state court lawsuit was terminated pursuant to a stipulated judgment in the amount of $7, 866, 633.99 against the Patels. Id . ¶ 21. To secure this judgment, the Patels executed deeds of trust in the Rolling Hills Property, the Huntington Park Property, and the Hemet Property. Id . ¶¶ 23-25. Plaintiff agreed to forebear from exercising any right to foreclose on the properties, however, as long as the Patels abided by certain settlement terms and conditions. Id . ¶ 25. Plaintiff alleges that the Patels did not abide by the settlement conditions, and has declared them in default and seeks to foreclose on the three properties. Id . ¶ 27.
On March 21, 2013, defendant Mahesh Patel filed a third-party complaint seeking indemnity from third-party defendants Juan Guerrero ("Guerrero") and Rockinghorse Property Investments, LLC ("Rockinghorse"). Dkt. #19 ("TPC"). The TPC alleges that third-party defendants owe Mahesh Patel an indemnity pursuant to the Operating Agreement of MSJ Investment, which is attached as an exhibit to the TPC. Specifically, the TPC alleges that an indemnity obligation arises from the following language in the Operating Agreement:
If the lender designated by the Company to provide financing for the planning, development and construction of a franchised hotel... requires personal guaranties from one (1) or more members of the Company (each, a "Guarantor Member"), then all non-guarantor members of the Company shall provide a repayment guaranty to each Guarantor Member limited to each non-guarantor member's membership interest in the Company multiplied by the amount of the guaranty.
Operating Agreement § 3.6. The TPC alleges that because Mahesh Patel provided a personal guaranty to Alliance Bank, and has now been sued by Alliance Bank arising out of this personal guaranty, he is owed a repayment guaranty from third-party defendants, presumably due to their status as "non-guarantor members of the company." See TPC at 2:27-4:3.
The Operating Agreement contains an arbitration clause, which provides:
Any dispute, controversy or claim arising out of or in connection with or relating to a Member's relationship with the Company or this Agreement or any breach of alleged breach thereof shall be determined and settled by arbitration in the City of Tucson, Arizona before a single arbitrator administered by the Uniform Arbitration Act and the expedited procedures thereunder (the "Rules") and applying Arizona law. Unless the parties mutually agree on the identity of the arbitrator, the arbitrator shall be selected in accordance with the Rules. Any award rendered shall be final and conclusive upon the parties and a judgment thereon may be entered in the highest court of the forum, state or federal, having jurisdiction, and shall include an award in favor of the prevailing party to pay all reasonable costs and attorneys' fees incurred by the prevailing party as well as the cost of the arbitration.
Operating Agreement, § 10.3. Moving parties Rockinghorse and Guerrero argue that under this provision, the claims asserted in the TPC should proceed in arbitration, not in this Court, and therefore that the TPC should be dismissed. Alternatively, third-party defendants contend that this Court lacks subject matter jurisdiction ...