Cellura v. Dollinger ( 2024 )

1 2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 6 JOSEPH R. CELLURA, individually and derivatively on behalf of ADMI, INC., a 7 Nevada Corporation, Case No 3:24-cv-172-ART-CSD 8 Plaintiffs, ORDER ON MOTION TO v. REMAND (ECF No. 8) AND 9 MOTION TO DISMISS, DOUGLAS R. DOLLINGER, an individual, TRANSFER, OR STAY 10 THE LAW OFFICES OF DOUGLAS R. (ECF No. 4) DOLLINGER, P.C., & ASSOCIATES, New 11 York law firm, MICHASEL GHISELLI, an individual, and DOES 1-10, inclusive. 12 Defendants, 13 And ADMI, INC., a Nevada Corporation, 14 Nominal Defendant. 15 16 17 Plaintiff Joseph Cellura brings this lawsuit individually and derivatively on 18 behalf of ADMI, INC against Defendants Douglas Dollinger, the Law Offices of 19 Douglas R. Dollinger, P.C., & Associates, Michael Ghiselli, and Does 1-10, 20 inclusive. Plaintiff brings claims for breach of contract, breach of fiduciary duty, 21 negligence/professional malpractice, defamation, intentional interference with 22 contract and with prospective economic advantage, and for declaratory relief. 23 Plaintiff originally filed his complaint in the Second Judicial District Court 24 of the State of Nevada. (ECF No. 1 at 11.) Defendants subsequently removed the 25 action to federal court based on diversity jurisdiction under 28 U.S.C § 1332. 26 (ECF No. 1). Before this Court are Plaintiff’s motion to remand (ECF No. 8) and 27 Defendants’ motion to dismiss, stay, or transfer under the first-to-file rule (ECF 28 No. 4). The Court held oral argument on both motions on November 5, 2024. (ECF 1 No. 23.) 2 Because the Court finds that ADMI should be aligned as a Defendant in 3 this action, there is no diversity of parties, and the Court grants Defendants 4 motion to remand (ECF No. 8). The Court further denies as moot Defendants’ 5 motion to dismiss, stay, or transfer this action (ECF No. 4). 6 I. BACKGROUND 7 The facts pertinent to this motion revolve around a dispute regarding the 8 control and ownership of ADMI. Cellura’s complaint alleges that he is the rightful 9 majority shareholder and CEO of ADMI. (ECF No. 1 at 13). According to Cellura, 10 Defendant Ghiselli falsely purports that he himself is the CEO of ADMI and that 11 Cellura is not the majority shareholder, a contention Ghiselli does not dispute 12 (Id. at 13, 16; ECF No. 4 at 7.) Thus, Cellura alleges in his complaint, among 13 other claims, that Defendant Ghiselli is in breach of the ADMI bylaws and his 14 fiduciary duties for falsely contending to control ADMI. (Id. at 22-23.) 15 Additionally, prior to this lawsuit being commenced, an action was filed in the 16 Southern District of New York, (“S.D.N.Y. action”) in which Ghiselli, as both an 17 individual and on behalf of ADMI and other entities, as well as other plaintiffs 18 unrelated to this action, filed suit against Cellura and other defendants.1 19 II. MOTION TO REMAND 20 A defendant may only remove a case brought in state court if the federal 21 district court would have original jurisdiction over the case. 28 U.S.C. § 1441(a). 22 Federal courts “strictly construe the removal statute against removal 23 jurisdiction.” Hansen v. Grp. Health Coop., 902 F.3d 1051, 1056 (9th Cir. 2018) 24 (citing Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 25 1102, 1107 (9th Cir. 2010)). When removal is based on diversity jurisdiction 26 under 28 U.S.C § 1332, there must be complete diversity between the parties; 27 1 Banyon International Corporation n/k/a Global Brands Capital Corp, et al. v. 28 Joseph Cellura et al., No. 24-cv-859-KMK (S.D.N.Y. filed Feb. 6, 2024). 1 “Diversity removal requires complete diversity, meaning that each plaintiff must 2 be of a different citizenship from each defendant.” Grancare, LLC v. Thrower by & 3 through Mills, 889 F.3d 543, 548 (9th Cir. 2018) (citing Caterpillar Inc. v. Lewis, 4 519 U.S. 61, 68 (1996)). 5 Here, Plaintiff Cellura is a citizen of Nevada. Defendant Dollinger, as well 6 as his law firm, are citizens of New York and Defendant Ghiselli is a citizen of 7 California (ECF No. 8 at 3; ECF No. 1 at 5.) ADMI, Inc. is a citizen of Nevada 8 because it is incorporated in and has a principal place of business in Nevada. 