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International Venture Associates v. Hawayek

United States District Court, Ninth Circuit

June 12, 2013

INTERNATIONAL VENTURE ASSOCIATES, a United Kingdom partnership, Plaintiff,
v.
JOSEPH HAWAYEK, an individual, Defendant.

ORDER GRANTING MOTION TO DISMISS

RICHARD SEEBORG, District Judge.

I. INTRODUCTION

This action concerns an alleged breach of an alleged partnership agreement. Six claims for relief are asserted: (1) Breach of fiduciary duty; (2) Fraudulent concealment; (3) Intentional interference with Contract; (4) Intentional interference with economic advantage; (5) Quantum Meruit; and (6) Unfair Business Practices in violation of California Business and Professions Code § 17200 et seq., Defendant moves to dismiss the action for lack of federal subject matter jurisdiction on the basis of lack of diversity jurisdiction or, in the alternative, for forum non conveniens. Pursuant to Civil Local Rule 7-1(b), this matter has been taken under submission and decided without oral argument. For the following reasons, the motion to dismiss shall be granted.

II. BACKGROUND

Plaintiff International Venture Associate (a partnership) ("IVAP") was allegedly formed in the United Kingdom by Dan Lavin, Marco Toja and defendant Joseph Hawayek for the purpose of providing business development, strategy, research, and advisory services to major media companies. If Hawayek was ever a partner, he is no longer. Hawayek owns and manages International Venture Associates, Inc., ("IVA, Inc.)" a California corporation. The Complaint alleges that Hawayek abused his fiduciary duties by diverting to himself business that IVAP had negotiated with a third party, British Sky Broadcasting Limited ("BSkyB"). Specifically, the Complaint alleges Hawayek modified the contract from listing BSkyB and "International Ventures Associates (a partnership)" as parties to the contract to instead listing "International Venture Associates, Inc., " his California corporation, as party to the contract. IVAP asserts this change was made after Hawayek was no longer a partner and without the partnership's approval. The Complaint further asserts that, while IVAP provided services to BSkyB, payments were made to Hawayek's California bank account and Hawayek has failed to credit IVAP for the services provided.

IVAP asserts that, in October 2012, it engaged in mediation with BSkyB. After mediation was unsuccessful, it initiated legal action in California Superior Court in San Mateo against both BSkyB and Hawayek. BSkyB moved to dismiss on basis of forum non conveniens, and the motion was granted, finding England to be the proper forum. IVAP then initiated the present case in federal court against Hawayek only. Hawayek insists the decision to proceed against himself only was a strategic one, but that the action arises out of the same contract as was at issue in the Superior Court case. IVAP, however, insists that contract with BSkyB is only tangentially relevant to this case, as the present claims arise out of Hawayek's conduct with respect to the partnership.

Defendant Hawayek is a resident of, and domiciled in San Mateo County, California. Lavin is a United States citizen residing in the United Kingdom, but declares he is domiciled in Ohio. Toja, an unactive member of the alleged partnership, is a resident of Switzerland.

III. LEGAL STANDARD

Federal district courts have original jurisdiction over civil actions in which the matter in controversy exceeds $75, 000, exclusive of interest and costs, and is between "citizens of different States." 28 U.S.C. § 1332(a)(1). To demonstrate citizenship for diversity purposes, a party must (a) be a Citizen of the United States, and (b) be domiciled in the United States. Lew v. Moss, 797 F.2d 747, 749 (9th Cir. 1986). A United States citizen domiciled abroad is not domiciled in a State and is therefore "stateless." Swiger v. Allegheny Energy, Inc., 540 F.3d 179, 184 (3d Cir. 2008). A "stateless" individual cannot sue or be sued in federal court under 28 U.S.C. § 1332(a)(1). Id. The party asserting diversity jurisdiction bears the burden of proof. Resnik v. La Paz Guest Ranch, 289 F.2d 814, 819 (9th Cir. 1961).

A party is "domiciled" in the location in which he or she has established a "fixed habitation or abode" and the person must have "an intention to remain there permanently or indefinitely." Owens v. Huntling, 115 F.2d 160, 162 (9th Cir. 1940). A party's old domicile is not lost until a new one is acquired. Barber v. Varleta, 199 F.2d 419, 423 (9th Cir.1952). A change in domicile requires the confluence of (a) physical presence at the new location with (b) an intention to remain there indefinitely. See Owens, 115 F.2d at 162. The existence of domicile for purposes of diversity is determined as of the time the lawsuit is filed. Hill, 615 F.2d at 889.

Determination of an individual's domicile involves a number of factors, including: "current residence, voting registration and voting practices, location of personal and real property, location of brokerage and bank accounts, location of spouse and family, membership in unions and other organizations, place of employment or business, driver's license and automobile registration, and payment of taxes." Lew, 797 F.2d at 750. Statements concerning an individual's intent to change domiciles are accorded little weight when they conflict with objective facts. Id. (defendant's deposition regarding his alleged domicile in Hong Kong given little weight because his wife and children still lived in the United States). While physical presence is central, no one factor is controlling. Rice v. Thomas, 64 F.Appx. 628 (9th Cir. 2003).

A partnership is considered a citizen of every State in which its individual members are citizens. Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 569 (2004). Hence, if one of the partners were "stateless, " the partnership could not sue or be sued in federal court because the partnership would also be "stateless" and lack diversity jurisdiction under 28 U.S.C. § 1332(a)(1). See ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 316 F.3d 731, 733 (7th Cir. 2003) (diversity jurisdiction unavailable because one of the partners was a U.S. citizen domiciled in Canada).

IV. DISCUSSION

Hawayek argues this Court lacks subject matter jurisdiction to hear this case, as plaintiff has not established diversity jurisdiction. Hawayek insists Lavin's declaration that he is domiciled in Ohio is unsubstantiated and a ...


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