DALE A. DROZD, District Judge.
This matter comes before the court on a motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6), and a motion for attorney's fees and costs both brought on behalf of defendants Western States International, Inc. ("WSI") and Ingrid Aliet-Gass. A hearing on these motions was held February 16, 2016. Joseph M. Hoats appeared in person on behalf of plaintiff Inviron Technologies, Inc. ("Inviron"). Anthony Alexander Gorman appeared telephonically on behalf of defendants WSI and Aliet-Gass. The court has considered the parties' briefs
Plaintiff Inviron commenced this action on October 23, 2015.
In or around August 2012, Riverwood was sold to defendant Jose Miguel Aguilar and later transferred to defendant Anthony Aguilar in December 2012. (Id. ¶ 88.) Riverwood then sold or assigned its interest in the JOA to plaintiff Inviron. (Id. ¶ 102.) Plaintiff Inviron's complaint generally seeks a declaratory judgment finding that: (1) the agreement between Inviron and Riverwood — the JOA separately, or in combination with the LOI — is valid and is the only enforceable agreement relating to the land leases in question; (2) defendants WSI and Aliet-Gass are in breach of the agreement; (3) as a result of the breach, plaintiff is entitled to certain rights and remedies under the agreement; and (4) an assignment of rights, dated 2006, between defendants WSI and Tearlach Resources Ltd., is invalid. Plaintiff also appears to seek injunctive relief as to defendants WSI and Aliet-Gass, as well as mandamus relief against federal and state agencies.
Plaintiff Inviron asserts that this court has federal subject matter jurisdiction — both diversity jurisdiction and subject matter jurisdiction — over the claims set out in its complaint. In particular, Inviron contends that this court has subject matter jurisdiction because the U.S. Department of the Interior, Bureau of Land Management originally issued the land leases in question to defendant WSI, pursuant to the Mineral Leasing Act of 1920, 30 U.S.C. § 181 et seq.
On December 21, 2015, defendants WSI and Aliet-Gass filed the instant motion to dismiss plaintiff's claims. (Doc. No. 25.) On December 28, 2015, defendants filed an addendum to their motion. (Doc. No. 28.) Separately, defendant Derek Willshee, proceeding pro se, filed a request for dismissal. (Doc. Nos. 17, 21.) To the extent the instant motion to dismiss covers claims also alleged against defendant Willshee, the court will liberally interpret defendant Willshee's request for dismissal as a joinder in this motion. See Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 1985) (en banc).
In addition, on December 28, 2015, defendants WSI and Aliet-Gass filed a motion for attorney's fees and costs. (Doc. No. 29.) Defendants' motion essentially seeks the imposition of sanctions against plaintiff and its counsel, pursuant to both 28 U.S.C. § 1927 and the district court's inherent power to impose sanctions, for allegedly frivolous and bad-faith behavior related to the filing of the complaint in this case.
Defendants move to dismiss plaintiff's claims for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. Rule 12(b)(1) allows a defendant to raise the defense, by motion, that the court lacks jurisdiction over the subject matter of an entire action or of specific claims alleged in the action.
When a party brings a facial attack to subject matter jurisdiction, that party contends that the allegations of jurisdiction contained in the complaint are insufficient on their face to demonstrate the existence of jurisdiction. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a Rule 12(b)(1) motion of this type, the plaintiff is entitled to safeguards similar to those applicable when a Rule 12(b)(6) motion is made. See Sea Vessel Inc. v. Reyes, 23 F.3d 345, 347 (11th Cir. 1994); Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). Accordingly, the factual allegations of the complaint are presumed to be true, and the motion is granted only if the plaintiff fails to allege an element necessary for subject matter jurisdiction. Savage v. Glendale Union High Sch. Dist. No. 205, 343 F.3d 1036, 1039 n.1 (9th Cir. 2003); Miranda v. Reno, 238 F.3d 1156, 1157 n.1 (9th Cir. 2001). Nonetheless, district courts "may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment" when resolving a facial attack. Safe Air for Everyone, 373 F.3d at 1039.
When a Rule 12(b)(1) motion attacks the existence of subject matter jurisdiction, however, no presumption of truthfulness attaches to the plaintiff's allegations. Thornhill Publ'g, 594 F.2d at 733. "[T]he district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction." McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988). When a Rule 12(b)(1) motion attacks the existence of subject matter jurisdiction in fact, plaintiff has the burden of establishing that such jurisdiction does in fact exist. Thornhill Publ'g., 594 F.2d at 733.
District courts have original jurisdiction of civil actions where the matter in controversy exceeds $75,000 and where the suit is between (1) citizens of different states; (2) citizens of a state and citizens or subjects of a foreign state; (3) citizens of different states in a suit in which citizens or subjects of a foreign state are additional parties; or (4) a foreign state as plaintiff and citizens of a state or of different states. 28 U.S.C. § 1332(a).
Complete diversity is required, and one instance of common citizenship between plaintiffs and defendants will prevent federal diversity jurisdiction. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005) ("[W]e have consistently interpreted § 1332 as requiring complete diversity: In a case with multiple plaintiffs and multiple defendants, the presence in the action of a single plaintiff from the same State as a single defendant deprives the district court of original diversity jurisdiction over the entire action."); Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 679 (9th Cir. 2006) ("[T]he Supreme Court has repeatedly held, and recently reiterated, that § 1332(a) requires complete diversity. . . ."). Diversity is determined by the state of facts that existed when the case was filed. Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 570-71 (2004).
