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Revive You Media LLC v. Esquire Bank

United States District Court, D. Arizona

May 10, 2018

Revive You Media LLC, Plaintiff,
v.
Esquire Bank, Defendant.

          ORDER

          David G. Campbell United States District Judge.

         Plaintiff Revive You Media LLC filed a complaint in Maricopa County Superior Court against Defendant Esquire Bank, alleging various contract-related claims. Doc. 1-1 at 4-12.[1] Defendant removed this action to federal court (Doc. 1), and Defendant has filed a motion to dismiss the complaint under Rule 12(b)(6) and (7) (Doc. 8). The motion is fully briefed and oral argument will not aid the Court's decision. Fed.R.Civ.P. 78(b); LRCiv 7.2(f). For the reasons that follow, the Court will dismiss Counts Two and Three.

         I. Background.

         For purposes of this motion, Plaintiff's factual allegations are accepted as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). On January 28, 2016, Plaintiff, doing business as LuminateSkin, SkinPerfect, TryLumaEssence, SkinEssentials, TryRejuvaEssence, UltraCleanse, and Pure Slim Cleanse, executed seven merchant agreements with Defendant. Doc. 1-1 at 13-47. American Payment Solutions (“APS”) was also a party to each agreement. Id. These agreements require Defendant and APS to provide certain payment processing services to Plaintiff. Id.

         The agreements permit Defendant to create reserve accounts at Defendant's bank “for all future indebtedness of [Plaintiff] to [Defendant] or [APS] that may arise out of or relate to the obligations of [Plaintiff] under this Agreement, including, but not limited to, Chargebacks and fees, in such amount as Defendant from time to time may determine in its sole discretion.” E.g., id. at 16, ¶ 6. Defendant established reserve accounts pursuant to each of the seven agreements. Id. at 6.

         The agreements also permit Defendant to terminate each agreement “upon at least 30 days' prior written notice to the other parties.” E.g., id. at 17, ¶ 27. But Defendant could terminate an agreement “immediately upon written notice” to Plaintiff upon the occurrence of 11 listed events. Id. Defendant terminated each of the seven agreements on or before April 7, 2017, without providing proper notice to Plaintiff of the termination. Id. at 5, ¶¶ 10-11.

         Each of the agreements explains the disposition of the reserve accounts after termination:

The Reserve Account will be maintained for a minimum of six months after the date on which this Agreement terminates or until such time as [Defendant] determines that the release of the funds to [Plaintiff] is prudent, in the best interest of [Defendant], and commercially reasonable, and that [Plaintiff's] account with [Defendant] is fully resolved. Upon expiration of this six-month period, any balance remaining in the Reserve Account will be paid to [Plaintiff]. [Defendant] will inform [Plaintiff] in writing of any charges debited to the Reserve Account during this six-month period.

E.g., id. at 16, ¶ 6.

         After the terminations, Defendant did not inform Plaintiff in writing of any debits to the seven reserve accounts. Id. at 6, ¶¶ 13, 15. Yet six months after the terminations, Defendant still retained the funds in all seven accounts, which totaled approximately $182, 897.15 as of October 2017. Id. at 6, ¶¶ 12, 14, 16-17.

         Plaintiff filed a complaint in January 2018 seeking damages arising from breach of contract (Count One), breach of the covenant of good faith and fair dealing (Count Two), unjust enrichment (Count Four), and conversion (Count Five). Id. at 7-12. Plaintiff also seeks a declaratory judgment (Count Three). Id. at 9-10.[2]

         II. Failure to Join Necessary Party.

         Defendant contends that the Court must dismiss the complaint because Plaintiff failed to join a necessary party. Doc. 8 at 7-8.

         A. Legal Standard.

         Rule 12(b)(7) allows dismissal of an action for failure to join a necessary and indispensable party under Rule 19. Rule 19 provides:

a three-step process for determining whether the court should dismiss an action for failure to join a purportedly indispensable party. First, the court must determine whether the absent party is “necessary[.]” . . . If the absent party is “necessary, ” the court must determine whether joinder is “feasible.” Finally, if joinder is not “feasible, ” the court must decide whether the absent party is “indispensable, ” i.e., whether in “equity and good conscience” the action can continue without the party.

United States v. Bowen, 172 F.3d 682, 688 (9th Cir. 1999) (citations omitted); see also Salt River Project Agric. Improvement and Power Dist. v. Lee, 672 F.3d 1176, 1179 (9th Cir. 2012).

         B. APS.

         An entity is a required party under Rule 19 if it is subject to service of process and its joinder will not deprive the court of subject matter jurisdiction, and at least one of the following conditions must be met:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

Fed. R. Civ. P. 19(a)(1).

         Defendant contends that APS is a required party under Rule 19(a)(1)(A) because Section 27 of the agreements identifies APS as a party that could terminate the agreements or take action that would warrant a termination. Doc. 8 at 8. For this reason, Defendant argues, the Court “cannot accord complete relief without the involvement of APS.” Id. But Defendant has not explained how Section 27 renders APS necessary in light of Plaintiff's allegations. The complaint asserts that Defendant, not APS, breached the agreements. Taking those allegations as true, the ...


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