Myhre v. Seventh-Day Adventist Church Reform Movement American Union International Missionary Society et al, No. 3:2013cv02741 - Document 120 (S.D. Cal. 2014)
Court Description: ORDER granting 34 Motion to Dismiss; granting 39 Motion to Dismiss; denying 50 Motion for Sanctions; denying 52 Motion for Sanctions; denying 55 Motion for Sanctions; denying 62 Motion for Sanctions; denying 69 Motion for Sanctions; d enying 72 Motion for Sanctions; granting 31 Motion to Dismiss for Lack of Jurisdiction; granting 32 Motion to Dismiss, Defendants Motions to Dismiss are granted with leave to amend. Pla is given 45 days to refile an amended complaint. Pla's Motions for Sanctions are denied. Signed by Judge Cynthia Bashant on 8/26/2014. (jah)
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Myhre v. Seventh-Day Adventist Church Reform Movement American Union Inte...Missionary Society et al Doc. 120 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 STEINAR MYHRE, Plaintiff, 12 13 14 15 16 17 Case No. 13-cv-02741-BAS(RBB) ORDER: (1) GRANTING MOTIONS TO DISMISS (ECF NOS. 31, 32, 34, 39); AND v. SEVENTH-DAY ADVENTIST CHURCH REFORM MOVEMENT AMERICAN UNION INTERNATIONAL MISSIONARY SOCIETY, et al., (2) DENYING MOTIONS FOR SANCTIONS (ECF NOS. 50, 52, 55, 62, 69, 72) Defendants. 18 19 On November 14, 2013, Plaintiff Steinar Myhre (“Plaintiff”) commenced this 20 action. On January 6, 2014, Plaintiff filed an Amended Complaint (“FAC”) against 21 seven defendants alleging breach of contract, breach of the covenant of good faith 22 and fair dealing, fraud, interference with contract, conversion, and civil conspiracy. 23 Plaintiff is a retired pastor who seeks money damages and injunctive relief for the 24 alleged termination of his pension benefits by his former employer. Plaintiff claims 25 he was forced to retire over a theological disagreement in 2009; by then, he alleges 26 he had worked for Defendants for over twenty-seven years as an ordained minister. 27 Plaintiff claims his retirement payments ceased in 2013. 28 Defendants now move to dismiss Plaintiff’s FAC under Federal Rule of Civil –1– 13cv02741 Dockets.Justia.com 1 Procedure 12(b)(1) for lack of subject matter jurisdiction, 12(b)(6) for failure to 2 state a claim, 12(b)(3) for improper venue, or in the alternative, under 28 U.S.C. § 3 1406(a) or 28 U.S.C. § 1404(a) to transfer venue. (ECF Nos. 31, 32, 34, 39.) 4 Plaintiff opposes. 5 Defendants’ motions to dismiss. Plaintiff has also filed six motions for sanctions related to 6 A hearing on Defendants’ motions to dismiss or transfer and Plaintiff’s 7 motions for sanctions was held before this Court on August 15, 2014. For the 8 following reasons, the Court GRANTS Defendants’ motions to dismiss WITH 9 LEAVE TO AMEND, and DENIES Plaintiff’s motions for sanctions. 10 I. BACKGROUND 11 Plaintiff originally named as defendants two entities: the Seventh-Day 12 Adventist Church Reform Movement American Union International Missionary 13 Society, a New Jersey corporation (“IMS-NJ”), and International Missionary 14 Society Seventh-Day Adventist Church Reform Movement General Conference 15 (“IMS-GC”). (ECF No. 1.) Plaintiff alleged that he resides in Colorado. (Id. at ¶ 16 1.) Plaintiff further alleged that Defendant IMS-NJ is a New Jersey corporation 17 headquartered in Georgia and doing business in various states, including the State 18 of California and the County of San Diego (id. at ¶ 2) and that Defendant IMS-GC 19 is a California corporation headquartered in Georgia1 and doing business in various 20 states, including the State of California (id. at ¶ 3). 