Suppressed v. Suppressed
Filing
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MEMORANDUM Opinion and Order: Defendant's Motion to Dismiss 4 is granted and this matter is dismissed without prejudice to the refiling of Plaintiff's claims in an appropriate state court. See Order for further details. Civil case terminated. Signed by the Honorable James B. Zagel on 10/27/2015. Mailed notice(ep, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
G2 EQUITIES,
Plaintiff,
v.
No. 15 C 4172
Judge James B. Zagel
RECO CEMENT PRODUCTS, LLC,
Defendant.
MEMORANDUM OPINION AND ORDER
Plaintiff G2 Equities (“G2”) brings this action against Defendant Reco Cement
Products, LLC, alleging breach of contract (Count I), unjust enrichment (Count II), and
promissory estoppel (Count III). G2 also requests an accounting of transactions and agreements
entered into between Defendant and third-party contacts provided by G2 (Count IV) and
declaratory judgment concerning G2’s rights surrounding the alleged controversy (Count V).
This case is presently before me on Defendant’s motion to dismiss the complaint on
three grounds: (1) dismissal under Rule 12(b)(1) for failure to satisfy 28 U.S.C. § 1332’s
requirement that there be at least $75,000 in controversy, (2) dismissal under Rule 12(b)(1) for
lack of standing because the G2’s claims were never ripe and are currently moot, and (3)
dismissal under Rule 12(b)(6) for failure to state a claim for which relief can be granted.
For the following reasons, I am granting Defendant’s motion and dismissing the
complaint because this Court lacks subject-matter jurisdiction.
BACKGROUND
Defendant produces a patented cementitious additive that allows manufacturers to use
less cement, which reduces environmental impact and lowers costs. When Defendant’s product
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was ready to come to market in 2009, Defendant met with G2 and discussed retaining G2 as a
consultant to help procure potential business partners and investors.
After these discussions, G2 and Defendant signed an agreement, titled “Reco Cement
Products Mutual Confidentiality Agreement,” on October 15, 2009 (the “Confidentiality
Agreement”). The Confidentiality Agreement provided that G2 would introduce Defendant to
several major players in the cement industry, and that Defendant would not enter into a business
relationship with, or accept an investment from, G2 referrals without compensating G2 for a
three-year period. According to the Confidentiality Agreement, G2 would be compensated by
Defendant “pursuant to a to-be-negotiated compensation agreement” (the “Compensation
Agreement”).
During the year that followed, G2 introduced Defendant to various third parties in the
building and cement industries. According to G2, Defendant repeatedly and continuously assured
G2 that Defendant intended to compensate them for their work and that they would go forward
“as partners.” While this was happening, the parties exchanged drafts and discussed the final
terms of the Compensation Agreement. On September 6, 2010, however, a representative of
Defendant sent an email to G2 stating that Defendant did not intend to honor its obligations
under the Confidentiality Agreement and would not continue to negotiate or finalize the
Compensation Agreement. G2 filed this lawsuit on May 12, 2015.
DISCUSSION
I am dismissing this complaint for lack of subject-matter jurisdiction under Rule
12(b)(1) because it fails to satisfy the jurisdictional requirements set forth in 28 U.S.C. § 1332. I
will not address Defendant’s other arguments because, in the absence of subject-matter
jurisdiction, this Court lacks the power to adjudicate any aspect of the case. See Schur v. L.A.
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Weight Loss Centers, Inc., 577 F.3d 752, 763 (7th Cir. 2009).
I.
Legal Standard
A motion to dismiss under Rule 12(b)(1) challenges the Court’s subject-matter
jurisdiction. Fed.R.Civ.P. 12(b)(1). The party asserting jurisdiction has the burden of proof.
United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003), overruled on
other grounds by Minn–Chem, Inc. v. Agrium, Inc., 683 F.3d 845 (7th Cir. 2012). The standard
of review for a Rule 12(b)(1) motion to dismiss depends on the purpose of the motion. Apex
Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443–44 (7th Cir. 2009). If a defendant
challenges the sufficiency of the allegations regarding subject-matter jurisdiction (a facial
challenge), the Court must accept all well-pleaded factual allegations as true and draw all
reasonable inferences in the plaintiff's favor. See id.; United Phosphorus, 322 F.3d at 946. If,
however, the defendant denies or controverts the truth of the jurisdictional allegations (a factual
challenge), the Court may look beyond the pleadings and view any competent proof submitted
by the parties to determine if the plaintiff has established jurisdiction by a preponderance of the
evidence. See Apex Digital, 572 F.3d at 443–44; Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d
536, 543 (7th Cir. 2006).
II.
