Chase Bank USA, N.A. v. NAES, Inc. et al, No. 2:2007cv00975 - Document 114 (D. Nev. 2010)
Court Description: ORDER Denying 80 Motion to Dismiss. Granting in part and Denying in part 103 Motion for Hearing. Denying 81 Motion to Dismiss. Signed by Judge Edward C. Reed, Jr on 1/8/10. (Copies have been distributed pursuant to the NEF - AXM)
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NAES, Inc. et al submit m erit les s bi lling disputes Doc. 114 20 and fi1e frivolous lawsuits against Chase . Now before the Court are 21 a motion dismiss (#8O) filed by Defendant Theresa Matson and a 22 motion to dismiss (#81) filed by Defendant Stellar Services Groupi 23 (nStellar Services''). In additionr Stellar Services has filed 24 nMotion for Oral Argument Pursuant 25 Local Rule 78-2'' (#103). The motions are ripe, and we now rule on them . 26 27 28 Dockets.Justia.com 1 I . Factual and Procedural Backcround 2 This lawsuit was filed on July 23, 2007 , and Chase 's First 3 Amended Complaint ('AFAC'') (#64) was fileci on March l9, 2009 .1 Chase 4 alleges that Defendants are involved in '%frauciulent or fictitious 5 debt elimination schemes'' conducted ''via the lnternet and other 6 marketing routes.'' (FAC % ll (#64).) As part of these schemes, 7 consumers are advi seci, for example , to file false claim s of h)i11ing 8 errors using form document s provided by Defendant s, and which lack 9 ''any individualized, fact-based claim s specific to a given credit 10 car account or credit card customer .'' (Id . % 28 .) The consumers 11 are advised to f ollow up with further form documents when the claims 12 are denied, extending the processing of the claims . (Id . % 29 .) 13 Numerous meritless lawsuits have been f iled by consumers act ing on 14 the advice of Defendants , and using form pleadings , discovery 15 requests , and motions provided by Lefendants . (Id . % 30 .) Chase 16 has been forced to expend significant resources to process the 17 claims and ciefend the lawsuits filed by consumers at the instigation 18 of Defendants. (Id . % 35.) in acidition, sorne Cbase customers have 19 stopped making payments and defaulted on their obligations to Chase 20 on the advice of Defendants . (Id .) Further, Chase argues that its 21 reputation is being damaged by the false allegations of illegal 22 act ivity contained in the form complaint s provided to consumers by 23 Defendants . (Ici.) 24 25 1 The facts described herein are taken from Chase 's Fi rst Amended 26 complaint and presumed to be true , as appropriate on a motion to dism iss . See in re Stac Elecs . Sec . Liticr., 8 9 F .3c1 1399 , 14 03 (9th 27 Cir . 19 96 ). 28 2 1 Defendant NAES, Inc. I'ANAES/'), is a corporation that began 2 providing such fraudulent debt elimination services to Chase 3 customers uby late 2006.'/ (Id . % 32 .) Defendant Michael 4 Fitzpatrick was the sole officer , director and shareholder of NAES, 5 and oversaw and directed the business of NAES. (Id. % 3.) In 6 February 2008, Fitzpatrick filed dissolution papers for NAES with 7 the Nevada Secretary of State . (Id . 1 36 .) Chase alleges, however, 8 that the assets and business operations of NAES were transferred to 9 Stellar Services, which is run by Matson and Defendant Christopher 10 Robinson , as well as others who have not yet been identified . (id . 11 %% 4-5, 37.) 12 Chase's First Amended Complaint asserts six claim s for relief: 13 (l) Preliminary and Permanent Tnjunction; (2) intentional 14 lnterference with Contractual Relations; (3) Defamation; (4) Civil 15 Conspiracy; (5) Alter Ego Against NAES and Fitzpatrick; and (6) 16 Alter Ego Against Stellar Servicesr Robinson and Matson . 17 Matson's motion to dismiss (480) was filed on May 26, 2009. 18 Chase opposed (#88) tbe motion (#80); no reply was filed . Stellar 19 Services' motion to dismiss (#81) was filed also on May 26, 2009. 