Brandpoint Services, Inc. v. Smart Property Inspectors, Corp. et al

Filing 23

OPINION AND ORDER denying 4 Motion to Dismiss for Lack of Jurisdiction. Signed by US Magistrate Judge Bruce J. McGiverin on September 19, 2012. (McGiverin, Bruce) Modified on 9/19/2012 as to title (er).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
BRANDPOINT SERVICES, INC.,
Plaintiff,
v.

Civil No. 11-2081 (BJM)

SMART PROPERTY INSPECTORS, et al.,
Defendants.

OPINION AND ORDER
In this diversity action, Brandpoint Services, Inc. (“Brandpoint”) sued Smart Property
Inspectors Corp. (“Smart”), Liquid Capital Exchange, Inc. (“Liquid”), and unnamed individuals
and insurance companies, alleging negligence and breach of contract. (Docket No. 1). In
addition to joint and several liability for damages against all defendants, Brandpoint seeks
declaratory relief against Smart and Liquid. (Id.). Before the court is Liquid‟s motion to dismiss
for lack of subject matter jurisdiction. (Docket No. 4). Brandpoint opposed. (Docket No. 7).
For the reasons that follow, Liquid‟s motion to dismiss is denied.
FACTUAL BACKGROUND
The following facts are taken from the complaint and the documentary evidence in the
record, namely demand letters from both Liquid and Smart. (Docket No. 7-1; 7-2). Brandpoint
is a Nevada corporation with its principal place of business in Pennsylvania and Canada.
(Docket No. 1, hereinafter “Compl.,” ¶ 2). Defendants are businesses incorporated and/or
operating with their principal place of business in Puerto Rico, Texas, and/or Delaware. (Id.).
In August 2011, Merchco Services, Inc. (“Merchco”) hired Brandpoint as a subcontractor
to provide “all labor, materials, equipment, supervision, taxes, permits, and associated incidentals
to complete painting and wall covering installation at designated Walgreens locations in Puerto
Rico.” (Id., ¶ 11). Brandpoint contracted for Smart to provide the painting and wallpaper
installation at each work site. (Id., ¶ 13). Work at each Walgreens location was to be completed

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according to work orders containing agreed-upon “Terms and Conditions,” which included
language allowing Brandpoint to withhold payment “on account of any correction or reexecution of those portions of any work which is defective or has not yet been performed
pursuant to the Work Order.” (Id., ¶ 16). Brandpoint was later informed that Smart had acquired
the services of Liquid “as a partner in processing accounts receivable and as a source of working
capital,” selling and assigning existing and future accounts receivable. (Id., ¶¶ 18, 19).
Smart‟s work performance was “unacceptable and deficient,” resulting in Merchco
terminating its agreement with Brandpoint for the remaining Walgreens locations in October
2011. (Id., ¶¶ 23, 26, 30). While Brandpoint was able to convince Mercho to allow them, at
their own expense, “to correct and re-execute” the work, Merchco prohibited Smart from reentering the work sites. (Id., ¶¶ 28, 29, 31). Smart has “taken certain actions making it more
difficult and expensive for Brandpoint to correct and/or re-execute Smart‟s defective and
improperly performed work.” (Id., ¶ 32). Such actions include refusing to return “over $21,000”
worth of wall coverings needed to complete the work and allowing Liquid to take possession of
them. (Id., ¶¶ 33, 35, 37, 65).
Acting in its capacity as the owner of Smart‟s accounts receivable, Liquid sent
Brandpoint a letter on October 25, 2011 requiring payment of “at least $85,344.96.” (Id., ¶ 38;
Docket No. 7-2, p. 2). Brandpoint has submitted Liquid‟s letter, as well as another from Smart
dated October 26, 2011; both seek collection of $85,344.96. (Docket No.7-1; Docket No. 7-2).
SUBJECT MATTER JURISDICTION STANDARD
Motions to dismiss for lack of subject matter jurisdiction are governed by Federal Rule of
Civil Procedure 12(b)(1). “[F]ederal jurisdiction is never presumed.” Viqueira v. First Bank,
140 F.3d 12, 16 (1st Cir. 1998). Rather, “the party invoking the jurisdiction of a federal court
carries the burden of proving its existence.” P.R. Tel. Co. v. Telecomm‟s Reg. Bd. of P.R., 189
F.3d 1, 7 (1st Cir. 1999). There are two general rubrics for evaluating subject matter jurisdiction.
First, a defendant may challenge the legal sufficiency of the facts offered by the plaintiff, while

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assuming their accuracy; the court then credits the plaintiff‟s factual allegations and draws
reasonable inferences in its favor. Valentín v. Hospital Bella Vista, 254 F.3d 358, 363 (1st Cir.
2001). Alternatively, the movant may challenge the truth of the plaintiff‟s facts and offer
contrary evidence; the court then weighs the evidence. Id.
DISCUSSION
Liquid argues that because Brandpoint failed to meet the amount-in-controversy
requirement, this court lacks jurisdiction. Original jurisdiction of district courts is dependent
upon complete diversity of the parties and whether the amount in controversy exceeds $75,000.
28 U.S.C. § 1332(a) (2006); Ortega v. Star-Kist Foods, Inc., 370 F. 3d 124, 139 (1st Cir. 2004),
rev‟d on other grounds sub nom. Exxon Mobil Corp. v. Allapattah Servs., 545 U.S. 546 (U.S.
2005). “[A] plaintiff's general allegation of damages that meet the amount requirement suffices
unless questioned by the opposing party or the court.” Spielman v. Genzyme Corp., 251 F. 3d 1,
5 (1st Cir. 2001). However, if challenged, plaintiff must show “„that it is not a legal certainty
that the claim involves less than the jurisdictional amount.‟” Id. (quoting Dep't of Recreation
and Sports v. World Boxing Ass'n, 942 F.2d 84, 88 (1st Cir. 1991). The plaintiff may meet this
burden by submitting additional evidence, such as depositions and exhibits. Id. at 487; Gonzales
v. United States, 284 F. 3d 281, 288 (1st Cir. 2002). In actions for declaratory relief, the amount
in controversy “„is measured by the value of the object of the litigation.‟” Dep‟t of Recreation
and Sports, 942 F. 2d at 88 (quoting Hunt v. Washington State Apple Advertising Comm‟n, 432
U.S. 333, 347-348 (U.S. 1977)).
Liquid argues that Brandpoint “cannot establish with legal certainty that their claim . . .
will exceed the jurisdictionally required amount of $75,000.” (Docket No. 4, ¶ 15). Liquid
claims that Brandpoint has not pleaded specific damages against Liquid, and that any amount
that may be attributable to them “does not amount (to) more than $21,000,” the cost of the wall
coverings in their possession. (Docket No. 4, ¶ 15). However, in the complaint, Brandpoint
seeks a declaration that it does not owe Liquid $85,344.96. (Compl., ¶ 71; Docket No. 7). That

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amount echoes the letter allegedly sent by Liquid, which Liquid has neither objected nor replied
to.

(See Docket No. 7-1).

In sum, the complaint states a facially good-faith claim for

declaratory relief in an amount exceeding $75,000, and any doubts about this amount have been
rebutted by the demand letters.1
CONCLUSION
For the foregoing reasons, Liquid‟s motion to dismiss is DENIED.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 19th day of September, 2012.
S/Bruce J. McGiverin
BRUCE J. McGIVERIN
United States Magistrate Judge

1

Because the amount-in-controversy requirement is satisfied by Brandpoint‟s request for declaratory relief,
it is unnecessary to resolve Liquid‟s argument that it is not jointly and severally liable for the other damages alleged
in the complaint.