Keswani v. Sovereign Jewelry Inc.

OPINION AND ORDER

KATHERINE POLK FAILLA UNITED STATES DISTRICT JUDGE

Plaintiff Jitender Keswani brings this pro se action against Satish Daryanani and Sovereign Jewelry Inc. (“Sovereign Jewelry, ” and together with Daryanani, “Defendants”), stemming from a dispute over a decade-long jewelry consignment relationship. Plaintiff claims that Defendants breached the terms of an oral contract and, further, that Defendants repeatedly defamed him, thereby causing damage to his reputation and stanching the flow of his jewelry business. For these alleged wrongs, Plaintiff seeks compensatory and punitive damages, as well as an accounting of any arrearages that Defendants believe Plaintiff owes them. Defendants move, unopposed, to dismiss Plaintiff's Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure Rule 12(b)(1) and, in the alternative, for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth in the remainder of this Opinion, the Court grants Defendants' unopposed motion to dismiss.

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BACKGROUND^[1]

A. Factual Background

1. Plaintiffs Business Relationship with Defendants Plaintiff, a citizen of New York, is involved in the retail sale of jewelry. (Compl. 3; Hr'g Tr. 7:7-18). In or about 2008, he founded a jewelry consignment business, with offices in New York, Los Angeles, and the Bahamas. (Hr'g Tr. 6:17-18, 11:1-13). Approximately one to two years after establishing his business, Plaintiff entered into an oral contract with Sovereign Jewelry, a wholesale supplier of jewelry, and its principal Daryanani. (See Compl. 4 (sourcing the beginning of the parties' business relationship to July 1, 2010, when the parties entered into an oral agreement)). Pursuant to the agreement, Defendants supplied jewelry to Plaintiff and extended loans to him

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for the purpose of purchasing additional jewelry and other business-related items. (Hr'g Tr. 7:7-8:1). In consideration of the jewelry received, Plaintiff paid the amounts listed on invoices that Defendants provided alongside the conveyances of jewelry. (Id. at 9:15-20, 13:13-19). Over the course of the next approximately ten years, Plaintiff paid Defendants more than $25 million for merchandise and services. (Compl. 4; Hr'g Tr. 18:18-24).

At an unspecified time prior to the commencement of this litigation, Defendants began accusing Plaintiff of being delinquent on payments owed to them and contacted Plaintiff's vendors to inform them of his outstanding debts. (Compl. 4 (“[L]ately Defendants began sabotaging [P]laintiff's flow of business and reputation by falsely accusing [P]laintiff of not fully paying them[.]”); see also Hr'g Tr. 13:23-14:4, 20:22-21:5). After a review of his records, Plaintiff believes he is current on his debt obligations to Defendants. (Compl. 4; Hr'g Tr. 19:20-22). Despite Plaintiff's repeated requests for an audit of the parties' business relationship, Defendants have refused to furnish Plaintiff with such historical information or an accounting of the amount he allegedly owes. (Compl. 4; Hr'g Tr. 18:18-24). Plaintiff rests his breach of contract claim on Defendants' failure to produce records of their relationship for the period from 2010 to 2020. (Compl. 4).

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2. The Bahamas Action^[2]

This case is not the only pending litigation arising out of Plaintiff's and Daryanani's commercial dealings. On July 24, 2020, Daryanani brought a breach of contract claim against Plaintiff and eight other individuals and entities in the jewelry business in the Supreme Court of the Commonwealth of the Bahamas. (See Bahamas Statement of Claim).^[3] Daryanani's claims against Plaintiff and the other defendants in the Bahamas Action are

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predicated on a written contract that was signed by Daryanani, Plaintiff, and two other individuals named in the Bahamas Action on or about October 2, 2019 (the “October 2019 Contract”).^[4] (See Id. at ¶ 6). The October 2019 Contract outlines the terms of a loan and the provision of consignment goods from Daryanani to Plaintiff and the other signatories. (Id. at ¶ 7(6)-(8)). In the Bahamas Action, Daryanani seeks $15 million in damages and the return of any unsold goods that were supplied by Daryanani on account of Plaintiff's and other defendants' alleged failure to make timely payments, all allegedly in violation of the terms of the October 2019 Contract. (Id. at ¶¶ 10-13; id., Prayer for Relief ¶ B(1), (4)).

On October 7, 2020, Plaintiff answered the Bahamas Statement of Claim and asserted a counterclaim against Daryanani, alleging Daryanani's breach of the October 2019 Contract and tortious interference with business relations.

