Nosler v. Quick & Assocs.
| Decision Date | 07 December 2020 |
| Docket Number | Case No. 4:20-cv-00267-KGB |
| Parties | MATT NOSLER and DHT ENTERPRISES PLAINTIFFS v. QUICK & ASSOCIATES, JAY HIGGINS, and JEFF QUICK DEFENDANTS |
| Court | U.S. District Court — Eastern District of Arkansas |
Before the Court is the motion to dismiss filed by defendants Quick & Associates, Jay Higgins, and Jeff Quick (collectively, "defendants") (Dkt. No. 7) and the motion to remand filed by plaintiffs Matt Nosler and DHT Enterprises ("DHT") (collectively, "plaintiffs") (Dkt. No. 14). For the following reasons, the Court denies plaintiffs' motion to remand and grants defendants' motion to dismiss.
On November 2, 2019, plaintiffs filed a complaint against defendants in the Circuit Court of Pulaski County, Arkansas (Dkt. No. 2). In their complaint, plaintiffs allege that "Defendants were engaged in the practice of Accountancy in the State of Arkansas" and "brokered a sale transaction between Plaintiffs as seller(s) and RCN Enterprises on or about November, December of 2016." (Id., ¶¶ 1, 2). Plaintiffs state that "Defendants knowingly made false statements and or representations related to the sales transactions to and or about interested parties." (Id., ¶ 3). Specifically, plaintiffs claim that "Defendants falsely represented the sale price as 3.1 million dollars to McDonald's Inc. in an attempt to make the buyer (RCN) have a more favorable debt to credit ratio so that McDonald's would approve the transaction." (Id., ¶ 4). Plaintiffs explain that "Defendants represented to the Plaintiffs that the buyer would include a $500,000 gift to the Plaintiffs as part of the sales transaction but not as part of the official record to McDonalds," and that "Defendants communicated a sale price of $3.6 million to the Plaintiffs but $3.1 million to McDonald's Inc." (Id., ¶ 5). A copy of the Acknowledgment of Gift is attached as Exhibit 1 to plaintiffs' complaint (Id., at 5). A copy of a text message conversation in which the parties discussed the gift and the need to conceal its existence from McDonald's is attached as Exhibit 2 to plaintiffs' complaint (Id., at 6). Plaintiffs, relying "upon the skill and knowledge of Defendants," executed the sale transaction documents; however, "the buyer did not provide the $500,000 gift as promised." (Id., ¶¶ 6, 7 (citation omitted)).
Plaintiffs contend that, because of defendants' "malpractice and fraudulent representation to McDonald's corporation," they "incurred massive amount of interest on unpaid debt, loss of income, loss of business, loss of family and continues to suffer economic loss in excess of $1.5 million." (Id., ¶¶ 8, 10). Plaintiffs elaborate: "Plaintiffs were injured in tort as a result of Defendants poor performance and negligence; and the Defendant has breached an implied contract because of their deviation from professional standards set by Arkansas Board of Accountancy as well as those established in Defendants' resident state of Arizona." (Id., ¶ 12). Plaintiffs maintain that they "suffered harm as a result of the Defendants' conduct as outlined in Arkansas Code Annotated § 16-55-206," and further accuse defendants of "fail[ing] to adhere to the standards outlined in Arkansas Code Annotated 17-12-302, 308, 311 and 402 . . . ." (Id., ¶¶ 13, 14). Finally, plaintiffs, citing Arkansas Code Annotated §§ 16-55-206 and 208, claim that they are "allowed to seek damages greater than three times the compensatory damages as a result of Defendant's malicious acts." (Id., ¶ 15).
On March 12, 2020, defendants removed the case to this Court pursuant to 28 U.S.C. § 1441(a), invoking the Court's diversity jurisdiction (Dkt. No. 1, ¶¶ 2-12). On April 2, 2020, defendants filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of CivilProcedure (Dkt. No. 7). Plaintiffs filed a response in opposition to the motion to dismiss on April 17, 2020 (Dkt. No. 12), to which defendants replied on April 24, 2020 (Dkt. No. 15). Plaintiffs filed a motion to remand on April 17, 2020 (Dkt. No. 14). Defendants filed a response in opposition to the motion to remand on April 30, 2020 (Dkt. No. 18).
Plaintiffs move to remand, arguing that "[t]his Court should deny the Defendants' request to remove this case from State Court because the claim arises out of a contract dispute written and/or dictated by the Defendants, which states in pertinent part on Page 17 part 11.6, this agreement shall be judged by the laws of the State of Arkansas." (Dkt. No. 14, at 1 (citation omitted)). The Court disagrees.
Under 28 U.S.C. § 1447(c), "[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a)." Here, plaintiffs filed their motion to remand 36 days after defendants filed their notice of removal. Therefore, the case may be remanded only if the Court determines that it lacks subject-matter jurisdiction over this action.
