Miller v. S&S Hay Company et al

Filing 29

ORDER ON MOTION TO DISMISS FIRST AMENDED COMPLAINT 24 25 signed by District Judge Lawrence J. O'Neill on June 5, 2013. (Munoz, I)

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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA

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WILLIAM JAKE MILLER,

1:12-CV-01796-LJO-SMS

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Plaintiff,

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ORDER ON MOTION TO DISMISS
FIRST AMENDED COMPLAINT
(Docs. 24, 25)

v.

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S&S HAY COMPANY, SKYE SAUER, and ARI
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Defendants.

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PRELIMINARY STATEMENT TO PARTIES AND COUNSEL
Judges in the Eastern District of California carry the heaviest caseload in the nation, and this

18 Court is unable to devote inordinate time and resources to individual cases and matters. This Court
19 cannot address all arguments, evidence and matters raised by parties and addresses only the arguments,
20 evidence and matters necessary to reach the decision in this order given the shortage of district judges
21 and staff. The parties and counsel are encouraged to contact the offices of United States Senators
22 Feinstein and Boxer to address this Court’s inability to accommodate the parties and this action. The
23 parties are required to consider consent to a Magistrate Judge to conduct all further proceedings in that
24 the Magistrate Judges’ availability is far more realistic and accommodating to parties than that of U.S.
25 District Judge Lawrence J. O'Neill who must prioritize criminal and older civil cases.
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INTRODUCTION
On November 2, 2012, Plaintiff William Jake Miller (“Miller”) brought this action for violation

28 of the California Unfair Competition Law (“UCL”), Cal. Bus. and Prof. Code §§ 17200, et seq.,
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against Defendants S&S Hay Company (“S&S Hay”), Skye Sauer (“Sauer”), and Ari Schiff (“Schiff”)

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(collectively “Defendants”). On March 27, 2012, this Court granted with leave to amend Defendants’

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motion to dismiss Miller’s complaint. Miller filed a first amended complaint on April 14, 2013.

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Defendants filed the instant motion to dismiss Miller’s amended complaint on April 15, 2013. As

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discussed further below, the Court ORDERS the parties to show cause whether this Court should

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transfer this action to the District of Arizona pursuant to 28 U.S.C.A. § 1406 and STAYS the instant

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motion to dismiss pending this Court’s determination as to venue transfer.

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BACKGROUND
On October 26, 2009, Miller obtained a default judgment in Kings County Superior Court

10 against S&S Hay and Sauer for $112,750 plus interest and costs on claims of breach of oral contract,
11 intentional and negligent misrepresentation, false promise, and conversion.
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S&S Hay and Sauer have not paid the judgment, and Miller has been unable to collect on the

13 judgment. Miller alleges that Sauer and Schiff have taken affirmative steps to wrongfully prevent
14 Miller from collecting on the judgment. Specifically, Miller alleges that, following service of the
15 default judgment, S&S Hay stopped doing business in California and then stopped doing business
16 altogether to prevent the attachment of any of S&S Hay’s funds or any funds payable to S&S Hay. In
17 addition, Sauer was removed from S&S Hay some two weeks after Miller domesticated and instituted
18 collection proceedings in Arizona. Miller also alleges that fifteen business entities pertaining to one or
19 more of the Defendants were formed following the default judgment.

This includes entities in

20 Wyoming and Montana, to which Defendants could divert income and assets outside of the states
21 where Miller had domesticated the judgment.
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On November 2, 2012, Miller initiated this action for violation of the UCL against

23 Defendants in this Court on the basis of diversity jurisdiction. Defendants filed a motion to dismiss
24 under Fed. R. Civ. P. 9(b), 12(b)(2), 12(b)(3), and 12(b)(6) on January 7, 2013. This Court granted
25 with leave to amend Defendants’ motion to dismiss Miller’s complaint on the basis of res judicata on
26 March 27, 2013. Miller filed an amended complaint on April 14, 2013. Miller seeks restitution, pre27 and post-judgment interest, and costs and fees. Defendants filed a motion to dismiss Miller’s amended
28 complaint on April 15, 2013, and re-submitted it on April 17, 2013. Miller filed an opposition on April
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25, 2013, and Defendants did not file a reply.

