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NAEGELE v. ALBERS

January 3, 2005.

TIMOTHY D. NAEGELE, Plaintiff,
v.
DEANNA J. ALBERS, RAYMOND H. ALBERS II, LLOYD J. MICHAELSON, and Does 1-10, Defendants.



The opinion of the court was delivered by: RICARDO URBINA, District Judge

MEMORANDUM OPINION

GRANTING IN PART AND DENYING IN PART DEFENDANT MICHAELSON'SMOTION TO DISMISS; DENYING THE PLAINTIFF'S MOTIONS FOR SANCTIONS; DENYING THE PLAINTIFF'S MOTION TO STRIKE DEFENDANT MICHAELSON'SRESPONSEDOCUMENT; DENYING THE PLAINTIFF'S MOTION TO STRIKE THE NOTICE OF AUTOMATIC STAY; GRANTING THE DEFENDANTS' MOTION TO STAY; AND DENYING ALL REMAINING MOTIONS AS MOOT
I. INTRODUCTION
The plaintiff brings this eight count complaint against Deanna Albers, Raymond Albers, II, Lloyd Michaelson, and Does 1 through 10 (collectively, "the defendants") alleging, inter alia, breach of contract, anticipatory breach of contract, fraud and deceit, common law conspiracy to commit fraud and deceit, negligent misrepresentation, tortious interference with contract, and conspiracy to commit tortious interference with contract. The parties bombarded the court with a multitude of motions before even sufficiently addressing the subject-matter jurisdiction of this court to hear any of their sundry claims. Currently pending before the court are the defendants' notices of automatic stay, which the court treats as a collective motion for stay; the plaintiff's motion to strike the defendants notices of automatic stay ("plaintiff's motion to strike stay"); defendant Michaelson's motion to dismiss; the plaintiff's motion for sanctions; defendant Michaelson's motion to continue the summary judgment hearing ("defendant Michaelson's motion to continue"); the plaintiff's motion to quash notice of deposition by defendant Michaelson ("plaintiff's motion to quash"); the plaintiff's second motion for sanctions; and the plaintiff's motion to strike the defendant's response to the court's June 18, 2004 order ("plaintiff's motion to strike"). Before ruling on the pending motions, the court takes a moment to review the somewhat tangled procedural posture of this case.

  The court faces a contractual dispute between two parties, each tugging for jurisdiction — either in California or in the District of Columbia. With a suit filed in this court and arbitration proceedings commencing in California, the parties have refused to play in the same judicial ballpark. Instead, they have engaged in Rambo-style litigation tactics, each arguing for proceedings to commence in his respective venue, and bombarded the court with a series of motions, including oppositions to motions that do not exist and multiple oppositions to a single motion. The court has ruled only on a motion to seal documents and a motion for extension of time. After wading through the flood of submissions offered by the parties, the court denies defendant Michaelson's motion to dismiss for lack of subject matter jurisdiction, but grants his motion for lack of personal jurisdiction; denies both of the plaintiff's motions for sanctions; denies the plaintiff's motion to strike the defendants' notices of automatic stay; denies the plaintiff's motion to strike defendant Michaelson's response document; grants the defendants Albers' motion to stay; and denies all remaining motions as moot. Moreover, the court dismisses defendant Michaelson from this action and stays all proceedings pending arbitration in California. By providing the parties with a single forum for debate, that is, arbitration in California, the court hopes that the parties will resolve at least some of their issues before returning to this jurisdiction. The parties are required to jointly notify the court of the results of the arbitration in California. Furthermore, should the parties return to this court, the parties are on notice that the first matters of inquiry will again be the subject matter jurisdiction of this court and the real parties in interest. The court now addresses the convoluted background of this case.

  II. Background

  Timothy D. Naegele brings this action against Deanna J. Albers ("D. Albers"), Raymond H. Albers II ("R. Albers"), Lloyd J. Michaelson, and John Does #1-10 to recover fees and damages for legal services he claims his firm rendered to the Albers. Pl.'s Am. Compl. ¶¶ 4-6. All of the defendants are citizens of California, see id., and the plaintiff is an attorney licensed to practice law in California and the District of Columbia. Pl.'s Opp'n to Mot. to Dismiss ("Pl.'s Opp'n to MTD") at ¶ 2. In December 1998, the Albers asked the plaintiff to represent them in a separate legal dispute ("the Suit"). Pl.'s Am. Compl. ¶ 7. They signed a contract ("the Fee Agreement") on December 18, 1998, with three subsequent addenda detailing costs. Id. ¶ 8. These addenda included a forum-selection clause that states that "a court of the District of Columbia and/or . . . the United States District Court for the District of Columbia" shall be the forum for the resolution of any dispute or litigation arising from the attorney-client agreement. Pl.'s Resp. to MTD, Ex. A (Fee Agreement) at 3.

