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Brownstone Specialty Finance, Inc. v. Freedom Mortgage Corp.

United States District Court, D. New Jersey

June 30, 2017

BROWNSTONE SPECIALTY FINANCE, INC., Plaintiff,
v.
FREEDOM MORTGAGE CORPORATION, Defendant.

          Paul Castronovo, Esquire, Castronovo & McKinney, LLC Attorney for Plaintiff Brownstone Specialty Finance.

          Matthew A. Green, Esquire Mathieu J. Shapiro, Esquire Samantha J. Koopman, Esquire Obermayer Rebmann Maxwell & Hippel LLP, Attorneys for Defendant Freedom Mortgage Corporation.

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This matter comes before the Court by way of Defendant Freedom Mortgage Corporation's motion [Doc. No. 8] seeking to dismiss Count I of Plaintiff's amended complaint [Doc. No. 5] pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. The Court has considered the parties' submissions and decides this matter pursuant to Federal Rule of Civil Procedure 78.

         For the reasons expressed below, Defendant's motion will be granted.

         I. JURISDICTION

         In this action, Plaintiff asserts claims for allegedly unpaid commissions in violation of the New Jersey Sales Representatives' Rights Act (Count I), N.J. Stat. Ann. §§ 2A:61A-1, et seq., and breach of contract (Count II). The Court exercises jurisdiction over Plaintiff's state law claims pursuant to 28 U.S.C. § 1332 based on diversity of citizenship and an amount in controversy in excess of $75, 000.

         Plaintiff Brownstone Specialty Finance, Inc. (hereinafter, "Brownstone" or "Plaintiff") is incorporated in the State of Texas and maintains its principal place of business in Texas. (Pl.'s Am. Compl. [Doc. No. 5], ¶ 1.) Accordingly, Plaintiff is a citizen of the State of Texas. Defendant Freedom Mortgage Corporation (hereinafter, "Freedom" or "Defendant") is incorporated in the State of New Jersey and maintains its principal place of business in New Jersey. (Id. ¶ 2.) Thus, Defendant is a citizen of the State of New Jersey. Therefore, complete diversity of citizenship exists between the parties.

         The amount in controversy is met because the allegations contained in Plaintiff's amended complaint sufficiently demonstrate that the damages sought are in excess of $75, 000, exclusive of interest and costs. Specifically, Brownstone claims damages of approximately $44, 667 for allegedly unpaid commissions under the Sales Representatives' Rights Act ("SRRA"), which permits exemplary damages in an amount three times greater than the amount of unpaid commissions and allows for the recovery of all attorney's fees actually and reasonably incurred in bringing such an action. See N.J. Stat. Ann. § 2A:61A-3(a). Plaintiff's initial claim for damages, when multiplied by three, and considered with a potential award for attorney's fees, clearly satisfies the amount in controversy requirement.[1]

         II. BACKGROUND

         In the amended complaint, Brownstone alleges that in August of 2014 Brownstone began "working for Defendant as a 'Consultant' providing 'commercial loan origination referral services' pursuant to a Services Agreement" between the parties.[2] (Pl.'s Am. Comp. ¶ 5.) Almost two years later, on July 1, 2016, Freedom verbally terminated the parties' Services Agreement. (Id. ¶ 7.) Freedom followed up by letter dated July 5, 2016, and provided Brownstone with a written notice of termination pursuant to the terms of the Services Agreement, which permitted either party to terminate the Agreement "at any time for any reason by giving the other party thirty (30) days prior written notice." (Id. ¶ 11; see also Ex. A [Doc. No. 8-1] to Def.'s Mem. of Law, Services Agreement, [3], ¶ 6.1.) Brownstone received the written notice of termination on July 7, 2016. (Id.) Relying upon Exhibit A to the Services Agreement, a document entitled "Fee Schedule", Brownstone alleges that after the termination Freedom was still obligated to pay Brownstone a Monthly Draw3 in the amount of $20, 000 for each of the months of June and July, and a pro-rata portion of the August Monthly Draw based on the effective date of the termination. (Id. ¶¶ 6-7, 9-12, 15, 18-20.) Brownstone now claims that Freedom's failure to pay the Monthly Draw constitutes a violation of the SRRA because the Monthly Draw qualifies as a "commission" as defined by the Act. (Pl.'s Am. Compl. ¶¶ 22-29.)

         III. DISCUSSION

         Freedom seeks to dismiss Count I of Plaintiff's amended complaint asserting a claim under the SRRA pursuant to Federal Rule of Civil Procedure 12(b)(6). When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2).

         A district court, in weighing a motion to dismiss, asks "'not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims[.]'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 n.8 (2007) (quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1953 (2009) ("Our decision in Twombly expounded the pleading standard for 'all civil actions[.]'") (citation omitted). The Third Circuit has instructed district ...


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