Nainesh Patel v. Garrison Investment Group, LP

NOTICE OF MOTION AND MOTION to Dismiss Plaintiff's Amended Complaint or, in the Alternative, Stay Litigation in Favor of Arbitration

C.D. Cal.December 5, 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 1 Noah R. Balch (SBN 248591) noah.balch@kattenlaw.com KATTEN MUCHIN ROSENMAN LLP 2029 Century Park East, Suite 2600 Los Angeles, CA 90067-3012 310.788.4400 (telephone) 310.788.4471 (facsimile) Attorneys for Defendants Garrison Investment Group LP and Premier Hospitality Group - New Stanton II UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, SOUTHERN DIVISION NAINESH PATEL ) ) Case No. 8:16-CV-1968-JLS-JCG Plaintiff, ) ) NOTICE OF MOTION TO DISMISS ) OR, IN THE ALTERNATIVE, STAY v. ) LITIGATION IN FAVOR OF ) ARBITRATION GARRISON INVESTMENT ) GROUP, LP and PREMIER ) HOSPITALITY GROUP - NEW ) DATE: January 20, 2017 STANTON II, ) TIME: 2:30 p.m. ) PLACE: Courtroom 10A Defendants. ) ) TO THE HONORABLE JOSEPHINE L. STATON, UNITED STATES DISTRICT JUDGE: PLEASE TAKE NOTICE that, pursuant to Section 3 of the Federal Arbitration Act (9 U.S.C. § 3) and Federal Rules of Civil Procedure 8, 12(b)(1), 12(b)(2) and 12(b)(6), Garrison Investment Group, LP (“Garrison”) and Premier Hospitality Group - New Stanton II (“Premier” and, collectively, “Defendants”), by and through their undersigned counsel, move this court for entry of an order Case 8:16-cv-01968-JLS-JCG Document 17 Filed 12/05/16 Page 1 of 2 Page ID #:256 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 2 dismissing Plaintiff Nainesh Patel’s Amended Complaint or, in the alternative, staying this litigation in favor of binding arbitration in the Eastern District of Pennsylvania. PLEASE TAKE FURTHER NOTICE that this motion is based upon this Notice of Motion, as well as the attached Memorandum of Points and Authorities and Affidavit of Charles Pomerantz in Support of Defendants’ Motion to Dismiss or, in the Alternative, Stay Litigation in Favor of Arbitration. PLEASE TAKE FURTHER NOTICE that this motion is made following conference of counsel pursuant to Local Rule 7-3, which took place on December 1, 2016. Dated: December 5, 2016 Los Angeles, California KATTEN MUCHIN ROSENMAN LLP By: /s/ Noah R. Balch Noah R. Balch California Bar No. 248591 Katten Muchin Rosenman 2029 Century Park East Suite 2600 Los Angeles, CA 90067-3012 Tel: (310) 788-4516 Fax: (310) 712-8229 noah.balch@kattenlaw.com Attorneys for Defendants Garrison Investment Group, LP and Premier Hospitality Group - New Stanton II Case 8:16-cv-01968-JLS-JCG Document 17 Filed 12/05/16 Page 2 of 2 Page ID #:257 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 Noah R. Balch (SBN 248591) noah.balch@kattenlaw.com KATTEN MUCHIN ROSENMAN LLP 2029 Century Park East, Suite 2600 Los Angeles, CA 90067-3012 310.788.4400 (telephone) 310.788.4471 (facsimile) Attorneys for Defendants Garrison Investment Group LP and Premier Hospitality Group - New Stanton II UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, SOUTHERN DIVISION NAINESH PATEL Plaintiff, v. GARRISON INVESTMENT GROUP, LP, and PREMIER HOSPITALITY GROUP - NEW STANTON II, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 8:16-CV-1968-JLS-JCG MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR, IN THE ALTERNATIVE, STAY LITIGATION IN FAVOR OF ARBITRATION PURSUANT TO FED. R. CIV. P. 8, 12(b)(1), 12(b)(2) AND 12(b)(6) DATE: January 20, 2017 TIME: 2:30 p.m. PLACE: Courtroom 10A ) Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 1 of 30 Page ID #:258 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 i TABLE OF CONTENTS Page PRELIMINARY STATEMENT .................................................................................... 1 FACTUAL BACKGROUND ......................................................................................... 4 A. The Parties .................................................................................................. 4 B. Premier Decides to Sell the Property ......................................................... 5 C. Patel Participates in the Auction and Agrees to Purchase the Property .... 5 D. The Parties Execute the Purchase Agreement ........................................... 6 E. Patel Experiences Buyer’s Remorse and Breaches the Agreement ........... 7 LEGAL ARGUMENT .................................................................................................... 8 I. The Dispute Between the Parties Must be Arbitrated .......................................... 8 A. Applicability of the Federal Arbitration Act .............................................. 8 B. The Current Dispute Between Patel and Premier Must Be Arbitrated and his Claims Must be Dismissed or Stayed ................................................. 11 II. Plaintiff’s Amended Complaint Should be Dismissed Pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(6), and 12(b)(1) ................................ 14 A. Plaintiff’s Complaint is Subject to Dismissal Pursuant to Fed. R. Civ. P. 12(b)(2) as Plaintiff Has Failed to Plead Facts Demonstrating that the Court can Exercise Personal Jurisdiction Over Premier .......................... 14 B. Plaintiff’s Claims are Subject to Dismissal Pursuant to Fed. R. Civ. P. 12(b)(6) ..................................................................................................... 17 C. Plaintiff Has Failed to Satisfy the Requisite Pleading Standard of Fed. R. Civ. P. 8 with Respect to Allegations Against Premier ........................... 21 D. Plaintiff’s Complaint is Subject to Dismissal Pursuant to Fed. R. Civ. P. 12(b)(1) as Plaintiff Has Failed to Plead Facts Demonstrating the Complete Diversity of the Parties ............................................................ 22 CONCLUSION ............................................................................................................. 23 Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 2 of 30 Page ID #:259 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 ii TABLE OF AUTHORITIES Page(s) Cases Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265 (1995)................................................................................................... 9 Amerault v. Intelcom Support Services, Inc., 16 F. App’x 724 (9th Cir. 2001) .............................................................................. 22 Amisil Holdings, Ltd. v. Clarium Capital Management, LLC, No. C-06-5255 MJJ (EMC), 2006 WL 3949332 (N.D. Cal. Dec. 21, 2006) ........................................................................................................................ 14 Arnold v. Arnold Corp.-Printed Communications For Business, 920 F.2d 1269 (6th Cir. 1990) ................................................................................. 14 Ashcroft v. Iqbal, 556 U.S. 662 (2009)................................................................................................. 21 AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (1986)................................................................................................. 12 BAC Home Loans Servicing, LP v. Bayangos, No. CV 10-8149-DSF, 2010 WL 4628007 (C.D. Cal. Nov. 8, 2010) ..................... 23 Balistreri v. Pacifica Police Dept., 901 F.3d 696 (9th Cir. 1988) ............................................................................. 17, 20 Battaglia v. McKendry, 233 F.3d 720 (3d Cir. 2000) .................................................................................... 12 Bautista v. Pan Am World Airlines, Inc., 828 F.2d 546 (1987) ................................................................................................ 22 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)................................................................................................. 21 Bischoff v. DirecTV, Inc., 180 F. Supp. 2d 1097 (C.D. Cal. 2002) ................................................................... 11 Boardman v. Pacific Seafood Group, 822 F.3d 1011 (9th Cir. 2016) ................................................................................... 8 Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 3 of 30 Page ID #:260 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 iii Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008) ..................................................................... 16, 17, 19 Calian v. Oxford Land Development, Inc., 858 A.2d 1229 (Pa. Super. 2004) ...................................................................... 12, 13 Casault v. Federal Nat. Mortg. Ass’n, 915 F. Supp. 2d 1113 (C.D. Cal. 2012) ................................................................... 18 Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (9th Cir. 2000) ............................................................................. 9, 11 Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001)................................................................................................... 9 CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066 (9th Cir. 2011) ........................................................................... 14, 15 Davis v. Nordstrom, Inc., 755 F.3d 1089 (9th Cir. 2014) ................................................................................... 9 First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995)............................................................................................. 9, 11 Government Computer Sales Inc. v. Dell Marketing, 199 F. App’x 636 (9th Cir. 2006) .............................................................................. 5 Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc., 896 F.2d 1542 (1989) .............................................................................................. 17 Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408 (1984)................................................................................................. 15 International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) ........................................................................................ 