In this case, plaintiff alleges that this court has diversity jurisdiction over the claims presented in its complaint pursuant to § 1332(a)(1). However, it is clear that plaintiff and at least three defendants are citizens of California. Indeed, according to the allegations of plaintiff's complaint, plaintiff Inviron and defendants Riverwood and Riverwood Gas and Oil, LLC are all California corporations, while defendant Aliet-Gass is a citizen of California. (Doc. No. 1 at 5-6.) The common citizenship of plaintiff and at least one defendant prevents federal diversity jurisdiction over this suit.
Under 28 U.S.C. § 1331, district courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." An action "arises under" federal law pursuant to § 1331 if the cause of action is (1) created by federal law, or (2) necessarily requires resolution of a substantial question of federal law. Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg. 545 U.S. 308, 314 (2005); Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006). Under the "well-pleaded complaint" rule, courts look to what "necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything in anticipation of avoidance of defenses which it is thought the defendant may interpose." California v. United States, 215 F.3d 1005, 1014 (9th Cir. 2000).
Here, plaintiff principally alleges that this court has federal question jurisdiction because its claims relate to federal land leases granted pursuant the Mineral Leasing Act:
(Doc. No. 1 at 11 (emphasis in original).) But plaintiff fails to demonstrate, either in its complaint or at oral argument on the pending motion, how defendants' actions violate the Mineral Leasing Act or how plaintiff's right to relief is otherwise derived from federal law. See, e.g., Naartex Consulting Corp. v. Watt, 542 F.Supp. 1196, 1202 (D.D.C. 1982) ("Congress did not intend to create a private right of action to police against transgressions of the [Mineral Leasing] Act by private parties."), aff'd, 722 F.2d 779 (D.C. Cir. 1983). Specifically, plaintiff's claims are all rooted in disputes over the terms of contract agreements between private parties — not the land leases themselves. Plaintiff's complaint does not point to a specific federal statute that would guide this court in the resolution of the parties' contract dispute.
To the extent plaintiff argues that these state law claims require resolution of a substantial question of federal law, it must show that the state-law claim necessarily raises a federal issue, the federal issue is actually disputed and substantial, and the exercise of federal jurisdiction would not disturb "any congressionally approved balance of federal and state judicial responsibilities." Grable & Sons, 545 U.S. at 314. Here, plaintiff's complaint is silent as to what substantial federal issue must be decided to resolve any of its claims. Because plaintiff has failed to establish a basis sufficient to confer subject matter jurisdiction on this court, this case must be dismissed.
Defendants' motion for attorney's fees and costs amounts to a motion for sanctions under both 28 U.S.C. § 1927 and the court's inherent authority. In summary, defendants enumerate the following bases for the imposition of sanctions against plaintiff and its counsel:
(Doc. No. 29 at 2-6.) For the reasons set forth below, the court declines to impose sanctions.
Under 28 U.S.C. § 1927, "[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." However, § 1927 applies only to conduct once a lawsuit has commenced, and cannot be applied to an initial pleading. In re Keegan Mgmt. Co., Sec. Litig., 78 F.3d 431, 435 (9th Cir. 1996). Defendants` allegations of opposing counsel's prelitigation misconduct and misconduct in other proceedings cannot give rise to sanctions under § 1927. See, e.g., GRiD Systems Corp. v. John Fluke Mfg. Co., Inc., 41 F.3d 1318, 1319 (9th Cir. 1994) (finding conduct in a state court is not subject to the district court's sanctioning power under § 1927). To the extent defendants suggest misconduct by counsel in this case, those allegations are limited only to the filing of the complaint. Thus, the court finds no basis for the imposition sanctions under § 1927.
Federal courts have the inherent authority to sanction conduct abusive of the judicial process. See Chambers v. NASCO, Inc., 501 U.S. 32, 43-45 (1991). The inherent power to impose sanctions against attorneys includes situations where there is bad faith litigation or willful disobedience of court rules or orders. See Zambrano v. City of Tustin, 885 F.2d 1473, 1481-82 (9th Cir. 1989); see also In re Lehtinen, 564 F.3d 1052, 1058 (9th Cir. 2009) (holding that the court must make explicit finding of bad faith or willful misconduct before imposing sanctions under its inherent sanctioning authority). The term bad faith "includes a broad range of willful improper conduct." Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001). Sanctions are thus "available for a variety of types of willful actions, including recklessness when combined with an additional factor such as frivolousness, harassment, or an improper purpose." Id. at 994. See also In re Keegan, 78 F.3d at 436. "Willful misconduct" or "conduct tantamount to bad faith" is "something more egregious than mere negligence or recklessness." In re Lehtinen, 564 F.3d at 1058 (internal quotation marks and citations omitted). Nevertheless, sanctions should be reserved for "serious breaches." Zambrano, 885 F.2d at 1485. Furthermore, the Supreme Court has warned that "[b]ecause of their very potency, inherent powers must be exercised with restraint and discretion." Chambers, 501 U.S. at 44.
While plaintiff's assertion of federal subject matter jurisdiction is perplexing at best, the court cannot find that plaintiff's counsel has acted in bad faith or with willful disregard of the court's rules thereby justifying the imposition of sanctions. Moreover, the court declines to impose sanctions on counsel here on the basis of alleged misconduct by other parties. See, e.g., Primus Automotive Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 650 (9th Cir. 1997) (noting that sanctions may be imposed against counsel based only on their "own improper conduct without considering the conduct of the parties or any other attorney"). Despite what may be arguably questionable conduct among several parties involved in this and the related Riverwood litigation, restraint dictates that sanctions not be imposed on plaintiff's counsel in this action pursuant to the court's inherent authority. Accordingly, defendants' motion for attorney's fees and costs is denied.
For the reasons set forth above:
IT IS SO ORDERED.