United States District Court, D. Colorado
LINDEN STUART, MELISSA STUART, BRUSKIN GIRLS, LLC, a Colorado limited liability company, and PRESENCE, LLC, a Colorado limited liability company, Plaintiffs,
COCORILLA, LTD., a Delaware corporation, Defendant.
Kristen L. Mix United States Magistrate Judge.
matter is before the Court on Defendant's Motion
to Dismiss For Lack of Subject Matter Jurisdiction Under FRCP
12(b)(1) and 12 U.S.C. § 1332 [#19] (the
“Motion”). Plaintiffs filed a Response [#23] in
opposition to the Motion, and Defendant filed a Reply [#24].
The Court has reviewed the Motion, the Response, the Reply,
the entire case file, and the applicable law, and is
sufficiently advised in the premises. For the reasons set
forth below, the Motion [#19] is
a start-up entity producing and selling coconut products,
sold a series of 7.5% Convertible Promissory Notes to fund
the further development of its business. Compl. [#1]
¶¶ 9-11. Plaintiffs Linden Stuart (“L.
Stuart”), Melissa Stuart (“M. Stuart”),
Bruskin Girls, LLC (“Bruskin”), and Presence, LLC
(“Presence”) entered into Subscription Agreements
with Defendant for Convertible Promissory Notes
(“Note(s)”) with principal and interest due and
payable by Defendant on March 31, 2018. Id. at 2-3.
Each Note provided that “in the case of a default in
the payment of any principal of or interest on the Note, the
Company will pay the Holder, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including, without limitation, reasonable attorneys'
fees, expense and disbursements.” See, e.g.,
Pls.' Attach. 1, Stuart Note [#23-1] at
specifically, Plaintiffs L. Stuart and M. Stuart entered into
a Subscription Agreement with Defendant pursuant to which
they purchased a $50, 000 Convertible Promissory Note, with a
7.5% interest rate, dated March 10, 2016, and due and payable
on March 31, 2018 (the “Stuart Note”).
Compl. [#1] ¶ 12; Stuart Note [#23-1]
at 1. Plaintiffs allege that $8, 353.99 of contractual
interest had accrued on the Stuart Note by March 31, 2018.
Compl. [#1] ¶ 20. Plaintiff Bruskin entered into a
Subscription Agreement pursuant to which it purchased a $12,
500 Convertible Promissory Note, with a 7.5% interest rate,
dated April 8, 2016, and due and payable on March 31, 2018
(the “Bruskin Note”). Compl. [#1] ¶
13; Pls.' Attach. 2, Bruskin Note [#23-2] at 8.
Plaintiff Presence entered into a Subscription Agreement
pursuant to which it purchased a $15, 000 Convertible
Promissory Note, with a 7.5% interest rate, dated April 8,
2016, and due and payable on March 31, 2018 (the
“Presence Note”). Compl. [#1] ¶ 14;
Pls.' Attach. 3, Presence Note [#23-3] at 8.
unsuccessfully sought enforcement of the Notes issued,
alleging that “[d]espite due demand, Defendant
Cocorilla has, to date, failed to pay any of the amounts due
and owing under the . . . Note.” See, e.g.,
Compl. [#1] ¶ 19. On April 19, 2018, Plaintiffs
filed their Complaint [#1] against Defendant. Plaintiffs
assert that the Court has diversity jurisdiction pursuant to
28 U.S.C. § 1332 over enforcement of the Stuart Note
(“Stuart Claim”) and supplemental jurisdiction
pursuant to 28 U.S.C. § 1367 over the other
claims. Compl. [#1] ¶¶ 5-6.
Plaintiffs assert six claims for relief: (1) the Stuart
Claim; (2) enforcement of the Bruskin Note; (3) enforcement
of the Presence Note; and (4, 5, 6) claims for unjust
enrichment against Defendant by the Stuarts, Presence, and
Bruskin. Id. ¶¶ 15-53.
Christopher P. Milazzo (“Milazzo”) and Trevor J.
