Court Opinion

ID: 178605
Source: CourtListenerOpinion
Date Created: 2010-11-02 21:03:04+00
Date Added: 2024-06-11T17:25:44.857451
License: Public Domain

FILED
                             NOT FOR PUBLICATION                            NOV 02 2010

                                                                        MOLLY C. DWYER, CLERK
                      UNITED STATES COURT OF APPEALS                     U .S. C O U R T OF APPE ALS

                             FOR THE NINTH CIRCUIT

ERIC J. LINDSEY, DBA E-Jays Panache               No. 08-56147
Images, E-Jays Panache Images,
                                                  D.C. No. 2:02-cv-03822-GAF-
               Plaintiff - Appellant,             FMO

  v.
                                                  MEMORANDUM *
STARWOOD HOTELS & RESORTS
WORLDWIDE INC., DBA Westin &
Westin Hotels,

               Defendant - Appellee.

                     Appeal from the United States District Court
                        for the Central District of California
                      Gary A. Feess, District Judge, Presiding

                        Argued and Submitted October 5, 2010

                                  Pasadena, California

Before:        CUDAHY, ** Senior Circuit Judge and WARDLAW and W.
               FLETCHER, Circuit Judges,.

          *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
          **
             The Honorable Richard D. Cudahy, Senior United States Circuit
Judge for the Seventh Circuit, sitting by designation.
      Eric Lindsey appeals the district court’s order dismissing for lack of

standing his claims alleging violations of 42 U.S.C. § 1981 and California’s Unruh

Civil Rights Act, Cal. Civ. Code § 51, and breach of contract. We have jurisdiction

pursuant to 28 U.S.C. § 1291. We affirm in part, reverse in part, and remand.

      The district court correctly determined that Panache Images was a

partnership as a matter of California law. See Cal. Corp. Code § 16202(a).

Panache’s members adopted bylaws, divided job responsibilities, exercised joint

control of the business through a board of directors, and made common financial

contributions to the enterprise. Lindsey signed the contract with Westin, but did so

in his capacity as “director” on behalf of Panache; the only parties to the contract

were Westin and Panache. The district court thus correctly concluded that Lindsey,

who brought this action in his individual capacity, could not assert contractual

claims belonging to the partnership. See Cal. Corp. Code §§ 16201, 16203,

16401(g); Lewis v. Hayes, 177 Cal. 587, 589-90 (1918); Carnation Co. v. Olivet

Egg Ranch, 189 Cal. App. 3d 809, 821 n.19 (1986). Cf. Domino’s Pizza, Inc. v.

McDonald, 546 U.S. 470, 479-80 (2006) (“Section 1981 plaintiffs must identify

injuries flowing from a racially motivated breach of their own contractual

relationship, not of someone else’s.”).

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      The district court erred, however, by treating Lindsey’s lack of standing as a

defect of Article III standing that deprived the court of subject matter jurisdiction.

Whether a plaintiff possesses legally enforceable rights under a contract is a

question on the merits rather than a question of constitutional standing. Such a

plaintiff fails to state a claim on which relief can be granted. Harris v. Amgen, Inc.,

573 F.3d 728, 732 n.3 (9th Cir. 2009). See also Domino’s Pizza, Inc., 546 U.S. at

479 (“[W]e hold that a plaintiff cannot state a claim under § 1981 unless he has . . .

rights under the . . . contract.” (emphasis added)). Failure to state a claim is a defect

that does not affect a court’s jurisdiction under Article III. Steel Co. v. Citizens for

a Better Env’t, 523 U.S. 83, 89 (1998). We therefore construe Starwood’s motion

to dismiss for lack of standing as a motion to dismiss for failure to state a claim,

Fed. R. Civ. P. 12(b)(6), which the district court treated as a motion for summary

judgment by considering matters outside the pleadings. Fed. R. Civ. P. 12(d). The

district court’s erroneous conclusion that it lacked subject matter jurisdiction does

not affect the disposition of Starwood’s motion, so construed. We may affirm on

any ground supported by the record. McCormick v. Adams, No. 09-15546, 2010

U.S. App. LEXIS 18452, at *10 (9th Cir. Sept. 3, 2010). As we explain above, the

record provides an ample basis for summary judgment in favor of Starwood on

contractual claims brought by Lindsey in his individual capacity.

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      The district court relied solely on its mistaken Article III analysis to deny

Lindsey’s motion to substitute Panache as plaintiff. Following Davis v. Yageo

Corp., 481 F.3d 661, 678 (9th Cir. 2007), the court reasoned that Lindsey could not

cure his lack of standing by invoking Fed. R. Civ. P. 17(a)(3). Davis, like the other

substitution cases cited by the court, involved a plaintiff who lacked Article III

standing because it had not suffered injury in fact. See 481 F.3d at 675. See also,

e.g., Zurich Ins. Co. v. Logitrans, Inc., 297 F.3d 528, 531 (6th Cir. 2002). Rule 17

is a proper procedural device to cure the failure to state a claim. The district court

was free to consider Lindsey’s motion to substitute Panache as plaintiff – or to

allow amendment of Lindsey’s complaint, see Fed. R. Civ. P. 15(a)(2) – free from

any perceived jurisdictional bar. We therefore reverse the denial of Lindsey’s Rule

17 motion and remand so that the district court may rule on this motion in the first

instance.

      AFFIRMED IN PART, REVERSED IN PART, REMANDED. Each

side to bear its own costs.

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