Mutaher v. Martin

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

MOUAD MUTAHER and

ISMAIL IBRAHIM, Case No. 3:24-cv-00889-JR

Plaintiffs, FINDINGS AND

RECOMMENDATION

v.

RYAN JAMES MARTIN, BRANDON

L. ALLEN, and GROVE COMPUTER

SERVICES, LLC,

Defendants.

_________________________________

RUSSO, Magistrate Judge:

Defendants Ryan James Martin and Grove Computer Services, LLC1 move to dismiss

plaintiffs Mouad Mutaher and Ismail Ibrahim’s complaint pursuant to Fed. R. Civ. P. 12(b)(7).

For the reasons stated below, defendants’ motion is denied.

1 “Defendant Brandon Allen has not yet been served in this matter pursuant to Fed. R. Civ. P. 4

and as such is intentionally omitted from the instant motion.” Defs.’ Mot. Dismiss 1 n.1 (doc. 17).

BACKGROUND

On August 20, 2024, plaintiffs filed an amended complaint alleging unjust enrichment,

fraud, and breach of contract. First Am. Compl. ¶¶ 46-50 (doc. 13). Plaintiffs’ claims stem from a

transaction with defendants for the purchase of used cell phones. Id. at ¶ 8. In particular, on January

4, 2024, defendants agreed to provide plaintiffs with “a large batch” of specified used cell phones

for $150,000. Id. at ¶ 11. Plaintiffs further assert that defendants “both knew the representations

that the phones would be provided was false and intended that plaintiffs would rely on their false

promise to provide the cell phones.” Id. Between January 6 and January 10, 2024, plaintiffs made

five payments, equalling the entire $150,000 purchase price. Id. at ¶¶ 13-18.

Plaintiffs then “made a mistaken wire transfer of an additional $66,100” to defendants on

January 10, 2024. Id. at ¶ 19. Plaintiffs in total paid defendants $216,000. Id. at ¶ 20. The same

day, after realizing the overpayment, plaintiffs requested that defendants return the overpaid

amounts. Id. at ¶ 22. Plaintiffs describe defendants’ response to these requests as alternating

between “threatening and cajoling and calming . . . wherein [defendants] repeatedly lied about

their intention to provide the promised phones and/or return the [overpaid] money.” Id.

On January 26, 2024, Martin sent images to plaintiffs indicating that he “had scheduled a

payment of $66,100 to ‘King’s Trading, Inc.,’ a company that Plaintiff Ibrahim was affiliated with,

to pay him back for the overpayment.” Id. at ¶ 24. Yet, as of February 13, 2024, defendants had

only repaid plaintiffs $10,000. Id. at ¶ 23.

Defendants eventually shipped boxes to Dubai, however, the boxes “contained junk and

not the agreed-upon phones.” Id. at ¶ 25. At the end of February, plaintiffs’ counsel sent defendants

a demand letter, seeking “immediate return of the overpayment and immediate delivery of the

promised phones.” Id. at ¶ 27. Defendants thereafter retained counsel who negotiated an agreement

with plaintiffs’ counsel. Id. at ¶ 28.

On April 29, 2024, the parties executed a contract requiring defendants to deliver the

previously agreed upon cell phones within ten days and a full refund of the outstanding $56,100

overpayment amount within five days (“April 2024 Agreement”). Id. at ¶ 29. That agreement lists

Grove Computer Services, LLC as the “seller” and Emad Ahmud as the “buyer.” Defs.’ Mot.

Dismiss Ex. A, at 1 (doc. 17). Plaintiffs, along with Answer Yahya, Adbulaziz Moh. Alshaif, and

Kings Trade, Inc. are designated as “buyer affiliates.” Id. The April 2024 Agreement specifies that

Mutaher is the “Buyer’s sole representative authorized to receive, to inspect, and to accept or reject

shipment of the Replacement Units and authorized to act on Buyer and Buyer Affiliates’ behalf in

connection with the delivery of the Replacement Units.” Id. at 3. The partial repayments of the

overpaid amounts were also made directly to plaintiffs. Id. at 1-2.

