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Rote v. Lot Solutions, Inc.

United States District Court, D. Oregon

March 3, 2017

TIMOTHY C. ROTE, Plaintiff,
v.
LOT SOLUTIONS, INC., and DOES 1 THROUGH 5, Defendants.

          FINDINGS AND RECOMMENDATION

          Honorable Paul Papak United States Magistrate Judge

         Plaintiff pro se Timothy C. Rote (a citizen of Oregon) filed this action against defendant Lot Solutions, Inc. ("Lot") (a corporation organized under Georgia law[1] and headquartered in Florida), and five Doe defendants (each alleged to be a citizen of a state other than Oregon) on July 15, 2016. By and through his complaint, Rote alleges that at all material times he was a "secured creditor" and shareholder of Northwest Direct Marketing, Inc. ("NDM"), that NDM and Lot were parties to an agreement pursuant to which NDM agreed to provide Lot with "inbound and outbound telemarketing services" and Lot agreed to pay NDM for those services, that Lot breached its payment obligations to NDM, and that Rote "has foreclosed on the Accounts Receivable of NDM for the purpose of collecting said receivables and paying the secured lenders' .. . their balances owed and to return the balance for the benefit of the unsecured creditors." Arising out of the foregoing, Rote alleges Lot's liability to him under Oregon law for breach of its contract with NDM, Rote seeks award of compensatory damages in the amount of $463, 701.90 plus interest. This court may properly exercise diversity jurisdiction over Rote's cause of action pursuant to 28 U.S.C. § 1332, based on the complete diversity of the parties and the amount in controversy.

         Now before the court is Lot's motion (#20) to dismiss Rote's cause of action for failure to state a claim and/or for failure to join a necessaiy party, and in the alternative to transfer this action to the state of Georgia pursuant to the forum-selection clause of the agreement between Lot and NDM. I have considered the motion and all of the pleadings and papers on file. For the reasons set forth below, Lot's motion to dismiss should be granted in part and denied in part, Rote's claim should be dismissed without prejudice, and Lot's alternative motion to transfer should be denied. I recommend that Rote be granted a period of thirty days within which to amend his pleading to cure the defects identified herein, and that the court enter judgment in connection with such dismissal only in the event of his failure to do so within the specified period.

         LEGAL STANDARDS

         I. Failure to State a Claim

         To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than a "formulaic recitation of the elements of a cause of action;" specifically, it must contain factual allegations sufficient to "raise a right to relief above the speculative level, " Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). To raise a right to relief above the speculative level, "[t]he pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [ofj a legally cognizable right of action." Id., quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004); see also Fed. R. Civ. P. 8(a). Instead, the plaintiff must plead affirmative factual content, as opposed to any merely conclusory recitation that the elements of a claim have been satisfied, that "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 970 (9th Cir. 2009), citing Iqbal, 129 S.Ct. at 1949.

         "In ruling on a 12(b)(6) motion, a court may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice." Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). In considering a motion to dismiss, this court accepts all of the allegations in the complaint as true and construes them in the light most favorable to the plaintiff. See Kahle v. Gonzales, 474 F.3d 665, 667 (9th Cir. 2007). Moreover, the court "presume[s] that general allegations embrace those specific facts that are necessary to support the claim." Nat'l Org. for Women v. Scheidler, 510 U.S. 249, 256 (1994), quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). The court need not, however, accept legal conclusions "cast in the form of factual allegations." Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

         II. Failure to Join a Necessary Party

         A party may move to dismiss a complaint for "failure to join a party under Rule 19." Fed.R.Civ.P. 12(b)(7). The courts of the Ninth Circuit follow a three-step inquiry in considering dismissal pursuant to Rule 12(b)(7). See Salt River Project Agr, Imp. & Power Dist. v. Lee, 672 F, 3d 1176, 1179 (9th Cir. 2012). That inquiry "is a practical, fact-specific one, designed to avoid the harsh results of rigid application." Dawavendewa v. Salt River Project Agr. Imp. & Power Dist, 276 F.3d 1150, 1154 (9th Cir. 2002), The court must first "determine whether a nonparty should be joined under Rule 19(a) ... as a person required to be joined if feasible.'" E.E. O. C v. Peabody W. Coal Co., 610 F.3d 1070, 1078 (9th Cir. 2010). If so, the court next determines "whether it is feasible to order that the absentee be joined." Id. (internal quotation marks omitted). Finally, "if joinder is not feasible, the court must determine at the third stage whether the case can proceed without the absentee or whether the action must be dismissed." Id. (internal quotation marks omitted). "Rule 19 is designed to protect the interests of absent parties, as well as those ordered before the court, from multiple litigation, inconsistent judicial determinations or the impairment of interests or rights." CP Nat'l Corp. v. Bonneville Power Admin., 928 F.2d 905, 911 (9th Cir. 1991).

         III. Transfer

         "[F]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a).

A motion to transfer venue under § 1404(a) requires the court to weigh multiple factors in its determination whether transfer is appropriate in a particular case. For example, the court may consider: (1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiffs choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiffs cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof. Additionally, the presence of a forum selection clause is a "significant factor" in the court's § 1404(a) analysis.

Jones v. GNC Franchising, Inc., 211 F.3d 495, 499 (9th Cir. 2000) (footnotes omitted). The defendant bears the burden of establishing the greater appropriateness of the transferee forum. See Id. Courts afford a degree of deference to a plaintiffs choice of her home forum. See, e.g., Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 (1981).

         FACTUAL BACKGROUND

         I. The Parties

         Plaintiff Rote is an individual citizen of Oregon. At all material times, Rote was the president, secretary, and registered agent of NDM. At all material times, NDM was organized under Oregon law and headquartered in Oregon.

         Defendant Lot is a Georgia corporation headquartered in Florida. Although Rote alleges that the Doe defendants are citizens of states other than Oregon, he does not otherwise refer to them in his complaint, allege any conduct attributable to them, or suggest that any of them played any direct or indirect role in the complained-of conduct.

         II. Rote's Allegations Regarding the Parties' Dispute[2]

         On February 17, 2008, Lot and NDM "entered into a contract for inbound and outbound telemarketing services. Complaint, ¶ 9. NDM provided such services to Lot from a call center located in Beaverton, Oregon. See id, ¶ 10. In approximately October 2011, Lot directed NDM to cease providing it with telemarketing services, and began relying on a business entity it had recently acquired to perform such services in-house. See id., ¶¶ 12, 14. Rote advised Lot at approximately that time that pursuant to the agreement between Lot and NDM, Lot was not entitled to terminate its agreement with NDM without first complying with a contractual provision calling for gradual "ramp down of the contract volume." Id., ¶ 13. Lot nevertheless ceased doing business with NDM without first gradually ramping down the volume of services it required NDM to perform. See id, ¶¶ 14, 16. At some subsequent time, Rote "foreclosed on the Accounts Receivable of NDM for the purpose of collecting said receivables and paying the secured lenders, Wells Fargo and Rote, their balances owed and to return the balance for the benefit of the unsecured creditors." Id., ¶ 20. It is Rote's position that, at the time Lot ceased doing business with NDM, NDM was entitled to $239, 172.29 in "ramp-down" payments, and that at the time he filed this action, that amount had grown with interest to $463, 701.90. See id., ¶¶ 17-18.

         III. ...


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