1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 MACIEL BUILDERS LLC, an Arizona Case No. 19-cv-03660-BLF limited liability company, 9 Plaintiff, ORDER TERMINATING AS MOOT 10 JOSE MACIEL’S MOTION TO v. DISMISS THIRD PARTY 11 COMPLAINT AND VACATING US FRAMING INTERNATIONAL LLC, a HEARING ON MOTION; AND 12 Florida limited liability company, et al., DIRECTING DEFENDANTS TO FILE A STIPULATION AND PROPOSED 13 Defendants. ORDER FOR DISMISSAL OF CASE, OR A FURTHER STATUS REPORT, 14 __________________________________ ON OR BEFORE AUGUST 26, 2020 15 US FRAMING WEST, INC., a Nevada [Re: ECF 91, 95] corporation, 16 Counterclaimant, 17 v. 18 MACIEL BUILDERS LLC, an Arizona 19 limited liability company, 20 Counterdefendant. 21 __________________________________ 22 US FRAMING WEST, INC., a Nevada corporation, 23 Third-Party Plaintiff, 24 v. 25 JOSE MACIEL, and individual, 26 Third-Party Defendant. 27 1 This order addresses (1) third-party defendant Jose Maciel’s motion to dismiss the third- 2 party complaint; and (2) the status of the action with respect to the remaining parties. For the 3 reasons discussed below, Jose Maciel’s motion to dismiss is TERMINATED AS MOOT and the 4 hearing on the motion, currently set for October 22, 2020, is VACATED. With respect to the 5 remaining parties, Defendants SHALL file a stipulation and proposed order for dismissal of the 6 case, or further status report, on or before August 26, 2020. 7 I. BACKGROUND 8 This action arises from a dispute over carpentry work performed by Plaintiff Maciel 9 Builders, LLC (“Maciel Builders”) on a construction project known as Ohlone Block B in San 10 Jose, California. Maciel Builders claims that it was not paid for work it performed on the project. 11 In June 2019, Maciel Builders filed this lawsuit against the following entities and individuals, 12 asserting a claim for breach of contract, related state law claims, and a federal civil RICO claim: 13 US Framing International, LLC (“US Framing International”); US Framing West, Inc. (“US 14 Framing West”); Thomas G. English (“English”); Nicholas Rivera (“Rivera”); Ivan Villalva 15 (“Villalva”); Joe Garcia (“Garcia”), Matthew Phillips (“Phillips”), and Ryan Therrien 16 (“Therrien”). See Compl., ECF 1. 17 US Framing International, US Framing West, English, Rivera, and Villalva (collectively, 18 “Defendants”) answered the complaint on February 28, 2020. See Answer, ECF 65. On the same 19 date, US Framing West filed a counterclaim against Maciel Builders and a third-party complaint 20 against the principal of Maciel Builders, Jose Maciel. See Counterclaim, ECF 66; Third-Party 21 Compl., ECF 67. 22 The other three defendants – Garcia, Phillips, and Therrien – were dismissed without 23 prejudice for failure to effect service of process. See Order Dismissing Unserved Defendants, 24 ECF 59. 25 On April 1, 2020, Maciel Builders filed a “Responsive Pleading” to the counterclaim 26 asserted against it by US Framing West, stating that Maciel Builders had filed a Chapter 7 27 bankruptcy petition in the United States Bankruptcy Court for the District of Arizona. See 1 case in its entirety for ninety days, through July 6, 2020. See Order Staying Case, ECF 83. The 2 Court noted that Maciel Builders’ claims against Defendants are the property of the bankruptcy 3 estate and may be pursued only by the Chapter 7 Trustee, and that US Framing West’s 4 counterclaim against Maciel Builders is subject to the automatic bankruptcy stay. See id. The 5 Court directed Defendants to file a status report upon expiration of the ninety-day stay, sharing 6 any information Defendants obtained as to whether the Trustee of Maciel Builder’s bankruptcy 7 estate would be filing an appearance in this case. See id. 8 In violation of the ninety-day stay, Jose Maciel filed a motion to dismiss US Framing 9 West’s third-party complaint on June 9, 2020. See First Motion to Dismiss, ECF 86. The Court 10 struck the motion to dismiss without prejudice to refiling after the stay was lifted. See Order 11 Striking Motion to Dismiss, ECF 87. 