Texaz Star Turbines, Inc. v. Turbine Powered Technology LLC ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JAN 11 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
TEXAZ STAR TURBINES, INC., No. 21-17120
Plaintiff-Appellant, D.C. No. 3:20-cv-08071-SMB
v.
MEMORANDUM*
TURBINE POWERED TECHNOLOGY,
LLC, a Louisiana limited liability company;
TED MCINTYRE,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Arizona
Susan M. Brnovich, District Judge, Presiding
Argued and Submitted December 5, 2022
Phoenix, Arizona
Before: WARDLAW and BUMATAY, Circuit Judges, and SCHREIER,** District
Judge.
Texaz Star Turbines, Inc. (“Texaz Star”) appeals the district court’s grant of
the motion to dismiss its complaint against Turbine Powered Technology, LLC
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Karen E. Schreier, United States District Judge for the
District of South Dakota, sitting by designation.
(“Turbine Powered”) and Ted McIntyre.
In October 2019, Texas Star Turbines, Inc. (“Texas Star”) filed a breach of
contract suit against appellees, Turbine Powered and Ted McIntyre, in Arizona
state court. The complaint alleges that appellees failed to make all of their
payments on an airplane equipment sales contract they entered into with Texas Star
in 2013. After appellees moved to dismiss the lawsuit in state court, Texaz Star
filed an amended complaint, replacing Texas Star as the plaintiff and alleging that
Texas Star had assigned its rights to Texaz Star. Appellees then removed the case
to the United States District Court for the District of Arizona. The district court
later dismissed Texaz Star’s first amended complaint for failure to state a claim
because “the contract, entered 15 years after [Texas Star] was terminated, is not
valid.” It further reasoned that “[s]ince the original contract entered by [Texas
Star] was not valid, then [Texaz Star] cannot assert a cause of action for its
breach.” Texaz Star moved to reconsider its dismissal and to extend the deadline
to file a second amended complaint. The district court denied both motions.
Texaz Star now appeals.
We have jurisdiction under 28 U.S.C. § 1291, and we remand the case to the
district court to (1) determine whether Texaz Star has Article III standing to bring
its suit against appellees; and (2) if so, whether Texaz Star has the capacity to sue
in a federal district court in Arizona.
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1. Standing. Article III, § 2, of the Constitution restricts the federal “judicial
Power” to resolving “Cases” and “Controversies.” Sprint Commc’ns Co., v. APCC
Servs., Inc., 554 U.S. 269, 273 (2008). For there to be a case or controversy, the
plaintiff must have standing to sue. See, e.g., Spokeo, Inc. v. Robins, 578 U.S. 330,
338 (2016). Standing is a jurisdictional requirement, and thus federal courts must
determine whether a plaintiff has standing at any and every point in the litigation
before addressing the arguments on the merits. See Steel Co. v. Citizens for a
Better Env’t, 523 U.S. 83, 93 (1998). Parties can never waive jurisdictional
defects, and federal courts are obligated to consider them sua sponte. Gonzalez v.
Thaler, 565 U.S. 134, 141 (2012).
For an assignee to have standing, it must show that its assignor had Article
III standing. Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz.,
Inc., 770 F.3d 1282, 1291 (9th Cir. 2014). That is because an assignee simply
“stands in the shoes of the assignor[.]” Misic v. Bldg. Servs. Emps. Health &
Welfare Tr., 789 F.2d 1374, 1378 n.4 (9th Cir. 1986).
Here, the district court did not determine Texas Star’s precise status under
Texas law. Specifically, the record is unclear whether Texas Star is a forfeited or
dissolved corporation according to Texas law. Although we make no
determination on Texas Star’s Article III standing, such standing may be affected
by its status as a forfeited or dissolved corporation. We remand to the district court
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to determine Texas Star’s status under Texas law and whether it, as an assignor,
had Article III standing to confer standing on assignee Texaz Star.
2. Capacity to Sue. Even if Texaz Star has Article III standing, Appellees
argue that Texaz Star lacks capacity to sue because Texas Star, its assignor, could
not sue in Texas state courts due to its forfeited status. See Tex. Tax Code Ann.
§ 171.252 (denying forfeited corporations “the right to sue or defend in a court of
this state.”). A party’s capacity to sue is different from standing. See In re Krause,
546 F.3d 1070, 1072 n.2 (9th Cir. 2008). If Texaz Star can establish standing, then
the district court must determine whether Texaz Star, as assignee of Texas Star, has
capacity to sue in Arizona federal district court. We do not limit consideration of
the capacity-to-sue issue and allow Texaz Star to raise defenses to that issue, such
as waiver.
3. Capacity to Contract. The district court dismissed Texaz Star’s first
amended complaint based on its view that Texas Star had no capacity to enter into
contracts. Texaz Star moved the district court to reconsider its decision, citing
Transamerica Corp v. Braes Woods Condo Ass’n, Inc., 580 S.W.3d 733 (Tex.
App. 2019) and Ross Amigos Oil Co. v. State, 138 S.W.2d 798 (1940). The district
court denied appellant’s motion to reconsider on the ground that appellant failed to
raise and argue these two cases in its original opposition to appellees’ motion to
dismiss. On remand, if the district court finds that Texaz Star has Article III
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standing, the district court should reconsider its original analysis in light of these
two cases.
We vacate the dismissal of Texaz Star’s complaint and remand to the district
court for consideration consistent with this decision
VACATED AND REMANDED.
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