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Sammons v. Rino Int'l Corp.

United States District Court, D. Nevada

February 13, 2015

MIKE SAMMONS, Plaintiff,

Michael Sammons, Plaintiff, Pro se, San Antonio, TX.


Gloria M. Navarro, Chief United States District Judge.

Pending before the Court is the Motion for Default Judgment (ECF No. 10) filed by Plaintiff Mike Sammons (" Plaintiff") on July 16, 2014. On July 29, 2014, the Honorable Cam Ferenbach, United States Magistrate Judge, entered a Report and Recommendation (ECF No. 11) recommending that this Court deny the motion and dismiss the Plaintiff's Complaint (ECF No. 1) for lack of subject-matter jurisdiction. Plaintiff subsequently filed an Objection (ECF No. 12) to the Report and Recommendation and a Memorandum in Support of the Objection (ECF No. 13).

For the reasons discussed below, the Court will accept and adopt Magistrate Judge Ferenbach's Report and Recommendation to the extent that it is not inconsistent with this opinion.


According to the three-page Complaint, Plaintiff is the owner of 1, 000, 000 shares of common stock in Defendant Rino International Corporation (" Rino"), a defunct entity. (Compl. ¶ ¶ 1-2, ECF No. 1). Rino was incorporated in the State of Nevada on September 26, 2006. (Id. ¶ 4). However, on October 8, 2011, the Nevada Secretary of State revoked Rino's charter and on May 15, 2013, the Securities and Exchange Commission obtained a permanent injunction against Rino, prohibiting the company from operating in the United States. (Id. ¶ ¶ 2, 4); see also (Final Judgment, Sec. & Exchange Comm'n v. Rino Int'l Copr., et al., No. 1:13-cv-00711-EGS (D. D.C. 2013) ECF No. 9).

Plaintiff filed his Complaint on April 15, 2014, asking this Court to appoint him receiver for Rino for the purpose of liquidating any assets and distributing them to the shareholders. (Compl., ECF No. 1). However, in the Complaint, Plaintiff acknowledges that Rino has no assets or operations in the United States, though he alleges that Rino possesses ownership interests in foreign companies. (Id. ¶ 6).

In the Report and Recommendation, Judge Ferenbach noted that the only available basis for federal jurisdiction identified in the Complaint was diversity jurisdiction pursuant to 28 U.S.C. § 1332 and that the amount in controversy necessary for the Court to exercise this jurisdiction, over $75, 000, was not present in this case. (R& R 2:23-3:17, ECF No. 11). In support of this finding, Judge Ferenbach pointed to two facts showing that a distribution of Rino's assets to Plaintiff pursuant to his stock ownership would not reach the necessary amount for jurisdiction. First, Plaintiff admitted in his Complaint that Rino had no assets in the United States and his allegation of " interests in foreign companies" was too vague and unsubstantiated to demonstrate that Rino possessed any assets. (Id. 3:7-8, 3:18-4:2). Second, on the date Plaintiff filed suit, April 15, 2014, Rino's stock was valued at $00.02 per share, so the value of his share of Rino's alleged assets would only be approximately $20, 000. (Id. 3:7-17) (citing RINO:US, BLOOMBERG.COM, Therefore, Judge Ferenbach recommended that the Court dismiss the Complaint for lack of jurisdiction. (Id. 5:6-9).

Plaintiff subsequently filed his Objection and Memorandum in Support in which he presents additional allegations to support his claim that the amount in controversy is met. (Objection, ECF No. 12; Memo., ECF No. 13). Plaintiff also attached a proposed First Amended Complaint to his Objection incorporating some of his new allegations. (First Am. Compl., Ex. 1 to Objection, ECF No. 12).


A party may file specific written objections to the findings and recommendations of a United States Magistrate Judge made pursuant to Local Rule IB 1-4. 28 U.S.C. § 636(b)(1)(B); D. Nev. R. IB 3-2. Upon the filing of such objections, the Court must make a de novo determination of those portions of the Report to which objections are made. Id. The Court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the Magistrate Judge. 28 U.S.C. § 636(b)(1); D. Nev. IB 3-2(b).

Federal courts are courts of limited jurisdiction, possessing only those powers granted by the Constitution and by statute. See United States v. Marks, 530 F.3d 799, 810 (9th Cir. 2008) (citation omitted). Furthermore, a court may raise the question of subject matter jurisdiction sua sponte at any time during the action. Fed.R.Civ.P. 12(h)(3); Snell v. Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 2002).

District courts have subject matter jurisdiction over civil actions where no plaintiff is a citizen of the same state as a defendant and the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332(a). In cases where the amount in controversy is in doubt, " the Supreme Court has drawn a sharp distinction between original jurisdiction and removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-90, 58 S.Ct. 586, 82 L.Ed. 845 (1938)). " Where the plaintiff originally files in federal court, 'the amount in controversy is determined from the face of the pleadings.'" Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010) (quoting Crum v. Circus Circus Enterprises, 231 F.3d 1129, 1131 (9th Cir. 2000)). The amount in controversy alleged by the proponent of federal jurisdiction controls so long as the claim is made in good faith. Id.; see also Riggins v. Riggins, 415 F.2d 1259, 1260 (9th Cir. 1969) (" [F]or jurisdictional purposes, the amount in controversy is measured by the amount of the claim . . . subject to the qualification that the amount of the claim must appear to be in good faith and not fictitiously asserted simply to allege a sum sufficient for federal jurisdiction."). To justify dismissal in these cases, " it must appear to a legal certainty that the claim is really for less than the jurisdictional ...

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