Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-02909/USCOURTS-casd-3_15-cv-02909-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FILED 

APR 20 2016 

CLERK US DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

BY DEPUTY 

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

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11 JAMES A. ZACHMAN, Case No.: 15-cv-2909-BEN (JMA) 

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13 v. 

Plaintiff, ORDER GRANTING DEFENDANT'S 

MOTION TO DISMISS 

14 WELLS FARGO N.A., 

15 Defendant. 

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17 Before this Court is a Motion to Dismiss pursuant to Federal Rule of Civil 

18 Procedure 12(b)(1) and (b)(6), filed by Defendant Wells Fargo N.A. (Docket No.8.) 

19 Plaintiff James Zachman filed an Opposition. (Docket No. 10.) 

20 BACKGROUND 1 

21 Plaintiff James Zachman, proceeding pro se, filed a Complaint alleging California 

22 state law claims for negligence, breach of contract, and "aiding and abetting a breach of 

23 fiduciary duty." (Docket No.1.) This case arises from an alleged unlawful transfer of 

24 funds from a limited liability company bank account. 

25 Real Time Data Services LLC ("Data Services") is organized under the laws of 

26 Delaware. (Compl. ~ 10, Ex. A.) Data Services is comprised, in relevant part, oftwo 

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28 1 Unless otherwise noted, the Court is not making any factual fmdings, but rather summarizing the 

allegations of Plaintiff s Complaint for purposes of evaluating Defendant's Motion to Dismiss. 

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members, two Co-Presidents, and one manager. (Compl. Ex. A) Plaintiff is CoPresident, member, and sole manager of Data Services. (Compl. ~~ 1, Ex. A) CBS 

Accounting Services, in New Delhi, is the remaining member, and is represented by Ms. 

Sangeeta Chhabra. (Compl. Ex. A) Ms. Chhabra is also Co-President. (Id.) Plaintiff 

and CBS Accounting each own a fifty percent interest in Data Services. (Id.) 

As the sole manager, Plaintiff was in charge of all of Data Services' U.S. banking 

and financial activities. (Compl. ~ 12.) Plaintiff created a bank account for Data Services 

at Wells Fargo (the "9809 account"). (Compl. ~ 23, Ex. E.) 

In May 2012, Ms. Chhabra "locked the Plaintiff out of the operations of Data 

Services by commandeering the computer servers." (Compl. ~ 13.) Plaintiff then shut 

Ms. Chhabra out of the 9809 account until the dispute could be resolved. (Compl. ~ 14.) 

On June 18,2012, Ms. Chhabra created a Wells Fargo account (the "9039 account") for a 

company called "My Real Data Services LLC," using Data Services' Employer 

Identification Number and Delaware business file number. (Compl. ~~ 16, 17.) 

According to Plaintiff, Wells Fargo contacted the State ofDe1aware and found no record 

of the company My Real Data Services, yet created the account anyway. (Compl. ~ 19.) 

Then, sometime between June 18 and July 1,2012, the company name on the 9039 

account changed from "My Real Data Services LLC" to "Real Time Data Services LLC". 

(Compl. ~ 20.) 

Ms. Chhabra used the Wells Fargo 9039 account to divert over $300,000 from 

Data Services to an account in India. (Compl. ~ 28.) 

LEGAL STANDARD 

A challenge to the existence of subject-matter jurisdiction under Federal Rule of 

Civil Procedure 12(b)(1) may be either facial or factual in nature. Wolfev. Strankman, 

392 F.3d 358, 362 (9th Cir. 2004). A facial 12(b)(I) motion involves a limited inquiry 

into the allegations of the complaint. Id. In doing so, courts must assume all material 

allegations in the complaint to be true and determine whether a lack of federal 

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1 jurisdiction appears from the complaint itself. Thornhill Publ 'g Co. v. Gen. Tel. Elec., 

2 594 F.2d 730, 733 (9th Cir. 1979). 

3 DISCUSSION 

4 Wells Fargo moves to dismiss the Complaint for lack of subject-matter jurisdiction 

5 and standing under Rule 12(b)(I). Wells Fargo also argues that Plaintiffs three state law 

6 claims fail under Rule 12(b)(6). The Court need not perform the Rule 12(b )(6) analysis 

7 because Plaintiff failed to establish diversity jurisdiction and standing. 

8 I. Diversity Jurisdiction 

9 Wells Fargo argues that Plaintiff has failed to meet his burden showing that 

10 diversity jurisdiction exists. 

11 "Federal courts are courts oflimited jurisdiction." Kokkonen v. Guardian Life Ins. 