12 Defendants filed a status report on July 7, 2020, advising that US Framing International, 13 US Framing West, and English had entered into a settlement agreement with the Chapter 7 Trustee 14 that, if approved by the Bankruptcy Court, would resolve all of Maciel Builders’ remaining claims 15 against all Defendants. See Status Report, ECF 88. 16 On July 9, 2020, US Framing West filed a voluntary dismissal of its third-party complaint 17 against Jose Maciel, without prejudice. See Notice of Voluntary Dismissal, ECF 89. On July 10, 18 2020, Jose Maciel filed a document titled “Rejection of Notice of Voluntary Dismissal from Third 19 Party Plaintiff,” asserting that the dismissal was ineffective. See Rejection, ECF 90. On the same 20 date, Jose Maciel also filed a motion to dismiss the third-party complaint. See Second Motion to 21 Dismiss, ECF 91. 22 On August 10, 2020, Defendants filed a status report informing the Court that the 23 Bankruptcy Court has approved the settlement agreement between the Chapter 7 Trustee of Maciel 24 Builder’s estate and US Framing International, US Framing West, and English. See Status Report, 25 ECF 95. The Bankruptcy Court’s order approving the settlement agreement is attached to the 26 status report. See id. Defendants represent that the settlement agreement resolves all of Maciel 27 Builders’ remaining claims against all Defendants. See id. The status report and attached order of 1 and Villalva, nor do those documents mention US Framing West’s counterclaim against Maciel 2 Builders. 3 II. JOSE MACIEL’S MOTION TO DISMISS THIRD-PARTY COMPLAINT 4 The third-party complaint filed against Jose Maciel by US Framing West asserts two 5 claims, both grounded in the theory that Jose Maciel is the alter ego of Maciel Builders. See 6 Third-Party Compl. ¶ 4, ECF 67. In Claim 1, brought under California Business and Professions 7 Code § 7031(b), US Framing West asserts that: it paid Maciel Builders more than $1,273,091.13 8 for work Maciel Builders performed on the project; Maciel Builders is legally required to disgorge 9 those monies because Maciel Builders did not possess a valid California contractor’s license; and 10 “[a]s the alter ego of Maciel Builders, Jose Maciel is jointly and severally liable to repay all 11 monies paid to Maciel Builders by U.S. Framing West for work Maciel Builders performed on the 12 Project.” Third-Party Compl. ¶¶ 10-13. In Claim 2, for breach of contract, US Framing West 13 asserts that Maciel Builders breached the Sub-subcontract Agreement it entered into with US 14 Framing West, and that “[a]s the alter ego of Maciel Builders, Jose Maciel is jointly and severally 15 liable for the damages incurred by U.S. Framing West for Maciel Builders’ breaches of the Sub- 16 subcontract Agreement. Third-Party Compl. ¶¶ 15-19. 17 As discussed above, US Framing West filed a voluntary dismissal of its third-party 18 complaint against Jose Maciel, without prejudice, on July 9, 2020. See Notice of Voluntary 19 Dismissal, ECF 89. Jose Maciel filed a “rejection” of that voluntary dismissal and a motion to 20 dismiss the third-party complaint under Federal Rules of Civil Procedure 12(b)(6), 12(b)(1), and 21 12(b)(2). See Rejection, ECF 90; Second Motion to Dismiss, ECF 91. In opposition, US Framing 22 West asserts that: its voluntary dismissal of the third-party complaint complied with Federal Rule 23 of Civil Procedure 41; the third-party complaint was terminated on the date the voluntary 24 dismissal was filed; and Jose Maciel’s “rejection” and Rule 12 motion therefore are without legal 25 effect. See Opp., ECF 93.