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Fameco Real Estate, Lp v. Bennett

United States District Court, Third Circuit

May 7, 2013

FAMECO REAL ESTATE, L.P., Plaintiff,
v.
TYLER BENNETT AND DANIEL SPECTOR, et al., Defendants.

OPINION

JOEL A. PISANO, District Judge.

This is an action brought by Plaintiff Fameco Real Estate, L.P. ("Plaintiff" or "Fameco") against Defendants Tyler Bennett ("Bennett"), Daniel Spector ("Spector"), Winick Realty Group NJ, LLC and Winick Realty Group LLC (collectively, "Defendants"). Plaintiff's Complaint alleges that Defendants are liable for breach of contract, breach of duty of loyalty, breach of the duty of good faith and fair dealing, interference with contract, interference with prospective economic advantage, conspiracy and aiding and abetting, and misappropriation of trade secrets. Plaintiff also alleges a claim for injunctive relief. Presently before the Court is Defendants' Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction (dkt. entry no. 7).[1] Plaintiff opposes the motion. The Court decides these matters without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth below, the Court finds that there is complete diversity of citizenship between the parties and the amount in controversy requirement is met, thereby vesting this Court with subject matter jurisdiction. Accordingly, Defendants' Motion to Dismiss shall be denied.

I. Background

A. Plaintiff's Complaint

The following allegations are summarized from the Complaint, and must be taken as true in deciding this Motion to Dismiss. Fameco is a real estate brokerage firm specializing in retailer representation, landlord leasing, property management and investment sales. In October 2008, Spector entered into a Broker-Salesperson contract with Fameco and in April 2010, Bennett entered into a Broker-Salesperson contract with Fameco (collectively, the "Broker Agreements"). The Broker Agreements set forth the terms by which Spector and Bennett would serve as independent contractors and salespersons for Fameco.

Among other things, the Broker Agreements obligated Spector and Bennett to devote their best efforts to further the interests of Fameco and to use any information gained from this affiliation to benefit Fameco. The Broker Agreements also prohibited Spector and Bennett from distributing information about Fameco's business to third parties without Fameco's written consent and from using such information in any way, should their affiliations with Fameco terminate. Finally, the Broker Agreements each provided that, in the event Spector or Bennett's respective affiliation with Fameco was terminated, such Defendant agreed that he would not provide brokerage services to any of Fameco's clients for a period of one year following termination. If Spector or Bennett failed to comply with these terms, he would forfeit his right to any future commissions or payments owed to him by Fameco. Throughout their respective affiliations with Fameco, Spector and Bennett provided brokerage services to various Fameco clients, in accordance with the terms of the Broker Agreements.

On June 27, 2012, Spector resigned from his position at Fameco. Several weeks later, on July 17, 2012, Bennett also resigned from his position at Fameco. After Spector and Bennett terminated their relationships with Fameco, they both became affiliated with Defendant Winick Realty Group LLC ("Winick"), another real estate brokerage firm. Plaintiff alleges that Winick hired Spector and Bennett in an effort to open an office in New Jersey that will provide retail leasing and advisory real estate services. Since becoming affiliated with Winick, Spector and Bennett have allegedly provided brokerage services to Fameco's clients, in violation of the terms of the Broker Agreements.

In August 2012, Fameco sent Bennett a letter, demanding that he cease and desist from violating his agreement with Fameco and notifying Bennett that it intended to file suit if Bennett did not confirm in writing that he had ceased working with Fameco's clients. Bennett did not respond to Fameco's letter. Similarly, in September 2012, Fameco sent Spector a letter, demanding that he cease and desist from violating his agreement with Fameco and notifying Spector of its intent to file suit if Spector did not confirm in writing that he had ceased working with Fameco's clients. Spector did not respond to Fameco's letter. Fameco also sent a letter to Winick in September 2012, in which it stated that it was aware of Bennett and Spector's affiliation with Winick and intended to file suit if Defendants did not cease working with Fameo's clients. Winick did not respond to this letter. On September 27, 2012, Fameco commenced this action.

