Glazer v. The Private Residences at Ont. Place Condo. Ass'n

• Decision Date: 02 February 2023
• Docket Number: 2:21-cv-01770-DAD-DB
• Parties: GERALD GLAZER, et al., Plaintiffs, v. THE PRIVATE RESIDENCES AT ONTARIO PLACE CONDOMINIUM ASSOCIATION, et al., Defendants.
• Court: U.S. District Court — Eastern District of California

GERALD GLAZER, et al., Plaintiffs, v. THE PRIVATE RESIDENCES AT ONTARIO PLACE CONDOMINIUM ASSOCIATION, et al., Defendants.

No. 2:21-cv-01770-DAD-DB

United States District Court, E.D. California

February 2, 2023

ORDER GRANTING, IN PART, DEFENDANTS' MOTION TO DISMISS

(Doc. No. 15)

This matter is before the court on a defendants' motion to dismiss plaintiffs' complaint pursuant to Federal Civil Procedure Rules 12(b)(1), 12(b)(2), 12(b)(3), and 12(b)(6). (Doc. No. 15.) On January 31, 2022, defendants' motion was taken under submission on the papers.^[1] (Doc No. 21.) For the reasons set forth below, the court will grant defendants' motion to dismiss (Doc. No. 15), in part.

BACKGROUND

On September 28, 2021, plaintiffs Gerald Glazer and Julius Cherry (collectively, “plaintiffs”) filed this action against The Private Residences at Ontario Place Condominium Association (the “Condominium Association”), Ellen Gutiontov, Jason Bischoff, Michael Lane, Samantha Lane, Malek Abdulsamad, and Sudler Property Management (collectively “defendants”).^[2] (Doc. No. 1.) In their complaint plaintiffs allege as follows.

Plaintiffs are owners of units in a residential condominium located at 10 E. Ontario Street in Chicago, Illinois (the “subject condominium”). (Doc. No. 1 at ¶¶ 6-7.) Defendant Condominium Association is a “unit owners association organized as an Illinois not-for-profit corporation to administer the property” at the subject condominium. (Id. at ¶ 6.) Defendant Sudler Property Management (“Sudler”) is an Illinois corporation that served as the property manager of the subject condominium during the time period relevant to this action. (Id. at ¶ 14.) Defendants Ellen Gutiontov, Jason Bischoff, Michael Lane, Samantha Lane, and Malek Abdulsamad (the “individual defendants”) own units at the subject condominium and are members of the Board of Managers (“BOM”) of the Condominium Association. (Id. at ¶¶ 9-13.)

On February 26, 2020, an organization called Strategic Properties of North America (“SPONA”) sent the BOM a letter of intent to purchase the subject condominium and the Condominium Association. (Id. at ¶ 28.) In August 2020, the proposed sale failed to pass a vote by the unit owners of the subject condominium. (Id. at ¶ 30.) Subsequently, SPONA sent the BOM another letter of intent to purchase the subject condominium and Condominium Association, which was put to another vote before the subject condominium's unit owners-and again failed to pass-on August 26, 2021. (Id. at ¶¶ 31-32.)

Despite the two failed attempts to pass the proposed sale of the subject condominium, the individual defendants “immediately met privately and secretly to strategize about anyway [sic] to change the vote.” (Id. at ¶ 32.) The individual defendants then, with the aid of defendant Sudler, informed unit owners that there would be a “vote extension” through September 10, 2021. (Id. at ¶¶ 32-34.) Defendant Sudler and the individual defendants “railroaded this [extended] vote” and thus were able to “intentionally push through the sale.” (Id. at ¶ 34.) As a result of this sale, unit owners were forced to sell their units, and plaintiffs “have been damaged in the value of their units and have suffered extreme emotional distress.”^[3] (See id. at ¶¶ 35, 77.)

Based on the foregoing allegations, plaintiffs assert the following claims: (1) breach of fiduciary duty in violation of the Illinois Condominium Property Act, 765 ILCS 605/18.4, brought against the individual defendants and defendant Sudler; (2) breach of fiduciary duty in violation of the Illinois Condominium Property Act, 765 ILCS 605/18.4, brought “derivatively on behalf of the Condominium Association” against the individual defendants and defendant Sudler; and (3) Fourth and Fourteenth Amendment due process violations, brought under 42 U.SC. § 1983 against all defendants. (Id. at ¶¶ 67-97.) Plaintiffs seek damages, an order enjoining defendants from continuing with the sale to SPONA, an order removing the individual defendants from the BOM, and a declaration that, inter alia, defendants did not have authority to pursue the sale of the subject condominiums and that the purported sale of the subject condominiums violated the Illinois Condominium Act, unnamed provisions of the Chicago city code, the Illinois Constitution, and the United States Constitution. (Id. at ¶¶ 67, 79.)

