Chyba v. Hughes, Watters & Askanase, Llp. et al

MOTION to Dismiss for Lack of Jurisdiction

S.D. Cal.September 28, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AU13-0000004 12070114.1 1 Case No. 16CV2209WQH-BLM DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND 12(b) MOTION TO DISMISS David W. Evans (Bar No. 79466) Renata L. Hoddinott (Bar No. 251714) HAIGHT BROWN & BONESTEEL LLP Three Embarcadero Center, Suite 200 San Francisco, California 94111 Telephone: 415.546.7500 Facsimile: 415.546.7505 Attorneys for TEN-X, LLC (fka Auction.com, LLC) UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA P. CHYBA, Plaintiff, v. HUGHES, WATTERS & ASKANASE, LLP; SARAH SPENCER ROBBINS; AUCTION.COM, LLC; JOHN PHILLIP MARQUEZ; and DOES 1- 100, Defendants. Case No. 16CV2209WQH-BLM DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND 12(b) MOTION TO DISMISS [Filed concurrently with Memorandum of Points and Authorities in support of 12(b) Motion to Dismiss and Declaration of T. Russell Gibson in support of 12(b) Motion for Dismiss] Date: October 31, 2016 Courtroom: 14B Judge: William Q. Hayes NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT TO ALL PARTIES HEREIN AND THEIR RESPECTIVE COUNSEL OF RECORD: PLEASE TAKE NOTICE that on October 31, 2016, in Courtroom 14B, of the above-entitled Court located at 333 West Broadway, San Diego, California 92101, Defendant TEN-X, LLC (formerly known as AUCTION.COM, LLC) (“Ten- X”) will and hereby does move for an order dismissing Plaintiff P. CHYBA’s Case 3:16-cv-02209-WQH-BLM Document 9 Filed 09/28/16 Page 1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AU13-0000004 12070114.1 2 Case No. 16CV2209WQH-BLM DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND 12(b) MOTION TO DISMISS (“Plaintiff”) Verified Complaint, without leave to amend, for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(1), (2), (4), (5), (6), and (7). This Motion is made on the following grounds: 1. This Court lacks subject matter jurisdiction pursuant to 28 U.S.C. § 1332; 2. This Court lacks personal jurisdiction because TEN-X was not served with a summons; 3. Because TEN-X was not served with a summons, process was defective; 4. Because TEN-X was served by mail without a summons, service of process was defective; 5. Plaintiff’s Verified Complaint fails to properly plead a claim against TEN-X as TEN-X is not the mortgagee and/or mortgage servicer of the deed of trust; and 6. Plaintiff failed to join a party to the action under Rule 19. This motion will be based upon this Notice, the Memorandum of Points and Authorities set forth below, the Declaration of T. Russell Gibson filed herewith, and such evidence and argument as may be presented at the hearing on this motion. Dated: September 28, 2016 HAIGHT BROWN & BONESTEEL LLP By: /s David W. Evans Renata L. Hoddinott Attorneys for TEN-X, LLC (fka Auction.com, LLC) Case 3:16-cv-02209-WQH-BLM Document 9 Filed 09/28/16 Page 2 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AU13-0000004 12070122.1 1 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND MOTION TO DISMISS David W. Evans (Bar No. 79466) Renata L. Hoddinott (Bar No. 251714) HAIGHT BROWN & BONESTEEL LLP Three Embarcadero Center, Suite 200 San Francisco, California 94111 Telephone: 415.546.7500 Facsimile: 415.546.7505 Attorneys for TEN-X, LLC (fka Auction.com, LLC) UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA P. CHYBA, Plaintiff, v. HUGHES, WATTERS & ASKANASE, LLP; SARAH SPENCER ROBBINS; AUCTION.COM, LLC; JOHN PHILLIP MARQUEZ; and DOES 1- 100, Defendants. Case No. 16CV2209WQH-BLM MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) MOTION TO DISMISS Date: October 31, 2016 Courtroom: 14B Judge: William Q. Hayes NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION 1. Plaintiff P. CHYBA (“Plaintiff”) filed this action on August 31, 2016, based on diversity jurisdiction pursuant to 28 U.S. Code §1332. In order for the district court to maintain jurisdiction of the action, there must be complete diversity between the parties. Plaintiff is a resident of California. Defendant TEN-X, LLC, formerly known as AUCTION.COM, LLC (“TEN-X”) is a Delaware limited liability company with its principal place of business in Irvine, California. Based on Case 3:16-cv-02209-WQH-BLM Document 9-1 Filed 09/28/16 Page 1 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AU13-0000004 12070122.1 2 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND MOTION FOR REMAND the foregoing and as set forth more fully below, complete diversity does not exist between the parties to this action and thus the matter should be dismissed. 