Kraft v. Williams

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Rune Kraft, No. CV-19-05181-PHX-JJT 10 Plaintiff, ORDER 11 v. 12 Scott E. Williams, et al., 13 Defendants. [14] 15 At issue is Defendant Scott Williams’s Motion to Dismiss (Doc. 18, Mot.), to which 16 Plaintiff filed a Response (Doc. 23, Resp.) and Defendant filed a Reply (Doc. 28, Reply). 17 For the reasons that follow, the Court grants Defendant’s Motion. 18 I. BACKGROUND 19 This case arises out of an eviction action against Plaintiff in 2018. In 2015, the 20 Gainey Ranch Community Association (“HOA”) filed a lawsuit in the McDowell 21 Mountain Justice Court against Plaintiff for failure to pay his HOA fees on the property he 22 occupied (“the property”). (Mot. at 2.) That case continued for two years before being 23 transferred to Maricopa County Superior Court. Twice, Plaintiff attempted to remove the 24 case to federal court under a theory of diversity jurisdiction. Both times, the case was 25 remanded for lack of diversity. (Mot. at 2 & Exs. 2–4.) In 2017, the Superior Court entered 26 a foreclosure judgment against Plaintiff. (Mot. at 3 & Ex. 5.) 27 On October 18, 2018, a Sheriff’s Deed was issued to the HOA, deeding the property 28 to Maricopoly, LLC. Maricopoly filed an eviction action against Plaintiff on November 20, 1 2018. Scott Williams, the sole named Defendant in the present case, served as 2 Maricopoly’s counsel of record in the eviction action. (Mot. at 3 & Ex. 9.) Plaintiff 3 defaulted in that action and default judgment was entered against him on December 4, 4 2018. Plaintiff filed four unsuccessful motions to vacate the judgement, as well as an appeal 5 of those motions, which was also dismissed. (Mot. at 3 & Ex. 10.) 6 Plaintiff now brings three causes of action—all of which he titles “Injunctive 7 Relief”—against Defendant, asking the Court to declare (1) the default judgment in the 8 eviction action void; (2) EQX Technologies as owner of the property; and (3) Plaintiff’s 9 entitlement to live in the property. Throughout the Complaint, Plaintiff also alludes to 10 violations of the Due Process Clause of the Fourteenth Amendment and the Racketeer 11 Influenced and Corrupt Organizations Act (“RICO”), see 18 U.S.C. §§ 1961 et seq. 12 Plaintiff asserts that he “resides outside the United States and has a business office 13 in Wilmington, Delaware” and that Defendant resides in Scottsdale, Arizona. (Doc. 1, 14 Compl. at 1; Resp. at 2.) Defendant now moves under Federal Rules of Civil Procedure 15 12(b)(1) and 12(b)(6) to dismiss the claims against him. 16 II. LEGAL STANDARD 17 A. 12 (b)(1) 18 “A motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) may 19 attack either the allegations of the complaint as insufficient to confer upon the court subject 20 matter jurisdiction, or the existence of subject matter jurisdiction in fact.” Renteria v. 21 United States, 452 F. Supp. 2d 910, 919 (D. Ariz. 2006) (citing Thornhill Publ’g Co. v. 22 Gen. Tel. & Elecs. Corp., 594 F.2d 730 , 733 (9th Cir. 1979)). “Where the jurisdictional 23 issue is separable from the merits of the case, the [court] may consider the evidence 24 presented with respect to the jurisdictional issue and rule on that issue, resolving factual 25 disputes if necessary.” Thornhill, 594 F.2d at 733; see also Autery v. United States, 424 26 F.3d 944, 956 (9th Cir. 2005) (“With a 12(b)(1) motion, a court may weigh the evidence 27 to determine whether it has jurisdiction.”). The burden of proof is on the party asserting [28] 1 jurisdiction to show that the court has subject matter jurisdiction. See Indus. Tectonics, Inc. 2 v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990). 3 B. 12 (b)(6) 4 Rule 12(b)(6) is designed to “test[] the legal sufficiency of a claim.” Navarro v. 5 Block, 250 F.3d 729, 732 (9th Cir. 2001). A dismissal under Rule 12(b)(6) for failure to 6 state a claim can be based on either (1) the lack of a cognizable legal theory or (2) 7 insufficient facts to support a cognizable legal claim. Balistreri v. Pacifica Police Dep’t, [8] 901 F.2d 696, 699 (9th Cir. 1990). When analyzing a complaint under Rule 12(b)(6), the 9 well-pled factual allegations are taken as true and construed in the light most favorable to 10 the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal 11 conclusions couched as factual allegations are not entitled to the assumption of truth, 12 Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are insufficient to defeat a 13 motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103 , 1108 14 (9th Cir. 2010). On a Rule 12(b)(6) motion, Rule 8(a) governs and requires that, to avoid 15 dismissal of a claim, Plaintiff must allege “enough facts to state a claim to relief that is 16 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 17 Where a plaintiff alleges fraud or misrepresentation, however, Rule 9(b) imposes 18 heightened pleading requirements. Specifically, “[a]verments of fraud must be 19 accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” Vess 20 