DOUGLAS L. RAYES, District Judge.
Before the Court is CNA National Warranty Corporation's ("CNA") application for provisional remedy in the form of a writ of garnishment. (Docs. 4, 8). For reasons stated below, CNA's application is granted.
On June 20, 2019, CNA filed this action, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, intentional misrepresentation, and negligent misrepresentation. (Doc. 1.) Concurrently, CNA filed an application for provisional remedy of garnishment. (Doc. 4.) CNA then filed its application for writ of garnishment with notice. (Doc. 8.) On July 5, 2019, Defendants filed an objection to CNA's application and requested a hearing pursuant to A.R.S. §§ 12-2403 and -2405. (Docs. 14 and 14-1.) On July 17, 2019, the Court held an evidentiary hearing. (Doc. 31.)
"A party may at any time after the filing of a civil action, make application, under oath, to the court to issue any provisional remedy allowed by law." A.R.S. § 12-2404(A). "Such application shall be filed with the [Court] . . . and shall set forth the factual and legal basis for each provisional remedy sought." Id. § 12-2404(B). Upon the filing of an application, a notice is issued to any party against whom any provisional remedy would operate. Id. §§ 12-2405; -2406. The party against whom the remedy would operate may request a hearing. Id. §§ 12-2405; -2407.
A hearing on an application for a provisional remedy is limited to the following issues: (1) "The probable validity of the applicant's claim or claims and any defenses and claims of personal property exemptions of the party against whom such provisional remedy will operate;" and (2) "[t]he existence of any statutory requirements for the issuance of any provisional remedies sought." Id. § 12-2410(C). The purpose of the hearing "is to afford a defendant an opportunity to attack the validity of the plaintiff's claim before issuance of a pre-judgment writ." Granmo v. Superior Court, 596 P.2d 36, 38 (Ariz. Ct. App. 1979). "If after hearing the court finds probable cause to believe the claim of the applicant is valid and that the statutory requirements for any provisional remedy have been met, such remedy shall be issued forthwith." A.R.S. § 12-2410(D).
The Court may grant a provisional remedy if: (1) the party against whom the remedy will be enforced is served with the application and notice; (2) the statutory requirements for the issuance of the provisional remedy (writ of garnishment) are met; and (3) the applicant shows that's its claim or claims are probably valid. Id. §§ 12-2403; -2410. The Court discusses each requirement in turn.
An application and notice for issuance of any provisional remedy must be filed with the clerk of the court and a copy of such notice and application must be served on the party against whom any remedy will operate. Id. § 12-2403(2). CNA filed its application for provisional remedy and writ of garnishment with the Court. (Docs. 4, 8.) Defendants were served with the application and notice. (Docs. 4-2; 15-21.) CNA therefore has satisfied the application, notice, and service requirement.
Next, the applicant must meet all statutory requirements for the issuance of such provisional remedy. A.R.S. § 12-2403(1). The statutory requirements for an application for writ of garnishment of monies are as follows:
Id. § 12-1572.
CNA offered the following: (1) statement that if it prevailed in its action, it would be a judgment creditor; (2) that it has good reason to believe that the garnishee, Banc of California, is indebted to the purported judgment debtor (Defendants) for monies which are not earnings; (3) that CNA's complaint seeks $6,046,092.00 in damages; and (4) the address of Banc of California. (Docs. 4, 8.) CNA's application for writ of garnishment therefore complies with the statutory requirements.
As a preliminary matter, Defendants contend that CNA is barred from bringing this action because it was required to bring these claims as compulsory counterclaims in another suit.
Federal Rule of Civil Procedure 13(a) governs compulsory counterclaims, and states in pertinent part:
"The purpose and design of Rule 13(a) is to prevent multiplicity of litigation and to bring about prompt resolution of all disputes arising from common matters." Local Union No. 11, Int'l Bhd. of Elec. Workers, AFL-CIO v. G.P. Thompson Elec., Inc., 363 F.2d 181, 184 (9th Cir. 1966). For that reason, "[i]f a party fails to plead a compulsory counterclaim, [the party] is held to waive it and is precluded by res judicata from ever suing upon it again." Id.
Rule 13, however, does not apply to every claim that could or should have been asserted in prior litigation. "Indeed, the language of the rule denotes that preclusion will only apply to claims that should have been asserted in a `pleading.'" Luis v. Metro. Life Ins. Co., 142 F.Supp.3d 873, 878 (N.D. Cal. 2015). The Federal Rule of Civil Procedure define a pleading as: (1) a complaint; (2) an answer to a complaint; (3) an answer to a counterclaim designated as a counterclaim; (4) an answer to a crossclaim; (5) a third-party complaint; (6) an answer to a third-party complaint; and (7) if the court orders one, a reply to an answer. Fed. R. Civ. P. 7(a). "[T]he bar to future suit does not arise if the defendant in the prior action did not file a responsive pleading." MRW, Inc. v. Big-O Tires, LLC, No. Civ. S-08-1732 LKK/DAD, 2008 WL 5113782, at *10 (E.D. Cal. Nov. 26, 2008); see also Bluegrass Hosiery, Inc. v. Speizman Indus., Inc., 214 F.3d 770, 772 (6th Cir. 2000) ("Rule 13(a), however, only requires a compulsory counterclaim if the party who desires to assert a claim has served a pleading. . . . In other words, Rule 13(a) does not apply unless there has been some form of pleading.").
At present, CNA has yet to file a responsive pleading in the First Action. Instead, CNA filed a motion to dismiss pursuant to Rule 12(b)(6). "After such a motion to dismiss for failure to state a claim is made, there is no reason to file any other pleadings until the motion is acted upon. If the motion is granted, no further pleadings will be necessary. If the motion is denied, time is allotted in which to file an answer." Lawhorn v. Atl. Ref. Co., 299 F.2d 353, 357 (5th Cir. 1962). Rule 12(a)(4) supports this understanding, as it provides that the ordinary time periods are altered when a party files a motion listed in Rule 12(b). See Fed. R. Civ. P. 12(a)(4). Accordingly, though the claims at issue here might become compulsory counterclaims in the First Action should CNA's motion to dismiss be denied, it is not presently the case that CNA must plead these claims as compulsory counterclaims in the First Action because CNA is not yet required to file a responsive pleading. This issue therefore does not impede the Court's ability to rule on CNA's application.
"In order to state a claim for breach of contract, a plaintiff must allege the existence of a contract between the plaintiff and defendant, a breach of the contract by the defendant, and resulting damage to the plaintiff." Snyder v. HSBC Bank, USA, N.A., 873 F.Supp.2d 1139, 1148 (D. Ariz. 2012).
At the hearing, CNA offered into evidence a contract between Defendants and CNA ("Override Agreement"). (Doc. 4-1 at 1-11.) CNA's Chief Financial Officer John Laughlin testified to the following at the hearing:
Based on the Override Agreement and Laughlin's testimony, the Court finds that CNA's claim for breach of contract is probably valid.
CNA has served Defendants with the application and notice, met the statutory requirements, and demonstrated that its breach of contract claim is probably valid. Because CNA seeks a provisional remedy, however, "a writ shall not be issued until the judgment creditor executes and delivers to the court a bond payable to the judgment debtor in the amount of the debt claimed therein[.]" A.R.S. § 12-1573. Therefore, upon receiving notification on the public docket that CNA has executed and delivered such a bond, the Court will issue the writ of garnishment. Accordingly,