21 On January 6, 2014, Plaintiff filed his FAC adding five more Defendants, 22 three more “American Union” defendants: (1) The Seventh-Day Adventist Church 23 Reform Movement American Union International Missionary Society, a Texas 24 corporation (“IMS-TX”); (2) The Seventh-Day Adventist Church Reform 25 Movement American Union, IMS, Inc., a Georgia corporation (“IMS-GA”); and (3) 26 The Seventh-Day Adventist Church Reform Movement American Union 27 28 1 In the FAC, for unknown reasons, Plaintiff dropped the language that IMSGC was “headquartered in Georgia.” (ECF No. 15 at ¶ 3.) –2– 13cv02741 1 International Missionary Society, a Florida corporation (“IMS-FL”); as well as two 2 additional defendants: (4) Miami Dade Area Seventh-Day Adventist Church 3 Reform Movement, International Missionary Society Inc., a Florida corporation 4 (“IMS-Miami”); and (5) Tampa Bay Area Seventh-Day Adventist Church Reform 5 Movement, International Missionary Society, Inc., a Florida corporation (“IMS- 6 Tampa”). (ECF No. 15.) For each defendant, Plaintiff alleges that it is doing 7 business in various states including California. (Id. at ¶¶ 2-8). Plaintiff further 8 alleges that Defendant “American Union” has not maintained any principal place of 9 business. (Id. at ¶¶ 15-16.) 10 Plaintiff alleges jurisdiction is proper in this Court pursuant to 28 U.S.C. 11 § 1332 because the parties are citizens of different states and the amount in 12 controversy exceeds $75,000. (Id. at ¶ 17.) The FAC alleges that Plaintiff is a 13 resident of Colorado. (Id. at ¶ 1.) Nowhere in the Complaint does it allege that the 14 Defendants do not have a principal place of business in Colorado. 15 Although Plaintiff merely alleges residency in the State of Colorado, there 16 appears no dispute that he is, in fact, a citizen of that state. (Id. at ¶ 1.) There are 17 no allegations that Colorado is either the principal place of business for or the state 18 of incorporation for IMS-Miami, IMS-Tampa, IMS-TX, or IMS-GC. For subject 19 matter jurisdiction, the factual dispute appears to revolve around where the 20 principal place of business is for IMS-NJ, IMS-GA, and IMS-FL. Plaintiff alleges 21 that all of the Defendants – except IMS-GC – should be considered one entity, and 22 he refers to these Defendants jointly as “American Union.” (Id. at ¶ 15.) 23 A. 24 Defendants allege that the principal place of business for IMS-NJ, IMS-GA, 25 Principal Place Of Business and IMS-FL is Colorado, defeating diversity jurisdiction.2 Plaintiff’s FAC 26 27 28 2 Significantly, Defendants have difficulty maintaining the argument that their principal place of business is Colorado and, at various times, argue alternatively, that their principal place of business is Cedartown, GA. (See ECF Nos. 32-1 at p. 9 –3– 13cv02741 6 provides: Upon information and belief, and based on admissions of Defendants, Defendant American Union has not maintained any principal place of business anywhere for almost 30 years. However, Defendant American Union has churches located in various states, including five churches in California, five in Florida, three in Georgia, two each in New York and Texas, and one each in Illinois, Colorado, New Jersey, Rhode Island, Virginia, and Washington DC. 7 (Id. at ¶ 16.) However, the FAC goes on to allege that, according to an American 8 Union newsletter, the current physical address of American Union is Denver, 9 Colorado (id. at ¶¶ 40, 41); IMS-NJ, IMS-GA, and IMS-FL all list their principal 10 place of business as being in Colorado (id. at ¶¶ 45-48, 80, 101); and the last few 11 years Plaintiff received W-2s from American Union, they came from an address in 12 Denver, Colorado (id. at ¶ 165). 1 2 3 4 5 13 The Vice President (and past President) of IMS-NJ helps explain the 14 difficulty pin-pointing the principal place of business for each company. Most of 15 the officers work out of their houses, thus, the primary work of the officers and 16 directors depends on who is elected and where that elected official is located. (ECF 17 No. 96-1, Exh. 1 (“Dering Depo.”) at p. 9.) That changes every two years. (Id. at 18 p. 21.) Most board meetings occur via teleconference, and, when officers and 19 directors do meet in person, they vary the location. (Id. at pp. 9-10.) Nonetheless, 20 IMS-NJ, IMS-GA, and IMS-FL all argue that corporate documents showing their 21 mailing address as Denver, Colorado means their principal place of business is 22 Colorado. (ECF Nos. 31-1 at pp. 9-11 and 34-1 at pp. 10-12.) However, none of 23 the officers listed in these documents is located in Colorado. (ECF Nos. 31-3 and 24 34-3, Exhs. A-E, H (listing CEO Petkov in Georgia; VP Dering in California; CFO 25 Arevalo in Florida; and Secretary Acevedo in New York)).3 26 27 28 and 32-2 at ¶¶ 4, 39.) 