15 Johnston v. Beazer Homes Texas, L.P., No. C 06-05382 SI, 2007 WL 708555 (N.D. Cal. Mar. 2, 2007) ............................ 13 Landis v. N. Am. Co., 229 U.S. 248 (1936)................................................................................................. 10 Lewis v. UBS Financial Services Inc., 818 F. Supp. 2d 1161 (N.D. Cal. 2011) ................................................................... 13 Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 4 of 30 Page ID #:261 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 iv Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857 (9th Cir. 1979) ................................................................................... 10 Lindley Contours, LLC v. AABB Fitness Holdings, Inc., 412 F. App’x 62 (9th Cir. 2011) .............................................................................. 23 Lugo v. Bank of America, N.A., No. 2:11-CV-01956-MCE-EFB, 2012 WL 893878 (E.D. Cal. Mar. 15, 2012) ........................................................................................................................ 22 Luna v. Kemira Specialty, Inc., 575 F. Supp. 2d 1166 (C.D. Cal. 2008) ................................................................... 11 Makreas v. First Nat. Bank of Northern California, 856 F. Supp. 2d 1097 (N.D. Cal. 2012) ................................................................... 18 McLachlan v. Bell, 261 F.3d 908 (9th Cir. 2001) ................................................................................... 23 McLeod v. Ford Motor Co., No. EDCV 04-1255VAPSGLX, 2005 WL 3763354 (C.D. Cal. Apr. 14, 2005) .................................................................................................................. 11 Momento, Inc. v. Seccion Amarilla USA, No. C 09-1223 SBA, 2009 WL 1974798 at *2-3 (N.D. Cal. July 8, 2009) ........................................................................................................................ 18 Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) ....................................................................................................... 9 Nationwide Agribusiness Insurance Company v. Buhler Barth GmbH, No. 15-CV-00582-JAM-EPG, 2015 WL 6689572 (E.D. Cal. Oct. 30, 2015) ........................................................................................................................ 10 Oliver v. Ralphs Grocery Co., 654 F.3d 903 (9th Cir. 2011) ................................................................................... 21 Ripple v. Director/Secretary of California Dept. of Corrections and Rehabilitation, No. CV 11-396-GHK (DTB), 2012 WL 5995623 (C.D. Cal. Sept. 21, 2012) ........................................................................................................................ 22 Robinson v. Delicious Vinyl Records Inc., No. 2:13-CV-04111-CAS, 2014 WL 5332837 (C.D. Cal. Oct. 20, 2014) ........................................................................................................................ 13 Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 5 of 30 Page ID #:262 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 v SanDisk Corporation v. SK Hynix Inc., 84 F. Supp. 3d 1021, 1027 (N.D. Cal. 2015) ............................................................. 9 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004) ............................................................................. 15, 16 Simonyan v. Ally Financial Inc., No. CV 12-8495-JFW, 2013 WL 45453 (C.D. Cal. Jan 3, 2013) ........................... 17 Soto v. Wells Fargo Bank, N.A., No. CV 11-1405 PSG, 2011 WL 1743296 (C.D. Cal. May 6, 2011) ..................... 22 Sparling v. Hoffman Const. Co., Inc., 864 F.2d 635 (9th Cir. 1988) ................................................................................... 10 Starr v. Baca, 652 F.3d 1202 (9th Cir. 2011) ................................................................................. 21 Strand v. U.S. Bank Nat. Ass’n, No., 2004 WL 5266927 (N.D. Cal. Mar. 12, 2004) ................................................ 10 Summit Technology, Inc. v. High-Line Medical Instruments Co., Inc., 922 F. Supp. 299 (C.D. Cal. 1996) .................................................................... 17, 20 Tosco Corp. v. Communities for a Better Environment, 41 F. Supp. 2d 1061 (C.D. Cal. 1999) ..................................................................... 23 Unic Oil Compania v. Internacional De Granos E Insumos S.A. de C.V., 92 F.3d 1194 (9th Cir. 1996) ................................................................................... 15 Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046 (9th Cir. 1996) ................................................................................... 11 Statutes 9 U.S.C. § 2 ..................................................................................................................... 9 9 U.S.C. § 3 ............................................................................................................... 1, 10 9 U.S.C. § 4 ..................................................................................................................... 9 28 U.S.C. § 1332 ..................................................................................................... 22, 23 Cal. Bus. & Prof. Code §§ 17200, et seq. ........................................................... 2, 18, 19 Cal. Bus. & Prof. Code §§ 17500, et seq. ................................................................. 2, 18 Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 6 of 30 Page ID #:263 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 vi Other Authorities Fed. R. Civ. P. 8 ..................................................................................................... passim Fed. R. Civ. P. 12(b)(1) .................................................................................. 1, 4, 14, 23 Fed. R. Civ. P. 12(b)(2) ........................................................................................ 1, 2, 14 Fed. R. Civ. P. 12(b)(6) ......................................................................................... passim Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 7 of 30 Page ID #:264 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 1 Defendants Garrison Investment Group, LP, (“Garrison”) and Premier Hospitality Group - New Stanton II (“Premier” and, collectively, “Defendants”), by and through their attorneys Katten Muchin Rosenman LLP, respectfully submit this memorandum of points and authorities in support of their motion to: (i) stay the claims asserted against Defendants in favor of arbitration pursuant to Section 3 of the Federal Arbitration Act, 9 U.S.C. § 3; and (ii) dismiss the claims asserted against Defendants pursuant to Fed. R. Civ. P. 8, 12(b)(1), 12(b)(2) and 12(b)(6). PRELIMINARY STATEMENT This dispute arises from Plaintiff Nainesh Patel’s (“Plaintiff” or “Patel”) attempt to prevent an escrow agent from turning over to Premier a $483,000 deposit (the “Earnest Money Deposit”) that became payable when Patel defaulted on his obligation to close on the purchase of a parcel of real property located at 107 Bair Boulevard, New Stanton, PA 15672 (the “Property”), which was being operated by Defendant Premier as a Fairfield Inn & Suites Hotel. Patel, a Georgia resident, agreed to pay $4,830,000 (the “Purchase Price”) to acquire the Property from Premier, a single purpose Pennsylvania limited partnership whose sole asset is the Property, pursuant to an Agreement of Purchase and Sale and Joint Escrow Instructions (Commercial), dated August 10, 2016. (Docket Entry No. 10-1, Ex. 2, the “Agreement.”) The Agreement clearly and unambiguously provides that Premier, as the seller, is entitled to keep the entire amount of the Earnest Money Deposit as liquidated damages in the event of Patel’s failure to close and contains an arbitration clause requiring that any disputes regarding the Earnest Money Deposit be arbitrated in Pennsylvania, where the Property is located. However, after Patel experienced buyer’s remorse and refused to close on the transaction, he and his counsel self-servingly chose to flout the clearly applicable arbitration clause requiring arbitration of this matter in Pennsylvania by filing the instant lawsuit in California - which has no nexus to the parties or their dispute whatsoever - asserting claims under Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 8 of 30 Page ID #:265 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 2 California’s False Advertising law (Bus. & Prof. Code §§ 17500, et seq.) and Unfair Competition law (Bus. & Prof. Code §§ 17200, et seq.). Patel further attempts to distance himself from the governing Agreement at the heart of this matter by frivolously naming Garrison as a defendant herein even though Garrison is not a party to the Agreement and merely acted as an investment advisor to the entities that own interests in Premier. It is evident that Patel, who has not alleged a single fact that would warrant piercing Garrison’s corporate veil, chose to name Garrison in a misguided and patently improper attempt to somehow persuade Premier to return Patel’s Earnest Money Deposit. Patel should never have filed this lawsuit in California (or elsewhere) and it should be stayed in favor of arbitration and/or dismissed with prejudice. First, Section 11 of the Agreement contains an arbitration clause which broadly provides that “ANY DISPUTE OR CLAIM IN LAW OR EQUITY ARISING BETWEEN [the parties] OUT OF THIS AGREEMENT SHALL BE DECIDED BY NEUTRAL, BINDING ARBIRATION . . . .” (Agreement § 11) (emphasis added). Here, the parties’ dispute regarding the Earnest Money Deposit clearly falls within the broad language of the arbitration clause at issue and it is therefore required to be arbitrated as a matter of law. Patel’s decision to file a frivolous lawsuit alleging violations of California consumer protection statutes against Garrison, a non-party to the Agreement, is a flimsy artifice that does not and