United States District Court, S.D. New York
OPINION AND ORDER
GABRIEL W. GORENSTEIN, District Judge.
The plaintiff in this action, Digizip.com, Inc. ("Digizip"), has brought claims for breach of contract and unjust enrichment under New York law against the defendants, which we will refer to collectively as "Verizon." Verizon now moves to dismiss Digizip's complaint pursuant to Fed.R.Civ.P. 12(b)(1) or 12(b)(6), or, in the alternative, for summary judgment pursuant to Fed.R.Civ.P. 56. The parties agreed to conduct all proceedings in this case before a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). For the reasons that follow, we conclude that Digizip assigned its claims and thus lacks standing to pursue them. However, we will stay entry of any judgment to determine whether a nonparty, Wholesale Carrier Services, Inc. ("WCS"), seeks to ratify, join, or be substituted in as the real party in interest pursuant to Fed.R.Civ.P. 17(a)(3).
Digizip entered into a series of written contracts, referred to as "Service Agreements, " with each of the defendants. See Complaint and Jury Demand, filed Mar. 13, 2014 (Docket # 2) ("Compl." or "complaint"), ¶ 2. Under these Service Agreements, Digizip resold Verizon's telephone services to businesses in New York, New Jersey, Massachusetts, and Pennsylvania. Id . Digizip alleges that the parties transacted business under the Service Agreements from July 1, 2005 until December 31, 2012. Id.
Each of the Service Agreements contained a section entitled "Tax Exemptions and Exemption Certificates." See id. ¶¶ 28, 30, 32, 35. This section provided that if Digizip was exempt from paying a tax and complied with the procedures to certify that exemption, Verizon would not collect that tax. See id. Digizip contends that it was exempt from certain surcharges and taxes, and that it provided Verizon with the necessary proof of this exempt status, but that Verizon nonetheless continued to include those surcharges and taxes on its monthly bills to Digizip from approximately September 2005 through November 2011. Id . ¶¶ 3, 36, 39. By Digizip's calculation, the total amount it paid to Verizon in exempt surcharges over this period was $386, 451.57. See id. ¶ 9. Digizip first discovered these overpayments in April 2013. Id . ¶ 39. When Digizip brought the issue to Verizon's representative, Verizon refused to credit Digizip for its past overpayment. Id . ¶¶ 40-41.
Prior to that date, however, on December 21, 2012, Digizip sold its business to WCS. See Purchase and Sale Agreement (annexed as Ex. 1 to Schneider Decl.), at 1. That sale was accomplished through a transfer of assets from Digizip to WCS. See id. § 3.01.
Digizip filed its complaint in the instant case on March 13, 2014. It seeks to recover $386, 451.57 in damages for breach of contract and the same amount for unjust enrichment, plus interest, attorney's fees, court costs, and disbursements. Compl. ¶¶ 46, 50. Verizon has moved (1) to dismiss all claims for lack of standing; (2) to dismiss all claims based on a purported settlement; (3) to dismiss the unjust enrichment claim; and (4) to dismiss any claims for damages arising prior to March 13, 2008 on statute of limitations grounds. See Verizon Mem. at 6-18. Because we find that Digizip lacks standing, we do not reach any of the other arguments raised by Digizip. We conclude by discussing the application of Fed.R.Civ.P. 17(a)(3), which allows a real party in interest to ratify, join, or substitute in a lawsuit.
A. Rule 12(b)(1)
"It is well established... that before a federal court can consider the merits of a legal claim, the person seeking to invoke the jurisdiction of the court must establish the requisite standing to sue." Whitmore v. Arkansas, 495 U.S. 149, 154 (1990). Although challenges to standing have "sometimes" been brought under Fed.R.Civ.P. 12(b)(6), "the proper procedural route is a motion under Rule 12(b)(1)." Alliance for Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 88 n.6 (2d Cir. 2006). In considering a Rule 12(b)(1) motion to dismiss for lack of standing, the court "may refer to evidence outside the pleadings." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (citing Kamen v. AT&T Co., 791 F.2d 1006, 1011 (2d Cir. 1986)).
Under Article III of the United States Constitution, federal courts may hear only "[c]ases" and "[c]ontroversies." U.S. Const. art. III, § 2, cl. 1. Thus, "[i]f plaintiffs lack Article III standing, a court has no subject matter jurisdiction to hear their claim." Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 433 F.3d 181, 198 (2d Cir. 2005); accord Altman v. Bedford Cent. Sch. Dist., 245 F.3d 49, 69 (2d Cir. 2001). To satisfy the Article III standing requirement, the plaintiff must show: (1) that he or she "suffered an injury in fact - an invasion of a legally protected interest which is (a) concrete and particularized... and (b) actual or imminent, not conjectural or hypothetical;" (2) that there was a "causal connection between the injury and the conduct complained of;" and (3) that it is "likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (citations and internal quotation marks omitted). The plaintiff must support each of these elements of standing "in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation." Id. at 561.
Invoking both Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 56, Verizon argues that the claims at issue here are barred by a document executed prior to the sale. See Verizon Mem. at 6-11, 13-15; Reply Mem. at 7-13. See generally Consent to Assignment of Contracts from Digizip.com, Inc. ("Digizip") to Wholesale Carrier Services, Inc. ("WCS") (annexed as Ex. 1 to Plummer Aff.). Verizon argues in the alternative that the claims at issue were assigned to WCS and thus can no longer be brought by Digizip. See Verizon Mem. at 11-13, 15; Reply Mem. at 3-7. Digizip opposes both arguments and also argues that if it did assign the claims to WCS, WCS subsequently assigned them back to Digizip. See ...