W. Acceptance, LLC v. Gen. Agric.
| Decision Date | 08 July 2021 |
| Docket Number | Civil Action 20-cv-00052-CMA-KMT |
| Court | U.S. District Court — District of Colorado |
| Parties | WESTERN ACCEPTANCE, LLC, Plaintiff, v. GENERAL AGRICULTURE INC. F/K/A GENERAL AGRICULTURE LLC, SONOMA STAINLESS, INC., STIG WESTLING, CALLAGHAN BECKER, PHIL TAGAMI, and CALIFORNIA CAPITAL & INVESTMENT GROUP, INC., Defendants. |
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Before the court are four motions: (1) “General Agriculture Inc.'s and Callaghan Becker's Motion to Dismiss Second Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6);” (2) “General Agriculture Inc.'s Motion to Stay Case to Give Effect to a Contractual Mandatory Mediation Provision;” (3) “Defendant Sonoma Stainless, Inc.'s Second Renewed Motion to Dismiss;” and (4) “Defendant Phillip Tagami's FRCP 12(b) Motion to Dismiss Plaintiff's Second Amended Complaint for Lack of Personal Jurisdiction and Failure to State a Claim.” ([“GenAg Defendants' Motion”], Doc. No. 115; [“GenAg Motion”], Doc. No. 116; [“Sonoma Motion”] Doc. No. 118; [“Tagami Motion”], Doc. No. 119.) Plaintiff has responded in opposition to each motion, and Defendants have each replied. (Doc. Nos. 121-22, 125-28, 132-33.)
In this commercial dispute, Plaintiff Western Acceptance, LLC [“Plaintiff, ” or “Western Acceptance”], a Colorado limited liability company headquartered in Colorado Springs, Colorado, has sued three California corporations-Defendants General Agriculture, Inc. [“GenAg”], Sonoma Stainless, Inc. [“Sonoma”], and California Capital & Investment Group, Inc. [“CCIG”]-as well as three California citizens affiliated with those entities-Defendants Stig Westling, Callaghan Becker, and Phil Tagami [collectively, “the Individual Defendants”]- asserting claims for breach of contract, negligence, civil theft, conspiracy, conversion, and unjust enrichment. ([“Complaint”], Doc. No. 112.) According to the Second Amended Complaint, at an unspecified point in time, Plaintiff agreed to pay former Defendant SXIP, LLC [“SXIP”][1]approximately $2 million to design and manufacture certain multicomponent business equipment, referred to as a “Distillate Unit.” (Id. at ¶ 10.) In connection with the transaction, on September 6, 2018, Western Acceptance and SXIP executed a Machine Purchase Agreement [“MPA”], which detailed, among other things, the terms of payment, remedies for default, and conditions for closing.[2] ([“MPA”], Doc. No. 115-2.)
Following the execution of the MPA, “[a]t some point in time during the manufacturing of the Distillate Unit, most likely in the Spring of 2019, ” Western Acceptance reportedly learned that SXIP had been “acquired by GenAg or one of its affiliates.” (Compl. ¶ 13.) Western Acceptance thereafter “entered into an oral contract” with GenAg, pursuant to which Western Acceptance “began dealing directly” with GenAg as to “the design and manufacture of the Distillate Unit, ” and GenAg, in exchange, “took monies directly from” Western Acceptance. (Id. at ¶¶ 13, 17, 31.) This oral agreement between Western Acceptance and GenAg was said to be “in addition to the contract with SXIP which GenAg now own[ed], ” by virtue of its acquisition of SXIP. (Id. at ¶ 31.)
Around that same time, certain of GenAg's “agents, ” including its Chief Executive Officer [“CEO”], Defendant Callaghan Becker [“Mr. Becker”], its retained consultant, Defendant Phil Tagami [“Mr. Tagami”], and its other agent, Defendant Stig Westling [“Mr. Westling”], [3] reportedly began “personally visiting” Plaintiff's facility in Colorado Springs, on GenAg's behalf, so as to “create[] a ruse that they wanted to partner with Plaintiff, [and] help Plaintiff grow its business, ” when in reality, they “were conspiring to learn of Plaintiff's business” for purposes of “eventually tak[ing]” Plaintiff's property and money. (Id. at ¶¶ 11-16, 51.) Western Acceptance alleges that, during one such visit, Mr. Tagami “attempt[ed] to take” its “equipment, ” by disingenuously advising Western Acceptance to “move its entire operation to another facility that [Mr. Tagami] designated.” (Id. at ¶ 16.) Plaintiff further alleges that, after “GenAg learned while visiting Plaintiff's facility that Heaters were necessary for the processing of distillate, ” unspecified “persons from GenAg showed up at” Plaintiff's facility and “took” the Heaters. (Id. at ¶ 18.) Plaintiff complains that “Defendants” have thus far refused to divulge the location of the Heaters. (Id. at ¶ 23.)