cannot enable him to avoid arbitration under the governing contract that he indisputably signed. Second, the Amended Complaint should be dismissed as against Premier pursuant to Fed. R. Civ. P. 12(b)(2), because there is absolutely no basis for this Court to assert personal jurisdiction over Premier, a Pennsylvania limited partnership whose sole asset is a Pennsylvania Property that Patel, a Georgia resident, agreed to purchase pursuant to the Agreement. Contrary to Patel’s assertion, the only nexus of the sale transaction at issue to this Court is the California office of Patel’s counsel, David J. Myers, whose practice is located at 19900 MacArthur Boulevard in Irvine. It is clear Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 9 of 30 Page ID #:266 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 3 that Mr. Myers, who was apparently hired by Patel to represent him in this matter after the Agreement was executed, only chose to file this matter in California in a self-serving effort to create leverage over Defendants by forcing them to incur the costs and burden of litigating a Pennsylvania purchase dispute in a Court located near his office in California. Clearly, the absence of any connection to California, aside from counsel’s office address, is not a valid basis for the assertion of personal jurisdiction over Premier. Third, the Amended Complaint should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) because Patel has failed to state a claim upon which relief may be granted. Patel is not a California resident and, as such, is not an intended beneficiary of the protections of the California consumer protection acts, which were enacted to protect California residents, not Georgia residents who seek to purchase property in Pennsylvania. Moreover, as noted above, Patel’s Amended Complaint asserts frivolous state law claims against Garrison stemming from an Agreement between Patel and Premier. Garrison was not a party to this Agreement, nor did it engage in activities meant to induce Patel to enter into it. In light of this, it is unsurprising that Patel has failed to plead facts sufficient to state a claim under California’s unfair competition and false advertising statutes. Moreover, even if the California statutory claims could be properly asserted, they are required to be asserted in arbitration in Pennsylvania. Thus, the Amended complaint should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6). Fourth, the Amended Complaint should be dismissed as against Premier because Patel has failed to satisfy the minimal pleading standard of Fed. R. Civ. P. 8. On November 12, 2016, Patel filed an Amended Complaint in this action, adding Premier as a defendant. Yet, Patel has failed to supplement his complaint with even a single factual allegation indicating any activities engaged in by Premier that might subject it to liability. Rule 8 requires that a complaint provide the defendant with fair notice of the claims against it so that it may adequately prepare a defense; Patel has Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 10 of 30 Page ID #:267 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 4 utterly failed to satisfy this standard and thus, the Amended Complaint must be dismissed as against Premier. Finally, the Amended Complaint must be dismissed against both Defendants pursuant to Fed. R. Civ. P. 12(b)(1) because Patel has failed to satisfy his burden of pleading facts demonstrating diversity for the purposes of establishing subject matter jurisdiction. As the Plaintiff, Patel bears the burden of affirmatively alleging facts establishing the diversity of the parties. However, Patel has failed to adequately plead the citizenship of either Garrison or Premier, both of which are limited partnerships, by failing to plead the citizenship of their members. Thus, the Amended Complaint does not adequately allege diversity for the purpose of establishing this Court’s subject matter jurisdiction and must be dismissed on that basis. In sum, Plaintiff’s suit is frivolous on multiple levels and has no business being litigated in a California federal court. Based on the undisputable facts surrounding the failed transaction between Plaintiff and Premier, as well as the manifest pleading deficiencies of the Amended Complaint, the Court should immediately stay this litigation in favor of arbitration in Pennsylvania pursuant to the clear language of the parties’ Agreement and/or dismiss the Amended Complaint with prejudice. FACTUAL BACKGROUND1 A. The Parties Plaintiff Nainesh Patel is an individual who is a citizen of Georgia, maintaining an address at 116 Grand Island, Albany, Georgia 31707. (See Am. Compl. ¶ 1; Pomerantz Decl. ¶ 2.) Defendant Garrison Investment Group, LP is a Delaware limited partnership with its principal place of business in New York. (See Am. Compl. ¶ 1; Pomerantz Decl. ¶ 3.) Defendant Premier Hospitality Group - New Stanton II is a Pennsylvania limited partnership with its principal place of business in New York. (See Am. Compl. ¶ 1; Pomerantz Decl. ¶ 4.) Garrison acts as an 1 The facts recited herein are drawn from the Amended Complaint and the declaration of Charles Pomerantz (“Pomerantz Decl.”) and attached exhibits. Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 11 of 30 Page ID #:268 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 5 investment management entity and in that capacity manages certain funds invested in Premier. (Pomerantz Decl. ¶ 3.) B. Premier Decides to Sell the Property In or about mid-June 2016, Premier - which owned the Property at issue - engaged an online auctioneer, Ten-X, to conduct an auction of the Property using the website www.ten-x.com. (Id. ¶ 5.) As part of the auction process, Premier sent Ten-X several documents related to the Property, including environmental and property condition reports, financial documents, title and insurance information, a draft copy of a purchase agreement, and a property improvement plan that had been prepared for the Property. (Pomerantz Decl. ¶ 6.) Those documents were uploaded by Ten-X to an “online due diligence room,” in order to allow potential purchasers to review those documents prior to commencement of the auction. (Id. ¶ 6.) C. Patel Participates in the Auction and Agrees to Purchase the Property In or about July 2016, Patel registered to participate in the auction by creating an account with Ten-X. (Id. ¶ 7.) By doing so, Patel agreed to abide by the Ten-X Participation Terms, which included a term providing that each auction participant was responsible for conducting his own due diligence. (Pomerantz Decl. ¶ 7, Ex. 1 (“Ten-X Participation Terms”) § 2.)2 Section 3 of the Ten-X Participation Terms include the provision requiring payment of the Earnest Money Deposit: Payment of Earnest Money Deposit. The Purchase Documents for each Property require Winning Buyer to pay a deposit to the escrow/closing agent. The amount of the Earnest Money Deposit is specified in the Purchase 2 While a court generally cannot look outside the pleadings on a motion to dismiss, “a court may consider a document on a motion to dismiss if that document is integral to the plaintiff’s claims and its authenticity is not in dispute, even if the plaintiff elects not to attach that document to its complaint.” Government Computer Sales Inc. v. Dell Marketing, 199 F. App’x 636 (9th Cir. 2006). Ten-X’s terms of participation in its online auction are clearly integral to Plaintiff’s claims here, and thus should be considered by the Court. In addition, Plaintiff has attached the Agreement as an exhibit to his Amended Complaint and, therefore, the Court may rely on that document as well. Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 12 of 30 Page ID #:269 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 6 Documents or the property Page for each Property. Unless otherwise specified in the Purchase Documents, the Earnest Money Deposit must be received no later than 5:00 PM in the time zone where the Property is located on the first business day after Seller countersigns the Purchase Documents, time being of the essence. (Ten-X Participation Terms § 3.) By agreeing to participate in the auction, Patel thus expressly acknowledged that it would be his sole responsibility to conduct due diligence concerning the Property, and that he would be required to pay the Earnest Money Deposit as security for the transaction in the event that he signed a purchase agreement. (See Ten-X Participation Terms §§ 2, 3.) The auction for the Property commenced on the Ten-X website on August 8, 2016. (Pomerantz Decl. ¶ 10.) The auction remained open for two days, with bids being accepted through August 10, 2016. (Pomerantz Decl. ¶ 10.) On August 10, 2016, Patel submitted a bid for the Property using the Ten-X site. (Id. ¶ 11.) Although another bidder subsequently submitted a higher bid, that bid was later withdrawn before it was accepted, and Patel was thereafter contacted about purchasing the Property. (Id. ¶ 11.) Patel ultimately agreed to purchase the property from Premier for a total price of $4,830,000. (Pomerantz Decl. ¶ 12, Ex. 2 (“Agreement”) § 2.) D. The Parties Execute the Purchase Agreement On August 10, 2016, the parties executed the Agreement for the sale of the property. (Pomerantz Decl. ¶ 13; Agreement.) The Agreement contains several pertinent provisions, including an acknowledgment that the property was being purchased “as is, where is,” as well as an acknowledgment that Patel had conducted his own due diligence investigation into the Property and was not relying on any representations or warranties made by Premier or any documents uploaded to the Ten-X website by Premier. (Agreement §§ 3, 6, 8(C).) The Agreement also contained various waivers and releases from liability, as well as a representation by Patel that he was adequately sophisticated to enter into the transaction. (Agreement Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 13 of 30 Page ID #:270 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 7 §§ 6, 8(C), 31.) Furthermore, the