Nuevos Destinos, LLC v. Samuel Peck

United States Court of Appeals
For the Eighth Circuit
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No. 20-1748
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Nuevos Destinos, LLC; Nuevos Destinos Peru, S.A.C.; William P. Cook
lllllllllllllllllllllPlaintiffs - Appellants
v.
Samuel Peck; Ignacio Harten Rodriguez Larrain; Marysol Salazar; Agricola
Peruana Del Sol, S.R.L.; SKE Midwestern, Inc.; Giuliana Pasquale; C&V Exports,
S.A.C.
lllllllllllllllllllllDefendants - Appellees
Jorge Harten Costa; Javier Rodriguez Larrain Salinas; Ofelia Maria Rodriguez
Larrain Salinas De Harten
lllllllllllllllllllllDefendants
Peruvian Organic International Trading S.A.C.
lllllllllllllllllllllDefendant - Appellee
Jorge Emilio Harten Rodriguez Larrain; Confactor S.A.C.
lllllllllllllllllllllDefendants
Gonzalo Rodriguez Larrain De Lavalle
lllllllllllllllllllllDefendant - Appellee
Convalor S.A.C.
lllllllllllllllllllllDefendant
Javier Urteaga
lllllllllllllllllllllDefendant - Appellee
Emilio Farah
lllllllllllllllllllllDefendant
Manuel Viduarre; Felipe Bedregal; Nilton Palacios Pozo; Antonio Salazar Salazar
lllllllllllllllllllllDefendants - Appellees
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Appeal from United States District Court
for the District of North Dakota - Eastern
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Submitted: February 17, 2021
Filed: June 9, 2021
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Before COLLOTON, BENTON, and KELLY, Circuit Judges.
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KELLY, Circuit Judge.
Plaintiffs Nuevos Destinos, LLC (NDL), Nuevos Destinos Peru, S.A.C. (NDP),
and William Cook (collectively, the Appellants) appeal the denial of their motion to
amend their complaint and the dismissal of their state law claims against various U.S.
and Peruvian defendants. Having jurisdiction under 28 U.S.C. § 1291, we affirm.
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I. Background
This case involves numerous parties and a detailed factual history, only some
of which is relevant to this appeal. NDL is a Florida limited liability company (LLC)
that purchases agricultural products in Peru and exports them to the United States and
other countries. NDP is a Peruvian corporation that purchases Peruvian agricultural
products on behalf of NDL. Cook, a United States citizen, is a principal of NDL who
allegedly “personally financed” the purchases of agricultural products at issue in this
action.
In 2012, the Appellants entered into business arrangements with the
defendants, a group that consists of a combination of natural persons and business
entities, for the purchase and export of Peruvian agricultural products. One of the
defendants, Ignacio Harten Rodriguez Larrain (Harten), was the General Manager of
Agricola Peruana Del Sol, S.R.L. (APS), a now-defunct Peruvian LLC that exported
Peruvian agricultural products. According to Appellants, Harten—the “central
mastermind” of an alleged racketeering enterprise—along with SKE Midwestern, Inc.
(SKE), a North Dakota corporation, Samuel Peck, a United States citizen and Vice
President of SKE, and the other defendants, fraudulently induced NDL to enter into
contracts with APS for the purchase and export of Peruvian agricultural products.
Appellants claim that although they spent $1,609,100 to purchase and to process
agricultural products, APS delivered only $238,907 worth of product to NDL, causing
Appellants to incur financial losses.
On October 30, 2015, Appellants filed the present action in the United States
District Court for the District of Columbia against SKE, Peck, APS, and 18 other
defendants, asserting civil Racketeer Influenced and Corrupt Organizations Act
(RICO) claims, 18 U.S.C. § 1962(c), (d), as well as related state law claims of fraud,
breach of contract, and conspiracy to commit fraud. Appellants alleged that the
district court had federal question subject matter jurisdiction over the civil RICO
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claims, see 28 U.S.C. § 1331; 18 U.S.C. § 1964(a), (c), and supplemental jurisdiction
over the remaining state law claims, see 28 U.S.C. § 1367(a). At no time did they
plead that the district court had diversity jurisdiction over their state law claims
pursuant to 28 U.S.C. § 1332(a)(3).