20 Chase opposed (#89) the motion (#81), and Stellar Services replied 21 (#92). Stellar Services' motion (#103) for oral argument on its 22 motion to dismiss (#81) was filed on September 2, 2009. Chase di; 23 not file a response to the motion for oral argument (#103). 24 25 II. Matson's Motion to Dismiss (#80) 26 Matson's motion to dismiss (#80) raises four basic issues. 27 First, she argues that the Court lacks personal jurisdiction over 28 3 1 her, and seeks dism issal on that basis pursuant to Federal Rule of 2 civil Procedure 22(b)(2). Second, in the alternative, she suggests 3 that the District of Nevada is an inappropriate venue under 28 4 U .S .C . 5 1391. Third, she asserts that Chase's First Amended 5 Complaint fails to state a claim , and seeks dism issal pursuant to 6 Federal Rule of Civil Procedure 12 (b)(6). Finally, she challenges 7 whether the amount in controversy requirement for diversity 8 jurisdiction is satisfied; this argument falls under Federal Rule of 9 Civil Procedure l2 (b)(1), dismissal for lack of subject matter 10 jurisdiction, though she fails to cite to that rule. We will 11 address each of Matson's arguments separately . 12 A . Personal Jurisdiction 13 The plaintiff bears the burden of establishing that this Court 14 has personal and subject matter jurisdiction over the defendant. 15 See Mattel, Inc. v . Greiner & Hausser GmbH, 354 F .3d 857, 862 (9th 16 Cir. 2003). A motion to dismiss for lack of jurisdiction may attack 17 the sufficiency of the complaint, or it may be made as a nspeaking 18 motion'' attaeking the existence of jurisdiction as a matter of fact. 19 Thornhill Pub . Co ., Inc . v . Gen . Tel . & Elecs. Corr w 594 F.2d 730, 20 733 (9th Cir. 1979). ''Where the jurisdictional issue is separable 21 from the merits of the case, the judge may consider the evidence 22 presented with respect to the jurisdictional issue and rule on that 23 issue, resolving factual disputes if necessary .'' 1d . However, 24 absent an evldentiary hearing, the plaintiff ''need only make a prima 25 facie showing of jurisdiction to survive the motion to dismiss.'' 26 Mattel, 354 F.3d at 862 . Further, absent an evidentiary hearing, 27 the non-movant's version of any contested facts must be taken as 28 4 1 true. Rhoades v. Avon Prods., lncw 504 F.3d 1151, 1160 (9th Cir. 2 2007). Herey Matson makes no arguments regarding jurisdiction based 3 on the sufficiency of the complaint . Rather, she appears to attack 4 the existence of jurisdiction as a matter of fact, based on the 5 circumstance that she A'does not reside in the District of Nevada nor 6 does gshel conduct business in this district.'' (D.'s Mot. at 2 7 (480).) 8 An analysis of personal Jurisdiction has two components. 9 First , there must be a statute that gives the court authority to 10 exercise jurisdiction . Data Disc Inc . v . Svs. Tech . Assoc . Inc ., 11 557 F .2:1 1280 , 1286 (9th Cir . 1977). Secondr the exercise of 12 jurisdiction must meet Constitutional due process standards. ld . 13 Because there is no applicable federa.l statute governing personal 14 jurisdiction, our starting point is Nevada's long-arm statute . See 15 Fed . R. Civ . P. 4 (k)(l) (A); Doe v . Unocal Corr ., 246 F .3d 9l5r 923 16 (9t)in Cir . 2 002 ) (per curiam ) . Nevada #s long-arm statute permits tine 17 exercise of jurisdiction to the limits of due process. NEv. REv. 18 STAT. 5 l4 .065; See Abraham v . Acfusta, S .P .A ., 968 F. Supp . 1403, 19 1407 (D. Nev. 1997). Thusr our analysis of personal jurisdiction 20 under Nevada's long-arm statut.e and the Constitution collap se into 21 one, and we consider only whether the exercise of jurisdiction 22 comport s with the Fourteenth Amendment 's due proce ss requirement s . 23 A court may have personal jurisdiction over a defenclant in one 24 o f two way s : genera1 or specif ic . Reebo k Int 'l Ltd . v .- Mclaa-uqh lin , 25 49 F .3d 1387, 1391 (9th Cir . 