Ponomarenko v. Shapiro

Decision Date05 February 2018
Docket NumberCase No. 16–cv–02763–BLF
Citation287 F.Supp.3d 816
Parties Paul PONOMARENKO, Plaintiff, v. Nathan SHAPIRO, et al., Defendants.
CourtU.S. District Court — Northern District of California

Sanjiv Nand Singh, Professional Law Corporation, San Francisco, CA, Michael Budi Indrajana, Indrajana Law Group, A Professional Law Corp., San Mateo, CA, for Plaintiff.

Project Vegas Mansion, pro se.

Angel Thomas Shaddix Law Office of Thomas Shaddix Las Vegas, NV, for Defendants.

ORDER GRANTING IN PART WITH LEAVE TO AMEND AND DENYING IN PART PLAINTIFF AND THIRD PARTY DEFENDANT'S MOTION TO DISMISS DEFENDANT SHAPIRO'S COUNTERCLAIMS AND THIRD PARTY COMPLAINT; GRANTING SHAPIRO'S MOTION TO CHANGE VENUE; TRANSFERRING CASE TO DISTRICT OF NEVADA

[Re: ECF 59, 74]

BETH LABSON FREEMAN, United States District Judge

Plaintiff Paul Ponomarenko ("Ponomarenko") brings this action against Defendants Nathan Shapiro ("Shapiro") and Project Vegas Mansion ("PVM") (collectively, "Defendants") for alleged breach of contract and fraud arising out of a contract for personal coaching services with PVM—services that Ponomarenko alleges were never provided to him. See generally First Amended Complaint ("FAC"), ECF 43. Shapiro, proceeding pro se , filed seven counterclaims against Ponomarenko as well as a Third Party Complaint against Ponomarenko's company, Summit Estate, Inc. ("Summit Estate").1 See Answer, Counterclaim and Third Party Complaint ("Answer & Counterclaim"), ECF 56.

Ponomarenko and Summit Estate filed a joint motion to dismiss the Counterclaim and Third Party Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). See Motion to Dismiss ("MTD"), ECF 59. In addition to opposing the motion to dismiss, Shapiro filed a motion to change venue to the United States District Court for the District of Nevada, unofficial southern division seated in Las Vegas, Clark County, pursuant to 28 U.S.C. § 1404(a) and the forum selection clause in the written agreement between the parties. See Motion to Change Venue ("Transfer Mot."), ECF 74.

The Court heard oral argument on both motions on December 7, 2017. At the hearing, the Court explained to the parties that it would rule on Ponomarenko and Summit Estate's motion to dismiss the counterclaim and third party complaint regardless of whether it ultimately transferred the case to Nevada pursuant to the forum selection clause. For the reasons that follow as well as those stated on the record at the hearing, Ponomarenko and Summit Estate's motion to dismiss the Counterclaim and Third Party Complaint is GRANTED IN PART WITH LEAVE TO AMEND and DENIED IN PART.

Moreover, upon consideration of the briefing, oral argument, and relevant law, Shapiro's motion to change venue is GRANTED. This action shall be transferred to the United States District Court for the District of Nevada, unofficial southern division seated in Las Vegas, Clark County, Nevada. Any amendments to Shapiro's Counterclaim and Third Party Complaint are due on or before March 7, 2018.

I. BACKGROUND
A. Allegations in the FAC2

Ponomarenko alleges that Shapiro is a life coach who markets his coaching services to potential clients in California such as Ponomarenko. See FAC ¶ 11. Shapiro regularly collaborated with other life coaches to promote his services in major cities in the United States including New York, Las Vegas, Miami, San Francisco, Chicago, and others. Id. ¶¶ 11–12. Shapiro is the sole owner and operator of Project Vegas Mansion ("PVM"), which offered these personal coaching sessions through PVM agents. Id. ¶¶ 3, 8. Ponomarenko met Shapiro at a PVM personal coaching seminar in San Francisco in February 2013. Id. ¶¶ 14–16. Ponomarenko paid $349 to attend the event. Id. ¶ 15.

Ponomarenko later attended an "in-field" coaching session, where Defendants took him and several other individuals on "training sessions." Id. ¶ 16. Following the seminar and training sessions, Defendants invited Ponomarenko to join them at a third event for further demonstration of their personal coaching methods. Id. ¶ 17. After these interactions, Shapiro allegedly induced Ponomarenko to consider a long-term business relationship with Defendants for personal coaching services which would include "substantial, regular, and organized feedback." Id. ¶¶ 18–19. Shapiro informed Ponomarenko that the personal coaching services would be provided in both California and Nevada, and would require Ponomarenko to "periodically travel" to Nevada to receive coaching. Id. ¶ 19. The coaching sessions would be provided under the PVM "umbrella" through PVM's agents including Shapiro and another individual who identified himself to be working on behalf of PVM as Shapiro's business partner. Id. Thereafter, Ponomarenko flew to Las Vegas, Nevada, where he visited PVM's "coaching center" and finalized a written agreement with PVM for long term personal coaching. Id. ¶¶ 20–21.