Agreement set forth the terms of the Earnest Money Deposit, requiring Patel to pay ten percent of the total purchase price into an escrow account to be held as security for the transaction and to serve as liquidated damages should the transaction not be completed. (Agreement § 2.) Of paramount importance to the instant motion, Section 11 of the Agreement contains a broad arbitration clause providing that: BUYER AND SELLER AGREE THAT ANY DISPUTE OR CLAIM IN LAW OR EQUITY ARISING BETWEEN THEM OUT OF THIS AGREEMENT SHALL BE DECIDED BY NEUTRAL, BINDING ARBITRATION HELD IN THE COUNTY IN WHICH THE PROPERTY LIES WITH AND UNDER THE COMMERCIAL DISPUTE RESOLUTION RULES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES (JAMS) OR THE AMERICAN ARBITRATION ASSOCIATION (AAA). (Agreement § 11) (emphasis added). Thus, by entering into the Agreement, Patel clearly and unequivocally committed to resolving any and all disputes arising from the purchase of the Property through binding arbitration.3 E. Patel Experiences Buyer’s Remorse and Breaches the Agreement Shortly after executing the Agreement, Patel began to express a strong reluctance to tender the required Earnest Money Deposit. (Pomerantz Decl. ¶ 17.) When the Earnest Money Deposit payment was not forthcoming, counsel for Premier sent two letters to Patel, dated August 16 and August 24, 2016, each of which was directed to Patel’s Georgia address and informed Patel that he was contractually obligated to pay the Earnest Money Deposit and that, in the event of a failure to make 3 Section 11 of the Agreement also requires that the parties submit disputes to mediation prior to arbitration or court action. (See Agreement § 11(A).) To that end, Defendants have submitted a request for appointment of a mediator by JAMS. (Pomerantz Decl. ¶ 24.) Should such mediation be unsuccessful, arbitration remains the appropriate vehicle for resolution of the parties’ dispute. Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 14 of 30 Page ID #:271 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 8 such payment, Premier would file an arbitration claim against Patel to recover the deposit. (See Pomerantz Decl. ¶ 17.) Finally, on August 29, 2016, Patel responded to an email from counsel for Premier. (Pomerantz Decl. ¶ 18.) In his message, Patel expressed his dissatisfaction with the deal and provided a litany of excuses as to why he should be absolved of his contractual obligations. (Id.) Premier rebuffed Patel’s attempts to renegotiate the terms of the Agreement, and Patel thereafter tendered the $483,000 Earnest Money Deposit to the escrow agent. (Id. ¶ 19.) However, Patel ultimately failed and refused to close on the transaction, thereby breaching the Agreement. (Id. ¶ 20.) By letter dated October 24, 2016, Premier demanded that the escrow agent turn over the full amount of the Earnest Money Deposit. (Pomerantz Decl. ¶ 21.) Patel, however, objected to the release of funds to Premier, and once again argued that he should be permitted to escape his contractual obligations under the Agreement. (Id. ¶ 21.) Thereafter, on October 28, 2016, Patel filed the instant suit, asserting California statutory claims of unfair competition and false advertising against Garrison (and, later, Premier), both of which stem from the transaction governed by the Agreement. (See Docket Entry Nos. 1, 10.) Patel’s filing suit in this Court represents a further breach of the Agreement, and plainly contravenes the express contractual terms agreed to between himself and Premier, which demand that all disputes arising from the Agreement governing the sale of the Property be settled through binding arbitration. To that end, on November 8, 2016, Premier filed its demand for arbitration with JAMS in the Eastern District of Pennsylvania. (Pomerantz Decl. ¶ 24.) LEGAL ARGUMENT I. THE DISPUTE BETWEEN THE PARTIES MUST BE ARBITRATED A. Applicability of the Federal Arbitration Act The Ninth Circuit has recognized that the Federal Arbitration Act (“FAA”) “makes enforceable a written arbitration provision in ‘a contract evidencing a transaction involving commerce.’” See Boardman v. Pacific Seafood Group, 822 F.3d Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 15 of 30 Page ID #:272 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 9 1011, 1017 (9th Cir. 2016) (quoting Federal Arbitration Act, 9 U.S.C. § 2); see also Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 274-79 (1995) (holding that the FAA applies to arbitration agreements involving foreign and interstate commerce). “An agreement to arbitrate is a matter of contract: ‘it is a way to resolve those disputes . . . that the parties have agreed to submit to arbitration.’” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). The Supreme Court has held that the Federal Arbitration Act constitutes “a congressional declaration of a liberal federal policy favoring arbitration agreements,” and that, as a result, arbitration clauses are to be liberally construed with “any doubts concerning the scope of arbitrable issues [to] be resolved in favor of arbitration.” Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983); see also Davis v. Nordstrom, Inc., 755 F.3d 1089, 1092 (9th Cir. 2014) (“The Federal Arbitration Act . . . reflects a liberal federal policy in favor of arbitration.”) (internal quotations omitted). The FAA creates a “body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act,” Moses H. Cone, 460 U.S. at 24, and “compels judicial enforcement of a wide range of written arbitration agreements.” Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 111 (2001). Furthermore, the FAA “provides that any arbitration agreement within its scope ‘shall be valid, irrevocable and enforceable.’” Chiron, 207 F.3d at 1130 (quoting 9 U.S.C. § 4). Because the “Federal Arbitration Act applies to arbitration agreements in any contract affecting interstate commerce,” SanDisk Corporation v. SK Hynix Inc., 84 F. Supp. 3d 1021, 1027 (N.D. Cal. 2015) (citing Circuit City Stores, 532 U.S. at 119), it is clearly applicable to the case at bar, which involves a transaction for the purchase of real property between two entities from different states. Pursuant to Section 3 of the FAA: [i]f any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 16 of 30 Page ID #:273 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 10 under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration. (9 U.S.C. § 3.) See also Strand v. U.S. Bank Nat. Ass’n, No., 2004 WL 5266927, at *3 (N.D. Cal. Mar. 12, 2004) (“The FAA provides that in any suit or proceeding brought in the courts of the United States upon any issue referable to arbitration, the court shall stay the action until arbitration has been conducted in conformance with the terms of the agreement.”) (citing 9 U.S.C. § 3). Moreover, “the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel and for litigants.” Landis v. N. Am. Co., 229 U.S. 248, 254 (1936); see also Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857, 863-64 (9th Cir. 1979) (“[a] trial court may, with propriety, find it is efficient for its own docket and the fairest court for the parties to enter a stay of an action before it, pending resolution of independent proceedings which bear upon the case.”). Thus, this Court is unquestionably empowered to stay the litigation should it find that the claims at issue are subject to arbitration. Furthermore, the Ninth Circuit has recognized that, pursuant to 9 U.S.C. § 3, a court may exercise its discretion to dismiss an action in its entirety where all of the relevant claims are covered by an arbitration clause. See, e.g., Sparling v. Hoffman Const. Co., Inc., 864 F.2d 635, 638 (9th Cir. 1988) (“This court held that 9 U.S.C. § 3 . . . does not preclude summary judgment when all claims are barred by an arbitration clause.”); see also Nationwide Agribusiness Insurance Company v. Buhler Barth GmbH, No. 15-CV-00582-JAM-EPG, 2015 WL 6689572, at *7 (E.D. Cal. Oct. 30, 2015) (“The FAA does not require a Court that has granted a motion to compel arbitration to issue a stay. Instead, a district court may dismiss the case if all claims Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 17 of 30 Page ID #:274 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 11 are barred by the arbitration clause); Luna v. Kemira Specialty, Inc., 575 F. Supp. 2d 1166, 1178 (C.D. Cal. 2008) (“[t]he weight of authority clearly supports dismissal of the case when all of the issues raised in the district court must be submitted to arbitration.”). B. The Current Dispute Between Patel and Premier Must Be Arbitrated and his Claims Must be Dismissed or Stayed It is utterly untenable for Patel to suggest that his claims arising from the Earnest Money Deposit dispute are not subject to arbitration pursuant to the Agreement’s broad arbitration clause. Because these claims are subject to arbitration, the Court should dismiss or, at the very least, stay this litigation in favor of arbitration. “In deciding a motion to stay [or dismiss] a proceeding pending arbitration, a court must determine (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” McLeod v. Ford Motor Co., No. EDCV 04-1255VAPSGLX, 2005 WL 3763354, at *2 (C.D. Cal. Apr. 14, 2005) (internal quotations omitted) (citing Chiron, 207 F.3d at 1130; Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1048-49 (9th Cir. 1996)); see also, Bischoff v. DirecTV, Inc., 180 F. Supp. 2d 1097, 1103 (C.D. Cal. 2002) (“the Court must first determine the breadth of the arbitration clause and then determine if Plaintiff’s claims are subject to the arbitration clause.”). As noted above, Section 11 of the Agreement broadly provides that “[b]uyer and seller agree that any dispute or claim in law or equity arising between them out of this agreement shall be decided by neutral, binding arbitration . . .” (See Agreement § 11.) The Supreme Court has held that “[w]hen deciding whether parties agreed to arbitrate a certain matter . . . courts generally . . . apply ordinary state-law principles that govern the formation of contracts.” First Options of Chicago, 514 U.S. at 944. Here, the Agreement containing the arbitration clause contains a choice of law provision stating that it is to “be governed by, construed and enforced in accordance with the laws of the state in which the Property is located . . .” (See Agreement § 19.) The Property at issue here is located in New Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 18 of 30 Page ID #:275 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 12 Stanton, Pennsylvania (see Am. Compl. ¶ 4), thus, Pennsylvania law applies to this court’s determination of whether this dispute falls within the scope of the arbitration clause at issue. As an initial matter, there can be no doubt that a valid agreement to arbitrate exists between Patel and Premier. Section 11 of the Agreement, which was signed by both parties, is a clear and unequivocal agreement to arbitrate, the validity of which is beyond reproach. (See Agreement § 11.) As to whether this dispute falls within the purview of the arbitration clause, Pennsylvania courts have recognized that “when parties have agreed to arbitrate in a clear and unmistakable manner, every reasonable effort should be made to favor the agreement unless it may be said with positive assurance that the arbitration clause involved is not susceptible to an interpretation that covers the asserted dispute.” Calian v. Oxford Land Development, Inc., 858 A.2d 1229, 1233 (Pa. Super. 