v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett, [21] 137 F.3d 616, 627 (9th Cir. 1997)). The heightened pleading requirements of Rule 9(b) 22 apply even where “fraud is not a necessary element of a claim.” Vess, 317 F.3d at 1106 . So 23 long as a plaintiff alleges a claim that “sounds in fraud” or is “grounded in fraud,” Rule 24 9(b) applies. Id. “While a federal court will examine state law to determine whether the 25 elements of fraud have been pled sufficiently to state a cause of action, the Rule 9(b) 26 requirement that the circumstances of the fraud must be stated with particularity is a 27 federally imposed rule.” Id. [28] 1 III. ANALYSIS 2 Federal courts are limited in the types of cases they can hear. The two most common 3 exercises of subject matter jurisdiction involve either a controversy between citizens of 4 different states (diversity jurisdiction) or a question of federal law (federal question 5 jurisdiction). See 28 U.S.C. §§ 1331 , 1332. Plaintiff asserts the existence of both. 6 A. Diversity Jurisdiction 7 The party asserting diversity jurisdiction must demonstrate that “the matter in 8 controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is 9 between . . . citizens of different states.” 28 U.S.C. § 1332 . Diversity jurisdiction requires 10 complete diversity of citizenship and “is not available when any plaintiff is a citizen of the 11 same State as any defendant.” Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365 , 366 12 (1978). Individuals are deemed to be citizens of the state in which they are domiciled. See 13 Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). A person is “domiciled” 14 when he has “established a fixed habitation or abode in a particular place, and [intends] to 15 remain there permanently or indefinitely.” Lew v. Moss, 797 F.2d 747 , 749–50 (9th Cir. 16 1986). “A person’s old domicile is not lost until a new one is acquired.” Id. Once 17 established, a person’s domicile is presumed to continue “unless rebutted with sufficient 18 evidence of change.” Mondragon v. Capital One Auto Fin., 736 F.3d 880 , 885–86 (9th Cir. 19 2013). The individual seeking to rebut the presumption of established domicile has the 20 burden of production of evidence demonstrating his changed domicile. See Lew, 797 F.2d 21 at 751 . 22 Defendant submitted evidence that, on several prior occasions, this Court 23 determined Plaintiff was a citizen of Arizona for purposes of diversity. In Plaintiff’s 24 removals of his HOA foreclosure action, this Court used Plaintiff’s Arizona address and 25 property located in Arizona to determine his Arizona domicile. (Mot. Ex. 3 at 2.) When 26 Plaintiff filed multiple motions for reconsideration, the Court reaffirmed its previous 27 finding, stating that Plaintiff had not presented new evidence by which the Court could find 28 diversity of citizenship. (Mot. Ex. 4 at 2.) 1 Once again, Plaintiff has produced no evidence to support the claim that he is no 2 longer domiciled in Arizona. Rather, he submits unsubstantiated and unsupported 3 statements that he “resides outside the United States.”1 (Resp. at 2.) Aside from the prior 4 court Orders determining Plaintiff is a citizen of Arizona, the only other evidence in the 5 record is Plaintiff’s stipulation that he maintains a current Arizona driver’s license. (Reply 6 Ex. 1.) 7 Plaintiff has failed to satisfy both his burden of production necessary to rebut his 8 previously established domicile of Arizona, and his burden of proof to establish diversity 9 of citizenship. The Court therefore finds that Plaintiff is a citizen of Arizona. As Defendant 10 is also a citizen of Arizona, the parties are not diverse and the Court cannot exercise 11 diversity jurisdiction in this case.2 12 B. Federal Question Jurisdiction 13 Federal courts have federal question jurisdiction over civil actions “arising under 14 the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331 . A claim arises 15 under federal law if either (1) federal law creates the cause of action, or (2) the plaintiff’s 16 right to relief necessarily depends on resolution of a substantial question of federal law, in 17 that federal law is a necessary element of one of the well-pleaded claims. Christianson v. 18 Colt Indus. Operating Corp., 486 U.S. 800, 808 (1988). 19 Plaintiff’s three labeled causes of action all seek declaratory relief. Plaintiff 20 correctly acknowledges that the Declaratory Judgment Act, 28 U.S.C. §§ 2201–02, “does 21 not confer an independent basis for federal jurisdiction.” (Resp. at 2.) However, also 22 scattered throughout the Complaint and Response are allegations that Defendant violated 23 the Due Process Clause and RICO. Although pled haphazardly, Plaintiff has alleged 24 violations of federal law over which the Court must exercise federal question jurisdiction. 25 The Court will therefore evaluate Plaintiff’s claims under Defendant’s 12(b)(6) Motion. [26] 1 In addition, the Delaware address Plaintiff provided is a business that does not accept 27 service on behalf of Plaintiff. (Mot., Ex. 13.) 