2. Additionally, TEN-X was improperly served with Plaintiff’s Complaint and was not served with a summons on the Complaint. 3. As to TEN-X, Plaintiff fails to state a claim upon which relief can be granted. 4. Finally, Plaintiff fails to join a party to the action, the mortgagee and/or mortgage servicer pursuant to Federal Rules of Civil Procedure Rule 19. II. FACTUAL BACKGROUND 5. On August 31, 2016, Plaintiff filed the instant action against TEN-X and other defendants alleging claims arising out of a foreclosure sale of property located in Texas. Plaintiff alleges this district court has jurisdiction over her claims only “pursuant to 28 U.S.C. § 1332.” (See Plaintiff’s Verified Complaint, ¶ 6). Further, Plaintiff claims “Defendant, AUCTION.COM, LLC an (sic) unregistered limited liability company that is not registered with the CA, TX, NV, or DE Secretary of State offices and currently conducting business in Texas and California.” (See Plaintiff’s Verified Complaint, ¶ 3). 6. Exhibit 5 to Plaintiff’s Verified Complaint encloses a Notice of Substitute Trustee’s Sale executed by the attorney agent for the mortgagee or mortgage servicer, which (among other things) identifies and appoints substitute trustees authorized to sell real property, “care of AUCTION.COM, LLC, 1 Mauchly, Irvine, California 92618.” (See Exhibit 5 to Plaintiff’s Verified Complaint). This is the only reference to TEN-X in Plaintiff’s attached exhibits. 7. TEN-X is a Delaware limited liability company that maintains its principal place of business in Irvine, California. (Declaration of T. Russell Gibson (“Gibson Decl.”), ¶ 2). On January 8, 2016, TEN-X filed a Certificate of Amendment with the Secretary of State of the State of Delaware, changing its name Case 3:16-cv-02209-WQH-BLM Document 9-1 Filed 09/28/16 Page 2 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AU13-0000004 12070122.1 3 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND MOTION FOR REMAND from Auction.com, LLC to Ten-X, LLC. (Gibson Decl., ¶ 3). Name change updates were filed in other states where TEN-X is registered as a foreign limited liability company, including Texas and California. (Gibson Decl., ¶¶ 4-5). III. COMPLETE DIVERSITY DOES NOT EXIST BETWEEN THE PARTIES 8. A district court has diversity jurisdiction over any civil action between citizens of different states as long as the amount in controversy exceeds $75,000, excluding interest and costs. 28 U.S.C. § 1332(a). 9. A complaint that fails to allege both (1) diversity of citizenship and (2) the proper amount in controversy is subject to a Rule 12(b)(1) “facial attack.” Rilling v. Burling Northern R.R. Co. 909 F.2d 399, 401 (9 th Cir. 1990). 10. For diversity jurisdiction to exist, the parties must be completely diverse. The plaintiff cannot be a citizen of the same state as any defendant. See Carden v. Arkoma Associates, 494 U.S. 185, 187 (1990). 11. For purposes of diversity jurisdiction, the Ninth Circuit has adopted the rule that citizenship of a limited liability company is determined by the citizenship of its members/owners. See Johnson v. Columbia Properties Anchorage, LP (9 th Cir. 2006) 437 F.3d 894, 899. One or more members of TEN-X is a natural person that is a citizen of California, or an entity that would be deemed a citizen of California. (Gibson Decl., ¶ 6). 12. Here, Plaintiff filed the action in district court based an incorrect assertion that Auction.com was not registered or headquartered in California. As set forth above and pursuant to 28 U.S.C. § 1332(c)(1), TEN-X is a citizen of both Delaware and California for purposes of determining diversity jurisdiction. Given that Plaintiff and TEN-X are both citizens of California, complete diversity does not exist between the parties to the action and thus this district court does not have original jurisdiction over the matter and the case should be dismissed pursuant to Fed. R. Civ. P. 12(b)(1). Case 3:16-cv-02209-WQH-BLM Document 9-1 Filed 09/28/16 Page 3 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AU13-0000004 12070122.1 4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND MOTION FOR REMAND IV. NO PERSONAL JURISDICTION OVER TEN-X EXISTS 13. TEN-X was not served with a proper summons. TEN-X received only a copy of the Complaint by mail and the enclosed summons