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LLC v. Paris Las Vegas Operating Company, LLC

United States District Court, D. Nevada

July 3, 2017

TPOV ENTERPRISES 16, LLC, Plaintiffs,
v.
PARIS LAS VEGAS OPERATING COMPANY, LLC, Defendants.

          ORDER

         Presently before the court is defendant Paris Las Vegas Operating Company, LLC's (“Paris”) motion to dismiss. (ECF No. 9). Plaintiff TPOV Enterprises 16, LLC (“TPOV 16”) filed a response (ECF No. 11), to which Paris replied (ECF No. 12).

         I. Facts

         This is a breach of contract case involving a restaurant in the Paris Hotel & Casino in Las Vegas. TPOV 16 alleges Paris breached a contract with TPOV 16 when it terminated the contract and continues to operate “Gordon Ramsay Steak” (“GR Steak”). (ECF No. 1). The contract was assigned to TPOV 16 by its predecessor-in-interest, TPOV Enterprises, LLC (“TPOV Enterprises”). (ECF No. 1 at 7).

         In November 2011, TPOV Enterprises and Paris entered into a development and operation agreement (“TPOV agreement”). (ECF No. 1 at 2). Under the TPOV agreement, TPOV Enterprises was to provide $1, 000, 000.00 of capital and services for the design, development, construction, and operation of a restaurant, GR Steak, inside the Paris Hotel. (ECF No. 1). In exchange, TPOV Enterprises and Paris agreed upon a structure by which profits were disbursed and payments were provided. (ECF No. 1 at 5-6). As a condition precedent to entering into the TPOV agreement, Paris entered into an agreement with celebrity chef Gordon Ramsay (“Ramsay”) “relating to the design, development, construction, and operation of [GR Steak]” (“Ramsay agreement”), under which Ramsay would be paid a percentage of the gross restaurant sales. (ECF No. 1 at 2-3).

         Rowan Seibel was a member of TPOV Enterprises at the time of the TPOV agreement, and later pleaded guilty to one count of obstructing or impeding the due administration of the internal revenue laws under 26 U.S.C. § 7212(a). (ECF No. 1 at 3). After Mr. Seibel pleaded guilty, TPOV Enterprises allegedly assigned its interests under the TPOV agreement to TPOV 16, and “the direct or indirect membership interests in TPOV Enterprises held by Mr. Seibel would be assigned to The Seibel Family 2016 Trust.” (ECF No. 1 at 7). Paris was allegedly notified of this and did not object. (ECF No. 1 at 7-8). Several months later, Paris terminated the TPOV agreement. (ECF No. 1 at 8). The purported termination was allegedly based on Paris's “rejection of the transfer to TPOV 16 and to the alleged unsuitability of Mr. Seibel.” (ECF No. 1 at 8).

         On February 3, 2017, TPOV 16 filed the underlying complaint, alleging five claims for relief: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) unjust enrichment; (4) declaratory relief; and (5) accounting. (ECF No. 1).

         In the instant motion, Paris moves to dismiss under Federal Rule of Civil Procedure 12(b)(1) and (6), as well as Rule 12(b)(7) for failure to join Gordon Ramsay and Gordon Ramsay Holdings (“GRH”) as necessary parties. (ECF No. 9). The court will address each as it sees fit.

         II. Legal Standards

         A. Subject Matter Jurisdiction

         Federal courts are courts of limited jurisdiction. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). “A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock West, Inc. v. Confederated Tribes of Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 1989). Thus, federal subject matter jurisdiction must exist at the time an action is commenced. Mallard Auto. Grp., Ltd. v. United States, 343 F.Supp.2d 949, 952 (D. Nev. 2004) (citing Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir.1988)).

         Federal Rule of Civil Procedure 12(b)(1) allows defendants to seek dismissal of a claim or action for a lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). Dismissal under Rule 12(b)(1) is appropriate if the complaint, considered in its entirety, fails to allege facts on its face sufficient to establish subject matter jurisdiction. In re Dynamic Random Access Memory (DRAM) Antitrust Litig., 546 F.3d 981, 984-85 (9th Cir. 2008).

         Although the defendant is the moving party in a 12(b)(1) motion to dismiss, the plaintiff is the party invoking the court's jurisdiction. As a result, the plaintiff bears the burden of proving that the case is properly in federal court to survive the motion. McCauley v. Ford Motor Co., 264 F.3d 952, 957 (9th Cir. 2001) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). More specifically, the plaintiff's pleadings must show “the existence of whatever is essential to federal jurisdiction, and, if [plaintiff] does not do so, the court, on having the defect called to its attention or on discovering the same, must dismiss the case, unless the defect be corrected by amendment.” Smith v. McCullough, 270 U.S. 456, 459 (1926).

         In moving to dismiss under Rule 12(b)(1), the challenging party may either make a “facial attack, ” confining the inquiry to challenges in the complaint, or a “factual attack” challenging subject matter on a factual basis. Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). For a facial attack, the court assumes the truthfulness of the allegations, as in a motion to dismiss under Rule 12(b)(6). Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1559 (9th Cir. 1987). By contrast, when presented as a factual challenge, a Rule 12(b)(1) motion can be supported by affidavits or other evidence outside of the pleadings. United States v. LSL Biotechs., 379 F.3d 672, 700 n.14 (9th Cir. 2004) (citing St. Clair v. City of Chicago, 880 F.2d 199, 201 (9th Cir. 1989)).

         B. Failure to State a Claim

         The court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide “[a] short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Although rule 8 does not require detailed factual allegations, it does require more than labels and conclusions. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Furthermore, a formulaic recitation of the elements of a cause of action will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009) (citation omitted). Rule 8 does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Id. at 678-79.

         To survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Id. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. When a complaint pleads facts that are merely consistent with a defendant's liability, and shows only a mere possibility of entitlement, the complaint does not meet the requirements to show plausibility of entitlement to relief. Id.

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering a motion to dismiss. Id. First, the court must accept as true all of the allegations contained in a complaint. However, this requirement is inapplicable to legal conclusions. Id. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id. at 678. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged - but not shown - that the pleader is entitled to relief.” Id. at 679. When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.

         The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court held:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Id.

         C. Failure ...


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