B. Defendants' Motion to Dismiss

Defendants move to dismiss Plaintiff's Complaint, arguing that one of Fameco's partners is a citizen of New Jersey and thus, there is not complete diversity of citizenship between the parties since Defendants are also New Jersey citizens. Specifically, Defendants assert that Plaintiff's Complaint fails to identify an individual named Jay Miller ("Miller") as a partner of Fameco, but that the firm's public materials make clear that Miller is a partner of the firm. Defendants claim that Miller became a partner in 2009 and since that time, Fameco has held Miller out as a partner to customers, firm employees and salespersons, including Defendants. Defendants further argue that, even if Miller is not an equity partner, they were never made aware of Miller's non-equity status or his purported inability to enter into agreements on the firm's behalf. Instead, they claim that they were led to believe that Miller was a full partner of the firm, with all the right and obligations associated with partnership. Accordingly, they contend that Fameco should be estopped from now denying Miller's status as partner. And because Mercer County tax records demonstrate that Miller is a citizen of New Jersey, Defendants argue that there is not complete diversity and the Court lacks jurisdiction.

Plaintiff does not dispute that Miller is a citizen of New Jersey, but instead asserts that Miller's citizenship is irrelevant for purposes of determining Fameco's citizenship because Miller is not in fact a partner of the firm. Plaintiff asserts that in 2009, Miller entered into an agreement with Fameco, which set forth the parameters of their relationship (the "Non-Equity Agreement"). The Non-Equity Agreement states that: Miller has a contractual relationship with Fameco that is outside the purview of the firm's partnership agreement; he is not a signatory to Fameco's partnership agreement; he has not contributed any capital to the firm; he has no voting rights or ownership rights in the partnership; he has no responsibility for Fameco's liabilities; and he is not entitled to a share of the firm's profits. In addition, Fameco claims that Miller has been issued a Form 1099 annually, as opposed to equity partners, who receive Form K-1s.[2] Finally, Plaintiff asserts that Miller is also bound by another agreement with the firm, which bars him from executing documents on Fameco's behalf or otherwise obligating the firm in any way. The Court addresses these arguments below.

II. Standard of Review

Federal courts are courts of limited jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). As a result, they only have jurisdiction over civil actions arising under the Constitution, laws or treaties of the United States. See 28 U.S.C. § 1331. When a claim does not arise out of a federal question, federal courts have jurisdiction only in cases where there is complete diversity of citizenship between the parties involved and the amount in controversy requirement is met. 28 U.S.C. § 1332. The current general-diversity statute grants federal district courts jurisdiction over suits for more than $75, 000 "between... citizens of different States."[3] 28 U.S.C. § 1332(a). For diversity jurisdiction to attach, "all parties on one side of a litigation must be of a different citizenship from all of those of the other." Carlsberg Resources Corp. v. Cambria Savings and Loan Assoc., 554 F.2d 1254, 1258 (3d Cir. 1977). The party claiming jurisdiction bears the burden of demonstrating complete diversity. See Chem. Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 177 F.3d 210, 222 n. 13 (3d Cir. 1999).

In evaluating a Rule 12(b)(1) motion to dismiss, the Court must determine whether the motion attacks the Complaint as deficient on its face, or whether the motion attacks the existence of subject matter jurisdiction in fact. See Turicentro, S.A. v. Am. Airlines, Inc., 303 F.3d 293, 300 & n.4 (3d Cir. 2002). "In reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff. In reviewing a factual attack, the court may consider evidence outside the pleadings." Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). The Court has substantial procedural flexibility in handling Rule 12(b)(1) motions, but "the record must clearly establish that after jurisdiction was challenged the plaintiff had an opportunity to present facts by affidavit or by deposition, or in an evidentiary hearing, in support of his jurisdictional contention." Berari v. Swanson Mem'l Lodge No. 48 of ...


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