2004). The presumption in favor of arbitrability “is particularly applicable where the arbitration clause at issue is broad.” Battaglia v. McKendry, 233 F.3d 720, 725 (3d Cir. 2000) (citing AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (1986)). Here, as noted above, Patel’s complaint asserts claims for unfair competition and false advertising based on the series of events that ultimately culminated with Patel’s signing, and subsequent breach, of the Agreement. Patel makes allegations with respect to alleged misrepresentations made by Garrison on the Ten-X website, as well as unfair business practices allegedly perpetrated by Garrison over the course of the parties’ dealings. (See generally Amended Complaint.) Each allegation stems from the transaction embodied in the Agreement, and thus falls within the parameters of the Agreement’s broad arbitration clause. Indeed, the Agreement contains a series of pertinent waivers, including: an agreement by Patel not to rely on seller-supplied materials (Agreement § 8); an acknowledgment that he performed his own due diligence regarding the Property (Agreement §§ 3, 8(D)); a waiver of claims arising Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 19 of 30 Page ID #:276 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 13 out of or relating to information provided on the Ten-X website (Agreement § 8(C)); and a representation that Patel was a sophisticated buyer with sufficient knowledge to evaluate the merits and risks of the transaction. (Agreement § 31.) Each of Patel’s claims, therefore, touches upon matters as covered by the Agreement. It cannot “be said with positive assurance that the arbitration clause involved is not susceptible to an interpretation that covers the asserted dispute[s]” and Patel’s claims must therefore be arbitrated. Calian, 858 A.2d at 1233. Because the broad arbitration provision in the Agreement encompasses each of Patel’s claims,4 the Court should exercise its discretion and dismiss those claims in favor of arbitration. See, e.g., Johnston v. Beazer Homes Texas, L.P., No. C 06-05382 SI, 2007 WL 708555, at *4 (N.D. Cal. Mar. 2, 2007) (“The arbitration clause is valid, and appears to cover the claims brought by plaintiff in this Court. The Court therefore GRANTS defendants’ motion to dismiss plaintiff’s claims in favor of arbitration”); see also Lewis v. UBS Financial Services Inc., 818 F. Supp. 2d 1161, 1169 (N.D. Cal. 2011) (“As discussed above, the class action waivers are enforceable, which leaves only Plaintiff’s individual claims remaining in this action. Since those claims are subject to arbitration, dismissal is appropriate.”). In the alternative, the Court should stay the litigation in favor of the pending arbitration, as both the FAA and its inherent authority permit. It would be wholly unjust - and highly inefficient - to allow the present litigation to proceed when Plaintiff’s claims should rightly be before an arbitral authority. The Court should therefore either dismiss or stay Plaintiff’s claims in favor of arbitration.5 4 Courts within this district have held that claims of false advertising and unfair business practices brought pursuant to California statutes are amenable to arbitration. See, e.g., Robinson v. Delicious Vinyl Records Inc., No. 2:13-CV-04111-CAS, 2014 WL 5332837, at *9 (C.D. Cal. Oct. 20, 2014). 5 Plaintiff should not be permitted to escape his obligation to arbitrate the instant dispute merely by having wrongfully named Garrison, a non-signatory to the Agreement, as a Defendant. Indeed, “if a party could ‘avoid the practical Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 20 of 30 Page ID #:277 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 14 II. PLAINTIFF’S AMENDED COMPLAINT SHOULD BE DISMISSED PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 8, 12(B)(1), 12(B)(2), AND 12(B)(6) Plaintiff’s Amended Complaint suffers from a litany of pleading deficiencies. In addition to the reasons outlined above, the Amended Complaint is subject to dismissal pursuant to: (1) Fed. R. Civ. P. 12(b)(2) for failure to plead facts demonstrating that the Court can properly exercise personal jurisdiction over Premier; (2) Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted as against Garrison; (3) Fed. R. Civ. P. 8 for failure to plead facts sufficient to meet the minimal pleading standard as against Premier; and (4) Fed. R. Civ. P. 12(b)(1) for failure to plead diversity for the purpose of the Court’s exercise of subject matter jurisdiction. A. Plaintiff’s Complaint is Subject to Dismissal Pursuant to Fed. R. Civ. P. 12(b)(2) as Plaintiff Has Failed to Plead Facts Demonstrating that the Court can Exercise Personal Jurisdiction Over Premier Plaintiff has utterly failed to plead facts demonstrating that this Court may exercise personal jurisdiction over Premier. “Where, as here, no federal statute [has] authorized personal jurisdiction, the district court applies the law of the state in which the court sits.” CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011). To that end, pursuant to California’s long-arm statute “[f]or a court to exercise personal jurisdiction over a nonresident defendant consistent with due process, that defendant must have ‘certain minimum contacts’ with the relevant forum ‘such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” CollegeSource, 653 F.3d at 1074 (quoting International consequences of an agreement to arbitrate by naming nonsignatory parties as [defendants] in his complaint, . . . the effect of the rule requiring arbitration would, in effect, be nullified.’” Amisil Holdings, Ltd. v. Clarium Capital Management, LLC, No. C-06-5255 MJJ (EMC), 2006 WL 3949332, at *6 (N.D. Cal. Dec. 21, 2006) (citing Arnold v. Arnold Corp.-Printed Communications For Business, 920 F.2d 1269, 1281 (6th Cir. 1990)). As explained supra, each of Patel’s claims ultimately stems from the Agreement, which was executed between Patel and Premier, and did not involve Garrison. Garrison may not be named as a Defendant purely for the purpose of circumventing the Agreement’s binding arbitration clause. Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 21 of 30 Page ID #:278 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 15 Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). “Personal jurisdiction over a non-resident defendant may be either general or specific.” Unic Oil Compania v. Internacional De Granos E Insumos S.A. de C.V., 92 F.3d 1194, at *2 (9th Cir. 1996) (citing Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414 (1984)). General jurisdiction applies “where a defendant’s activities in the forum state are ‘substantial’ or ‘continuous and systematic.’” Unic Oil, 92 F.3d 1194, at *2. “Where general jurisdiction is not found, a court may still exercise specific jurisdiction if the defendant has sufficient contacts with the forum state in relation to the cause of action.” Id. Here, Plaintiff has alleged only that Premier is subject to specific personal jurisdiction. (See Am. Compl. ¶ 3.) The Ninth Circuit has held that specific personal jurisdiction is analyzed under a three-prong test: (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). With respect to Premier, Plaintiff’s Amended Complaint alleges only that “Premier is subject to specific personal jurisdiction in California, based on its involvement as a Garrison controlled entity through which Garrison engaged in the transaction . . . that [is] the subject of this action . . . .” (Am. Compl. ¶ 3.) Such an allegation utterly fails to satisfy the three-prong test for specific personal jurisdiction set out above. Plaintiff fails to plead any facts demonstrating that Premier “direct[ed its] activities or consummate[d] some transaction with the forum or resident.” Schwarzenegger, 374 F.3d at 802. Indeed, as noted above, Plaintiff has failed to allege that Premier Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 22 of 30 Page ID #:279 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 16 engaged in any affirmative actions that might link the company to California or demonstrate that it “purposefully availe[ed itself] of the privilege of conducting activities” in California. Id. The Ninth Circuit has recognized that a “lone transaction for the sale of one item does not establish that [a] Defendant[] purposefully availed [itself] of the privilege of doing business in California.” Boschetto v. Hansing, 539 F.3d 1011, 1017 (9th Cir. 2008). In Boschetto, the Ninth Circuit flatly rejected an argument offered by the plaintiff - who was a California resident - that a transaction between himself and the defendant