12 Co. of Am., 511 U.S. 375, 377 (1994). Federal courts may hear cases that involve a 

13 federal question or are based in diversity. 28 U.S.C. §§ 1331, 1332; see Exxon Mobil 

14 Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005). Federal question jurisdiction 

15 exists if a case arises "under the Constitution, laws, or treaties of the United States." 28 

16 U.S.C. § 1331. Courts have diversity jurisdiction over civil actions between citizens of 

17 different states, where the amount in controversy exceeds $75,000. 28 U.S.C. § l332(a). 

18 "If the court determines at any time that it lacks subject-matter jurisdiction, the court 

19 must dismiss the action." Fed. R. Civ. P. 12(h)(3). 

20 Here, Plaintiff alleges three state law claims: negligence, breach of contract, and 

21 aiding and abetting a breach of fiduciary duty. As this case does not arise under a federal 

22 law, Plaintiff must satisfy the diversity jurisdiction requirement. 

23 "[A] national bank is a citizen only ofthe state in which its main office is located." 

24 Rouse v. Wachovia Mortg., FSB, 747 F.3d 707, 709 (9th Cir. 2014) (finding that Wells 

25 Fargo is a citizen of South Dakota). 

26 According to the Complaint, Plaintiff is a citizen of California and Wells Fargo "is 

27 a corporation organized under California laws and is registered to conduct business in all 

28 fifty states." (Compl. mr 5-6.) Plaintiff did not allege that Wells Fargo's main office is in 

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1 California or in any other state. In his Opposition, however, Plaintiff asserts that Wells 

2 Fargo is a citizen of South Dakota. (Opp'n 6.) 

3 The Complaint is devoid of facts showing that diversity jurisdiction exists. 

4 Defendant's Motion is therefore GRANTED for lack of subject-matter jurisdiction. 

5 II. Standing 

6 Defendant argues that Plaintiff lacks standing to bring this lawsuit because he was 

7 not harmed in his individual capacity. Plaintiff did not respond to this argument. 

8 The plaintiff bringing an action in the federal court has the burden to show that 

9 Article III standing exists. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); 

10 Snake River Farmers' Ass 'n, Inc. v. Dep't of Lab. , 9 F.3d 792,795 (9th Cir. 1993). 

11 Specifically, the plaintiff must show (1) an injury in fact; (2) traceable to the challenged 

12 action ofthe defendant; and (3) likely to be redressed by a favorable decision. Lujan, 504 

13 U.S. at 560. 

14 In California, a limited liability company is governed by the "law of the state or 

15 other jurisdiction under which [it] is formed." Cal. Corp. Code § 17708.01. Data 

16 Services was organized under Delaware law. Accordingly, the Court looks to Delaware 

17 law to determine whether Plaintiff has any individual right to Data Services' assets. 

18 Delaware courts have held that case law governing corporate derivative suits is 

19 applicable to derivative suits brought on behalf of an LLC. See Kelly v. Blum, No. 4516-

20 VCP, 2010 WL 629850, at *9 (Del. Ch. Feb. 24, 2010); VGS, Inc. v. Castiel, No. 17995, 

21 2003 WL 723285, at * 11 (Del. Ch. Feb. 28, 2003); Gotham Partners, L.P. v. Hallwood 

22 Realty Partners, L.P., No. 15754, 1998 WL 832631, at *5 (Del. Ch. Nov. 10, 1998). In 

23 determining whether a claim is derivative or direct, "[a] court should look to the nature of 

24 the wrong and to whom the relief should go." Tooley v. Donaldson, Lufkin & Jenrette, 

25 845 A.2d 1031, 1039 (Del. 2004). A direct lawsuit is proper where the plaintiff is 

26 directly injured by the defendant's conduct. See VGS, Inc., 2003 WL 723285, at * 11. In 

27 other words, a suit to recover damages to an LLC must be brought in that LLC's name. 

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1 Plaintiff initiated this action in his individual capacity, claiming that money, of 

2 which he had a fifty percent interest as a member of Data Services, was unlawfully or 

3 fraudulently transferred out of a Data Services account, to another company out of his 

4 reach. Taking the allegations of Plaintiff's Complaint as true, Plaintiff did not suffer 

5 injury in his individual capacity. Rather, it appears that Data Services was directly 

6 harmed. As such, Plaintiff cannot show he has suffered an injury in fact and therefore 

7 lacks standing. The Court therefore GRANTS Defendant's motion for lack of standing. 

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CONCLUSION 

.)I . GER T. BENITEZ 

/ United States District Judge 

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