United States District Court, E.D. Virginia, Richmond Division
James R. Spencer Senior U.S District Judge
THIS MATTER is before the Court on a Motion to Dismiss for Lack of Subject Matter Jurisdiction (“Motion”) (ECF No. 8), filed by Defendant Steve Vorlop (“Vorlop”). Plaintiff filed a response in opposition on August 13, 2015 (“Opp’n Mem.”) (ECF No. 13). Vorlop subsequently filed a reply on August 19, 2015 (“Reply Mem.”) (ECF No. 14). The parties have not requested a hearing on this matter, and the Court finds that oral argument is unnecessary. See E.D. Va. Loc. Civ. R. 7(J). For the reasons that follow, the Court DENIES the Motion.
a. Factual Background
This action arises from an alleged agreement between Jacob A. Schur (“Schur”) and Defendant Mark D. Sprenkle (“Sprenkle”) to establish Blackwater Management LLC (“BWM LLC” or the “Company” or “Plaintiff”), a talent management company specializing in representing musical talent. On June 19, 2008, Schur and Sprenkle signed the Operating Agreement for BWM LLC (hereinafter, the “Operating Agreement”). To gain ownership rights in BWM LLC, the agreement required Schur to invest $34, 675.00 in cash and Sprenkle to assign two management contracts, one with Jesse Harper and one with Colin Healy and the Jet Skis. (See Operating agreement, Ex. A.) Schur made an initial investment of $49, 675.00. Sprenkle, however, allegedly failed to assign any contracts to the Company. Contrary to what he told Schur, Sprenkle had no artist management contracts to assign and he actively concealed the nonexistence of these contracts from Schur.
Sprenkle allegedly did not care whether he had an ownership interest in BWM LLC, nor was he concerned with the success of BWM LLC. Instead, he wanted BWM LLC to “bankroll” his expenses. Sprenkle also allegedly planned to exploit for his benefit any business opportunities made available through his affiliation with Schur and BWM LLC. Sprenkle convinced the other defendants to aid him in his efforts.
Schur brought actions in state court in his personal capacity against Sprenkle and the other defendants to discover the truth and recover the significant damages caused by the conspirator’s acts and omissions. Schur learned through the testimony of the artists with whom Sprenkle claimed to have management contracts that Sprenkle never possessed rights in any artist management contract at the time he purported to assign those contracts to BWM LLC.
b. Procedural Background
Plaintiff filed the present action on June 16, 2015 “to vindicate its rights against these Defendants who conspired and colluded to strip it of its assets and destroy its contractual relationships and business expectancies.” (ECF No. 1, “Complaint, ” at ¶ 6.) The seven-count Complaint names the following nine defendants: Sprenkle; Colin Healy; Kevin Healy; TBT Network LLC d/b/a Tim Be Told, Timothy Ouyang (“Ouyang”), Luan Nguyen (“Nguyen”), Jacob James “Jim” Carisma Barredo (“Barredo”), Andrew Daniel Chae (“Chae”) (individually and collectively, “TBT”); and Vorlop. The Complaint alleges: (1) Declaratory Judgment (Against Sprenkle) (Count One); (2) Conspiracy to Tortiously Interfere With Contract and/or Business Expectancies (All Defendants) (Count Two); (3) Conspiracy to Breach Fiduciary Duties (All Defendants) (Count Three); (4) Conspiracy to Convert Assets of BMW LLC (All Defendants) (Count Four); (5) Conversion (Against Sprenkle) (Count Five); (6) Breach of Contract (Against TBT and Colin Healy) (Count Six); and (7) Accounting (Against TBT, Colin Healy, and Sprenkle) (Count Seven).
Defendant Steve Vorlop (“Vorlop”) was served on July 9, 2015. (ECF No. 6). He then timely filed the present Motion on July 30, 2015, seeking to dismiss the action for lack of subject matter jurisdiction.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(1) allows a defendant to move for dismissal of a claim when the court lacks subject matter jurisdiction over the action. The Court must dismiss the action if it determines at any time that it lacks subject-matter jurisdiction. Fed.R.Civ.P. 12(h)(3). Under Rule 12(b)(1), the plaintiff bears the burden of proving that jurisdiction exists in federal court. Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). “In determining whether jurisdiction exists, the district court is to regard to the pleadings’ allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Id. (citations omitted). The Court should apply the same standard as it does in a motion for summary judgment: “the nonmoving party must set forth specific facts beyond the pleadings to show that a genuine issue of material fact exists.” Id. (citations omitted). The district court must then weigh the evidence to determine whether jurisdiction is proper. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). A court should grant a Rule 12(b)(1) motion to dismiss if the material jurisdictional facts are known and the moving party is entitled to prevail as a matter of law. Richmond, Fredericksburg & Potomac R.R. Co., 945 F.2d at 768.
“Federal courts are courts of limited jurisdiction . . . [and] possess only that power authorized by the Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). For example, federal district courts have original jurisdiction pursuant to 28 U.S.C. § 1332 over civil actions where the amount in controversy exceeds $75, 000 and the matter is between citizens of different states, also known as “diversity jurisdiction.” In order to maintain an action based upon diversity jurisdiction, complete diversity between the plaintiffs and defendants must exist at the time the complaint is filed. Martinez v. Duke Energy Corp., 130 F. App’x 629, 634 (4th Cir. 2005). “Complete diversity” means “that the citizenship of every plaintiff must be different from the citizenship of every defendant.” Cent. W.Va. Energy Co., Inc. v. Mountain State Carbon, LLC, 636 F.3d 101, 103 (4th Cir. 2011) (citation omitted). For purposes of determining citizenship, a natural person is deemed a citizen of the State in which he or she is domiciled, see Axel Johnson, Inc. v. Carroll Carolina Oil Co., Inc., 145 F.3d 660, 663 (4th Cir. 1998), while the citizenship of a limited liability company is determined by the citizenship of all of its members, Cent. W.Va. Energy Co., Inc., 636 F.3d at 103.
Here, Plaintiff brings this action pursuant to 28 U.S.C. § 1332, claiming there is complete diversity between Plaintiff and Defendants, and the amount in controversy exceeds $75, 000. (Compl. at ¶ 9.) Plaintiff defines the citizenship of each of the parties as follows:
• BWM LLC: “[A]n unincorporated entity organized under the laws of the Commonwealth of Virginia.” (Id. at ¶ 11.)
• Schur: A resident of Colorado. (Id. at ¶ 12.)
• Sprenkle: A resident of the Commonwealth of Virginia. (Id. at ¶ 13.)
• Colin Healy: A resident of the Commonwealth of Virginia. (Id ...