Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-02059/USCOURTS-azd-2_12-cv-02059-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Joseph M. Mistretta, 

Plaintiff, 

vs.

Kahn Swick & Foti LLC et. al., 

Defendants. 

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No. CV-12-02059-PHX-FJM

ORDER

The court has before it defendants Kahn Swick & Foti LLC and Lewis S. Kahn's

motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim (doc.

5), plaintiff's response (doc. 12), defendants' reply (doc. 13), and plaintiff's sur-reply (doc.

14), which we ignore because LRCiv 7.2 does not allow responses to replies.

Plaintiff alleges he retained defendants to represent him in a class action law suit

against Dendreon Corporation (“Dendreon”) to recover the sum of $25,400, which he claims

he lost as a result of Dendreon's alleged securities fraud. Defendants, as well as several other

putative plaintiffs' attorneys, filed class action securities fraud complaints against Dendreon

and related defendants in the United States District Court for the Western District of

Washington. The district court consolidated the complaints and appointed Bernstein Litowitz

Berger & Grossman LLP as lead plaintiffs' counsel. See In re: Dendreon Corporation Class

Action Litigation, C11-1291JLR (W.D. Wa.), Dec. 19, 2011 Order on Motions for

Consolidation, Dkt. # 50. Plaintiff claims that defendants failed to inform him that they had

Case 2:12-cv-02059-FJM Document 15 Filed 03/29/13 Page 1 of 4
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not been appointed lead counsel. On September 28, 2012, plaintiff filed this action alleging

that defendants are liable for negligence, breach of fiduciary duty, and breach of contract.

Plaintiff seeks to recover $25,400, plus punitive damages in connection with the negligence

and breach of fiduciary duty claims. 

Defendant moves to dismiss plaintiff's complaint pursuant to Rule 12(b)(1), Fed. R.

Civ. P., on the grounds that we lack diversity jurisdiction because the amount in controversy

does not exceed $75,000. See 28 U.S.C. § 1332(a). "To justify dismissal, it must appear to

a legal certainty that the claim is really for less than the jurisdictional amount." Crum v.

Circus Circus Enterprises, 231 F.3d 1102, 1106 (9th Cir. 2000). The "legal certainty

standard" means we have jurisdiction unless "upon the face of the complaint, it is obvious

that the suit cannot involve the necessary amount." Geographic Expeditions, Inc. v. Estate

of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010). The suit cannot involve the

necessary amount "when a rule of law or limitation of damages would make it virtually

impossible for a plaintiff to meet the amount-in-controversy requirement." Pachinger v.

MGM Grand Hotel-Las Vegas, Inc., 802 F.2d 362, 364 (9th Cir. 1986). Where a defendant

challenges the plaintiff's allegation as to the amount in controversy, the plaintiff has the

burden to show that "it does not appear to a legal certainty that [the] claim is for less than the

required amount." United States v. Southern Pac. Transp. Co., 543 F.2d 676, 682 (9th Cir.

1976) (citing St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288–89, 58 S.

Ct. 586, 590, 82 L.Ed. 845 (1938)).

Here, the sum of $25,400 that plaintiff pleads on the face of his complaint is well

below the $75,000 threshold for federal jurisdiction in a diversity action. Plaintiff argues that

the punitive damages alleged could far exceed the jurisdictional threshold. Punitive damages

may be included in determining the amount in controversy if they are recoverable under

applicable law. Bell v. Preferred Life Assurance Soc'y, 320 U.S. 238, 240, 64 S. Ct. 5, 88

L.Ed. 15 (1943); Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir. 2001). To recover

punitive damages in Arizona, a plaintiff must prove by clear and convincing evidence that

Case 2:12-cv-02059-FJM Document 15 Filed 03/29/13 Page 2 of 4
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1

 Because we do not have subject matter jurisdiction, we do not determine whether

plaintiff has failed to state a claim upon which relief can be granted. 

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the defendant engaged in aggravated and outrageous conduct with an "evil mind." Linthicum

v. Nationwide Life Ins. Co., 150 Ariz. 326, 331-32, 723 P.2d 675, 680-81 (1986). A

defendant acts with the requisite evil mind when he is "aware of the evil of his actions, of the

spitefulness of his motives or that his conduct is so outrageous, oppressive or intolerable in

that it creates a substantial risk of tremendous harm to others. Linthicum, 150 Ariz. at 330,

723 P.2d at 679 (citation omitted). 

Plaintiff provides no evidence that he is likely to recover punitive damages in this

case. None of the facts alleged in the complaint establish or suggest that defendants engaged

in aggravated and outrageous conduct with an "evil mind." Moreover, plaintiff makes no

allegations as to what specific amount, if any, he might recover in punitive damages.

Plaintiff cannot meet his burden by simply stating that the amount of punitive damages

awarded could exceed the jurisdictional threshold. Although plaintiff cites a case in which

the court awarded punitive damages, he does not compare the facts of that case with the facts

in this case to show that he would similarly recover punitive damages. Accordingly, plaintiff

fails to meet the requisite burden of proof to establish recovery of punitive damages in

Arizona.

Because plaintiff provides no evidence to overcome the legal certainty that the amount

of punitive damages coupled with the other relief that plaintiff seeks is "for less than the

required amount," this Court lacks subject matter jurisdiction under 28 U.S.C. § 1332(a).

Southern Pac. Transp. Co., 543 F.2d at 682.1

IT IS THEREFORE ORDERED GRANTING defendant's motion to dismiss for

lack of subject matter jurisdiction (doc. 5). Plaintiff is advised that he may refile this action

in state court within six months of its termination in federal court. A.R.S. § 12–504. We urge

plaintiff to seek the advice of a lawyer. If he does not have one, he may wish to contact the

Lawyer Referral Service of the Maricopa County Bar Association at 602-257-4434. He also

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may wish to contact plaintiffs' counsel in the class action referred to in the motion. 

DATED this 27th day of March, 2013.

Case 2:12-cv-02059-FJM Document 15 Filed 03/29/13 Page 4 of 4