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 MACIEL BUILDERS LLC, an Arizona Case No. 19-cv-03660-BLF limited liability company, 9 Plaintiff, ORDER TERMINATING AS MOOT 10 JOSE MACIEL’S MOTION TO v. DISMISS THIRD PARTY 11 COMPLAINT AND VACATING US FRAMING INTERNATIONAL LLC, a HEARING ON MOTION; AND 12 Florida limited liability company, et al., DIRECTING DEFENDANTS TO FILE A STIPULATION AND PROPOSED 13 Defendants. ORDER FOR DISMISSAL OF CASE, OR A FURTHER STATUS REPORT, 14 __________________________________ ON OR BEFORE AUGUST 26, 2020 15 US FRAMING WEST, INC., a Nevada [Re: ECF 91, 95] corporation, 16 Counterclaimant, 17 v. 18 MACIEL BUILDERS LLC, an Arizona 19 limited liability company, 20 Counterdefendant. 21 __________________________________ 22 US FRAMING WEST, INC., a Nevada corporation, 23 Third-Party Plaintiff, 24 v. 25 JOSE MACIEL, and individual, 26 Third-Party Defendant. 27 1 This order addresses (1) third-party defendant Jose Maciel’s motion to dismiss the third- 2 party complaint; and (2) the status of the action with respect to the remaining parties. For the 3 reasons discussed below, Jose Maciel’s motion to dismiss is TERMINATED AS MOOT and the 4 hearing on the motion, currently set for October 22, 2020, is VACATED. With respect to the 5 remaining parties, Defendants SHALL file a stipulation and proposed order for dismissal of the 6 case, or further status report, on or before August 26, 2020. 7 I. BACKGROUND 8 This action arises from a dispute over carpentry work performed by Plaintiff Maciel 9 Builders, LLC (“Maciel Builders”) on a construction project known as Ohlone Block B in San 10 Jose, California. Maciel Builders claims that it was not paid for work it performed on the project. 11 In June 2019, Maciel Builders filed this lawsuit against the following entities and individuals, 12 asserting a claim for breach of contract, related state law claims, and a federal civil RICO claim: 13 US Framing International, LLC (“US Framing International”); US Framing West, Inc. (“US 14 Framing West”); Thomas G. English (“English”); Nicholas Rivera (“Rivera”); Ivan Villalva 15 (“Villalva”); Joe Garcia (“Garcia”), Matthew Phillips (“Phillips”), and Ryan Therrien 16 (“Therrien”). See Compl., ECF 1. 17 US Framing International, US Framing West, English, Rivera, and Villalva (collectively, 18 “Defendants”) answered the complaint on February 28, 2020. See Answer, ECF 65. On the same 19 date, US Framing West filed a counterclaim against Maciel Builders and a third-party complaint 20 against the principal of Maciel Builders, Jose Maciel. See Counterclaim, ECF 66; Third-Party 21 Compl., ECF 67. 22 The other three defendants – Garcia, Phillips, and Therrien – were dismissed without 23 prejudice for failure to effect service of process. See Order Dismissing Unserved Defendants, 24 ECF 59. 25 On April 1, 2020, Maciel Builders filed a “Responsive Pleading” to the counterclaim 26 asserted against it by US Framing West, stating that Maciel Builders had filed a Chapter 7 27 bankruptcy petition in the United States Bankruptcy Court for the District of Arizona. See 1 case in its entirety for ninety days, through July 6, 2020. See Order Staying Case, ECF 83. The 2 Court noted that Maciel Builders’ claims against Defendants are the property of the bankruptcy 3 estate and may be pursued only by the Chapter 7 Trustee, and that US Framing West’s 4 counterclaim against Maciel Builders is subject to the automatic bankruptcy stay. See id. The 5 Court directed Defendants to file a status report upon expiration of the ninety-day stay, sharing 6 any information Defendants obtained as to whether the Trustee of Maciel Builder’s bankruptcy 7 estate would be filing an appearance in this case. See id. 8 In violation of the ninety-day stay, Jose Maciel filed a motion to dismiss US Framing 9 West’s third-party complaint on June 9, 2020. See First Motion to Dismiss, ECF 86. The Court 10 struck the motion to dismiss without prejudice to refiling after the stay was lifted. See Order 11 Striking Motion to Dismiss, ECF 87. 