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COHEN v. KURTZMAN

January 11, 1999

JONATHAN M. COHEN, PLAINTIFF,
v.
ERIC C. KURTZMAN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Lechner, District Judge.

OPINION

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 Sanctions").*fn1

For the reasons set forth below, the Motion to Dismiss is granted; the Motion for Sanctions is granted.

Background

A. Facts

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
  partnership.

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 pertinent part:

  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 KCMG-NY."

Id. at ¶ 15.

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.

B. Procedural History

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.

Discussion

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 ...


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