United States District Court, D. New Mexico
RICK JARAMILLO, STEVE DURAN, RAILYARD BREWING COMPANY, LLC, RINGSIDE ENTERTAINMENT, LLC, Plaintiffs,
DAVID FREWING, U.S. BOWLING CORPORATION, a Nevada corporation, and CRAIG DILL, Chapter 11 Trustee., Defendants.
PROPOSED FINDINGS AND RECOMMENDED
MATTER comes before the Court on Defendant Craig Dill's
Amended Motion to Dismiss for Failure to State a Claim, Lack
of Jurisdiction, and for Sanctions (Doc. 12) and Defendants
David Frewing and U.S. Bowling Corporation's Amended
Motion to Dismiss, or in the alternative, Stay the
Proceedings (Doc. 14). This matter was referred to me
pursuant to 28 U.S.C. § 636(b)(1)(B), (b)(3) by United
States District Judge James O. Browning on January 29, 2018.
Doc. 18. Consistent with that Order of Reference, the Court
enters these proposed findings and recommended disposition
(PFRD) recommending that Defendants' Motions be GRANTED
for the reasons explained below.
Rick Jaramillo and Steve Duran are equity partners in
Railyard Company, LLC. On September 4, 2015, Railyard Company
commenced Chapter 11 bankruptcy proceedings. See In re
Railyard Co., LLC, No. 15-12386-t11, Doc. 1. On July 13,
2016, United States Bankruptcy Judge Robert Jacobvitz entered
an order approving the appointment of Defendant Craig Dill as
Chapter 11 Trustee of the bankruptcy estate over the
objections of Plaintiffs Duran and Jaramillo. Bank. Proc.,
Doc. 308. On August 18, 2018, Defendant Dill, in his capacity
as Trustee, moved for an order approving the rejection of an
executory contract between Railyard Company, LLC and
Plaintiff Railyard Brewing Company. United States Bankruptcy
Judge David T. Thuma granted the motion and approved
rejection of the lease. Bank. Proc., Doc. 508. Judge Thuma
further approved rejection of a pre-petition lease with
Plaintiff Ringside Entertainment and terminated that lease as
well. Bank. Proc., Doc. 420.
leases concerned a space at a two-story, multi-tenant
building at the Railyard in Santa Fe, New Mexico.
See Bank. Proc., Doc. 629. Plaintiff Ringside
Entertainment's lease contemplated use of the space as a
combination restaurant, bar, and eight-lane bowling center.
Id. Pursuant to the plan, Plaintiff Ringside
contracted with U.S. Bowling for the purchase of bowling
lanes and related bowling equipment. Id. At some
point, however, Ringside Entertainment abandoned this
project. Id. On January 30, 2014, Plaintiff Railyard
Brewing signed a lease for the space with the intention of
operating the restaurant, bar, and bowling center.
Id. After bankruptcy proceedings were commenced,
Defendant Dill determined that a bowling center would not be
feasible at that location and moved for an order approving
the sale of the bowling equipment. Plaintiffs Duran and
Jaramillo objected to the sale of the equipment and contended
that the bowling equipment did not belong to the bankruptcy
estate. Id. at 7. Plaintiffs Duran and Jaramillo
further argued in the alternative that the sale should not be
completed because the bankruptcy estate has claims against
U.S. Bowling for negligent installation of the bowling
equipment. Id. at 8. Judge Thuma rejected these
arguments and approved sale of the bowling equipment on June
21, 2017. Bank. Proc., Doc. 629 at 11; Bank. Proc., Doc. 640.
U.S. Bowling ultimately entered into an agreement to purchase
back the bowling equipment. Bank Proc., Doc. 640.
