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Josiane Hird v. Imergent

January 6, 2011

JOSIANE HIRD, PLAINTIFF,
v.
IMERGENT, INC., STEVEN G. MIHAYLO, CLINT SANDERSON, BRANDON B. LEWIS, ROBERT M. LEWIS,DONALD L. DANKS, DAVID L. ROSENVALL, DAVID T. WISE, PETER FREDERICKS, THOMAS SCHEINER, DEFENDANTS.



OPINION & ORDER

Pro se plaintiff Josiane Hird brings this action for breach of contract and fraud. Certain defendants have moved to dismiss the plaintiff's complaint, or in the alternative, to compel arbitration. For the following reasons, the motion to compel arbitration is granted.

BACKGROUND

The following facts are taken from the plaintiff's July 27, 2010 second amended complaint as well as her submissions of May 17 and August 5, 2010. Plaintiff is a New York City resident who contracted with defendant StoresOnline Inc. ("StoresOnline"), a Utah corporation, to purchase six "web-stores." StoresOnline "sells software and service packages for starting and conducting business on the internet." StoresOnline is owned by defendant iMergent, Inc. ("iMergent"), a Delaware corporation, which holds seminars in hotels around the country for customers interested in starting an internet business. Also named as defendants are nine individuals, two of whom are executive officers of StoresOnline and iMergent ("Officer Defendants") and seven of whom are described as current or former directors of iMergent (the "Director Defendants").*fn1

Plaintiff asserts that a number of representations were made to her during seminars conducted by StoresOnline in 2005. Plaintiff was "assured" that she would make at least $70,000 to $80,000 per web-store per year. She was also told that StoresOnline customers would be able to "have their sites hosted anywhere on the W[eb]."

Relying on these representations, on or about June 29, 2005, plaintiff entered into a contract with StoresOnline for the purchase of six web-stores ("the contract"). The contract contains an arbitration clause, which reads as follows:

By execution of this Order Form Agreement (the "Agreement"), purchaser/customer ("Merchant") and StoresOnline, Inc. ("Company") hereby consent and agree that any and all disputes that arise between them concerning this Agreement or any of the terms of this Agreement, or that concern any aspect of the relationship between Merchant and Company, shall be decided exclusively in binding arbitration conducted by the American Arbitration Association ("AAA"). . . . Merchant and Company consent and agree that the AAA shall have exclusive and sole jurisdiction to decide all disputes between Merchant and Company, and Merchant and Company decide that the AAA arbitrator shall exclusively apply Utah law to the dispute . . . . [I]n the event that Merchant or Company files any court proceeding in violation of this contractually agreed-upon arbitration requirement, the party who is required to appear in any Court proceeding to defend against such proceeding shall be entitled to an immediate stay and dismissal of such Court proceeding . . . . (Emphasis supplied).

Despite weekly telephone calls to StoresOnline over the next year and a half, the plaintiff was unable to operate her websites. When plaintiff demanded back the money that she had paid to StoresOnline, she was informed that she would not be given any refund.

On January 11, 2010, plaintiff filed this lawsuit against StoresOnline, iMergent, and the two Officer Defendants. The case was assigned to the Honorable Denny Chin, United States District Judge. On March 3, 2010, StoresOnline was voluntarily dismissed from this action at the plaintiff's request, and the plaintiff initiated an arbitration proceeding against StoresOnline before the American Arbitration Association.

On March 25, the remaining defendants moved to dismiss the lawsuit or, in the alternative, to compel arbitration. On March 30, the plaintiff filed an amended complaint seeking contract, compensatory, and punitive damages. By Order of April 1, Judge Chin denied the March 25 motion, which was addressed to the original complaint, and directed the defendants to answer or move with respect to the amended complaint by April 25.

On April 23, iMergent and the Officer Defendants moved to dismiss the amended complaint. On May 12, the case was reassigned to this Court. Plaintiff's opposition papers were filed on May 17, and defendants' reply was filed on June 4.

In her May 17 opposition papers, plaintiff argued that the defendants are the "alter egos" of StoresOnline and asserted that they committed fraud as well as breach of contract. These assertions were not pleaded in the plaintiff's amended complaint. Accordingly, on July 1, the Court issued an Order (the "July 1 Order") directing the plaintiff to file a second amended complaint by July 23 "if she wishe[d] to assert an alter-ego theory of breach of contract and/or a fraud claim against the defendants." The July 1 Order also advised the defendants that they could make a further submission in support of their April 23 motion by July 30, if they wished to do so.

The plaintiff filed her second amended complaint on July 27. In the second amended complaint, the plaintiff retains all of the existing defendants and adds the seven Director Defendants. To date, only two of the Director Defendants --David L. Rosenvall ("Rosenvall") and David T. Wise ("Wise") --have been served.*fn2 On July 29, iMergent and the Officer Defendants made a further submission in support of their motion to compel arbitration. Hird filed a response to this supplemental submission on August 5.*fn3

Plaintiff's second amended complaint failed to plead any basis for this Court's subject matter jurisdiction. Thus, by Order dated August 26, the parties were instructed to submit a letter addressing whether the Court had subject matter jurisdiction over the action. The plaintiff was also directed to provide the Court with a statement of the steps she had taken to serve a summons and complaint upon the Director Defendants that were added in her second amended complaint. By Order dated December 22, the Court determined that it has subject matter jurisdiction over this case. The December 22 Order also instructed iMergent to provide Hird with the current or last known addresses of the five Director Defendants who had not yet been served. Plaintiff was given until January 21, 2011 to deliver original signed copies of the second amended complaint to the United States Marshall Service for service upon these remaining defendants.*fn4

DISCUSSION iMergent and the four individual defendants who have been served move to compel arbitration of plaintiff's claims. Plaintiff appears to oppose arbitration on two grounds. First, Hird asserts that she only agreed to arbitrate her disputes with StoresOnline and did not make a similar agreement with any of the other defendants. Second, the plaintiff contends that her agreement with StoresOnline is unenforceable in ...


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