In February 2016, the nine defendants who had entered appearances, including
SKE and Peck, moved to dismiss the complaint on a number of grounds, including
improper service of process, lack of personal jurisdiction, failure to state civil RICO
claims, and lack of supplemental jurisdiction over the Appellants’ state law claims.
On January 2, 2019, the district court1 granted those defendants’ motions to dismiss.
On February 22, 2019, however, the court stayed its dismissal order and transferred
the case to the United States District Court for the District of North Dakota, finding
that transfer rather than dismissal was the more appropriate remedy due to SKE and
Peck’s contacts with North Dakota.
In June 2019, the same nine defendants renewed their motions to dismiss,
which the transferee district court2 granted on December 2, 2019. The court
dismissed seven defendants, finding that Appellants failed to properly serve them, see
Fed. R. Civ. P. 4(f), and that the court lacked personal jurisdiction over them, see
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011). It then
dismissed the civil RICO claims against SKE and Peck, finding that the complaint
failed to plead a continuous pattern of racketeering activity. See Crest Constr. II, Inc.
v. Doe, 660 F.3d 346, 356 (8th Cir. 2011) (“A pattern is shown through two or more
related acts of racketeering activity that amount to or pose a threat of continued
criminal activity.” (quoting Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 428 (8th
1
The Honorable Emmet G. Sullivan, United States District Judge for the
District of Columbia.
2
The Honorable Peter D. Welte, Chief Judge, United States District Court for
the District of North Dakota.
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Cir. 2009))). The court, left with only Appellants’ state law claims against SKE and
Peck, declined to exercise supplemental jurisdiction over those remaining claims and
dismissed them from the case.3 See 28 U.S.C. § 1367(c)(3) (“The district court[] may
decline to exercise supplemental jurisdiction over a claim . . . [if] the district court has
dismissed all claims over which it has original jurisdiction . . . .”).
On January 17, 2020, after more than four years of litigation, Appellants moved
for the first time to amend their complaint. They proposed to “allege with further
particularity facts” to show predicate racketeering acts sufficient to sustain their civil
RICO claims. The motion did not address the district court’s decision not to exercise
supplemental jurisdiction over their remaining state law claims, and Appellants did
not attach a proposed amended complaint with their motion. The district court denied
the motion on February 20, 2020, finding that Appellants failed to comply with the
court’s local rules, which require “[a] party filing a motion for leave of court to file
pleadings [to] file the proffered pleading as an attachment,” D.N.D. Civ. L. R. 5.1(C),
and moreover that “any amendment would be severely untimely, futile, and unfairly
prejudicial.”
3
“A district court’s decision whether to exercise [supplemental] jurisdiction
after dismissing every claim over which it had original jurisdiction is purely
discretionary.” Crest Constr. II, 660 F.3d at 359 (quoting Carlsbad Tech., Inc. v. HIF
Bio, Inc., 556 U.S. 635, 639 (2009)). The district court did not abuse its discretion
in declining to exercise supplemental jurisdiction. See id. (finding no abuse of
discretion where, as here, the defendants requested that the district court decline to
exercise supplemental jurisdiction over the remaining state law claims after
dismissing the federal RICO claims, and the plaintiffs failed to object or otherwise
respond to the defendants’ request); see also McManemy v. Tierney, 970 F.3d 1034,
1041 (8th Cir. 2020) (“[W]hen a district court has dismissed every federal
claim, . . . ‘judicial economy, convenience, fairness, and comity’ will usually ‘point
toward declining to exercise jurisdiction over the remaining state-law claims.’”
(quoting Wilson v. Miller, 821 F.3d 963, 970–71 (8th Cir. 2018))).