1995). Though Chase argues that 26 exercise of general personal jurisdiction over Matson would be 27 approp riate , there is no need to decide that issue : spec:i fic 28 5 1 jurisdiction alone would be sufficient to survive Matson's motion to 2 dismiss . 3 The N inth Cir cu it ha s e st ab l ishe d a t hree -p rong te st fo r 4 analyzing a claim of specificr personal jurisdiction ; 5 6 7 8 (1) The non-resident defendant must purposefully direct his activities or consurcm ate some transaction with the forum or resident thereof ; or perform some aet by which he purposefully avails himself of the privilege of conducting activities in the forum , thereby invoking the benefits and p rot ect ion s o f its law s ; (2 ) the claim must be one which ari ses out of or relates to the defendant 's forum-related activities ; and 9 (3) the exercise of jurisdiction must comport with fair play and substantial justice , i .e ., it must be reasonable . 10 The plaintiff bears the burden of satisfying the first two prongs of tbe test . If the plaintl.ff f ails to 11 satisfy either of these prongs, personal jur1sciiction is 12 not establi shed . lf the plaint iff succeeds l-n satisfying 10th of the first two prongs, the burden then shifts to the defendant to present a compelling case that the 13 exercise of jurisdiction would not be reasonable . 14 Schwarzenecfqer v . Fred Martin Motor Co .# 37 4 F .3d 7 97 , 8 02 (9th Cir . 15 2004) (internal citations and quotation marks omitted). 16 Chase asserts that Matson has repeatedly engaged in business in 17 Nevada and witin Nevada residents , and has presented evicienco 18 relating to one instance of such business activity . Matson engaged 19 in extensive correspondence via e-mail with Lance Taylor-Warren, a 20 Chase custom er who utilized the services of Defendants and 21 eventually initiated litigation against Chase using documents and 22 legal advice provided to him by Matson . 23 C, D, and E .) (See P.'s Opp . (#88) Exs . lt is precisely the sorts of services provided to Mr. 24 Taylor-Warren by Matson that give rise to Chase's claim s . 25 The matter is complicated somewhat by the circumstance that Mr . 26 Taylor-Warren was a customer of NAES , and Matson was apparently an 27 employee of NAES at the time of their interactions . Matson argues 28 6 1 that her activities on behalf of an employer should not give rise to 2 personal jurisdiction over her as an individual. The Supreme Court 3 has rejected, however, the notion that uemployees who act in their 4 official capacity are somehow shielded from suit in their individual 5 capacity .'' Keeton v . Hustler Maaazine, (65 U.S . 770, 78l n .l3 6 (l984); see also Calder v . Jones, 465 U .S. 783, 790 (l984) 7 ('APetitioners are correct that their contacts with Cali fornia are 8 not to be judged according to their employer's activities there . On 9 the other hand , their status as employees does not somehow insulace 10 them from Jurisdiction .''). In other words, the existence of a 11 corporate form does not create a due process limit on jurisdiction 12 over the employees of a corporation . Davis v . Metro Procis ., lnc . 13 885 F.2d 5l5, 520-522 (9th Cir . l969) (discussing Calder and 14 Keeton ) . Though some states have adopted a ''fiduciary shield'' 15 doctrine that would create such a limit , Nevada is not such a state ; 16 rather , as noted above , Nevada's long arm statute permits exercise 17 of Jurisdiction to the limit)s of due process . See NEv. REV. 18 STAT . fl 14 .0 65 ; c .f . Marine Midland Bank, N .A . v . Miller, 664 F .2:1 19 899, 902 (2d Cir . l98l) (explaining fiduciary shield doctrine as 20 formerly applied under New York long-arm statute). Moreover, Chase 21 has alleged that Stellar Services has taken over the business of 22 NAES since the latter 's dissolution , and that Stellar Services is an 23 alter ego of Matson . 