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Yellowstone Poky, LLC v. First Pocatello Associates, L.P.

United States District Court, D. Idaho

March 8, 2017

YELLOWSTONE POKY, LLC, an Idaho Limited Liability Company, Plaintiff,
v.
FIRST POCATELLO ASSOCIATES, L.P., Defendant. FIRST POCATELLO ASSOCIATES, L.P., Counterclaimant,
v.
YELLOWSTONE POKY, LLC, an Idaho Limited Liability Company, and FEATHERSTON HOLDINGS, INC. Counterdefendant.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill Chief Judge United States District Court

         INTRODUCTION

         Pending before the Court is a series of motions, including: (1) Defendant's Partial Motion to Dismiss for Failure to State a Claim (Dkt. 7); Defendant's Motion to Strike Affidavit of Counsel (Dkt. 16); Plaintiff's Motion to Amend the Complaint (Dkt. 24); Plaintiff's Motion for Joinder (Dkt. 25); a Motion to Intervene filed by Roger Featherston (Dkt. 26); Defendant's Motion to Dismiss for Lack of Jurisdiction (Dkt. 30); Defendant's Motion for Leave to Supplement (Dkt. 32). The Court heard oral argument on the motions on March 2, 2017 and took the matters under advisement. For the reasons explained below, the Court will briefly reserve ruling on the pending motions and grant Plaintiff leave to file an amended complaint to cure the defective allegations of jurisdiction.

         BACKGROUND

         This action arises out of an alleged real estate purchase and sale agreement (the “Agreement”) between Defendant First Pocatello Associates, L.P. (“First Pocatello”) and Featherston Holdings, Inc. (“FHI”), a California corporation. On July 16, 2016, Plaintiff Yellowstone Poky, LLC filed a Complaint against First Pocatello in Idaho District Court, alleging that “Yellowstone Poky is the successor-in-interest to Featherston's interest and rights arising out of the Agreement” and asserting claims for breach of contract, unjust enrichment, and promissory estoppel. Compl. ¶¶ 28, 41-64, Dkt. 1-2.

         On July 13, 2016, First Pocatello removed the case to federal court on the basis of diversity jurisdiction, under 28 U.S.C. § 1332. Notice of Removal at 1, Dkt. 1. In its Answer to Plaintiff's Complaint, First Pocatello asserted that Yellowstone Poky lacks standing to assert its claims and subsequently moved to dismiss Plaintiff 's complaint for lack of subject matter jurisdiction, reiterating three distinct standing arguments. Def. Mot. to Dismiss, Dkt. 30. First, Defendant argues that Yellowstone Poky can show no “injury in fact” because its predecessor in interest, FHI, executed the alleged Agreement while its corporate status was suspended by the California Franchise Tax Board and it lacked the “capacity to contract”, rendering the underlying Agreement unenforceable. Second, Defendant argues that as a suspended corporation, FHI lacks “capacity to sue” on the alleged Agreement and that its assignee, Yellowstone Poky, is subject to the same defense. Third, Defendant argues that Yellowstone Poky has failed to demonstrate an “injury in fact” because there is no allegation of an assignment conveying FHI's interest in the underlying Agreement to Yellowstone Poky.

         In its response brief, Plaintiff informed the court that proceedings were pending to revive FHI's corporate status. Accordingly, on November 7, 2016, the Court sua sponte ordered a brief stay to allow FHI to complete this process. On November 9, 2016, Plaintiff filed a copy of FHI's Certificate of Revivor and Certificate of Relief from Contract Voidability, demonstrating that the corporation is now in good standing with the California Franchise Tax Board. Featherston Decl. at 4-6, Dkt. 40. Thereafter, the stay was lifted and proceedings commenced.

         Defendant's Motion to Dismiss for Lack of Jurisdiction goes to the power of this Court to proceed at all. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 84 (1998) (“[W]ithout proper jurisdiction, a court cannot proceed at all, but can only note the jurisdictional defect and dismiss the suit.”). Accordingly, we consider it first, before ruling on the remainder of the pending motions.

         LEGAL STANDARD

         1. Rule 12(b)(1) Motion to Dismiss

         A Rule 12(b)(1) challenge to subject matter jurisdiction may be either facial or a factual. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004)). “In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.” Id. A court reviewing such a challenge must presume the truthfulness of plaintiff's allegations and may not look beyond the pleadings. Id. “By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction. . . . In resolving a factual attack on jurisdiction, the district court may review evidence beyond the complaint . . . [and] need not presume the truthfulness of the plaintiff's allegations.” Id. (internal citations omitted).

         Here, the Court construes the Defendant's jurisdictional attack as both facial and factual. The argument regarding contract assignment is directed at the facial sufficiency of the Complaint's jurisdictional allegations. However, the arguments regarding FHI's corporate status are factual in nature. Both parties have submitted evidence as to FHI's corporate status, and the Court will therefore weigh the evidence submitted as to those claims.

         2. Standing

         Standing is a jurisdictional matter, and thus a motion to dismiss for lack of standing is properly raised in a Rule 12(b)(1) motion to dismiss. See Chandler v. StateFarm Mut. Auto. Ins. Co., 598 F.3d 1115, 1121 (9th Cir. 2010). To establish standing under Article III, a plaintiff has the burden of establishing three elements: (1) it has “suffered an injury in fact-an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical”; (2) the injury is “fairly traceable to the challenged action”; and (3) “it [is] likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (internal citations and footnote omitted). ...


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