Estakhrian v. Obenstine

320 F.R.D. 63, 2017 U.S. Dist. LEXIS 84746, 2017 WL 2191622
District Court, C.D. California·Decided February 4, 2017·No. Case No. CV 11-3480 FMO (CWx)·Published·Cited by 1 cases

Opinion

Proceedings: (In Chambers) Order Re: Motion for Class Certification

The Honorable Fernando M. Olguin, United States District Judge

Having reviewed and considered all the briefing filed with respect to plaintiffs’ Motion for Class Certification (Dkt. 424, “Motion”), the court concludes that oral argument is not necessary to resolve the Motion, see Fed. R. Civ. P. 78; Local Rule 7-15; Willis v. Pac. Mar. Ass’n, 244 F.3d 675, 684 n. 2 (9th Cir. 2001), and concludes as follows.

INTRODUCTION

The instant matter arises out of a class action that was litigated in Nevada state court, Daniel Watt, et al. v. Nevada Property 1, LLC, et al., Case No. A582541 (“Nevada litigation”). (See Dkt. 490, Court’s Order of October 24, 2016, at 2) (citing Dkt. 373, Second Amended Class Action Complaint (“SAC”) at ¶20). On February 11, 2009, plaintiffs filed a class action complaint regarding the purchase of condominium units in what became the Cosmopolitan Hotel (“Cosmopolitan”), located in Las Vegas, Nevada. (See id.) (citing Dkt. 373, SAC at ¶ 20). The class members sought to “rescind their purchase contracts and to obtain a refund of their escrow deposits[,]” (See id.) (citing Dkt. 373, SAC at ¶¶ 14-16). The Nevada litigation was eventually settled in two stages in 2010. (See Dkt. 373, SAC at ¶ 32; see also infra at Statement of Facts (describing East Tower and West Tower settlements)).

Thereafter, on April 22, 2011, plaintiff James Estakhrian (“Estakhrian”), on behalf of himself and others similarly situated, filed this action against defendants Mark Oben-stine (“Obenstine”), Benjamin F. Easterlin (“Easterlin”) and his law firm King & Spald-ing, LLP (“King & Spalding,” and with East-erlin, the “King & Spalding defendants”), Terry A. Coffing (“Coffing”) and his law firm Marquis & Aurbach P.C. (now called Marquis Aurbach Coffing, P.C.) (“MAC” and with Coffing, the “MAC defendants”). (See Dkt. 1, Complaint). Obenstine, the King & Spalding defendants, and the MAC defendants are all attorneys who represented the class members in the Nevada litigation. (See id. at ¶¶ 17-20). The court previously dismissed the MAC defendants for lack of personal jurisdiction. (See Dkt. 329, Court’s Order of July 9, 2015). The court also approved a class settlement between plaintiffs and the King & Spalding defendants and entered judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. (See Dkt. 490, Court’s Order of October 24, 2016, at 21-22). As [70]*70such, Obenstine is the sole remaining defendant in this action.

On October 27, 2015, the operative SAC was filed to add Abdi Naziri (“Naziri”) as an additional named plaintiff (collectively, Es-takhrian and Naziri are referred to as “plaintiffs”). (See Dkt. 373, SAC). Plaintiffs assert common law torts for professional malpractice, breach of fiduciary duty, and fraud against Obenstine. (See id. at ¶¶ 51-60 & 76-77). Plaintiffs also assert statutory claims for violations of California Business & Professions Code §§ 17200, et seq. (“UCL” or “unfair competition”) and California Consumers Legal Remedies Act, California Civil Code §§ 1750, et seq. (“CLRA”). (See id. at ¶¶ 67-75). Finally, Estakhrian asserts a claim for breach of contract on behalf of a subclass of approximately 500 purchasers who entered into a retainer agreement with Obenstine. (See id. at ¶¶ 19, 61-66 & Exhibit (“Exh.”) A).

