Aimsley Enterprises Inc. v. Merryman

Background

Aimsley Enterprises Inc. and the other named plaintiffs are companies that marketed dietary supplements and beauty products online. Each plaintiff entered a substantially identical agreement with Affinitas Medios De Pagos, SAPI de CV (AMDP), which was to authorize, process, and settle customers’ credit-card transactions. The plaintiffs alleged that AMDP stopped making timely deposits, continued deducting fees, and ultimately acknowledged owing at least $269,076.36 before later asserting that only $867.50 was owed after deductions.

The plaintiffs asserted claims against AMDP for negligence, conversion, money had and received, violation of California’s Unfair Competition Law, and, alternatively, breach of contract. They asserted claims against Doug E. Merryman and OPMNY, LLC for conversion, money had and received, violation of California Penal Code section 496, and violation of the Unfair Competition Law. The complaint incorporated allegations from two other lawsuits, including allegations that funds were transferred through OPMNY to another company controlled by Merryman and that Merryman diverted funds for personal gain. The court noted that it did not resolve factual disputes about chargebacks or other contested facts in deciding the motions.

AMDP’s Motion

AMDP moved under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(3), and alternatively under the doctrine of forum non conveniens. Forum non conveniens is a doctrine allowing a court to dismiss a case when an adequate and more appropriate foreign forum is available. AMDP argued that the plaintiffs could not satisfy the amount-in-controversy requirement for diversity jurisdiction and that the agreements required disputes to be arbitrated or litigated in Mexico.

The court rejected AMDP’s amount-in-controversy arguments. It held that contractual limits on damages could not be used at the pleading stage to show that the jurisdictional threshold could not be met. It also held that, although damages generally could not be aggregated across separate plaintiffs, AMDP conceded that Everly’s claim alone was at least $75,000 before possible additional damages and other relief were considered. The court therefore declined to dismiss for lack of the required amount in controversy.

The court enforced the agreements’ forum-selection provisions. The agreements required arbitration in Mexico for disputes concerning reserve funds and litigation in the Mexican Federal Court in Mexico City for other disputes concerning the agreements’ interpretation or performance. The court found that the plaintiffs had not shown that the provisions were procured by fraud or overreaching, violated a strong public policy of the current forum, or would deprive them of a fair opportunity to litigate. The court also rejected the argument that dismissal was improper because Merryman and OPMNY might not be subject to suit in Mexico. AMDP’s motion to dismiss was granted in part on the forum-selection grounds, and AMDP was dismissed from the case.

Merryman and OPMNY’s Motion

Merryman and OPMNY moved to dismiss based on alleged lack of complete diversity, an insufficient amount in controversy, inadequate alter-ego allegations, and failure to state claims for conversion, violation of Penal Code section 496, and money had and received. The court denied the motion in its entirety.

The plaintiffs conceded that Rosland Operations Inc. and OPMNY shared Georgia citizenship. The court dismissed Rosland as a party-plaintiff, allowing the plaintiffs to avoid dismissal for lack of complete diversity. The court denied dismissal based on the amount in controversy for the reasons discussed in the AMDP section.

The court also held that the complaint plausibly alleged Merryman’s individual liability. Although Merryman argued that the plaintiffs had insufficiently pleaded that he was OPMNY’s alter ego, the court found that the allegations described alleged personal wrongdoing, including commingling funds, diverting money for personal gain, altering records, and siphoning money from the plaintiffs’ funds. Under the law discussed by the court, a company manager may be personally liable for his own tortious conduct without requiring the plaintiffs to pierce the corporate veil.

Finally, the court rejected the argument that the conversion, Penal Code section 496, and money-had-and-received claims failed because Merryman and OPMNY allegedly no longer possessed the funds. The court concluded that none of those claims required the defendants to retain possession of the funds. The court noted that later proceedings might address whether the conversion claim identified a sufficiently specific sum and whether the Penal Code section 496 claim was viable for other reasons, because those issues had not been adequately briefed.

Disposition

The court granted in part AMDP’s motion to dismiss and dismissed AMDP. The court dismissed Rosland Operations Inc. as a party-plaintiff. The court denied Merryman and OPMNY’s motion to dismiss in its entirety and ordered them to answer the amended complaint within 30 days. The court also set a case-management hearing for May 18, 2020. Judge Yvonne Gonzalez Rogers did not decide the ultimate merits of the plaintiffs’ claims in this order.