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Farris v. D'Angelo

United States District Court, W.D. Washington, Seattle

October 31, 2014

LAURA FARRIS, Plaintiff,
v.
LUKE D'ANGELO, et. al., Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

MARSHA J. PECHMAN, District Judge.

THIS MATTER comes before the Court on Defendant AppTech Corporation, Luke D'Angelo, Steven Cox, and Transcendent One, Inc.'s ("Defendants") Motion to Dismiss Plaintiff Laura Farris's ("Plaintiff") suit. (Dkt. No. 21-1.) The Court considered the complaint (Dkt. No. 1), the motion (Dkt. No. 21-1), the response (Dkt. No. 25), the reply (Dkt. No. 29), and all attached documents. The Court GRANTS Defendants' Motion to Dismiss Plaintiff's complaint.

Background

Eric Ottens, a nonparty to this suit, held a convertible promissory note payable to him by AppTech Corporation ("AppTech") in the amount of $50, 000. (Dkt. No. 1 at 3.) Under the promissory note, Mr. Ottens had the option to convert the $50, 000 debt into AppTech stock at par value of $0.01 per share. (Id.) On May 6, 2013, Mr. Ottens assigned $25, 000 of the promissory note to Plaintiff in exchange for $10, 000, to be paid by Plaintiff by May 2014. (Id.)

Plaintiff alleges that Defendants issued or signed several documents between March and August of 2013 that recognize Plaintiff's right to convert her interest in the $25, 000 promissory note to 2.5 million shares of AppTech stock:

• In a March 2013 "Lock-Up/Leak-Out Agreement, " Defendants agreed to convert Plaintiff's interest in the promissory note to 2.5 million AppTech shares;
• Defendants issued a document on May 7, 2013 entitled "Unanimous Consent of the Board of Directors of AppTech Corporation" which recognized and approved the issuance of 2.5 million shares in exchange for the $25, 000 owed by Defendants to Plaintiff;
• Defendants issued a public disclosure statement on August 14, 2013-"Initial Issuer Information and Disclosure Statement Pursuant to Rule 15c2-11(a)(5) of the Securities Exchange Act of 1934"-describing in detail the transaction that resulted in the issuance of 2.5 million shares to Plaintiff and Mr. Ottens.

(Dkt. No. 1 at 3-4.)

On August 14, 2013, Defendants sent a letter to Plaintiff and the transfer agent directing the transfer agent not to issue the shares to Plaintiff. (Id. at 4.) Plaintiff alleges claims for breach of contract, conversion, and violations of state and federal securities laws against Defendants arising out of their refusal to issue shares to her. (Id. at 5-6.) Plaintiff seeks declaratory and injunctive relief. (Id.) Defendants move to dismiss Plaintiff's complaint for: (1) lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1); (2) failure to state a claim under Federal Rule of Civil Procedure 12(b)(6); and (3) failure to join an indispensible party, Mr. Ottens under Federal Rule of Civil Procedure 12(b)(7). (Dkt. No. 21-1 at 6-18.)

Analysis

I. Legal Standard for a 12(b)(1) Motion

Federal courts are courts of limited jurisdiction. Gunn v. Minton, ___ U.S. ___ , 133 S.Ct. 1059, 1064, 185 L.Ed.2d 72 (2013) (citation omitted). As such, this Court is to presume "that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377 (1994) (citations omitted). A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction may be either "facial" or "factual." Safe Air for Everyone v. Meyer , 373 F.3d 1035, 1039 (9th Cir. 2004). A facial attack on subject matter jurisdiction is based on the assertion that the allegations contained in the complaint are insufficient to invoke federal jurisdiction. Id . "A jurisdictional challenge is factual where 2017the challenger ...


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