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McAllister v. Dispute Prevention and Resolution, Inc.

United States District Court, D. Hawaii

January 7, 2020



          Derrick K. Watson United States District Judge

         On November 8, 2019, the Court dismissed the civil complaint filed by pro se Plaintiff Willis McAllister and granted him leave to file an amended complaint by December 16, 2019. On December 17, 2019, McAllister filed his first amended complaint (FAC), Dkt. No. 19, [2] along with a motion requesting that the Court instruct the U.S. Marshal to execute service of process on Defendants Dispute Prevention and Resolution, Inc.; Keith W. Hunter; and Stefan M. Reinke, Esq. Dkt. No. 20. Because McAllister has failed to correct the deficiencies in his complaint, and otherwise fails to state a claim, this action is DISMISSED WITHOUT LEAVE TO AMEND.[3]

         I. Screening

         The standard for dismissing a complaint on the grounds that it fails to state a claim is the same under 28 U.S.C. Section 1915(e)(2)(B)(ii) and Fed.R.Civ.P. 12(b)(6). Barren v. Harrington, 152 F.3d 1193, 1194 (9th Cir. 1998); Jones v. Schwarzenegger, 723 Fed.Appx. 523, 524 (9th Cir. 2018); see also Wilhelm v. Rotman, 680 F.3d 1113, 1121 (9th Cir. 2012) (same standard under Section 1915A). The Court must take the allegations in the complaint as true, excluding those allegations that are merely conclusory, and if the complaint does not “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face, ” the Court must dismiss the action. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although the Court liberally construes a pro se Complaint, Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987), the Court cannot act as counsel for a pro se litigant, such as by supplying the essential elements of a claim. Pliler v. Ford, 542 U.S. 225, 231 (2004); Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982).

         In McAllister's FAC, Dkt. No. 19, he asserts that in an underlying employment discrimination case, [4] the court issued a February 22, 2018 Order, requiring the parties to arbitrate all claims and staying the case, pending the completion of the arbitration. See Id. at 5, 13; Order, McAllister v. Hertz Global Holdings, Inc., No. 1:17-cv-00146 (D. Haw. Feb. 22, 2018), ECF No. 68 [hereinafter “Hertz”]. McAllister alleges that on October 18, 2018, he entered into a contract with Defendants DPR, Hunter, and Reinke, when he sent a signed agreement via email to Kelly Bryant at DPR. See Dkt. No. 20 at 7. Under this “contract, ” McAllister alleges the parties agreed to participate in binding arbitration with Reinke serving as the arbitrator. Id.

         On July 1, 2019, Defendant Hunter, President of DPR, sent a letter to the parties in the underlying case, informing them that DPR and Reinke had “made the decision to withdraw” and that they would “refund in full all deposits received.” Dkt. No. 1-7; see Dkt. No. 19 at 11. McAllister then filed a motion in the underlying action, requesting that the court order Reinke and Hunter to (a) show cause why they should not be sanctioned, and (b) explain why they withdrew from the arbitration process. Hertz, No. 1:17-cv-146 (D. Haw. July 31, 2019), ECF No. 60. The motion was denied, the court reasoned, because it lacked jurisdiction to intervene. Entering Order at 1, Hertz, No. 1:17-cv-146 (D. Haw. Aug. 7, 2019), ECF No. 62. McAllister's lawsuit in Hertz remains stayed pending the completion of arbitration.

         In the instant action, McAllister seeks $1.5 million in damages from Defendants DPR, Hunter, and Reinke. Dkt. No. 19 at 22. McAllister avers Defendants breached their contract to arbitrate the dispute when they withdrew from the arbitration process. Id. at 11, 15. Because McAllister is African American and Defendants did not offer a reason for withdrawing, McAllister maintains that Defendants withdrew “because of his race.” Id. McAllister asserts claims for breach of contract in violation of 28 U.S.C. Section 1332; violation of 42 U.S.C. Section 1981;[5] and conspiracy to violate civil rights in violation of 42 U.S.C. Section 1985. The FAC, however, is plagued by the same defects previously identified by the Court, Dkt. No. 13; that is, McAllister's “bare assertions . . . amount to nothing more than a ‘formulaic recitation of the elements' of a constitutional discrimination claim.” Iqbal, 556 U.S. at 681 (quoting Twombly, 550 U.S. at 555).

         A. Breach of Contract

         McAllister has no claim under 28 U.S.C. Section 1332 because that statute does not establish substantive rights or any cause of action; Section 1332 merely grants federal courts the power to exercise jurisdiction over state law claims (e.g., breach of contract claims) between citizens of different states where the amount in controversy exceeds $75, 000, exclusive of interests and costs. See Exxon Mobil Corp. v. Allapattah Servs., 545 U.S. 546, 552-53 (2005). To sustain a claim for breach of contract, a plaintiff must allege: (1) the existence of a contract;[6] (2) plaintiff's performance; (3) defendant's failure to perform an obligation under the contract; and (4) damages as a result of failure to perform. See Calipjo v. Purdy, 439 P.3d 218, 225 (Haw. 2019). The FAC founders on elements one, three and four.

         First, although McAllister alleges the existence of a signed contract with Defendants by virtue of his October 18, 2018 email, there is not an enforceable contract because nothing in the FAC suggests that the purported contract was supported by consideration. Calipjo, 439 P.3d at 233; Douglass v. Pflueger Haw., Inc., 135 P.3d 129, 143 (Haw. 2006) (defining consideration).

         Second, as in McAllister's original complaint, the FAC does not contain facts showing that Defendants had an obligation under the terms of the contract to arbitrate the case, much less that, according to the terms of the agreement, Defendants breached their obligation. See Johnson v. Fed. Home Loan Mortg. Corp., 793 F.3d 1005, 1007 (9th Cir. 2015) (state law breach of contract claim properly dismissed because complaint did not allege any facts that showed defendant had a contractual duty to service loan). It is telling that, for the second time, the terms of any agreement, and the agreement itself, are absent from the FAC.

         Third, the FAC does not identify damages that McAllister incurred as a result of Defendants' alleged withdrawal from the arbitration process. Defendants agreed to reimburse any deposits made to the parties when they stated their intent to withdraw, there can hardly be a serious dispute that Defendants are not the only arbitrators locally available, and there has been no consequence in Hertz as a result of the arbitration delay. The court in that case continues to hold the matter in abeyance pending completion of the arbitration process.

         For the foregoing reasons, McAllister has again failed to state a claim for breach of contract.

         B. Claim Under 42 ...

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