Plaintiffs filed their complaint in this court on September 28, 2021. (Doc. No. 1.) On December 16, 2021, defendants filed the pending motion to dismiss plaintiffs' complaint. On February 24, 2022, plaintiffs filed their opposition to the pending motion. (Doc. No. 32.) Defendants filed their reply thereto on March 3, 2022. (Doc. No. 33.)

LEGAL STANDARD

A. Motion to Dismiss Pursuant to Rule 12(b)(1)

“Federal courts are courts of limited jurisdiction and are presumptively without jurisdiction over civil actions.” Howard Jarvis Taxpayers Ass'n v. Cal. Secure Choice Ret. Sav. Program, 443 F.Supp.3d 1152, 1156 (E.D. Cal. 2020) (citing Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994)), aff'd, 997 F.3d 848 (9th Cir. 2021). Federal courts “possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree.” Kokkonen, 511 U.S. at 377 (internal citations omitted). Subject matter jurisdiction is required; it cannot be forfeited or waived. Howard Jarvis Taxpayers Ass 'n, 443 F.Supp.3d at 1156. Indeed, “[i]f the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed.R.Civ.P. 12(h)(3).

Rule 12(b)(1) of the Federal Rules of Civil Procedure provides that a party may “challenge a federal court's jurisdiction over the subject matter of the complaint.” Nat'l Photo Grp., LLC v. Allvoices, Inc., No. 3:13-cv-03627-JSC, 2014 WL 280391, at *1 (N.D. Cal. Jan. 24, 2014). “A Rule 12(b)(1) jurisdictional attack may be facial or factual. In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004) (citing White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000)). Here, because defendants argue that the allegations in plaintiffs' complaint are insufficient for the invocation of federal diversity jurisdiction, defendants mount a facial attack under Rule 12(b)(1).

A party making a facial attack does not submit supporting evidence with the motion because jurisdiction is challenged based solely on the pleadings. Howard Jarvis Taxpayers Ass 'n, 443 F.Supp.3d at 1156; see also Diva Limousine, Ltd. v. Uber Techs., Inc., 392 F.Supp.3d 1074, 1084 (N.D. Cal. 2019) (“[C]ourts do not consider evidence outside the pleadings when deciding a facial attack.”) (citation omitted). “The district court resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6): [a]ccepting the plaintiffs allegations as true and drawing all reasonable inferences in the plaintiffs favor, the court determines whether the allegations are sufficient as a legal matter to invoke the court's jurisdiction.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014). The court need not assume the truth of legal conclusions cast in the form of factual allegations. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003).

B. Motion to Dismiss Pursuant to Rule 12(b)(2)

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a defendant may move to dismiss an action for lack of personal jurisdiction. In opposing such a motion, the plaintiff bears the burden of proof to show that jurisdiction is appropriate. Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015); Love v. Assoc. Newspapers, Ltd., 611 F.3d 601, 608 (9th Cir. 2010). When a defendant's motion to dismiss is based on written materials rather than an evidentiary hearing and is to be decided on the pleadings, affidavits, and discovery materials, the plaintiff need only make aprimafacie showing that personal jurisdiction exists in order for the action to proceed. See Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015); Picot, 870 F.3d at 1211.

In determining whether a plaintiff has established personal jurisdiction, the court accepts the plaintiff's allegations as true and resolves any conflicts between the parties over statements contained in affidavits in the plaintiff's favor. Love, 611 F.3d at 608; Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). However, where allegations are controverted by a defendant, the plaintiff cannot “simply rest on the bare allegations of [the] complaint, but rather [is] obligated to come forward with facts, by affidavit or otherwise, supporting personal jurisdiction.” Philips v. Pitt Cnty. Mem'lHosp., Inc., 855 Fed.Appx. 324 (9th Cir. 2021)^[4] (quoting AmbaMktg. Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)).

“Where, as here, there is no applicable federal statute governing personal jurisdiction, the law of the state in which the district court sits applies.” Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1484 (9th Cir. 1993). “California's long-arm statute allows courts to exercise personal jurisdiction over defendants to the extent permitted by the Due Process Clause of the United States Constitution.” Core-Vent Corp., 11 F.3d at 1484; see also Cal. Civ. Proc. Code § 410.10 (“A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.”). Thus, only constitutional principles constrain the jurisdiction of a federal court in California. Love, 611 F.3d at 608-09.

Under the Fourteenth Amendment's Due Process Clause, courts may exercise personal jurisdiction over non-resident defen...