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On March 10, 2020, the district court dismissed the remaining 12 defendants,
dismissing five for Appellants’ failure to prosecute, see Fed. R. Civ. P. 41(b), six for
deficient service of process and lack of personal jurisdiction, and one (APS) after
dismissing Appellants’ civil RICO claims for failure to state a claim and after
declining to exercise supplemental jurisdiction over the remaining state law claims.
Appellants now appeal.
II. Discussion
On appeal, Appellants for the first time seek to abandon the basis of their initial
motion to amend4—to plead additional facts in support of their civil RICO claims—to
4
To the extent Appellants challenge the district court’s denial of their motion
to amend, we affirm the district court’s decision. We generally review the denial of
a motion for leave to amend for an abuse of discretion, reviewing de novo the legal
conclusions underlying a denial based on the futility of the proposed amendments.
See Crest Constr. II, 660 F.3d at 359. A court should grant a party leave to amend its
pleading at any time “when justice so requires.” Fed. R. Civ. P. 15(a)(2).
Nevertheless, “denial of leave to amend may be justified by undue delay, bad faith on
the part of the moving party, futility of the amendment or unfair prejudice to the
opposing party.” United States ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552,
557–58 (8th Cir. 2006) (quoting United States ex rel. Gaudineer & Comito, L.L.P. v.
Iowa, 269 F.3d 932, 936 (8th Cir. 2001)); see also In re Medtronic, Inc., Sprint Fidelis
Leads Prod. Liab. Litig., 623 F.3d 1200, 1208 (8th Cir. 2010) (“Post-dismissal
motions to amend are disfavored.”).
The district court did not abuse its discretion in denying Appellants leave to
amend. Appellants failed to submit a proposed amended pleading with their motion,
as required by the local rules. See O’Neil v. Simplicity, Inc., 574 F.3d 501, 505 (8th
Cir. 2009) (“A district court does not abuse its discretion in denying leave to amend
where a plaintiff has not followed applicable procedural rules.”). Moreover,
Appellants’ proposed amendments were untimely, relied on previously available
documents and facts, and would have been futile. See In re Medtronic, 623 F.3d at
1208.
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instead “delete” their RICO claims and assert the remaining state law claims of fraud,
breach of contract, and conspiracy to commit fraud against six defendants (including
SKE, Peck, and APS)5 based on diversity jurisdiction, see 28 U.S.C. § 1332(a)(3).
In their pleadings and motions briefing before the district court, Appellants
“consistently and exclusively” asserted supplemental jurisdiction as the basis for their
state law claims. Dubach v. Weitzel, 135 F.3d 590, 593 (8th Cir. 1998). They did not
seek to amend their complaint to recharacterize their state law claims as diversity-
based claims or to allege the citizenship of all 24 parties initially named in this action.
“Federal courts are courts of limited jurisdiction and the ‘threshold requirement
in every federal case is jurisdiction.’” Barclay Square Props. v. Midwest Fed. Sav.
& Loan Ass’n of Minneapolis, 893 F.2d 968, 969 (8th Cir. 1990) (quoting Sanders
v. Clemco Indus., 823 F.2d 214, 216 (8th Cir. 1987)); see also Gonzalez v. Thaler,
565 U.S. 134, 141 (2012) (“Subject-matter jurisdiction can never be waived or
forfeited.”). “The existence of federal jurisdiction ordinarily depends on the facts as
they exist when the complaint is filed.” Newman-Green, Inc. v. Alfonzo-Larrain, 490
U.S. 826, 830 (1989); see also Walker ex rel. Walker v. Norwest Corp., 108 F.3d 158,
161 (8th Cir. 1997) (noting that the party asserting diversity jurisdiction bears the
burden “to plead the citizenship of the parties”). We nevertheless have the discretion
to “allow the party asserting that subject matter jurisdiction exists to amend its
complaint on appeal to properly allege diversity of citizenship.” Barclay Square
Props., 893 F.2d at 969; see 28 U.S.C. § 1653 (“Defective allegations of jurisdiction
may be amended, upon terms, in the trial or appellate courts.”).
