1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 PETER STROJNIK, Case No. 19-cv-01844-VKD
9 Plaintiff, ORDER GRANTING PLAINTIFF’S 10 v. MOTION TO DISMISS COUNTERCLAIM WITH LEAVE TO 11 ENSEMBLE HOTEL PARTNERS, LLC, AMEND 12 Defendant. Re: Dkt. No. 15
13 14 I. BACKGROUND 15 Plaintiff Peter Strojnik, Sr. filed this disability rights action, claiming that he is a disabled 16 individual and was denied full and equal access to the facilities and services at a hotel in Santa 17 Cruz, California. Defendant is Ensemble Hotel Partners, LLC dba Dream Inn Santa Cruz (“Hotel 18 Partners”).1 Mr. Strojnik claims that booking websites did not describe accessibility features and 19 guest rooms in sufficient detail and did not permit reservations to be made in the same manner as 20 reservations for individuals who do not require accessible rooms. Dkt. No. 1. Mr. Strojnik also 21 alleges the existence of accessibility barriers in various places at the hotel, including the pool, bar, 22 and guestroom accommodations. Id. He asserts claims for violation of the Americans with 23 Disabilities Act (“ADA”), 42 U.S.C. § 12101, et seq. and corresponding regulations, the 24 California Unruh Civil Rights Act, Cal. Civ. Code §§ 51, 52, and the California Disabled Persons 25 Act, Cal. Civ. Code §§ 54-54.3. Mr. Strojnik also asserts a claim for negligence based on 26
27 1 All parties have expressly consented that all proceedings in this matter may be heard and finally 1 allegations that Hotel Partners lost his car keys during his stay at the hotel. 2 Hotel Partners answered the complaint and asserted various affirmative defenses, as well 3 as a counterclaim for breach of contract. Dkt. No. 11. In its counterclaim, Hotel Partners alleges 4 that by filing the present lawsuit, Mr. Strojnik breached a March 19, 2019 settlement agreement 5 that resolved a different disability access lawsuit Mr. Strojnik filed earlier this year in the Central 6 District of California, Strojnik v. Hyatt Hotels Corp. dba Hyatt Place Pasadena, Case No. CV19- 7 1148-PS (ASx) (“Hyatt Action”). Hotel Partners claims that it entered into the settlement 8 agreement with Mr. Strojnik in the Hyatt Action. Id. at 12. According to paragraph 5 of the 9 counterclaim:
10 In the Agreement in the Hyatt Action, Strojnik released Ensemble Investments, LLC and its “past and present” “representatives”, 11 “partners”, “third-party vendors”, “affiliates” “assigns, agents, independent contractors” and “joint ventures” “from all liabilities, 12 causes of actions . . . complaints, suits, claims, obligations, costs, losses, damages, rights, judgments, attorneys’ fees, expenses, . . . 13 penalties . . . and all other legal responsibilities of any form whatsoever, whether known or unknown, presently existing or 14 arising in the future . . . including those arising under any theory of law, whether common, . . . statutory or other, of any jurisdiction . . . 15 which they/now have, ever had or may claim to have against any of them, including, without limitation, those arising out of or 16 relating to . . . any acts or omissions by the releasing parties occurring, or conditions existing, prior to the [March 19, 2019] 17 Effective Date. 18 Id. at 12-13 (alterations and ellipses in original). Hotel Partners says that after the present lawsuit 19 was filed, it informed Mr. Strojnik that this action is covered by the prior settlement agreement, 20 but Mr. Strojnik refused to dismiss his claims. Id. at 13 21 Mr. Strojnik now moves to dismiss Hotel Partners’s counterclaim for lack of subject matter 22 jurisdiction and for failure to state a claim for relief.2 He contends that the Court lacks 23 supplemental jurisdiction over the counterclaim under 28 U.S.C. § 1367 because the counterclaim 24 has no relation whatsoever to the claims he asserts in this case. Additionally, Mr. Strojnik argues 25 2 The motion before the Court is an amended one. Hotel Partners claims that the original motion 26 (Dkt. No. 13) appended an inaccurate version of the subject settlement agreement. Additionally, Hotel Partners says that the agreement is confidential. Mr. Strojnik withdrew his original motion. 27 Dkt. No. 15. Although Hotel Partners has not requested sealing with respect to the settlement 1 that Hotel Partners has no standing to assert a claim based on the prior settlement agreement 2 because Hotel Partners is not a party to, or a third-party beneficiary of, that agreement. Hotel 3 Partners opposes the motion. The Court previously advised that the motion was deemed suitable 4 for determination without oral argument pursuant to Civil Local Rule 7-1(b). Dkt. No. 22. Upon 5 consideration of the moving and responding papers, the Court grants Mr. Strojnik’s motion to 6 dismiss. 