1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 William Barta, et al., No. CV-23-00211-PHX-DWL
10 Plaintiffs, ORDER
11 v.
12 Dealer Trade Incorporated,
13 Defendant. 14 15 Pending before the Court is a motion to dismiss for lack of subject-matter 16 jurisdiction filed by Defendant Dealer Trade, Inc. (“Defendant”). (Doc. 19.) For the 17 following reasons, the motion is denied. 18 RELEVANT BACKGROUND 19 On February 1, 2023, Plaintiffs William Barta and Leeder Automotive, LLC 20 (together, “Plaintiffs”) initiated this action by filing the complaint. (Doc. 1.) 21 The complaint alleges that in June 2022, Plaintiffs bought a boat from Defendant 22 for $73,000. (Id. ¶¶ 1-2, 17.) Plaintiffs also paid $1,250 to a third-party transportation 23 service to deliver the boat to them. (Id. ¶ 18.) Before agreeing to buy the boat, Plaintiffs 24 reviewed one of Defendant’s online advertisements, which contained various 25 representations and warranties concerning the boat. (Id. ¶¶ 1-2, 11-17.) However, “[u]pon 26 delivery of the Boat to Plaintiffs, it was discovered that [Defendant’s] express warranties 27 and affirmative representations were false.” (Id. ¶ 3, emphasis omitted.) Plaintiffs then 28 asked Defendant “to rescind the sale transaction” but Defendant “refused.” (Id. ¶¶ 27-28.) 1 Based on these allegations, Plaintiffs assert claims for breach of express warranty, 2 consumer fraud, fraudulent misrepresentation, negligent misrepresentation, and 3 promissory estoppel. (Id. ¶¶ 29-61.) Plaintiffs seek compensatory damages of “no less 4 than $70,000,” an unspecified amount of punitive damages, and costs and attorneys’ fees 5 under A.R.S. §§ 12-341 and 12-341.01 “which exceed $5,000 to date.” (Id. ¶¶ 35-36, 41, 6 48 & 9.) 7 The complaint also contains allegations intended to establish the existence of 8 diversity jurisdiction. (Id. ¶¶ 5-10.) Specifically, the complaint alleges that Plaintiffs are 9 both citizens of Nebraska, that Defendant is a citizen of Arizona, and that “[t]his Court has 10 subject matter jurisdiction pursuant to 28 U.S.C. § 1332 because this is a civil action 11 between citizens of different states and the matter in controversy exceeds the sum or value 12 of $75,000, exclusive of interests and costs.” (Id.) 13 On February 7, 2023, Plaintiffs filed proof that Defendant had been served on 14 February 1, 2023. (Doc. 6.) 15 On February 24, 2023, after Defendant did not respond to the complaint within the 16 21-day timeline prescribed by Rule 12(a)(1)(A), Plaintiffs filed an application for entry of 17 default. (Doc. 12) 18 On February 27, 2023, the Clerk entered default. (Doc. 14.) 19 On February 28, 2023, Plaintiffs filed a motion for default judgment. (Doc. 15.) As 20 relevant here, the motion requested an award of “$75,258.89 plus attorney’s fees, interest, 21 and taxable costs.” (Id. at 6.) In an effort to substantiate this $75,258.89 figure, Plaintiffs 22 provided a declaration from Barta as an attachment to their motion. (Doc. 15-1.) The Barta 23 declaration explains that Plaintiffs paid $73,000 to purchase the boat, with the payment 24 taking the form of an initial $3,000 deposit paid by credit card and a subsequent $70,000 25 wire transfer; that the $3,000 credit-card deposit was later refunded to Plaintiffs via a 26 chargeback; that Plaintiffs separately incurred $2,375.57 in financing costs associated with 27 the transaction; that Plaintiffs also paid $1,250 to a third party to transport the boat from 28 Arizona to Nebraska; that Plaintiffs also paid $226.12 to a third party to inspect the boat 1 upon delivery; and that Plaintiffs also paid $1,407.22 “to winterize or otherwise attempt 2 repairs on the Boat.” (Id.) 3 On March 6, 2023, Defendant filed a motion to set aside the default. (Doc. 16.) 4 After Plaintiffs filed a notice of non-opposition (Doc. 17), the motion was granted and the 5 default was set aside. (Doc. 18.) 6 On March 20, 2023, Defendant filed the motion now pending before the Court—a 7 motion to dismiss the complaint due to a lack of subject-matter jurisdiction. (Doc. 19.) 8 The motion is now fully briefed and neither side requested oral argument. (Docs. 20, 21.) 9 Additionally, after the motion became fully briefed, Plaintiffs filed a notice of 10 supplemental authority. (Doc. 22.) 