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LLC v. Liu

United States District Court, D. New Jersey

October 10, 2019

800 COOPER FINANCE, LLC, Plaintiff,
v.
SHU-LIN LIU, et al, Defendants.

          OPINION

          HON. JOSEPH H. RODRIGUEZ, UNITED STATES DISTRICT JUDGE

         Hon. Joseph H. Rodriguez This case comes before the Court on Plaintiff, Counterclaim Defendant's, Motion to Dismiss Defendants, Counterclaim Plaintiffs', Counterclaims to 800 Cooper Finance's Amended Complaint [Dkt. No. 59] pursuant to Fed.R.Civ.P. 12(b)(1). For the Reasons that follow the Court denies Counterclaim Defendant's Motion.

         I. Background

         This matter concerns the collection of a debt allegedly owed to 800 Cooper Finance, LLC (“800 Cooper Finance” or “Counterclaim Defendant”) by Defendants/ Counterclaim Plaintiffs, Shu-Lin Liu and Jolin Chiaolin Tsao (“Counterclaim Plaintiffs”). The Counterclaim Plaintiffs are the sole members of KL Holdings, LLC (“KL Holdings”) which had an ongoing loan relationship with PNC bank for many years. Counterclaim Plaintiffs executed Guarantees for KL Holdings to secure its debt incurred with PNC. Amend. Compl. ¶ 6. 800 Cooper Finance was a Delaware Limited Liability Company until its recent dissolution. “On January 22, 2016, PNC Bank assigned the KL Holdings debt to 800 Cooper, along with all rights and powers relating to the Commercial Guarantees.” Id. at ¶ 7.

         Counterclaim Plaintiffs allege that its initial PNC loans were secured by a mortgage on a parcel of real estate owned by KL Holdings, referred to as the “Bridgeview Property.” Amend. Counterclaim ¶ 8. Counterclaim Plaintiffs were also personal guarantees on that mortgage. At some point in 2015, KL Holdings entered into an agreement of sale for the Bridgeview Property with a company, Kamgirsons, Inc. That agreement was terminated in November 2015 after information on the loans at issue were provided. Id. at ¶ 9. According to Counterclaim Plaintiffs, Kowong, the principal of Kamgrisons, subsequently created 800 Cooper Finance to acquire and hold KL Holdings' loans. Id. at ¶ 10. Counterclaim Plaintiffs claim that shortly after the acquisition, 800 Cooper Finance took “an aggressive litigation strategy to collect.” Id. at ¶ 11. Counterclaim Plaintiffs further allege that 800 Cooper Finance initiated excessive demands with the knowledge that the Counterclaim Plaintiffs had a new and pending agreement of sale for their property with a third party. Id. at ¶ 13. To proceed on that property sale, KL Holdings needed a release of the mortgage from 800 Cooper Finance. Id. at ¶ 12.

         800 Cooper Finance initially filed a Complaint in this Court for Confession of Judgment regarding the “debt” it purchased; particularly, 800 Cooper Finance sought monies owed on a line of credit and two business loans that it declared KL Holdings defaulted on. [Dkt Nos. 1, 15]. Counterclaim Defendant brought this action against Counterclaim Plaintiffs as the grantors of the debt owed. It required the following payments:

$100, 000 Line of Credit: Principal, $62, 819.50; Interest, $7, 987.91 $500, 000 Business Loan: Principal, $439, 962.96; Interest, $21, 830.29 Legal Fees: $ 982.50 Appraisal Fees: $ 3, 900.00 $201, 000 Business Loan: Principal, $201, 000.00; Interest, $9, 881.04 Total Due and Owing through March 1, 2016: $748, 364.20

Amend. Compl. ¶ 57. Counterclaim Plaintiffs argue that 800 Cooper Finance's pleadings included “excessive and improper calculations” of interest and collection fees due and failed to account for the loan extensions previously agreed to by PNC. Amend. Counterclaim ¶ 11. Counterclaim Plaintiffs disputed those amounts and reserved affirmative defenses to 800 Cooper Finance's confession of judgment in its initial Answer to the Amended Complaint. [See Dkt No. 19].

         Additionally, Counterclaim Plaintiffs requested documentation confirming the costs and fees allegedly incurred by 800 Cooper Finance, which it then charged to them; Cooper Finance did not provide any documents. Amend. Counterclaim ¶ 23. 800 Cooper Finance also rejected Counterclaim Plaintiffs' request to reduce the amount of payment demanded and refused to place the disputed amounts in escrow. Id. at ¶¶ 23-24. During the pendency of this action, the Counterclaim Plaintiffs ultimately paid the amounts demanded on the debts and 800 Cooper Finance executed a satisfaction of mortgage. Id. at ¶ 17. Counterclaim Plaintiffs claim that in order to meet the demand, they had to borrow money to fund a “bridge loan.” Id. at ¶ 28.

         After payment of the Debt, in January 2017, 800 Cooper Finance obtained a certificate of cancellation from the State of Delaware. Id. at ¶ 37. It then voluntarily dismissed this case on July 27, 2017. [Dkt. No. 41]. On August 25, 2017, Counterclaim Plaintiffs moved for leave to file After Acquired Counterclaim and for Consolidation. [Dkt. No. 42]. Counterclaim Defendant opposed the Motion. [Dkt. No. 43]. An Order was filed granting the motion for leave on March 22, 2018, at which point the case was reopened. [ Dkt. No. 50].

         Another order was entered on April 6, 2018 granting Counterclaim Plaintiffs leave to file their revised proposed pleading. Counterclaim Plaintiffs' Amended Answer proposes Counterclaims for Breach of Contract (Count I), Conversion (Count II), Unjust Enrichment (Count II), Improper Cancelation of 800 Cooper Finance (Count IV), and Improper Distribution of LLC Assets (Count V). [Dkt. No. 54]. In response, Counterclaim Defendant filed the current Motion to Dismiss for Lack of Jurisdiction on two grounds asserting that: (1) the Court lacks subject matter jurisdiction because 800 Cooper Finance is no longer in existence; and (2) Counterclaim Plaintiffs' assertions are insufficient to establish the amount in controversy requirement for diversity jurisdiction. [Dkt. No. 59; Counterclaim Def. Brf. at 5-6].

         I. Standard of Review

         A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) may involve either a facial challenge to subject matter jurisdiction or a factual challenge to the jurisdictional allegations. Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). If the defendant's attack is facial-i.e., “asserting that the complaint, on its face, does not allege sufficient grounds to establish subject matter jurisdiction”-a court must accept all allegations in the complaint as true. Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006). Alternatively, a defendant may “challenge a federal court's jurisdiction by factually attacking the plaintiff's jurisdictional allegations as set forth in the complaint.” Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A factual challenge attacks the existence of a court's subject matter jurisdiction apart from any of the pleadings and, when considering such a challenge, a presumption of truthfulness does not attach to a plaintiff's allegations.” Id.; see also Martinez v. U.S. Post Office, 875 F.Supp. 1067, 1070 (D.N.J. 1995).

         II. Discussion

         A. Subject Matter Jurisdiction over the Claims asserted

         First, Counterclaim Defendant argues that because 800 Cooper Finance is dissolved, it is no longer amenable to suit and the Court should, therefore, dismiss ...


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