United States District Court, D. Idaho
DALE L. MIESEN, an individual; DONNA J. TAYLOR, an individual and the Personal representative of the Estate of Sarah Taylor; WHO ARE SHAREHOLDERS BRINGING THIS ACTION ON BEHALF OF AND/OR IN THE RIGHT OF AIA SERVICES CORPORATION AND ITS WHOLLY OWNED SUBSIDIARY AIA INSURANCE, INC., Plaintiffs,
CONNIE TAYLOR HENDERSON, an individual; JOLEE DUCLOS, an individual; HAWLEY TROXELL ENNIS & HAWLEY LLP, an Idaho limited liability partnership, GARY D. BABBITT, an individual; D. JOHN ASHBY, an individual, RICHARD A. RILEY, an individual; MICHAEL W. CASHMAN SR., an individual; JAMES BECK, an individual; R. JOHN TAYLOR, an individual; CROP USA INSURANCE AGENCY, INC., an Idaho corporation; AIA SERVICES CORPORATION, an Idaho corporation; and AIA INSURANCE, INC., an Idaho corporation; Defendants.
DECISION AND ORDER RE: HAWLEY TROXELL DEFENDANTS' MOTION
TO DISMISS PURSUANT TO 12(b)(1) (Dkt. 138); PLAINTIFFS'
MOTION TO AMEND AND/OR DISMISS PARTIES WITHOUT PREJUDICE
(DKT. 139); THIRD PARTY GEMCAP LENDING I, LLC'S MOTION TO
INTERVENE AND SEAL (DKT. 141); and PLAINTIFFS' MOTION TO
STRIKE (DKT. 169)
HONORABLE CANDY W. DALE UNITED STATES MAGISTRATE JUDGE.
before the Court are four motions: (1) Hawley Troxell
Defendants' Motion to Dismiss pursuant to Fed.R.Civ.P.
12(b)(1) (Dkt. 138); (2) Plaintiffs' Motion to Amend, or
alternatively, Motion to Voluntarily Dismiss Parties (Dkt.
139); (3) Third Party GemCap Lending I, LLC's Motion to
Intervene and Seal (Dkt. 141); and (4) Plaintiff's Motion
to Strike (Dkt. 169). The Court heard oral argument from the
parties and the proposed intervenor GemCap Lending I, LLC, on
October 24, 2016. After review of the record, consideration
of the parties' arguments and relevant legal authorities,
and otherwise being fully advised, the Court issues the
following memorandum decision and order.
a shareholder's derivative action, the Court's
jurisdiction over which is based upon diversity of
citizenship. Although the complaint was filed nearly
six years ago, the case has yet to proceed beyond its initial
stages. After taking a detour to the United States Court of
Appeals for the Ninth Circuit, the Court conducted both a
status conference and a scheduling conference on March 7 and
24, 2016 (Dkt. 112, 118, 126), with the goal of determining
the operative complaint and moving this litigation forward.
Unable to stipulate to a litigation plan in advance of the
March 24, 2016 scheduling conference, the Court ordered the
parties to meet and confer in person to develop a workable
litigation plan. However, the meet and confer did not result
in a litigation plan; instead, the parties agreed to postpone
their litigation plan until after Plaintiffs filed their
motion for leave to amend their complaint.
27, 2016, Plaintiffs filed their motion for leave to amend.
(Dkt. 130.) In the proposed Second Amended Complaint,
Plaintiffs sought to add Connie Taylor Henderson and JoLee
Duclos, two additional shareholders/officers of the AIA
entities, as individual defendants, and Donna Taylor as the
personal representative of the Estate of Sarah Taylor as a
plaintiff. The existing Defendants filed notices of
non-opposition to Plaintiffs' motion. (Dkt. 133, 134.) On
June 20, 2016, after the Court granted leave, Plaintiffs
filed their Second Amended Complaint. (Dkt. 137.)
21, 2016-one day after Plaintiffs filed their Second Amended
Complaint-the Hawley Troxell Defendants filed a motion
seeking to dismiss the new complaint for lack of diversity
jurisdiction. (Dkt. 138.) In response, on July 15, 2016,
Plaintiffs filed a motion for leave to amend their complaint,
or alternatively, to dismiss the non-diverse parties to cure
the jurisdiction issue raised by the Hawley Troxell
Defendants' motion to dismiss.