"Federal courts are courts of limited jurisdiction" and "possess only that power authorized by [the] Constitution and statute, which is not to be expanded by judicial decree." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). "A defendant may remove a state law claim to federal court only if the action originally could have been filed there." In re Prempro Prod. Liab. Litig., 591 F.3d 613, 619 (8th Cir. 2010) (citing Phipps v. F.D.I.C., 417 F.3d 1006, 1010 (8th Cir. 2005)).
In removing this action, defendants invoked the Court's diversity jurisdiction under 28 U.S.C. § 1332 (Dkt. No. 1, ¶¶ 2-12). "Diversity jurisdiction under 28 U.S.C. § 1332 requires anamount in controversy greater than $75,000 and complete diversity of citizenship among the litigants." In re Prempro Prod. Liab. Litig., 591 F.3d at 619-20 (citing 28 U.S.C. § 1332(a)). "Complete diversity of citizenship exists where no defendant holds citizenship in the same state where any plaintiff holds citizenship." OnePoint Sols., LLC v. Borchert, 486 F.3d 342, 346 (8th Cir. 2007) (citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978)). The Eighth Circuit has clarified that a limited liability company's citizenship is that of its members for diversity-jurisdiction purposes. See GMAC Commercial Credit LLC v. Dillard Dep't Stores, Inc., 357 F.3d 827, 829 (8th Cir. 2004). "For a party to remove a case to federal court based on diversity jurisdiction, the parties must be diverse both when the plaintiff initiates the action in state court and when the defendant files the notice of removal in federal court." Chavez-Lavagnino v. Motivation Educ. Training, Inc., 714 F.3d 1055, 1056 (8th Cir. 2013). Further, "[a] defendant may not remove to federal court on the basis of diversity if any of the defendants is a citizen of the state where the action was filed." Hurt v. Dow Chem. Co., 963 F.2d 1142, 1145 (8th Cir. 1992).
Because defendants removed this case to federal court, they bear the burden of establishing jurisdiction by a preponderance of the evidence. See Altimore v. Mount Mercy Coll., 420 F.3d 763, 768 (8th Cir. 2005); Yeldell v. Tutt, 913 F.2d 533, 537 (8th Cir. 1990). The Court is "required to resolve all doubts about federal jurisdiction in favor of remand." Wilkinson v. Shackelford, 478 F.3d 957, 963 (8th Cir. 2007) (quoting Transit Cas. Co. v. Certain Underwriters at Lloyd's of London, 119 F.3d 619, 625 (8th Cir. 1997)).
In their notice of removal, defendants allege that "[c]omplete diversity of citizenship exists between Plaintiffs and Defendants under 28 U.S.C. §§ 1332(a) and 1332(c)." (Dkt. No. 1, ¶ 3). Specifically, defendants note that plaintiffs allege that DHT is an Arkansas corporation with its principal place of business in Arkansas (Id., ¶ 4 (citing Compl., ¶ 11)). Defendants allege that,"upon information and belief, to the extent DHT is a limited liability company, its members are citizens of Arkansas" and that DHT is, therefore, a citizen of Arkansas (Id. (citation omitted)). Defendants further note that plaintiffs allege that Mr. Nosler is a resident of Pulaski County, Arkansas (Id., ¶ 5 (citing Compl., ¶ 11)). On this basis, defendants conclude that Mr. Nosler is a citizen of Arkansas (Id.). Defendants then allege that Quick & Associates, Mr. Higgins, and Mr. Quick are citizens of Arizona (Id., ¶¶ 6-8). Finally, defendants allege that the amount in controversy exceeds $75,000, exclusive of interest and costs, because plaintiffs allege that they have incurred losses in excess of $1.5 million (Id., ¶ 11 (citing Comp., ¶ 10)).
In their motion to remand, plaintiffs do not challenge these allegations. Thus, the Court finds that defendants have established, by a preponderance of the evidence, complete diversity and an amount in controversy exceeding $75,000. That the contract upon which plaintiffs sue contains an Arkansas choice-of-law provision does not divest the Court of jurisdiction over this action, see, e.g., Tyler v. Alltel Corp., 265 F.R.D. 415, 423-25 (E.D. Ark. 2010) (), nor does the fact that defendants wrote the contract. Accordingly, the Court denies plaintiffs' motion to remand the case to state court.
Defendants move to dismiss the complaint for failure to state a claim upon which relief can be granted. For the reasons explained below, the Court grants the motion.
A Rule 12(b)(6) motion tests the legal sufficiency of the claim or claims stated in the complaint. See Peck v. Hoff, 660 F.2d 371, 374 (8th Cir. 1981). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief thatis plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007))....
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