Over a month later, on May 3, 2024, defendants “sent a set of ten Western Union money

orders totaling $9,800.” First Am. Compl. ¶ 33 (doc. 13). Plaintiffs allege that defendants have not

returned either the remaining overpayment amount or delivered the cell phones as promised in the

April 2024 Agreement. Id. at ¶¶ 34-35.

On September 10, 2024, defendants filed the present motion to dismiss. Briefing was

completed in regard to that motion on October 7, 2024.

STANDARD OF REVIEW

Under Rule 12(b)(7), an action may be dismissed for “failure to join a party under Rule

19.” Fed. R. Civ. P. 12(b)(7). Pursuant to Rule 19, the court evaluates a 12(b)(7) motion in three

steps. First, the court must determine “whether the absent party must be joined under Rule 19(a)”

– i.e., whether they are a “required” party. Klamath Irrigation Dist. v. U.S. Bureau of Reclamation,

48 F.4th 938, 943 (9th Cir. 2022). Second, if so, the court asks “whether joinder of that party is

feasible.” Id. Third, “if joinder is infeasible, [the court] must determine whether, in equity and

good conscience, the action should proceed among the existing parties or should be dismissed.”2

Id. (internal quotations omitted). This “inquiry is a practical one and fact specific, and is designed

to avoid the harsh results of rigid application.” Makah Indian Tribe v. Verity, 910 F.2d 555, 558

(9th Cir. 1990) (citations omitted). “The moving party has the burden of persuasion in arguing for

dismissal.” Id. The court may additionally “consider evidence outside of the pleadings.” Weiss v.

Perez, 635 F.Supp.3d 930, 939 (N.D. Cal. 2022).

DISCUSSION

Defendants argue that plaintiffs’ complaint should be dismissed because they failed to join

the remaining parties to the April 2024 Agreement. Defendants claim that all “buyer affiliates”

and the “buyer” are necessary and indispensable, without which “full relief is impossible to

obtain.” Defs.’ Mot. Dismiss 4, 7 (doc. 17).

I. Necessary Parties

In arguing that the absent parties are necessary under Rule 19, defendants point to three

reasons without citing to any supporting case law or providing any analysis: (1) “the Transaction

and the Agreement directly involve the Absent Parties, and their rights and obligations under these

alleged contracts may be affected by the outcome of this litigation”; (2) “[f]ull and complete relief

cannot be afforded without the participation of [the absent parties], as they are integral to the

2 “Before 2007, parties that are now called ‘required’ under Rule 19 were referred to as ‘necessary,’

and parties without whom the litigation could not, in good conscience, continue, were referred to

as ‘indispensable.’” Tribes v. U.S. Bureau of Reclamation, 2023 WL 7182617, at *14 n.20 (D. Or.

Sep. 11, 2023), adopted by 2024 WL 471977 (D. Or. Feb. 7, 2024) (citation and internal quotations

omitted). Both case law and the parties continue to employ these terms, such that the Court

employs them as well.

contractual relationship that forms the basis of Plaintiff’s claims”; and (3) “[p]roceeding without

[the absent parties] may expose the current Defendants to a substantial risk of incurring double,

multiple, or otherwise inconsistent obligations.”3 Id. at 4.

The court applies a “two-pronged inquiry” to determine whether absent parties are

necessary under Rule 19. White v. Univ. of Cal., 765 F.3d 1010, 1027 (9th Cir. 2014). An absent

party must be necessary for it to be indispensable. MasterCard Int’l. Inc. v. Visa Int’l. Serv. Ass’n,

Inc., 471 F.3d 377, 389 (2d Cir. 2006). “First, the court must determine whether complete relief

can be afforded if the action is limited to the existing parties.” White, 765 F.3d at 1027 (citation

and internal quotations omitted). “Second, the court must determine whether the absent party has

a legally protected interest in the subject of the action.” Id. (citation and internal quotations

omitted). If an absent party has a legally protected interest, then the court must determine “whether

the party’s absence will impair or impede the party’s ability to protect that interest or will leave an

existing party subject to multiple, inconsistent legal obligations with respect to that interest.” Id.

“[Rule 19(a)(1)(A)] is concerned with consummate rather than partial or hollow relief as

to those already parties, and with precluding multiple lawsuits on the same cause of action.”

