The opinion of the court was delivered by: Lechner, District Judge.
This is an action brought by the plaintiff, Jonathan M. Cohen
("Cohen"), against the defendants, Eric C. Kurtzman ("Kurtzman"),
Kurtzman Cohen Matera and Gurock, a New York sole-proprietorship
("KCMG-NY") and predecessor to the law firm of Kurtzman Resnik
Matera & Gurock, LLP, a New York limited liability partnership
("KRMG-NY") (collectively, the "Defendants"). In a complaint
filed on 16 June 1998, (the "Complaint"), Cohen alleges, inter
alia, KCMG-NY, KRMG-NY and Kurtzman breached partnership and
employment agreements with Cohen, breached their fiduciary duty,
wrongfully converted partnership assets and wrongfully withheld
employee earnings. See Complaint at ¶ 1. Jurisdiction is
premised upon 28 U.S.C. § 1332(a)(1) ("Section 1332(a)(1)")
because Cohen asserts "there exists complete diversity of
citizenship between the plaintiff and all defendants, and the
amount in controversy exceeds the sum of seventy five thousand
dollars ($75,000.00) exclusive of interest and costs." See
Complaint at ¶ 2.
Currently pending is the motion of the Defendants to dismiss
the Complaint, pursuant to Fed.R.Civ.P. 12(b)(1) ("Rule
12(b)(1)"), for lack of subject matter jurisdiction (the "Motion
to Dismiss"). Also pending is the motion of the Defendants for
sanctions, pursuant to Fed.R.Civ.P. 11 ("Rule 11") (the "Motion
For the reasons set forth below, the Motion to Dismiss is
granted; the Motion for Sanctions is granted.
KRMG-NY is a law practice which presently maintains offices in
Rockland County, New York. Kurtzman, along with Kenneth Resnik
("Resnik"), Rosemarie Matera ("Matera"), Howard Gurock
("Gurock"), are partners of KRMG-NY.*fn2 See Kurtzman
R. 12(b)(1) Aff. at ¶ 2. Kurtzman, Cohen, Matera and Gurock
originally were engaged in the practice of law under the
predecessor firm, KCMG-NY. See id. KCMG-NY was a sole
proprietorship, of which Kurtzman was the sole proprietor. See
Kurtzman R. 12(b)(1) Reply Aff. at ¶ 2. The offices of KCMG-NY
also were located in Rockland County, New York. See Complaint
at ¶ 8.
Upon the departure of Cohen in November 1997, it appears
KCMG-NY continued to practice law as a limited liability
partnership under the name "Kurtzman Resnik Matera & Gurock,
LLP." See Kurtzman R. 12(b)(1) Aff. at ¶ 2; Kurtzman R.
12(b)(1) Reply Aff. at ¶ 3. On 1 December 1997, KRMG-NY assumed
the assets and liabilities of KCMG-NY. See Complaint at ¶ 15;
see also Feldstein 12(b)(1) Aff.
On 13 November 1997, KRMG-NY filed the Business Certificate for
Partners with the Office of the Clerk of the County of Rockland.
See Business Certificate for Partners; Kurtzman R. 12(b)(1)
Aff. at ¶ 3. On 14 November 1997, KRMG-NY filed a Certificate of
Registration with the Secretary of State of the State of New
York. See Certificate of Registration; Kurtzman R. 12(b)(1)
Aff. at ¶ 4.*fn3
The Certificate of Registration states, in relevant part:
[t]he name of the registered limited liability
partnership is: Kurtzman, Resnik, Matera & Gurock,
LLP. . . . The profession to be practiced by the
partnership is the practice of law. The partnership
is eligible to register as a registered limited
liability partnership, pursuant to Section
121-1500(a) of the New York Revised Limited
Partnership Act. The Secretary of State is designated
as the agent of the partnership upon whom process
against the partnership may be served. . . . The
Partnership hereby is filing a registration for
status as a registered limited liability
Certificate of Registration (emphasis added); see also Kurtzman
R. 12(b)(1) Aff. at ¶ 4.
The Business Certificate for Partners also evidences the
partnership status of KRMG-NY: "The undersigned [Kurtzman,
Resnik, Matera and Gurock] do hereby certify that they are
conducting or transacting business as members of a partnership
under the name or designation of Kurtzman, Resnik, Matera and
Gurock. . . .". Business Certificate for Partners.