11 DISCUSSION 12 I. Legal Standard 13 Rule 12(b)(1) of the Federal Rules of Civil Procedure provides that a defendant may 14 move to dismiss an action for “lack of subject-matter jurisdiction.” “[I]n reviewing a Rule 15 12(b)(1) motion to dismiss for lack of jurisdiction, we take the allegations in the plaintiff's 16 complaint as true.” Wolfe v. Strankeman, 392 F.3d 358, 362 (9th Cir. 2004). However, 17 “in ruling on a 12(b)(1) jurisdictional challenge, a court may look beyond the complaint 18 and consider extrinsic evidence.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 19 1145 n.5 (9th Cir. 2003). The plaintiff bears the burden of establishing that subject-matter 20 jurisdiction exists. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). 21 A federal district court has “original jurisdiction of all civil actions where the matter 22 in controversy exceeds the sum or value of $75,000, exclusive of interest and costs” and 23 the parties are diverse. 28 U.S.C. § 1332(a). The amount in controversy is the “amount at 24 stake in the underlying litigation,” which comprises “any result of the litigation, excluding 25 interests and costs, that entails a payment by the defendant,” including “inter alia, damages 26 (compensatory, punitive, or otherwise) and the cost of complying with an injunction, as 27 well as attorneys’ fees awarded under fee shifting statutes.” Gonzales v. CarMax Auto 28 Superstores, LLC, 840 F.3d 644, 648-49 (9th Cir. 2016) (internal quotation marks and 1 citations omitted). See also Gibson v. Chrysler Corp., 261 F.3d 927, 946 (9th Cir. 2001) 2 (“It is well established that punitive damages are part of the amount in controversy in a 3 civil action.”); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998) (“[W]here 4 an underlying statute authorizes an award of attorneys’ fees, either with mandatory or 5 discretionary language, such fees may be included in the amount in controversy.”). 6 “In determining the amount in controversy, courts first look to the complaint.” 7 Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). “Generally, the 8 sum claimed by the plaintiff controls if the claim is apparently made in good faith.” Id. 9 (quotation omitted). See also Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. 10 Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010) (“Where the plaintiff originally files in federal 11 court, the amount in controversy is determined from the face of the pleadings.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 William Barta, et al., No. CV-23-00211-PHX-DWL
10 Plaintiffs, ORDER
11 v.
12 Dealer Trade Incorporated,
13 Defendant. 14 15 Pending before the Court is a motion to dismiss for lack of subject-matter 16 jurisdiction filed by Defendant Dealer Trade, Inc. (“Defendant”). (Doc. 19.) For the 17 following reasons, the motion is denied. 18 RELEVANT BACKGROUND 19 On February 1, 2023, Plaintiffs William Barta and Leeder Automotive, LLC 20 (together, “Plaintiffs”) initiated this action by filing the complaint. (Doc. 1.) 21 The complaint alleges that in June 2022, Plaintiffs bought a boat from Defendant 22 for $73,000. (Id. ¶¶ 1-2, 17.) Plaintiffs also paid $1,250 to a third-party transportation 23 service to deliver the boat to them. (Id. ¶ 18.) Before agreeing to buy the boat, Plaintiffs 24 reviewed one of Defendant’s online advertisements, which contained various 25 representations and warranties concerning the boat. (Id. ¶¶ 1-2, 11-17.) However, “[u]pon 26 delivery of the Boat to Plaintiffs, it was discovered that [Defendant’s] express warranties 27 and affirmative representations were false.” (Id. ¶ 3, emphasis omitted.) Plaintiffs then 28 asked Defendant “to rescind the sale transaction” but Defendant “refused.” (Id. ¶¶ 27-28.) 1 Based on these allegations, Plaintiffs assert claims for breach of express warranty, 2 consumer fraud, fraudulent misrepresentation, negligent misrepresentation, and 3 promissory estoppel. (Id. ¶¶ 29-61.) Plaintiffs seek compensatory damages of “no less 4 than $70,000,” an unspecified amount of punitive damages, and costs and attorneys’ fees 5 under A.R.S. §§ 12-341 and 12-341.01 “which exceed $5,000 to date.” (Id. ¶¶ 35-36, 41, 6 48 & 9.) 7 The complaint also contains allegations intended to establish the existence of 8 diversity jurisdiction. (Id. ¶¶ 5-10.) Specifically, the complaint alleges that Plaintiffs are 9 both citizens of Nebraska, that Defendant is a citizen of Arizona, and that “[t]his Court has 10 subject matter jurisdiction pursuant to 28 U.S.C. § 1332 because this is a civil action 11 between citizens of different states and the matter in controversy exceeds the sum or value 12 of $75,000, exclusive of interests and costs.” (Id.) 13 On February 7, 2023, Plaintiffs filed proof that Defendant had been served on 14 February 1, 2023. (Doc. 6.) 