24 Taking all reasonable inferences in the non-m oving party 's 25 favor, as we must in the present procedural posture , it appears that 26 Matson 's business activities in Nevada on behalf of NAES and later, 27 allegedly, Stellar Services , satisfy all three prongs of 28 7 1 Schwarzeneclqer test with regarci to personal jurisdiction over her 2 individually, as well. As such, we have personal jurisdiction over 3 Matson, anci her arguments to the contrary are rejected . 4 B . Venue 5 In a diversity case , venue is appropriate in il district where 6 (l) any defendant resides , if a11 defendants reside in the same 7 state , (2 ) a substantial part of the events giving rise to the claim 8 occurred, or (3) where any ciefendant is subject to personal 9 jurisdiction at the tl-me the action is corrt menced, if there is no 10 district in which the action may otherwise be brought . 2 8 U .S .C . f; 11 1391 (a). Matson's argument that Nevada is an inappropriate venue 12 invokes only the first of these subsections , asserting that Matson 13 does not reside in Nevada, nor does she conduct business here . 14 As discussed above , the evidence does not support the second 15 part of Matson 's argument : it appears that she has conducted 16 business in Nevada . ln any case , Matson offers no evidence or 17 argument that demonstrates venue in Nevada would not be appropriate 18 pursuant to 28 U .S.C. !; 1391 (a ) (2), as a place where a substantial 19 part of the events giving rise to Chase's claims occurred . Chase's 20 claims are based , at least in part , on debt elim ination schemes 21 involving Chase customers w'ino are Nevada residents , and who filed 22 claim s and lawsuits against Chase in Nevada . A s such , a substantial 23 part o. f the events giving rise to Chase's claims occurred in Nevada . 24 Thus, venue is proper in Nevada pursuant to 28 U .S.C . 5 l39l (a) (2 ). 25 C . F'ailure to State a Claim 26 Matson's argument that Chase's First M ended Complaint fails to 27 state a claim upon which relief can be granted is based in part cn a 28 8 1 purported lac;k of speci fieity . Matson asserts that Chase ''has 2 failecz to identifj? any damages with the exception of possible legal 3 fees and cost s associated with lit igation against its cardholciers .'' 4 (Mot . at 4 (#8O).) Further, Matson notes that Chase A'has failed to 5 identify any specific action against any cardholder (s) gin) whic!h it 6 has incurred any legal fees or costs.'' 7 (ld .) Federal Rule of Civil Procedure 6 (a ) does not require a 8 plaintiff to plead the details that Matson asserts are lacking from 9 Chase's First M ended Complaint . The First Amended Complaint (#64 ) 10 contains na short antj plain statement of tbe grounds f or the court 's 11 jurisdiction ,'' ua short and plain statement of the claim showing 12 that the pleader i s entitled to relie f ,'' and E: ''demand for the 13 relief sought .'' FED. R . CIv . P . 8 (a ) . Indeed , Chase's complaint 14 describes the factual basis for its claim s in some detail , as we 15 have suramarized above . Though the specific Chase cu stomers who have 16 acted on Defendants' alleged debt elimination schemes are not named , 17 Matson has demonstrated no reason why a heighteneci pleading 18 standard, so as to require such details , should be required in this 19 ca se . 20 Mat son further as serts that the First M ended Complaint nfails 21 to establish any damages whlch have not already been awarded 22 previously .'' (Mot . at 5 (#80).) The premise underlying this 23 assertion is that the only damages claimed by Chase are attorney's 24 fees and court costs incurred in litigation with cardholciers . 25 Matson assumes that Chase either would have already recovereci these 26 alleged damages in tlne judgments against the Chase customers, or 27 28 9 1 that Chase was not entitled to such damages, because the customers 2 prevailed . 3 Matson's argument fails for several reasons . First, under the 4 American rule, a prevailing party normally does not recover 5 attorney's rees. See , e .q ., Buckhannon Bd . and Care Home, Inc . v . 