United States District Court, D. Arizona
Honorable John J. Tuchi United States District Judge
issue are Plaintiffs' Motion to Confirm Arbitral Award
(Doc. 2, MTC), to which Defendants filed a Response (Doc. 29,
Resp. to MTC) and Plaintiffs filed a Reply (Doc. 30, Reply to
MTC); and Defendants' Motion to Dismiss (Doc. 28, MTD),
to which Plaintiffs filed a Response (Doc. 31, Resp. to MTD),
and Defendants filed a Reply (Doc. 37, Reply to MTD). In this
Order, the Court will also resolve Plaintiffs' Motion to
Amend (Doc. 38). The Court finds these matters appropriate
for resolution without oral argument. See LRCiv
7.2(f). For the reasons that follow, the Court will deny
Plaintiffs' Motion to Confirm Arbitral Award and grant
Defendants' Motion to Dismiss.
case arises out of a real estate sale in Costa Rica.
According to the Complaint, on or about November 11, 1993,
Defendant Punta Vista Bahia, S.A. (“PVBSA”)
signed a concession contract to develop the Monarch Resort in
Playa Panama, Guanacaste, Costa Rica. (Doc. 1, Compl. ¶
31.) PVBSA advertised the resort as a four-star condo-hotel
with amenities for hotel guests and condo owners alike. Each
of the 14 individual Plaintiffs, by way of 15 entity
Plaintiffs, entered into a Purchase Option Agreement with
PVBSA for one or more condos between February 2003 and
October 2006. (Compl. ¶ 45.)
Purchase Option Agreements, all of which are identical in
substance, stated that each owner could occupy his/her condo
for 30% of the year; the remaining 70% had to be available
for rent to hotel guests. Condo owners were to receive a
portion of the rental income generated by hotel guests. The
Agreements mandated that the Arbitration Court of the Center
of Conciliation and Arbitration of the Chamber of Commerce of
Costa Rica would settle any disputes between the parties.
(Compl. ¶ 135.)
early 2009, three years after it opened, the Monarch Resort
began to fall into disrepair. The condo walls were water
damaged, moldy, and falling apart, and neither the resort
grounds nor the pool were maintained. Around October 2010,
Defendant John Michael Fitzgerald, an Arizona resident,
asserted his ownership of PVBSA. (Compl. ¶¶ 19, 21,
77.) Plaintiffs claim they have been denied access to their
condos since 2012 and are not receiving any part of the
rental income. (Compl. ¶¶ 115, 122.) Defendants
began operating the resort exclusively as a hotel under the
name Vista Bahia Beach Resort in March 2017, and Plaintiffs
still do not have access to their condos. (Compl.
to the Agreements, Plaintiffs filed for arbitration of a
number of claims against Defendants in the designated
Arbitration Court on or about October 10, 2012. (Compl.
¶ 141.) The arbitration panel found in favor of
Plaintiffs on August 29, 2013. (Compl. ¶ 147.)
Defendants then appealed the arbitration award, and the Costa
Rica Supreme Court set aside the award on December 3, 2015.
(MTD at 5.)
their Complaint, filed December 12, 2017, Plaintiffs allege
that Defendants violated the Federal Arbitration Act, 9
U.S.C. §§ 201-208 (“FAA”), by failing
to pay the arbitration award to Plaintiffs. (Doc. 1, Compl.
¶¶ 134-55.) Plaintiffs also allege eight state law
claims, including breach of contract, breach of the implied
covenant of good faith and fair dealing, conversion,
violations of the Arizona Consumer Fraud Act, common law
fraud, negligent misrepresentation, breach of fiduciary
duties, and negligence. (Compl. ¶¶ 156-246.) Along
with their Complaint, Plaintiffs filed a Motion to Confirm
Arbitral Award. (Doc. 2.) Defendants have now filed a Motion
to Dismiss, arguing that the Court lacks jurisdiction over
Plaintiffs' FAA claim and should decline to exercise
supplemental jurisdiction over Plaintiffs' state law
claims, which in any event Plaintiffs are obligated to
arbitrate under the parties' arbitration agreement.
move to dismiss Plaintiffs' claims under both Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(6).
Lack of Subject Matter Jurisdiction
Rule 12(b)(1), “[a] motion to dismiss for lack of
subject matter jurisdiction . . . may attack either the
allegations of the complaint as insufficient to confer upon
the court subject matter jurisdiction, or the existence of
subject matter jurisdiction in fact.” Renteria v.
United States, 452 F.Supp.2d 910, 919 (D. Ariz. 2006)
(citing Thornhill Publ'g Co. v. Gen. Tel. &
Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979)).
“Where the jurisdictional issue is separable from the
merits of the case, the [court] may consider the evidence
presented with respect to the jurisdictional issue and rule
on that issue, resolving factual disputes if
necessary.” Thornhill, 594 F.2d at 733;
see also Autery v. United States, 424 F.3d 944, 956
(9th Cir. 2005) (“With a 12(b)(1) motion, a court may
weigh the evidence to determine whether it has
jurisdiction.”). The burden of proof is on the party
asserting jurisdiction to show that the court has subject
matter jurisdiction. See Indus. Tectonics, Inc. v. Aero
Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990).
Failure to State a Claim for Relief
dismissal under Rule 12(b)(6) for failure to state a claim
can be based on either (1) the lack of a cognizable legal
theory or (2) insufficient facts to support a cognizable
legal claim. Balistreri v. Pacifica Police
Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
“While a complaint attacked by a Rule 12(b)(6) motion
does not need detailed factual allegations, a plaintiff's
obligation to provide the ‘grounds' of his
‘entitle[ment] to relief' requires more than labels
and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Twombly,
550 U.S. at 555 (citations omitted). The complaint must thus
contain “sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Twombly, 550 U.S. at 570).
“[A] well-pleaded complaint ...