3 Defendants IMS-NJ, IMS-GC, IMS-TX, IMS-GA, IMS-Miami, IMS-FL, and IMS-Tampa request that the Court take judicial notice of several publicly filed –4– 13cv02741 1 Several different addresses are consistently used by IMS-NJ. (ECF No. 89 at 2 pp. 16-18.) Since the treasurer is currently located in Florida, financial documents 3 come from and use the Tampa, Florida address. (ECF No. 96 at p. 10; Dering 4 Depo. at pp. 21-22, 26-29.) There is only one officer based in Denver, Colorado, 5 she is only there part-time, and is planning to move to Georgia to spend more time 6 with her husband who is based in Georgia. (See ECF No. 96 at p. 9; Dering Depo. 7 at pp. 10-12; ECF No. 89 at p. 15; ECF No. 92, Exh. 30 at p. 858.) Although the 8 current president (Petkov) says the “headquarters” of IMS-NJ is in Denver, 9 Colorado, he lives and works out of his office in Cedartown, Georgia. (ECF No. 10 31-2 at ¶ 4.) At various times, in various legal documents filed over the past few 11 years, the corporation has listed as its “headquarters” or “principal place of 12 business” Georgia, Colorado and Florida. Most of the current officers are based out 13 of Georgia. (ECF No. 89 at p. 15.) Current officers live in California, Georgia, 14 Florida, New York, Puerto Rico and Colorado (part time) (ECF Nos. 89-9 at ¶ 6 and 15 91 at Exh. 14.) Vice President Dering has not been to Colorado for a meeting in 16 about a year. (Dering Depo. at p. 10.) 17 With respect to IMS-GA and IMS-FL, both claim they are “local churches” 18 created to provide places of worship in their geographical areas (not Colorado). 19 (ECF No. 91, Exhs. 16 and 17.) IMS-GA lists only business locations in Georgia; it 20 does not identify any business location or church in Colorado. (ECF No. 91, Exh. 21 22 23 24 25 26 27 28 documents in support of their motions to dismiss or transfer pursuant to Federal Rule of Evidence 201. (ECF No. 31-3, 32-3, 34-3, 39-3.) The Court GRANTS the requests under Federal Rule of Evidence 201 as to all publicly filed documents relied upon and takes judicial notice of the fact these documents were filed bearing the representations contained therein. See Fed. R. Evid. 201(b)(2) (a court may take judicial notice of a fact that “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned”); L’Garde, Inc. v. Raytheon Space and Airborne Sys., 805 F.Supp.2d 932, 937-38 (C.D. Cal. 2011). “Plaintiff does not object to the Court taking judicial notice of the ‘fact’ of these documents having been filed.” (ECF No. 89-1 at p. 3.) –5– 13cv02741 1 16 at pp. 563-64 (Response to Interrogatory #8).) Similarly, IMS-FL lists only 2 business locations in Florida; it does not identify any business location or church in 3 Colorado. (ECF No. 91, Exh. 17 at p. 608 (Response to Interrogatory #8) and p. 4 615 (Response to Supplemental Interrogatory #8).) Finally, Ciro Arevalo says he 5 handled the day-to-day activities of IMS-FL out of his office in Orlando, FL. (ECF 6 No. 91, Exh. 17 at p. 614 (Response to Supplemental Interrogatory #5).) 7 II. 8 9 LEGAL STANDARD Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss based on the court’s lack of subject-matter jurisdiction. See Fed. R. Civ. P. 10 12(b)(1). In such a motion, the plaintiff bears the burden of establishing the court’s 11 subject-matter jurisdiction. “A federal court is presumed to lack jurisdiction in a 12 particular case unless the contrary affirmatively appears.” 13 Confederated Tribes of the Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 14 1989) (citation omitted). A Rule 12(b)(1) jurisdictional attack may be either facial 15 or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). Stock West, Inc. v. 16 In a facial attack, the challenger asserts that the allegations in the complaint 17 are insufficient on their face to invoke federal jurisdiction, even assuming that all of 18 the allegations are true and construing the complaint in the light most favorable to 19 the plaintiff. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 20 2004; Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 21 2003). “By contrast, in a factual attack, the challenger disputes the truth of the 22 allegations that, by themselves, would otherwise invoke federal jurisdiction.” Safe 23 Air for Everyone, 373 F.3d at 1039. “[T]he district court is not restricted to the face 24 of the pleadings, but may review any evidence, such as affidavits and testimony, to 25 resolve factual disputes concerning the existence of jurisdiction.” McCarthy v. 26 United States, 850 F.2d 558, 560 (9th Cir. 1988). “Once the moving party has 27 converted the motion to dismiss into a factual motion by presenting affidavits or 28 other evidence properly brought before the court, the party opposing the motion –6– 13cv02741 1 must furnish affidavits or other evidence necessary to satisfy its burden of 2 establishing subject matter jurisdiction.” Savage, 343 F.3d at 1039 n.2. 3 III. ANALYSIS 4 A. Plaintiff Fails To Allege Sufficient Facts For Diversity Jurisdiction 5 Plaintiff alleges federal jurisdiction based on diversity of citizenship. In 6 order to establish diversity of citizenship, plaintiff must allege that it is a citizen of a 7 state that is different than the citizenship of every defendant. 28 U.S.C. §1332; 8 Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). “The burden of persuasion for 9 establishing diversity jurisdiction, of course, remains on the party asserting it.” 10 Hertz Corp. v. Friend, 559 U.S. 77, 96 (2010). The diversity statute is strictly 11 construed, and any doubts are resolved against finding jurisdiction. Kantor v. 12 Wellesley Galleries, Ltd., 704 F.2d 1088, 1092 (9th Cir. 1982) (citing Shamrock Oil 13 & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941)). “When challenged on 14 allegations of jurisdictional facts, the parties must support their allegations by 15 competent proof.” 16 Aircraft Industries, Inc., 813 F.2d 1553, 1558 (9th Cir. 1987). “Since the party 17 invoking the federal court’s jurisdiction has the burden of proving the actual 18 existence of subject matter jurisdiction, regardless of the pleadings allegations, the 19 courts have held that the pleader must establish jurisdiction with evidence from 20 other sources.” Trentacosta, 813 F.2d at 1559 (citing 5 C. Wright & A. Miller, 21 Federal Practice and Procedure, § 1363, at 653–54 (1969)). The allegations in the 22 pleading are merely evidence on the issue. Id. at 1558. Hertz, 559 U.S. at 96-97; Trentacosta v. Frontier Pacific 23 The mere filing of a form with the Secretary of State is insufficient. Hertz, 24 559 U.S. at 97; L’Garde, Inc., 805 F.Supp.2d at 940. Simply alleging that a party is 25 a resident of a state is also insufficient. See 28 U.S.C. § 1332. It is the fact that the 26 party is a citizen of the state which is critical. Id.; Luehrs v. Utah Home Fire Ins., 27 450 F.2d 452, 454 (9th Cir. 1971); Kanter v. Warner-Lambert Co., 265 F.3d 853, 28 857 (9th Cir. 2001). –7– 13cv02741 1 In addition, when a corporation is a party, it “shall be deemed to be a citizen 2 of any state by which it has been incorporated and of the State where it has its 3 principal place of business.” Hertz, 559 U.S. at 60 (emphasis in original), citing 28 4 U.S. C. §1332(c)(1). Thus, every corporation is typically a citizen of two states for 5 determining diversity jurisdiction. Breitman v. May Co. California, 37 F.3d 562, 6 564 (9th Cir. 1994). This means, simply alleging that a corporation is incorporated 7 in a particular state is insufficient. Luehrs, 450 F.2d at 454. 