6 W . Va . Deo 't of Hea1th and Human Res w 532 U .S . 598, 602 (2001). 7 Matson's assumption that if Chase prevailed in suits against the 8 eardholders it would have necessarily already recovered its costs 9 and attorney's fees is therefore flawed . 10 Moreover, Matson 's characterization of the damages sought by 11 Chase as lim ited to attorney's fees and costs is simply false . 12 Chase also seeks to recover sums lost due to customers defaulting on 13 obligations at the instigation of Defendants. (FAC % 35 (#64).) 14 Further, Chase seeks damages to compensate for alleged injury to its 15 reputation from defamatory statements published by Defendants 16 regarding alleged illegal activity on the part of Chase. (Id. % 60- 17 63.) In addition, Chase seeks injunctive relief against any future 18 activity by Defendants similar to that which gave rise to this case . 19 (Id. % 48.) As such, even a cursory examination of Matson's Firs< 20 Amended Complaint reveals that Chase does seek relief that has no-21 already been awarded previously . 22 In short , Chase 's First Amended Complaint states a claim to 23 relief that is uplausible on its face .'' Bell Atl. Corr . v . Twomblv, 24 550 U .S. 544, 570 (2007). Matson's arguments to the contrary are 25 without merit . As such , dismissil pursuant to Federal Rule of Civil 26 Procedure l2 (b)(6) would be inappropriate. 27 28 10 1 D. Amount in Controversv 2 Matson challenges whether we have subject matter jurisdiction 3 over this action , arguing that Chase has A'failed to substantiate a 4 controversy that exceed Esicq the sum or value of 5 $75,000.00 . . . .'' (Mot. at 2 (#80).) As noted above, the burden 6 of establishing that the Court has jurisdiction over the defendant 7 lies with the plaintiff . Mattel, 354 F.3d at 862. Where the amount 8 in controversy is at issue, ''ltqo justify dismissal, it must appear 9 to a legal certainty that the claim is really for less than the 10 jurisdictional amount.'' Crum v. Circus Circus Entersw 231 F.3d 11 1129, 1131 (9th Cir. 2000) (internal quotation marks omitted). 12 Thus, because the burden of proof to establish jurisdiction lies 13 with t%e plaintiff, Chase must show that it does not appear to a 14 legal certainty that its claims are for less than the required 15 amount. United States v . S . Pac. Transr . Co ., 543 F.2d 676, 682 16 (9th Cir. 1976). 17 Matson's argument that the amount in controversy requirement is 18 not met is based on the premise, discussed above in a different 19 eontexts that the only dam ages claimed by Chase are attorney's fees 20 and court costs incurred in litigation with cardholders . Matson 21 asserts that Chase either would have already recovered these alleged 22 damages in the judgments against the Chase customersr or that Chase 23 was not entitled to such damages, because the customers prevailed . 24 Matson's argument fails here, too, and for similar reasons . 25 Dnder the American rule r a prevailing party normally does not 26 recover attorney 's fees. See, e .g ., Buekhannon, 532 U .S. at 602. 27 Matson 's assumption that if Chase prevailed in suits against the 28 11 l cardholders it would have necessarily already recovered its costs 2 and attorney's fees is therefore flawed . Furthermore, Matson 's 3 characterization of the damages sought by Chase as limited to 4 attorney's fees and costs is false. Chase additionally seeks to 5 recover sums lost due to custom ers defaulting on obligations at the 6 instigation of Defendants. (FAC % 35 (#64).) Also, Chase alleges 7 damage to its reputation from defamatory statements published by 8 Defendants regarding alleged illegal activity on the part of Chase . 