12 Defendants filed a status report on July 7, 2020, advising that US Framing International, 13 US Framing West, and English had entered into a settlement agreement with the Chapter 7 Trustee 14 that, if approved by the Bankruptcy Court, would resolve all of Maciel Builders’ remaining claims 15 against all Defendants. See Status Report, ECF 88. 16 On July 9, 2020, US Framing West filed a voluntary dismissal of its third-party complaint 17 against Jose Maciel, without prejudice. See Notice of Voluntary Dismissal, ECF 89. On July 10, 18 2020, Jose Maciel filed a document titled “Rejection of Notice of Voluntary Dismissal from Third 19 Party Plaintiff,” asserting that the dismissal was ineffective. See Rejection, ECF 90. On the same 20 date, Jose Maciel also filed a motion to dismiss the third-party complaint. See Second Motion to 21 Dismiss, ECF 91. 22 On August 10, 2020, Defendants filed a status report informing the Court that the 23 Bankruptcy Court has approved the settlement agreement between the Chapter 7 Trustee of Maciel 24 Builder’s estate and US Framing International, US Framing West, and English. See Status Report, 25 ECF 95. The Bankruptcy Court’s order approving the settlement agreement is attached to the 26 status report. See id. Defendants represent that the settlement agreement resolves all of Maciel 27 Builders’ remaining claims against all Defendants. See id. The status report and attached order of 1 and Villalva, nor do those documents mention US Framing West’s counterclaim against Maciel 2 Builders. 3 II. JOSE MACIEL’S MOTION TO DISMISS THIRD-PARTY COMPLAINT 4 The third-party complaint filed against Jose Maciel by US Framing West asserts two 5 claims, both grounded in the theory that Jose Maciel is the alter ego of Maciel Builders. See 6 Third-Party Compl. ¶ 4, ECF 67. In Claim 1, brought under California Business and Professions 7 Code § 7031(b), US Framing West asserts that: it paid Maciel Builders more than $1,273,091.13 8 for work Maciel Builders performed on the project; Maciel Builders is legally required to disgorge 9 those monies because Maciel Builders did not possess a valid California contractor’s license; and 10 “[a]s the alter ego of Maciel Builders, Jose Maciel is jointly and severally liable to repay all 11 monies paid to Maciel Builders by U.S. Framing West for work Maciel Builders performed on the 12 Project.” Third-Party Compl. ¶¶ 10-13. In Claim 2, for breach of contract, US Framing West 13 asserts that Maciel Builders breached the Sub-subcontract Agreement it entered into with US 14 Framing West, and that “[a]s the alter ego of Maciel Builders, Jose Maciel is jointly and severally 15 liable for the damages incurred by U.S. Framing West for Maciel Builders’ breaches of the Sub- 16 subcontract Agreement. Third-Party Compl. ¶¶ 15-19. 17 As discussed above, US Framing West filed a voluntary dismissal of its third-party 18 complaint against Jose Maciel, without prejudice, on July 9, 2020. See Notice of Voluntary 19 Dismissal, ECF 89. Jose Maciel filed a “rejection” of that voluntary dismissal and a motion to 20 dismiss the third-party complaint under Federal Rules of Civil Procedure 12(b)(6), 12(b)(1), and 21 12(b)(2). See Rejection, ECF 90; Second Motion to Dismiss, ECF 91. In opposition, US Framing 22 West asserts that: its voluntary dismissal of the third-party complaint complied with Federal Rule 23 of Civil Procedure 41; the third-party complaint was terminated on the date the voluntary 24 dismissal was filed; and Jose Maciel’s “rejection” and Rule 12 motion therefore are without legal 25 effect. See Opp., ECF 93. In reply, Jose Maciel argues that the settlement agreement between the 26 Chapter 7 Trustee and Defendants required US Framing West to dismiss the third-party complaint 27 against him with prejudice, but US Framing West instead voluntarily dismissed the third-party 1 party complaint with prejudice, and to order US Framing West to pay all of his attorneys’ fees. 2 See id. at 6. 