7 II. DISCUSSION 8 The parties cite virtually no legal authority in support of their respective arguments. 9 Nevertheless, the Court observes that for motions to dismiss counterclaims, the same standards 10 that apply to a complaint also apply to counterclaims. Rescap Liquidating Trust v. First 11 California Mortgage Co., No. 18-cv-03283-WHO, 2019 WL 402318, at *2 (N.D. Cal. Jan. 31, 12 2019) (citation omitted). Although Mr. Strojnik does not say so expressly, his motion is one 13 brought pursuant to Rules 12(b)(1) and 12(b)(6). The Court first addresses Mr. Strojnik’s 14 arguments under Rule 12(b)(1) pertaining to subject matter jurisdiction. For the reasons discussed 15 below, the Court concludes that Hotel Partners fails to establish that this Court has supplemental 16 jurisdiction over the counterclaim. 17 Federal district courts have original jurisdiction over civil actions that either “aris[e] under 18 the Constitution, laws, or treaties of the United States” or where complete diversity of jurisdiction 19 exists and the matter in controversy exceeds $75,000. 28 U.S.C. §§ 1331, 1332. Here, the Court 20 has original jurisdiction over Mr. Strojnik’s ADA claim because that claim arises under federal 21 law. On the record presented it is not apparent that diversity jurisdiction exists; and, in any event, 22 neither side has invoked this Court’s diversity jurisdiction under 28 U.S.C. § 1332. Thus, the 23 Court concludes that it does not have original jurisdiction over Hotel Partners’ counterclaim. 24 Pursuant to 28 U.S.C. § 1367, the Court may nonetheless exercise “supplemental 25 jurisdiction over all other claims that are so related to claims in the action within such original 26 jurisdiction that they form part of the same case or controversy under Article III of the United 27 States Constitution.” Id. § 1367(a). Relevant to the discussion here, counterclaims may be 1 out of the transaction or occurrence that is the subject matter of the opposing party’s claim’ and 2 ‘does not require adding another party over whom the court cannot acquire jurisdiction.’” Moore 3 v. Pflug Pkg. & Fulfillment, Inc., No. 17-cv-05823-YGR, 2018 WL 2430903, at *3 (N.D. Cal. 4 May 30, 2018) (quoting Rule 13(a)(1)(A)-(B)); see also Mattel, Inc. v. MGA Entm’t, Inc., 705 5 F.3d 1108, 1110 (9th Cir. 2013) (same). “In determining if the counterclaim is compulsory, the 6 Ninth Circuit applies a ‘logical relationship test,’ where the court ‘analyze[s] whether the essential 7 facts of the various claims are so logically connected that considerations of judicial economy and 8 fairness dictate that all the issues be resolved in one lawsuit.’” Campos v.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 PETER STROJNIK, Case No. 19-cv-01844-VKD
9 Plaintiff, ORDER GRANTING PLAINTIFF’S 10 v. MOTION TO DISMISS COUNTERCLAIM WITH LEAVE TO 11 ENSEMBLE HOTEL PARTNERS, LLC, AMEND 12 Defendant. Re: Dkt. No. 15
13 14 I. BACKGROUND 15 Plaintiff Peter Strojnik, Sr. filed this disability rights action, claiming that he is a disabled 16 individual and was denied full and equal access to the facilities and services at a hotel in Santa 17 Cruz, California. Defendant is Ensemble Hotel Partners, LLC dba Dream Inn Santa Cruz (“Hotel 18 Partners”).1 Mr. Strojnik claims that booking websites did not describe accessibility features and 19 guest rooms in sufficient detail and did not permit reservations to be made in the same manner as 20 reservations for individuals who do not require accessible rooms. Dkt. No. 1. Mr. Strojnik also 21 alleges the existence of accessibility barriers in various places at the hotel, including the pool, bar, 22 and guestroom accommodations. Id. He asserts claims for violation of the Americans with 23 Disabilities Act (“ADA”), 42 U.S.C. § 12101, et seq. and corresponding regulations, the 24 California Unruh Civil Rights Act, Cal. Civ. Code §§ 51, 52, and the California Disabled Persons 25 Act, Cal. Civ. Code §§ 54-54.3. Mr. Strojnik also asserts a claim for negligence based on 26
27 1 All parties have expressly consented that all proceedings in this matter may be heard and finally 1 allegations that Hotel Partners lost his car keys during his stay at the hotel. 2 Hotel Partners answered the complaint and asserted various affirmative defenses, as well 3 as a counterclaim for breach of contract. Dkt. No. 11. In its counterclaim, Hotel Partners alleges 4 that by filing the present lawsuit, Mr. Strojnik breached a March 19, 2019 settlement agreement 5 that resolved a different disability access lawsuit Mr. Strojnik filed earlier this year in the Central 6 District of California, Strojnik v. Hyatt Hotels Corp. dba Hyatt Place Pasadena, Case No. CV19- 7 1148-PS (ASx) (“Hyatt Action”). Hotel Partners claims that it entered into the settlement 8 agreement with Mr. Strojnik in the Hyatt Action. Id. at 12. According to paragraph 5 of the 9 counterclaim:
10 In the Agreement in the Hyatt Action, Strojnik released Ensemble Investments, LLC and its “past and present” “representatives”, 11 “partners”, “third-party vendors”, “affiliates” “assigns, agents, independent contractors” and “joint ventures” “from all liabilities, 12 causes of actions . . . complaints, suits, claims, obligations, costs, losses, damages, rights, judgments, attorneys’ fees, expenses, . . . 13 penalties . . . and all other legal responsibilities of any form whatsoever, whether known or unknown, presently existing or 14 arising in the future . . . including those arising under any theory of law, whether common, . . . statutory or other, of any jurisdiction . . . 15 which they/now have, ever had or may claim to have against any of them, including, without limitation, those arising out of or 16 relating to . . . any acts or omissions by the releasing parties occurring, or conditions existing, prior to the [March 19, 2019] 17 Effective Date. 18 Id. at 12-13 (alterations and ellipses in original). Hotel Partners says that after the present lawsuit 19 was filed, it informed Mr. Strojnik that this action is covered by the prior settlement agreement, 20 but Mr. Strojnik refused to dismiss his claims. Id. at 13 21 Mr. Strojnik now moves to dismiss Hotel Partners’s counterclaim for lack of subject matter 22 jurisdiction and for failure to state a claim for relief.2 He contends that the Court lacks 23 supplemental jurisdiction over the counterclaim under 28 U.S.C. § 1367 because the counterclaim 24 has no relation whatsoever to the claims he asserts in this case. Additionally, Mr. Strojnik argues 25 2 The motion before the Court is an amended one. Hotel Partners claims that the original motion 26 (Dkt. No. 13) appended an inaccurate version of the subject settlement agreement. Additionally, Hotel Partners says that the agreement is confidential. Mr. Strojnik withdrew his original motion. 27 Dkt. No. 15. Although Hotel Partners has not requested sealing with respect to the settlement 1 that Hotel Partners has no standing to assert a claim based on the prior settlement agreement 2 because Hotel Partners is not a party to, or a third-party beneficiary of, that agreement. Hotel 3 Partners opposes the motion. The Court previously advised that the motion was deemed suitable 4 for determination without oral argument pursuant to Civil Local Rule 7-1(b). Dkt. No. 22. Upon 5 consideration of the moving and responding papers, the Court grants Mr. Strojnik’s motion to 6 dismiss. 7 II. DISCUSSION 8 The parties cite virtually no legal authority in support of their respective arguments. 9 Nevertheless, the Court observes that for motions to dismiss counterclaims, the same standards 10 that apply to a complaint also apply to counterclaims. Rescap Liquidating Trust v. First 11 California Mortgage Co., No. 18-cv-03283-WHO, 2019 WL 402318, at *2 (N.D. Cal. Jan. 31, 12 2019) (citation omitted). Although Mr. Strojnik does not say so expressly, his motion is one 13 brought pursuant to Rules 12(b)(1) and 12(b)(6). The Court first addresses Mr. Strojnik’s 14 arguments under Rule 12(b)(1) pertaining to subject matter jurisdiction. For the reasons discussed 15 below, the Court concludes that Hotel Partners fails to establish that this Court has supplemental 16 jurisdiction over the counterclaim. 17 Federal district courts have original jurisdiction over civil actions that either “aris[e] under 18 the Constitution, laws, or treaties of the United States” or where complete diversity of jurisdiction 19 exists and the matter in controversy exceeds $75,000. 28 U.S.C. §§ 1331, 1332. Here, the Court 20 has original jurisdiction over Mr. Strojnik’s ADA claim because that claim arises under federal 21 law. On the record presented it is not apparent that diversity jurisdiction exists; and, in any event, 22 neither side has invoked this Court’s diversity jurisdiction under 28 U.S.C. § 1332. Thus, the 23 Court concludes that it does not have original jurisdiction over Hotel Partners’ counterclaim. 