Plaintiffs seek to certify two classes. (See Dkt. 424-1, Joint Brief Concerning Plaintiffs’ Motion for Class Certification (“Class Cert. Jt. Br.”) at 1). As to the first, second, fourth, and fifth causes of action for professional malpractice, breach of fiduciary duty, unfair competition, and the CLRA,1 plaintiffs seek to certify the following class: “Ml individuals who were class members in, he. did not opt out of, Daniel Watt, et al. v. Nevada Property 1, LLC, et al., Nevada District Court, Case No. A582541, excluding Sanjay Varma.” (Dkt. 424-1, Class Cert. Jt. Br. at 1). As to the third cause of action for breach of contract, Estakhrian also seeks certification of a subclass consisting of: “[All] class members who entered into a retainer agreement with Defendant Mark Obenstine regarding the subject matter of the [Nevada litigation].” (Id.).

STATEMENT OF FACTS

I. BACKGROUND OF THE NEVADA LITIGATION.

The Cosmopolitan was promoted as a project consisting of a West Tower with more than 1,300 condominium units and an East Tower with more than 700 units. (See Dkt. 373, SAC at ¶ 14). Purchasers of the units signed purchase and sale agreements, and made earnest money deposits totaling approximately $250 million, or $140,000 per purchaser, on average. (See id.).

The developer of the Cosmopolitan, 3700 Associates LLC, projected that the condominium units would be ready for occupancy in early 2008. (See Dkt. 373, SAC at ¶ 15). However, 3700 Associates LLC defaulted on its construction loan with Deutsche Bank, which then foreclosed on the property in March 2008. (See id.). Following the foreclosure, Nevada Property 1, LLC (“NP1”), a wholly-owned subsidiary of Deutsche Bank, acquired the property and all rights and obligations under the purchase and sale agreements. (See id.).

A. The King & Spalding Defendants.

On August 22, 2008, a purchaser of a Cosmopolitan unit, Carol Muszik (“Muszik”), contacted Easterlin about NPl’s refusal to return her earnest money deposit after 3700 Associates LLC filed for chapter 11 bankruptcy. (See Dkt. 433-5, Joint Evidentiary Appendix Concerning Defendant Mark Oben-stine’s Motion for Summary Judgment / Adjudication (“MSJ. Evid. App’x”), Exh. 19 at P0149; Dkt. 433-10, MSJ Evid. App’x, Exh. 33 at P0516). On August 29, 2008, Easterlin contacted Obenstine by email about the possibility of jointly litigating the issues raised by Muszik, and referred Obenstine to a blog of Cosmopolitan purchasers. (See Dkt. 433-10, MSJ Evid. App’x, Exh. 19 at P0516; Dkt. 433-5, MSJ Evid. App’x, Exh. 19 at P0151). A few days later, Easterlin told Obenstine that he had uploaded a fake post to the blog, stating that Cosmopolitan purchasers were in contact with them, the “Tramp Tower attorneys.”2 (See Dkt. 433-5, MSJ Evid. App’x, Exh. 19 at P0151) (“When you look at the [71]*71blogs, yon will see one where someone tells everyone they are in contact with Trump Tower attorneys. I wrote that blog to generate interest and to keep people from pursuing other avenues until we spring into action.”).

On October 2, 2008, Easterlin told Oben-stine that he and his firm had a conflict of interest:

I have received bad news. Deutsche Bank is a K & S client. Because Nevada Property 1, LLC is an affiliate of the bank, K & S has a clear conflict of interest that would enable the defendant to disqualify the firm from any litigation involving NP1. Moreover, the firm does not want to damage its relationship with this client. So, I am directed that K & S cannot be part of any engagement letter with any clients and cannot be on any pleadings in any litigation against NP1. If this means that you want to proceed without me, I understand. Of course, I would like to continue if you are agreeable and my involvement would be helpful.

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Estakhrian v. Obenstine, 320 F.R.D. 63, 2017 U.S. Dist. LEXIS 84746, 2017 WL 2191622 (C.D. Cal. 2017).

320 F.R.D. 63 (Estakhrian v. Obenstine) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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