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(See Def. Ex. C (the “Bahamas Defense”)). In his Bahamas Defense, Plaintiff contends that, at all relevant times, he was in full compliance with the terms of the October 2019 Contract. (Id. at ¶ 3.1).

B. Procedural Background

Plaintiff initiated the instant action on October 26, 2020, with the filing of the Complaint. (Dkt. #1). On November 19, 2020, Defendants filed a pre-motion letter requesting a conference to discuss their contemplated motion to dismiss the action. (Dkt. #10). On November 30, 2020, the Court issued an order scheduling a conference for December 15, 2020. (Dkt. #12). Plaintiff filed a response to Defendants' pre-motion submission on December 3, 2020 (Dkt. #13-14), and the pre-motion conference was held on December 15, 2020 (Dkt. #15). At the conference, the Court set a briefing schedule for Defendants' motion to dismiss. (See Minute Entry for December 15, 2020).

Defendants filed their motion to dismiss on February 16, 2021. (Dkt. #17-20). On April 13, 2021 - eight days past the deadline the Court set for Plaintiff's opposition papers - the Court sua sponte granted Plaintiff an extension of time to file his opposition until May 7, 2021. (Dkt. #23). On May 7, 2021, Plaintiff submitted a letter seeking an additional thirty days to file his opposition papers (Dkt. #24), which request the Court granted. (Dkt. #25). Following the expiration of this thirty-day period, on June 11, 2021, the Court sua sponte granted Plaintiff a third extension until June 28, 2021. (Dkt. #26). To date, Plaintiff has not submitted an opposition to Defendants' motion to

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dismiss. Therefore, the Court considers Defendants' motion unopposed, fully briefed, and ripe for decision.

DISCUSSION

Defendants move to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction (Def. Br. 24-25), as well as under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim (id. at 12-23). As the instant motion implicates both the Court's jurisdiction and the adequacy of Plaintiff's pleadings, the Court begins by outlining the applicable legal standards for both types of challenges.

A. Applicable Law

1. Motions to Dismiss Under Federal Rule of Civil Procedure 12(b)(1)

“Subject-matter jurisdiction is a threshold issue that must be addressed prior to the merits, ” Allen v. N.Y.C. Hous. Auth., No. 15 Civ. 173 (ALC), 2016 WL 722186, at *4 (S.D.N.Y. Feb. 19, 2016), and “a district court may properly dismiss a case for lack of subject matter jurisdiction under Rule 12(b)(1) if it lacks the statutory or constitutional power to adjudicate it, ” Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005) (internal quotation marks and citation omitted); accord Sokolowski v. Metro. Transp. Auth., 723 F.3d 187, 190 (2d Cir. 2013). “A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000).

Federal courts have original jurisdiction over civil actions in which the parties have diversity of citizenship and the amount in controversy exceeds

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$75, 000. 28 U.S.C. § 1332(a). This is known as diversity jurisdiction, as contrasted with jurisdiction based on the existence of a federal question. See 28 U.S.C. § 1331. Diversity jurisdiction requires complete diversity between the parties, meaning that no plaintiff has the same citizenship as any defendant. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005). Here, Plaintiff represents that he is a citizen of New York and that both Daryanani and Sovereign Jewelry are citizens of Florida (Compl. 3), and Defendants do not contest the citizenship requirement. Plaintiff seeks $66 million in monetary damages.

On a Rule 12(b)(1) motion, the challenge to subject matter jurisdiction may be facial or fact-based. Carter v. HealthPort Techs., LLC , 822 F.3d 47, 56 (2d Cir. 2016). As the instant motion is unopposed, and neither party has proffered any additional jurisdictional facts for the Court to consider, the Court construes Defendants' Rule 12(b)(1) arguments as a facial challenge. When considering a facial challenge, a court must determine whether the pleading “allege[s] facts that affirmatively and plausibly suggest that” subject matter jurisdiction exists. Id. (quoting Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011)). For purposes of a Rule 12(b)(1) facial challenge, a court accepts all factual allegations as true and draws all reasonable inferences in favor of the plaintiff asserting jurisdiction. Id. at 57.

2. Motions to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)

“[A]lthough a party is of course to be given a reasonable opportunity to respond to an opponent's motion, the sufficiency of a complaint is a matter of

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law that the court is capable of determining based on its own reading of the pleading and knowledge of the law.” McCall v. Pataki, ...