28 9 U.S.C. § 1332(c)(1); (ECF No. 8 at 3.) Thus, whether ADMI is properly aligned as 10 a plaintiff or defendant in this action will determine whether there is complete 11 diversity between the parties. If ADMI is properly aligned as a plaintiff, diversity 12 remains. However, if ADMI is properly aligned as a defendant, then both Cellura 13 as a plaintiff and ADMI as a defendant are citizens of Nevada, and diversity is 14 destroyed. 15 A. Legal Standard 16 “Because a derivative lawsuit brought by a shareholder is ‘not his own but 17 the corporation's,’ the corporation ‘is the real party in interest’ and usually 18 properly aligned as a plaintiff.” In re Digimarc Corp. Derivative Litig., 549 F.3d 19 1223, 1234 (9th Cir. 2008) (quoting Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 20 518, 522–23 (1947)). However, an exception exists when the corporation’s 21 directors are antagonistic to the plaintiff. Id. When “the very individuals who have 22 a stranglehold over the corporation are the people against whom suit is sought 23 to be brought … in any sense that has any meaning they are the defendants for 24 that reason,” Id. (quoting Smith v. Sperling, 354 U.S. 91, 103 (1957)). For example, 25 where a plaintiff stockholder has demanded that the directors of a corporation 26 bring an action on behalf of the corporation and they have refused to do so, 27 antagonism is generally shown. Smith, 54 U.S. at 97; Swanson v. Traer, 354 U.S. 28 114 (1957). Antagonism will not be shown, however, where a stockholder plaintiff 1 has the power to oust the officers or directors opposed to the suit (such as when 2 the plaintiff is a majority shareholder), or where the corporation is “deadlocked” 3 and cannot take any action. See e.g. Taylor v. Swirnow, 80 F.R.D. 79, 84 (D. Md. 4 1978). Under Ninth Circuit precedent, “a court determining alignment is 5 permitted to “‘look beyond the pleadings’ to the actual interest of the parties” In 6 re Digimarc, 549 F.3d 1223, 1236 (9th Cir. 2008) (internal citations omitted). 7 B. Analysis 8 Cellura argues that antagonism exists because Defendant Ghiselli purports 9 to control ADMI and thus would oppose any demand by Cellura that ADMI bring 10 an action against himself and Dollinger. Defendants counter that antagonism 11 does not exist because 1) Plaintiff claims that he is a majority shareholder and 12 the CEO of ADMI and thus has control over the corporation, and 2) that the 13 corporation is deadlocked. 14 1) Plaintiff’s Claim that he is Majority Shareholder and CEO of ADMI 15 Defendants assert that because Plaintiff’s complaint pleads that he is the 16 majority shareholder and CEO of ADMI, he cannot be antagonistic to ADMI. 17 Plaintiff’s complaint states, “Plaintiff Joseph R. Cellura…is an officer, director, 18 and majority shareholder of ADMI, Inc…” and that Defendant Ghiselli is “a 19 minority shareholder of ADMI, a former director and officer of ADMI, and 20 currently purports to control ADMI as its Chief Executive Officer.” (ECF No. 1 at 21 13.) 22 Defendants cite Taylor v. Swirnow, 80 F.R.D. 79 (D. Md. 1978) and Irwin v. 23 W. End Dev. Co., 342 F. Supp. 687 (D. Colo. 1972), aff'd in part, rev'd in part, 481 24 F.2d 34 (10th Cir. 1973), for the proposition that where a plaintiff pleads that 25 they are the majority shareholder or controlling officer, the corporation cannot be 26 antagonistic and must be aligned as a plaintiff. However, Taylor and Irwin did not 27 deal with a situation in which actual control and ownership over the corporation 28 was at issue. In Taylor, it was not contested that plaintiffs were majority 1 shareholders. 80 F.R.D. at 84. In Irwin, the court found that after a decree in the 2 case was entered, plaintiffs would own a majority of stock – this also did not 3 appear contested. 342 F.Supp at 702. 