Todero v. Laxcom, LLC et al

Filing 61

MEMORANDUM OPINION AND ORDER - This matter is before the Court on a Motion to Dismiss for Lack of Subject Matter Jurisdiction filed by Defendants LAXCOM, LLC, John A. Arrix, Paul Shields Ferber, Jr., George West, Ernest Mahler, III, Matthew Briggs F orelli, Eric Steinfeldt, and John Vanderslice (collectively "Defendants"). For the reasons stated herein, Defendants' Motion is GRANTED. This matter is hereby DISMISSED and Plaintiffs Motion to Dismiss John Vanderslice and Transfer the Case to the United States District Court for the District of New Jersey (ECF No. 58) is DENIED. Signed by District Judge Raymond A. Jackson and filed on 2/11/2013. (bnew)

FILED
IN THE UNITED STATES DISTRICT COURT

FEB 1 1 2013

FOR THE EASTERN DISTRICT OF VIRGINIA

Newport News Division
CLERK, U.S. DISTRICT COURT
NORFOLK, VA

MARK TODERO,
Plaintiffs,
v.

CIVIL ACTION NO. 4:1 lcvl57

LAXCOM, LLC, et«/.,
Defendants.

MEMORANDUM OPINION AND ORDER

This matter is before the Court on a Motion to Dismiss for Lack of Subject Matter
Jurisdiction filed by Defendants LAXCOM. LLC, John A. Arrix, Paul Shields Ferber, Jr.,
George West, Ernest Mahler. Ill, Matthew Briggs Forelli. Eric Steinfeldt, and John
Vandcrslice (collectively "Defendants"). For the reasons stated herein. Defendants'
Motion is GRANTED.
I. FACTUAL AND PROCEDURAL HISTORY

Defendant LAXCOM. LLC ("LAXCOM) is a Delaware limited liability company
with its principal place of business in Connecticut. Plaintifff Mark Todero ("Plaintiff

or "Todero") is a resident of Virginia who, in 2008. entered into an agreement with
Defendant John A. Arrix ("Arrix"') to form ajoint venture for the purpose of purchasing
Lax.com, a website that sells lacrosse gear. Compl. *| 15-17, 20. Plaintiff and Defendant
Arrix entered into negotiations with the remaining Defendants (collectively, "Florida
Team") to secure their investment in the venture. Compl. f 46. In or about November

I

2009, Arrix notified Todero that the Florida Team offered Arrix the opportunity to

complete the investment, on the condition that Todero no longer be involved. Compl. U

66-67. Arrix accepted the Florida Team's terms and offered to compensate Todero for
his time. Compl. ^j68. Todero declined and in January 2010, Arrix and several members
of the Florida team acquired Lax.com and formed LAXCOM without Todero.
On November 29,2011, Plaintiff filed the instant Complaint, citing diversity

jurisdiction pursuant to 28 U.S.C. § 1332, as grounds for the Court's jurisdiction.
Compl. 1. In the thirteen-count Complaint, Plaintiff alleges breach of contract, fraud,
tortious interference, and various other claims related to the Lax.com deal. On April 20,
2012, Defendants filed a Motion to Dismiss for Failure to State a Claim and a Motion to

Dismiss for Lack of Personal Jurisdiction.1 Defendants Ernest Mahler, III and John
Vanderslice separately filed a Motion for Summary Judgment. In response, on May 15,
2012, Plaintiff filed a Motion to Stay asking the Court to transfer this action to the United
States District Courts of either Connecticut or Florida, pursuant to 28 U.S.C. § 1631. On

May 21, 2012, Defendants filed Responses, asserting that Plaintiff failed to meet the
requirements for both venue transfer and personal jurisdiction. The parties came before
the Court for a hearing on January 24, 2013. On January 20, 2013, Defendants filed a
Motion to Dismiss for Lack of Subject Matter Jurisdiction. On January 31,2013,
Plaintiff filed a Motion to Sever John Vanderslice and Transfer the Case to the United

States District Court for the District of New Jersey. This matter is now ripe for judicial
determination.

John Vanderslice did not join Defendants' Motion to Dismiss for Lack of Personal Jurisdiction.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(h)(3) provides for the dismissal of an action at

any time where the Court determines that it lacks subject matter jurisdiction. See Fed. R.
Civ. P. 12(h)(3). Unless the matter involves an area over which federal courts have

exclusive jurisdiction, a federal district court has subject matter jurisdiction over a case
only where the matter involves a "federal question arising under the Constitution, laws or
treaties of the United States," 28 U.S.C. § 1331, or if "the matter in controversy exceeds
the sum or value of $75,000, exclusive of interests and costs, and is between citizens of
different States," 28 U.S.C. § 1332(a)(1). See Pinkley, Inc. v. City ofFrederick, Md.,\9\

F.3d 394, 399 (4th Cir. 1999) ("Federal courts are courts of limited subject matter

jurisdiction, and as such there is no presumption that the court has jurisdiction.").
Accordingly, "before a federal court can decide the merits of a claim, the claim must
invoke the jurisdiction of the court." Miller v. Brown, 462 F.3d 312,316 (4th Cir. 2006).
III. DISCUSSION

