Armored Group LLC v. Lutzker

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8

Armore d Group LLC, ) No. CV-24-01516-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Monty Lutzker, et al., ) 12 ) 13 Defendants. ) ) 14 )

15 Before the Court is the parties’ joint Stipulation to Consolidate Lutzker, et al. v. 16 Armored Group LLC, et al., Case No. 2:24-cv-03521-PHX-SPL (the “Second Action”) 17 with case Armored Group LLC v. Lutzker, et al., Case No. 2:24-cv-01516-PHX-SPL (the 18 “First Action”). (Doc. 79). 19 Federal Rule of Civil Procedure (“Rule”) 42(a) allows a court to consolidate cases 20 “[i]f the actions before the court involve a common question of law or fact.” Fed. R. Civ. 21 P. 42(a). District courts, however, “enjoy substantial discretion in deciding whether and to 22 what extent to consolidate cases.” Hall v. Hall, 584 U.S. 59, 77 (2018). A court “must 23 balance the interest of judicial convenience against the potential for delay, confusion and 24 prejudice that may result from such consolidation.” Sapiro v. Sunstone Hotel Inv’rs, L.L.C., 25 No. CV-03-1555-PHX-SRB, 2006 WL 898155, at *1 (D. Ariz. Apr. 4, 2006). To that end, 26 under Rule 42(a)(3), courts may “issue any other orders to avoid unnecessary cost or delay” 27 as an alternative to consolidating cases. Fed. R. Civ. P. 42(a). 28 The Defendants in the First Action—Monty Lutzker, Ryan Holden, and Beau 1 Gailey—brought the Second Action against Armored Group LLC, its sole member and 2 owner Robert Pazderka, and two other entities closely affiliated with the Armored Group 3 LLC that are owned by Robert Pazderka.1 In Defendants’ initial Motion to Transfer (Doc. 4 33), Defendants attested that the cases “involve substantially the same parties and 5 substantially the same questions of law” and that the claims would have been asserted as 6 counterclaims rather than a separate action but for the pendency of their Motion to 7 Dismiss.2 (Doc. 33 at 2). 8 The Court agrees that both cases involve substantially the same parties, arise out of 9 the same set of facts and circumstances, and involve several overlapping issues. Given the 10 procedural posture of both actions, their common questions of law and fact, and judicial 11 economy considerations, the Court could order the cases consolidated. However, the most 12 appropriate and efficient course of action would have been for the First Action Defendants 13 to bring the Second Action claims as counterclaims in the First Action and to have joined 14 the additional Second Action defendants and plaintiffs to the First Action. The same result 15 could be achieved in a much more straightforward and efficient fashion by directing the 16 First Action Defendants to include the Second Action claims as counterclaims in their 17 answer and to permit joinder of any additional counterclaimants or counter-defendants in 18 the First Action at that time. See Topower Computer Indus. Co., Ltd. v. Xion, Inc., C 08- 19 3584 SBA, 2009 WL 4572771, at *2 (N.D. Cal. Dec. 4, 2009) (denying motion to 20 21 1 On February 24, 2025, Beau Gailey was terminated as a Plaintiff in the Second Action. Instead, Marne Consulting Group, LLC, joined Monty Lutzker and Ryan Holden 22 in filing a First Amended Complaint in the Second Action. See First Amended Complaint, Lutzker, et al. v. Armored Group LLC, et al., Case No. 2:24-cv-03521-PHX-SPL, (D. Ariz. 23 Feb. 24, 2025), ECF No. 22. Marne Consulting Group, LLC is owned and operated by its sole member, Beau Gailey. Id. at 4. 24 2 First Action Defendants’ obligation to file a responsive pleading had not been 25 triggered due to the pendency of their Motion to Dismiss (Doc. 27). Plaintiff filed an Amended Complaint on April 28, 2025 (Doc. 81), and thus, Defendants’ obligation to file 26 a responsive pleading still has not been triggered. As such, First Action Defendants have not been barred from bringing any compulsory counterclaims. See CNA Nat’l Warranty 27 Corp. v. RHN Inc., CV-19-04516-PHX-GMS, 2019 WL 4394487, at *1 (D. Ariz. Sept. 13, 2019) (finding that Rule 13 had no preclusive effect over claims brought in second action 28 until responsive pleading was filed in first action). 1 consolidate in favor of dismissing defendant’s second-filed action and directing defendant 2 to amend its answer in order to bring claims from second-filed action). Moreover, 3 consolidation of cases does not “merge” cases such that they become one and lose their 4 distinct identities. Hall, 584 U.S. at 76. Thus, consolidation of these actions could present 5 a risk of confusion and inconsistency in post-judgment proceedings. Instead, requiring the 6 First Action Defendants to bring their compulsory and permissive counterclaims with leave 7 to join any necessary or permissive parties and dismissing the Second Action would 8 mitigate any potential for conflicting judgments on appeal, promote judicial efficiency, and 9 prevent unnecessary clogging of the Court’s docket. 10 The Court has broad discretion under Rule 42, which includes the discretion to issue 11 “orders to avoid unnecessary cost or delay.” Fed. R. Civ. P. 42(a)(3). Pursuant to that 12 authority, the Court directs First Action Defendants Monty Lutzker, Beau Gailey, and Ryan 13 Holden to bring their Second Action claims as counterclaims accompanying their First 14 Action answer, and the Court grants leave to join the additional Second Action parties as 15 counterclaimants and counter-defendants in the First Action. Since that course of action 16 will render consolidation unnecessary and the Second Action superfluous, the Court will 17 dismiss the Second Action. To the extent that any party desires to challenge the propriety 18 of a party’s joinder in First Action Defendants’ counterclaims, they may do so after first 19 meeting and conferring with opposing counsel, then filing an appropriate motion seeking 20 relief from the Court. 21 Accordingly, 22 IT IS ORDERED that the parties’ Stipulation to Consolidate (Doc. 79) is denied. 23 IT IS FURTHER ORDERED that Case No. CV-24-03521-PHX-SPL is dismissed 24 without prejudice. The Clerk of Court shall terminate that action. 25 IT IS FURTHER ORDERED that the Defendants in the First Action may include 26 the claims alleged in the Second Action as counterclaims within a timely-filed answer to 27 Plaintiff’s Amended Complaint, with leave to join additional parties to the First Action 28 pursuant to Fed. R. Civ. P. 19 and 20. Any response to the counterclaims shall be filed 1 | within 14 days of the filing of the answer and counterclaims. 2 IT IS FURTHER ORDERED that this Order shall be filed in both CV-24-03521- | PHX-SPL and CV-24-01516-PHX-SPL. 4 Dated this 29th day of April, 2025. 5

7 United States District kidge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28