United States District Court, D. Nevada
SINBAD S. GHOLSON, Plaintiff,
COVER WALLET, et al., Defendants.
SCREENING ORDER AND REPORT AND
WEKSLER, UNITED STATES MAGISTRATE JUDGE.
plaintiff Sinbad S. Gholson brings this case based on a
dispute with defendants Cover Wallet and Marlon Simpson
regarding insurance. Gholson submitted the affidavit required
by 28 U.S.C. § 1915(a) showing an inability to prepay
fees or costs or give security for them. Accordingly, the
court will grant his request to proceed in forma
pauperis. The court now screens his complaint.
granting a request to proceed in forma pauperis, a
court must screen the complaint under 28 U.S.C. §
1915(e)(2). In screening the complaint, a court must identify
cognizable claims and dismiss claims that are frivolous,
malicious, fail to state a claim on which relief may be
granted or seek monetary relief from a defendant who is
immune from such relief. 28 U.S.C. § 1915(e)(2).
Dismissal for failure to state a claim under §
1915(e)(2) incorporates the standard for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6).
Watison v. Carter, 668 F.3d 1108, 1112 (9th Cir.
2012). To survive § 1915 review, a complaint must
“contain sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its
face.” See Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). The court liberally construes pro se complaints
and may only dismiss them “if it appears beyond doubt
that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief.”
Nordstrom v. Ryan, 762 F.3d 903, 908 (9th Cir. 2014)
(quoting Iqbal, 556 U.S. at 678).
considering whether the complaint is sufficient to state a
claim, all allegations of material fact are taken as true and
construed in the light most favorable to the plaintiff.
Wyler Summit P'ship v. Turner Broad. Sys. Inc.,
135 F.3d 658, 661 (9th Cir. 1998) (citation omitted).
Although the standard under Rule 12(b)(6) does not require
detailed factual allegations, a plaintiff must provide more
than mere labels and conclusions. Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). A formulaic
recitation of the elements of a cause of action is
insufficient. Id. Unless it is clear the
complaint's deficiencies could not be cured through
amendment, a pro se plaintiff should be given leave to amend
the complaint with notice regarding the complaint's
deficiencies. Cato v. United States, 70 F.3d 1103,
1106 (9th Cir. 1995).
Screening the complaint
alleges he is a citizen of Nevada and owns Gholson Van Lines,
LLC. (Compl. (ECF No. 1-1) at 2.) Gholson further alleges he
went online to obtain quotes for small business insurance and
was contacted by defendants Cover Wallet and Marlon Simpson.
(Id. at 2-3.) According to Gholson, defendants
“la[id] out a false contract to provide service that
defendants knew or should have known they could not
provide.” (Id. at 3.) After allegedly
accepting $2, 022 from Gholson, defendants stated they would
not provide the requested insurance and would only return $1,
627 to Gholson. (Id.) Gholson now brings this
lawsuit for fraud, seeking in excess of $10, 000 for general
and special damages and $20 million in punitive damages.
(Id. at 3-4.) He alleges the basis for the
court's jurisdiction is diversity jurisdiction.
(Id. at 1.)
district courts are courts of limited jurisdiction,
possessing only that power authorized by Constitution and
statute.” K2 Am. Corp. v. Roland Oil & Gas,
LLC, 653 F.3d 1024, 1027 (9th Cir. 2011) (quotation
omitted). Federal district courts “have original
jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States.”
28 U.S.C. § 1331. Federal district courts have original
jurisdiction over civil actions in diversity cases
“where the matter in controversy exceeds the sum or
value of $75, 000” and where the matter is between
“citizens of different States.” 28 U.S.C. §
1332(a). “Section 1332 requires complete diversity of
citizenship; each of the plaintiffs must be a citizen of a
different state than each of the defendants.”
Morris v. Princess Cruises, Inc., 236 F.3d 1061,
1067 (9th Cir. 2001). Federal courts have the jurisdiction to
determine their own jurisdiction. Special Investments,
Inc. v. Aero Air, Inc., 360 F.3d 989, 992 (9th Cir.
2004). A court may raise the question of subject-matter
jurisdiction sua sponte, and it must dismiss a case if it
determines it lacks subject-matter jurisdiction.
Id.; Fed.R.Civ.P. 12(h)(3).
damages are considered when calculating the amount in
controversy, even when the actual damages claimed are short
of the jurisdictional amount, so long as the punitive damages
are recoverable as a matter of law. Gibson v. Chrysler
Corp., 261 F.3d 92, 945 (9th Cir. 2001). Nevada law
provides for punitive damages “in an action for the
breach of an obligation not arising from contract, where it
is proven by clear and convincing evidence that the defendant
has been guilty of oppression, fraud or malice.” Nev.
Rev. Stat. § 42.005. Punitive damages may not exceed
“[t]hree hundred thousand dollars if the amount of
compensatory damages awarded to the plaintiff is less than
$100, 000.” Id. at § 42.005(1)(b).
Gholson does not allege sufficient facts invoking the
court's jurisdiction. He alleges a common law fraud claim
and therefore does not invoke the court's federal
question jurisdiction. As for the amount in controversy,
Gholson alleges actual damages of approximately $2, 000 and
punitive damages of $10 million. Taking all allegations of
material fact are taken as true and construing them in the
light most favorable to Gholson, it appears he meets the
amount in controversy if his alleged punitive damages are
included in damages, although punitive damages would be
capped at $300, 000 given that Gholson's actual damages
are under $100, 000. As for the parties' citizenship,
Gholson states he is a Nevada citizen, but he does not allege
the defendants' citizenship. Without this information,
the court cannot evaluate whether there is complete
diversity. Thus, even liberally construing his complaint,
Gholson does not allege facts invoking the court's
diversity jurisdiction. As the party seeking to invoke the
court's jurisdiction, Gholson bears the burden of
establishing jurisdiction exists. See Naffe v. Frey,
789 F.3d 1030, 1040 (9th Cir. 2015). The court therefore will
recommend that this case be dismissed for lack of
subject-matter jurisdiction, with leave to amend.
Gholson chooses to amend, he must include factual allegations
demonstrating that a federal question exists, thereby
allowing the court to determine its own jurisdiction.
Alternatively, he must include factual allegations
demonstrating there is complete diversity of citizenship and
more than $75, 000 in controversy. Additionally, Gholson is
advised that if he files an amended complaint, the original
complaint (ECF No. 1-1) no longer serves any function in this
case. As such, if plaintiff files an amended complaint, each
claim and the involvement of each defendant must be alleged
sufficiently. The court cannot refer to a prior pleading or
to other ...