Delivery Financial Services LLC v. Lemberg Law LLC ( 2019 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Delivery Financial Services, L.L.C., No. CV-18-04242-PHX-ESW 10 Plaintiff, ORDER 11 v. 12 Lemberg Law LLC, 13 Defendant. 14 15 On March 27, 2019, the Court granted in part and denied in part Defendant’s 16 Motion to Dismiss (Doc. 22). (Doc. 27). Defendant moved for reconsideration of that 17 Order, which the Court denied. (Doc. 33). On June 10, 2019, with leave of the Court, 18 Plaintiff filed a First Amended Complaint (Doc. 34). Pending before the Court is 19 Defendant’s Motion to Dismiss (Doc. 35). 20 I. DISCUSSION 21 A. Subject Matter Jurisdiction 22 The Court’s March 27, 2019 Order found that the original Complaint inadequately 23 invoked diversity jurisdiction as the Complaint failed to sufficiently allege an amount in 24 controversy greater than $75,000. (Doc. 27 at 5). Defendant’s Motion to Dismiss asserts 25 that the First Amended Complaint fails to correct that deficiency. (Doc. 35-1 at 7-10). 26 The original Complaint made the conclusory assertion that the amount in 27 controversy exceeds $75,000, but did not allege any facts to support this assertion. (Doc. 28 1 at 2). The First Amended Complaint includes the allegation that “[o]ne of the 1 Plaintiff’s existing clients informed Plaintiff of the content of Defendant’s website. After 2 reviewing the content, the existing client terminated its contract with Plaintiff. The 3 termination resulted in a loss of revenue in excess of $300,00 on an annual basis.” (Doc. 4 34 at 3, ¶ 13). The First Amended Complaint also alleges that “since the libelous 5 publication by Defendant, Plaintiff has suffered a decline in its annual growth of 6 healthcare clients in excess of $75,000.” (Id., ¶ 14). Because Defendant has presented a 7 facial attack on subject matter jurisdiction, the Court assumes that the allegations in the 8 First Amended Complaint are true and the Court draws all inferences in Plaintiff’s favor.1 9 Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). The Court finds that the First 10 Amended Complaint corrects the deficiencies in the original Complaint regarding 11 diversity jurisdiction. 12 B. Standing 13 Defendant asserts that Plaintiff “lacks standing because it has not established a line 14 of causation between Lemberg’s actions and its alleged harm.” (Doc. 35-1 at 11). Yet 15 Paragraph 13 of the First Amended Complaint may be reasonably interpreted as alleging 16 that one of Plaintiff’s clients terminated its contract with Plaintiff as a direct result of 17 reading Defendant’s website. (Doc. 34 at 3, ¶ 13). The Court finds that the First 18 Amended Complaint sufficiently asserts that Defendant’s actions caused Plaintiff 19 damages. 20 C. Statute of Limitations 21 In its Motion to Dismiss, Defendant also asserts that all three counts of the First 22 Amended Complaint must be dismissed on statute of limitations grounds. (Doc. 35-1 at 23 12-14). A statute of limitations defense “may be raised by a motion to dismiss . . . [i]f the 24 running of the statute is apparent on the face of the complaint.” Jablon v. Dean Witter & 25 Co., 614 F.2d 677, 682 (9th Cir. 1980) (citing Graham v. Taubman, 610 F.2d 821 (9th 26 Cir. 1979)). “While a statute of limitations defense may be raised by a motion to dismiss, 27 1 “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 28 factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Wolfe, 392 F.3d at 362. 1 a complaint cannot be dismissed unless it appears beyond doubt that the plaintiff can 2 prove no set of facts that would establish the timeliness of the claim.” Seitz v. Rheem 3 Mfg. Co., 544 F. Supp. 2d 901, 910 (D. Ariz. 2008) (internal quotation marks and citation 4 omitted). 5 Plaintiff does not dispute that a one-year limitations period applies to the claims 6 presented in the First Amended Complaint. Here, the First Amended Complaint alleges 7 that Defendant published libelous statements on the Internet “on November 15, 2018, and 8 preceding and succeeding dates.” (Doc. 34 at 1, ¶ 1). This action was filed on November 9 28, 2018. Dismissal on statute of limitations grounds is not appropriate at this time as 10 Plaintiff may be able to prove a set of facts that would establish the timeliness of its 11 claims. Seitz, 544 F.Supp.2d at 910. 12 D. Counts I and II of the First Amended Complaint: Libel Per Se and Libel 13 Counts I and II of the First Amended Complaint present libel per se and libel 14 claims. “According to Arizona law, libel and slander are classified as either per se or per 15 quod.” Ultimate Creations, Inc. v. McMahon, 515 F. Supp. 2d 1060, 1067 (D. Ariz. 16 2007) (citing Boswell v. Phoenix Newspapers, Inc., 730 P.2d 178, 183 n.4 (Ariz. Ct. App. 17 1985)). “A communication is libel per se if on its face it tends to impeach one’s honesty, 18 integrity, or reputation. If a communication is libelous only by considering extrinsic 19 information, then it is considered libel per quod.” Id. (internal quotation marks and 20 citation omitted). A claim for libel requires a plaintiff to plead pecuniary damages. Id. 21 Damages are presumed with respect to a libel per se claims. Id. 22 Assuming the truth of all facts alleged in the First Amended Complaint and 23 construing them in the light most favorable to Plaintiff, the Court finds that Counts I and 24 II sufficiently state claims for libel per se and libel. Defendant’s Motion to Dismiss 25 (Doc. 35) is denied as to Counts I and II. 26 E. Count III of the First Amended Complaint: Negligent Misrepresentation 27 Count III of the First Amended Complaint is labeled as a negligent 28 misrepresentation claim. (Doc. 34 at 4, ¶ 20). “Under Arizona law, a defendant is liable || for negligent misrepresentation when he or she negligently provides false information to 2|| another in the course of his business or employment and the other party, justifiably relying on this false information, incurs damages.” Allstate Life Ins. Co. v. Robert W. 4|| Baird & Co., 756 F. Supp. 2d 1113, 1165-66 (D. Ariz. 2010) (citing PLM Tax Certificate 5|| Program 1991-92, L.P. v. Schweikert, 162 P.3d 1267, 1270 (Ariz. Ct. App. 2007)). The || Court concurs with Defendant’s argument that the First Amended Complaint fails to adequately allege that Plaintiff or a third party incurred damages because they relied on || the allegedly false information published on Defendant’s website. (Doc. 35-1 at 20). 9|| The Court grants Defendant’s Motion to Dismiss (Doc. 35) as to Count III of the First 10 || Amended Complaint. 11 Il. CONCLUSION 12 Based on the foregoing, 13 IT IS ORDERED denying in part and granting in part Defendant’s Motion to 14|| Dismiss (Doc. 35) as set forth herein. 15 IT IS FURTHER ORDERED dismissing Count I] of the First Amended 16 || Complaint. 17 Dated this 27th day of August, 2019. ; . 18 Eileen 5. Willett 19 United States Magistrate Judge 20 21 22 23 24 25 26 27 28 _4-