Nolting et al v. Direct Media Services Corporation et al
Filing
23
ORDER granting 6 Motion to dismiss for lack of subject matter jurisdiction as to Defendant Mag Systems, Inc., without prejudice, and dismissing without prejudice as to Defendant Direct Media Services Corporation for improper venue. The Clerk of Court shall close this case. Signed by Judge Elizabeth A. Kovachevich on 12/7/2012. (JM)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
RANDALL NOLTING, et al.,
Plaintiffs,
CASE NO. 8:12-CV-1983-T-17AEP
v.
DIRECT MEDIA SERVICES
CORPORATION and MAG
SYSTEMS, INC.,
Defendants.
ORDER
This cause is before the Court on:
Dkt. 6
Dkt. 14
Motion to Dismiss (Mag Systems, Inc.)
Response
Plaintiffs' Complaint includes Count I, Declaratory Judgment, and Count I, Duty
to Indemnify. Plaintiffs attached Exhibits A-K to the Complaint.
Defendant Mag Systems, Inc. moves to dismiss for lack of subject matter
jurisdiction, for dismissal for failure to state a claim, and because Plaintiffs' claims are
barred by res judicata.
I. Standard of Review
A) Failure to state a claim
"Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a "short
Case No. 8:12-CV-1983-T-17AEP
and plain statement of the claim showing that the pleader is entitled to relief." "[D]etailed
factual allegations" are not required, Bell Atlantic v. Twomblv, 550 U.S. 544, 555 (2007),
but the Rule does call for sufficient factual matter, accepted as true, to "state a claim to
relief that is plausible on its face," .kl, at 570. A claim has facial plausibility when the
pleaded factual content allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged. kL, at 556. Two working principles
underlie Twomblv. First, the tenet that a court must accept a complaint's allegations as
true is inapplicable to threadbare recitals of a cause of action's elements, supported by
mere conclusory statements, jd,, at 555. Second, only a complaint that states a
plausible claim for relief survives a motion to dismiss. Determining whether a complaint
states a plausible claim is context-specific, requiring the reviewing court to draw on its
experience and common sense. Id, at 556. A court considering a motion to dismiss
may begin by identifying allegations that, because they are mere conclusions, are not
entitled to the assumption of truth. While legal conclusions can provide the complaint's
framework, they must be supported by factual allegations. When there are
well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief. See Ashcroft v.
Iqbal. 129 S.Ct. 1937, 1955-1956 (2009)(quoting Bell Atlantic v. Twomblv. 550 U.S. 544
(2007).
B. Subject matter jurisdiction
A motion to dismiss for lack of subject matter jurisdiction, pursuant to Rule
12(b)(1), Federal Rules of Civil Procedure, can be a facial attack or a factual attack. In
a facial attack, the factual allegations of the Complaint are taken as true. In a factual
attack, the Court may consider matters outside the Complaint, and is free to weigh
evidence and satisfy itself as to the existence of its power to hear the case. In a factual
attack, the allegations of the Complaint are not presumptively true. Where the attack
on jurisdiction implicates the merits of the plaintiffs federal cause of action, the Court
Case No. 8:12-CV-1983-T-17AEP
should find that jurisdiction exists and deal with the objection as a direct attack on the
merits of plaintiffs case, proceeding under Rule 12(b)(6) or Rule 56. The exceptions to
this rule are narrowly drawn, and are intended to allow jurisdictional dismissals only in
those cases where the federal claim is clearly immaterial or insubstantial. See
Williamson v. Tucker. 645 F.2d 404 (5th Cir.), cert denied. 454 U.S. 897, 102 S.Ct.
396, 70LEd.2d212(1981).
C. Declaratory Judgment
The Declaratory Judgment Act does not, of itself, confer jurisdiction upon federal
courts. See Household Bank v. JFS Group. 320 F.3d 1249. 1253 (11th Cir. 2003). In
the context of a declaratory judgment action, the normal position of the parties is
reversed; the Court does not look to the face of the declaratory judgment complaint in
order to determine the presence of a federal question, but determines whether or not
the cause of action anticipated by the declaratory judgment plaintiff arises under federal
law. The Court's inquiry is whether, absent the availability of declaratory relief, the
instant case could nonetheless have been brought in federal court. The Court analyzes
the assumed coercive action by the declaratory judgment defendant.
See Stuart
Weitzman, LLC v. Microcomputer Resources. Inc.. 524 F.3d 859, 862 (11* Cir. 2008).
II. Discussion
A. Preliminary issue
The Court takes judicial notice of the docket of Case No.
292005CA004842001HC, Direct Media Services, Inc. and Mag Systems, Inc. v.
Jhadwarn, Inc. et al., Hillsborough County Circuit Court. The Court notes that a non
jury final judgment in the amount of $1,124,630.98 was entered in the Hillsborough
County Circuit Court on December 15, 2011 in favor of Defendant Mag Systems, Inc.
Case No. 8:12-CV-1983-T-17AEP
and against Plaintiffs Randall Nolting and Stephanie Nolting. Plaintiffs moved for relief
from the judgment, or to set aside the judgment, which the Hillsborough County Circuit
Court denied. The Second District Court of Appeals has affirmed the ruling of the
Hillsborough Count Circuit Court. (Dkt. 6-1).
B. Subject matter jurisdiction
The basis of jurisdiction is diversity. Plaintiffs allege:
5. This Court has subject matter jurisdiction over this matter
pursuant to 28 U.S.C. Sec. 1332, because Plaintiffs and
Defendants are citizens of different States and the amount
in controversy exceeds the sum of $75,000, exclusive of
interest and costs.