Analysis
Under 28 U.S.C. § 1332, a case is properly in federal court sitting in diversity
jurisdiction if (1) the parties are completely diverse and (2) the amount in controversy exceeds
$75,000. Conceding that the parties are completely diverse, Defendant argues that G2’s
complaint should be dismissed because it fails to satisfy 28 U.S.C. § 1332’s amount in
controversy requirement. Neuma, Inc. v. AMP, Inc., 259 F.3d 864, 881 (7th Cir. 2001).
The amount in controversy is determined by the amount a plaintiff is seeking, not what
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he ultimately may recover. See Grinnell Mut. Reinsurance Co. v. Haight, 697 F.3d 582, 585 (7th
Cir. 2012). Uncontested claims of an amount in controversy are generally accepted unless it
appears to a legal certainty that the claim is really for less than the jurisdictional amount.
McMillian v. Sheraton Chi. Hotel & Towers, 567 F.3d 839, 844 (7th Cir. 2009).
Here, G2 does not specify an exact amount of money that it is seeking to recover, but
instead alleges that “the amount in controversy exceeds $75,000, exclusive of costs and
interests.” This lack of specificity, on its own, is not dispositive because a party need not provide
an exact number it is seeking as long as it alleges that this amount, whatever it is, exceeds
$75,000.
Although it would probably survive a facial challenge, and this is a close call because
of G2’s self-confessed uncertainty, subject-matter jurisdiction here is clearly defeated by
Defendant’s factual challenge.
Where a defendant challenges a plaintiff’s allegation of the amount in controversy, the
plaintiff must support its assertion with “competent proof.” Id. (quoting McNutt v. Gen. Motors
Acceptance Corp., 298 U.S. 178, 189 (1936)). Competent proof has been interpreted to mean a
preponderance of the evidence. See id. The specific question to address on a motion to dismiss,
therefore, is whether the plaintiff has established facts that are, more likely than not, true.
Meridian Security Insurance Co., 441 F.3d. at 543.
In the complaint, G2 admits that “the amount of money due to G2 from [Defendant] is
unknown and cannot be ascertained without an accounting of any and all transactions and
agreements entered into between [Defendant] and G2 Contacts.” G2 has not alleged any
additional expenses or costs that could help it reach its jurisdictional threshold. Even if I assume
that it would be a legal possibility for G2 to recover 100% of the revenue generated by
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Defendant from G2 referrals, jurisdiction is only proper here if G2 can establish, by a
preponderance of the evidence, that such revenue exceeded $75,000.
Because this is a factual challenge, I am allowed to look beyond the pleadings and view
all the proof submitted by both parties in making my determination. In an attempt to meet its
burden, G2 produced the affidavit of its Managing-Member, Jorge Galdamez. According to
Galdamez, “the business relationships and/or investments from third-parties were going to lead
to compensation for G2 in amounts substantially greater than $75,000.” This belief is based on
conversations that Galdamez had with various executives who worked for Defendant. Without
something more, however, Galdamez’s belief has little significance to any of G2’s claims.
To support its assertion that there is not in fact subject-matter jurisdiction, Defendant
produced an affidavit of its CEO and Managing-Member, which stated that “although [G2]
introduced [Defendant] to several third-parties at various times, these introductions never led to
sales of [Defendant’s] products, licenses of [Defendant’s] technology or investment in
[Defendant]” and “[Defendant] has never received any revenue or profits from third-parties
introduced by G2.” According to this affidavit, Defendant entered into only one agreement
related in any way to introductions by G2. Defendant signed a financial advisor services
agreement with one of G2’s referrals, Siva Yam and Associates, LLC on March 28, 2013.
Pursuant to the agreement with Siva Yam and Associates, Defendant paid a retainer in the
amount of $10,000 and, in exchange, Siva Yam agreed to assist Defendant in securing customers
and investors from the Greater China Region. According to the affidavit produced by Defendant,
however, this relationship expired at the end of December 2014 and yielded no customers or
revenues for Defendant.
Even if I ignore Defendant’s affidavit, which seems to squarely address the amount in
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controversy that is at stake in this case but has obvious credibility issues, I still conclude that
Plaintiff has failed to meet its burden here. Without alleging any expenses or costs that it
incurred as a result of Defendant’s foul play, G2’s request for damages is capped by a number—
the profits and revenues that Defendant generated from G2 referrals—that is admittedly
unknown to G2.
Because G2 has failed to meet its burden, I conclude that G2’s complaint fails to satisfy
28 U.S.C. § 1332’s amount in controversy requirement. Accordingly, I am dismissing the
complaint for lack of subject-matter jurisdiction.
CONCLUSION
For the reasons set forth above, this Court does not have subject-matter jurisdiction
over G2’s claims pursuant to 28 U.S.C. § 1332. I am granting Defendant’s motion to dismiss
under Rule 12(b)(1), but this dismissal shall be without prejudice to the refiling of G2’s claims in
an appropriate state court.
ENTER:
James B. Zagel
United States District Judge
DATE: October 27, 2015
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