AO Ventures, LLC v. Gutierrez et al

Filing 46

AMENDED ORDER RE MOTIONS TO DISMIS. Signed by Judge Joseph C. Spero on December 18, 2012. (jcslc1, COURT STAFF) (Filed on 12/18/2012)

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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 6 7 AO VENTURES, LLC, 8 Plaintiff, ARMANDO GUTIERREZ, et al., Defendants. 11 United States District Court Northern District of California AMENDED ORDER RE MOTIONS TO DISMISS [Docket Nos. 15, 22]1 v. 9 10 Case No. 12-04625 JCS 12 13 I. INTRODUCTION Plaintiff AO Ventures, LLC (“AO Ventures”) alleges in its complaint that it entered into an 14 15 agreement with Defendant Armando Gutierrez for the purchase of the domain name 16 (“the Domain Name”) for the amount of $14,500. Complaint, ¶ 14. Instead 17 of transferring the Domain Name to AO Ventures, Plaintiff alleges, Gutierrez transferred it to 18 Defendant CEA Global Education (“CEA”). On the basis of these allegations, AO ventures 19 asserts claims for breach of contract, specific performance and fraud against Gutierrez and for 20 intentional interference with contract against CEA. Plaintiff alleges that there is federal subject 21 matter jurisdiction under 28 U.S.C. § 1332(a) on the basis that there is complete diversity of 22 citizenship and the amount in controversy exceeds $75,000. 23 Gutierrez brings a motion to dismiss (“Gutierrez Motion ”) asserting that: 1) there is no 24 personal jurisdiction over Gutierrez, who is a resident of Florida; 2) there is no subject matter 25 jurisdiction because it is apparent to a legal certainty that the amount-in-controversy requirement 26 27 28 1 The Court amends its previous order to reflect that dismissal of Plaintiff’s complaint is without prejudice. 1 is not met; and 3) a forum selection clause in the registration agreement makes clear that litigation 2 must be conducted in Broward County, Florida. CEA brings a motion to dismiss (“CEA Motion”) asserting that the allegations of 3 4 intentional interference with contract are too conclusory to state a claim under Rule 12(b)(6). 5 CEA further asserts that AO Ventures cannot cure this deficiency because CEA did not, in fact, 6 know anything about the agreement between Gutierrez and AO Ventures for the purchase of the 7 domain name -- a required element to state a claim for intentional interference with contract. 8 CEA also asserts, in a footnote, that there is no subject matter jurisdiction because it is clear that 9 the amount is controversy requirement is not satisfied. The parties have consented to the jurisdiction of a United States Magistrate Judge pursuant 10 United States District Court Northern District of California 11 to 28 U.S.C. § 636(c). The Court finds that the Motions are suitable for determination without 12 oral argument, pursuant to Civil Local Rule 7-1(b), and therefore vacates the December 21, 13 2012 hearing. The Court concludes that the amount-in-controversy requirement is not met and 14 therefore GRANTS the Gutierrez Motion on that basis and dismisses Plaintiff’s complaint in its 15 entirety.2 16 II. ANALYSIS 17 A. Legal Standard 18 Gutierrez seeks dismissal of this action pursuant to Rule 12(b)(1) of the Federal Rules of Civil 19 Procedure, which permits a defendant to seek dismissal on the basis of lack of subject matter 20 jurisdiction. The Complaint in this action asserts that there is federal diversity jurisdiction 21 pursuant to 28 U.S.C. § 1332(a)(1). Under that provision, “[t]he district courts shall have original 22 jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of 23 $75,000, exclusive of interest and costs, and is between . . . citizens of different States.” It is 24 undisputed that the parties to this action are citizens of different states. Therefore, diversity 25 jurisdiction exists if Plaintiff has met the amount-in-controversy requirement. 26 27 28 2 Because the court finds there is no subject matter jurisdiction over this action, the Court need not rule on the CEA Motion. 2 1 To determine whether the amount-in-controversy requirement is met, courts apply the “legal 2 certainty” test: “[I]f, from the face of the pleadings, it is apparent, to a legal certainty, that the 3 plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like 4 certainty that the plaintiff never was entitled to recover that amount, and that his claim was 5 therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed.” St. Paul 6 Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). “[T]he legal impossibility of 7 recovery must be so certain as virtually to negative the plaintiff's good faith in asserting the claim. 8 If the right of recovery is uncertain, the doubt should be resolved, for jurisdictional purposes, in 9 favor of the subjective good faith of the plaintiff.” McDonald v. Patton, 240 F.2d 424, 426 (4th 10 Cir. 1957). United States District Court Northern District of California 11 A motion to dismiss based on lack of subject matter jurisdiction can be either “facial” or 12 “factual.” See, e.g., White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). Where a defendant brings 13 a facial challenge, that is, a challenge to the court’s subject matter jurisdiction based on the 14 allegations in the complaint, the court conducts an inquiry that is “analogous to a 12(b)(6) 15 motion.” Roberts v. Corrothers, 812 F.2d 1173, 1178 (9th Cir. 1987). On the other hand, “[i]f 16 the moving party converts ‘the motion to dismiss into a factual motion by presenting affidavits or 17 other evidence properly brought before the court, the party opposing the motion must furnish 18 affidavits or other evidence necessary to satisfy its burden of establishing subject matter 19 jurisdiction.’” Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004) (quoting Safe Air for 20 Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.2004) (quoting Savage v. Glendale Union High 21 Sch., 343 F.3d 1036, 1039 n. 2 (9th Cir.2003), cert. denied, 541 U.S. 1009, 124 S.Ct. 2067, 158 22 L.Ed.2d 618 (2004))). The district court may review this evidence without converting the motion 23 to dismiss into a motion for summary judgment. Safe Air for Everyone, 373 F.3d at 1039. 24 Where a party brings a factual challenge to subject matter jurisdiction, the court does not presume 25 that the factual allegations in the complaint are true. Id. However, a court may not resolve 26 genuinely disputed facts where the question of jurisdiction is dependent on the resolution of 27 factual issues going to the merits. Id. 28 B. Summary of Evidence Submitted on Amount in Controversy 3 1 Gutierrez brings a factual challenge to the existence of subject matter jurisdiction, citing not 2 only the amount Plaintiff agreed to pay for the Domain Name, that is $14,500, but also emails 3 from the individual who negotiated the agreement on behalf of Plaintiff stating that the Domain 4 Name was worth less than $15,000. See Declaration of Armando Gutierrez, Jr. in Support of his 5 Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(3) 6 (“Gutierrez Decl.), ¶ 4 & Ex. 1(emails). 7 Plaintiff, in turn, cites evidence that a similar domain name,, sold for 8 $100,000 in 2009, in support of the contention that the Domain Name “can be valued in excess of 9 $75,000.” Declaration of Alex Alexander in Support of Opposition to Armando Gutierrez, Jr.’s Motion to Dismiss (“Alexander Decl.”), ¶ 13. In addition, Plaintiff presents evidence that “[f]rom 11 United States District Court Northern District of California 10 approximately two months before May 2, 2012 when escrow was initiated [in connection with 12 Plaintiff’s agreement to purchase the Domain Name] until today, AO ventures has invested over 13 eight months of design, programming and business development efforts in building out the 14 studying abroad business.” Id, ¶ 11. Mr. Alexander estimates that the value of these efforts is 15 approximately $5,000 per month, for a total of $40,000. Id. He further states that AO Ventures 16 has retained an expert in the studying abroad market and that the cost of the expert over the last 17 eight months to date was $40,000. Id., ¶ 12. 18 C. Application of the Law to the Facts 19 Because Defendant Gutierrez presented evidence going to the amount in controversy, Plaintiff 20 was required to come forth with evidence demonstrating that the legal certainty test is not met. 21 Plaintiff failed to do so. 22 First, Plaintiff’s vague statement that the Domain Name “can be valued in excess of 23 $75,000” based on another Domain Name that was sold in 2009 is not credible. Plaintiff offers no 24 explanation for its dramatic change in position in comparison to the opinion stated by Mr. 25 Alexander in early 2012, when he was negotiating to purchase the Domain Name on behalf of AO 26 Ventures, that the Domain Name was not worth even $15,000. Rather, it is apparent to the Court 27 that this new-found opinion is simply an attempt to manufacture subject matter jurisdiction and is 28 not made in good faith. 4 1 Second, Plaintiff of , ffers no basis from which to conclud that either the develop s h de r pment costs 2 or the costs of retaining an expert were incurred as a result of D t r Defendant’s failure to tra ansfer the 3 Dom Name to Plaintiff. Indeed, all but two mon of the d main nths development expenditure t es 4 (approximately $10,000 ba y ased on Plain ntiff’s estima of $5,000 a month) w incurred after ate 0 were d 5 Gut tierrez allege edly cancelled the transa action, on M 17, 2012 See Comp May 2. plaint, ¶ 19. Similarly, 6 the Alexander Declaration does not stat that any o the costs to retain the e D te of o expert were incurred 7 bef fore the alleg breach. Because con ged nsequential d damages resulting from a breach of c contract 8 mu be reasonably foresee ust eable at the ti the cont ime tract was ent tered, see 99 v. CIT Co 99 orp., 776 9 F.2 866, 872 (9th Cir. 198 this evid 2d ( 85), dence is not s sufficient to counter the evidence pr resented by 10 United States District Court Northern District of California 11 Gut tierrez as to the amount in controver rsy. o nce rties, it is app parent to a le certainty that the egal y Based on the eviden presented by the part 12 $75 5,000 amoun nt-in-controv versy require ement is not met in this c case. 13 III. CONCLU . USION 14 For the re easons stated above, the Gutierrez M d Motion is GR RANTED. The Court dis smisses this 15 acti in its en ion, ntirety, witho prejudice for lack of subject matt jurisdicti out e ter ion. Because the Court e 16 find based on the evidence presented by the partie that this de ds e b es eficiency can nnot be cure Plaintiff ed, 17 sha not be per all rmitted to fil an amende complain The Clerk is instructe to close th file in le ed nt. k ed he 18 this case. s 19 IT IS SO ORDERED 20 Dat Decemb 18, 2012 ted: ber 21 __________ ___________ ___ ___ Jos seph C. Sper ro Un nited States M Magistrate Ju udge 22 23 24 25 26 27 28 5

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