Bank Transactions, Inc. v. Franco

Filing 23

ORDER. IT IS HEREBY ORDERED that 9 Defendant's Motion to Dismiss is GRANTED. Plaintiff's Complaint is dismissed without prejudice. If Plaintiff can correct this pleading defect, it may file a Second Amended Complaint no later than 2/3/17. Signed by Chief Judge Gloria M. Navarro on 1/17/17. (Copies have been distributed pursuant to the NEF - ADR)

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UNITED STATES DISTRICT COURT 1 DISTRICT OF NEVADA 2 3 BANK TRANSACTIONS, INC., 4 Plaintiff, vs. 5 6 FRIDA FRANCO, 7 Defendant. 8 ) ) ) ) ) ) ) ) ) Case No.: 2:16-cv-200-GMN-VCF ORDER 9 10 Pending before the Court is the Motion to Dismiss or Alternatively to Transfer Venue 11 (ECF No. 9) filed by Defendant Frida Franco (“Defendant”). Plaintiff Bank Transactions, Inc. 12 (“Plaintiff”) filed a Response (ECF No. 12), Defendant filed a Reply (ECF No. 13), and 13 Plaintiff filed a Sur-Reply (ECF No. 22). 14 I. 15 BACKGROUND This case arises out of an alleged violation of a non-compete clause in an employment 16 agreement entitled “Marketing Agreement” between Plaintiff, the company employer, and 17 Defendant, its former sales representative. On February 2, 2016, Plaintiff filed the instant 18 lawsuit against Defendant alleging one claim for breach of contract. (See Compl., ECF No. 1). 19 On March 7, 2016, Plaintiff filed an Amended Complaint, re-alleging breach of contract, and 20 adding claims for breach of covenant of good faith and fair dealing and unjust enrichment. (See 21 Am. Compl., ECF No. 4). 22 On April 5, 2016, Defendant filed the instant Motion asserting that the Court lacked 23 personal jurisdiction over her. (Mot. Dismiss 4:3–6:23, ECF No. 9). Defendant specifically 24 argues that the choice of law and forum selection clauses in the Marketing Agreement are 25 “invalid.” (Id. 6:23–10:18). Alternatively, if the Court is not inclined to dismiss the case, Page 1 of 4 1 Defendant seeks to transfer it to the United States District Court for the Southern District of 2 California under 28 U.S.C. § 1404, “for the convenience of the parties and in the interest of 3 justice.” (Id. 13:1–20:22). Plaintiff counters that the Marketing Agreement dictates the 4 governing law is that of the State of Nevada, and such an agreement as to choice of law is valid 5 and enforceable. (Resp. 2:19–5:24, ECF No. 12). In her Reply, Defendant first suggests that this Court lacks subject matter jurisdiction 6 7 because the parties are not diverse. (Reply 1:20–7:9, ECF No. 13). District courts may 8 disregard arguments first raised in a reply brief because the timing of the argument deprives the 9 opposing party of the opportunity to respond. See, e.g., Provenz v. Miller, 102 F.3d 1478, 1483 10 (9th Cir. 1996); USF Ins. Co. v. Smith’s Food & Drug Ctr., Inc., 921 F. Supp. 2d 1082, 1090 11 n.1 (D. Nev. 2013). However, given the importance of subject matter jurisdiction, the Court 12 determined the appropriate remedy was to allow Plaintiff the opportunity to respond in the form 13 of a Sur-Reply (see ECF No. 21), which Plaintiff timely filed (ECF No. 22). 14 II. 15 LEGAL STANDARD Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of 16 Am., 511 U.S. 375, 377 (1994). District courts have jurisdiction in two instances. First, district 17 courts have subject matter jurisdiction over civil actions that arise under federal law. 28 U.S.C. 18 § 1331. Second, district courts have subject matter jurisdiction over civil actions where no 19 plaintiff is a citizen of the same state as a defendant and the amount in controversy exceeds 20 $75,000. 28 U.S.C. § 1332(a). For the latter, referred to as diversity jurisdiction, a corporation 21 is a citizen of both the “state by which it has been incorporated and [the state] where it has its 22 principal place of business.” 28 U.S.C. § 1332(c)(1). Diversity of citizenship is determined as 23 of the filing of the complaint. Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 696 (9th Cir. 24 2005) (citing Smith v. Sperling, 354 U.S. 91, 93 n.1 (1957)). 