Nuevos Destinos, LLC v. Samuel Peck

United States Court of Appeals

For the Eighth Circuit

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No. 20-1748

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Nuevos Destinos, LLC; Nuevos Destinos Peru, S.A.C.; William P. Cook lllllllllllllllllllllPlaintiffs - Appellants v.

Samuel Peck; Ignacio Harten Rodriguez Larrain; Marysol Salazar; Agricola Peruana Del Sol, S.R.L.; SKE Midwestern, Inc.; Giuliana Pasquale; C&V Exports,

S.A.C. lllllllllllllllllllllDefendants - Appellees

Jorge Harten Costa; Javier Rodriguez Larrain Salinas; Ofelia Maria Rodriguez

Larrain Salinas De Harten lllllllllllllllllllllDefendants

Peruvian Organic International Trading S.A.C. lllllllllllllllllllllDefendant - Appellee Jorge Emilio Harten Rodriguez Larrain; Confactor S.A.C. lllllllllllllllllllllDefendants Gonzalo Rodriguez Larrain De Lavalle lllllllllllllllllllllDefendant - Appellee Convalor S.A.C. lllllllllllllllllllllDefendant Javier Urteaga lllllllllllllllllllllDefendant - Appellee Emilio Farah lllllllllllllllllllllDefendant

Manuel Viduarre; Felipe Bedregal; Nilton Palacios Pozo; Antonio Salazar Salazar lllllllllllllllllllllDefendants - Appellees ____________ Appeal from United States District Court for the District of North Dakota - Eastern ____________ Submitted: February 17, 2021 Filed: June 9, 2021 ____________

Before COLLOTON, BENTON, and KELLY, Circuit Judges.

____________ KELLY, Circuit Judge.

Plaintiffs Nuevos Destinos, LLC (NDL), Nuevos Destinos Peru, S.A.C. (NDP), and William Cook (collectively, the Appellants) appeal the denial of their motion to amend their complaint and the dismissal of their state law claims against various U.S. and Peruvian defendants. Having jurisdiction under 28 U.S.C. § 1291, we affirm.

I. Background

This case involves numerous parties and a detailed factual history, only some of which is relevant to this appeal. NDL is a Florida limited liability company (LLC) that purchases agricultural products in Peru and exports them to the United States and other countries. NDP is a Peruvian corporation that purchases Peruvian agricultural products on behalf of NDL. Cook, a United States citizen, is a principal of NDL who allegedly “personally financed” the purchases of agricultural products at issue in this action.

In 2012, the Appellants entered into business arrangements with the defendants, a group that consists of a combination of natural persons and business entities, for the purchase and export of Peruvian agricultural products. One of the defendants, Ignacio Harten Rodriguez Larrain (Harten), was the General Manager of Agricola Peruana Del Sol, S.R.L. (APS), a now-defunct Peruvian LLC that exported Peruvian agricultural products. According to Appellants, Harten—the “central mastermind” of an alleged racketeering enterprise—along with SKE Midwestern, Inc. (SKE), a North Dakota corporation, Samuel Peck, a United States citizen and Vice President of SKE, and the other defendants, fraudulently induced NDL to enter into contracts with APS for the purchase and export of Peruvian agricultural products. Appellants claim that although they spent $1,609,100 to purchase and to process agricultural products, APS delivered only $238,907 worth of product to NDL, causing Appellants to incur financial losses.

On October 30, 2015, Appellants filed the present action in the United States District Court for the District of Columbia against SKE, Peck, APS, and 18 other defendants, asserting civil Racketeer Influenced and Corrupt Organizations Act (RICO) claims, 18 U.S.C. § 1962(c), (d), as well as related state law claims of fraud, breach of contract, and conspiracy to commit fraud. Appellants alleged that the district court had federal question subject matter jurisdiction over the civil RICO claims, see 28 U.S.C. § 1331; 18 U.S.C. § 1964(a), (c), and supplemental jurisdiction over the remaining state law claims, see 28 U.S.C. § 1367(a). At no time did they plead that the district court had diversity jurisdiction over their state law claims pursuant to 28 U.S.C. § 1332(a)(3).

In February 2016, the nine defendants who had entered appearances, including SKE and Peck, moved to dismiss the complaint on a number of grounds, including improper service of process, lack of personal jurisdiction, failure to state civil RICO claims, and lack of supplemental jurisdiction over the Appellants’ state law claims. On January 2, 2019, the district court1 granted those defendants’ motions to dismiss. On February 22, 2019, however, the court stayed its dismissal order and transferred the case to the United States District Court for the District of North Dakota, finding that transfer rather than dismissal was the more appropriate remedy due to SKE and Peck’s contacts with North Dakota.

In June 2019, the same nine defendants renewed their motions to dismiss, which the transferee district court2 granted on December 2, 2019. The court dismissed seven defendants, finding that Appellants failed to properly serve them, see Fed. R. Civ. P. 4(f), and that the court lacked personal jurisdiction over them, see Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011). It then dismissed the civil RICO claims against SKE and Peck, finding that the complaint failed to plead a continuous pattern of racketeering activity. See Crest Constr. II, Inc. v. Doe, 660 F.3d 346, 356 (8th Cir. 2011) (“A pattern is shown through two or more related acts of racketeering activity that amount to or pose a threat of continued criminal activity.” (quoting Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 428 (8th Cir. 2009))). The court, left with only Appellants’ state law claims against SKE and Peck, declined to exercise supplemental jurisdiction over those remaining claims and dismissed them from the case.3 See 28 U.S.C. § 1367(c)(3) (“The district court[] may decline to exercise supplemental jurisdiction over a claim . . . [if] the district court has dismissed all claims over which it has original jurisdiction . . . .”).

