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Garza v. Western Stone of Lyons, LLC

United States District Court, D. Colorado

June 24, 2015

ELOY GARZA, Plaintiff,


NINA Y. WANG, Magistrate Judge.

This matter comes before the court on the Motion to Dismiss First Amended Complaint ("Motion") filed by Defendants Western Stone of Lyons, LLC ("Western Stone") and Paul W. Frysig ("Frysig") (collectively, the "Defendants") on December 29, 2014 (the "Motion") [#45]. Pursuant to the Order of Reference [#15] dated October 21, 2014, the Order Referring Motion [#46] dated December 31, 2015, and the Reassignment [#49] dated February 10, 2015, the Motion was referred for recommendation to this Magistrate Judge. The court has carefully considered the motions and related briefing, and the applicable case law. For the following reasons, I respectfully RECOMMEND that Defendants' Motion be DENIED.


I. Plaintiffs' Complaint

Plaintiff Eloy Garza ("Plaintiff" or "Mr. Garza") filed his original complaint in this matter on July 14, 2014. [#1]. On December 12, 2014, Plaintiff amended his complaint as a matter of course pursuant to Fed.R.Civ.P. 15 (a)(1)(B). [#42] ("First Amended Complaint"). The following is a summary and recitation of the allegations contained in Plaintiff's First Amended Complaint, which are presumed to be true insofar as Defendants' Motion seeks dismissal for failure to state a claim and/or for failure to state sufficiently plausible jurisdictional allegations.

Plaintiff Eloy Garza is a Colorado resident who "[i]n or around 2000 or 2001" entered into an employment contract with Western Stone. [#42 at ¶¶ 3, 8]. The employment relationship came to an end "in or about the summer of 2013." [ Id. at ¶ 9]. Western Stone has claimed that it is one of the "leading suppliers of finished and unfinished stone products in the country." [ Id. at ¶ 6]. In that capacity, Western Stone "provides finished stone ( e.g., stone furniture and countertops), yard stone ( e.g., for patios, retaining walls, garden borders or firepits), and stone for incorporation into structures ( e.g., buildings, walls, and stairs)." [ Id. at ¶ 7]. As a Western Stone employee, Mr. Garza "cut stone, weighed stone, created stone countertops and furniture, and moved stone throughout the Western Stone's operation." [ Id. at ¶ 10].

The finished and unfinished stone products Mr. Garza helped manufacture "moved, or could reasonably be expected to move, in interstate commerce." [ Id. at ¶ 22]. Accordingly, at one point, Western Stone's website claimed that its "unique products have been used in many showcase homes and landscapes throughout the world, " and that "[o]ut-of-state deliveries are shipped using either UPS, DHL, Yellow Freight or Brokered Freight." [ Id. ]. On the basis of "information and belief, " Plaintiff alleges that, "based on the size of Defendant Western Stone's operations and the cost of the materials used by Western Stone, Western Stone had annual revenues in excess of $500, 000 during the Plaintiff's entire employment." [ Id. at ¶ 20].

Throughout the course of Mr. Garza's employment at Western Stone, "Defendant Frysig was a member, manager, and agent of Defendant Western Stone." [ Id. at ¶ 11]. According to the Complaint, Western Stone and Mr. Frysig failed to pay Plaintiff overtime as required by applicable federal and state law, illegally withheld a portion of Plaintiff's earnings for rent, and "fraudulently misreported Mr. Garza's earnings to the IRS." [ Id. at ¶¶ 13-16].

Based on these and other allegations, Plaintiff's First Amended Complaint asserts federal claims under the Fair Labor Standards Act ("FLSA") and for willful filing of fraudulent information returns pursuant to 26 U.S.C. § 7434. [Plaintiff also brings a number of related state law claims for breach of fiduciary duty and civil theft under the Colorado Trust Fund Act; willful withholding of wages in violation of the Colorado Wage Claim Act; recovery of overtime pay under the Colorado Wage Protection Act and the Wage Protection Act Rules promulgated by the Colorado Department of Labor and Employment, Division of Labor; breach of contract, or in alternative, promissory estoppel; and unjust enrichment or quantum meruit. Defendants contend that the court lacks subject matter jurisdiction over Plaintiff's FLSA and 26 U.S.C. § 7434 claims, and accordingly may not exercise supplemental jurisdiction over the state law claims.]


I. Standard of Review

A. Subject Matter Jurisdiction

Challenges to a court's subject matter jurisdiction may take two forms: facial or factual. Facial attacks concern the sufficiency of a complaint as pled. Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995) (citation omitted). In reviewing whether a complaint has pled sufficient facts to support subject matter jurisdiction on its face, the court accepts the allegations in the complaint as true. Id. When a party's Rule 12(b)(1) motion challenges the facts upon which subject matter depends, "a district court may not presume the truthfulness of the complaint's factual allegations." Sizova v. Nat'l Inst. of Standards & Tech., 282 F.3d 1320, 1324 (10th Cir. 2002) (citation and quotations omitted). Instead, the court has "wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1)." Holt, 46 F.3d at 1003. Reliance on evidence outside the pleadings in addressing such a motion does not, as a general rule, convert the motion to one for summary judgment under Rule 56. Id. (citation omitted).

The Tenth Circuit "recognize[s] an exception to this general rule, where the jurisdictional question is intertwined with the merits of the case.'" Sizova, 282 F.3d at 1324 (quoting Wheeler v. Hurdman, 825 F.3d 257, 259 (10th Cir. 1987)). In determining whether the jurisdictional question is intertwined with the merits of Plaintiffs' case, the court inquires "whether the resolution of the jurisdictional question requires resolution of an aspect of the substantive claim." Sizova, 282 F.3d at 1324. Similarly, when a party challenges a nonjurisdictional element of relief under applicable federal law, the court may properly convert the motion to dismiss for lack of subject matter jurisdiction to one for failure to state a claim pursuant to Rule 12(b)(6). See e.g., U.S. ex rel. Saunders v. Unisys Corp., No. 1:12-cv-00379 (GBL/TCB), 2014 WL 1165869, ...

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