23, 2017, Plaintiffs filed the present lawsuit against
Chapter 11 Trustee Craig Dill, U.S. Bowling, and David
Frewing bringing claims for breach of contract, promissory
estoppel, and negligent misrepresentation. Civ. No. 17-673,
Doc. 1. Plaintiffs' claims are premised on the
circumstances surrounding U.S. Bowling's installation of
the bowling equipment and the eventual sale of the bowling
equipment by Defendant Dill. While difficult to parse the
exact facts being asserted in support of Plaintiffs'
claims, Plaintiffs allege that they entered into an agreement
for the installation of bowling equipment with U.S. Bowling.
Doc. 1 at ¶ 12. Plaintiffs allege that in March 2013,
Jaramillo signed a change order for the installation of sound
attenuation equipment due to complaints from other tenants
regarding noise emanating from the bowling equipment. Doc. 1
at ¶ 15. Plaintiffs allege that U.S. Bowling represented
that installation of the sound attenuation equipment would
satisfy the other tenants' concerns. Doc. 1 at ¶ 15.
Plaintiffs allege, however, that they continued to receive
complaints regarding noise. Doc. ¶ 16. Plaintiffs allege
that they continued to exchange communications with U.S.
Bowling regarding completion of the sound attenuation
equipment as well as other bowling equipment. Doc. ¶ 17.
Plaintiffs allege that the project was not completed because
Defendant Dill subsequently moved in the bankruptcy
proceedings to terminate the project. Doc. 1 at ¶ 21.
Plaintiffs allege Defendant Dill subsequently entered into an
agreement with U.S. Bowling for U.S. Bowling to purchase the
bowling equipment at a significantly reduced price. Doc. 1 at
¶ 22. Plaintiffs further allege that U.S. Bowling did
not have the appropriate contractor's licenses to
undertake the work contrary to state law. Doc. 1 at ¶
24. Plaintiffs allege that Defendant Dill is “aiding
and abetting” U.S. Bowling's unlicensed contracting
work and conspired with U.S. Bowling “in its unjust
enrichment.” Doc. 1 at ¶ 26.
not the first lawsuit Plaintiffs Steven Duran and Rick
Jaramillo have pursued against Defendant Dill in his capacity
as trustee of the bankruptcy estate. On August 15, 2016,
Plaintiffs filed suit against Mr. Dill and attempted to
nullify Judge Jacobvitz's order approving his appointment
as trustee. See Duran v. Dill, Civ. No. 16-928.
Chief Judge William P. Johnson ultimately dismissed the
plaintiffs' Complaint on the bases that (1) Defendant
Dill, in his capacity as trustee, was immune from suit; (2)
the court lacked subject matter jurisdiction because the
plaintiffs had not obtained permission to sue Defendant Dill,
and (3) the plaintiffs insufficiently served him. See
Id. Doc. 6 at 5-7.
present case, Defendants filed their Amended Motions to
Dismiss on November 1, 2017, and November 6, 2017,
respectively. Defendants raise multiple reasons as to why
Plaintiffs' Complaint should be dismissed. Both
Defendants contend that (1) the Court does not have federal
question or diversity jurisdiction; (2) Plaintiffs do not
have standing to pursue claims set forth in the Complaint,
which are exclusively bankruptcy estate property; (3)
Plaintiffs have willfully violated the automatic stay in the
bankruptcy proceeding; and (4) Plaintiffs have failed to
comply with D.N.M.LR-Civ. 83.7 requiring corporations,
partnerships, or business entities to be represented by
attorneys authorized to practice law before this Court.
Defendant Dill separately also moves for dismissal on the
basis that he is entitled to quasi-judicial immunity in his
capacity as trustee of the bankruptcy estate and that the
Court lacks subject matter jurisdiction because Plaintiffs
failed to obtain the permission of the Bankruptcy Court to
sue him in that capacity. Defendant Frewing separately
contends that Plaintiffs have failed to state a claim against
did not respond to Defendants' Amended Motions to
Dismiss. Although the Court's local rules provide that a
party's failure to respond to a motion generally
constitutes consent to grant the motion, the Court
“cannot…grant a motion to dismiss or a motion
for summary judgment based solely on plaintiff's failure
to respond and must consider the merits of the motion.”
