Rothschild v. The Pacific Companies

Background

Thomas E. Rothschild was proceeding without paying the filing fee. The court had previously screened his original complaint and allowed him to amend allegations concerning subject-matter jurisdiction, meaning the court’s power to hear the case. Rothschild then filed a first amended complaint and a second amended complaint. The second amended complaint was the operative complaint.

The remaining claims were for fraud, civil conspiracy, tortious interference with business expectancy, breach of contract, nuisance, and “personal injury.” Rothschild brought those state-law claims against The Pacific Companies, Caleb Roope, Stephanie Ann Gildred, Lorton Management Corporation, and Byldan Corporation.

Screening and jurisdiction

Under 28 U.S.C. § 1915(e)(2), a court must screen a complaint filed without the filing fee and dismiss it if, among other things, it fails to state a claim or the allegation of poverty is untrue. The court found that the second amended complaint failed to state a claim under that statute.

Because the second amended complaint contained no federal-law claims, the court determined that federal-question jurisdiction was unavailable. The court therefore considered whether diversity jurisdiction could exist. Rothschild alleged that he was domiciled in Scottsdale, Arizona; that Stephanie Gildred was domiciled in Tacoma, Washington; and that The Pacific Companies was incorporated in Idaho and headquartered in Eagle, Idaho. The court found those allegations sufficient as to Rothschild and those two defendants.

The court found insufficient allegations concerning Caleb Roope’s domicile and the place of incorporation and principal place of business of Byldan Corporation and Lorton Management Corporation. The court explained that a corporation generally has citizenship in its state of incorporation and in the state containing its principal place of business, and that merely alleging a company is located in a state or has an address there is not enough. Without additional information, the court could not determine whether complete diversity existed.

The court also found that most of the claims consisted largely of bare statements of the legal elements rather than enough factual allegations to support liability. It instructed Rothschild to provide facts supporting each claim and stated that he could incorporate the facts from his “Nexus of Events” section into the individual claims.

Information about the filing-fee waiver

The court identified a possible inconsistency between Rothschild’s filing-fee application, in which he reported no income from business, profession, or self-employment, and an allegation in an amended complaint in a related case that he worked in real estate. The court stated that dismissing a case based on an untrue poverty allegation requires bad faith, not merely inaccuracy. It ordered Rothschild to submit a revised application stating whether he currently worked in real estate, whether he did so when he filed the June 2023 application, and why any undisclosed income was omitted.

Disposition

The court ordered Rothschild to file a third amended complaint and a revised application to proceed without paying the filing fee by September 22, 2023. The court continued the case-management conference, originally scheduled for September 14, 2023, by 90 days. The court stated that if Rothschild failed to file a timely third amended complaint or failed to address all identified deficiencies, it would recommend that the action be dismissed. The order did not itself dismiss the action.