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Mvp Asset Management (Usa) LLC, A Delaware Limited Liability Company v. Steven Vestbirk

July 11, 2012

MVP ASSET MANAGEMENT (USA) LLC, A DELAWARE LIMITED LIABILITY COMPANY,
PLAINTIFF,
v.
STEVEN VESTBIRK, JEFF BALLIET, ALLISON HANSLIK, JIM GRANT, ARK ROYAL ASSET MANAGEMENT, LTD., A BERMUDA LIMITED COMPANY, VESTBIRK CAPITAL MANAGEMENT, LTD., A BERMUDA LIMITED COMPANY, ARK ROYAL ASSET MANAGEMENT, LLC, A NEVADA LIMITED-LIABILITY COMPANY, ARK DISCOVERY, LLC, A BUSINESS ENTITY OF UNKNOWN FORM, ARK ROYAL HOLDINGS, LLC, A NEVADA LIMITED-LIABILITY COMPANY, ARK ROYAL SERVICES, LLC, A NEVADA LIMITED-LIABILITY COMPANY, ARK ROYAL CAPITAL, LLC, A NEVADA LIMITED-LIABILITY COMPANY, ARK ROYAL CAPITAL FUNDING, LLC, A NEVADA LIMITED- LIABILITY COMPANY, ARK ROYAL CAPITAL, INC., A NEVADA CORPORATION, ARK ROYAL RESOURCES, LLC, A NEVADA LIMITED-LIABILITY COMPANY, ARK ROYAL ASSURANCE LLC, A NEVADA LIMITED-LIABILITY COMPANY, AND ARK ROYAL INVESTMENTS, LLC, A NEVADA LIMITED-LIABILITY COMPANY,
DEFENDANTS.



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

ORDER

Defendants filed a motion to dismiss Plaintiff's Third Amended Complaint ("TAC") under Federal Rule of Civil Procedure ("Rule") 12(b)(1), arguing, inter alia, Plaintiff lacks Article III standing and the Court lacks diversity jurisdiction over Plaintiff's state claims. (Defs.' Mot. to Dismiss TAC for Lack of Jurisdiction ("Defs.' 12(b)(1) Mot."); ECF No. 111.) Plaintiff opposes the motion, arguing it has properly alleged standing. (Pl.'s Opp'n to Defs.' Mot. to Dismiss ("Pl.'s 12(b)(1) Opp'n"); ECF No. 116.)

Defendants also filed a motion to dismiss Plaintiff's TAC under Rules 12(b)(6) and 12(b)(2), arguing "Plaintiff cannot state a valid claim for relief[ and] . . . cannot allege facts sufficient to establish personal jurisdiction over any Defendant." (Defs.' Mot. to Dismiss TAC Pursuant to Rule 12(b)(6) and Rule 12(b)(2) ("Defs.' 12(b)(6) Mot.") 1:5-6; ECF No. 109.) Plaintiff opposes the motion, arguing it has "adequately stated" its federal and state law claims. (Pl.'s Opp'n to Defs.' Mot. to Dismiss ("Pl.'s 12(b)(6) Opp'n") 1:25-2:3; ECF No. 113.)

Further, Defendant Steven Vestbirk filed a motion to dismiss Defendants' TAC under Rule 12(b)(2), arguing Plaintiff has not alleged sufficient contacts with California to establish personal jurisdiction over Vestbirk. (Def.'s Mot. 1:22-24; ECF No. 112.) Plaintiff opposes the motion, arguing it is duplicative of Defendants' 12(b)(2) motion to dismiss. (ECF No. 117.)

For the reasons stated below, Defendants' 12(b)(1) motion to dismiss is granted in part and denied in part; Defendants' 12(b)(6) motion to dismiss is granted in part and denied in part; and Defendants' 12(b)(2) and Defendant Vestbirk's 12(b)(2) motions are denied as moot.