4 Here, while Plaintiff has alleged that he is the rightful CEO and majority 5 shareholder of ADMI, he alleges that he does not have actual control over ADMI. 6 (ECF No. 8 at 4.) Defendants do not contest this. In support of this argument, 7 Plaintiff notes that Defendant Ghiselli, acting on behalf of ADMI, has brought suit 8 against Cellura in the S.D.N.Y. action. (ECF No. 17 at 5; ECF No. 4-4.) Based on 9 the allegations and facts presented to the Court, it appears that Defendant 10 Ghiselli, as opposed to Plaintiff Cellura, is currently acting on behalf of ADMI. As 11 Ghiselli is adverse to Cellura’s claim of control of ADMI, antagonism exists 12 between Plaintiff and Defendants who have current actual control over the 13 corporation. See In re Digimarc, 549 F.3d at 1234. 14 2) Defendants’ Claim that the Corporation is “Deadlocked” 15 Where a corporation is “disabled from acting in its own interest, for the 16 purpose of the alignment of parties it cannot be considered to be adverse to the 17 plaintiff.” Kartub v. Optical Fashions, Inc., 158 F. Supp. 757, 758 (S.D.N.Y. 1958). 18 A mere inability to act does not create antagonism, and in such a situation the 19 corporation should be considered a plaintiff. Id.; see also Duffey v. Wheeler, 820 20 F.2d 1161, 1163 (11th Cir. 1987); Gibson v. BoPar Dock Co. Corp., 780 F. Supp. 21 371, 375 (W.D. Va. 1991). However, if the deadlock is a result of a conscious 22 refusal to take action, antagonism may be found. See e.g. Trabucco v. Carlile, 57 23 F. Supp. 2d 1074, 1077 (D. Or. 1999)(overruled in part). 24 Defendants assert in their opposition that ADMI is deadlocked and thus 25 cannot be antagonistic to Cellura. Specifically, Defendants argue that Cellura’s 26 claim of power is causing a deadlock of ADMI’s operations: they cannot make 27 payments to beneficiaries or investor interest payments, or sell assets for debt 28 payment. (ECF No. 14 at 8-9.) However, Defendant Ghiselli conceded at oral 1 argument that despite the ownership dispute, ADMI is not deadlocked and Mr. 2 Ghiselli is in fact running ADMI. 3 The circumstances in this action indicate that ADMI is not deadlocked as 4 to this particular issue of corporate ownership and control. While ADMI does 5 seem to be facing operational difficulties, it is not unable to act as to this 6 ownership dispute. Put another way, there is no evidence that Ghiselli is disabled 7 from recognizing Cellura’s claim of ownership (regardless of its merits) – rather, 8 Ghiselli consciously denies Cellura’s claim. See Kartub, 158 F. Supp. at 758; 9 Trabucco, 57 F. Supp. 2d at 1077. Thus, the Court finds that ADMI is not 10 deadlocked so as to prevent a showing of antagonism. 11 Because antagonism exists and ADMI is not deadlocked, ADMI should be 12 properly aligned as a Defendant in this action. As both Plaintiff Cellura and 13 Defendant ADMI are citizens of Nevada, diversity does not exist between the 14 parties and this court lacks jurisdiction over this action pursuant to 28 U.S.C. § 15 1332. The Court thus grants Plaintiff’s motion to remand. 16 A. Defendants’ Request for Leave to Amend 17 In their response, Defendants request leave to amend their notice of 18 removal to add federal question jurisdiction as a basis for jurisdiction in this 19 Court. (ECF No. 14 at 15.) Defendants state “[i]t is clear from the Plaintiff[’s] 20 inclusion and discussion of the Plaintiff’s State Court allegation in his Motion to 21 Remand the matter involves securities fraud by Cellura concerning a federal 22 question.” (Id. at 16.) 23 Courts have generally held that after the thirty-day period in which a 24 defendant may remove an action to federal court, a petition for removal can be 25 amended only to clarify or correct the grounds for removal already stated, but “in 26 most circumstances, however, defendants may not add completely new grounds 27 for removal or furnish missing allegations, even if the court rejects the first- 28 proffered basis of removal.” 14C Wright & Miller, Federal Practice & Procedure § 1 3733 (Rev. 4th ed.). 