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DISCUSSION

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Motion to Dismiss

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A.

12(b)(6) Failure to State a Claim

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Legal Standard

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A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) is a challenge to the sufficiency of the

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allegations set forth in the complaint. A Fed.R.Civ.P. 12(b)(6) dismissal is proper where there is either

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a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal

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theory.” Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1990). In considering a motion

10 to dismiss for failure to state a claim, the court generally accepts as true the allegations in the
11 complaint, construes the pleading in the light most favorable to the party opposing the motion, and
12 resolves all doubts in the pleader's favor. Lazy Y. Ranch LTD. v. Behrens, 546 F.3d 580, 588 (9th
13 Cir.2008).
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To survive a Fed.R.Civ.P. 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts

15 to state a claim to relief that is plausible on its face.” Bell Ail. Corp. v. Twombly, 550 U.S. 544, 570,
16 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads
17 factual content that allows the court to draw the reasonable inference that the defendant is liable for the
18 misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).
19 “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer
20 possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556). “Where a
21 complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line
22 between possibility and plausibility for entitlement to relief” Id. (citing Twombly, 550 U.S. at 557).
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“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual

24 allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief’ requires more
25 than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not
26 do.” Twombly, 550 U.S. at 555 (internal citations omitted). Thus, “bare assertions ... amount[ing] to
27 nothing more than a formulaic recitation of the elements ... are not entitled to be assumed true.” Iqbal,
28 129 S.Ct. at 1951. A court is “free to ignore legal conclusions, unsupported conclusions, unwarranted
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inferences and sweeping legal conclusions cast in the form of factual allegations.” Farm Credit

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Services v. American State Bank, 339 F.3d 764, 767 (8th Cir.2003) (citation omitted). Moreover, a

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court “will dismiss any claim that, even when construed in the light most favorable to plaintiff, fails to

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plead sufficiently all required elements of a cause of action.” Student Loan Marketing Ass'n v. Hanes,

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181 F.R.D. 629, 634 (S.D.Cal.1998).

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inferential allegations respecting all the material elements necessary to sustain recovery under some

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viable legal theory.” Twombly, 550 U.S. at 562 (quoting Car Carriers, Inc. v. Ford Motor Co., 745

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F.2d 1101, 1106 (7th Cir.1984)).

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2.

In practice, “a complaint ... must contain either direct or

Analysis

This Court dismissed Miller’s original complaint on the basis of res judicata. In their prior

11 supplemental briefing, Defendants had argued that res judicata does not apply in this action. Now, in
12 support of their motion to dismiss Miller’s amended complaint, Defendants make no arguments other
13 than, “[f]or precisely those reasons described in the Order dated March 26, 2013, Plaintiff’s First
14 Amended Complaint should be dismissed.”
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i.

Res Judicata

As explained in the previous order, California’s primary rights analysis provides that, “‘a

17 cause of action is (1) a primary right possessed by the plaintiff, (2) a corresponding primary duty
18 devolving upon the defendant, and (3) a harm done by the defendant which consists in a breach of such
19 primary right and duty.’” Brodheim v. Cry, 584 F.3d 1262, 1268 (9th Cir. 2009) (quoting City of
20 Martinez v. Texaco Trading & Transp., Inc., 353 F.3d 758, 762 (9th Cir.2003)). “[I]f two actions
21 involve the same injury to the plaintiff and the same wrong by the defendant, then the same primary
22 right is at stake even if in the second suit the plaintiff pleads different theories of recovery, seeks
23 different forms of relief and/or adds new facts supporting recovery.” Id. (quoting Eichman v. Fotomat
24 Corp., 147 Cal.App.3d 1170, 1174 (1983)).
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The Court held that both Miller’s original complaint and the state court case in which Miller

26 obtained a default judgment fundamentally involve Miller’s primary right to recover the $112,750 that
27 he paid to Defendants and Defendants’ failure and/or refusal to return that amount thus causing injury
28 to Miller. In his amended complaint, Miller seeks to overcome this by only basing his UCL claim on
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and making more allegations regarding Defendants’ conduct following the default judgment.