Willard (“Willard”) appear to have worked for all
four Plaintiffs collectively throughout the relevant times of
this lawsuit. Pls.' Attach. 4, Milazzo Affidavit
[#23-4] at 5; Pls.' Attach. 5, Willard Affidavit
[#23-5] at 4. Their invoices do not separately identify
billing per claim or per Plaintiff. See Id.
Plaintiffs assert that attorneys' fees thus far total
$10, 492.40. Response [#23] at 8. Moreover,
Plaintiffs' “counsel anticipates future attorney
fees to be greater than $7, 000.” Response
[#23] at 8.
present Motion [#19], Defendant argues that none of the
claims meet the minimum amount in controversy of $75, 000
required by 28 U.S.C. § 1332(a). Motion [#19]
at 3. Plaintiffs respond that, when the contractual interest
and attorneys' fees are included, the Stuart Claim meets
the jurisdictional minimum. Response [#23] at 7-8.
Defendant replies that Plaintiffs improperly (1) aggregated
the attorneys' fees on the individual notes and (2)
speculated on future attorneys' fees to meet the minimum.
Reply [#24] at 4-6.
Plaintiffs' Complaint [#1] nor Response [#23] specifies
the mathematical breakdown or exact amount of damages they
seek for the Stuart Claim; rather, they contend the total is
“well in excess” of $75, 000. Response
[#23] at 8. Without specifically saying so, Plaintiffs appear
to rely on the following numbers to meet the jurisdictional
minimum: (1) the $50, 000 principal on the Stuart Note, (2)
the $8, 353.99 of interest on the Stuart Note, (3) $10,
492.39 in aggregated past attorneys' fees, and (4) over
$7, 000 of estimated future attorneys' fees. See
Response [#23] at 7-8. These four amounts combined equal
$75, 846.38. The Court discusses these amounts in greater
detail in the analysis section below.
Standard of Review
purpose of a motion to dismiss pursuant to Rule 12(b)(1) is
to test whether the Court has jurisdiction to properly hear
the case before it. Because “federal courts are courts
of limited jurisdiction, ” the Court must have a
statutory basis to exercise its jurisdiction. Montoya v.
Chao, 296 F.3d 952, 955 (10th Cir. 2002); Fed.R.Civ.P.
12(b)(1). Statutes conferring subject matter jurisdiction on
federal courts are to be strictly construed. F & S
Const. Co. v. Jensen, 337 F.2d 160, 161 (10th Cir.
1964). It is well established that “[t]he party
invoking federal jurisdiction bears the burden of
establishing such jurisdiction as a threshold matter.”
Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1224
(10th Cir. 2004).
motion to dismiss pursuant to Rule 12(b)(1) may take two
forms: facial attack or factual attack. Holt v. United
States, 46 F.3d 1000, 1002 (10th Cir. 1995). When
reviewing a facial attack, the Court accepts the allegations
of the complaint as true. Id. By contrast, when
reviewing a factual attack, the Court “may not presume
the truthfulness of the complaint's factual
allegations.” Id. at 1003. With a factual
attack, the moving party challenges the facts upon which
subject matter jurisdiction depends. Id. The Court
therefore must make its own findings of fact. Id. In
order to make its findings regarding disputed jurisdictional
facts, the Court “has wide discretion to allow
affidavits, other documents, and a limited evidentiary
hearing.” Id. (citing Ohio Nat'l Life
Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir.
1990); Wheeler v. Hurdman, 825 F.2d 257, 259 n.5
(10th Cir.), cert. denied, 484 U.S. 986 (1987)). The
Court's reliance on “evidence outside the
pleadings” to make findings concerning purely
jurisdictional facts does not convert a motion to dismiss
pursuant to Rule12(b)(1) into a motion for summary judgment
pursuant to Rule 56. Id.
argues that the Court lacks subject matter jurisdiction
because there is no single claim meeting the $75, 000 minimum
amount in controversy. Motion [#19] at 3.
Specifically, Defendant argues that because (1) accrued
attorneys' fees cannot be aggregated for purposes of
diversity jurisdiction, and (2) speculative attorneys'
fees cannot be considered to ...