See Issa v. Comp USA, 354 F.3d 1174, 1177-78 (10th
Cir. 2003). As explained below, because neither federal
question nor diversity jurisdiction exists, I recommend
concluding that the Court lacks subject matter jurisdiction
and that Plaintiffs' Complaint should be dismissed.
Plaintiffs Duran and Jaramillo are Not Permitted to Represent
Railyard Brewing Company, LLC and Ringside Entertainment, LLC
initial matter, the Court notes that Plaintiffs Duran and
Jaramillo are proceeding pro se. There has been no
entry of appearance on behalf of Railyard Brewing Company,
LLC or Ringside Entertainment, LLC. The Supreme Court of the
United States has directed lower courts to hold pro
se litigants' pleadings “to less stringent
standards than formal pleadings drafted by lawyers.”
Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594,
30 L.Ed.2d 652 (1972). The pro se litigant
“nevertheless must follow the same rules of procedure
that govern other litigants, ” Green v.
Dorrell, 969 F.2d 915, 917 (10th Cir.1992), and it is
not “the proper function of the district court to
assume the role of advocate for the pro se litigant, ”
Hall v. Bellmon, 935 F.2d 1106, 1110 (10th
this district's local rules, “a corporation,
partnership or business entity other than a natural person
must be represented by an attorney authorized to practice
before this Court.” D.N.M.LR-Civ. 83.7. Although it is
certainly permissible for Plaintiffs Duran and Jaramillo to
represent themselves pro se in this litigation,
under D.N.M.LR-Civ. 83.7, they cannot represent Plaintiffs
Railyard Brewing Company or Ringside Entertainment. Both of
these Plaintiffs are limited liability companies and are
therefore obviously not natural persons. To the extent that
Plaintiffs Jaramillo and Duran continue to pursue claims in
this lawsuit as pro se litigants, such
representation shall be limited to their individual
courts are courts of limited jurisdiction; they must have a
statutory basis for their jurisdiction. There are two
statutory bases for federal subject-matter jurisdiction:
diversity jurisdiction under 28 U.S.C. § 1332 and
federal-question jurisdiction under 28 U.S.C. §
1331.” Nicodemus v. Union Pac. Corp., 318 F.3d
1231, 1235 (10th Cir.2003)(internal quotations and citations
omitted). “If jurisdiction is challenged, the burden is
on the party claiming jurisdiction to show it by a
preponderance of the evidence.” Karnes v. Boeing
Co., 335 F.3d 1189, 1193 (10th Cir.2003)(citing
United States ex rel. Hafter v. Spectrum Emergency Care,
Inc., 190 F.3d 1156, 1160 (10th Cir.1999)).
Plaintiffs did not respond to Defendants' Amended Motions
to Dismiss, the only jurisdictional facts proffered by
Plaintiffs appear in their Complaint. Plaintiffs Duran and
Jaramillo allege that they reside and are domiciled in Santa
Fe, New Mexico. Doc. 1at ¶¶ 1-2. Plaintiffs allege
that Plaintiffs Railyard Brewing Co, and Ringside
Entertainment are limited liability companies organized under
the laws of the State of New Mexico with their place of
business being in Santa Fe, New Mexico. ¶¶ 3-4.
Plaintiffs allege that Defendant U.S. Bowling is a
corporation organized in the State of Nevada with its
principle place of business in Chino, California. Doc. 1 at
¶ 5. Plaintiffs allege that Defendant David Frewing
resides in Chino, California. Doc. 1 at ¶ 6. Finally,
Plaintiffs allege that Defendant Dill resides in Albuquerque,
New Mexico. Doc. 1 ¶ 7. Plaintiffs do not clarify
whether they are asserting that the Court has federal
question jurisdiction or diversity jurisdiction but instead
merely state that based on the above facts the Court has
“jurisdiction over the parties and the subject matter
of this action.” Doc. 1 at ¶ 10. I will
accordingly consider both potential bases of jurisdiction.
Law Regarding Federal ...