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Pnc Equipment Finance, LLC, A v. California Fairs Financing Authority

May 23, 2012

PNC EQUIPMENT FINANCE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS SUCCESSOR TO NATIONAL CITY COMMERCIAL CAPITAL CORPORATION,
PLAINTIFF,
v.
CALIFORNIA FAIRS FINANCING AUTHORITY, A CALIFORNIA JOINT POWERS AUTHORITY; 15TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 18TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 21ST DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 26TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 27TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; 30TH DISTRICT AGRICULTURAL ASSOCIATION, A STATE INSTITUTION OF THE STATE OF CALIFORNIA; EL DORADO COUNTY FAIR ASSOCIATION, INC., A CALIFORNIA CORPORATION; AND MADERA COUNTY LIVESTOCK ASSOCIATION, A CALIFORNIA CORPORATION,
DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER

AND RELATED CROSS-CLAIMS AND COUNTER-CLAIMS.

Defendants 15th District Agricultural Association ("15th DAA"); 21st District Agricultural Association ("21st DAA"); 26th District Agricultural Association ("26th DAA"); 27th District Agricultural Association ("27th DAA"); 30th District Agricultural Association ("30th DAA"); and California Fair Financing Authority ("CFFA") (collectively, "Defendants") move for dismissal of Plaintiff's First Amended Complaint ("FAC") under Federal Rule of Civil Procedure ("Rule") 12(b)(1). Defendants argue the FAC should be dismissed because the requirements for diversity jurisdiction are not satisfied and Plaintiff's claims are not ripe. Defendants also seek dismissal of the FAC under Rule 12(b)(6). Plaintiff opposes the motions.

I. LEGAL STANDARD

A. Rule 12(b)(1)

"A Rule 12(b)(1) jurisdictional attack may be facial or 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. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Id.

Here, Defendants argue they "challenge jurisdiction on the basis of [Plaintiff's] allegations and on extrinsic factual evidence[.]" (Defs.' Mot. to Dismiss ("Mot.") 7:7.) However, the gravamen of Defendants' jurisdictional attack is comprised of their arguments that "Plaintiff's Case Does Not Meet the Requisite Amount in Controversy" and "Diversity of Citizenship Does Not Exist." Id. 7:17 & 8:8. Since the motion attacks the truth of Plaintiff's allegations, Defendants' attack is factual.

When "[f]aced with a factual attack on subject matter jurisdiction, "the trial court may proceed as it never could under Rule 12(b)(6) . . . . [N]o presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover, the plaintiff will have the burden of proof that jurisdiction does in fact exist."

Thornhill Pub. Co., Inc. v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979) (quoting Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)).

B. Rule 12(b)(6)

Decision on Defendants' Rule 12(b)(6) dismissal motion requires determination of "whether the complaint's factual allegations, together with all reasonable inferences, state a plausible claim for relief." Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., 637 F.3d 1047, 1054 (9th Cir. 2011) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009)). "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." Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

When determining the sufficiency of a claim, "[w]e accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the non-moving party[; however, this tenet does not apply to] . . . legal conclusions . . . cast in the form of factual allegations." Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (citation and internal quotation marks omitted). "Therefore, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Id. (citation and internal quotation marks omitted); see also Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555) (stating "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do'").

II. PLAINTIFF'S ALLEGATIONS

This case concerns a lease for solar equipment between Plaintiff and CFFA, and agreements regarding use of the solar equipment between CFFA and several California agricultural, livestock, and fair associations ("Individual Fairs"*fn1 ). Plaintiff alleges that "[o]n or about June 2, 2006, [Plaintiff's predecessor in interest,] National City Commercial Capital Corporation ('National City'), as lessor, and [CFFA], as lessee, entered into [a] Master Photovoltaic Equipment Lease--Purchase Agreement ('[Master] Lease')[.]" (FAC ¶ 13.) Plaintiff alleges that under the Master Lease, "National City agreed to lease [the solar equipment] to [CFFA for use by the Individual Fairs] . . . and [CFFA] agreed . . . to pay National City periodic installments of principal and interest[.]" Id. "To secure its obligations to National City . . . , [CFFA] granted National City a first priority security interest in, among other things, the Use Agreements and User Fees[.]" Id. ¶ 14.

Plaintiff alleges that "National City agreed to finance a total of [$18,255,295.14] for the acquisition" of the equipment, and "[CFFA] agreed to repay that amount, with specified interest thereon in accordance with the terms of an amortization schedule[.]" Id. ¶¶ 16, 41 & 46. Plaintiff alleges that in July and August 2006, each Individual Fair entered into a Use Agreement with CFFA, under which "[CFFA] granted the right to use a designated portion of the [e]quipment to each [Individual Fair] in return for periodic payments of principal and interest (the 'User Fees')." Id. ¶¶ 14, 17, 21, 25, 29, 33, 37, 41 & 46. Plaintiff alleges that under the Use Agreements, each Individual Fair "acknowledged that [CFFA] had pledged to National City all of [CFFA's] rights and interest under [the Use Agreements], including . . . the right to receive the User Fees," and that each Individual Fair consented to this term of the agreement. Id. ¶¶ 18, 22, 26, 30, 34, 38, 43 & 47.

Plaintiff alleges "[CFFA] has breached the [Master] Lease by . . . failing and refusing to make [payments] . . . for the months of March 2011 through July 2011." Id. ¶ 50. Plaintiff alleges that under "Section 20 of the [Master] Lease, upon an event of default, [P]laintiff has the right to . . . collect the User Fees owing from [Individual Fairs] to [CFFA]." Id. ¶ 51. Plaintiff further alleges that "[o]n or about May 9, 2011, [it] transmitted written notice to [each Individual Fair] of [CFFA's] default and of [the Individual Fair's] obligation to pay the User Fees directly to Plaintiff." Id. ¶¶ 54, 63, 72, 81, 90, 99, 108 & 117. Plaintiff alleges the Individual Fairs have "failed and refused, and continue[] to fail and refuse, to pay the User Fees to

[P]laintiff." Id. Plaintiff further alleges "[CFFA] has interfered with [P]laintiff's right to collect the User Fees from the [Individual Fairs] by, among other things, directing them to ...


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