2 The parties also dispute whether the $75,000 amount in controversy is satisfied. However, 28 because the parties lack diversity of citizenship, the Court need not reach the issue of amount in controversy. 1 C. Failure to State a Claim 2 The Due Process Clause “forbids the State itself to deprive individuals of life, 3 liberty, or property without due process of law.” DeShaney v. Winnebago Cty. Dep’t of 4 Soc. Servs., 489 U.S. 189, 196 (1989) (emphasis added). It was “intended to prevent 5 government” from abusing its power or employing it as an instrument of oppression. Id. 6 An individual can assert a Due Process claim against a private actor only if there is such a 7 “close nexus between the State and the challenged action” that the private behavior may 8 be fairly attributed to the state itself. Brentwood Acad. v. Tenn. Secondary Sch. Athletic 9 Ass’n, 5314 U.S. 288 , 295 (2001). Here, Defendant is a private attorney. His sole relation 10 to Plaintiff is that he was the attorney of record in Plaintiff’s eviction action. Plaintiff has 11 alleged no facts to support that Defendant is either (1) a State actor, or (2) a private actor 12 with a “close nexus” to the State. Accordingly, Plaintiff fails to state a Due Process claim 13 under Rule 12(b)(6). 14 Section 1964 of RICO provides a private right of action for a plaintiff who has 15 suffered injury to property because of a defendant’s violation of 18 U.S.C. § 1962 . Section 16 1962(c) prohibits “any person employed by or associated with any enterprise engaged in, 17 or the activities of which affect interstate commerce, to conduct, or participate, directly or 18 indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering 19 activity.” Thus, in addition to alleging an effect on interstate commerce, Plaintiff must 20 allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. See 21 Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 647 (2008). 22 Defendant Williams is the only named Defendant in the action, whose only 23 relationship to Plaintiff is, again, that he represented Maricopoly in the eviction action 24 against Plaintiff. The Complaint’s only factual allegation even tangentially relating to 25 Defendant is the allegation that Plaintiff was not served in his eviction action. Plaintiff then 26 states “Defendants” do not own the property and that by unlawfully “forcing” Plaintiff out 27 of the property, Defendants have violated various criminal statutes, including those 28 prohibiting mail and wire fraud. The Complaint then repeatedly and conclusorily recites 1 various provisions and elements of a RICO claim. This falls far short of Rule 8’s pleading 2 standards, let alone the heightened standards required for fraud under Rule 9. Accordingly, 3 Plaintiff fails to state a cause of action under RICO’s civil enforcement provision. 4 As the Court cannot exercise diversity jurisdiction over the matter, Plaintiff’s 5 Complaint can survive only if he states a plausible claim for relief under the federal 6 Constitution or federal statutes. Plaintiff has not done so. Because Defendant was merely an 7 attorney for the party opposing Plaintiff in a prior action—whose result has been upheld on 8 numerous occasions by several courts—the Court finds that Plaintiff will be unable to cure 9 the defects in his Complaint. See Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (noting 10 that leave to amend should not be given when a complaint’s defects cannot be cured). 11 D. Fees and Sanctions 12 Defendant requests an award of sanctions against Plaintiff in the form of attorneys’ 13 fees and a designation from this Court that Plaintiff is a vexatious litigant. The Court agrees 14 that Plaintiff is eligible for fees under both Rule 11 and A.R.S. § 12-349, which permits 15 the Court to award reasonable fees and expenses against a party who brings a claim without 16 substantial justification. However, the Court does not find it appropriate at this time to issue 17 an Order declaring Plaintiff a vexatious litigant or enjoining him from filing suit without 18 prior authorization. The Court may revisit the matter if Plaintiff files groundless claims 19 against Defendant in the future. At that time, the Court may also refer to the relevant orders 20 from the Central District of California and the Maricopa County Superior Court that 21 Defendant refers to in his Motion. 22 IT IS THEREFORE ORDERED granting Defendant’s Motion to Dismiss 23 (Doc. 18). 24 IT IS FURTHER ORDERED dismissing the Complaint (Doc. 1) with prejudice. 25 IT IS FURTHER ORDERED denying as moot Plaintiff’s Motion for Speedy 26 Hearing and Motion to Compel Local Attorneys to Produce Specific Things for the Purpose 27 of Resolving this Controversy Speedily (Doc. 24). [28] 1 IT IS FURTHER ORDERED that Defendant has 21 days from the date of this || Order to file its fee application in compliance with LRCiv 54.2. 3 Dated this 25th day of November, 2019. CN 4 “wok: Unie States#District Judge [28] -8-