Before considering any substantive motions, the Court must first address the

question of whether these matters are properly before it. It is well established that federal
courts have an independent obligation to determine the existence of subject matter
jurisdiction and may do so absent a challenge from any party. See Arbaugh v. Y&H
Corp., 546 U.S. 500, 514 (2006) ("[C]ourts ... have an independent obligation to
determine whether subject-matter jurisdiction exists, even in the absence of a challenge
from any party." (citations omitted)); In re Kirkland, 600 F.3d 310, 315 (4th Cir. 2010)

("Subject matter jurisdiction cannot be forfeited or waived, and can be raised by a party,

or by the court sua sponte, at any time prior to final judgment."). A plaintiff may bring
suit in federal court only if "the matter in controversy exceeds the sum or value of
$75,000, exclusive of interests and costs, and is between citizens of different States,"

pursuant to 28 U.S.C. § 1332(a)(1), or if the matter involves a federal question arising
"under the Constitution, laws or treaties of the United States," pursuant to 28 U.S.C. §
1331.

Plaintiffs sole ground for subject matter jurisdiction is 28 U.S.C. § 1332. The

United States Supreme Court has "consistently interpreted § 1332 as requiring complete
diversity." ExxonMobil Corp. v. Allapattah Serv., Inc., 545 U.S. 546, 553 (2005).

Complete diversity is satisfied "when no party shares common citizenship with any party
on the other side." Mays v. Rapoport, 198 F.3d 457,461 (4th Cir. 1999). In cases

involving multiple plaintiffs and multiple defendants, the presence of a single plaintiff
from the same state as a single defendant destroys complete diversity and deprives the

district court ofjurisdiction over the entire action. Exxon Mobil, 545 U.S. at 553.

The Complaint establishes that Plaintiff is a citizen of Virginia. Compl. ^ 1.
Plaintiff also initially listed Defendant John Vanderslice as a resident of Connecticut.
Compl. K2. However, in an affidavit submitted to the Court on January 29, 2012, counsel
for the Defendant avers that Defendant Vanderslice was a Virginia resident at the time

the Complaint was filed. The pleadings indicate a lack of complete diversity, as both
Plaintiff and Defendant John Vanderslice are citizens of Virginia. Plaintiff also concedes
that "there is currently no diversity [jurisdiction] within the meaning of 28 U.S.C.

§1332." PI. Mot. to Dismiss John Vanderslice. Accordingly, the Court FINDS that it
lacks subject matter jurisdiction.

Plaintiff attempts to overcome this jurisdictional defect by asking the Court to
sever Defendant Vanderslice and transfer this action to the United States District Court

for the District of New Jersey, pursuant to 28 U.S.C. § 1406(a). The Court declines to

provide any such remedy. Where there is no subject matter jurisdiction by reason of lack
of diversity, the Court must dismiss. Raese v. Kelly, 59 F.R.D. 612,615 (N.D.W.Va
1973) (citing Fed. R. Civ. P. (12)(h)(3)); see also Integrated Health Serv. ofCliffManor,
Inc. v. THCICo., LLC, 417 F.3d 953 (8th Cir. 2005) (citations omitted).
The Court also declines to grant Plaintiffs request for a venue transfer. Venue
transfer falls squarely within the Court's discretion. Landers v. Dawson Const. Plant,

Ltd., 201 F.3d 436,437 (4th. Cir. 1993); Morgan v. RichmondSch. ofHealth & Tech,
Inc., 857 F.Supp.2d 104, 110 (D.D.C. 2012). A district court may only transfer a civil

action to another district or division where it might have been originally brought, if such
a transfer is in the interest ofjustice. 28 U.S.C. § 1404(a); Nichols v. G.D. Searle & Co.,
991 F.2d 1195, 1201 (4th Cir. 1993); see also 28 U.S.C. § 1631. Plaintiff asks that the

Court transfer this case to the District of New Jersey. In order to do so, Plaintiff again
asks the Court to sever another Defendant, Ernest Mahler, III, to effectuate proper
jurisdiction. Plaintiffs request indicates that the Complaint, as originally filed with the
existing Defendants, could not have been brought in the District of New Jersey. In
addition, even if the Court were to sever Defendants Vanderslice and Mahler, it is not

entirely clear that the New Jersey District Court would have proper jurisdiction over the
remaining Defendants.
Furthermore, it is well within the Court's discretion to find that the interests of

justice are not served by "allowing a plaintiff whose attorney committed an obvious error
in filing the plaintiffs action in the wrong court to simply transfer his/her action to the
proper court." Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1201 (4th Cir. 1993).

Accordingly, Plaintiffs transfer request is DENIED. This matter is DISMISSED for
lack of subject matter jurisdiction.
IV. CONCLUSION

For the reasons stated above, this Court lacks subject matter jurisdiction. This

matter is hereby DISMISSED and Plaintiffs Motion to Dismiss John Vanderslice and
Transfer the Case to the United States District Court for the District of New Jersey (ECF
No. 58) is DENIED.
The Clerk is DIRECTED to send a copy of this Memorandum Order to counsel

and parties of record.
IT IS SO ORDERED.

Norfolk, Virginia

February ^ ,2013

Raymond AJackson

United States DistrictJudge