On January 17, 2020, after more than four years of litigation, Appellants moved for the first time to amend their complaint. They proposed to “allege with further particularity facts” to show predicate racketeering acts sufficient to sustain their civil RICO claims. The motion did not address the district court’s decision not to exercise supplemental jurisdiction over their remaining state law claims, and Appellants did not attach a proposed amended complaint with their motion. The district court denied the motion on February 20, 2020, finding that Appellants failed to comply with the court’s local rules, which require “[a] party filing a motion for leave of court to file pleadings [to] file the proffered pleading as an attachment,” D.N.D. Civ. L. R. 5.1(C), and moreover that “any amendment would be severely untimely, futile, and unfairly prejudicial.”

On March 10, 2020, the district court dismissed the remaining 12 defendants, dismissing five for Appellants’ failure to prosecute, see Fed. R. Civ. P. 41(b), six for deficient service of process and lack of personal jurisdiction, and one (APS) after dismissing Appellants’ civil RICO claims for failure to state a claim and after declining to exercise supplemental jurisdiction over the remaining state law claims. Appellants now appeal.

II. Discussion

On appeal, Appellants for the first time seek to abandon the basis of their initial motion to amend4—to plead additional facts in support of their civil RICO claims—to instead “delete” their RICO claims and assert the remaining state law claims of fraud, breach of contract, and conspiracy to commit fraud against six defendants (including SKE, Peck, and APS)5 based on diversity jurisdiction, see 28 U.S.C. § 1332(a)(3). In their pleadings and motions briefing before the district court, Appellants “consistently and exclusively” asserted supplemental jurisdiction as the basis for their state law claims. Dubach v. Weitzel, 135 F.3d 590, 593 (8th Cir. 1998). They did not seek to amend their complaint to recharacterize their state law claims as diversity- based claims or to allege the citizenship of all 24 parties initially named in this action.

“Federal courts are courts of limited jurisdiction and the ‘threshold requirement in every federal case is jurisdiction.’” Barclay Square Props. v. Midwest Fed. Sav. & Loan Ass’n of Minneapolis, 893 F.2d 968, 969 (8th Cir. 1990) (quoting Sanders v. Clemco Indus., 823 F.2d 214, 216 (8th Cir. 1987)); see also Gonzalez v. Thaler, 565 U.S. 134, 141 (2012) (“Subject-matter jurisdiction can never be waived or forfeited.”). “The existence of federal jurisdiction ordinarily depends on the facts as they exist when the complaint is filed.” Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830 (1989); see also Walker ex rel. Walker v. Norwest Corp., 108 F.3d 158, 161 (8th Cir. 1997) (noting that the party asserting diversity jurisdiction bears the burden “to plead the citizenship of the parties”). We nevertheless have the discretion to “allow the party asserting that subject matter jurisdiction exists to amend its complaint on appeal to properly allege diversity of citizenship.” Barclay Square Props., 893 F.2d at 969; see 28 U.S.C. § 1653 (“Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.”).

Looking to the totality of the circumstances, we decline to exercise our discretion to permit Appellants to amend their complaint on appeal.6 This case presents the unusual circumstance in which Appellants not only failed to plead diversity jurisdiction in their complaint but also made no attempt to amend their complaint to do so—in spite of the defendants’ jurisdictional challenges and the district court’s decision not to exercise supplemental jurisdiction over the remaining state law claims. This case does not involve merely a technical pleading error. See, e.g., Reece v. Bank of N.Y. Mellon, 760 F.3d 771, 778 (8th Cir. 2014) (exercising discretion under § 1653 to amend a defective complaint that alleged diversity of residence rather than diversity of citizenship under 28 U.S.C. § 1332); Nat’l Farmers Union Prop. & Cas. Co. v. Fisher, 284 F.2d 421, 422–23 (8th Cir. 1960) (same). Rather, Appellants seek to amend entirely the jurisdictional basis for their remaining state law claims—in addition to dropping their two civil RICO claims and 15 of 21 defendants—for the first time on appeal. Appellants had notice as early as 2016 that the district court could decline to exercise supplemental jurisdiction over their state law claims if it dismissed their civil RICO claims. As such, Appellants had a reasonable opportunity—indeed, years—to allege diversity jurisdiction in the district court but failed to do so. Permitting Appellants to amend their defective pleadings this late in the game would be unfair to the defendants. See Dubach, 135 F.3d at 593; cf. Sarnoff v. Am. Home Prods. Corp., 798 F.2d 1075, 1079 (7th Cir. 1986) (noting § 1653 “presupposes that the parties, not suspecting a jurisdictional difficulty, had no reasonable opportunity to cure it before the appeal”), superseded on other grounds by Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955 (7th Cir. 1998); Mills v. State of Maine, 118 F.3d 37, 53 (1st Cir. 1997) (“[W]here a party has had an opportunity to seek to amend its pleadings in the district court, it is not appropriate for that party belatedly to seek leave to amend on appeal pursuant to 28 U.S.C. § 1653.”).

III. Conclusion

For the foregoing reasons, we decline to grant Appellants leave to amend the jurisdictional basis of their claims on appeal, and we affirm the judgment of the district court.

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