J. Lloyd Int'l, Inc. v. Super Wings Int'l, Ltd.

• Court: U.S. District Court — Northern District of Iowa
• Writing for the Court: LINDA R. READE CHIEF JUDGE, U.S. DISTRICT COURT NORTHERN DISTRICT OF IOWA
• Decision Date: 08 February 2016
• Docket Number: No. 15-CV-74-LRR,15-CV-74-LRR
• Citation: J. Lloyd Int'l, Inc. v. Super Wings Int'l, Ltd., No. 15-CV-74-LRR (N.D. Iowa Feb 08, 2016)
• Parties: J. LLOYD INTERNATIONAL, INC., Plaintiff, v. SUPER WINGS INTERNATIONAL, LTD., Defendant.

J. LLOYD INTERNATIONAL, INC., Plaintiff, v. SUPER WINGS INTERNATIONAL, LTD., Defendant.

No. 15-CV-74-LRR

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA CEDAR RAPIDS DIVISION

February 8, 2016

ORDER

TABLE OF CONTENTS

I. INTRODUCTION ........................................ 1

II. PROCEDURAL HISTORY .................................. 2

III. FACTUAL BACKGROUND ................................. 2

A. Parties ........................................... 2

B. Overview of the Dispute ............................... 2

IV. MOTION TO DISMISS .................................... 4

A. Subject Matter Jurisdiction ............................. 5

B. Personal Jurisdiction ................................. 7

C. Failure to State a Claim ............................... 9

1. Res judicata .................................. 10

2. Judicial estoppel ............................... 13

D. Venue .......................................... 14

V. MOTION FOR ALTERNATIVE SERVICE ...................... 16

VI. CONCLUSION ........................................ 16

I. INTRODUCTION

The matters before the court are Defendant Super Wings International, Ltd.'s ("SWI") "Motion to Dismiss or to Quash Service" ("SWI Motion") (docket no. 9) and Plaintiff J. Lloyd International, Inc.'s ("JLI") "Motion for Alternative Service of Summonsand Complaint on Defendant" ("JLI Motion") (docket no. 16) (collectively, "Motions"). On February 2, 2016, the court held a telephonic hearing and heard argument on the Motions. See February 2, 2016 Minute Entry (docket no. 26). The matter is fully submitted and ready for decision.

II. PROCEDURAL HISTORY

On August 13, 2015, JLI filed a Complaint (docket no. 2). The Complaint contains two counts. Count I alleges that SWI breached a contract by refusing to release tooling and molds to JLI. Count II alleges that SWI's actions constitute conversion of the tooling and molds. On September 4, 2015, SWI filed the SWI Motion. On September 28, 2015, JLI filed a Resistance to the SWI Motion ("JLI Resistance") (docket no. 15). On October 1, JLI filed the JLI Motion. On October 8, 2015, SWI filed a Reply to the SWI Motion ("SWI Reply") (docket no. 17). On October 19, 2015, SWI filed a Resistance to the JLI Motion ("SWI Resistance") (docket no. 18). On October 26, 2015, JLI filed a Reply to the JLI Motion ("JLI Reply") (docket no. 19).

III. FACTUAL BACKGROUND¹

Viewed in the light most favorable to Plaintiffs, the facts are as follows:

A. Parties

JLI is an Iowa corporation with its principal place of business in Cedar Rapids, Iowa. SWI is a corporation organized under the laws of Hong Kong, China.

B. Overview of the Dispute

JLI and SWI entered into an Agreement (docket no. 2-2) dated December 30, 2008. The Agreement provides that certain molds and tooling in the possession of SWI are the property of JLI. The Agreement provides that SWI will "release the molds and tooling toa party authorized by [JLI] to receive same" and that SWI releases all interest in the molds and tooling "in consideration of" promissory notes signed by Tim Yip, an owner of SWI, and Jody Keener, the founder of JLI. Complaint ¶¶ 9-10. After entering into the Agreement, the parties became involved in various litigation, summarized as follows:

In August 2009, a dispute developed between the parties and SWI filed an action against Keener in this court to recover payment of Keener's debt. See Super Wings Int'l, Ltd. v. Keener, 09-CV-115-JSS (N.D. Iowa 2009) [hereinafter First Action]. JLI intervened in that action. See First Action, ECF No. 20. Chief Magistrate Judge Jon S. Scoles granted judgment in favor of SWI and dismissed JLI's petition of intervention, stating that there was no evidence that "JLI provided [SWI] with a list of specific molds and tooling to be released" and that he could not, therefore, "find that [SWI] has refused to release the molds and tooling, as required by the Agreement." First Action, ECF No. 69, at 22. Judge Scoles noted that JLI "may still pick up the molds and tooling by providing [SWI] with notice of the specific molds and tooling to be released, and the party authorized to receive the same." Complaint ¶ 15 (quoting First Action, ECF No. 69, at 24).