  The plaintiff claims that in December 2002, attorney Lloyd J. Michaelson and other agents and/or lawyers (Does #1-10)*fn1 advised the Albers to take certain actions or engage in inaction which resulted in injuries to the plaintiff. Pl.'s Am. Compl. ¶ 10. But the Albers signed the third and final addendum in January 2003, with one extra stipulation: an $82,000 retainer that required them to sign a note placing a lien on their home. Pl.'s Resp. to MTD, Attach. A (Third Addendum). In August 2003, Michaelson notified the plaintiff that he was now representing the Albers in the Suit. Pl.'s Resp. to MTD at ¶ 8(D)(6). The plaintiff responded by suing the defendants for breach of contract, conspiracy, and tortious interference with the contract. Pl.'s Am. Compl. ¶¶ 11-48.

  Back in their home state, California, the defendants filed a notice of automatic stay under the California Business and Professions Code ("Cal. Prof. & Bus. Code"), § 6201(c), to halt the current suit and allow the parties to arbitrate this fee dispute in Los Angeles. Yet, the plaintiff is denying the terms of the California stay and attempting to proceed with this suit. He first filed a motion to strike the notice of automatic stay, setting off an avalanche of successive motions that now inundate this court. The defendants, all filing pro se, continue to insist the stay freezes any further court action. Reply to Opp'n to Pl.'s Mot. to Strike Not. of Automatic Stay at 4.

  In May 2004, pro se defendant Michaelson filed a motion to dismiss for lack of subject matter and personal jurisdiction. Def. Michaelson's Mot. to Dismiss ("Def. Michaelson's MTD"). On June 18, 2004, this court directed the plaintiff to show cause that the court has subject matter jurisdiction over the present suit. Order dated June 18, 2004. In the plaintiff's declaration and in his supplemental memorandum, he claims that diversity jurisdiction exists and requests the dismissal of Michaelson's motion with prejudice. The parties continued to fire motions directed at one another, and currently have six motions pending before the court. The court faces a tangle of issues all blinking for attention, and the court now addresses each motion in turn.

  III. ANALYSIS

 
A. The Court Grants in Part and Denies in Part the Defendant Michaelson's Motion to Dismiss
1. Legal Standard for Diversity Jurisdiction
  A federal district court has subject-matter jurisdiction over a suit when the amount in controversy exceeds $75,000 and the parties are diverse in citizenship. 28 U.S.C. § 1332(a); DeBerry v. First Gov't Mortgage & Investors Corp., 170 F.3d 1105, 1106 n. 1 (D.C. Cir. 1999); see also Stevenson v. Severs, 158 F.3d 1332, 1334 (D.C. Cir. 1998) (per curiam) (identifying the $75,000 amount-in-controversy requirement for federal diversity jurisdiction under 28 U.S.C. § 1332(a)). The amount in controversy is established at the commencement of the action. 28 U.S.C. § 1335(a). Subsequent events reducing the amount in controversy will not divest the court of its jurisdiction. St. Paul, 303 U.S. at 289-90. If it becomes apparent during the course of litigation that from the outset the maximum conceivable amount in controversy was less than the jurisdictional minimum, the court must dismiss the case for lack of subject matter jurisdiction. Watson v. Blankinship, 20 F.3d 383, 387-88 (10th Cir. 1994); Jones v. Knox Exploration Corp., 2 F.3d 181, 182-83 (6th Cir. 1993). Where the plaintiff has alleged a sum certain that exceeds the requisite amount in controversy, that amount controls if made in good faith. St. Paul, 303 U.S. at 289-90. Additionally, to justify dismissal, it must appear to a legal certainty that the claim is for less than the jurisdictional amount. Id. at 288-89; Hartigh v. Latin, 485 F.2d 1068, 1071 (D.C. Cir. 1973) (citing Gomez v. Wilson, 477 F.2d 411 (D.C. Cir. 1973)).