facilitated by eBay created substantial minimum contacts with the state of California to subject the defendant to personal jurisdiction there. Id. The Ninth Circuit noted the “limited nature of the transaction at issue,” holding that it “did not create any ongoing obligations with [plaintiff] in California.” Id. Moreover, the Court flatly rejected the plaintiff’s argument that personal jurisdiction was appropriate because “the eBay listing could have been viewed by anyone in California . . . with Internet access,” noting that “the eBay listing was not part of broader e-commerce activity; the listing temporarily advertised a good for sale and that listing closed once the item was sold, thereby extinguishing the Internet contact for this transaction within the forum state (and every other forum).” Id. at 1018. Plaintiff’s haphazard attempt to invoke jurisdiction here is even more egregious, as Patel does not reside in California - he lives in Georgia and purchased a property in Pennsylvania. There are no contacts with California. And, as in Boschetto, the transaction here “was a one-time contract for the sale of a good . . . [that] created no ‘substantial connection’ or ongoing obligations” and, therefore, there is no way for this Court to exercise personal jurisdiction over Premier. Id. at 1019. Simply put, Plaintiff’s Amended Complaint fails to establish that Premier had any contact with California sufficient to satisfy the “minimum contacts” requirement for this Court to exercise personal jurisdiction over Premier. Moreover, Premier is a Pennsylvania-based entity that engaged in a transaction with a Georgia resident. (See Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 23 of 30 Page ID #:280 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 17 Pomerantz Decl. ¶¶ 2, 4.) Thus, allowing Plaintiff to haul Premier into federal court in California simply does not comport with the “traditional notions of fair play and substantial justice” that the Supreme Court demands. B. Plaintiff’s Claims are Subject to Dismissal Pursuant to Fed. R. Civ. P. 12(b)(6) Plaintiff has likewise failed to state a claim upon which relief may be granted and therefore, his claims must be dismissed. “A motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint.” Simonyan v. Ally Financial Inc., No. CV 12-8495-JFW, 2013 WL 45453, at *1 (C.D. Cal. Jan 3, 2013). “A Rule 12(b)(6) dismissal is proper only where there is either a ‘lack of a cognizable legal theory’ or ‘the absence of sufficient facts alleged under a cognizable legal theory.’” Summit Technology, Inc. v. High-Line Medical Instruments Co., Inc., 922 F. Supp. 299, 304 (C.D. Cal. 1996) (quoting Balistreri v. Pacifica Police Dept., 901 F.3d 696, 699 (9th Cir. 1988)). And, while a court must accept as true all material allegations in the complaint and draw all reasonable inferences in favor of the plaintiff, the court “need not accept as true unreasonable inferences, unwarranted deductions of fact, or conclusory legal allegations cast in the form of factual allegations.” Summit Technology, 922 F. Supp. at 304. Moreover, while a court generally may not consider material beyond the pleadings in ruling on a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), “material which is properly considered as part of the complaint may be considered.” Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc., 896 F.2d 1542, 1557 n.19 (1989). Because Plaintiff has attached the Agreement as an exhibit to his Amended Complaint (see Docket Entry No. 10-1, Ex. 2), the Court may consider the Agreement in deciding Defendants’ motion to dismiss pursuant to Rule 12(b)(6). The present matter revolves entirely around the Agreement between Plaintiff and Premier. Notwithstanding the fact that Garrison is not a party to the Agreement, Plaintiff, in an attempt to gain leverage over Defendants, has alleged two state law Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 24 of 30 Page ID #:281 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 18 consumer protection causes of action against Defendants in his Amended Complaint: false advertising, pursuant to California Business & Professions Code §§ 17500 et seq. and unfair competition, pursuant to California Business & Professions Code §§ 17200 et seq. “A false advertising claim under California Business and Professions Code § 17500 has three elements: (1) an untrue or misleading statement; (2) that is known to be untrue or misleading; and (3) the likelihood that members of the public are deceived.” Momento, Inc. v. Seccion Amarilla USA, No. C 09-1223 SBA, 2009 WL 1974798, at *2-3 (N.D. Cal. July 8, 2009). And, while “[a] claim [for unfair competition] under the fraudulent prong of Section 17200 is distinct from common law fraud,” Makreas v. First Nat. Bank of Northern California, 856 F. Supp. 2d 1097, 1102 (N.D. Cal. 2012), a plaintiff must still allege that “members of the public are likely to be deceived,” by the defendant’s actions to plead a claim under Section 17200. Casault v. Federal Nat. Mortg. Ass’n, 915 F. Supp. 2d 1113, 1129 (C.D. Cal. 2012). As an initial matter, Patel is not a California resident and, as such, is not an intended beneficiary of the protections of the California consumer protection statutes, which were enacted to protect California residents, not Georgia residents who seek to purchase property in Pennsylvania in transactions that have no connection to California whatsoever. The mere fact that the online auctioneer, Ten-X, is located in California does not change the fact that this entire transaction took place outside of California pursuant to an Agreement between parties who do not reside in California. As such, Patel has no basis for invoking the protections afforded by California’s false advertising and unfair competition statutes, California Business & Professions Code §§ 17500 et seq. and California Business & Professions Code §§ 17200 et seq., respectively.6 6 If Patel’s logic regarding Ten-X were accepted, then any on-line transaction that takes place outside of California between non-California residents would hypothetically be subject to jurisdiction in California if the web-hosting company happens to have offices in California. Thus, for example, a dispute regarding a Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 25 of 30 Page ID #:282 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 19 Moreover, Plaintiff concedes in his Amended Complaint that he “had no direct dealings with Garrison until following completion of the auction.” (Am. Compl. ¶ 33.) In so doing, Plaintiff effectively admits that Garrison made no “untrue or misleading statement[s]” from which a claim for false advertising might stem and furthermore, that Garrison did nothing to mislead him or the public with respect to the transaction at issue, which is a necessary element of a claim of unfair competition. It is inherently contradictory for Plaintiff to assert that he was induced into entering into a transaction by an entity with which he admittedly had no contact prior to commencement of that transaction. The claims are fatally deficient for the further reason that Plaintiff was required to allege that members of the public were likely to be deceived by Defendants’ purported actions. Yet, Plaintiff makes these allegations in an entirely conclusory fashion and in a manner that is directly contradicted by the contents of the Agreement. With respect to his false advertising claim, Plaintiff’s allegations are based entirely on the contents of a property improvement plan, or “PIP,” that was allegedly uploaded to the Ten-X website by Garrison prior to the Property auction. (See Am. Compl. ¶¶ 20-28.) Putting aside the fact that Premier is the entity that retained Ten-X to run the auction, not Garrison, the Agreement contains multiple provisions wherein Plaintiff explicitly confirmed that he did “not rel[y] on any representation or warranty made by Seller and/or its agents with respect to the condition of the Property.” (Agreement § 3.) Plaintiff also disclaimed reliance on any materials supplied by the seller of the Property, to wit: “Buyer acknowledges that it has been granted an opportunity to . . . conduct due diligence regarding the Property . . . [and] Seller makes transaction resulting from a non-Californian’s use of Google to purchase property located outside of California could end up being litigated in California despite the absence of any palpable connection to the State. This would lead to absurd results and a potential avalanche of litigation into the California federal and state court systems. See Boschetto, 539 F.3d 1011 (9th Cir. 2008) infra. Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 26 of 30 Page ID #:283 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 20 no representations or warranties as to the truth, accuracy or completeness of any materials, data or information supplied to Buyer in connection with Buyer’s inspection of the property (e.g., that such materials are complete, accurate or the final version thereof . . .).” (Agreement §§ 3, 8(C).) Furthermore, Plaintiff expressly acknowledged that any such materials, like the PIP, “were provided only for [his] convenience in making [his] own examination and determination as to whether [he] wishe[d] to buy the property” and that he “relied exclusively on [his] own independent investigation and evaluation . . . and not on any materials supplied by Seller.” (Agreement § 8(C).) It defies logic that Plaintiff should allege that he, along with members of the public, were likely to be misled by documents that he expressly disclaimed reliance upon. Because the waivers in the Agreement demonstrate “the absence of sufficient facts alleged under a cognizable legal theory,” Balistreri, 901 F.3d at 699, upon which Plaintiff’s may base his false advertising claim, this claim must be dismissed pursuant to Fed. R. Civ. P. 12(b)(6). Plaintiff’s claim for unfair competition also fails for substantially the same reasons. Plaintiff vaguely alleges in the Amended Complaint that “[i]n addition to the false advertising alleged in detail above, Garrison violated the Federal Trade Commission Act . . . and engaged in extensive unfair practices by withholding material information, making unsubstantiated advertising claims, using high pressure sales and negotiation tactics, and depriving consumers’ post-purchase remedies . . .” (Am. Compl. ¶ 31.) This litany of alleged wrongdoings is asserted in conclusory fashion and must be rejected by the Court. See Summit Technology, 922 F. Supp. at 304. Moreover, Plaintiff fails to plead facts demonstrating that Garrison engaged in any activities that were likely to deceive the public - an unsurprising result considering that Garrison was not a party to the subject transaction. The waivers in the Agreement make abundantly clear that the onus to conduct due diligence fell to prospective purchasers, and the express disclaimer of reliance on any statements made Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 27 of 30 Page ID #:284 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 21 or information supplied by the seller eviscerates any allegation that Garrison acted to mislead the public. (Agreement §§ 3, 8(C).) Because Plaintiff has failed to - and indeed cannot - plead essential elements of his false advertising and unfair competition claims, both claims are subject to dismissal pursuant to Fed. R. Civ. P. 12(b)(6). C. Plaintiff Has Failed to Satisfy the Requisite Pleading Standard of Fed. R. Civ. P. 8 with Respect to Allegations Against Premier Federal Rule of Civil Procedure 8 requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” See Fed. R. Civ. P. 8. “The Supreme Court has interpreted the ‘short and plain statement’ requirement to mean that the complaint must provide ‘the defendant [with] fair notice of what the . . . claim is and the grounds upon which it rests.’” Oliver v. Ralphs Grocery Co., 654 F.3d 903, 908 (9th Cir. 2011) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Indeed, the Rule 8 standard requires “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To that end, “allegations in a complaint . . . must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). With respect to his claims against Premier, Plaintiff has utterly failed to satisfy this standard. Plaintiff has failed to allege any facts with respect to Premier’s involvement in the Causes of Action asserted in the Amended Complaint. (See generally Am. Compl.) Plaintiff has not alleged a single affirmative action taken by Premier, nor how any such action might relate to his claims for false advertising or unfair competition. (See id. ¶¶ 20-38.) Rather, Plaintiff alleges, in conclusory terms, that that Garrison engaged in a series of “acts and omissions . . . on behalf of and for the benefit of Premier . . . .” (Am. Compl. ¶ 3.) This utter dearth of factual allegations fails to put Premier on notice of the claims against it and in no way enables Premier to prepare an adequate defense. See Lugo v. Bank of America, N.A., Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 28 of 30 Page ID #:285 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 22 No. 2:11-CV-01956-MCE-EFB, 2012 WL 893878, at *6 (E.D. Cal. Mar. 15, 2012) (finding plaintiff’s “conclusory allegations of [] fraud to be inadequate” under Rule 8 and granting dismissal of those claims); see also Soto v. Wells Fargo Bank, N.A., No. CV 11-1405 PSG, 2011 WL 1743296, at *1 (C.D. Cal. May 6, 2011) (“Despite the liberal pleading standards of Rule 8, conclusory allegations will not save a complaint from dismissal”); Ripple v. Director/Secretary of California Dept. of Corrections and Rehabilitation, No. CV 11-396-GHK (DTB), 2012 WL 5995623, at *6 (C.D. Cal. Sept. 21, 2012) (holding that plaintiff fell short of satisfying Rule 8 by failing “to plead facts which show any affirmative acts on the part of any of the named defendants . . . .”). In light of the paucity of factual allegations relating to Premier in the Amended Complaint, Plaintiff fails to satisfy the pleading requirements of Rule 8, and Premier should be dismissed from this suit. D. Plaintiff’s Complaint is Subject to Dismissal Pursuant to Fed. R. Civ. P. 12(b)(1) as Plaintiff Has Failed to Plead Facts Demonstrating the Complete Diversity of the Parties In the first paragraph of the Amended Complaint, Plaintiff alleges that this Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332, which grants federal courts jurisdiction over cases between citizens of different states wherein the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332, see also Amerault v. Intelcom Support Services, Inc., 16 F. App’x 724, 725 (9th Cir. 2001) (“The essential elements of diversity jurisdiction, including the diverse residence of all parties, must be affirmatively alleged in the pleadings”) (quoting Bautista v. Pan Am World Airlines, Inc., 828 F.2d 546, 552 (1987)). Plaintiff, however, has failed to properly allege the citizenship of either Garrison or Premier. Because both Garrison and Premier are limited partnerships, Plaintiff is required to allege the citizenship of each individual member of each partnership. See, e.g., Lindley Contours, LLC v. AABB Fitness Holdings, Inc., 412 F. App’x 62, 64 (9th Cir. 2011) (“Appellees . . . were warned that if any of th[e] defendants had partnerships, limited partnerships, or limited liability corporations as members, the citizenship of each individual member Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 29 of 30 Page ID #:286 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 23 of these entities must be alleged . . . .”); see also BAC Home Loans Servicing, LP v. Bayangos, No. CV 10-8149-DSF, 2010 WL 4628007, at *2 (C.D. Cal. Nov. 8, 2010) (“Defendant also has not met her burden of showing that the Court has jurisdiction pursuant to § 1332 . . . Plaintiffs are all limited partnerships, but Defendant has not alleged their members’ citizenship.”). Plaintiff has failed to plead any facts establishing the citizenship of the members of either Garrison or Premier. (See Am. Compl. ¶ 1.) As controlling case law makes clear, this deficiency is a sufficient basis for the Court to dismiss the Amended Complaint. See, e.g., Tosco Corp. v. Communities for a Better Environment, 41 F. Supp. 2d 1061 (C.D. Cal. 1999) (dismissing complaint upon finding that diversity between the parties did not exist). Thus, the Amended Complaint should be dismissed pursuant to Fed. R. Civ. P. 12(b)(1). See McLachlan v. Bell, 261 F.3d 908 (9th Cir. 2001) (Rule 12(b)(1) motion is appropriate vehicle for dismissal for lack of subject matter jurisdiction). CONCLUSION In light of the foregoing, Defendants respectfully request that the Court grant their motion to dismiss the Amended Complaint or, in the alternative, stay the instant litigation in favor of arbitration in Pennsylvania. Dated: December 5, 2016 Respectfully submitted, By: /s/ Noah R. Balch Noah R. Balch (SBN 248591) Katten Muchin Rosenman LLP 2029 Century Park East, Suite 2600 Los Angeles, CA 90067-3012 Tel: (310) 788-4516 Fax: (310) 712-8229 noah.balch@kattenlaw.com Attorneys for Defendants Garrison Investment Group, LP and Premier Hospitality Group - New Stanton II Case 8:16-cv-01968-JLS-JCG Document 17-1 Filed 12/05/16 Page 30 of 30 Page ID #:287 Noah R. Balch (SBN 248591) KATTEN MUCHIN ROSEm4AN LLP 2029 Century Park East, Suite 2600 Los Angeles, CA 90067-3012 310.78R4400 (telephone) 310.788.4471 (faesimile) 1 2 3 4 Attorneys for Defendants Garrison Investment Group LP and Premier Elospitality Group - New Stanton II 5 6 7 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, SOUTHERN DIVISION 8 9 10 Case No. 8:I6-CV-1968-JLS-JCGNAINESH PATEL 11 Plaintiff, AFFIDAVIT OF CHARLES POMERANTZ IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS OR, IN THE ALTERNATIVE, STAY LITIGATION IN FAVOR OF ARBITRATION 12 -against- GARRISON INVESTMENT GROUP, LP, and PREMIER HOSPITALITY GROUP - NEW STANTON II, 13 14 15 Defendants. 16 17 19 20 21 22 23 24 25 26 27 28 Case 8:16-cv-01968-JLS-JCG Document 17-2 Filed 12/05/16 Page 1 of 7 Page ID #:288 2 Charles Pomerantz declares under penalty of perjury, pursuant to 28 U.S.C. 3 § 1746, as follows:4 5 I am the Managing Director of Garrison Investment Group, LP. I1. 6 respectfully submit this Affidavit in Support of Defendants Garrison Investment 7 Group, LP and Premier Hospitality Group - New Stanton IPs motion to dismiss this 9 action or, in the alternative, stay the instant case in favor of arbitration. 10 On information and belief. Plaintiff Nainesh Patel (“Plaintiff’ or “Patel”)2. 11 individual who is a citizen of Georgia, maintaining an address at 116 Grandis an12 13 Island, Albany, Georgia 31707. (See also Docket Entry No. 10, Amended Complaint 14 (“Am. Compl.”)T| 1.) 15 Defendant Garrison Investment Group, LP (“Garrison”) is a Delaware3.16 17 limited partnership with its principal place of business in New York. Garrison acts as 18 investment management entity, and in that capacity manages certain funds that arean 19 invested in related entities.20 21 New Stanton II (“Premier”) is aDefendant Premier Hospitality Group4. 22 single-purpose Pennsylvania limited partnership with its principal place of business in 23 New York. Garrison manages funds that are invested in Premier.24 25 On or about mid-June, 2016, Premier engaged an online auctioneer, Ten-5. 26 X, to conduct an auction of certain real property located at 107 Blair Boulevard, New 27 28 2 123327296 l.DOC Case 8:16-cv-01968-JLS-JCG Document 17-2 Filed 12/05/16 Page 2 of 7 Page ID #:289 1 Stanton, PA 15672 (the “Property”) which was being operated by Premier as a 2 Fairfield Inn & Suites Flotel, using the website www.ten-x.com. J As part of the auction process, Premier sent Ten~X documents related to6.4 5 the Property which were uploaded by Ten-X to an “online due diligence room,” for 6 These documents included environmental andpotential purchasers to review, property condition reports, financial documents, title and insurance information, a draft copy of a purchase agreement, and a property improvement plan that had been 7 8 9 10 prepared for the ITotel. In or about July 2016, Patel registered to participate in the action by creating an account with Ten-X. By doing so, Patel agreed to abide by the Ten-X Participation Terms, which included a term providing that each auction participant was responsible for conducting his own due diligence. A true and correct copy of the Ten-X Participation Terms is annexed hereto as Exhibit 1. (See Ten-X Participation 7.12 13 14 15 16 17 18 Terms § 2.) 