MVP Asset Management (USA) LLC v. Vestbirk, et al

Filing 53

ORDER signed by Judge Garland E. Burrell, Jr on 4/14/11 ORDERING that MVPAM is granted 10 days from the date on which this order is filed to file a First Amended Complaint. (Dillon, M)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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MVP ASSET MANAGEMENT (USA) LLC,
a Delaware Limited Liability
Company,
Plaintiff,

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v.
STEVEN VESTBIRK, JEFF BALLIET,
ALLISON HANSLIK, JIM GRANAT, ARK
ROYAL ASSET MANAGEMENT, LTD, a
Bermuda Limited Company,
VESTBIRK CAPITAL MANAGEMENT,
LTD, a Bermuda Limited Company,
ARK ROYAL ASSET MANAGEMENT, LLC,
a Nevada Limited-Liability
Company, ARK DISCOVERY, LLC, a
Business Entity of Unknown Form,
ARK ROYAL HOLDINGS, LLC, a
Nevada Limited-Liability
Company, ARK ROYAL SERVICES,
LLC, a Nevada Limited-Liability
Company, ARK ROYAL CAPITAL, LLC,
a Nevada Limited-Liability
Company, ARK ROYAL CAPITAL
FUNDING, LLC, a Nevada LimitedLiability Company, ARK ROYAL
CAPITAL, INC, a Nevada
Corporation, ARK ROYAL
RESOURCES, LLC, a Nevada
Limited-Liability Company, ARK
ROYAL ASSURANCE LLC, a Nevada
Limited-Liability Company, and
ARK ROYAL INVESTMENTS, LLC, a
Nevada Limited-Liability
Company,
Defendants.
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2:10-cv-02483-GEB-CMK
ORDER

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Certain Defendants move for dismissal of Plaintiff’s Complaint

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under Federal Rules of Civil Procedure (“Rule”) 12(b)(1), 12(b)(2),

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12(b)(6), and 12(b)(7). (The caption has been amended according to the

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order dismissing Defendant Royal Capital Funding, LLC. ) Plaintiff MVP

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Asset Management (USA) LLC (“MVPAM”) opposes the motion. (ECF No. 26.)

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Since Defendants prevail on their Rule 12(b)(1) argument and the motion

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will be granted on this ground, the remaining dismissal arguments are

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disregarded.

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Defendants argue, inter alia, that MVPAM lacks Article III

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standing to pursue this securities fraud action since MVPAM is “merely

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[an] investment advisor and attorney in fact” and has not suffered an

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injury-in-fact. (Mot. 13:5-7, 19-20.)

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“A suit brought by a plaintiff without Article III standing is

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not a ‘case or controversy,’ and an Article III federal court therefore

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lacks subject matter jurisdiction over the suit. In that event, the suit

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should be dismissed under Rule 12(b)(1).” Cetacean Community v. Bush,

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386 F.3d 1169, 1174 (9th Cir. 2004) (citation omitted).

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[T]o satisfy Article III’s standing requirements, a
plaintiff must show that (1) it has suffered an
“injury in fact” that is (a) concrete and
particularized and (b) actual or imminent, not
conjectural or hypothetical; (2) the injury is
fairly traceable to the challenged action of the
defendant; and (3) it is likely, as opposed to
merely speculative, that the injury will be
redressed by a favorable decision.

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Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528

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U.S. 167, 180-81 (2000). Plaintiff has the burden of establishing

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jurisdiction. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377

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(1994).

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“A Rule 12(b)(1) jurisdictional attack may be facial or

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factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.
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2004). “In a facial attack, the challenger asserts that the allegations

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contained in a complaint are insufficient on their face to invoke

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federal jurisdiction. By contrast, in a factual attack, the challenger

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disputes

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otherwise invoke federal jurisdiction.” Id. Defendants’ Rule 12(b)(1)

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motion is “a facial attack on . . . subject matter jurisdiction[.]” Doe

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v. Holy See, 557 F.3d 1066, 1073 (9th Cir. 2009).

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factual allegations in Plaintiff’s Complaint are assumed to be true and

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all reasonable inferences capable of being drawn therefrom are drawn in

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Plaintiff’s favor. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir.

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2004).

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extrinsic evidence Plaintiff submitted in its opposition brief is

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disregarded.

the

In

truth

light

of

of

the

allegations

Defendants

facial

that,

by

themselves,

would

Therefore, the

jurisdictional

attack,

the

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MVPAM alleges in its Complaint that it is the investment

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manager for MVP Fund of Funds Ltd. (“MVP”) and in this capacity it has

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“unrestricted decision making authority to control and act as MVP’s

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attorney-in-fact [concerning] . . . all investments and litigation

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relating thereto.” (Compl. ¶ 3.) MVPAM alleges it invested two million

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dollars in Ark Discovery Fund (Offshore) Ltd. (“Ark Discovery Fund”) on

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behalf of MVP between February and August 2008. Id. ¶ 24. MVPAM alleges

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Defendants made false and misleading representations regarding their due

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diligence in confirming the legitimacy of the Ark Discovery Fund and

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that “[b]y the end of October 2008, the Ark Discovery Fund was in

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liquidation . . . [and] Plaintiff . . . lost virtually the entire $2

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million it invested in the Ark Discovery Fund.” Id. ¶¶ 26, 64. MVPAM

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seeks rescission of MVP’s investment in the Ark Discovery Fund; or, in

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the alternative, an award of damages in an amount no less than two

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million dollars plus interest. Id. ¶ 94.
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Defendants argue MVPAM “lacks constitutional standing because

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[it]

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counters that MVP “assigned its claims arising out of the investments in

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Ark Discovery to MVPAM . . . [and, as] an assignee of a claim, . . .

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MVPAM[] has Article III standing.” (Opp’n 9:24-10:1.) However, MVPAM’s

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Complaint does not allege MVP assigned its claims arising out of the

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investments in Ark Discovery to MVPAM.

has

not

suffered

an

injury-in-fact.”

(Mot.

13:19-20.)

MVPAM

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MVPAM’s “status as both an attorney-in-fact for litigation

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purposes and an investment advisor with unfettered discretion over its

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client[’s] investment decisions does not confer on [MVPAM] Article III

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standing to sue in a representative capacity on its client[’s] behalf.”

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W.R. Huff Asset Management Co., LLC v. Deloitte & Touche LLP, 549 F.3d

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100, 111 (2d Cir. 2008). Therefore, MVPAM has not established Article

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III standing and Defendants’ motion under Rule 12(b)(1) is GRANTED.

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MVPAM is granted ten (10) days from the date on which this

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order is filed to file a First Amended Complaint. Further, MVPAM is

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notified that this action may be dismissed with prejudice under Federal

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Rule of

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Complaint within the prescribed time period.

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Dated:

Civil Procedure 41(b) if MVPAM fails to file an amended

April 14, 2011

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GARLAND E. BURRELL, JR.
United States District Judge

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