Dishon v. Gorham

Opinion

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

9 Terry Dishon, et al., No. CV-16-04069-PHX-ROS

10 Plaintiffs, ORDER

11 v.

12 Connie R Gorham, et al.,

13 Defendants. 14 15 Plaintiffs Terry Dishon and Luci Dishon, husband and wife, filed suit against 16 Defendants Connie Gorham and Gary Haak, alleging breach of contract and requesting 17 declaratory judgment. (Doc. 6.) On June 4, 2019, the Court conducted a bench trial. 18 During the trial, Defendants declined to offer any evidence for admission.1 (Doc. 156 at 19 131–32.) Pursuant to Federal Rule of Civil Procedure 52, the Court makes the following 20 findings of fact and conclusions of law. 21 FINDINGS OF FACT 22 Plaintiffs Terry Dishon and Luci Dishon met David Gorham, the late husband of 23 Defendant Connie Gorham, in October 2011. (Doc. 156 at 55.) At that time, Terry Dishon 24 was the owner of Dishon Disposal, Inc., an oil field services company in North Dakota. 25 (Doc. 156 at 54.) David Gorham offered to provide business consulting services to Dishon 26 Disposal. (Doc. 156 at 55.)

27 1 In his post-trial filing, Defendant Haak attaches multiple exhibits to support his proposed findings of fact. (Doc. 157.) However, Haak did not offer these exhibits for admission 28 into evidence at trial, despite having the opportunity to do so. Because these exhibits were not admitted at trial, the Court does not consider them in its findings of fact. 1 David Gorham and Scott Hepford owned MCI Partners, which provided business 2 consulting, management, planning, and strategy services to Dishon Disposal. (Doc. 156 at 3 56.) The Dishons have never been owners, members, officers, or employees of MCI 4 Partners. (Doc. 156 at 56.) In May 2012, Gary Haak began work for MCI Partners. (Doc. 5 156 at 60.) Haak did not work for Dishon Disposal, the Dishons, or any company owned 6 by the Dishons. (Doc. 156 at 61.) The Dishons never made any promises to Haak for the 7 services that he provided to Dishon Diposal through MCI Partners; nor did Dishon Disposal 8 agree to pay Haak for his work through MCI Partners. (Doc. 156 at 61.) 9 In November 2012, Dishon Disposal was acquired by Digerati Technologies, Inc., 10 through a series of transactions and reverse merger that the parties call the “November 11 Transactions.” (Doc. 156 at 61–62.) Shortly thereafter, litigation relating to the November 12 Transactions ensued between David Gorham and other parties, but the Dishons were not 13 named as parties in any of the litigation. (Doc. 165 at 68.) In May 2013, Digerati 14 Technologies filed for Chapter 11 Bankruptcy in the United States Bankruptcy Court for 15 the Southern District of Texas. (Ex. 2.) Pursuant to the bankruptcy, two settlement 16 agreements were executed: the Rule 11 Mediated Settlement Agreement and the 17 Bankruptcy Settlement Agreement (collectively, the “Settlement Agreements”). (Exs. 1; 18 2.) The Dishons, David Gorham, Connie Gorham, MCI Partners, and multiple other parties 19 were signatories to the Settlement Agreements, which provided that all parties “mutually 20 release, acquit and forever discharge . . . any and all claims, causes of action, demands, of 21 any character or kind, known or unknown, whether in contract or in tort, relating to the 22 Lawsuits . . . or any theory of law concerning the facts giving rise to the allegations brought 23 forth in any of the Lawsuits or that could have been brought forth related to any of the 24 Lawsuits through the date of this Settlement Agreement.” (Exs. 1 at 21.) 25 After David Gorham passed away in 2015, Defendant Connie Gorham, through her 26 attorney, demanded that the Dishons pay $1.5 million “for the water treatment system and 27 payment for consultation and services rendered by Mr. Gorham.” (Ex. 4.) In addition, 28 Defendant Haak also asserted claims and made demands to the Dishons for payments 1 relating to his employment at MCI Partners and the November Transactions. (Exs. 14; 17; 2 18; 21; 45; 46; 48; 49.) In a related lawsuit also before this Court, Haak sued the Dishons 3 for breach of contract in connection with Haak’s work related to the November 4 Transactions. See Haak v. Dishon, 17-cv-03576-ROS (the “Related Lawsuit”). 5 CONCLUSIONS OF LAW 6 Defendants breached the Settlement Agreements by making demands for payments 7 and asserting claims related to the November Transactions. (Doc. 6.) The Settlement 8 Agreements explicitly provided that all claims related to the November Transactions and 9 work provided by MCI Partners were released. (Ex. 1; 2.) Defendant Gorham was a 10 signatory to the Settlement Agreements and Defendant Haak, as a former employee of MCI 11 Partners, was also a party to the Settlement Agreements. Accordingly, Defendants are 12 liable for breach of contract. 13 In their Proposed Findings of Fact and Conclusions of Law, Plaintiffs argue they 14 are titled to $339,166.57 in damages, which represents “the amount of reasonable and 15 necessary attorney’s fees and costs incurred by Plaintiffs in connection with Defendants’ 16 improper claims and demands.” (Doc. 153 at 6.) However, Plaintiffs cite no law and offer 17 no explanation for their damages theory. The Court notes that under the “American Rule,” 18 courts generally prohibit the recovery of attorney’s fees as damages. Seattle Times Co. v. 19 Seattle Mailer’s Union Non. 32, 664 F.2d 1366, 1370 (9th Cir. 1982). As such, Plaintiffs 20 shall file a brief explaining why they are entitled to attorney’s fees and citing relevant law 21 supporting their theory. 22 Finally, Plaintiffs argue that the Related Lawsuit should be dismissed because the 23 claims in the Related Lawsuit are compulsory counterclaims in this lawsuit. Plaintiffs are 24 correct. “A pleading shall state as a [compulsory] counterclaim any claim which at the 25 time of serving the pleading the pleader has against any opposing party, if it arises out of 26 the transaction or occurrence that is the subject matter of the opposing party's claim[.]” 27 Pochiro v. Prudential Ins. Co. of America, 827 F.2d 1246, 1249 (9th Cir. 1987) (citations 28 omitted). Whether two claims arise out of the same “transaction or occurrence” depends || on whether “the essential facts of the various claims are so logically connected that 2|| considerations of judicial economy and fairness dictate that all the issues be resolved in || one lawsuit.” Jd. Haak’s claims in the Related Lawsuit involve his alleged consulting 4|| work for the Dishons’ business—the very subject of the present lawsuit. Haak alleges he 5 || was hired by the Dishons to work for MCI Partners and was also promised payment in 6 || exchange for his work related to the November Transactions. (Haak v. Dishon, 17-cv- || 03576-ROS, Doc. 56.) Haak did not assert these claims in the present suit as compulsory 8 || counterclaims, and is not allowed to assert them in a separate lawsuit. 9 Accordingly, 10 IT IS ORDERED no later than October 3, 2019, Plaintiffs shall file a brief 11 || explaining their damages theory and citing law supporting the theory. Defendants shall respond no later than October 17, 2019. 13 IT IS FURTHER ORDERED the Related Lawsuit, Haak v. Dishon, 17-cv-03576- ROS, is DISMISSED WITH PREJUDICE. 15 Dated this 20th day of September, 2019. 16 fo . 17 f —— i 19 Senior United States District Judge 20 21 22 23 24 25 26 27 28

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