3 After reviewing the record and relevant legal authorities, the Court concludes that US 4 Framing West’s voluntary dismissal of the third-party complaint, without prejudice, complied with 5 Federal Rule of Civil 41 and therefore terminated the third-party complaint as of July 9, 2020. 6 Jose Maciel’s motion to dismiss therefore will be terminated as moot. 7 Federal Rule of Civil Procedure 41 provides in relevant part that, subject to exceptions not 8 relevant here, “the plaintiff may dismiss an action without a court order by filing . . . a notice of 9 dismissal before the opposing party serves either an answer or a motion for summary judgment.” 10 Fed. R. Civ. P. 41(a)(1)(A)(i). “This rule applies to a dismissal of any counterclaim, crossclaim, 11 or third-party claim.” Fed. R. Civ. P. 41(c). A third-party plaintiff’s voluntary dismissal must be 12 made: “(1) before a responsive pleading is served; or (2) if there is no responsive pleading, before 13 evidence is introduced at a hearing or trial.” See id. 14 At the time US Framing West voluntarily dismissed its third-party complaint, Jose Maciel 15 had not served “an answer or a motion for summary judgment” as specified in Rule 41(a)(1)(A)(i), 16 or “a responsive pleading” as specified in Rule 41(c). The voluntary dismissal therefore 17 terminated the third-party complaint. See Miller v. Reddin, 422 F.2d 1264, 1266 (9th Cir. 1970) 18 (“A voluntary dismissal by a plaintiff under Rule 41(a)(1) Fed. R. Civ. P., automatically 19 terminates the action upon the filing of the dismissal with the clerk. No order of court is 20 required.”). The Court notes that this result would be the same even if the Court had not struck 21 Jose Maciel’s first motion to dismiss, as a motion to dismiss is not a responsive pleading. See 22 CRST Van Expedited, Inc. v. Werner Enterprises, Inc., 479 F.3d 1099, 1104 n.3 (9th Cir. 2007) 23 (“A Rule 12(b)(6) motion to dismiss is not such a responsive pleading.”); Morrison v. Mahoney, 24 399 F.3d 1042, 1046 (9th Cir. 2005) (“A motion to dismiss is not a pleading.”). 25 Jose Maciel does not contend that he filed a responsive pleading that would preclude US 26 Framing West’s voluntary dismissal of the third-party complaint under Rules 41(a)(1)(A)(i) and 27 (c). Instead, he argues that US Framing West’s right to voluntarily dismiss the third-party 1 the Chapter 7 Trustee of Maciel Builders’ bankruptcy estate and Defendants. Jose Maciel argues 2 that because that settlement agreement provides for dismissal of Maciel Builder’s claims against 3 Defendants in the main action with prejudice, US Framing West’s third-party complaint also must 4 be dismissed with prejudice. As an initial matter, it does not appear that Jose Maciel is a party to 5 the settlement agreement, and the Bankruptcy Court’s order approving the settlement agreement 6 does not refer to Jose Maciel or the third-party complaint against him. See Status Report, ECF 95. 7 Even if the settlement agreement could be read to apply to Jose Maciel, however, the proper 8 mechanism for enforcement would be a separate lawsuit for breach of the settlement agreement. 9 Jose Maciel has not cited, and this Court has not discovered, any authority suggesting that such an 10 agreement constrains a party’s right to dismiss its complaint pursuant to Rules 41(a)(1)(A)(i) and 11 (c). 12 Jose Maciel argues that the Court may take the settlement agreement into account when 13 considering dismissal of the third-party complaint under Rule 41(a)(2). That rule provides that 14 when voluntary dismissal under Rule 41(a)(1) is not appropriate, “an action may be dismissed at 15 the plaintiff’s request only by court order, on terms that the court considers proper.” Fed. R. Civ. 16 P. 41(a)(2). Jose Maciel’s reliance on Rule 41(a)(2) is misplaced because, as discussed above, US 17 Framing West’s dismissal of the third-party complaint was proper under Rules 41(a)(1) and (c), 18 and terminated the third-party complaint on July 9, 2020. See Notice of Voluntary Dismissal, 19 ECF 89. 