While in Las Vegas, Ponomarenko and Defendants executed a written agreement whereby PVM would provide a specific number of hours and sessions of personal coaching to Ponomarenko in exchange for payment. Id. ¶ 21; see also Project Vegas Mansion's Agreement, ECF 74–1 ("First Agreement"). The First Agreement was executed in writing on March 3, 2013, and obligated Ponomarenko to make an initial down payment of $25,000. FAC ¶ 21; First Agreement at 16. Ponomarenko paid Shapiro $5,000 while he was in Las Vegas, and paid an additional $15,000 a few days later. FAC ¶ 21. Upon execution of the First Agreement, Ponomarenko also paid $5,000 to another individual named Luke Krogh ("Krogh").3 The remainder of the payments owed under the First Agreement were to be made in regular intervals during the course of the training period. Id.

The First Agreement expressly stated that Ponomarenko would receive his training from Krogh. See FAC ¶ 22; First Agreement at 16. Krogh became Ponomarenko's "personal mentor and instructor," and Ponomarenko alleges that he was told to make his remaining payments due under the First Agreement to Krogh. FAC ¶ 22. In the time period from March 2013 to January 2014, Ponomarenko repeatedly and regularly traveled between California and Nevada to attend the contracted coaching sessions. FAC ¶ 23. Ponomarenko alleges that it became evident that the personal coaching sessions lacked the "clearly defined structure" he was promised, and many sessions were conducted "in a party like setting," at Ponomarenko's expense. Id. ¶ 24. Ponomarenko grew frustrated with the lack of organized training, which he communicated to Krogh. Id. ¶ 25.

In January 2014, Krogh proposed a second agreement to Ponomarenko whereby Krogh would move to San Francisco to provide the coaching sessions so that Ponomarenko did not have to regularly fly to Las Vegas. Id. ¶ 26 (hereafter, "Second Agreement"). Ponomarenko was given the impression that PVM authorized the Second Agreement, although Ponomarenko did not communicate with Shapiro during this time period. Id.4 Pursuant to the Second Agreement, which was in oral form only, Ponomarenko agreed to pay $99,000 to enroll in an advanced personal coaching program. Id. In addition to the fees, Ponomarenko agreed to cover all of Krogh's travel expenses for the duration of the Second Agreement. Id.

In February 2014, Krogh traveled to San Francisco and stayed in a short-term rental apartment—paid for by Ponomarenko—for a purported coaching session that lasted approximately 7 days. Id. ¶ 27. On February 20, 2014, Krogh required Ponomarenko to pay $40,000, consisting of a $23,500 payment on the First Agreement and a $16,500 down payment for the Second Agreement. Id. ¶ 28. Ponomarenko made these payments to Krogh, and alleges that he was shocked when Shapiro contacted Ponomarenko in January 2016 to inform him that a $23,500 payment was still owed to PVM. Id. Krogh never delivered on the promise to provide advanced coaching services to Ponomarenko. Id. ¶ 29. Much like the First Agreement, it appeared that Ponomarenko's payments were instead used to fund "a lavish San Francisco/Vegas lifestyle" for PVM's agents, and to solicit other clients and business with no benefit to Ponomarenko. Id.

Ponomarenko terminated the Second Agreement in November 2014, yet Krogh demanded the full amount of the coaching fee as well as additional expenses. Id. ¶ 30. When Krogh finally left the apartment, Ponomarenko had to pay additional expenses to terminate the lease. Id. Ponomarenko alleges that he paid thousands of dollars to PVM and its agents, including Shapiro, for coaching services that were never provided to him as promised. Id. ¶¶ 31–43.

Ponomarenko filed this suit against Shapiro and PVM on May 23, 2016. See generally Complaint, ECF 1. Shapiro moved to quash service of process for failure to serve in accordance with the Federal Rules of Civil Procedure, and moved to dismiss the complaint for lack of personal jurisdiction over him. See ECF 27. On May 3, 2017, the Court denied Shapiro's motion to quash service of process, and granted the motion to dismiss for lack of personal jurisdiction with leave to amend in order to allege Shapiro's contacts with California, an agency relationship between Shapiro and PVM or "PVM's agent," (Krogh), and/or that PVM has no corporate identity separate from Shapiro. See ECF 42 at 11.5

On May 30, 2017, Ponomarenko filed the FAC asserting six claims against Shapiro and PVM for (1) breach of contract; (2) intentional misrepresentation; (3) negligent misrepresentation; (4) false promise; (5) breach of the covenant of good faith and fair dealing; and (6) violation of California's Unfair Competition Law, California Business and Professions Code § 17200 ("UCL"). See generally FAC.

B. Allegations in Shapiro's Counterclaim and Third Party Complaint6

Shapiro answered the FAC on June 30, 2017, asserting venue in the United States District Court of Nevada seated in Clark County, Las Vegas, Nevada. See Answer & Counterclaim ¶ 5 at 19, 31. Shapiro brought a Counterclaim against Ponomarenko,...

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