did not set forth the identity of the defendant pursuant to Fed R. Civ. P 4(a)(1)(b). Because Plaintiff failed to serve a proper summons with the Complaint, the Court has no personal jurisdiction over TEN-X and the case should be dismissed pursuant to Fed. R. Civ. P. 12(b)(1) and 4(a)(1)(b). V. PROCESS IS INSUFFICIENT 14. Plaintiff did not serve TEN-X with a proper summons in compliance with Fed. R. Civ. P. 4(a)(1)(b). Further, Plaintiff served TEN-X by mail. Accordingly, process was defective pursuant to Fed. R. Civ. P 4(c)(1) and the case should be dismissed. VI. SERVICE OF PROCESS IS INSUFFICIENT 15. As stated, TEN-X was served only by mail and with an improper summons. Therefore, Plaintiff’s action should be dismissed pursuant to Fed. R. Civ. P 12(b)(5). VII. PLAINTIFF FAILS TO STATE A CLAIM AGAINST TEN-X UPON WHICH RELIEF CAN BE GRANTED 16. A FRCP 12(b)(6) motion tests the legal sufficiency of the claims stated in a complaint. Dismissal of a claim pursuant to FRCP 12(b)(6) is proper where there is either a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990). A complaint survives a motion to dismiss if it contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 17. Plaintiff’s action arises out of a foreclosure sale of property located in Texas. In the Complaint, Plaintiff cites to Texas statutory authority in the Case 3:16-cv-02209-WQH-BLM Document 9-1 Filed 09/28/16 Page 4 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AU13-0000004 12070122.1 5 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND MOTION FOR REMAND declaratory relief cause of action. Plaintiff does not, however, allege any specific facts as to TEN-X with regard to the foreclosure sale or the claims related thereto. 18. Further, Plaintiff does not plead any relationship, contractual or otherwise, between herself and TEN-X. TEN-X is not a party to the deed of trust nor does Plaintiff alleged TEN-X to be a party to the deed of trust. (See Exhibit 1 to Plaintiff’s Complaint). TEN-X is only referenced in Exhibit 5 to Plaintiff’s Complaint as set forth above. Accordingly, the instant matter should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6). VIII. PLAINTIFF FAILS TO JOIN THE MORTGAGEE AND/OR MORTGAGE SERVICE UNDER RULE 19 19. Fed. R. Civ. P 19(a)(1)(A) provides that a required party must be joined to the action if “in that person's absence, the court cannot accord complete relief among existing parties.” Here, Plaintiff’s Complaint arises out of the foreclosure sale but does not join the mortgagee and/or the mortgage servicer to the action. 20. In Exhibits 2 and 3 to the Complaint, Plaintiff’s mortgage servicer is identified. Plaintiff, however, has not joined it to the action. Given that the notice of intent to accelerate, notice of acceleration, and notice of trustee’s sale originated from and on behalf of the mortgage servicer and not TEN-X as alleged in Plaintiff’s Complaint at paragraphs 12 and 13, the Court cannot afford relief between the existing parties and the matter should be dismissed pursuant to Fed. R. Civ. P. 12(b)(7). / / / / / / / / / / / / / / / / / / / / / Case 3:16-cv-02209-WQH-BLM Document 9-1 Filed 09/28/16 Page 5 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AU13-0000004 12070122.1 6 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TEN-X, LLC’S (fka AUCTION.COM, LLC) NOTICE OF MOTION AND MOTION FOR REMAND IX. CONCLUSION 21. Based on the foregoing, TEN-X respectfully requests this Honorable Court dismiss the instant action as against TEN-X without leave to amend. Dated: September 28, 2016 Respectfully submitted, HAIGHT BROWN & BONESTEEL LLP By: /s David W. Evans Renata L. Hoddinott Attorneys for TEN-X, LLC (fka Auction.com, LLC) Case 3:16-cv-02209-WQH-BLM Document 9-1 Filed 09/28/16 Page 6 of 6 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 1 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 2 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 3 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 4 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 5 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 6 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 7 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 8 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 9 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 10 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 11 of 12 Case 3:16-cv-02209-WQH-BLM Document 9-2 Filed 09/28/16 Page 12 of 12