Defendant Mag Systems, Inc. argues that, although Plaintiffs allege that the amount in
controversy exceeds $75,000, it is clear from the face of the Complaint, with the
attached Exhibits, that Plaintiffs' damages are at most the $50,000 Plaintiffs claim they
paid to Defendant Direct Media Services Corporation, and Plaintiffs allege no other loss
or potential loss. Defendant Mag Systems, Inc. argues that, in a diversity action, the
amount in controversy is measured by the amount of the plaintiff's claim. Rosario
Ortega v. Star-Kist Foods. Inc., 370 F.3d 124, 127-128 (1st Cir. 2004)(citing St. Paul
Mercury Indem. Co. v. Red Cab Co.. 303 U.S. 283, 288-89 (1938). When it appears
legally certain that the claim is really for less than the jurisdictional amount, dismissal is
justified. Id at 127.
In Par. 31, Plaintiffs allege:
31. It was common knowledge that the full amount of the first wire
transfer for $50,000, was immediately paid directly to Mag Systems with
Direct Media acting as partial straw man, for Mag Systems. After this
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Case No. 8:12-CV-1983-T-17AEP
transaction Direct Media would dissolve itself by years end.
Plaintiffs also allege that the underlying judgment is in the amount of $1,124,630.98.
(Dkt. 1, par. 36).
In Count I, Plaintiffs allege that they have completely discharged all legal
obligations owed by them to both Defendant Direct Media Services Corporation and
Defendant Mag Systems, Inc. Plaintiffs seek a declaration of the rights of the parties
with respect to the Release Agreement.
Article 4.3, Release and Indemnity Agreements, states:
4.3
Indemnification. Effective as of the date of this
Agreement, Florida Parties hereby agree to defend,
indemnify and hold harmless buyer and the Noltings from
Claims that either Buyer or the Noltings may be called upon
to pay now, or any losses sustained due to Claims, at any
later date, to any individual, corporation, or the like by way of
indemnity, contribution, or otherwise in connection with such
Claims, including, but not limited to, those arising out of or
relating by way of lawsuit or bankruptcy. This right of
indemnity specifically arises as to any and all events which
could arise in the bankruptcy of JHADWARN, INC. due to
the actions of JHADWARN, INC., which may result in harm
to either Buyer or Noltings. Such events would include but
not be limited to a challenge that some of the assets
conveyed herein are rightfully owned by JHADWARN, INC.
or that the assets of the (sic) JHADWARN, INC. were
conveyed in such a way that buyer, Noltings or both were
called upon to either return the assets or pay for assets that
may have been determined to have been improperly
transferred. This agreement to indemnify includes, without
limitation, attorneys' and other fees and costs. Should
Buyer or Noltings be called upon to make any payments or
sustain any loss other than the Purchase price, as defined in
this Agreement, to any person, corporation, or other, related
Case No. 8:12-CV-1983-T-17AEP
to Claims, Florida Parties, do hereby agree to indemnify
Buyer and the Noltings for any and all said sums. It is the
intent of the Parties that Buyer and the Noltings shall not be
required to pay any further sums as a result of the
aforementioned Claims and obligations, including but not
limited to any and all claims or defenses asserted in the Suit,
to any other individual, corporation, or the like. Further, it is
the intent of the Parties that this agreement to indemnify
shall extend to the defense of the validity and ownership of
the Assets against a bankruptcy Trustee of any and all
chapters.
The Court notes that Defendant Mag Systems Inc. is not a party to the Asset
Purchase Agreement and Release Agreement of July 3, 2009 (Dkt. 1-6). The Court
also notes the following provision:
8.9 Governing Law, Jurisdiction, Forum Selection. This
Agreement shall be governed by, construed, and enforced in
accordance with the laws of the State of Ohio as it applies to
a contract made and performed in such State and without
regard to its conflict of laws provisions that would require the
application of any other jurisdiction's law. Any and all
actions pertaining to this Agreement or its subject matter
shall only be brought in a court of competent jurisdiction in
Hamilton County, Ohio. All parties irrevocably consent to
the jurisdiction of such courts.
Any declaratory judgment action as between Plaintiffs Randall Nolting and Stephanie
Nolting and Direct Media Services Corporation, parties to the Asset Purchase and
Release Agreement, is to be brought in a court of competent jurisdiction in Hamilton
County, Ohio.
As to a declaratory judgment action between Plaintiffs Randall Nolting and
Stephanie Nolting and Defendant Mag Systems, Inc., the Court notes that the Plaintiffs
allege that Defendant Direct Media Services Corporation paid $50,000 to Defendant
Mag Systems after Plaintiffs and Defendant Direct Media Services Corporation entered
Case No. 8:12-CV-1983-T-17AEP
into the Asset Purchase and Release Agreement. However, $50,000 is not a sufficient
amount to establish the jurisdiction of this Court over Defendant Mag Systems, Inc.
where the only basis for jurisdiction is diversity.
Because this Court does not have
subject matter jurisdiction as to the claim against Defendant Mag Systems, Inc., the
Court will not rule on the motion to dismiss under Fed. R. Civ. P. 12(b)(6).
After consideration, the Court dismisses this case without prejudice as to
Defendant Mag Systems, Inc. for lack of subject matter jurisdiction, and dismisses this
case without prejudice as to Defendant Direct Media Services Corporation for improper
venue. Accordingly, it is
ORDERED that the Motion to Dismiss (Dkt. 6) is granted as to Defendant Mag
Systems, Inc. for lack of subject matter jurisdiction. This case is dismissed without
prejudice as to Defendant Mag Systems, Inc. It is further
ORDERED that this case is dismissed without prejudice as to Defendant
Direct Media Services Corporation for improper venue. The Clerk of Court shall close
this case.
DONE and ORDERED in Chambers, in Tampa, Florida on this
_cfey of December, 2012.
Vr-KQVACHEVTC
United States District Ju
Copies to:
All parties and counsel of record
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