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California cases have found a plaintiff’s claims for contract violations against a defendant to

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not involve the same primary right as that plaintiff’s claims in a later action for post-judgment tortious

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conduct against the same defendant. See, Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc., 29 Cal.

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App. 4th 1828, 1837 (1994) (“[T]he right to have contractual obligations performed is distinct from the

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right to be free from tortious behavior preventing collection of a judgment.), Sawyer v. First City Fin.

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Corp., 124 Cal. App. 3d 390, 403 (1981) (“While the monetary loss may be measurable by the same

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promissory note amount, and hence in a general sense the same “harm” has been done in both cases,

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theoretically the plaintiffs have been “harmed” differently by tortious conduct destroying the value of

10 the note, than by the contractual breach of simply failing to pay it.”).
However, assuming that it survives res judicata, this Court finds that transfer of venue to the

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12 District of Arizona under 28 U.S.C.A. § 1406 may be appropriate because this Court may lack personal
13 jurisdiction over Defendants.
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B.

28 U.S.C.A. § 1406
Under 28 U.S.C.A. § 1406, “[t]he district court of a district in which is filed a case laying

16 venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such
17 case to any district or division in which it could have been brought.” “[D]istrict courts in the Ninth
18 Circuit may sua sponte transfer venue under 28 U.S.C. § 1404, or under § 1406.” Ahead, LLC v.
19 KASC, Inc., 2013 WL 1747765 at *3(W.D. Wash. Apr. 23, 2013) (citing Engel v. CBS, Inc., 886
20 F.Supp. 728, 730 (C.D. Cal. 1995) (additional internal citation omitted). “Title 28 U.S.C. § 1406(a)
21 has been held to authorize the transfer of a case so as to cure the lack of personal jurisdiction in the
22 district where the case was first brought.” Wood v. Santa Barbara Chamber of Commerce, Inc., 705
23 F.2d 1515, 1523 (9th Cir. 1983) (citing Goldlawr v. Heiman, 369 U.S. 463, 466 (1961)).
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Defendants contested this Court’s personal jurisdiction over them in their motion to dismiss

25 Miller’s original complaint. This Court concluded that it may exercise specific personal jurisdiction
26 over Defendants where Miller based his UCL claim on his entire course of dealing with Defendants.
27 However, Miller now bases his UCL claim only on Defendants’ conduct after he obtained the default
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Defendant S&S Hay is a limited liability company registered in Arizona. Defendants Sauer

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and Schiff both are citizens and residents of Arizona. Miller alleges that Defendants admitted they

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stopped doing business in California after he filed and served a request for default judgment on August

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27, 2009. Miller obtained a default judgment against Defendants on October 26, 2009. S&S Hay

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stopped doing business altogether in March 2010. Moreover, it is unclear what part of Defendants’

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alleged post-judgment conduct upon which Miller bases his claim relates to California. Miller alleges

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that Sauer was removed from S&S Hay shortly after Miller domesticated the default judgment in

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Arizona and that fifteen business entities pertaining to Defendants were formed following the default

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judgment. Miller alleges that some of these entities are in Arizona, Montana, and Wyoming, but does

10 not mention whether any have ties to California.
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Therefore, this Court ORDERS the parties to show cause whether this Court should transfer

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CONCLUSION AND ORDER

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For the reasons discussed above, the Court:
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ORDERS the parties no later than June 12, 2013 to file supplemental briefings on

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whether this Court should transfer this action to the District of Arizona pursuant to 28

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U.S.C.A. § 1406, and
STAYS the instant motion to dismiss pending this Court’s determination on

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transfer of venue.

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Dated:

/s/ Lawrence J. O’Neill

June 5, 2013

UNITED STATES DISTRICT JUDGE
DEAC_Signature-END:

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