Threadgill v. Saddlebrook Investments LLC
2:23-cv-01089
| D. Ariz. | Aug 16, 2024Background
- Plaintiffs Threadgill and Christy sued Defendants All Done Consulting, LLC and Ryan Morgan (ADC Defendants) in the District of Arizona, alleging breach of contract, fraud, securities, and consumer protection violations under Arizona law.
- ADC Defendants were served but failed to answer; default was entered against them. Other defendants settled, and one plaintiff (Orzalli) was dismissed.
- Plaintiffs moved for default judgment seeking $70,000 in damages (combined $35,000 investments each), pre- and post-judgment interest, attorneys’ fees, and costs.
- The magistrate determined Arizona law governed, despite choice-of-law clauses, due to Arizona's anti-waiver provision for securities acts and the significant relationship to the state.
- Plaintiffs supplemented the record with declarations supporting damages and interest, as ordered by the Court.
- Plaintiffs’ motion for attorneys’ fees and costs was denied without prejudice due to significant noncompliance with local rules and insufficient documentation/reasonableness showing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default judgment should be granted on state law claims against ADC Defendants | Plaintiffs argue ADC Defendants failed to respond, and facts and exhibits support claims. | No response—Defendants defaulted. | Default judgment granted on state law claims (breach of contract, fraud, securities fraud, consumer fraud). |
| Whether Arizona law applies despite contractual choice-of-law clauses | Arizona law governs due to anti-waiver statute and Arizona's significant relationship to transactions. | No position; Defendants did not appear. | Arizona law applies, overriding Texas/Montana provisions in contracts. |
| Whether damages, including pre-judgment and post-judgment interest, are proper | Plaintiffs request $35,000 per plaintiff plus interest from Dec. 1, 2022. | No opposition. | $70,000 damages awarded total; pre-judgment interest at $9.58/day from Mar. 28, 2023 (date of demand); post-judgment interest awarded under federal law. |
| Whether attorneys’ fees and costs should be awarded | Plaintiffs request fees/costs under contract terms and Arizona statutes. | No opposition. | Denied without prejudice; motion failed local rules compliance and lacked sufficient documentation/reasonableness. |
Key Cases Cited
- Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (lists factors for granting default judgment)
- Geddes v. United Fin. Grp., 559 F.2d 557 (9th Cir. 1977) (default admits facts except for damages)
- Fair Hous. of Marin v. Combs, 285 F.3d 899 (9th Cir. 2002) (no need for detailed findings of fact in default judgment)
- KB Home Tucson, Inc. v. Charter Oak Fire Ins. Co., 340 P.3d 405 (Ariz. Ct. App. 2014) (elements of fraud under Arizona law)
- Missouri v. Jenkins, 491 U.S. 274 (1989) (billing standards—clerical tasks not recoverable as attorney/paralegal fees)
- Keg Restaurants Ariz., Inc. v. Jones, 375 P.3d 1173 (Ariz. Ct. App. 2016) (implied covenant of good faith and fair dealing)
- Swanson v. Image Bank, Inc., 77 P.3d 439 (Ariz. 2003) (Arizona follows the Restatement for choice of law)
- Northrop Corp. v. Triad Int’l Mktg. Corp. S.A., 842 F.2d 1154 (9th Cir. 1988) (federal law governs post-judgment interest)