I. STANDING

Defendants argue in their 12(b)(1) dismissal motion that Plaintiff lacks Article III standing, since "Plaintiff, the uninjured investment advisor to the allegedly harmed underlying investor [MVP Fund of Funds Ltd. ('MVP')], simply cannot allege a valid assignment of MVP's purported claims to [MVP Asset Management (USA) LLC ('MVPAM']." (Defs.' 12(b)(1) Mot. 1:6-8.) Defendants argue:

Plaintiff alleges little else new [in the TAC], except that it was a "non-written agreement." As the agreement was not documented in any fashion, and did not result from oral communications between MVP and MVPAM, Plaintiff is left only with this coy characterization; the alleged agreement to assign, in other words, apparently exists only in the mind of MVPAM's principal: Michael Stratford.

Id. 8:13-17 (quoting TAC ¶ 87). Plaintiff opposes the motion, contending "MVPAM has specifically alleged that, pursuant to its management authority, it caused MVP to assign its claims against Defendants to MVPAM for collection." (Pl.'s 12(b)(1) Opp'n 2:17-19.) Defendants rejoin that Plaintiff's allegations are merely legal conclusions; specifically, Defendants argue "no fact concerning any purported manifestation is alleged. All that is alleged is that MVPAM 'caused' an assignment, ergo there was an assignment." (Pl.'s Reply to Defs.' 12(b)(1) Opp'n 3:24-3:25.)

"A suit brought by a plaintiff without Article III standing is not a 'case or controversy,' and an Article III federal court therefore lacks subject matter jurisdiction over the suit. In that event, the suit should be dismissed under Rule 12(b)(1)." Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004) (citation omitted).

[T]o satisfy Article III's standing requirements, a plaintiff must show that (1) it has suffered an "injury in fact" that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000). Plaintiff has the burden of establishing jurisdiction. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994).

"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). Here, Defendants challenge subject matter jurisdiction based on a facial attack. (Defs.' 12(b)(1) Mot. 9:17.) "In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction." Safe Air for Everyone, 373 F.3d at 1039. "[I]n reviewing a Rule 12(b)(1) motion to dismiss for lack of jurisdiction, we take the allegations in the plaintiff's complaint as true . . . and draw all reasonable inferences in [Plaintiff's] favor." Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004) (internal quotation marks and citations omitted).

Here, the parties dispute whether a valid assignment occurred, which is a question of state law. See Dolch v. United Cal. Bank, 702 F.2d 178, 181 (9th Cir. 1983) ("The nature and scope of renewal rights, as well as their assignability, are federal questions, but the conditions for valid assignment are not.") Since the parties agree that California law applies for purposes of the 12(b)(1) motion only, the Court will apply California law. (Defs.' 12(b)(1) Mot. 3:1 n.1.; Pl.'s 12(b)(1) Opp'n 4:3-9; see also 21X Capital, Ltd. v. Werra, 2008 WL 753907, at *2 (N.D. Cal. Mar. 19, 2008) ("The parties agree that, for purposes of this motion, California law applies.").)

Under California law, "[a] thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner." Cal. Civ. Code § 954. "While no particular form of assignment is necessary, the assignment, to be effective, must include manifestation to another person by the owner of his intention to transfer the right, without further action, to such other person or to a third person." Cockerell v. Title Ins. & Trust Co., 42 Cal. 2d 284, 291 (1954); see also Cal. Ins. Guarantee Ass'n v. Workers' Comp. Appeals Bd., 203 Cal. App. 4th 1328, 1335 (2012) (same). "[I]n the absence of a statute requiring that an assignment be in writing it is immaterial whether it is made orally or by writing." Swing v. Lingo, 129 Cal. App. 518, 523 (1933).

Plaintiff alleges the following concerning the assignment of its claims:

Plaintiff . . . is a Limited Liability Company organized and existing under the laws of the State of Delaware with its principal place of business until August 2009 in Tahoe City, California and since September 2009 in San Francisco, California. At all relevant times mentioned herein, MVPAM has been the investment manager to [MVP], an Investment Company organized and existing under the laws of the British Virgin Islands. On or about March 23, 2004, MVP and MVPAM entered into an Investment Management Agreement ("IMA") (a true and correct copy of which is attached hereto as Exhibit A and incorporated herein). Under the IMA, MVP, pursuant to MVP's Memorandum and Articles of Association ("M&A") (a true and correct copy of which is attached hereto as Exhibit B and incorporated herein), delegated to MVPAM a general power of attorney including all powers and discretions to manage the business and affairs of MVP. ...


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