2 Under Ninth Circuit precedent, a defendant is not permitted raise a new 3 ground for removal after the thirty-day removal period. O'Halloran v. Univ. of 4 Washington, 856 F.2d 1375, 1381 (9th Cir. 1988) (A petition for removal “cannot 5 be amended to add a separate basis for removal jurisdiction after the thirty-day 6 period.”); see also Villegas v. The Pep Boys Manny Moe & Jack of Cal., 551 F. 7 Supp. 2d 982, 992 (C.D. Cal. 2008) (action was removed on the basis of ERISA; 8 defendants could not later amend the removal petition to assert a ground for 9 removal under CAFA after the thirty-day removal period); Sullivan v. BNSF Ry. 10 Co., 447 F. Supp. 2d 1092, 1099 (D. Ariz. 2006) (defendant could not raise new 11 ground for removal in response to petition for removal after thirty-day period). 12 Plaintiff’s claim was filed in state court on March 15, 2024. (ECF No 1 at 13 12.) Defendants’ notice of removal, filed on April 15, 2024 was based on diversity 14 jurisdiction under 28 U.S.C § 1332, and did not raise federal question jurisdiction 15 under 28 U.S.C § 1331 as a basis for removal. (ECF No. 1 at 4-5.) Defendants 16 requested to amend their removal notice on June 12, 2024 (approximately 58 17 days after the filing of their removal notice). (ECF No. 14.) Thus, Defendants are 18 beyond the thirty-day removal period and may not amend their notice of removal 19 to include federal question jurisdiction as a basis. The Court accordingly denies 20 this request. 21 B. Personal Jurisdiction 22 In their response to Plaintiff’s motion to remand, Defendants assert for the 23 first time that there is no personal jurisdiction over them in Nevada. (ECF No. 14 24 at 7.) Defendants did not file a motion to dismiss for lack of personal jurisdiction, 25 but rather moved to dismiss for lack of personal jurisdiction in their responsive 26 briefing. (Id.) When a federal court has before it a motion to remand and a motion 27 to dismiss for lack of personal jurisdiction, the court has discretion in 28 determining which motion to resolve first. See Ruhrgas AG v. Marathon Oil Co., 1 526 U.S. 574, 575-576 (1999). “[I]n most instances “expedition and sensitivity to 2 state courts’ coequal stature should impel the federal court to dispose of 3 [the remand] issue first.” Id. at 576; see also Riggs v. Hecker, 325 F. Supp. 3d 4 1110, 1111 n. 1 (D. Nev. 2018), aff'd sub nom. Riggs v. Airbus Helicopters, Inc., 5 939 F.3d 981 (9th Cir. 2019) (declining to exercise discretion to review personal 6 jurisdiction before motion to remand where the subject matter jurisdiction 7 inquiry did not involve a complex question). 8 Because the Court has determined that it lacks subject matter jurisdiction 9 and will grant Plaintiff’s motion to remand, the Court will not consider whether 10 lack of personal jurisdiction is a defense or was properly raised in Defendants’ 11 response. 12 III. MOTION TO DISMISS, TRANSFER, OR STAY ACTION 13 Defendants’ motion to dismiss, transfer, or stay argues that because a 14 similar lawsuit was filed in S.D.N.Y. before the present case, the “first-to-file” rule 15 applies, and this action should be dismissed, transferred to S.D.N.Y., or stayed 16 pending the outcome of the S.D.N.Y. action. (ECF No. 4 at 11-14.) Because the 17 Court has determined that it lacks subject matter jurisdiction over this action 18 and is granting Plaintiff’s motion to remand to state court, the Court denies 19 Defendants’ motion as moot. 20 // 21 // 22 // 23 // 24 // 25 // 26 // 27 // 28 // 1 IV. CONCLUSION 2 It is therefore ordered that Plaintiffs motion to remand (ECF No. 8) is 3 || GRANTED. 4 It is further ordered that Defendants’ motion to dismiss, transfer, or stay 5 || this action (ECF No. 4) is DENIED AS MOOT. 6 It is further ordered that the Clerk of the Court is instructed to REMAND 7 || this case to the Second Judicial District Court in Washoe County, Nevada. 8 It is further ordered that the Clerk of the Court is instructed to CLOSE this 9 || case. 10 11 Dated this 18 day of November, 2024. 12 13 Ans paid iden 14 ANNE R. TRAUM 15 UNITED STATES DISTRICT JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28