  Punitive damages are properly considered as part of the amount in controversy. Hartigh, 485 F.2d at 1072 (citing Bell v. Preferred Life Assurance Soc'y, 320 U.S. 238, 240, (1943)). In considering punitive damages to satisfy the jurisdictional minimum in a diversity case, the court must conduct a two-part inquiry. Bell, 320 U.S. at 240; Cadek v. Great Lakes Dragaway, Inc., 58 F.3d 1209 (7th Cir. 1995). First, the court must determine whether the plaintiff can recover punitive damages as a matter of governing substantive law. Bell, 320 U.S. at 240. If so, the court has subject-matter jurisdiction unless it is clear beyond a legal certainty that the plaintiff would under no circumstances be entitled to recover the jurisdictional amount. Cadek, 58 F.3d at 1212. In this second step, the plaintiff must present some factual evidence of entitlement to punitive damages. Larkin v. Brown, 41 F.3d 387, 388-89 (8th Cir. 1994) (citing Esler v. Northrop Corp., 86 F.R.D. 20, 28 (W.D. Mo. 1979) (recognizing that "when the plaintiff's allegation of the amount in controversy is challenged . . . existence of the required amount must be supported by competent proof") (citing Hulsenbusch v. Davidson Rubber Co., 344 F.2d 730 (8th Cir. 1965))).

 
2. The Plaintiff Adequately Demonstrates That This Court has Subject Matter Jurisdiction
  The defendant argues that the court lacks subject matter jurisdiction to hear this claim for the following reasons: (1) there is not complete diversity between the parties because the defendants are all domiciled in the State of California, see Def. Michaelson's MTD at 3, and the plaintiff moved to California in 1995 and has since resided there, see id. at 3-4; and (2) the plaintiff's claim does not meet the amount in controversy requirement, that is, the amount claimed does not exceed $75,000.*fn2 Def. Michaelson's Reply to Pl.'s Opp'n to Def. Michaelson's MTD ("Def. Michaelson's Reply") at 3-4.

  The plaintiff argues that there is diversity of citizenship between the parties because he is a citizen of Florida, see Pl.'s Resp. to MTD at ¶ 2, while the defendants are all residents of California. Pl.'s Opp'n to Def.'s MTD ("Pl.'s Opp'n to MTD") at 7-10. Additionally, the plaintiff contends that he is entitled to judgment in the sum of $7,411,477.14, see Pl.'s Opp'n to MTD at 40, which is an amount that exceeds the statutory requirement of $75,000.

  For the purpose of diversity jurisdiction, "[d]omicile is determined by two factors: physical presence in a state, and intent to remain there for an unspecified or indefinite period of time." Prakash v. Am. Univ., 727 F.2d 1174, 1180 (D.C. Cir. 1984) (citations omitted). "Citizenship depends upon domicile, and, as domicile and residence are two different things, it follows that citizenship is not determined by residence." Shafer v. Children's Hosp. Soc. of Los Angeles, Cal., 265 F.2d 107, 122 (D.C. Cir. 1959) (quotations omitted); see also Williams v. Wash. Post Co., 1990 U.S. Dist. LEXIS 11183, at *5 (D.D.C. 1990) (stating that "[d]omicile, a concept drawn from conflicts of law, is more narrow than the concept of residency . . . one can reside in one place but be domiciled in another"). Hence, a mere allegation of residence in a state is not an assertion of citizenship therein. Id. at 121. While residency is indicative of domicile, it is not determinative; therefore, a "prolonged absence from one's domicile is not determinative of abandonment." Wagshal v. Rigler, 947 F. Supp. 10, 13 (D.D.C. 1996).

  "The question of domicile is a mixed question of law and fact." Hicks v. Hicks, 80 F. Supp. 219, 220 (D.D.C. 1940). In many instances, a party's intent to remain in a particular state for an indefinite period of time will be clear from the factual evidence presented to the court. See Mayo v. Questech, Inc., 1989 U.S. Dist. LEXIS 4267, at *2 (D.D.C. 1989). A plaintiff may submit "a number of generally accepted indicia of domiciliary status," including sworn declaration of domicile; voting registration; state driver's license; ownership of personal property in a given state; bank accounts and club membership. Wagshal, 947 F. Supp. at 13. Once a party presents to the court evidence of substantial indicia of domiciliary status, the party is entitled to a presumption that it has established a domicile. Id. An evidentiary hearing is necessary, however, when the opposing party's written submissions contradict the stated intent of the party whose domicile is in dispute. See Prakash, 727 F.2d at 1179. Finally, it is the plaintiff that bears the burden of proof when jurisdictional facts are challenged. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 188-89 (1936); Mayo, 1989 U.S. Dist. LEXIS 4267, at *2 (citing Thompson v. Gaskill, 315 U.S. 442, 446 (1942)).