8 Unfortunately, as noted by the Supreme Court in Hertz, “the phrase ‘principal 9 place of business’ has proved more difficult to apply than its originators likely 10 expected.” Hertz, 559 U.S. at 89. In an attempt to simplify the analysis, the 11 Supreme Court concluded “that ‘principal place of business’ is best read as 12 referring to the place where a corporation’s officers direct, control, and coordinate 13 the corporation’s activities.” Id. at 92-93. “[I]n practice, it should normally be the 14 place where the corporation maintains its headquarters—provided that the 15 headquarters is the actual center of direction, control, and coordination…and not 16 simply an office where the corporation holds its board meetings.” Id. at 93. A 17 corporation should have one “principal place of business” not multiple places. Id. 18 In New Alaska Dev. Corp. v. Guetschow, 869 F.2d 1298 (9th Cir. 1989), the 19 Ninth Circuit pointed out that the plaintiff’s complaint itself was defective. Id. at 20 1301. First, it didn’t allege that the defendant’s “principal place of business” was 21 not the same as the plaintiff’s citizenship. Id. Second, the allegations in the 22 complaint themselves indicated that the defendant’s principal place of business 23 appeared to be Alaska, the same as the plaintiff’s citizenship. Id. 24 Like the plaintiff in New Alaska, Plaintiff’s FAC is defective. The FAC fails 25 to allege any principal place of business for any of the seven defendants but instead 26 alleges that “American Union” (grouping six of the defendants together) “has not 27 maintained any principal place of business” but has business activities in various 28 states. (ECF No. 15 at ¶16.) Again, like the Plaintiff in New Alaska, the FAC then –8– 13cv02741 1 goes on to list various allegations detailing how the principal place of business 2 could be Colorado which would defeat diversity jurisdiction. (ECF No. 15 at ¶¶ 40, 3 41, 45-48, 80, 101, 165.) Nowhere in the Complaint does it allege that the principal 4 place of business of these defendants is not Colorado. Therefore, Defendants’ 5 Motions to Dismiss for lack of subject matter jurisdiction are GRANTED. 6 It is possible Plaintiff could amend the Complaint to sufficiently show 7 diversity of citizenship. Although Defendants IMS-NJ, IMS-GA, and IMS-FL 8 claim their principal place of business is Colorado, in fact, there appears to be 9 minimal activity in the state. The officers appear to direct, control, and coordinate 10 corporate activities through their homes, which are in Georgia (Petkov), California 11 (Dering), Florida (Arevalo), and New York (Acevedo). (ECF No. 31-3 at. Exhs. A- 12 E, H.) Further, financial documents come from and use an address in Tampa, 13 Florida. (Dering Depo. at pp. 21-22, 26-29.) Therefore, Plaintiff is given leave to 14 amend his FAC. If he chooses to do so, he must do so within 45 days. 15 B. Plaintiff’s Motions For Sanctions Are Denied 16 Federal Rule of Civil Procedure 11(b) requires that pleadings not be pursued 17 for an improper purpose (i.e. harassment, unnecessary delay or increasing the costs 18 of litigation) and that arguments and legal contentions be non-frivolous and have 19 evidentiary support. Fed. R. Civ. P. 11(b). A court may impose sanctions for a 20 violation of this rule. Fed. R. Civ. P. 11(c). 21 Plaintiff points to numerous misstatements and contradictions in the 22 Defendants’ papers and argues that these contradictions support his request for 23 sanctions in this case. 24 Admittedly, there appears to be much confusion on the part of the defendant 25 witnesses regarding where each defendant is incorporated and where its principal 26 place of business is. This may support Plaintiff’s argument that these entities are 27 not truly separate but one entity. 28 principal place of business for a corporation that operates largely out of director’s However, it also is clear that identifying a –9– 13cv02741 1 garages and via the internet is difficult. Ultimately, the misstatements in the 2 moving papers go to the weight that should be given to their declarations. This 3 Court declines to find that the motion papers were frivolous or that there were any 4 intentional misrepresentations. Therefore, this Court DENIES Plaintiff’s Motions 5 for Sanctions. 6 IV. CONCLUSION 7 For the foregoing reasons, Defendants’ Motions to Dismiss (ECF Nos. 31, 8 32, 34, 39) are GRANTED with LEAVE TO AMEND. Plaintiff is given 45 days 9 to refile an amended complaint. Plaintiff’s Motions for Sanctions (ECF Nos. 50, 10 11 52, 55, 62, 69, 72) are DENIED. IT IS SO ORDERED. 12 13 DATED: August 26, 2014 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 – 10 – 13cv02741
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