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Gastrocare, PC v. Trxservices, LLC

United States District Court, N.D. Alabama, Western Division

June 16, 2017

GASTROCARE, PC, Plaintiff,
v.
TRXSERVICES, LLC d/b/a/ TRANSACTION SERVICES, [1] Defendant.

          MEMORANDUM OPINION [2]

          JOHN H. ENGLAND, III UNITED STATES MAGISTRATE JUDGE.

         Plaintiff GastroCare, PC (“GastroCare”) initiated this action against Defendant TrxServices d/b/a Transaction Services (“TRX”) alleging state law claims for breach of contract, unjust enrichment, and fraud arising out of a business relationship whereby TRX provided GastroCare with credit/debit card transaction services. (Doc. 1). Thereafter, TRX filed a motion to dismiss for lack of subject-matter jurisdiction pursuant Federal Rule of Civil Procedure 12(b)(1) contending the amount in controversy is not met and, alternatively, for forum non-conveniens based on a forum selection clause. (Doc. 10). GastroCare filed a response in opposition to the motion to dismiss, (doc. 13), TRX filed a reply brief, (doc. 14), and GastroCare has filed a sur-reply, (docs. 19 & 20).

         Awaiting a ruling on the motion to dismiss, GastroCare filed a motion to amend its complaint, requesting to add “individuals involved in the conduct made the basis of this lawsuit” as defendants. (Doc. 21). Specifically, GastroCare moves to add David Jennings and David Leppek as defendants, alleging “David Leppek is the President of TRX and is responsible for the actions of David Jennings and others whose wrongful actions were carried out in the line and scope of their duties with TRX.” (Doc. 21 at 4-5). There are no other new allegations in the proposed amended complaint. (See Id. at 4-9). TRX opposed the motion to amend, (doc. 25), and GastroCare replied, (doc. 26).

         The court will “freely grant” a motion to amend “when justice so requires.” Fed.R.Civ.P. 15(a)(2). The court's discretion in deciding whether to grant or deny a motion to amend, however, is not unlimited. Grayson v. K Mart Corp., 79 F.3d 1086, 1110 (11th Cir. 1996) (citing Espey v. Wainwright, 734 F.2d 748 (11th Cir. 1984); Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594 (5th Cir. 1981)). A district court should allow a plaintiff to amend unless there is a “substantial countervailing reason.” Id. Such “substantial countervailing reasons” include: undue delay, bad faith or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and the futility of the amendment. Id. (citing Nolin v. Douglas Cnty., 903 F.2d 1546, 1550 (11th Cir. 1990)).

         The futility threshold is akin to that for a motion to dismiss; thus, if the amended complaint could not survive such scrutiny, the amendment is futile and leave to amend is properly denied. B.D. Stephenson Trucking LLC v. Riverbrooke Capital Partners, LLC, No. 06-0343-WS-M, 2006 WL 2772673, at *6 (S.D. Ala. Sept. 26, 2006) (citing Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 (11th Cir. 1999)); see also Fla. Power & Light Co. v. Allis Chalmers Corp., 85 F.3d 1514, 1520 (11th Cir. 1996). As explained below, because allowing the proposed amended would be futile, the motion to amend, (doc. 21), is DENIED.

         Whether proceeding under the original complaint or the proposed amended complaint, GastroCare cannot prove the amount in controversy is met, and the motion to dismiss (doc. 10), is due to be GRANTED.

         I. Standard of Review

         Federal courts are courts of limited jurisdiction, with the power to hear only cases authorized by the Constitution or by statute. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Under Federal Rule of Civil Procedure 12(b)(1), a party may move the court to dismiss a case if the court lacks jurisdiction over the subject matter of the case. Even when a party does not assert a jurisdictional challenge, “a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.” Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir.2005). Simply put, a federal court is powerless to act beyond its constitutional or statutory grant of subject-matter jurisdiction. Smith v. GTE Corp., 236 F.3d 1292, 1299 (11th Cir.2001). Regardless of how the issue came before the court, a plaintiff, as the party invoking jurisdiction, bears the burden of establishing the court's subject-matter jurisdiction. Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir.1994).

         A challenge to a court's subject matter jurisdiction may come by way of a facial attack or a factual attack:

Facial attacks on the complaint require the court merely to look and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion. Factual attacks, on the other hand, challenge the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered.

Garcia v. Copenhaver, Bell & Assocs., M.D.s, 104 F.3d 1256, 1261 (11th Cir.1997) (citations omitted).

         Because the TRX relies on documents which are outside of the pleadings, (see docs. 10-1 & 14-1), its challenge to the court's subject-matter jurisdiction is a factual attack. Under such an attack, “no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.” Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir.1990) (per curiam) (citation omitted). Indeed, “[i]n the face of a factual challenge to subject matter jurisdiction, the burden is on the plaintiff to prove that jurisdiction exists.” OSI, Inc. v. United States, 285 F.3d 947, 951 (11th Cir.2002); Motta v. United States, 717 F.3d 840, 844 (11th Cir.2013). However, a court may only find that it lacks subject matter jurisdiction “if the facts necessary to sustain jurisdiction do not implicate the merits of plaintiff's cause of action.” Morrison v. Amway Corp., 323 F.3d 920, 925 (11th Cir.2003) (citations omitted). When a jurisdictional challenge implicates the merits of the plaintiff's claim, the court must “find that jurisdiction exists and deal with the objection as a direct attack on the merits of the plaintiff's case.” Id. (citations omitted). This ensures “a greater level of protection for the plaintiff who in truth is facing a challenge to the validity of his claim: the defendant is forced to proceed under Rule 12(b)(6) . . . or Rule 56 . . . both of which place great restrictions on the district court's discretion.” Id. (citations omitted) (alterations in original).

         II. Factual Background

         According to the complaint, in January 2013, David Jennings of TRX approached someone with GastroCare about providing its medical practice with credit/debit card transactions services. (Doc. 1 at ¶5). GastroCare contends TRX provided it with quotations and applications stating GastroCare would be charged ten cents ($0.10) per transaction plus a fee of thirty base points (0.3%), (see doc. 10-1 at 7) and, through its principals, GastroCare agreed for TRX to provide these services to GastroCare and another related entity. (Id. at ¶¶6-7). GastroCare further alleges TRX has provided these services since early April 2013, and that it has since discovered TRX has been deducting thirty percent (30%) instead of thirty base points (0.3%). (Id. at ¶¶8-9). The complaint states GastroCare requested TRX return all of these funds, but TRX refused to do so. (Id. at ¶10). GastroCare requests $72, 902.96, it claims TRX wrongfully deducted over a period of thirty-eight months (April 2013 to June 2016), pre-judgment interests ($6, 943.99), and unspecified punitive damages for fraud. (Id. at ¶12-14).

         According to an affidavit submitted by David Leppek, who has been employed by TRX since February 2010, and who is the current president of TRX, GastroCare entered into a Merchant Application and Agreement with TRX on or about March 18, 2013 (the “Merchant Agreement”) (Doc. 10-1 at ¶2, 6-8, 10-13). The Merchant Application specifically referenced and incorporated terms and conditions, including a limitation of liability as follows:

For purposes of this Agreement, Bank and ISO are collectively referred to hereinafter as the “Bank.” The Bank ...

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