3 As a part of defendants’ broader argument that the absent signatories to the agreement are

necessary, they maintain that plaintiffs are seeking dissolution by claiming fraud in the

inducement, not common law fraud. Defs.’ Reply to Mot. to Dismiss 4-5 (doc. 20); see also Defs.’

Mot. Dismiss 9 (doc. 17). This is incorrect. The complaint pleads a straightforward common law

fraud claim and seeks to keep the parties’ contracts in place for the sake of enforcement. First Am.

Compl. ¶¶ 49-50 (doc. 13); see also Pls.’ Resp. to Mot. Dismiss 4-5 (doc. 19) (plaintiffs are “not

attempting to ‘decimate’ any contract in this case. Plaintiffs believe that [defendants’] behavior . .

. amounts to Fraud [but], in the alternative, in case Plaintiffs fail to meet the standard of proof of

Fraud, which is an elevated standard, Plaintiffs have also alleged breach of contract in the hope of

at least recovering damages based on the fact that Defendants did not provide what was promised

in exchange for the money they paid”). Importantly, the Ninth Circuit has drawn a distinction

between setting aside a contract and enforcing it. Disabled Rights Action Comm. v. Las Vegas

Events, Inc., 375 F.3d 861, 881 (9th Cir. 2004); see also Ward v. Apple Inc., 791 F.3d 1041, 1053

(9th Cir. 2015) (“We have not, however, held that an absent party is always required when the

relief sought in an action merely implicates an absent party’s contract rights.”).

Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1043 (9th Cir. 1983). This factor “is

concerned only with ‘relief as between the persons already parties, not as between a party and the

absent person whose joinder is sought.’” Eldredge v. Carpenters 46 N. Cal. Cntys. Joint

Apprenticeship & Training Comm., 662 F.2d 534, 537 (9th Cir. 1981) (quoting 3A Moore’s

Federal Practice P 19.07-1(1), at 19-128 (2d ed. 1980)).

Here, plaintiffs acted on behalf of the “buyer” during the transaction and April 2024

Agreement. Moreover, plaintiffs seek only to recover damages for defendants’ allegedly wrongful

conduct. “Because defendants are liable on their own for their violations, plaintiff[s] can obtain

complete relief for defendants’ violations from defendants.” Brown v. Stored Value Cards, Inc.,

2023 WL 6366756, at *2 (D. Or. Sept. 29, 2023). Indeed, the complaint indicates that plaintiffs

made the cell phone payments at least in part from their own accounts and/or funds, such that the

injury inheres to them personally.

Additionally, plaintiffs adequately embody the absent parties’ interests. “[A]n absent

party’s ability to protect its interest will not be impaired by its absence from the suit where its

interest will be adequately represented by existing parties to the suit.” Washington v. Daley, 173

F.3d 1158, 1167 (9th Cir. 1999). To determine whether the existing parties adequately represent

the absent ones, the court evaluates three factors. Shermoen v. United States, 982 F.2d 1312, 1318

(9th Cir. 1991) (citation and internal quotations omitted). First, “whether the interests of a present

party to the suit are such that it will undoubtedly make all of the absent party’s arguments.” Id.

Second, “whether the party is capable of and willing to make such arguments.” Id. Third, “whether

the absent party would offer any necessary element to the proceedings that the present parties

would neglect.” Id. The interests of plaintiffs are nearly identical to the absent parties, as such

plaintiffs can “be expected to adequately represent” the absent parties’ interests in this action.

Brimberry v. Northwestern Mut. Life Ins. Co., 2014 WL 689911, at *3 (C.D. Cal. Feb. 20, 2014).

Not only did Mutaher act directly as the “Buyer Representative” in entering into the April

2024 Agreement, but plaintiffs are also seeking to enforce a contract to which the absent parties

agreed and are the beneficiaries of. This alignment of interests at all stages suggests that plaintiffs

are capable and willing to make arguments that protect the absent parties’ interests.

