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Pacesetter Consulting LLC v. Kapreilian

United States District Court, D. Arizona

June 25, 2019

Pacesetter Consulting LLC, Plaintiff,
Herbert A Kapreilian, et al., Defendants.


          Dominic W. Lanza United States District Judge

         Pending before the Court are Defendants Craig L. Kapreilian, Herbert Kapreilian, Fruit World Nursery, Inc., and Eastside Packing, Inc.'s motion to dismiss the First Amended Complaint (“FAC”) (Docs. 45, 46) and Plaintiff Pacesetter Consulting LLC's (“Pacesetter”) motion for leave to file a Second Amended Complaint (“SAC”) (Doc. 67). Defendant Mark R. Bassetti (“Bassetti”) has filed a response to Pacesetter's motion, asserting that Pacesetter should be denied leave to amend because the proposed amendments are futile and Pacesetter has unduly delayed in amending its complaint. (Doc. 73.)

         For the following reasons, the Court will grant Pacesetter's motion and accordingly deny the motion to dismiss as moot. The motion to dismiss may be refiled after Pacesetter files the SAC, and at that time, Bassetti may also refile and restyle his response as a motion to dismiss the SAC. Separately, when Pacesetter files its SAC, it must cure the jurisdictional allegation deficiencies identified below.

         I. Subject Matter Jurisdiction

         The Court has an independent obligation to determine whether it has subject-matter jurisdiction. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999). Pursuant to Rule 12(h)(3) of the Federal Rules of Civil Procedure, “[i]f the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”

         In the proposed SAC, just as in its previous complaints, Pacesetter relies on diversity jurisdiction to invoke this Court's subject matter jurisdiction. (Doc. 67-1 ¶ 17.)

         The Court finds the jurisdictional allegations in the proposed SAC facially deficient for two reasons. First, with respect to each defendant corporation, “[t]he facts must be alleged from which it may be determined of which state, or states, the corporation is ‘deemed' to be a citizen-i.e. the state in which it was incorporated and the state in which it has its principal place of business.” Fifty Assocs. v. Prudential Ins. Co. of Am., 446 F.2d 1187, 1190 (9th Cir. 1970). Pacesetter seems to have alleged the state of incorporation of the defendant corporations by alleging that they are “California corporation[s]” or “Florida corporation[s]” (Doc. 67-1 ¶¶ 11, 12, 13, 15), but Pacesetter must also allege the state in which they have their principal place of business.

         Second, Pacesetter has failed to allege its own citizenship. (Id. ¶ 9.) As an LLC, Pacesetter is a citizen of every state of which its owners/members are citizens. 3123 SMB LLC v. Horn, 880 F.3d 461, 465 (9th Cir. 2018).

         To cure these deficiencies, the Court will require Pacesetter to amend its jurisdictional allegations when it files its SAC. NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 612 (9th Cir. 2016) (“Courts may permit parties to amend defective allegations of jurisdiction at any stage in the proceedings.”). Pacesetter is advised that its failure to timely comply with this order shall result in dismissal of this action without further notice for lack of subject matter jurisdiction.

         II. Motion For Leave To Amend

         On January 26, 2019, Pacesetter initiated this action by filing the original complaint. (Doc. 1.) On February 4, 2019, Pacesetter filed its FAC (Doc. 7) as a matter of course, pursuant to Rule 15(a)(1)(A) of the Federal Rules of Civil Procedure. Having already amended its pleading once as a matter of course, Pacesetter may amend its complaint again “only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). The court-ordered deadline for amending pleadings in this action is July 15, 2019. (Doc. 58 at 1.)

         On April 15, 2019, the Court held a case management conference and addressed several then-pending motions, including the motions to dismiss filed by Daniel Duda and Duda & Sons LLC (Docs. 20, 21, 22), which the Court granted. (Doc. 57.) During the case management conference, Pacesetter made a verbal motion for leave to amend the FAC to add a new Duda entity. Counsel for Bassetti and the now-terminated Duda entities opposed that verbal motion, noting that there are “numerous Duda entities” and Plaintiff had not specified which Duda entity it intended to add. The Court denied the verbal motion for leave to amend and told Pacesetter's counsel “if you want to move to amend the [FAC] to add a different entity, you can try to do that later. But I don't want to try to do it on the fly with a verbal motion now.”

         On April 25, 2019, Pacesetter filed a purported SAC. (Doc. 62.) Because Pacesetter did not have leave from the Court or the opposing parties' written consent, the Court struck that pleading on April 30, 2019. (Doc. 65.) The Court's order noted that Pacesetter could either obtain the opposing parties' consent to file its SAC or file a motion seeking the Court's leave to amend. (Id.)

         On May 9, 2019, Pacesetter filed a motion for leave to file the SAC. (Doc. 67.) Bassetti opposes that motion on the ground that “the proposed amendments are futile for numerous reasons, including a lack of legal bases and lack of factual allegations supporting the proposed amendments and the absence of plausible claims, the expiration of the statute ...

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