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Lycurgan, Inc. v. Rood

United States District Court, Ninth Circuit

December 2, 2013

LYCURGAN, INC., dba ARES ARMOR, Plaintiff,
v.
RICHARD R. ROOD, JR., aka BRINK ROOD; BLOOD BROTHERS ARMORY, LLC; VISION ARMORY; and VISION ARMORY, LLC;, Defendants.

ORDER DENYING MOTION TO DISMISS FOR IMPROPER VENUE; DENYING MOTION TO TRANSFER FOR IMPROPER VENUE; GRANTING MOTION FOR CONVENIENCE TRANSFER

JEFFREY T. MILLER, District Judge.

Defendants Richard R. Rood, Jr., aka Brink Rood, Blood Brothers Armory, LLC ("BB Armory"), Vision Armory, and Vision Armory LLC ("VA) move to dismiss the complaint for improper venue, to transfer for improper venue to the United States District Court for the Northern District of Indiana, and for a convenience venue transfer to the Northern District of Indiana. Plaintiff Lycurgan, Inc., dba Ares Armor ("Ares"), opposes the motion. Pursuant to Local Rule 7.1(d)(1), the court finds this matter appropriate for decision without oral argument. For the reasons set forth below, the court denies the motion to dismiss for improper venue, denies the motion to transfer for improper venue, and grants the motion for a convenience transfer. The Clerk of Court is instructed to transfer this matter to the United States District Court for the Northern District of Indiana.

BACKGROUND

On August 26, 2013, Plaintiff commenced this action in the Superior Court of California, County of San Diego, seeking damages in excess of $75, 000. Plaintiff, a citizen of the State of California, alleges five state law causes of action against Defendants, citizens of the State of Indiana, for breach of contract, fraud - intentional representation, fraud - false promise, avoidance of intentionally fraudulent transfers, and avoidance of constructively fraudulent transfers. On October 17, 2013, Defendants removed this action based upon diversity of citizenship.

Ares commenced operations in Oceanside, California in 2010, manufacturing backpacks, slings and other textile-based equipment used by Marines and soldiers. (Compl. ¶12). In 2011 Plaintiff provided milled or cast aluminum metal parts to customers who desired to fabricate their own sport-utility firearms.

On February 7, 2013, Defendant Rood telephonically contacted Ares regarding the supply of various types of lower receivers. (Compl. ¶21). On February 13, 2013, Defendants provided Plaintiff with a sample receiver of the proposed "AR15 Cast 80%, 7075, anodized, .002"." (Compl. ¶23). The sample receiver allegedly conformed to Plaintiff's specification. Id . In order to take advantage of an increasing demand for firearms and products, on February 21, 2013, Plaintiff placed a purchase order for some 20, 000 AR15, 10, 000 AR10, and 10, 000 AR15 upper receivers. (Comp. ¶24). The purchased products were to be manufactured with 7075 aluminum, and tolerances of.002", and an eight-week delivery schedule. Plaintiff received a partial delivery after 12 weeks and found that the lower receivers allegedly were manufactured with inferior quality aluminum and did not comply with specified tolerances. (Compl. ¶¶27, 28).

Upon receipt of the initial delivery, Plaintiff provided notice of non-conformity to Defendants. On June 11, 2013, Dimitri Karras, the founder of Ares Armor, went to Indiana to meet with Defendant Rood, an alleged owner or manager of BB Armory and Vison Armory, to discuss the discrepancies with the ordered products. (Compl. ¶29). Defendant Rood represented that the discrepancies would be cured. Between May 31, 2013, and August 17, 2013, Plaintiff received an additional 12, 800 allegedly non-conforming units. (Compl. ¶33). On August 15, 2013, dimensional testing allegedly confirmed that the products shipped were non-conforming. (Compl. ¶34). While Plaintiff filed the state court complaint on August 26, 2013, it was not served on Defendants until September 17, 2013.

On September 5, 2013, Defendant BB Armory commenced an action against Ares in the Northern District of Indiana alleging six counts for breach of contract, one count for defamation, and a single count for false advertising (the "Indiana Complaint"). The Indiana Complaint sets forth a different version of the allegations than Ares. BB Armory alleges that Ares refused to honor its contractual obligations including the payment, exclusivity, and minimum annual purchase provisions. (Def's Exh. A, ¶4). The Indiana Complaint alleges that the products provided to Ares possessed identical specifications to the sample accepted by Ares. With respect to the June 11, 2013 meeting with Mr. Karras in Indiana, BB Armory represents that Ares' concern about the product centered on whether the AR15 uppers would line up with the AR15 lowers. When shown that the uppers lined up with the lowers, Mr. Karras allegedly accepted the products and instructed BB Armory "to send them even if they were out of specification." (Id. ¶¶46, 47).

On July 30, 2013, when Ares allegedly asserted that the products were out of specification, BB Armory requested that Ares provide them a copy of the report indicating that "the Spec Samples were out of [Ares'] Specifications and that they may pose a potential safety hazard, but none were ever provided." (Id. ¶56). BB Armory then had an independent third-party conduct tests to ensure the safety of the products. No safety problems were revealed by the testing that included firing 2, 000 rounds in two and a half minutes. (Id. ¶58). BB Armory further alleges that Ares, on or about May 30, 2013, began selling AR15 lowers made by other manufacturers in violation of the parties' exclusivity agreement. (Id. ¶66). The defamation claim allegedly arises from statements on Ares' website to the effect that BB Armory's AR15 lowers "were out of specification and were not safe to be turned into and used as a firearm." (Id. ¶¶67, 68).

DISCUSSION

The Motion to Dismiss or, Alternatively, to Transfer for Improper Venue

Defendants move to dismiss the complaint for improper venue or, alternatively, to transfer venue to the Northern District of Indiana pursuant to Federal Rule of Civil Procedure 12(b)(3). Defendants argue that venue, pursuant to the general venue statute, 28 U.S.C. §1391(b), is not appropriate in this district because all Defendants reside in Indiana, 28 U.S.C. §1391(b)(1), and a substantial part of the events giving rise to Plaintiff's claim occurred in California. These arguments are not persuasive.

In removal cases, 28 U.S.C. §1441(a) controls venue. Polizzi v. Cowles Magazines, Inc. , 345 U.S. 663, 665 (1953). Under this general removal statute, venue is proper in the district court "embracing the place where such action is pending." 28 U.S.C. §1441(a). As the San Diego Superior Court is ...


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