In 2010, JLI filed an action against SWI, alleging that SWI manufactured defective molds and tooling and that SWI falsified documents regarding the inspection of manufactured toys. See J. Lloyd Int'l, Inc. v. Super Wings Int'l, Ltd., 10-CV-83-LRR (N.D. Iowa 2010) [hereinafter Second Action]. The court dismissed the Second Action due to JLI's failure to adequately plead subject matter jurisdiction. See Second Action, ECF No. 13. In 2011, Keener sued his company, JLI, and obtained a default judgment against JLI in the Iowa District Court for Linn County, No. LACV071352. On July 30, 2013, SWI filed an involuntary Chapter 7 bankruptcy petition against Keener in the United States Bankruptcy Court for the Northern District of Iowa. See Complaint ¶ 21. On March 31, 2014, JLI "executed a [g]eneral [a]ssignment of 'all right, title and interest of Assignor, in, to all tooling located in China currently in the custody of [SWI]' in favor of Keener, inexchange for a partial satisfaction of judgment." Id. ¶ 22. On July 28, 2014, JLI filed a Chapter 11 petition for relief in the United States Bankruptcy Court for the Northern District of Iowa. SWI filed a motion to dismiss in that action, challenging JLI's assignment of the molds and tooling to Keener as a violation of the automatic stay in place during bankruptcy proceedings. Chief Bankruptcy Judge Thad Collins found that Keener "had failed to demonstrate that the [a]ssignment was not 'improperly or collusively made'" and that, therefore, his cause of action fell outside the limits of federal bankruptcy jurisdiction. In re Keener, 14-4469, 2015 WL 5118691, at *5 (Bankr. N.D. Iowa 2015). However, Judge Collins did not make any ruling on the validity of the assignment itself.

In the Complaint, JLI alleges that SWI has demanded several rent payments for storage of the molds and tooling. JLI also alleges that SWI "made several demands . . . that had to be met for [JLI] to be able to have its designee retrieve the tooling and molds and each time [JLI] agreed to [SWI's] demand," but SWI would then prevent JLI from retrieving the materials. Complaint ¶ 20. JLI alleges that it has made efforts to retrieve the molds and tooling, and attached to the Complaint various e-mails between the parties to demonstrate such efforts. See Exhibits 2-9 (docket nos. 3-10).

IV. MOTION TO DISMISS

SWI argues that the court should grant the SWI Motion for the following reasons: (1) lack of subject matter jurisdiction; (2) lack of personal jurisdiction; (3) failure to state a claim upon which relief can be granted; and (4) improper venue.² SWI Motion at 1. JLI argues that dismissal is not warranted on any of those grounds. See JLI Resistance at 1. The court will address each argument in turn.

A. Subject Matter Jurisdiction

Federal Rule of Civil Procedure 12(b)(1) provides that a party may file a motion asserting the defense of "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). A Rule 12(b)(1) motion can either attack the complaint's assertion of jurisdiction on its face or it can attack the factual basis underlying the court's jurisdiction. See Branson Label, Inc. v. City of Branson, Mo., 793 F.3d 910, 914 (8th Cir. 2015); Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993). In a facial challenge, the factual allegations concerning jurisdiction are presumed to be true, and the motion will fail unless the plaintiff fails to allege some element necessary to invoke the court's jurisdiction. Branson Label, 793 F.3d at 914. "Accordingly, 'the court restricts itself to the face of the pleadings and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6).'" Id. (quoting Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990)).

Under a factual attack, "the trial court may proceed as it never could under 12(b)(6)." Osborn, 918 F.2d at 730 (quoting Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). Where a party attacks the very facts underpinning the court's jurisdiction, "no presumptive truthfulness attaches to the plaintiff's allegations" and the court may undertake an independent evaluation of those disputed facts. Id. (quoting Mortensen, 549 F.2d at 891). "Because at issue in a factual 12(b)(1) motion is the trial court's jurisdiction—its very power to hear the case—there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Id. (quoting Mortensen, 549 F.2d at 891). Therefore, "the court may receive competent evidence such as affidavits, deposition testimony, and the like in order to determine the factual dispute." Titus, 4 F.3d at 593.

SWI argues that the court should grant the SWI Motion because "JLI has failed to allege diversity of citizenship." Brief in Support of the SWI Motion (docket no. 9-4) at 9.Therefore, this is a facial attack on the Complaint and the court will "restrict itself to the face of the pleadings" and accept all of the factual allegations in the complaint as true. See Branson Label, 793 F.3d at 914 (quoting Osborn, 918 F.2d at 729 n.6); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) ("[F]or the purposes of a motion to dismiss [the court] must take all of the factual allegations in the complaint as true.").

The Complaint alleges that the court has subject matter jurisdiction based on diversity of citizenship. Complaint ¶ 2. Diversity jurisdiction exists where "the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between—(1) citizens of different States; (2) citizens of a State and citizens or subjects of a foreign state." 28 U.S.C. § 1332(a) (formatting omitted). Furthermore, "a corporation shall be deemed to be a citizen...