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Cai v. Frequency Networks, Inc.

United States District Court, E.D. New York

November 3, 2017

MARIA CAI, Plaintiff,



         Pro se Plaintiff Maria Cai brings this action against Defendant Frequency Networks, Inc. alleging a breach of contract. Defendant moves for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), or, in the alternative, to dismiss the complaint for lack of jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). Defendant also moves for attorneys' fees.


         In 2013, Plaintiff, a citizen of New York, began raising capital for Defendant, a California-based company.[1] (Am. Compl. 4-5, ECF No. 5.) Plaintiff and Blair Harrison, Defendant's CEO, agreed that Defendant would pay Plaintiff a $35, 000 consultant fee on each monthly invoice she sent to the company. (Id.) Plaintiff sent the company three invoices. (Id.) Defendant sent Plaintiff one check for $35, 000, dated March 13, 2014. (Id. at 5, 10.) On the same day, Harrison sent Plaintiff an email in which she asked Plaintiff to agree that the email would “confirm our agreement that this payment of $35, 000 for consulting services plus the 75, 000 share stock option grant together constitute payment in full by Frequency of any and all amounts owed to you as of this date for any reason whatsoever.” (Answer to Am. Compl. Ex. A, ECF No. 12-1.) In the email, Harrison asked Plaintiff to reply that she agreed to the statement. (Id.) The next day, Plaintiff responded, “I Confirm.” (Id.) Harrison then forwarded the email exchange to two employees of Defendant, Rita Tocco and Mike Gordon, writing, “Confirmation of full and final settlement with Maria Tsai.” (Id.)

         On June 9, 2016, Plaintiff commenced this diversity action, alleging that Defendant owed her $70, 000 in business commission fees for the two unpaid invoices, 75, 000 shares of stock in cash value, and $315 for a cellphone. (See Compl. 5.) On July 13, 2016, the Court dismissed Plaintiff's complaint for failure to satisfy the amount-in-controversy requirement. (See Order to File an Amended Complaint, ECF No. 4.) Plaintiff was granted thirty days to amend. (Id.)

         Plaintiff filed an amended complaint on July 18, 2016, alleging that Defendant owes her $70, 000 in commission, “75, 000 shares of stock” at a price of “$1 per share or more after years of business evaluation, ” and $315 for a cellphone. (See Am. Compl. 5-6.) In the amended complaint, Plaintiff maintained that when her stock matured “after one year from issue date, [she] still could not liquidate it.” (Am. Compl. 5.) In support of her claim, Plaintiff attached a Stock Option Agreement between Defendant and Plaintiff dated March 10, 2014. (Am. Compl. 8.) Pursuant to the Stock Option Agreement, Defendant granted Plaintiff the option to purchase 75, 000 shares of common stock, at an exercise price of $0.195 per share. (Id.) The option to purchase is set to expire on March 9, 2024. (Id.)

         On November 23, 2016, Defendant filed an answer, denying the allegations and asserting as affirmative defenses that: (1) the amended complaint fails to state a claim upon which relief can be granted; (2) the Court lacks subject-matter jurisdiction because Plaintiff has not met the amount-in-controversy requirement to establish diversity jurisdiction under § 28 U.S.C. 1332; (3) the Eastern District of New York is the improper venue for the action because Defendant is a California company and the events giving rise to the claim occurred in California; (4) Plaintiff was paid in full for any and all amounts owed; (5) Plaintiff released her claim against Defendant; and (6) Plaintiff's claims are barred by the doctrines of accord and satisfaction, promissory estoppel, and fraud in the inducement. (See Answer.) On March 31, 2017, Defendant filed the instant motion.


         When a party moves for dismissal under Federal Rule of Civil Procedure 12(b)(1) and on other grounds, courts consider the Rule 12(b)(1) challenge first. See Rhulen Agency, Inc. v. Alabama Ins. Guar. Ass'n, 896 F.2d 674, 678 (2d Cir. 1990). If a court finds that it lacks subject matter jurisdiction, “then the accompanying objections and defenses become moot.” Id.

         A case is properly dismissed under Rule 12(b)(1) for lack of subject matter jurisdiction when “the district court lacks the statutory or constitutional power to adjudicate it.” Pivotal Payments, Inc. v. FVA Ventures, Inc., No. CV 11-5713, 2012 WL 3887360, at *2 (E.D.N.Y. July 30, 2012) (quoting Makarova v. U.S., 201 F.3d 110, 113 (2d Cir. 2000)). A party invoking federal jurisdiction “must allege in [its] pleading the facts essential to show jurisdiction, ” and “must support [those facts] by competent proof.” U.S. ex rel Phipps v. Comprehensive Cmty. Dev. Corp., 152 F.Supp.2d 443, 448 (S.D.N.Y. 2001) (quoting McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 178 (1936).

         On a Rule 12(b)(1) motion, “the court must accept all factual allegations in the complaint as true and draw inferences from those allegations in the light most favorable to the plaintiff.” Jaghory v. New York State Dep't of Educ., 131 F.3d 326, 329 (2d Cir. 1997). The court may refer, however, to evidence outside the pleadings. See Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). When a plaintiff proceeds pro se, in addition, the court will read her submissions liberally and “interpret them to raise the strongest arguments that they suggest.” Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994) (citing Mikinberg v. Baltic S.S. Co., 988 F.2d 327, 330 (2d 1993)). Yet, still, a pro se “plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Makarova, 201 F.3d at 113.


         I. Subject Matter Jurisdiction

         Federal courts are courts of limited jurisdiction and may not preside over cases absent subject matter jurisdiction. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005); Frontera Res. Azerbaijan Corp. v. State Oil Co. of Azerbaijan Republic, 582 F.3d 393, 397 (2d Cir. 2009). The requirement of subject matter jurisdiction cannot be waived. See United States v. Cotton, 535 U.S. 625, 630 (2002). In other words, when a court lacks subject ...

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