United States District Court, W.D. North Carolina, Charlotte Division
Cogburn Jr., Judge
MATTER comes before the Court on a Motion to Dismiss
by Defendants Banc of America Merchant Services, LLC and Bank
of America, N.A. (Doc. No. 43).
action brought by Plaintiffs against Defendants Banc of
America Merchant Services, LLC (“BAMS”) and Bank
of America, N.A. (“BANA”), Plaintiffs bring
various claims against Defendants after Mikhail Siretskiy (a
non-party) allegedly wrongfully diverted thousands of dollars
from Plaintiff's merchant accounts into his own accounts.
own and operate two deli locations in Las Vegas. (Doc. No. 1
at ¶¶ 12-13). On or about December 6, 2016,
Plaintiffs each entered into a contract with Defendants for
the purpose of processing credit card transactions.
(Id. at ¶ 16). The contracts between Defendants
and each Plaintiff consist of a Merchant Processing
Application (“MPA”) (Doc. No. 1-2 at 2-19) and a
“Program Guide.” (Doc. No. 12-1). Although each
Plaintiff entered into a separate contract with Defendants,
they are substantively identical (compare Doc. No. 1-2 at
2-10 (Linq location MPA) with Doc. No. 1-2 at 11-19 (Tivoli
location MPA)). The Court therefore refers to both contracts
together as the “Canters Contracts.” On or about
June 12, 2017, each Plaintiff entered into a separate
agreement (the “FreedomPay Contracts”) with
FreedomPay, Inc. (“FPI”). Under the FreedomPay
Contracts, FPI agreed to act as an intermediary between
Plaintiffs and Defendants, essentially linking the equipment
FPI provided to Plaintiffs with Plaintiffs' merchant
accounts with Defendants. (Doc. No. 1 at ¶¶ 19-20;
Doc. No. 1-3).
Siretskiy is an “indirect” owner of Plaintiffs.
That is, he owns High Roller Holding Firm, LLC and Tivoli
Holding Firm, LLC, which are, apparently, members of
Plaintiffs Canters Deli Las Vegas, LLC and Canters Deli
Tivoli Village, LLC, respectively. (Doc. No. 1 at ¶ 14).
Plaintiffs allege that each Plaintiff's operating
agreement makes clear that Siretskiy has no right to
participate in the management or control of either Plaintiff.
(Id. at ¶ 15).
around June 2018, Siretskiy opened accounts with Defendants
BANA and BAMS. (Id. at ¶¶ 21-22). BAMS
opened accounts for Canters Deli Tivoli, Inc. and Canters
Deli Linq, Inc. See (Doc. No. 44 at ¶ 9:
Declaration of Adam Kjeldgaard). These accounts were entirely
separate from Plaintiffs' accounts. According to
Plaintiffs, Siretskiy falsely claimed to a BAMS
representative that he had won a lawsuit against Plaintiffs
and that he would be taking over their Las Vegas restaurants.
(Doc. No. 1 at ¶ 23). Siretskiy was then able to obtain
a “VAR Sheet” from BAMS. (Id. at ¶
24). A VAR Sheet is an instructions file containing
information such as merchant account numbers and bank and
deposit accounts associated with those merchant accounts that
is provided to a third-party payment gateway, such as FPI.
(Id. at ¶ 25).
presented the VAR Sheets to FPI, which began processing
Plaintiffs' transactions through the Siretskiy Accounts.
(Id. at ¶ 26). From the time the Siretskiy
Accounts were first opened, Defendants processed a total of
$30, 396.24 for Canters Deli Linq, Inc. and $27, 770.50 for
Canters Deli Tivoli, Inc. (all amounts exclusive of fees),
for a total amount of $58, 166.74 that Siretskiy allegedly
wrongfully diverted. See (Doc. No. 44 at
¶¶ 26-28). On June 20, 2018, counsel for Plaintiffs
spoke to a representative of FPI, who claimed that FPI was
merely a third-party intermediary payment processor and
implied that the issue must have arisen based on conduct by
BAMS and BANA. (Doc. No. 1 at ¶ 28). On June 27, 2018,
counsel for Plaintiffs spoke to a BAMS representative, who
explained that before Plaintiffs brought this action, no
changes has been made to the Canters Accounts, thus implying
that the issue must have arisen based on conduct by FPI.
(Id. at ¶ 29). BAMS placed a hold on
Plaintiffs' Accounts (Doc. No. 1 at ¶ 31), and no
transactions have been processed since the placement of the
hold. See (Doc. No. 44 at ¶¶ 29).
October 2, 2018, Plaintiffs filed this lawsuit in the
District of Nevada, bringing the following claims against
Defendants: (1) breach of contract; (2) breach of the implied
covenant of good faith and fair dealing; (3) negligence; (4)
and breach of fiduciary duty. (Doc. No. 1). Plaintiffs seek
both compensatory and punitive damages. Plaintiffs assert in
the Complaint that subject matter jurisdiction in federal
court is based on diversity of citizenship under 28 U.S.C.
§ 1332. (Id. at ¶ 9).
November 9, 2018, Defendants filed a motion to dismiss based,
in part, on the fact that the Canters Contracts had a forum
selection clause requiring the suit to be brought against
BAMA and BANA in North Carolina. (Doc. No. 12). On July 10,
2019, the District of Nevada construed Defendants' motion
to dismiss as a motion to transfer pursuant to 28 U.S.C.
§ 1404(a), and that court granted the motion,
transferring this case to this Court. (Doc. No. 36 at 6, 13).
Because the District of Nevada granted the motion to
transfer, it did not reach Defendants' then-pending
motion to dismiss pursuant to Rule 12(b)(6). (Id. at
now move to dismiss this action without prejudice pursuant to
Rule 12(b)(1), on the grounds that Plaintiffs cannot
establish that the amount in controversy is in excess of $75,
000.00, and that this Court therefore does not have
jurisdiction over the subject matter of this dispute.
Alternatively, Defendants request that this Court dismiss
this action with prejudice pursuant to Rule 12(b)(6) on the
grounds that Plaintiffs have failed to state any legally
cognizable claims. Defendants filed their motion to dismiss
on July 24, 2019, Plaintiffs filed their response in
opposition on August 21, 2019, and Defendants filed their
Reply on August 28, 2019. Thus, this matter is ripe for
Defendants' Motion to Dismiss Based on Lack of Subject
Matter Jurisdiction under Fed.R.Civ.P. 12(b)(1)
Court first addresses Defendants' motion to dismiss for
lack of subject matter jurisdiction. Plaintiffs rely on 28
U.S.C. § 1332 as the basis for this Court's
jurisdiction. (Doc. No. 1 at ¶ 9). Under Section 1332,
federal courts have original jurisdiction over civil actions
between citizens of different states if the amount in
controversy exceeds $75, 000 and complete diversity exists
between the parties. See 28 U.S.C. § 1332(a).
In their motion to dismiss, Defendants argue that the Court
lacks subject matter jurisdiction over this action ...