Finally, while defendants might be exposed to defending other actions from the absent

parties, this fact alone “is insufficient to require Rule 19 joinder if the parties to the action can

obtain meaningful relief and would not confront inconsistent judgments.” Bank of Am. Nat’l Tr. &

Sav. Ass’n v. Hotel Rittenhouse Assoc., 844 F.2d 1050, 1054 n.5 (3d Cir. 1988); see also Cachil

Dehe Band of Wintun Indians of the Colusa Indian Cmty. v. California, 547 F.3d 962, 977 (9th

Cir. 2008) (“Inconsistent obligations occur when a party is unable to comply with one court’s order

without breaching another court’s order concerning the same incident. Inconsistent adjudications

or results, by contrast, occur when a defendant successfully defends a claim in one forum, yet loses

on another claim arising from the same incident in another forum.”) (citation and internal

quotations omitted). Defendants fail to raise any facts that rise to the substantial risk threshold.

II. Indispensable Parties

Even assuming the absent parties were necessary/required, joinder is not feasible. That is,

two absent parties reside outside of the United States. Defs.’ Mot. Dismiss Ex. A, at 1 (doc. 17).

If a party is necessary under Rule 19(a) but cannot be joined, the court turns to Rule 19(b). Equal

Emp. Opportunity Comm’n v. Peabody Western Coal Co., 610 F.3d 1070, 1083 (9th Cir. 2010). In

determining indispensability, the court looks at four primary factors: (1) “to what extent a

judgment rendered in the person’s absence might be prejudicial to the person or those already

parties”; (2) “the extent to which, by protective provisions in the judgment, by shaping of relief,

or other measures, the prejudice can be lessened or avoided”; (3) “whether a judgment rendered in

the person’s absence will be adequate”; and (4) “whether the plaintiff will have an adequate

remedy if the action is dismissed for nonjoinder.” Shermoen, 982 F.2d at 1318-19.

Defendants claim that “[a] judgment rendered in the absence of [the absent parties] would

be prejudicial” to both defendants and the absent parties, “as it would affect contractual rights and

obligations without allowing all involved parties to present their positions.” Defs.’ Mot. Dismiss

9 (doc. 17). As noted above, any prejudice towards the absent parties is alleviated by adequate

representation of those parties’ interests by plaintiffs.

The second factor weights against dismissal as well. See Campbell v. Triangle Corp., 56

F.R.D. 480, 482 (E.D. Pa. 1972) (“Rule 19(b) recognizes that the shaping of relief may avert or

lessen prejudice to absent parties, and the award of money damages in lieu of specific relief has

been utilized by courts to achieve this purpose.”).

The third factor also weighs against dismissal. Plaintiffs would be able to recover on the

claims alleged against defendants, thereby protecting the interests of the absent parties. Further,

while defendants allege that “dismissal may temporarily inconvenience the Plaintiffs,” the last

factor underscores the challenge of refiling this action with all absent parties. Defs.’ Mot. Dismiss

9 (doc. 17). Critically, the “buyer” resides abroad outside the reach of this Court. Defs.’ Mot.

Dismiss Ex. A, at 1 (doc. 17). Given its international nature, this Court finds no other forum

suitable to resolve this dispute. See Brosnahan v. Pozgay, 2007 WL 173969, at *4 (S.D. Cal. Jan.

17, 2007) (“[A] critical consideration under Rule 19(b) is the availability or unavailability of an

alternative forum.”) (citation and internal quotations omitted). The four factors favor proceeding

among the existing parties.

RECOMMENDATION

For the foregoing reasons, defendants’ Motion to Dismiss (doc. 17) should be denied. This

recommendation is not an order that is immediately appealable to the Ninth Circuit Court of

Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure,

should not be filed until entry of the district court’s judgement or appealable order. The parties

shall have fourteen (14) days from the date of service of a copy of this recommendation within

which to file specific written objections with the court. Thereafter, the parties shall have fourteen

(14)days within which to file a response to the objections. Failure to timely file objections to any

factual determination of the Magistrate Judge will be considered as a waiver of the party’s right to

de novo consideration of the factual issues and will constitute a waiver of a party’s right to

appellate review of the findings of the fact in an order or judgement entered pursuant to this

recommendation.

DATED this 16th day of October, 2024.

_______/s_/_ J_o_l_ie_ _A_. _R_u_s_s_o_______

Jolie A. Russo

United States Magistrate Judge