  The plaintiff declares that he was a citizen of Florida at the time of filing of the lawsuit and that he currently remains a domiciliary of Florida. Naegele Decl. in Support of Pl.'s Opp'n to Def. Michaelson's MTD ("Naegele Decl. dated Aug. 2, 2004") ¶ 7. In support of his claim, the plaintiff has submitted a copy of his Florida driver's license; a copy of the Declaration of Domicile and Citizenship filed with the Clerk of the Circuit Court of Monroe County, Florida; and proof of his membership in the Ocean Reef Club, located in the Florida Keys. Naegele Decl. dated Aug.2, 2004, Attach. A, B. He further asserts that he is registered to vote in Florida and that he maintained two bank accounts at Florida bank branches. Naegele Decl. dated Aug. 2, 2004, ¶¶ 5, 7. Defendant Michaelson alleges that the plaintiff's domicile is California because he maintained offices in California. Def. Michealson's Mot. to Dismiss at 3. The defendant further argues that the co-defendants, the Albers, assert that the plaintiff had "resided in the Malibu/Calabasas area in Los Angeles County" between 1998 and March 2003. R. Albers Decl., ¶ 3.

  Because the plaintiff has presented substantial evidence that his domicile is Florida and that he has an intent to remain there for an indefinite period of time, and the defendant has only proffered unsupported allegations to contest the plaintiff's domicile, the plaintiff is entitled to the presumption that he successfully established Florida as his domicile. Wagshal, 947 F. Supp. at 13. Based on the evidence presented by the parties, the court finds it unnecessary to engage in an evidentiary hearing to determine the plaintiff's domicile. The court is persuaded that the plaintiff's domicile is indeed Florida and the domicile of all the named defendants is California; thus, there is complete diversity between the plaintiff and the defendants.

  Diversity jurisdiction, however, requires not only diversity in citizenship but also that the amount in controversy exceed $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a); DeBerry, 170 F.3d at 1106 n. 1. The plaintiff's claim for money damages in the amount of $69,018.37 towards prejudgment interest and an amount of $8,237.82 towards attorney fees and costs would not contribute to the amount in controversy. 28 U.S.C. § 1332(a), see also Velez v. Crown Life Ins. Co., 599 F.2d 471, 473 (1st Cir. 1979) (stating that "[i]nterest is specifically excluded . . . as part of the jurisdictional amount"); 15-102 Moore's Federal Practice § 102.106 (2004). The court, however, finds that the plaintiff has a right to claim an amount of $160,071.74 in legal fees and expenses incurred by his representation of the Albers with respect to the Albers' appeal. Additionally, the D.C. Circuit has instructed that a plaintiff's punitive damages claim, which here is an amount of $4 million, is properly considered as part of the amount in controversy when the plaintiff proffers factual evidence that he is entitled to punitive damages and it is not clear beyond a legal certainty that the plaintiff would be unable to recover such damages. Hartigh, 485 F.2d at 1072 (citing Bell v. Preferred Life Assurance Soc'y, 320 U.S. 238, 240, (1943)). Because the plaintiff meets the amount in controversy requirement even excluding the punitive damages claim, the court deems it unnecessary to decide the issue of whether the punitive damages claim in the instant case contributes to the amount in controversy. Therefore, the plaintiff met his burden in proving that the two prongs of diversity jurisdiction exist, diversity of citizenship and amount in controversy. Accordingly, the court concludes that it has subject matter jurisdiction over this action.

 
3. Legal Standard for a Motion to Dismiss for Lack of Personal Jurisdiction
  On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), the plaintiff has the burden of establishing a prima facie case that personal jurisdiction exists. E.g., Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001). A prima facie case in this context means that the plaintiff must present evidence sufficient to defeat a motion for judgment as a matter of law. See Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 855 (11th Cir. 1990); Carter v. Duncan-Huggins, Ltd., 727 F.2d 1225, 1227 (D.C. Cir. 1984) (indicating, under a differently labeled but similar standard, that such motions should be denied unless "the evidence, together with all inferences that can reasonably be drawn therefrom is so one-sided that reasonable men could not disagree on the verdict").

  To determine if a basis for personal jurisdiction exists, the court should resolve factual discrepancies in the complaint and affidavits in favor of the plaintiff. Crane v. New York Zoological Soc., 894 F.2d 454, 456 (D.C. Cir. 1990). However, the court need not treat all of the plaintiff's allegations as true. United States v. Philip Morris Inc., 116 F. Supp. 2d 116, 120 n. 4 (D.D.C. 2000); GTE New Media Servs. v. BellSouth Corp., 199 F.3d 1343, 1349 (D.C. Cir. 2000) (stating that courts should not accept bare allegations and conclusory statements). Moreover, the court "may receive and weigh affidavits and any other relevant matter to assist ...


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