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Epic Advertising D/B/A Azoogleads.Com, Inc., A Delaware Corporation v. Asis Internet Services

December 13, 2011

EPIC ADVERTISING D/B/A AZOOGLEADS.COM, INC., A DELAWARE CORPORATION,
PLAINTIFF,
v.
ASIS INTERNET SERVICES, A CALIFORNIA CORPORATION; AND NELLA WHITE, AN INDIVIDUAL. DEFENDANTS.



ORDER DENYING DEFENDANTS' MOTION TO DISMISS

I. INTRODUCTION

Before the Court is a Motion to Dismiss filed by Defendants Asis Internet Services ("Asis") and Nella White ("White") 20 (collectively, "Defendants"). ECF No. 30 ("Mot."). Plaintiff Epic 21 Advertising ("Plaintiff") filed an Opposition. ECF No. 32 22 ("Opp'n"). Defendants did not file a Reply. For the following 23 reasons, the Court DENIES Defendants' Motion. 24 25

II. BACKGROUND

The Court detailed the background of this dispute in its prior 27 order denying Defendants' first motion to dismiss and does not 28 repeat that background here. ECF No. 28 ("Sep. 29, 2011 Order").

In short, this action involves Plaintiff's attempt to collect on a 2 judgment against Defendants from a prior lawsuit, ASIS Internet 3 Plaintiff filed this action on April 7, 2011, asserting state 5 law claims for malicious prosecution, tort of another, and 6 fraudulent transfer. ECF No. 1 ("Compl.") ¶¶ 103-133. On July 14, 7 Plaintiff's 2010 acquisition of non-party Connexus Corporation 9 Services v. Optin Global, Inc., No. 05-5124 (N.D. Cal.). 4

2011, Defendants filed their first motion to dismiss, claiming that 8 ("Connexus"), a California corporation, divested the Court of 10 diversity jurisdiction. See ECF No. 16 ("Defs.' First MTD"). The Court denied Defendants' motion, finding that Plaintiff had 12 established that Connexus was its subsidiary. Sep. 29, 2011 Order 13 at 7. 14 15 arguing that the Court lacks jurisdiction because of an arbitration 16 clause contained in a 2007 settlement agreement between Asis and 17 Connexus (the "Settlement Agreement"). Mot. at 2-3. Plaintiff 18 filed an Opposition arguing that the Motion fails for numerous 19 reasons and that the Court should impose sanctions upon Defendants 20 for unreasonably and vexatiously multiplying the proceedings. For 21 the following reasons, the Court DENIES Defendants' Motion and 22 DENIES Plaintiff's request for sanctions. 23 24

27 subject matter jurisdiction on the ground that the parties 28 contracted to resolve their disputes exclusively through

On October 18, 2011, Defendants filed the instant Motion,

III. DISCUSSION

A. Defendants' Motion

Defendants move to dismiss the instant action for lack of arbitration. When an action involves an issue properly governed by 2 an arbitration clause, however, the district court "is not deprived 3 of jurisdiction altogether." See Nicholson v. Labor Ready, Inc., May 23, 1997). Rather, pursuant to Section 4 of the Federal Arbitration Act ("FAA"), "the court shall make an order directing 7 the parties to proceed to arbitration in accordance with the terms 8 of the agreement." See 9 U.S.C. § 4. Additionally, pursuant to No. C 97-0518 FMS, 1997 U.S. Dist. LEXIS 23494, at *5 (N.D. Cal. Section 3 of the FAA, the court is required to stay, not dismiss, 10 the action pending arbitration. See id. § 3. Consequently,

Defendants are not entitled to dismissal of the instant action.

Although Defendants do not expressly move to compel

13 arbitration, the gravamen of their Motion is that this dispute is 14 subject to mandatory arbitration under the Settlement Agreement 15 between Asis and Connexus. Because Plaintiff has addressed the 16 merits of Defendants' arguments in support of arbitration, the Court will construe the instant Motion as a motion to compel 18 arbitration. See, e.g., Filimex, L.L.C. v. Novoa Invs., L.L.C., Ariz. July 17, 2006) (construing motion to dismiss for lack of 21 subject matter jurisdiction as motion to compel arbitration). When 22 ruling on a motion to compel arbitration, the district court's "role is limited to determining ...


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