In this lawsuit, Plaintiff also alleges that it was “damaged by the actions” of Defendant Sonoma, a California corporation to which “SXIP and/or GenAg” had reportedly “subcontracted” certain “portions of the manufacturing process for the Distillate Unit.” (Id. at ¶ 19.) According to the Second Amended Complaint, at some point during the manufacturing process, Plaintiff entered into an oral contract with Defendant Sonoma “for the providing of monies and direction directly from Plaintiff with regard to the manufacture of the Distillate Unit.” (Id.) Defendant Sonoma is said to have “requested to enter into this agreement with Plaintiff knowing [that Plaintiff] was a Colorado company and knowing that the Distillate Unit was to be shipped to Colorado upon completion.” (Id. at ¶ 20.) After orally contracting with Sonoma, Western Acceptance's representatives reportedly travelled to Sonoma's facility in California “to check on progress of the Distillate Unit.” (Id. at ¶ 21.) According to the Second Amended Complaint, during that visit, one of GenAg's agents, who was also present, “told [Western Acceptance] that after completion of the Distillate Unit, GenAg wanted to take possession of it.” (Id.) Western Acceptance claims that it “vehemently refused” to allow GenAg to do so. (Id.) At the time, Western Acceptance reportedly made clear to both GenAg and Sonoma that it “wanted the Distillate Unit sent to Colorado Springs following completion.” (Id.) Plaintiff now alleges that Defendant Sonoma, “[r]ather than abide by [its] direction, ” instead “allowed the Distillate Unit to be taken by Defendants.” (Id. at ¶ 22.) To date, “Defendants” allegedly “refuse to tell Plaintiff where the [Distillate Unit and Heaters] are, ” and “refuse[] to return the property to Plaintiff, ” despite “repeated demands” to do so. (Id. at ¶ 23.)
Based on these allegations, on January 7, 2020, Western Acceptance commenced this lawsuit. (Doc. No. 1.) On January 8, 2021, Western Acceptance filed a Second Amended Complaint, asserting the following claims: (1) breach of contract by Sonoma; (2) breach of contract by GenAg; (3) negligence by Sonoma; (4) civil theft by GenAg, CCIG, and the Individual Defendants; (5) conspiracy by GenAg, CCIG, and the Individual Defendants; (6) conversion by GenAg, CCIG, and the Individual Defendants; and (7) unjust enrichment by all Defendants. (Compl. ¶¶ 24-59.) As relief, Plaintiff requests compensatory damages, interest, costs, and attorneys' fees. (Id. at 10-11.)
On January 22, 2021, Defendants GenAg and Becker [collectively, the “GenAg Defendants”] responded to Plaintiff's allegations by filing a motion to dismiss, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), while Defendant GenAg filed a separate motion to compel mediation, in the alternative.[4] (GenAg Defs.' Mot. 1; GenAg Mot. 1 & n.1.) In the motion to dismiss, the GenAg Defendants argue, among other things, that the court lacks subject matter jurisdiction over this case, due to a lack of complete diversity between the parties. (GenAg Defs.' Mot. 4-6.) The GenAg Defendants contend, specifically, that Western Acceptance “is both the plaintiff and a member of former defendant SXIP, ” and thus, “complete diversity does not exist.” (Id. at 4.) In addition, the GenAg Defendants argue that each of the claims asserted against them is inadequately pled. (Id. at 6-15.) In the motion to compel mediation, Defendant GenAg argues that Plaintiff's claims are all subject to certain “mandatory” dispute resolution provisions contained within the MPA. (GenAg Mot. 1-3.) Defendant GenAg contends that this case must be stayed “to give effect to [the MPA's] contractual mandatory mediation provision.” (Id. at 1.)
On January 22, 2021, Defendant Sonoma filed its own motion to dismiss, pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6). (Sonoma Mot. 1.) In the motion, Sonoma argues, among other things, that “[t]his dispute has little to do with Sonoma or with Colorado, ” and thus, the claims against it should be dismissed, in their entirety, for lack of personal jurisdiction and/or improper venue. (Id. at 1-2.) Finally, also on January 22, 2021, Defendant Tagami filed a separate motion to dismiss, pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), for lack of personal jurisdiction and failure to state a claim. (Tagami Mot. 1.) Mr. Tagami argues, specifically, that he cannot be held subject to either jurisdiction or liability in this case, because at all times relevant, he was acting as an agent for CCIG, which in turn, was acting as an agent for GenAg. (Id. at 5-13.) All four motions-the GenAg Defendants' motion to dismiss, Sonoma's motion to dismiss, Mr. Tagami's motion to dismiss, and GenAg's motion to compel mediation-are fully briefed and pending.[5]
The court begins with the GenAg Defendants' argument that this case should be dismissed, in its entirety, under Rule 12(b)(1), for lack of subject matter jurisdiction. See Steel Co. v. Citizens for Better Env't, 523 U.S 83, 93-102 (1998) (...
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