24 Pursuant to 28 U.S.C. § 1367, the Court may nonetheless exercise “supplemental 25 jurisdiction over all other claims that are so related to claims in the action within such original 26 jurisdiction that they form part of the same case or controversy under Article III of the United 27 States Constitution.” Id. § 1367(a). Relevant to the discussion here, counterclaims may be 1 out of the transaction or occurrence that is the subject matter of the opposing party’s claim’ and 2 ‘does not require adding another party over whom the court cannot acquire jurisdiction.’” Moore 3 v. Pflug Pkg. & Fulfillment, Inc., No. 17-cv-05823-YGR, 2018 WL 2430903, at *3 (N.D. Cal. 4 May 30, 2018) (quoting Rule 13(a)(1)(A)-(B)); see also Mattel, Inc. v. MGA Entm’t, Inc., 705 5 F.3d 1108, 1110 (9th Cir. 2013) (same). “In determining if the counterclaim is compulsory, the 6 Ninth Circuit applies a ‘logical relationship test,’ where the court ‘analyze[s] whether the essential 7 facts of the various claims are so logically connected that considerations of judicial economy and 8 fairness dictate that all the issues be resolved in one lawsuit.’” Campos v. Western Dental Servs., 9 Inc., 404 F. Supp. 2d 1164, 1167 (N.D. Cal. 2005) (quoting Pochiro v. Prudential Ins. Co. of Am., 10 827 F.2d 1246, 1249 (9th Cir.1987)); see also Moore, 2018 WL 2430903 at *3 (same). “A logical 11 relationship exists when the counterclaim arises from the same aggregate set of operative facts as 12 the initial claim, in that the same operative facts serve as the basis of both claims or the aggregate 13 core of facts upon which the claim rests activates additional legal rights otherwise dormant in the 14 defendant.” Mattel, Inc., 705 F.3d at 1110. Courts are required to read the “transaction or 15 occurrence” component liberally, and should consider whether there is substantial overlap between 16 the facts necessary to prove the claim and counterclaim. Moore, 2018 WL 2430903 at *3. “If a 17 counterclaim is compulsory, it is inherently part of the same case or controversy and will always 18 invoke supplemental jurisdiction.” Id. at *3 (internal quotations and citation omitted); see also 19 Campos, 404 F. Supp. 2d at 1167 (“[C]ompulsory counterclaims by definition form party of the 20 same case or controversy since they arise out of the same transaction or occurrence and, therefore, 21 supplemental jurisdiction over compulsory counterclaims is proper.”) (internal quotations and 22 citation omitted). 23 A counterclaim that is not compulsory is permissive. Fed. R. Civ. P. 13(b). Traditionally, 24 “federal courts did not have jurisdiction over permissive counterclaims absent an independent 25 basis for federal subject matter jurisdiction.” Campos, 404 F. Supp. 2d at 1167. Some courts, 26 including the Second and Seventh Circuits, and some district courts within this circuit, have 27 concluded that “[t]he test for supplemental jurisdiction under Section 1367 appears to be broad 1 Hotel Partners has offered no argument as to whether its counterclaim is compulsory, 2 || except to say that it operates the subject hotel in this action and that the Hyatt Action is a 3 “practically ... identical lawsuit.” Dkt. No. 18 at 2. Although Mr. Strojnik may have asserted the 4 same types of claims under the same statutes, his allegations in the present action appear to 5 concern a different hotel than the one at issue in the Hyatt Action. Moreover, Hotel Partners’s 6 || counterclaim does not sufficiently allege facts establishing that the settlement agreement released 7 Hotel Partners, or that Hotel Partners properly may assert a claim for breach of that agreement. 8 Indeed, the counterclaim states that the settlement agreement released an entity called “Ensemble 9 || Investments, LLC.” Dkt. No. 11 at 12. In its opposition brief, Hotel Partners claims that it is 10 || owned by Ensemble Investments LLC. Dkt. No. 18 at 2. Even assuming that assertion is true, 11 Hotel Partners’s counterclaim contains no such allegation or any facts establishing whether and 12 || how Hotel Partners and the present action fall within the parties and matters reportedly released by 5 13 the prior settlement agreement. 14 Accordingly, on the record presented, the Court finds no basis to conclude that Hotel 3 15 || Partners’s counterclaim is so related to the claims in this action falling within the Court’s original 16 || jurisdiction that they form part of the same case or controversy. 28 U.S.C. § 1367(a). Mr. 3 17 Strojnik’s motion to dismiss the counterclaim for lack of subject matter jurisdiction is granted. To 18 the extent Hotel Partners believes that, consistent with its obligations under Rule 11, it can remedy 19 the defects identified in this order, it may amend its counterclaim. 20 || I. CONCLUSION 21 Based on the foregoing, the Court grants Mr. Strojnik’s motion to dismiss Hotel Partners’s 22 counterclaim with leave to amend. If Hotel Partners chooses to amend, its amended counterclaim 23 shall be filed by November 13, 2019. Mr. Strojnik’s response to any such amended counterclaim 24 || shall be filed by November 27, 2019. 25 IT IS SO ORDERED. 26 Dated: October 30, 2019
28 VIRGINIA K. DEMARCH United States Magistrate Judge