25 Page 2 of 4 “The party seeking to invoke the district court’s diversity jurisdiction always bears the 1 2 burden of both pleading and proving diversity jurisdiction.” NewGen, LLC v. Safe Cig, LLC, 3 840 F.3d 606, 613–14 (9th Cir. 2016). When a plaintiff originally files in federal court, “[t]he 4 essential elements of diversity jurisdiction . . . must be affirmatively alleged in the pleadings.” 5 Bautista v. Pan Am. World Airlines, Inc., 828 F.2d 546, 552 (9th Cir. 1987) (citation omitted); 6 see also Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001) (“[I]n a diversity 7 action, the plaintiff must state all parties’ citizenships such that the existence of complete 8 diversity can be confirmed.”). At the pleading stage, the plaintiff is “merely required to allege 9 (not to prove) diversity.” Kanter, 265 F.3d at 857. Federal Rule of Civil Procedure 15 provides that “leave to amend shall be freely given 10 11 when justice so requires.” Fed. R. Civ. P. 15(a); Foman v. Davis, 371 U.S. 178, 182 12 (1962); Amerisource Bergen Corp. v. Dialysis West, Inc., 465 F.3d 946, 951 (9th Cir. 2006). 13 Specifically, when a court dismisses a complaint for failure to properly allege diversity 14 jurisdiction, leave to amend should be granted unless doing so would be futile. See Jacobs v. 15 Patent Enf’t Fund, 230 F.3d 565, 567–68 (9th Cir. 2000). When amendment is futile in a case 16 dismissed for lack of subject matter jurisdiction, the court should still dismiss the case without 17 prejudice so the plaintiff may reassert its claims in a competent court. See Frigard v. United 18 States, 862 F.2d 201, 204 (9th Cir. 1988) (per curiam). 19 III. 20 DISCUSSION Plaintiff brought this case under the Court’s diversity jurisdiction, pursuant to 28 U.S.C. 21 § 1332. (Am. Compl. ¶ 1). Amount in controversy is not in dispute, nor is Defendant’s 22 citizenship as an individual domiciled in the State of California. However, Defendant asserts 23 that while Plaintiff is incorporated in Nevada, and therefore a citizen of Nevada, Plaintiff is also 24 a citizen of California because its “principal place of business” is California. (Reply 2:24– 25 5:21); see also 28 U.S.C. § 1332(c)(1) (a corporation is a citizen of both the state in which it Page 3 of 4 1 was incorporated and the state in which its principal place of business is located). In its Sur- 2 Reply, Plaintiff argues that the Court should not rely on the “self-serving conclusions stated in 3 [Defendant’s] Affidavit” to determine subject matter jurisdiction. (Sur-Reply 2:10, ECF No. 4 22). However, Plaintiff never asserts where its principal place of business is located, despite 5 ample opportunity to do so in its Complaint, Amended Complaint, and the Sur-Reply allowed 6 by the Court specifically to address subject matter jurisdiction. Given the lack of pleading as to 7 Plaintiff’s principal place of business, Plaintiff’s Amended Complaint plainly fails to allege the 8 “essential elements of diversity jurisdiction” required under § 1332(a). See Bautista, 828 F.2d 9 at 552. Accordingly, the Court lacks subject matter jurisdiction over this case. However, the 10 Court will dismiss the case without prejudice and allow Plaintiff leave to file a Second 11 Amended Complaint because it is possible that diversity jurisdiction exists in this matter. See 12 Jacobs, 230 F.3d at 567–68. 13 IV. 14 CONCLUSION IT IS HEREBY ORDERED Defendant’s Motion to Dismiss (ECF No. 9) is 15 GRANTED. Plaintiff’s Complaint is dismissed without prejudice. If Plaintiff can correct this 16 pleading defect, it may file a Second Amended Complaint no later than February 3, 2017. 17 Otherwise, Plaintiff may pursue any further action regarding this matter in state court. 18 17 DATED this _____ day of January, 2017. 19 20 21 ___________________________________ Gloria M. Navarro, Chief Judge United States District Court 22 23 24 25 Page 4 of 4

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