15 On February 24, 2023, after Defendant did not respond to the complaint within the 16 21-day timeline prescribed by Rule 12(a)(1)(A), Plaintiffs filed an application for entry of 17 default. (Doc. 12) 18 On February 27, 2023, the Clerk entered default. (Doc. 14.) 19 On February 28, 2023, Plaintiffs filed a motion for default judgment. (Doc. 15.) As 20 relevant here, the motion requested an award of “$75,258.89 plus attorney’s fees, interest, 21 and taxable costs.” (Id. at 6.) In an effort to substantiate this $75,258.89 figure, Plaintiffs 22 provided a declaration from Barta as an attachment to their motion. (Doc. 15-1.) The Barta 23 declaration explains that Plaintiffs paid $73,000 to purchase the boat, with the payment 24 taking the form of an initial $3,000 deposit paid by credit card and a subsequent $70,000 25 wire transfer; that the $3,000 credit-card deposit was later refunded to Plaintiffs via a 26 chargeback; that Plaintiffs separately incurred $2,375.57 in financing costs associated with 27 the transaction; that Plaintiffs also paid $1,250 to a third party to transport the boat from 28 Arizona to Nebraska; that Plaintiffs also paid $226.12 to a third party to inspect the boat 1 upon delivery; and that Plaintiffs also paid $1,407.22 “to winterize or otherwise attempt 2 repairs on the Boat.” (Id.) 3 On March 6, 2023, Defendant filed a motion to set aside the default. (Doc. 16.) 4 After Plaintiffs filed a notice of non-opposition (Doc. 17), the motion was granted and the 5 default was set aside. (Doc. 18.) 6 On March 20, 2023, Defendant filed the motion now pending before the Court—a 7 motion to dismiss the complaint due to a lack of subject-matter jurisdiction. (Doc. 19.) 8 The motion is now fully briefed and neither side requested oral argument. (Docs. 20, 21.) 9 Additionally, after the motion became fully briefed, Plaintiffs filed a notice of 10 supplemental authority. (Doc. 22.) 11 DISCUSSION 12 I. Legal Standard 13 Rule 12(b)(1) of the Federal Rules of Civil Procedure provides that a defendant may 14 move to dismiss an action for “lack of subject-matter jurisdiction.” “[I]n reviewing a Rule 15 12(b)(1) motion to dismiss for lack of jurisdiction, we take the allegations in the plaintiff's 16 complaint as true.” Wolfe v. Strankeman, 392 F.3d 358, 362 (9th Cir. 2004). However, 17 “in ruling on a 12(b)(1) jurisdictional challenge, a court may look beyond the complaint 18 and consider extrinsic evidence.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 19 1145 n.5 (9th Cir. 2003). The plaintiff bears the burden of establishing that subject-matter 20 jurisdiction exists. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). 21 A federal district court has “original jurisdiction of all civil actions where the matter 22 in controversy exceeds the sum or value of $75,000, exclusive of interest and costs” and 23 the parties are diverse. 28 U.S.C. § 1332(a). The amount in controversy is the “amount at 24 stake in the underlying litigation,” which comprises “any result of the litigation, excluding 25 interests and costs, that entails a payment by the defendant,” including “inter alia, damages 26 (compensatory, punitive, or otherwise) and the cost of complying with an injunction, as 27 well as attorneys’ fees awarded under fee shifting statutes.” Gonzales v. CarMax Auto 28 Superstores, LLC, 840 F.3d 644, 648-49 (9th Cir. 2016) (internal quotation marks and 1 citations omitted). See also Gibson v. Chrysler Corp., 261 F.3d 927, 946 (9th Cir. 2001) 2 (“It is well established that punitive damages are part of the amount in controversy in a 3 civil action.”); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998) (“[W]here 4 an underlying statute authorizes an award of attorneys’ fees, either with mandatory or 5 discretionary language, such fees may be included in the amount in controversy.”). 6 “In determining the amount in controversy, courts first look to the complaint.” 7 Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). “Generally, the 8 sum claimed by the plaintiff controls if the claim is apparently made in good faith.” Id. 9 (quotation omitted). See also Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. 