5
Appellants seek to assert their remaining state law claims against—in addition
to SKE, Peck, and APS—Harten, Marysol Salazar, and Peruvian Organic
International Trading S.A.C. (POIT). Appellants do not, however, challenge the
district court’s dismissal of the claims against those three defendants for deficient
service of process and lack of personal jurisdiction. We therefore need not consider
Appellants’ § 1653 motion to amend as to Harten, Salazar, and POIT.
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Looking to the totality of the circumstances, we decline to exercise our
discretion to permit Appellants to amend their complaint on appeal.6 This case
presents the unusual circumstance in which Appellants not only failed to plead
diversity jurisdiction in their complaint but also made no attempt to amend their
complaint to do so—in spite of the defendants’ jurisdictional challenges and the
district court’s decision not to exercise supplemental jurisdiction over the remaining
state law claims. This case does not involve merely a technical pleading error. See,
e.g., Reece v. Bank of N.Y. Mellon, 760 F.3d 771, 778 (8th Cir. 2014) (exercising
discretion under § 1653 to amend a defective complaint that alleged diversity of
residence rather than diversity of citizenship under 28 U.S.C. § 1332); Nat’l Farmers
Union Prop. & Cas. Co. v. Fisher, 284 F.2d 421, 422–23 (8th Cir. 1960) (same).
Rather, Appellants seek to amend entirely the jurisdictional basis for their remaining
state law claims—in addition to dropping their two civil RICO claims and 15 of 21
defendants—for the first time on appeal. Appellants had notice as early as 2016 that
the district court could decline to exercise supplemental jurisdiction over their state
law claims if it dismissed their civil RICO claims. As such, Appellants had a
reasonable opportunity—indeed, years—to allege diversity jurisdiction in the district
court but failed to do so. Permitting Appellants to amend their defective pleadings
6
Appellants seek to allege diversity jurisdiction under 28 U.S.C. § 1332(a)(3),
which confers to district courts “original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or value of $75,000, exclusive of interest and
costs, and is between . . . citizens of different States and in which citizens or subjects
of a foreign state are additional parties.” Our court has not had the occasion to
construe the requirements of § 1332(a)(3), but for purposes of this appeal, we assume
without deciding that the presence of foreign parties from the same country on both
sides of the action does not destroy diversity. See Tango Music, LLC v. DeadQuick
Music, Inc., 348 F.3d 244, 245–46 (7th Cir. 2003); cf. Dresser Indus., Inc. v.
Underwriters at Lloyd’s of London, 106 F.3d 494, 497 (3d Cir. 1997); Transure, Inc.
v. Marsh & McLennan, Inc., 766 F.2d 1297, 1298 (9th Cir. 1985). Therefore, we
assume that Appellants would be able to base their claims on diversity jurisdiction
even though there are Peruvian parties on both sides of the action.
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this late in the game would be unfair to the defendants. See Dubach, 135 F.3d at 593;
cf. Sarnoff v. Am. Home Prods. Corp., 798 F.2d 1075, 1079 (7th Cir. 1986) (noting
§ 1653 “presupposes that the parties, not suspecting a jurisdictional difficulty, had no
reasonable opportunity to cure it before the appeal”), superseded on other grounds by
Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955 (7th Cir. 1998); Mills v. State
of Maine, 118 F.3d 37, 53 (1st Cir. 1997) (“[W]here a party has had an opportunity
to seek to amend its pleadings in the district court, it is not appropriate for that party
belatedly to seek leave to amend on appeal pursuant to 28 U.S.C. § 1653.”).
III. Conclusion
For the foregoing reasons, we decline to grant Appellants leave to amend the
jurisdictional basis of their claims on appeal, and we affirm the judgment of the
district court.
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