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Shnayderman v. Cell-U-More, Inc.

United States District Court, D. New Jersey

November 20, 2018



          PETER G. SHERIDAN, U.S.D.J.

         Presently before the Court is Defendants Cell-U-More, Inc. and Roy Davoult's Motion to Dismiss Plaintiff Alex Shnayderman's Complaint pursuant Federal Rules of Civil Procedure 12(b)(1), 12(b)(2) and 12(b)(6). (ECF No. 6). For the reasons discussed herein, Defendants' Motion to Dismiss is granted in part and denied in part.


          This case arises from a dispute between former business partners and friends. Plaintiff Alex Shnayderman, a New Jersey resident, brings this matter against Defendants Roy Davoult and Cell-U-More, based on a purported breach of contract. According to the Complaint, Davoult, a Texas resident and owner of Cells-U-More, approached Plaintiff about obtaining a $200, 000 loan. (Complaint at ¶ 6). Apparently, Cells-U-More, a Texas mobile phone business with its principal place of business in Texas, had fallen on hard times and Davoult needed additional funding to help keep his business afloat. (Id. at ¶¶ 7-8). In June 2013, Davoult flew to New Jersey to meet with Plaintiff to "further solicit" a loan from him. (Id. at ¶ 10). Once at Plaintiffs home, the two reached an oral agreement, whereby Plaintiff would extend a $200, 000 loan to Davoult, "with a terms of repayment of the loan in a short period of time and Defendant Davoult personally guaranteeing repayment of the loan." (Id. at ¶ 11). After orally agreeing to the terms of the loan, Plaintiff wired $200, 000 from his account to Cells-U-More's on July 10, 2013. (Id. at ¶ 12). Thereafter, Defendants purportedly failed to timely repay Plaintiff; as such, Plaintiff now brings this four-count complaint, alleging: (1) breach of contract; (2) legal fraud; (3) equitable fraud; (4) unjust enrichment; and (5) guaranty.

         In seeking to demonstrate a lack of personal jurisdiction, Defendants attach Davoult's declaration to their Brief in Support of their Motion to Dismiss.[1] (ECF No. 6-2). As background, Davoult explained that he and Plaintiff were co-owners of a junior hockey team, the Wichita Falls Wildcats, which was worth approximately $400, 000. (Id. at ¶ 7, 41). According to Davoult, Cells-U-More's business is limited to its retail locations in Texas, Oklahoma, Kansas and Nebraska. (Id. at ¶¶ 12, 15). In addition, Davoult avers that Cells-U-More has never done business in, or solicited customers from, New Jersey; nor has Cells-U-More "had any meaningful, systematic, or continuous contacts with New Jersey or New Jersey's residents." (Id. at ¶ 15). Regarding the party's loan agreement, Davoult disclaims having ever solicited a loan from Plaintiff; instead, he claims:

In June 2013, [Plaintiff] and I had a telephone conversation to discuss our team. I was in Texas for that phone call. On a personal note, during the call I informed him that [Cells-U-More] was not doing well, which was putting a financial strain on me and the business, and therefore, I was considering selling my ownership interest in the Wildcats, which was then valued at about $200, 000.
Without my requesting or prompting, [Plaintiff] offered to help after citing the growing success of his medical billing business and asked me how much money we needed.

(Id. at ¶¶ 21-22). According to Davoult, the terms of the agreement were that Plaintiff would wire $200, 000 to him and, in exchange, Plaintiff would receive Davoult's share of the team, if they were to sell it. (Id. at ¶¶ 23-24). In any event, Davoult claims that in late June 2013, Plaintiff invited him to New Jersey to see an ice hockey rink that he recently purchased and a New Jersey junior hockey team that he was interested in acquiring. (Id. at ¶ 29). Davoult averred that the trip was purely personal and no discussions regarding the loan were ever made. (Id. at ¶¶ 28, 30-31).

         In response to Defendants' motion, Plaintiff attached a declaration seeking to establish personal jurisdiction. (ECF No. 8-1). Contrary to Davoult's declaration, Plaintiff claims that Davoult's New Jersey trip was not strictly personal. (Id. at ¶ 4). According to Plaintiff, during Davoult's visit, he mentioned the financial difficulties he was experiencing with Cells-U-More and that he needed $200, 000 to keep the business in operation. (Id.). Plaintiff expressed concern for Davoult's financial situation, and mentioned that he may be able to help him, although no agreement was made. (Id. at ¶ 5). Apparently, after returning to Texas, Davoult continued to contact Plaintiff about providing the $200, 000 and, eventually, Plaintiff agreed. (Id. at ¶ 6). According to Plaintiff, as conditions for the loan, Davoult agreed to provide a personal financial statement and assurances. (Id. at ¶ 7). Satisfied with Davoult's financial statements, Plaintiff wired him the money through one of his business accounts, ACB Receivables Management, Inc. (Id. at ¶15).

         Legal Standard

         I. Federal Rule of Civil Procedure 12(b)(1)

         Under Federal Rules of Civil Procedure 12(b)(1) a claim can be dismissed for "lack of jurisdiction over the subject matter." "A motion to dismiss for lack of standing is also properly brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter." Federman v. Bank of Am., N.A., No. 14-0441, 2014 U.S. Dist. LEXIS 175565, at *10 (D.N.J. Dec. 16, 2014) (quoting Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007). "When subject matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff must bear the burden of persuasion." Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005) (quoting Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).

         Here, Defendants contend that because ACB Receivables was the party that provided the loan to Davoult, not Plaintiff, he lacks standing to assert any claims. The Court disagrees.

         "Article III of the United States Constitution 'limits the jurisdiction of federal courts to "Cases" and "Controversies." Edmonson v. Lincoln Nat'l Life Ins. Co., 725 F.3d 406, 414 (3d Cir. 2013) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 559 (1992)). To establish Article III standing, a plaintiff must allege: "(1) an injury in fact'; (2) 'a causal connection between the injury and the conduct complained of- the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court'; and (3) a showing that it 'be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.'" N.J. Physicians, Inc. v. President of the U.S., 653 F.3d 234, 238 (3d Cir. 2011).

         Here, Plaintiff, not ACB Receivables Management, entered an agreement with Davoult to wire money to him. In doing so, Plaintiff authorized ABC Receivables to forward the funds to Davoult. Since forwarding the loan proceeds, Davoult has failed to make Plaintiff whole. As such, Plaintiff established Article III standing, since he suffered injury in fact by providing money through ABC Receivables to Davoult, and Davoult failing to perform his end of the agreement. As such, the Court will not dismiss Plaintiffs Complaint for lack of standing. However, the parties may re-open the standing issue after discovery if a fact question arises about Plaintiffs ownership and control of the funds.

         II. Federal Rule of Civil ...

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