20 Because US Framing West’s voluntary dismissal terminated the third-party complaint, Jose 21 Maciel’s motion to dismiss the third-party complaint is TERMINATED AS MOOT. The hearing 22 on the motion, currently set for October 22, 2020, is VACATED. 23 III. STATUS OF ACTION AS TO REMAINING PARTIES 24 With respect to the remaining parties, the Court has before it Maciel Builders’ complaint 25 against Defendants US Framing International, US Framing West, English, Rivera, and Villalva, 26 and US Framing West’s counterclaim against Maciel Builders. Defendants’ status report filed 27 August 10, 2020 advises that “Defendants US Framing International, US Framing West and 1 for Plaintiff Maciel Buildings [sic] to settle and resolve Maciel Builders’ remaining claims against 2 all defendants in the above referenced action, Case No. 5:19-cv-03660-BLF.” Status Report, ECF 3 95. Defendants also advise that the Bankruptcy Court has approved the settlement agreement, and 4 they submit a copy of the Bankruptcy Court’s order. See id. The Court notes that neither the 5 status report nor the Bankruptcy Court’s order specifically refers to Maciel Builders’ claims 6 against Defendants Rivera and Villalva, or US Framing West’s counterclaim against Maciel 7 Builders. It appears that Defendants nonetheless believe that all remaining claims in the case have 8 been resolved. 9 Because Maciel Builders’ claims against Defendants are the property of the bankruptcy 10 estate and may be pursued only by the Chapter 7 Trustee, this Court cannot dismiss Maciel 11 Builders’ claims without the consent of the Trustee. Because US Framing West’s counterclaim 12 against Maciel Builders is subject to the automatic bankruptcy stay, this Court cannot dismiss the 13 counterclaim absent approval of the Bankruptcy Court. 14 Defendants SHALL file a stipulation and proposed order dismissing all remaining claims 15 and the counterclaim in this case, signed by the Chapter 7 Trustee and all Defendants or their 16 representatives, on or before August 26, 2020. The stipulation and proposed order shall state 17 expressly that the Trustee approves the dismissal of Maciel Builder’s claims against all 18 Defendants, including Rivera and Villalva, and that the Bankruptcy Court approves the dismissal 19 of US Framing West’s counterclaim against Maciel Builders. Alternatively, Defendants SHALL 20 file a further status report on or before August 26, 2020 regarding the status of the remaining 21 claims and counterclaim in this case. 22 IV. ORDER 23 (1) Third-party defendant Jose Maciel’s motion to dismiss the third-party complaint is 24 TERMINATED AS MOOT and the hearing on the motion is VACATED; 25 (2) Defendants SHALL file a stipulation and proposed order dismissing all remaining 26 claims and the counterclaim in this case, signed by the Chapter 7 Trustee and all 27 Defendants or their representatives, on or before August 26, 2020. The stipulation 1 Maciel Builder’s claims against all Defendants, including Rivera and Villalva, and 2 that the Bankruptcy Court approves the dismissal of US Framing West’s 3 counterclaim against Maciel Builders. 4 (3) Alternatively, in lieu of the stipulation and proposed order described above, 5 Defendants SHALL file a further status report on or before August 26, 2020 6 regarding the status of the remaining claims and counterclaim in this case. 7 (4) This order terminates ECF 91. 8 9 Dated: August 17, 2020 han tn) BETH LABSON FREEMAN 11 United States District Judge 12
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