9 (Id. % 60-63.) Moreover, Chase seeks injunctive relief against any 10 future activity by Defendants similar to that which gave rise to 11 this case. (Id. % 48.) The amount in controversy requirement may 12 be met wbere tbe value of the injunction sought to either party 13 meets or exceeds the statutory minimum . See Mccaulev v . Ford Motor 14 Co . (In re Ford Motor Co./citibank tS.D.), N .A .), 264 F.3d 952, 958 15 (9th Cir. 2OOi). Any of these eategories of damages could 16 potentially exceed the jurisdictional amount. 17 We conclude that Ohase has met its burden of demonstrating that 18 it does not appear to a legal certainty that the amount in 19 controversy is less than the jurisdictional amount. As such, we 20 have subject matter jurisdiction over this case, and Matson's motLon 21 will be denied in that respect . 22 23 111. Stellar Services' Motion for Oral Arm 4ment (#103) 24 Stellar Services requests oral argument on its motion to 25 dismiss (#81), pursuant to Local Rule 78-2. Local Rule 78-2 26 provides that 'U aqll motions may, in the court's discretion, be 27 considered and decided with or without a hearing .zz Having now 28 12 l examined the papers filed in support of and in opposition to Stellar 2 Services' motion to dism iss (#81), we will deny Stellar Services' 3 request for oral argument . The issues raised by the motion an the 4 arguments of the parties are clear from the papers, and it does not 5 appear that oral argument would be helpful to the Court . 6 In the alternative to its request for oral argument, Stellar 7 Services requests a ruling on its motion to dismiss (#81) at the 8 Court's A'earliest convenience .'' This request is granted : we now 9 turn to consideration of the merits of the motion . 10 11 IV . Steilar Services' Motion to Dismiss (#81) 12 Stellar Services' motion to dismiss (#81) asserts the same 13 arguments as Matson's motion to dismiss (#80). Indeed, the two 14 motions are virtually identical , except for the name of the moving 15 party - they even share many of the same typographical errors. 16 Though the evidence presented by Chase relates to business dealings 17 by Matson, on behalf of NAES, it is also alleged that Stellar 18 Services has taken over the business of NAES, including its business 19 conducted in Nevada, and no evidence has been submitted that would 20 demonstrate otherwise . As such , though the evidenee of personal 21 jurisdiction is somewhat weak with regard to Stellar Services, in 22 particular, it is suffieient in the present procedural posture . We 23 need not elaborate further on the other issues raised by Stellar 24 Service's motion (#81); our discussion above suffiees. The motion 25 (#81) will be denied. 26 27 28 13 1 2 V . Conclusion We hive specific personal jurisdiction over b0th Matson and 3 Stellar Services , on the basis of the business activities they 4 conduct in Nevada that have given risû to Chase 's claim s . Venue is 5 proper in Nevada because Nevada is the district where a substantial 6 part of the events giving rise to the claim occurred . We have 7 subject matter jurisdiction, because the amount in controversy 8 appears to be satisfied . Finally, Chase's First Amended Complaint 9 does not fail to state a claim ; the allegations are made with the 10 requisite specificity to satisfy Federal Rule of Civil Procedure 11 8 (a), and Chase's claims for damages are not limited to amounts 12 already recovered in other cases . 13 14 IT IS , THEREFORE , HEREBY ORDERED that Matson 's motion to 15 dismiss (#80) is DENIED . 16 17 IT IS FURTHER ORDERED that Stellar Services' motion for oral 18 argument (#103) is GRANTED IN PART and DENIED IN PART on the 19 following basis : Stellar Services' request for oral argument is 20 denied; its request for a ruling on its motion to dismiss (#81) 21 at the Court's A'earliest convenience'' is granted . 22 23 // 24 // 25 // 26 // 27 28 I4 IT IS FURTHER ORDERED that Stellar Services' motion to dismiss DEN IED . January 2 , C w . UNITED STATES DISTRICT JUDGE
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