Additionally, an endorsement (the "Change Endorsement") was
added to the professional liability insurance policy of KRMG-NY.
See Kurtzman R. 12(b)(1) Reply Aff. at ¶ 5; Change Endorsement,
attached as Exhibit A to Kurtzman Reply R. 12(b)(1) Reply Aff.
The Change Endorsement, dated 27 January 1998, reads, in
THIS ENDORSEMENT CHANGES THE [LIABILITY INSURANCE]
POLICY. PLEASE READ IT CAREFULLY. In consideration of
the return premium it is hereby agreed that: . . .
Item 1 of the Declarations page Named Insured is
amended to read: Kurtzman, Resnik, Matera & Gurock,
LLP. . . . Item 3 of the Declarations page Form of
the New Insured's Business is amended to Partnership.
See Change Endorsement. The Certificate of Registration, the
Business Certificate for Partners and the Change Endorsement, all
submitted by the Defendants, indicate KRMG-NY is a New York
Limited Liability Partnership.
In the Complaint, Cohen alleges KRMG-NY is "organized and
existing as a partnership and/or other unincorporated entity of
the State of New York." See Complaint at ¶ 12; see also id.
at ¶ 11 ("KRMG[-NY] was and is organized and existing as a
general partnership of the State of New York. . . ."). Cohen also
alleges Kurtzman is a general partner and the managing partner of
KRMG-NY. See id. at ¶¶ 16, 17.*fn4 Cohen further alleges "on
or about December 1, 1997 defendant KRMG-NY assumed, obtained
and/or otherwise acquired assets and liabilities of defendant
It appears from the Complaint Cohen resides in New Jersey.
See Complaint at ¶ 4. It appears from the Business Certificate
for Partners, Kurtzman, Resnik and Gurock all reside in New York,
while Matera resides in Bergen County, New Jersey. See Business
Certificate for Partners; Kurtzman R. 12(b)(1) Aff. at ¶ 3;
Matera R. 12(b)(1) Aff. at ¶ 3.
According to Matera, Cohen was personally aware she resides in
New Jersey. See Matera R. 12(b)(1) Aff. at ¶ 4. She
specifically alleges Cohen picked her up at her home in Bergen
County, New Jersey at the start of a business trip before he left
KCMG-NY. See id. Matera states she and Cohen had "countless
discussions concerning the owning of a home in Bergen County New
Jersey [sic]." Id. Matera also states Cohen knew of her
intention to remain in New Jersey, and even referred her name to
a real estate agent whose territory encompasses Bergen County.
Id. at ¶ 5.
As mentioned, Cohen filed the Complaint on 16 June 1998. See
Complaint. On 14 July 1998, the Defendants requested, and were
granted, an extension of time in which to answer the Complaint.
By letter, dated 20 July 1998, (the "20 July 1998 Letter") the
Defendants placed Cohen on notice of the jurisdictional
deficiencies of the Complaint. See 20 July 1998 Letter,
attached as Exhibit B to Eberle R. 12(b)(1) Decl. The 20 July
1998 Letter also alerted Cohen of the intention of the Defendants
to move for sanctions pursuant to Rule 11 if Cohen did not
withdraw the Complaint. See id. Cohen responded in a letter,
dated 23 July 1998, (the "23 July 1998 Letter") asserting, inter
alia, his belief that the partnership status of KRMG-NY is a
"sham" and requesting further discovery on the issue. See 23
July 1998 Letter at 2.
The Defendants filed the Motion to Dismiss on 9 September 1998.
On the same date, the Defendants filed the Motion for Sanctions.
A. Standard of Review Under Rule 12(b)(1)
A challenge to the subject matter jurisdiction of a Federal
court pursuant to Rule 12(b)(1) differs from an attack on the
merits under Fed.R.Civ.P. 12(b)(6) ("Rule 12(b)(6)") or
Fed.R.Civ.P. 56 ("Rule 56"). See Robinson v. Dalton,
107 F.3d 1018, 1021 (3d Cir. 1997); Boyle v. Governor's Veterans Outreach
& Assistance Ctr., 925 F.2d 71, 74 (3d Cir. 1991); Mortensen v.
First Federal Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.
1977); Martinez v. United ...