10 Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010) (“Where the plaintiff originally files in federal 11 court, the amount in controversy is determined from the face of the pleadings. The amount 12 in controversy alleged by the proponent of federal jurisdiction—typically the plaintiff in 13 the substantive dispute—controls so long as the claim is made in good faith. To justify 14 dismissal, it must appear to a legal certainty that the claim is really for less than the 15 jurisdictional amount. This is called the ‘legal certainty’ standard, which means a federal 16 court has subject matter jurisdiction unless upon the face of the complaint, it is obvious 17 that the suit cannot involve the necessary amount.”) (cleaned up). 18 II. The Parties’ Arguments 19 Defendant argues that Plaintiffs cannot satisfy the $75,000 amount-in-controversy 20 threshold for diversity jurisdiction because the complaint fails to mention that $3,000 of 21 the $73,000 purchase price was refunded to Plaintiffs via a credit-card chargeback. (Doc. 22 19 at 1.) Defendant also contends the Court should disregard Plaintiffs’ claim for punitive 23 damages when evaluating whether the $75,000 threshold has been satisfied because “the 24 mere possibility of a punitive damages award is insufficient to prove that that amount in 25 controversy is met.” (Id. at 2, citation omitted.) Finally, Defendant accuses Plaintiffs of 26 filing this action in federal court as part of an improper scheme to obtain a strategic 27 litigation advantage. (Id. at 2-3.) 28 Plaintiffs oppose Defendant’s motion. (Doc. 20.) According to Plaintiffs, the 1 $75,000 threshold is easily satisfied here because the complaint itself identifies 2 compensatory damages totaling more than $74,000, also includes a claim for punitive 3 damages, and also seeks at least $5,000 in statutory attorneys’ fees. (Id.) 4 In reply, Defendant includes a lengthy discussion of a prior lawsuit between the 5 parties in Nebraska state court. (Doc. 21 at 1-2.) Turning to the merits, Defendant argues: 6 “[Plaintiffs] have essentially admitted that the amount in dispute is less than $75,000. They 7 request ‘no less than $70,000’ in their Complaint. In order to create jurisdiction, Plaintiffs 8 now allege ‘fraud’ and seek punitive damages, counts that were not alleged in its Nebraska 9 state court complaint. In order to increase Plaintiffs’ damages to try to meet the 10 jurisdictional [threshold], Plaintiffs allege to have incurred in excess of $5,000.00 attorney 11 to prepare a Complaint. This Court should ask itself what lengths the Plaintiffs will go to 12 create jurisdiction as it continues to forum shop.” (Id. at 2-3.) 13 III. Analysis 14 The jurisdictional analysis here is neither close nor difficult. Even assuming, as 15 Defendant contends, that Plaintiffs’ claim for compensatory damages should be reduced 16 by $3,000 to account for the chargeback that Plaintiffs subsequently acknowledged in their 17 default-judgment motion, the complaint still alleges in good faith that Plaintiffs are seeking 18 over $70,000 in compensatory damages. Additionally, the complaint asserts a breach-of- 19 warranty claim, notes that the prevailing party on such a claim has a statutory right to 20 recover its attorneys’ fees under Arizona law, and specifically alleges that Plaintiffs have 21 already incurred over $5,000 in attorneys’ fees. Chaurasia v. General Motors Corp., 126 22 P.3d 165, 174 (Ariz. Ct. App. 2006) (“Time after time, Arizona courts have held that a 23 claim for breach of warranty does arise out of contract for purposes of A.R.S. § 12- 24 341.01(A).”). Under Ninth Circuit law, such fees count toward the amount-in-controversy 25 threshold. Gonzales, 840 F.3d at 648-49 (“This amount includes . . . attorneys’ fees 26 awarded under fee shifting statute.”); Galt G/S, 142 F.3d at 1156 (“[W]here an underlying 27 statute authorizes an award of attorneys’ fees, either with mandatory or discretionary 28 language, such fees may be included in the amount in controversy.”). Thus, the $75,000 || threshold is satisfied here regardless of whether Plaintiffs’ claim for punitive damages is || also added to the mix. 3 Accordingly, 4 IT IS ORDERED that Defendant’s motion to dismiss (Doc. 19) is denied. 5 Dated this 13th day of September, 2023. 6 7 Am ee g i t _——— Dominic W. Lanza 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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