Pacesetter Consulting LLC v. Kapreilian

ORDER

Dominic W. Lanza, United States District Judge.

Pending before the Court are motions for summary judgment filed by the following defendants: (1) AgriCare and Tom Avinelis (the “AgriCare Defendants”) (Doc. 201); (2) Eastside Packing Inc., Fruit World Nursery Inc., Craig Kapreilian, and Herbert Kapreilian (the “Kapreilian Defendants”) (Doc. 202); and (3) Mark Bassetti (“Bassetti”) (Doc. 203). Also pending before the Court are various motions to exclude expert testimony (Docs. 195, 196, 198) and Pacesetter's motion for leave to file a Fourth Amended Complaint (Doc. 256). For the following reasons, all three motions for summary judgment are granted, the expert-related motions are denied as moot, the motion for leave to amend is denied, and this action is terminated.

BACKGROUND

I. Relevant Factual Background

In 2004, John R. Norton III (“Norton”), now deceased, and Roger Stevenson (“Stevenson”) met with Judson C. Ball (“Ball”) and solicited an investment from the Judson C. Ball Revocable Trust (the “Trust”), of which Ball is the trustee. (Doc. 227 at 22 ¶ 1.) The investment was for a mandarin orange project run by Phoenix Orchard Group I, L.P. (“POG I”) and Phoenix Orchard Group II, L.P. (“POG II”). Judson C. Ball Revocable Tr. v. Phx. Orchard Grp. I L.P., 2020 WL 547250, *1 (Ariz.Ct.App. 2020).^[1] After reviewing the first few pages of an Executive Summary, Ball agreed to invest in POG I and POG II on behalf of the Trust. Id. The Trust invested $200, 000 each into both POG I and POG II. (Doc. 227 at 22-23 ¶ 2.) II. State Court Litigation

In 2015, the Trust brought a lawsuit in Maricopa County Superior Court against POG I, POG II, Stevenson, Norton, and various business entities they controlled. (Doc. 103-1 at 2-5.) The Trust brought statutory claims under A.R.S. §§ 44-1991(A), -(B) and -2003(A) and tort claims for misrepresentation and nondisclosure. (Id. at 12-14.) The defendants answered and filed a counterclaim seeking rescission of the Trust's interests in the orchard groups under A.R.S. § 44-2001(A). (Doc. 103-2 at 11-21.)

In a March 2016 order, the state court determined that rescission was appropriate and entered a declaratory judgment to that effect. (Doc. 103-3 at 6.) Rescission satisfied the Trust's statutory claims. (Id.) The court noted, however, that rescission did not satisfy the potential damages available pursuant to the tort claims and declined to declare the Trust's tort claims satisfied. (Id.)

The Trust appealed the decision. Judson C. Ball Revocable Tr. v. Phx. Orchard Grp. I, LP, 2018 WL 283049 (Ariz.Ct.App. 2018) (mem. decision). In January 2018, the Arizona Court of Appeals affirmed the rescission. Id. at *1.

Although the Trust maintained its tort claims, those claims ultimately failed. (Doc. 103-6.) In an August 2018 order, the state court determined that Ball, the Trust's representative, didn't read any of the relevant materials before investing. (Id. at 5, 7-8, 11.) Because it was Ball's “extreme carelessness” that led to his alleged injuries, rather than misrepresentations made by the defendants, the court granted summary judgment in favor of the defendants. (Id. at 2, 5, 11.)

The Trust appealed this decision, too. Judson C. Ball Revocable Tr. v. Phx. Orchard Grp. I, 2020 WL 547250 (Ariz.Ct.App. 2020) (mem. decision). In February 2020, the Arizona Court of Appeals affirmed on alternative grounds, holding that the “Trust produced no admissible evidence on damages, a key element of both its remaining claims.” Id. at *2. The Trust had previously identified attorneys' fees, costs, accountant fees, and lost opportunity costs as its categories of claimed damages, but the court held that “[a]ttorney fees and costs . . . cannot be used to establish the damage element of its claims” and that the Trust had not proffered any admissible evidence to support its other alleged damages. Id.

Separately, in January 2016, the Trust brought a derivative action in state court against both orchard groups. Judson C. Ball Revocable Tr. v. Phx. Orchard Grp. I, 431 P.3d 589, 591 (Ariz.Ct.App. 2018). The trial court dismissed following the rescission finding in the parallel state-court action, holding that the Trust, because it no longer had an interest in the orchard groups, no longer had standing. Id. The Trust appealed but the Arizona Court of Appeals affirmed, concluding that, “because the Trust no longer possesses any ownership interest in POG, ” it no longer had standing to pursue the derivative action. Id. at 594.

III. Relevant Procedural History

The winding procedural history of this case is set out in prior orders. (Docs. 128, 152, 160, 224, 235.) A brief summary is necessary here to set the stage for the current ruling.