19 Section 3 of the Ten-X Participation Terms include the provision8.20 21 requiring payment of the Earnest Money Deposit: 22 Payment of Earnest Money Deposit. The Purchase Documents for each Property require Winning Buyer to pay a deposit to the escrow/closing agent. The amount of the Earnest Money Deposit is specified in the Purchase Documents or the property Page for each Property. Unless otherwise specified in the Purchase Documents, the Earnest Money Deposit must be received no later than 5:00 PM in the time zone where the Property is _ located on the first business day after Seller countersigns the Purchase Documents, time being of the essence. 23 24 25 26 27 28 (Ten-X Participation Terms § 3.) 3 23327296 l.DOC Case 8:16-cv-01968-JLS-JCG Document 17-2 Filed 12/05/16 Page 3 of 7 Page ID #:290 By agreeing to participate in the auction, Patel thus expressly9. 2 acknowledged that it would be his sole responsibility to conduct due diligence 3 concerning the Property, and that he would be required to pay the Earnest Money4 5 Deposit as security for the transaction in the event that he signed a purchase 6 agreement. 7 The auction ran on the Ten-X website from August 8 through August 10,10.8 9 2016. 10 On August 10, 2016, Patel submitted a bid for the property using the11. 11 Ten-X website. Although he was outbid, the higher bid was later withdrawn, and12 13 Patel was thereafter contacted about purchasing the Property. 14 Patel agreed to purchase the property from Premier for a total price of $4,830,000. A true and correct copy of the Purchase Agreement (the “Agreement”) is 12. 15 16 17 annexed hereto as Exhibit 2. 18 The Agreement was executed on August 10, 2016. (See Agreement.)13. 19 The Agreement contained several pertinent provisions, including an14.20 21 acknowledgment that Patel had conducted his own due diligence investigation into the Property and was not relying on any representations or warranties made by Premier, or any documents uploaded to the Ten-X website by Premier. (Agreement §§ 3, 6, 8(C).) The Agreement also set forth the terms of the Earnest Money Deposit, 22 23 24 25 15. 26 requiring Patel to pay 10% of the total purchase price into an escrow account to be 27 28 4 123327296 l.DOC Case 8:16-cv-01968-JLS-JCG Document 17-2 Filed 12/05/16 Page 4 of 7 Page ID #:291 1 held as security for the transaction, and to serve as liquidated damages should the 2 transaction not be completed. (Agreement § 2.) 3 Section 11 of the Agreement contains a broad arbitration clause16.4 5 providing that: 6 BUYER AND SELLER AGREE THAT ANY DISPUTE OR C.LAIM IN LAW OR EOUrrY ARISING BETWEEN THEM OUT OF THIS AGREEMENT SHALL BE DECIDED BY NEUTRAL, BINDING ARBITRATION HELD IN THE COUNTY IN WHICH THE PROPERTY LIES WIITI AND UNDER THE COMMERCIAL DISPUTE RESOLUTION RULES OF .lUDICIAL ARBITRATION AND MEDIATION SERVICES (JAMS) OR THE AMERICAN ARBITRATION ASSOCIATION (AAA). 7 9 10 11 12 13 (Agreement § II) (emphasis added). Thus, by entering into the Agreement, Patel clearly and unequivocally committed to resolving any and all disputes arising from the 14 15 16 purchase of the Property through binding arbitration 17 Shortly after executing the Agreement, Patel began to express a strong17. 19 reluctance to tender the Earnest Money Deposit. He failed to tender the deposit within 20 24 hours of executing the Agreement. Letters from counsel for Premier to Patel 21 inquiring after the status of the Earnest Money Deposit went unanswered.22 23 On August 29, 2016, Patel responded to an email from counsel for18. 24 Premier. In his message, Patel expressed his dissatisfaction with the deal and 25 provided a litany of excuses as to why he should be absolved of his contractual26 27 obligations. Premier rebuffed Patel’s attempts to renegotiate the terms of the 28 Agreement. 5 123327296 I,DOC Case 8:16-cv-01968-JLS-JCG Document 17-2 Filed 12/05/16 Page 5 of 7 Page ID #:292 1 On September 8, 2016, Patel tendered the Earnest Money Deposit.19. 2 Patel ultimately failed and refused to close on the transaction to purchase20. 0 the Property, thereby breaching the Agreement.4 5 By letter dated October 24, 2016, Premier demanded that the escrow21. 6 agent turn over the full amount of the Earnest Money Deposit. Patel, however, objected to the release of funds to Premier, and once again argued that he should be 7 9 permitted to escape his contractual obligations under the Agreement. 10 Patel filed the instant suit, representing a further22. On October 28, 2016, 11 breach of the Agreement, and plainly contravening the express contractual terms agreed to between himself and Premier, which demand that all disputes arising from the Agreement governing the sale of the Property be settled through bindin 12 13 14 0to 15 arbitration.16 17 On November 8, 2016, Premier filed its demand for arbitration with23. 18 JAMS in the Eastern District of Pennsylvania. 19 On November 16, 2016, Premier filed a request for mediation with JAMS24.20 21 in the Eastern District of Pennsylvania. 22 23 24 25 26 27 28 6 123327296 l.DOC Case 8:16-cv-01968-JLS-JCG Document 17-2 Filed 12/05/16 Page 6 of 7 Page ID #:293 2 •? ItExecuted on December E , 2016 in /3 4 5 V „.i Charles Pomeraiitz6 7 State of 9 Inror r,7 E byH) ..-■•'•"7 i,2 ,a moiary Rur.iic-state of newyork 14 lll€-S!AfE OF MEW- !.:82L-A62350I9 in Westchester County 15 t..pt^es May 04.;a, 7 IS 19 22 23 25 27 7 123327296 I,DOC Case 8:16-cv-01968-JLS-JCG Document 17-2 Filed 12/05/16 Page 7 of 7 Page ID #:294 Case 8:16-cv-01968-JLS-JCG Document 17-3 Filed 12/05/16 Page 1 of 5 Page ID #:295 Case 8:16-cv-01968-JLS-JCG Document 17-3 Filed 12/05/16 Page 2 of 5 Page ID #:296 Case 8:16-cv-01968-JLS-JCG Document 17-3 Filed 12/05/16 Page 3 of 5 Page ID #:297 Case 8:16-cv-01968-JLS-JCG Document 17-3 Filed 12/05/16 Page 4 of 5 Page ID #:298 Case 8:16-cv-01968-JLS-JCG Document 17-3 Filed 12/05/16 Page 5 of 5 Page ID #:299 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 1 of 49 Page ID #:300 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 2 of 49 Page ID #:301 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 3 of 49 Page ID #:302 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 4 of 49 Page ID #:303 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 5 of 49 Page ID #:304 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 6 of 49 Page ID #:305 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 7 of 49 Page ID #:306 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 8 of 49 Page ID #:307 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 9 of 49 Page ID #:308 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 10 of 49 Page ID #:309 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 11 of 49 Page ID #:310 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 12 of 49 Page ID #:311 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 13 of 49 Page ID #:312 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 14 of 49 Page ID #:313 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 15 of 49 Page ID #:314 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 16 of 49 Page ID #:315 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 17 of 49 Page ID #:316 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 18 of 49 Page ID #:317 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 19 of 49 Page ID #:318 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 20 of 49 Page ID #:319 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 21 of 49 Page ID #:320 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 22 of 49 Page ID #:321 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 23 of 49 Page ID #:322 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 24 of 49 Page ID #:323 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 25 of 49 Page ID #:324 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 26 of 49 Page ID #:325 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 27 of 49 Page ID #:326 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 28 of 49 Page ID #:327 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 29 of 49 Page ID #:328 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 30 of 49 Page ID #:329 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 31 of 49 Page ID #:330 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 32 of 49 Page ID #:331 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 33 of 49 Page ID #:332 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 34 of 49 Page ID #:333 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 35 of 49 Page ID #:334 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 36 of 49 Page ID #:335 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 37 of 49 Page ID #:336 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 38 of 49 Page ID #:337 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 39 of 49 Page ID #:338 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 40 of 49 Page ID #:339 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 41 of 49 Page ID #:340 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 42 of 49 Page ID #:341 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 43 of 49 Page ID #:342 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 44 of 49 Page ID #:343 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 45 of 49 Page ID #:344 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 46 of 49 Page ID #:345 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 47 of 49 Page ID #:346 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 48 of 49 Page ID #:347 Case 8:16-cv-01968-JLS-JCG Document 17-4 Filed 12/05/16 Page 49 of 49 Page ID #:348