Second Amended Complaint (Dkt. 137), the parties to this
litigation consist of the following: Plaintiffs Dale
Miesenand Donna Taylor as the minority
shareholders of Defendant AIA Services Corporation, the
alleged wronged corporation. Dale Miesen is a citizen of
Texas and Donna Taylor is a citizen of Washington. Donna
Taylor is named also as the personal representative of the
Estate of Sarah Taylor (Donna Taylor's deceased
daughter)-the citizenship of Sarah Taylor's estate is
are two groups of Defendants. The first group consists of AIA
Services Corporation, AIA Insurance, Inc., Crop USA Insurance
Agency, Inc., and several controlling shareholders and
officers of those entities, including: R. John Taylor, James
Beck, Michael Cashman, Connie Taylor Henderson and JoLee
Duclos. Each entity is an Idaho corporation. John
Taylor is a citizen of Idaho, James Beck and Michael Cashman
are citizens of Minnesota, and Connie Taylor Henderson and
JoLee Duclos are citizens of Washington. The second group
consists of the law firm Hawley Troxell Ennis & Hawley,
LLP, and several of its attorneys who represent the AIA
entities and Crop USA. The Hawley Troxell Defendants are all
citizens of Idaho.
additional motions were filed after the motion to dismiss and
motion to amend, unrelated to the diversity jurisdiction
issue. On July 18, 2016, third-party GemCap, filed a motion
to intervene and seal a Settlement Agreement, filed by
Plaintiffs with a declaration from Plaintiffs' counsel
regarding the status of counsels' conferences. (Dkt.
141.) On September 5, 2016, Plaintiffs filed a motion to
strike several documents related to GemCap's motion.
efficiently discuss and resolve the four motions before the
Court, the Court will address the motions in reverse
chronological order in which they were filed, beginning with
Plaintiffs' motion to strike.
Plaintiffs' Motion to Strike (Dkt. 169)
seek an order striking: (1) the AIA Defendants' untimely
notice of non-opposition to GemCap's motion to intervene
and seal; (2) an email attached as an exhibit to a
declaration filed in support of GemCap's motion to
intervene and seal, and portions of GemCap's reply brief
that reference the email; (3) GemCap's notice of
supplemental authority in support of its motion to intervene
and seal; and (4) a standing argument raised for the first
time by the Hawley Troxell Defendants in their reply
memorandum filed in support of their motion to dismiss. For
the following reasons, the Court will deny the entirety of
12(f) of the Federal Rules of Civil Procedure provides that
“[t]he court may strike from a pleading an insufficient
defense or any redundant, immaterial, impertinent, or
scandalous matter.” Fed.R.Civ.P. 12(f). “[T]he
function of a 12(f) motion to strike is to avoid the
expenditure of time and money that must arise from litigating
spurious issues by dispensing with those issues prior to
trial.” SidneyVinstein v. A.H. Robins Co., 697
F.2d 880, 885 (9th Cir. 1983). However, Rule 12(f) motions
are “generally regarded with disfavor because of the
limited importance of pleading in federal practice, and
because they are often used as a delaying tactic.”
Neilson v. Union Bank of Cal., N.A., 290 F.Supp.2d
1101, 1152 (C.D. Cal.2003).
Court has broad discretion in disposing of motions to strike.
Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1528 (9th
Cir. 1993) rev'd on other grounds510 U.S. 517
(1994). The Court construes motions to strike in the light
most favorable to the nonmoving party and will deny the
motion if the challenged defenses have “‘any
relation to the subject matter of the controversy, could be
held to in any manner defeat the plaintiff's claim, or if
it fairly presents any question of fact or law.'”
United States v. 45.43 Acres of Land Situate in Ada
County, Idaho, 2009 WL 1605127 (D. Idaho June 4, 2009)
(quoting United States v. Articles of Food ... Clover
Club Potato Chips, 67 F.R.D. 419, 421 (D. Idaho 1975));