On December 23, 2019, Pacesetter filed its Third Amended Complaint (“TAC”). (Doc. 129.) The TAC was thereafter answered by the various groups of defendants. (Docs. 130 [AgriCare Defendants], 131 [Bassetti], 132 [Kapreilian Defendants].)

On November 30, 2020, Bassetti filed two motions to exclude expert testimony. (Docs. 195, 196.) The first challenges Pacesetter's expert Jeffrey McMullin and the second challenges Pacesetter's expert Roger Brown. (Id.) The AgriCare Defendants subsequently joined both motions in full (Docs. 208, 209) and the Kapreilian Defendants joined the McMullin motion in full (Doc. 214). These motions later became fully briefed. (Docs. 212 & 216 [Brown], 213 & 215 [McMullin].)

Also on November 30, 2020, Pacesetter filed its own motion to exclude expert testimony, seeking to exclude defense experts Christopher G. Linscott and Dwight J. Duncan. (Doc. 198.)^[2] These motions later became fully briefed. (Docs 210, 211, 220.)

On December 7, 2020, each group of defendants filed a motion for summary judgment. (Docs. 201, 202, 203.) On February 4, 2021, these motions seemed to become fully briefed. (Docs. 226, 227, 228, 232, 233, 234.) However, on April 30, 2021, Pacesetter filed a motion for leave to supplement its responses. (Doc. 244.) The supplementation request was based on the fact that, after Pacesetter filed its responses, the deposition of one witness-former party Edward Daniel Duda, Jr. (“Duda”)-had been reopened to allow limited additional questioning. (Id.)

On May 3, 2021, the Court granted this motion in part, limiting any supplementation to (1) “relevant portions of the transcript of the [reopened] Duda deposition to provide additional evidentiary support for [Pacesetter's] arguments” or (2) “add new arguments that are based on the newly-added deposition excerpts.” (Doc. 246 at 3.) The Court clarified that it would not permit Pacesetter to “raise new arguments that were previously available to it” and that any “new arguments must be based on any relevant testimony that was obtained during the reopened deposition.” (Id., internal quotation marks omitted.)

On May 24, 2021, Pacesetter filed a supplemental response to Bassetti's motion. (Doc. 251.) Pacesetter did not, in contrast, choose to file supplemental responses to the other two summary judgment motions.

On June 4, 2021, Bassetti filed a revised reply. (Doc. 254.)

On June 15, 2021, Pacesetter moved for leave to file a Fourth Amended Complaint. (Doc. 256.) At the defendants' joint request, further briefing was stayed pending the resolution of the summary judgment motions. (Docs. 273, 274.)

On July 1, 2021, the Court issued a tentative ruling. (Doc. 276.)

On July 13, 2021, the Court held oral argument. (Doc. 278.)

DISCUSSION

I. Challenged Exhibits

As an initial matter, the defendants object to two of the exhibits Pacesetter attached to all of its summary judgment responses. The challenged exhibits are (1) a declaration by Ball (Doc. 226 at 27-35, Doc. 227 at 22-30, Doc. 228 at 25-33) and (2) a “Fact Worksheet” that purports to summarize and paraphrase the testimony from nine depositions (Doc. 226 at 73-135, Doc.227 at 68-130, Doc.228 at 66-128).

At summary judgment, a party may cite “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c)(1)(A). “A trial court can only consider admissible evidence in ruling on a motion for summary judgment.” Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773 (9th Cir. 2002), superseded by rule on other grounds as recognized in Dinkins v. Schinzel, 362 F.Supp.3d 916 (D. Nev. 2002).^[3] See also 2 Gensler, Federal Rules of Civil Procedure, Rules and Commentary, Rule 56, at 178 (2021) (list in Rule 56(c) “is not exhaustive and courts generally may consider any materials that would be admissible or usable at trial”). “While a nonmoving party need not present evidence in an admissible form, ‘the facts underlying the [evidence] must be of a type that would be admissible as evidence.'” De La Torre v. Merck Enters., Inc., 540 F.Supp.2d 1066, 1075 (D. Ariz. 2008) (alteration in original) (citation omitted). “Thus, though [a party] is not required to produce evidence in a form that would be admissible at trial, [it] must show that [it] would be able to present the underlying facts in an admissible manner at trial.” Id.

A. Ball Declaration

1. Objections

All defendants object to Ball's declaration. The AgriCare Defendants argue that “Ball's unsupported beliefs and inferences are insufficient to withstand summary judgment” and that the declaration “is replete with unfounded expert agriculture opinions by [Ball], ” which are “not admissible and are improper support to oppose a motion for summary judgment.” (Doc. 232 at 5.) These defendants also contend that Pacesetter “does not provide any evidence, factual basis, or foundation to support [Ball's] inadmissible...